SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
FENWAY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 84-1426038
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
308-409 Granville Street, Vancouver, British Columbia, Canada V6C 1T2
(Address of registrant's principal executive offices) (Zip Code)
604.844.2265
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
-------------------- -------------------------------
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par value $.001
- -----------------------------
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
Attorneys-at-Law
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 24
Exhibit Index is specified on Page 22
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Fenway International, Inc.,
a Nevada corporation
Index to Form 10-SB Registration Statement
Item Number and Caption Page
- ----------------------- ----
1. Description of Business 3
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
3. Description of Property 12
4. Security Ownership of Certain Beneficial Owners and Management 13
5. Directors, Executive Officers, Promoters and Control Persons 14
6. Executive Compensation - Remuneration of Directors and Officers 17
7. Certain Relationships and Related Transactions 19
10. Recent Sales of Unregistered Securities 21
13. Financial Statements 22
14. Changes in and Disagreements with Accountants 22
15. Financial Statements and Exhibits 23
15(a) Index to Financial Statements
Financial Statements F-1 through F-30
15(b) Index to Exhibits
Exhibits E-1 through E-207
Signatures 25
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Item 1. Description of Business.
Development of the Company. Fenway International, Inc., a Nevada
corporation ("Company") was incorporated in the State of Nevada on May 7, 1984
using the name Nevada-Gold, Inc. for the primary purpose of developing mining
properties. During 1985, the Company settled its liabilities and was inactive
until 1998, when it began acquiring property and mineral interests in
anticipation of developing commercial grade cement production facilities in the
Philippines. Specifically, on or about August 10, 1998, the Company acquired the
assets of Fenway Resources, Ltd., a British Columbia corporation, which
redomiciled to Delaware, which assets included property and mineral interests in
the Philippines. The Company issued 7,644,067 shares of its $.001 par value
common stock for the assets acquired. The assets acquired and the common stock
issued for those assets are specified in the Company's financial statements
which are part of this Amendment No. 1 to the Company's Registration Statement
on Form 10-SB (See Item No. 15 beginning on Page 25 of this Amendment No. 1). On
or about September 4, 1998, the Company filed a Certificate of Amendment to its
Articles of Incorporation changing its name to Fenway International, Inc. The
executive offices of the Company are located at 308-409 Granville Street,
Vancouver, British Columbia, Canada V6C 1T2. The Company's telephone number is
604.844.2265.
Business of the Company. The Company plans to develop and construct two
large commercial grade cement production facilities in the Philippines. The
Company's predecessor-in-interest, Fenway Resources, Ltd., spent more than five
years obtaining the necessary licensing, permits and environmental approvals
necessary to support construction of such facilities on the island of Negros
Oriental (the "Negros Project") and the Company is continuing its efforts to
obtain the necessary licensing, permits and environmental approvals for a
proposed facility on the island of Palawan (the "Palawan Project"). The Company
is required to participate with local corporations in the Philippines in order
to commercially exploit Philippine mineral claims and, therefore, the Company
has acquired significant ownership interest in various Philippine corporations.
The organizational chart attached as Exhibit 21 to this Registration Statement
provides a diagram of the Company's relationships with these entities, which are
specified in detail below.
The Negros Project. On or about July 16, 1998, the Company entered into an
option agreement ("Option Agreement") with Negor RR Cement Corporation, an
independent Philippine corporation, for the purpose of forming and operating a
Negros mining company ("NMC") and a Negros cement manufacturing company ("NCC").
Pursuant to the Option Agreement, the Company purchased a 90% equity interest in
the Negor RR Cement Corporation, a Philippine corporation ("Negor Corporation").
The details of the Option Agreement are as follows:
A. For a period of four (4) years following the date of acceptance by the
Company of a commercial feasibility study and report for the Negros
Project, which study and report are sufficient to enable the Company
to obtain any and all funds necessary or appropriate to finance the
development and operation of the Negros Project, Negor Corporation has
the option to acquire that number of shares of the Company's $.001 par
value common stock equal to the lesser of (a) two million (2,000,000),
or (b) ten percent (10%) of the then issued and outstanding shares of
the Company's common stock, at a purchase price of Five Dollars
($5.00) per share.
B. NMC shall prepare, sign and deliver to Negor Corporation any and all
documents and other instruments necessary or appropriate to vest in
Negor Corporation an ownership interest in NMC equal to ten percent
(10%) of the total issued and outstanding capital stock of NMC. As a
result
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of such ownership interest, Negor Corporation shall be entitled to
have allocated to it ten percent (10%) of the net profits, losses and
credits of NMC.
C. NMC shall prepare, sign and deliver to the Company any and all
documents and other instruments necessary or appropriate to vest in
the Company an ownership interest in NMC equal to ninety percent (90%)
of the total issued and outstanding capital stock of NMC. As a result
of such ownership interest, the Company shall be entitled to have
allocated to it ninety percent (90%) of the net profits, losses and
credits of NMC.
D. NCC shall prepare, sign and deliver to Negor Corporation any and all
documents and other instruments necessary or appropriate to vest in
Negor Corporation an ownership interest in NCC equal to forty percent
(40%) of the total issued and outstanding capital stock of NMC. As a
result of such ownership interest, Negor shall be entitled to have
allocated to it forty percent (40%) of the net profits, losses and
credits of NCC.
E. NCC shall prepare, sign and deliver to the Company any and all
documents and other instruments necessary or appropriate to vest in
the Company an ownership interest in NCC equal to forty percent (40%)
of the total issued and outstanding capital stock of NMC. As a result
of such ownership interest, the Company shall be entitled to have
allocated to it forty percent (40%) of the net profits, losses and
credits of NCC.
F. NCC shall prepare, sign and deliver to one or more third party
investors any and all documents and other instruments necessary or
appropriate to vest collectively in those third party investors an
ownership interest in NCC equal to twenty percent (20%) of the total
issued and outstanding capital stock of NMC. As a result of such
ownership interest, those third party investors shall be entitled to
have allocated to them, in the aggregate, twenty percent (20%) of the
net profits, losses and credits of NCC.
G. The Company paid Negor Corporation Fifty Thousand Dollars ($50,000) at
the date of signing of the Option Agreement and Fifty Thousand Dollars
($50,000) on or prior to September 30, 1998, as specified in the
Option Agreement.
At such time as all feasibility studies and similar studies and
reports which are necessary or appropriate for the construction and
operation of the manufacturing facilities (and which will be required
prior to the receipt of the funds to finance construction of the
manufacturing facilities) are completed, NMC has agreed to pay to
Negor One Million Dollars ($1,000,000.00) which funds may be
contributions to capital and proceeds from one or more borrowing
transactions, or either of them. In connection with any and all such
borrowing transactions, the acquired claims may be utilized as
collateral or otherwise be pledged to enhance the credit of the
borrower.
The Palawan Project. Fenway Resources, Ltd., as a British Columbia
corporation, acquired mineral rights to 10,296 hectares in 1992 and mineral
rights to 3,200 hectares in 1995 in three (3) contiguous claims on the west
central portion of Palawan Island near Scott Point, Municipality of Sofronio
Espanola, Palawan, the Philippines. The Company believes Scott Point is a good
location because it is a seaward site providing immediate access to marine
transport which will allow the Company to transport its products at a low cost
to various regional markets in the Philippines and to other regions in Asia.
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The Company believes that these claims have significant reserves of
limestone and shale, the two main ingredients for the manufacture of Type 1
(heavy construction quality) Portland cement. The Company retained Kilborn
Engineering Pacific Ltd., now known as Kilborn-SNC Lavolin Inc., to prepare a
project feasibility study, which was completed in 1995. Management of the
Company believes that the study supports the proposed Palawan Project.
The Palawan Project has been under development for more than five years by
the Company, in association with local mining and development interests in
Palawan. Explorations by the Philippine Government in 1994 first confirmed the
existence of limestone deposits in the central part of the main island of
Palawan. The professional feasibility study by Kilborn-SNC Lavolin, Inc.
completed for the Company in 1995 concluded that the plant and quarries can be
developed in full compliance with environmental regulations in the Philippines
and should not have any adverse effect on local communities. Local communities
have expressed strong support for the Palawan Project, which the Company
believes will stimulate local economic development and employment. Formal
application for certification of the Palawan Project has been submitted to the
Philippine Department of Environment and Natural Resources. Although the
application has not yet been approved, departmental review has been completed.
In addition to the license application procedures and environmental review
process mandated by the Philippine government, the Company has conducted
discussions with provincial government officials, with indigenous leaders
(specifically, leaders of the Barangay people), and with local landowners who
might be affected by the Palawan Project. The Company believes there is local
support for the Palawan Project.
Commercial law in effect on Palawan Island requires the participation of
local entities to exploit the island's mineral resources. Two local corporations
have been created and formally registered in compliance with local commercial
law and securities regulation. The Company owns approximately 40% of Palcan
Mining Company ("PMC") which will be responsible for the quarry properties and
the production of crushed stone, both graded and blended, for cement plant
processing operations. PMC will also be responsible for payments of royalties
and fees based on the volumes of quarried stone extracted for cement production.
PMC was incorporated in the Republic of the Philippines on August 13, 1998, and
has several common directors with the Company. Specifically, Herbert John
Wilson, President of the Company, is an incorporator and director of PMC. Arthur
Leonard Taylor, Chief Financial Officer, Secretary and a director of the
Company, is an incorporator and director of PMC. Rene E. Cristobel and Carlos A.
Fernandez, directors of the Company, are also incorporators and directors of
PMC. Rene E. Cristobel and Carlos Fernandez each hold 10% or more of the issued
and outstanding capital stock of PMC. The Company owns approximately 90% of a
second Philippine corporation, Palcan Cement Company ("PCC"), which will own and
operate the Palawan cement plant and will be responsible for the marketing and
distribution of the Company's products.
The Company has also continued to assess the market acceptance for products
of the proposed Palawan plant within the Philippines and in export markets. The
ability to produce cement of high quality and reliable uniformity from local
materials is essential to the Company's success and this ability is currently
unproven.
Discussions are currently in progress with several design-build groups to
construct and equip the Palawan plant. The Company is negotiating with
Krupps-Polysius to provide the cement plant equipment and with Bilfinger &
Berger to engineer and construct the Palawan Project. These negotiations have
not been concluded and there can be no assurance that either Krupps-Polysius or
Bilfinger & Berger will provide equipment or services to the Company.
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The Company has prepared the following schedule for completion of the
Negros Project and Palawan Project which includes forward looking statements
which estimate the happenings of future events. The actual occurrence of these
events may differ materially from those contemplated by this schedule.
<TABLE>
<CAPTION>
Activity Palawan Negros
-------- ------- ------
<S> <C> <C>
1. Complete permit application process and ground 01/99-10/99 06/99-02/00
testing programs
2. Obtain financing 10/99 10/99
3. Complete land acquisitions for 09/99-10/99 11/99-12/99
plant sites; begin development
of port site
4. Complete engineering 09/99-09/00 03/00-03/01
5. Begin plant construction 12/99 11/00
6. Negotiate and execute 03/00-03/01 01/01-01/02
sales contracts
7. Complete plant construction and begin 03/02 12/02
cement production
</TABLE>
The capital costs of the plants, including the construction of all
facilities such as power and ports, are estimated by the Company's engineering
consultants to be approximately $260 million for the Negros Project and
approximately $380 million for the Palawan Project. To conform to investment
guidelines promulgated by the Philippine government, 70% of those capital costs
must be financed by loans, including export credits, and 30% must be financed by
equity investments.
The approximately $450 million required in loans may be provided by a
consortium of German banks. Krupp-Polysius, one of the world's largest
corporations, anticipates supplying the cement plant equipment to both the
Negros Project and the Palawan Project and has offered to assist the Company in
its loan negotiations with these German banks. The Company anticipates that
approximately $190 million may be received from a registered offering of the
Company's common or preferred stock, probably through brokerage firms located in
New York.
On August 3, 1999, the Company announced the signing of a Financial Agency
Agreement with First Access Financial Group, Inc., international investment
bankers ("First Access"). First Access has represented to the Company that it
has clients interested in providing funding to the Company's Philippine cement
projects. The Financial Agency Agreement between the Company and First Access is
not exclusive and the Company is currently negotiating with other parties to
finance the Company's proposed commercial grade cement production facilities in
the Philippines.
On August 5, 1999, the Company announced the appointment of Friedhelm
Menzel as resident general manager for the Company's Philippine cement projects.
Mr. Menzel was educated in Germany, specializing in the study of export
marketing and linguistics. Mr. Menzel was export marketing manager for a leading
German garment manufacturer from 1962 to 1967, at which time he joined the
German-based multinational corporation Krupp-Polysius AG, Germany, as Far East
Sales Manager. From 1968 to 1994, Mr. Menzel was employed by Krupp-Polysius in
various capacities relating to the manufacture and supply of heavy industrial
equipment to clients in India, the middle east and the far east by
Krupp-Polysius from its various plants. From 1995 to July 1999, Mr. Menzel was
General Manager of Krupp-Polysius's Philippine agent, Marsson Industrial Inc.,
which specialized in the development and manufacture of cement producing
equipment and other heavy industrial equipment and applications.
Products. The Company is not currently producing any products or supplying
any services to any third parties. When, and if, the Company develops and
constructs its cement manufacturing facilities, the Company anticipates
producing commercial quantities of Portland cement. Portland cement is a finely
ground processed material that, when mixed with sand, gravel, water and other
minerals, forms concrete. The raw materials, limestone and shale, are mined,
crushed, and burned in high-temperature rotary kilns, producing a substance
commonly referred to as "clinker". The resulting clinker is then finely ground
with small amounts of gypsum to produce Portland cement. From the Palawan
Project, the Company anticipates producing 2.5 million metric tonnes of Portland
cement per year.
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The products of the Company may be subject to numerous foreign government
standards and regulations that are continually being amended. Although the
Company will endeavor to satisfy foreign technical and regulatory standards,
there can be no assurance that the products of the Company will comply with
foreign government standards and regulations, or changes thereto, or that it
will be cost effective for the Company to redesign its products to comply with
such standards or regulations. The inability of the Company to design or
redesign products to comply with foreign standards could have a material adverse
effect on the Company's business, financial condition and results of operations.
Marketing and Sales. The Company anticipates that all revenues from the
sale of the Company's products will be derived from customers located outside
the United States. To support its overseas customers, the Company anticipates
operating offices outside the continental United States. There can be no
assurance that the Company will be able to manage these operations effectively
or that the Company will be able to compete successfully in international
markets or satisfy the service and support requirements of its customers. In
addition, a significant portion of the Company's sales and operations are
subject to significant risks, including tariffs and other trade barriers,
difficulties in staffing and managing foreign subsidiary and branch operations,
currency exchange risks and exchange controls, potentially adverse tax
consequences, and the possibility of difficulty in accounts receivable
collection. There can be no assurance that any of these factors will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company anticipates that initially the Portland cement produced by the
Negros and Palawan Projects will be marketed exclusively in the Philippines,
with expanded capacity providing cement to foreign markets, such as Japan, South
Korea, Thailand, Malaysia, Singapore, Taiwan, Vietnam and Indonesia
(collectively, the "Target Countries"). Nearby Asian export markets for cement
products have a current volume exceeding 90 million tonnes per year moving in
trade. Entities that have previously taken most Philippine cement exports have
been countries bordering the South China Sea, those close to the Malacca Straits
and other countries in the South Asia Sub-Continent.
The strategy of the Company for growth is substantially dependent upon its
ability to market and distribute products successfully. Other companies,
including those with substantially greater financial, marketing and sales
resources, compete with the Company, and have the advantage of marketing
existing products with existing production and distribution facilities. There
can be no assurance that the Company will be able to market and distribute
products on acceptable terms, or at all. Failure of the Company to market its
products successfully could have a material adverse effect on the Company's
business, financial conditions or results of operations.
The Company anticipates that the construction industries in the Target
Countries will experience positive growth, ranging from modest growth expected
for Japan, to more significant growth anticipated in the lesser developed
countries, such as Vietnam, Thailand, the Philippines and Indonesia. The
location of the Palawan and the Negros Projects provides easy access to the
Target Countries.
Raw Materials. For the Palawan Project, the Company has acquired mineral
rights to 13,496 hectares in three contiguous claims on the west central portion
of the Palawan Island near Scott Point. The claims are underlain by significant
reserves of limestone and shale, the two main ingredients for the manufacture of
Type I Portland cement. Chemical analysis by the Philippine Bureau of Mines and
Geosciences, Technical Services Division, indicates that the site of the Palawan
Project contains commercial quantities of these raw materials.
The Negor Corporation (in which the Company holds a 90% equity interest)
has mineral claims on the island of Negros Oriental in the Philippines, which
include significant reserves of limestone and shale suitable for the manufacture
of Portland cement. Limestone mineral claims lie near the coastal towns of
Guihulngan and
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La Libertad on the island of Negros Oriental. Geological studies suggest that
the raw resources on those claims could sustain significant cement manufacturing
operations. The Company has received an Environmental Compliance Certificate and
has entered into the Mineral Production Sharing Agreement required by the
Philippine government for all mining projects in the Philippines before mining
operations can proceed.
Distribution and Transportation. Distribution in the cement industry is
typically conducted using agency contracts. The agent accepts product in bulk or
bagged from the plant at a specified price. The agent then takes responsibility
for marketing within the region(s) served; for transport and delivery to
customers; and for selling to large-volume customers, retailers or intermediate
wholesalers. The agent marks up the price to cover all costs of distribution.
The final price to consumers at retail accommodates markups as appropriate in
the distribution process. An allowance is included in the markup applied at each
step as profit for product handling and sale.
The Palawan plant will adopt the customary methods typically used in the
Philippines for distribution of cement products, with the following variations:
1. As the Palawan plant will ship to markets in different countries, not
one but several distribution agencies probably will be utilized.
2. Shipments of bagged or bulk product by truck will be for the emerging
market on Palawan.
3. Most products will be shipped from the Palawan plant in bulk by sea to
reach the Target Countries.
4. Transfer of Palawan product from vessels, bulk storage, bagging (as
needed)and distribution by truck will occur within regional markets in
the Target Countries.
5. Intra-regional transportation to customers will be minimized by the
locations of regional facilities for the receipt and handling of
Palawan plant products.
Costs of the first water crossing from Palawan to Philippine markets will
be less than typical costs associated with the transport of equivalent tonnage
in bulk by truck from competing plants. Overall, the Company believes that the
costs of product distribution to Philippine regional markets from the new plant
in Palawan pursuant to agency contracts will be equivalent to similar costs for
competing plants serving the same markets. If necessary to assure entry to
Philippine regional markets, all or part of the costs of the initial water
crossing can be absorbed at the Palawan plant by adjusting the price for product
placed to agents for distribution. Given the cost advantages of marine
transport, this will not be necessary as a general condition, but can be done
where and as needed in special situations.
The Palawan plant is ideally located for export of cement products to
regional markets in the Target Countries. Export sales will be developed and
sustained from the Palawan plant, as a means of broadening market presence,
preserving high utilization of plant assets and pursuing the best combination of
available customer relationships and opportunities for product sales and
profits. Direct relationships with large-volume customers and distribution
relationships with importers will be established in receptive countries, to
assure that export options remain available for the Palawan plant at all times.
The Company believes that it can provide its products to markets in the
Target Countries, subject to import barriers. Overt barriers have not been
present in the countries where Philippine cement has been accepted
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in the past, and import duties in these and other locations continue to decline.
Additional liberalization of trade in East and South Asia may expand
opportunities for general acceptance of products from the Palawan plant. If
necessary in particular situations, entry may be eased by adjusting prices to
absorb some of the costs of marine transport and import costs. Although not
necessary as a general condition, some absorption of transport costs has been
assumed to apply, for purposes of project valuation, to all products shipped
from Palawan.
Employees. The Company currently has eight full-time employees, three of
whom are salaried. Management of the Company anticipates using consultants for
business, accounting, engineering, and legal services on an as-needed basis.
Management has senior company experience in mine management, mineral processing,
engineering, construction, administration, and marketing. All members of
management have held senior positions in international companies or
organizations.
Competition. As a result of the lack of product differentiation and the
commodity nature of cement, the cement industry is quite competitive.
Competition is based generally on price and, to a lesser extent, quality and
service. The Company may compete with national, international and regional
cement producers in its target markets. Many of the Company's competitors are
larger and have significantly greater resources than the Company. The prices
that the Company charges its customers probably won't be materially different
from the prices charged by other cement producers in the same markets.
Accordingly, profitability in the cement industry is generally dependent on the
level of cement demand and on a cement producer's ability to contain operating
costs. Prices are subject to material changes in response to relatively minor
fluctuations in supply and demand, general economic conditions and other market
conditions beyond the Company's control. There can be no assurance that prices
will not decline in the future or that such declines will not have a material
adverse effect on the Company's financial condition or results of operations.
The Company's anticipated cost per tonne of production will be directly
related to the number of tonnes of cement manufactured; and decreases in
production will increase the Company's fixed cost per tonne. Equipment
utilization percentages can vary from year to year based upon demand for the
Company's products or as a result of equipment failure. Much of the Company's
anticipated manufacturing equipment requires significant time to replace and is
very costly to replace or repair. Although the Company will attempt to maintain
sufficient spare parts to avoid long periods of shutdown in the event of
equipment failure, there can be no assurance such shutdowns can be avoided.
Compliance with Environmental Laws. The proposed site for the Palawan
Project is near the ancestral lands of a Filipino indigenous people. These lands
may contain a portion of the Company's mineral claims. The risk of accidental
contamination or injury to indigenous peoples from hazardous materials cannot be
completely eliminated. In the event of such an accident, the Company, or any
successor-in-interest, could be held liable for any damages that result and any
such liability could exceed the financial resources of the Company. In addition,
there can be no assurance that in the future the Company will not be required to
incur significant costs to comply with environmental laws and regulations
relating to hazardous materials. There can be no assurance that the Company will
not be required to incur significant costs to comply with current or future
environmental laws and regulations nor that the operations, business or assets
of the Company will not be materially or adversely affected by current or future
environmental laws or regulations; provided, however, that the Company has
retained SNC Lavalin, a Canadian firm, and GAIA, Inc., a Philippine firm, to
prepare and file the requisite environmental impact statements necessary for the
Company to receive its Environmental Compliance Certificate for the Palawan
Project (an Environmental Compliance Certificate has already been issued for the
Negros Project).
The Company's management believes that both the Palawan Project and the
Negros Project can operate cleanly and without significant pollution in an
environmentally safe manner. However, certain environmental
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consequences associated with mining are unavoidable. The primary environmental
damage from the mineral industry occurs during the extraction of raw materials,
which requires large amounts of water and energy. The Company believes that with
the utilization of modern technology and careful planning it can significantly
reduce the environmental impact of the manufacturing of cement. As the Company
is not presently manufacturing any products, management of the Company believes
the Company will not have any significant material expenditures in the next
fiscal year related to the cost of compliance with applicable environmental
laws, rules and regulations. However, at some time in the future, the Company's
operations may involve the controlled use of hazardous materials. As a result,
the Company may be subject to various laws and regulations governing the use,
manufacture, storage, handling, and disposal of such materials and certain waste
products. The Company cannot presently estimate the potential costs of complying
with the applicable foreign environmental laws.
Reports to Security Holders. The Company will provide an annual report to
its security holders, which will include audited financial statements. The
public may read and copy any materials filed with the SEC at the SEC's Public
Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may
also obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. The address of that site is
http://www.sec.gov. The Company currently maintains its own Internet address at
http://www.fenwayintl.com.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following information specifies forward-looking statements of
management of the Company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology such as "may", "will", "could", "expect", "estimate", "anticipate",
"probable", "possible", "should", "continue", or similar terms, variations of
those terms or the negative of those terms. Actual results may differ materially
from those contemplated by the forward-looking statements.
The Company presently anticipates that initial construction on the Palawan
Project will begin in 1999, with production of cement beginning in 2002. The
Palawan Project, if completed pursuant to the Company's current schedule, will
be the only cement manufacturing facility on Palawan Island. The Company
anticipates that the Negros Project will consist of a cement producing facility
capable of producing 1.5 million tonnes per year of Portland cement with
expansion capacity to 3 million tonnes per year. The Company has solicited and
received bids for an exploratory drilling program, pursuant to which the Company
hopes to confirm the extent of limestone reserves on Negor Corporation's Negros
Oriental Province mineral claims in the central islands of the Philippines. On
June 9, 1999, the Company announced that it had signed a contract with Roctest
Machinery and Drilling Corporation to core drill 2,000 meters for test sampling
of the limestone deposits at the Negros Project. The core drilling will commence
as soon as the Company obtains the necessary regional work licenses and permits.
The business of the Company will expose it to potential product liability
risks that are inherent in the development, mining, manufacturing and marketing
of cement products. The Company does not currently require product liability
insurance, and, when and if the Company begins operations which make such
insurance necessary, there can be no assurance that the Company will be able to
obtain or maintain such insurance on acceptable terms or, if obtained, that such
insurance will provide adequate coverage against potential liabilities. The
Company has an inherent business risk of exposure to product liability and other
claims in the event that the development or use of its product is alleged to
have resulted in adverse consequences. Such risk exists even with respect to
those products that are manufactured in licensed and regulated facilities or
that otherwise possess regulatory approval for commercial sale. There can be no
assurance that the Company will avoid significant product liability exposure.
There can be no assurance that insurance will be available in the future on
commercially reasonable terms, or at all, or that such insurance will be
adequate to pay potential product liability
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claims or that a loss of insurance coverage or the assertion of product
liability claims would not materially adversely affect the Company's business,
financial condition and results of operations. Although the Company has taken,
and will continue to take, what it believes are appropriate precautions, there
can be no assurance that the Company will avoid significant liability exposure.
An inability to obtain product liability insurance at an acceptable cost or to
otherwise protect against potential liability claims could prevent or inhibit
the commercialization of products developed by the Company. A product liability
claim could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company believes, however, that such
insurance will be available at commercially reasonable rates.
Foreign Currencies. Currency risks and fluctuations in exchange rates are
an important consideration for lenders and investors. The Company anticipates
that many of its transactions will involve the use of the Philippine Peso, the
official currency of the Philippines. In 1998, the Philippine Peso was volatile,
as were the currencies of the Target Countries. From January to June, 1999, the
Philippine Peso and the currencies of the Target Countries have strengthened
considerably in comparison to 1998. Even if the Company is able to obtain all
funds necessary to finance the development and operation of the Palawan Project
and the Negros Project, and a commercially viable amount of Portland cement can
be produced, there can be no assurance that foreign currencies and exchange
rates will remain stable and that the Company will be profitable. The exchange
rates of the Philippine Peso and the currencies of the Target Countries could
have a material adverse effect on the Company's business, financial position and
results of operation.
Liquidity and Capital Resources. At December 31, 1998, the Company had cash
resources of $11,583; accounts receivable of $12,234; and a loan receivable of
$85,211. Employment agreements with H. John Wilson and A. Leonard Taylor
obligate the Company to payments of $5,850 per month; $3,250 to Mr. Wilson and
$2,600 to Mr. Taylor. Employment agreements with R. George Muscroft and Laurie
Maranda obligate the Company to payments of $6,500 per quarter; $3,250 to Mr.
Muscroft and $3,250 to Mr. Maranda. The cash and equivalents constitute the
Company's present internal sources of liquidity. Because the Company is not
generating any revenues at this time from its operations, the Company's only
external source of liquidity is the sale of its capital stock. The Company is
attempting to acquire funding for both the Palawan Project and the Negros
Project from German financial institutions with assistance from Marsson
Industrial Corporation, which is the Philippine affiliate of Krupp-Polysius, a
German machinery manufacturing, engineering, trading and financial services
company. Krupp-Polysius has agreed to help the Company arrange the export
credits and the required loan guaranties for the $450 million total of loans
required for both projects.
Results of Operations. The Company has not yet realized any revenue from
operations.
Manufacturing the Company's Products. The Company's present business plan,
which is subject to the availability of financing, weather conditions, the
political climate in the Philippines, and other factors beyond the Company's
control, anticipates the completion of construction of both the Palawan Project
and the Negros Project in or before the year 2002. Assuming completion of the
two facilities, the Company may be the largest manufacturer of cement in the
Philippines.
Item 3. Description of Property
Property held by the Company. As of December 31, 1998, the Company held the
following property:
11
<PAGE>
================================================================================
Property
--------
December 31,
1998
- --------------------------------------------------------------------------------
Cash and equivalents $ 11,583
- --------------------------------------------------------------------------------
Advance Royalty Payments $ 160,813
- --------------------------------------------------------------------------------
Project Investments $2,685,687
- --------------------------------------------------------------------------------
Property and Equipment (consists of office equipment and
computers, less accumulated depreciation)
$ 6,399
================================================================================
The Company defines cash equivalents as all highly liquid investments with
a maturity of 3 months or less when purchased.
Property and equipment are specified at cost. Major renewals and
improvements are charged to the asset accounts, while replacements, maintenance
and repairs, which do not improve or extend the lives of respective assets, are
expensed. At the time property and equipment are retired or otherwise disposed
of, the assets and related depreciation accounts are relieved of the applicable
amounts. Gains or losses from retirements or sales are credited or charged to
income.
The Company depreciates its property and equipment for financial reporting
purposes using the accelerated method based upon an estimated useful life of 5
years.
The components of the property and equipment are as follows:
Office equipment $ 6,189
Computers 5,360
-------
Total cost 11,549
Less accumulated depreciation 5,150
-------
Total property and equipment $ 6,399
-------
The Company is leasing office facilities in Vancouver, British Columbia, Canada
and Manila, Philippines. The Company's Vancouver office has a 5 year lease which
expires on February 28, 2001, with a monthly rental of $308 plus occupancy
costs. The Company's Manila office has a 5 year lease which expires on April 30,
2002, with a monthly rental of $1,754 plus occupancy costs. The rent expense for
the year ended December 31, 1998, was $11,085. An escalation clause provides
that future minimum yearly lease payments, which are:
December 31, 1999 $24,744
December 31, 2000 24,744
December 31, 2001 23,204
December 31, 2002 7,538
-------
$80,230
-------
12
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table specifies the amount of the Company's shares of $.001
par value common stock and the amount of options to purchase the Company's
shares of $.001 par value common stock that each executive officer and director
hold, rounded to the nearest 1/10 of 1%.
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of Percent of
Title of Class of Beneficial Owner Beneficial Owner Class
-------------- ------------------- ---------------- ----------
<S> <C> <C> <C>
Options to *** H. John Wilson 500,000 *2.6%
Purchase Common 574 Clearwater Way President
Stock at $3.00 Coquitlam, B.C. V3C 5W3 Director
Options to *** A. Leonard Taylor 500,000 *2.6%
Purchase Common 63 Chadwick Road Chief Executive Officer
Stock at $3.00 R.R.#6, Site 19, C27 Secretary
Gibsons, B.C. V0N 1V0 Director
Options to *** Laurie Maranda 300,000 *1.5%
Purchase Common #58-5531 Cornwall Dr. Vice President
Stock at $3.00 Richmond, B.C. V7C 5N7 Director
[also owns 5,000 shares of
common stock]
Options to *** R. George Muscroft 300,000 *1.5%
Purchase Common 13339 14A Avenue Vice President
Stock at $3.00 Surrey, B.C. V4A 6H6 Director
Options to *** Rene Cristobel 200,000 *1.0%
Purchase Common 15 Sto. Domingo St. Director
Stock at $3.00 Urdaneta Village
Makati City, Philippines
Options to *** Dr. Carlos A. Fernandez 200,000 *1.0%
Purchase Common 59 Caimito Road Director
Stock at $3.00 Mapayapa Village
Quezon City, Philippines
Common Stock Raghbir Kahbra 2,000,000** 10.3%
13911 N.W. 21st Avenue Director
Vancouver, Washington 98685
Common Stock All officers and directors 4,005,000 *20.7%
as a group
</TABLE>
* Percent of common stock held if all options are exercised.
** Issued May 29, 1998, for a total consideration of $20,000
*** All options expire July 4, 2004, and are exercisable at any time at the
discretion of the holder.
13
<PAGE>
Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is defined by
the provisions of Item 403(c) of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and principal executive officers of the Company are as
specified on the following table:
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Herbert John Wilson 58 President, Director
- --------------------------------------------------------------------------------
Arthur Leonard Taylor 69 Chief Financial Officer,
Secretary and Director
- --------------------------------------------------------------------------------
Laurie Maranda 62 Vice President, Director
- --------------------------------------------------------------------------------
Robert George Muscroft 70 Vice President, Director
- --------------------------------------------------------------------------------
Rene E. Cristobel 63 Director
- --------------------------------------------------------------------------------
Dr. Carlos A. Fernandez 58 Director
- --------------------------------------------------------------------------------
Raghbir Kahbra 54 Director
================================================================================
Herbert John Wilson is the President and a director of the Company. Mr.
Wilson graduated from the University of British Columbia in 1962 with a Bachelor
of Science degree in Chemistry. Beginning in 1962, Mr. Wilson worked for the
Government of Canada Soil Survey Division as an assistant Soil Surveyor and
Chemist. In 1963, Mr. Wilson accepted a position with MacMillan Bloedel Ltd.,
Port Alberni Pulp and Paper Division, as an Industrial Chemist. In 1964, Mr.
Wilson enrolled in the graduate studies program at the University of British
Columbia, where he studied soil science and plant physiology. From 1965 to 1973,
Mr. Wilson was employed by Placer Development Ltd., as the Chief Geochemist. In
1973, Mr. Wilson began working for Hallmark Resources Ltd. and Ramm Venture
Corporation as Chairperson and Managing Director, respectively. He was also the
mine manager for Hallmark's quarry and gold prospect at Bullhead City, Arizona
and Cronin Mine at Smithers in British Columbia. Mr. Wilson became President and
a director of Ramm Venture Corporation in 1987 and was responsible for
acquisition and development of silver, zinc and copper prospects in Houston and
British Columbia. Mr. Wilson was the Chief Executive Officer and a director of
Fenway Resources Ltd. , a British Columbia corporation, from June 1, 1990, until
the assets of that corporation were acquired by the Company.
Arthur Leonard Taylor is the Secretary, a Vice President and a director of
the Company. In 1952, Mr. Taylor became a Chartered Accountant in the Province
of British Columbia with Price Waterhouse. In 1954, he enrolled in the Executive
Development Program at the University of British Columbia. From 1952 to 1957,
Mr. Taylor worked as a Staff Accountant with Scott Paper Inc. in Philadelphia.
He then became the Senior Financial Analyst for MacMillan Bloedel. In 1960, Mr.
Taylor became the Vice President of Operations for
14
<PAGE>
McDonald's Drive-In Restaurants. From 1963 to 1971, Mr. Taylor was the Executive
Vice President and General Manager of Burke's World-Wide Travel Ltd. From 1973
to 1981, he worked for Global Travel Computer Ltd., as Vice President. In 1981,
Mr. Taylor accepted a position as a Consultant for Ramm Venture Corporation and
Hallmark Resources Inc. In 1983, he became Vice President and Director of
Franchising for Marlin Travel in Vancouver, British Columbia. Mr. Taylor was the
President of Alliance of Canadian Travel Associations from 1991 to 1992, then
became President of the Universal Federation of Travel Agents Association. Mr.
Taylor was the Secretary, a Vice President and a director of Fenway Resources
Ltd., a British Columbia corporation, from February 10, 1992 until the assets of
that corporation were acquired by the Company. Mr. Taylor is currently the
President of Ramm Venture Corporation.
Robert George Muscroft is a Vice President and a director of the Company.
Mr. Muscroft holds a Bachelor of Science degree in Mining Engineering from the
University of Toronto. Mr. Muscroft currently holds professional affiliations
with the Association of Professional Engineers in British Columbia, the
Association of Professional Engineers in Ontario and the Canadian Institute of
Mining and Metallurgy. Mr. Muscroft worked for Steep Rock Iron Mines in 1953 as
a Junior Engineer. In 1954, he became the Shift Boss for United Keno Hill Mines
in the Yukon Territory. In 1968, he accepted a position as Project Manager of
Cerro's Pine Bay Mine in Flin Flon, Manitoba. From there, he became the General
Superintendent of Patino's Copper Rand Mine in 1969. From 1970 to 1975, he
managed the Manitou Barvue Mines and from 1975 to 1977 he managed Kerr Addison's
Agnew Lake Mine. From 1978 to 1979, Mr. Muscroft worked as Project Engineer for
Ontario Hydro. From 1979 to 1982, he was the Senior Project Engineer for Placer
Development Corporation. In 1982, he accepted a position as the Senior Mining
Engineer for the Government of the Northwest Territories. From 1984 to 1995, Mr.
Muscroft worked as an Independent Consulting Engineer for Fenway Resources Ltd.,
a British Columbia corporation. He also later assumed a position as a director
of that corporation on September 6, 1991.
Laurie G. Maranda is currently Vice President and a director of the
Company. Mr. Maranda graduated in 1956 from the University of British Columbia
with a Bachelor of Applied Science degree. He received a Master of Arts in
Science from Stanford University in 1956. Mr. Maranda holds the following
professional affiliations: Registered Professional Engineer (British Columbia
and the Yukon); member of the American Concrete Institute; member of the
American Society of Civil Engineers; member of the Post Tensioned Concrete
Institute; member of the Engineering Institute of Canada; past member of the
Concrete Code Committee CAN3- A23.3-M77; past Chairperson of the B.C. Consulting
Engineers Association; past Chairperson of the A.P.E.B.C. Building Code
Committee; past Chairperson of the Richmond Advisory Design Panel; past Board
Member of the Association of Consulting Engineers of Canada; and past
Chairperson of the A.P.E.B.C. Committee on Liability. From 1957 to 1995, Mr.
Maranda worked for the Vancouver Consulting Engineering Company of Choukalos
Woodburn McKenzie Maranda Ltd. From 1967 to 1995, Mr. Maranda was a Partner with
Woodburn McKenzie Maranda Ltd. In 1995, Mr. Maranda retired, but remained as a
consultant with his former company. He also began working with Fenway Resources
Ltd., a British Columbia corporation, as a consultant at that time. He became a
director of Fenway Resources Ltd., a British Columbia corporation, on February
4, 1991.
Rene E. Cristobel is a director of the Company. Mr. Cristobel graduated
from the University of the East with a Bachelor of Science in Business
Administration. He later earned a Master of Arts in Economics at the University
of the East Graduate School in 1957. Mr. Cristobel is the current President of
Trans-Orient Overseas Contractors, Inc. as well as current President of Manpower
Resources of Asia, Inc., and Sealanes Marine Services, Inc. He is the vice
president and founder of the Philippine Association of Manpower Agencies. He is
also a director of Overseas Contractors Association of the Philippines and a
member of the Philippine Association of Service Exporters, Inc. Mr. Cristobel is
the Chairman of the Manpower Services Committee of the Philippine Chamber of
Commerce and Industry. Mr. Cristobel currently serves as Governor of the
Employers' Confederation of the Philippines and vice president of the Employment
and Sustainable
15
<PAGE>
Development Division. He is the current vice chairman of the Bagong Bayani
Foundation, Inc. Mr. Cristobel was honored by the POEA as the "Top Performance
Awardee" for 1984, 1985, and 1986 and his name currently resides in that
organization's Hall of Fame. Moreover, he was honored by Central Bank as the
"Top Foreign Exchange Earner Awardee" in 1984. Mr. Cristobel is also active in
the International Labor Organization ("ILO") and non-government organizations in
labor migration. As such, he has been not only a participant but also a
consultant in the following symposiums sponsored by the ILO: Intercountry
Programme on Overseas Employment Administration Training in Manila;
Standardization of Job Classification for Overseas Employment; Labour Migration
in Bangkok; Return Migration in Pakistan; Employers' Confederation of the
Philippines in Geneva; Rehabilitation of Sri Lankan Returnees of the Kuwait War
in Sri Lanka; and Association of General Contractors of Finland. He became a
director of Fenway Resources Ltd., a British Columbia corporation, on October 8,
1997.
Carlos A. Fernandez is a director of the Company. Mr. Fernandez earned a
Bachelor of Political Science, History and Government from the Philippine Normal
College in 1960 and a Master of Arts in Anthropology and Sociology from Ateneo
de Manila in 1967. In 1969, he enrolled in the University of California and
graduated in 1969 with a Master of Arts in Social Anthropology. Dr. Fernandez
completed his doctoral studies in 1974 in Social Anthropology. He then received
a Master of Science in Rural Policy and Regional Planning from the Institute of
Social Studies, The Hague, Netherlands. His fellowships for post graduate work
include: Small Holder Agriculture and Food Security, University of Paris,
Sorbonne, 1996; Rural Policy of the Year 2000, Land Reform Training Institute,
Taiwan 1993; Highland Agricultural Policy and Plans, International Center for
Mountain Development, Nepal 1990; Managing Farming Systems Research, University
of Florida 1989; Museology, City Museum of Venice (1978); and Mexico Museum of
Anthropology, 1986. In addition to the above, Dr. Fernandez has chaired numerous
committees on agricultural and development programs including: 1996 Planning
Adviser for the Livelihood Components Banati Say Conservation and Rehabilitation
Joint Project of 3 Municipalities of Iloilo; 1996 Chairman of the Oversight
Committee for the Mt. Apo National Park And Interagency Technical Study and
Policy Team of Mt. Apo National Park, organized by the Southern Mindanao
Regional Agriculture Program, Davao City (1991-1996); 1996 Planning Adviser to
the Sarangani Provincial government Regional Museum for Culture and Natural
Heritage, Alabel, Sarangani Province; 1996 Planning and Social Development
Specialist Advisor for the Mangrove and Coastal Marine Ecosystem: The Case of
Bohol Small Island Ecosystem Project, European Union, Pitogo, Tagbilaran, Bohol;
and 1996 Planning Specialist/Advisor to the Mangrove Project Small Islands
Ecosystems Project-European Union, Guirnaras. Dr. Fernandez has written papers
on Anthropology and Sociology and on Rural and Regional Planning. He has
participated in and conducted numerous training and educational programs, mostly
in his specialties of agriculture, anthropology and rural planning. Dr.
Fernandez has been previously associated with various regional centers and
government departments (including an eight year tenure as Undersecretary to the
Department of Agriculture). He served in government for 25 years and represented
the Philippines as Chief of Mission in the ASEAN, UN-FAO and the Non-Aligned
Movement. Over the past year, Dr. Fernandez has taken an active role in
assisting both the Company and governmental agencies to provide food, seed,
fertilizer and hand tools to the tribes-people in the region of Southern
Palawan, particularly in the area where the Palawan Cement Project proponents
operate. He became a director of Fenway Resources Ltd., a British Columbia
corporation, on January 22, 1998.
Raghbir Kahbra is a director of the Company. Mr. Kahbra graduated from
Panjab University in Chandigarh, India with a Bachelor of Science in Combined
Sciences. He also attended the Control Data Institute in Frankfurt, Germany
studying Computer Technology, and the West Midland School of Business Studies in
Wolverhampton, England, where he studied business. From 1972 to 1974, he worked
for A.G. Frankfurt Airport in Frankfurt, Germany as a computer technician. From
1974 to 1978, Mr. Kahbra worked for the National Chemsearch U.K. Ltd., in West
Bromwich, England as an analyst and programmer. From 1978 to 1981, he
16
<PAGE>
worked for Birmid Qualcast Foundries Ltd., in Smethwick, England as a senior
systems analyst. Mr. Kahbra worked for First Interstate Bank of Oregon in
Portland, Oregon from 1981 to 1989 as a project manager. In 1989, Mr. Kahbra
became a technical consultant for Security Pacific Automation Company in
Seattle, Washington, where he managed and facilitated the design, development
and utilization of state-of-the-art business focused software. In 1992 Mr.
Kahbra became senior project analyst for Seafirst Bank in Seattle, Washington,
where he researched and re-engineered existing business processes and managed
new software implementation. Currently, Mr. Kahbra is employed by Standard
Insurance Company in Portland, Oregon as a senior project leader. His areas of
expertise include Project Management; Analysis and Design, Enterprise Modeling;
Methodology Development; and Business Process Re-engineering.
None of the above listed individuals share any familial relationship. Other
than the persons specified above, there are no significant employees expected by
the Company to make a significant contribution to the business of the Company.
All directors of the Company serve until the next annual meeting of
stockholders. The Company's executive officers are appointed by the Company's
Board of Directors and serve at the discretion of the Board of Directors.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Specified below, in tabular form, is the aggregate annual remuneration of
the Company's Chief Executive Officer and the four (4) most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of the Company's last completed fiscal year.
================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group Remuneration was received Remuneration
- --------------------------------------------------------------------------------
Herbert John Wilson President $39,000
- --------------------------------------------------------------------------------
Arthur Leonard Taylor Chief Financial Officer $31,000
- --------------------------------------------------------------------------------
Laurie Maranda Vice President $13,000
- --------------------------------------------------------------------------------
Robert George Muscroft Vice President $13,000
================================================================================
Other than as set forth under the heading "Employment Agreements" below,
there is no arrangement for compensation of the named Executive officers or
directors of the Company in the event of termination of employment, changes in
responsibilities and/or employment contracts, or in the event of change of
control of the Company.
Employment Agreements. On September 1, 1995, Fenway Resources Ltd., a
British Columbia corporation, entered into an employment agreement, with a term
expiring August 31, 2000, with H. John Wilson (the "Wilson Agreement"), pursuant
to which Mr. Wilson agreed to act as the President and Chief Executive Officer
of that corporation. The Wilson Agreement was assumed by the Company and is
renewable by mutual consent of the parties for successive five (5) year periods.
Pursuant to the terms of the Wilson Agreement, Mr. Wilson is entitled to
compensation in the amount of $400,000 per year, commencing September 1, 1995.
Despite the terms of the Wilson Agreement, Mr. Wilson has only received $3,250
per month from the Company and has agreed to defer all other compensation
payable to him until the Company's board of directors deems it appropriate to
pay Mr. Wilson the full amount of the compensation and benefits required
pursuant to the Wilson Agreement.
17
<PAGE>
Mr. Wilson is also entitled to reimbursement for out-of-pocket expenses and
rights and benefits pursuant to any profit sharing, deferred compensation, stock
appreciation rights, stock option or other plans or programs adopted by the
Company, if any, comparable to rights and benefits pursuant to such plans and
programs as are customarily granted to persons holding similar positions as that
held by Mr. Wilson or performing duties similar to those performed by him in
corporations of similar size that carry on a similar type of business as that
carried on by the Company.
On September 1, 1995, Fenway Resources Ltd., a British Columbia
corporation, entered into an employment agreement with A. Leonard Taylor (the
"Taylor Agreement"), pursuant to which Mr. Taylor agreed to act as that
corporation's Secretary and Chief Financial Officer. The Taylor Agreement was
assumed by the Company and is substantially the same as the Wilson Agreement.
Pursuant to the terms of the Taylor Agreement, Mr. Taylor is entitled to
compensation in the amount of $300,000 per year, commencing September 1, 1995.
Despite the terms of the Taylor Agreement, Mr. Taylor has only received $2,600
per month from the Company and has agreed to defer all other compensation
payable to him until the Company's board of directors deems it appropriate to
pay Mr. Taylor the full amount of the compensation and benefits required
pursuant to the Taylor Agreement.
On February 1, 1996, Fenway Resources Ltd., a British Columbia corporation,
entered into an employment agreement with Laurie G. Maranda (the "Maranda
Agreement"), pursuant to which Mr. Maranda agreed to act as that corporation's
Project Manager, Quarrying and Production. The Maranda Agreement was assumed by
the Company and is substantially the same as the Wilson Agreement.
Pursuant to the terms of the Maranda Agreement, Mr. Maranda is entitled to
compensation in the amount of $200,000 per year, commencing February 1, 1996.
Despite the terms of the Maranda Agreement, Mr. Maranda has only received $3,250
per month from the Company and has agreed to defer all other compensation
payable to him until the Company's board of directors deems it appropriate to
pay Mr. Maranda the full amount of the compensation and benefits required
pursuant to the Maranda Agreement.
On February 1, 1996, Fenway Resources Ltd., a British Columbia corporation,
entered into an employment agreement with R. George Muscroft (the "Muscroft
Agreement"), pursuant to which Mr. Muscroft agreed to act as that corporation's
Project Manager, Port and Power. The Muscroft Agreement was assumed by the
Company and is substantially the same as the Wilson agreement.
Pursuant to the terms of the Muscroft Agreement, Mr. Muscroft is entitled
to compensation in the amount of $200,000 per year, commencing September 1,
1995. Despite the terms of the Muscroft Agreement, Mr. Muscroft has only
received $3,250 per month from the Company and has agreed to defer all other
compensation payable to him until the Company's board of directors deems it
appropriate to pay Mr. Maranda the full amount of the compensation and benefits
required pursuant to the Maranda Agreement.
Director's Compensation. For the Company's most recently completed fiscal
year:
(a) no compensation of any kind was accrued, owing or paid to any of the
Company's directors for acting in their capacity as such; and
(b) no arrangements of any kind existed with respect to the payment of
compensation of any kind to any of the Company's directors for acting in
their capacity as such.
18
<PAGE>
Item 7. Certain Relationships and Related Transactions
Transactions with Promoters. Brockington Securities is the market maker for
the Company. Brockington Securities has not received any shares of common stock
of the Company for its services provided to the Company.
Transactions with Related Parties. On or about August 10, 1998, the Company
purchased the assets of Fenway Resources, Ltd., a British Columbia corporation,
which had redomiciled to Delaware. Thereafter, the Company issued 7,644,067
shares of its common stock for the assets acquired. It is anticipated that
Fenway Resources, Ltd. will wind up and dissolve and those shares of the
Company's common stock will be distributed, pro rata, to the shareholders of
Fenway Resources, Ltd. at such time as the appropriate registration statement is
effective with the Securities and Exchange Commission.
Rene Cristobel, Carlos Fernandez, Laurie Maranda, R. George Muscroft,
Milton Schlesinger, A. Leonard Taylor, and H. John Wilson were directors of
Fenway Resources, Ltd. at the time of the acquisition, with A. Leonard Taylor
serving as the Secretary and Chief Financial Officer and H. John Wilson serving
as the President and Chief Executive Officer of Fenway Resources, Ltd.
The Option Agreement which the Company entered into with Negor Corporation,
a Philippine corporation, in which the Company holds a 90% equity interest,
provides for, among other things, payment of $50,000 at the date of signing that
agreement and an additional $50,000 payment no later than September 30, 1998,
both of which payments were made. Additional terms and conditions of the Option
Agreement are specified at Page 3 of this Registration Statement under the
caption entitled The Negros Project. Negor Corporation had no prior affiliations
with the Company and does not share any common management with the Company.
On February 1, 1996, the Company entered into employment agreements with R.
George Muscroft and Laurie Maranda, former directors of Fenway Resources, Ltd.
and present officers and directors of the Company. The employment agreement with
Mr. Muscroft was assumed by the Company and provides for, among other things,
the payment by the Company to Mr. Muscroft of $3,250, payable quarterly. The
employment agreement with Mr. Maranda was assumed by the Company and provides
for, among other things, the payment by the Company to Mr. Maranda of $3,250
payable quarterly. These employment agreements supersede all previous consulting
agreements and are attached hereto as exhibits.
Palcan Mining Corporation ("PMC"), was incorporated in the Republic of the
Philippines on August 13, 1998, and has several common directors with the
Company. Specifically, Herbert John Wilson, President of the Company, is an
incorporator and director of PMC. Arthur Leonard Taylor, Chief Financial
Officer, Secretary and a director of the Company, is an incorporator and
director of PMC. Rene E. Cristobel and Carlos A. Fernandez, directors of the
Company, are also incorporators and directors of PMC. Rene E. Cristobel is also
the President of PMC and owns 20% of the issued and outstanding shares of common
stock of PMC which will be voted in favor of the Company. Fenway Resources Ltd.
paid 398,000 Philippine Pesos for 398 shares of PMC which equals 39.8% of the
issued and outstanding shares of common stock of PMC.
The primary purpose of PMC is to hold the mineral claims of Central Palawan
Mining & Industrial Corp. ("CPMIC"), Palawan Star Mining Ventures Inc. ("PSMVI")
and Pyramid Hill Mining & Industrial Corp. ("PHMIC"), their respective Mineral
Production Sharing Agreements (MPSA), Environmental Compliance Certificates
(ECC), quarry shale and limestone, and any other commercial minerals found on
these claims. Moreover, PMC shall buy, sell, exchange or otherwise produce and
deal in all kinds of minerals, as well as
19
<PAGE>
purchase, lease, option, locate or otherwise acquire, own, exchange, sell,
assign or contract out the property and the operation of the property; or
otherwise dispose of, pledge, mortgage, deed in trust, hypothecate and deal in
mining claims, land related to production from the mining claims, timber lands,
water, and water rights and other property, both real and personal.
The Company lent $80,000 to CPMIC, PSMVI and PHMIC on September 6, 1995.
This loan accrues interest at 7% per annum from the date of signing until repaid
in full. The loan is repayable out of future royalty payments due to CPMIC after
the start-up of operations. The balance of the loan presently totals $86,611.
By letter amendment agreement dated March 21, 1997, all prior agreements
between successors-in-interests to the Company and CPMIC, PSMVI, and PHMIC were
amended to provide, among other things, that (i) a Joint Venture Mining Company
("JVMC") would be established; (ii) CPMIC, PSMVI and PHMIC (collectively, the
"Consortium") would not have any equity interest in the JVMC, and each member
would assign and waive all right to own and subscribe to the shares of the JVMC;
(iii) 10% of the net profits of the JVMC would be paid to the Consortium as
consideration for the transfer of their respective interests in each of the
properties, including the mining claims; (iv) royalty payments applicable to raw
materials quarried or mined from property belonging individually to CPMIC, PSMVI
and PHMIC would be waived and surrendered by each member of the Consortium in
favor of the Consortium; and (v) the properties, consisting of mining claims,
the Mineral Production Sharing Agreement, the Environmental Compliance
Certificate, and all rights, title and interest thereto, would be transferred by
each member of the Consortium to the JVMC.
The Company has also agreed to pay the Consortium $100,000 as an advance
payment which will be deducted from the royalties payable to the Consortium. The
agreement also specifies that JVMC is to advance $100,000 to each member of the
Consortium each year, payable pro rata in quarterly payments, as advance royalty
payments to be deducted from the royalties of $0. 35 per tonne of raw material
used in the manufacture of cement from the properties. Advance royalty payments
shall cease upon commencement of commercial production of any one of the
properties of the Consortium.
The agreement also specifies that a joint venture cement manufacturing
company ("JVCC") will be formed for the development of the Palawan Cement
Project for the manufacturing of cement and related cement products and that 10%
interest in the net profits of the JVCC shall be allocated to the Consortium
from the interest of the Company in the JVCC.
The agreement also specifies that the Consortium members will have options
to purchase shares of the Company's common stock, subject to regulatory
approvals and other conditions, as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
CPMIC PSMVI PHMIC
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Nine hundred thousand shares @ 1 million shares 4 million shares
CDN $2.00/share (Approximately @ CDN $4.00/share @ CDN $2.00/share
US$1.36)* (Approximately US$2.72)* (Approximately US$1.36)*
With 1:1 warrant 1 million shares
@ CDN $3.00/share @ CDN $5.00/share
(Approximately US$2.04)* (Approximately US$3.40)*
exercisable at any time exercisable at any time
- ----------------------------------------------------------------------------------------
</TABLE>
* Based on exchange rate of 1.47 Canadian dollars to US dollars, as of June
30, 1999.
20
<PAGE>
On or about May 27, 1998, the Company issued 2,000,000 shares of its $.001
par value common stock to Raghbir Kahbra, a director of the Company, for a total
consideration of $20,000.
Other than the transactions and proposed transactions between the Company
and PMC, PCC, CPMIC, PSMV, PHMI, Negor Corporation, NMC, NCC, JVMC and JVCC
disclosed herein, no significant future related party transactions are
contemplated at this time.
Item 10. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three
(3) years which would be required to be disclosed pursuant to Item 701 of
Regulation S-B, except for the following:
On or about May 27, 1998, the Company sold 9,000,000 shares of its $0.001
par value common stock for $0.01 per share. The shares were issued in reliance
upon the exemption from the registration and prospectus delivery requirements of
the Securities Act of 1933 set forth in Section 3(b) of that act and Rule 504 of
Regulation D promulgated by the Securities and Exchange Commission. The offering
price for the shares was arbitrarily set by the Company and had no relationship
to assets, book value, revenues or other established criteria of value. There
were no commissions paid on the sale of shares. The net proceeds to the Company
were $90,000. The Company issued 2,000,000 shares of its $.001 par value common
stock to Raghbir Kahbra, an officer and a director of the Company as part of
this offering.
On or about August 10, 1998, the Company entered into an Agreement of
Purchase and Sale of Assets with Fenway Resources Ltd. for the purpose of
acquiring substantially all of the assets of Fenway Resources Ltd. The Company
issued 7,644,067 shares of its $.001 par value common stock in exchange for the
assets of Fenway Resources Ltd., in reliance on the exemption specified by the
provisions of Section 4(2) of the Securities Act of 1933. A copy of that
agreement is attached hereto as Exhibit 10.2.
On or about September 2, 1998, the Company issued 500,000 shares of its
$0.001 par value common stock, which the Company valued at $0.25 per share, to
G.I. Joe Ltd., a United Kingdom corporation, whose principals include Norhinder
Singh and Karmit Kajr. The shares were issued in exchange for two hundred
thousand (200,000) shares of $.001 par value common stock of Fortune Oil & Gas,
Inc., a Nevada corporation, and in reliance upon the exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933
set forth in Section 3(b) of that act and Rule 504 of Regulation D promulgated
by the Securities and Exchange Commission. Specifically, the offer was made to
"accredited investors", as that term is defined under applicable federal and
state securities laws, and no more than 35 non-accredited investors. The value
of the shares was arbitrarily set by the Company and had no relationship to
assets, book value, revenues or other established criteria of value. There were
no commissions paid on the sale of shares.
On or about October 29, 1998, the Company sold 2,798 shares of its $0.001
par value common stock for $3.00 per share to Mr. H. Scott (2,128 shares) and
Mr. K. Brause (670 shares). The shares were issued in reliance upon the
exemption from the registration requirements of the Securities Act of 1933 set
forth in Section 3(b) of that act and Rule 504 of Regulation D promulgated by
the Securities and Exchange Commission. The offering price for the shares was
arbitrarily set by the Company and had no relationship to assets, book value,
revenues or other established criteria of value. There were no commissions paid
on the sale of shares. The net proceeds to the Company were $8,394.
On or about February 4, 1999, the Company sold 500,000 shares of its $.001
par value common stock for $0.25 per share, for an aggregate total of $125,000.
On or about February 24, 1999, the Company sold 2,000 shares of its $.001 par
value common stock for $3.00 per share, for an aggregate total of $6,000. On or
about March 16, 1999, the Company sold 5,000 shares of its $.001 par value
common stock for $3.00 per share, for an aggregate total of $15,000. On or about
March 17, 1999, the Company sold 4,000 shares of its $.001 par value common
stock for $3.00 per share, for an aggregate total of $12,000. On or about March
30, 1999, the Company sold 9,000 shares of its $.001 par value common stock for
$3.00 per share, for an aggregate total of $27,000. On or about April 12, 1999,
the Company sold 9,000 shares of its $.001 par value common stock for $3.00 per
share, for an aggregate total of $27,000.
21
<PAGE>
The shares were issued in reliance upon the exemption from the registration
requirements of the Securities Act of 1933 set forth in Section 3(b) of that act
and Rule 504 of Regulation D promulgated by the Securities and Exchange
Commission. The offering price for the shares was arbitrarily set by the Company
and had no relationship to assets, book value, revenues or other established
criteria of value. There were no commissions paid on the sale of shares.
Item 13. Financial Statements
Copies of the financial statements specified in Regulation 228.310 (Item
310) are filed with this Registration Statement, Form 10-SB (see Item 15 below).
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
In August, 1998, the Company's former accountants, the firm of Anderson,
Anderson & Strong ("Anderson") were dismissed. Anderson's reports on the
financial statements for either of the past two (2) years did not contain an
adverse opinion or disclaimer of opinion and the reports were not modified as to
uncertainty, audit scope or accounting principals. The decision to change
accountants was recommended and approved by the Board of Directors and did not
result from any disagreement regarding the Company's policies or procedures.
There have been no disagreements with the Company's accountants since the
formation of the Company. In August, 1998, a new accountant, Moffitt & Company,
PC was engaged as the principal accountant to audit the Company's financial
statements.
Item 15. Financial Statements and Exhibits
<TABLE>
<CAPTION>
(a) Index to Financial Statements. Page
- ----------------------------------- ----
<S> <C>
Amended Cover Letter of Independent Auditor's Report by
Moffitt & Company, P.C. to indicate City and State of Issue F-3
Balance Sheets as of August 31, 1998 F-4
Statement of Operations for the Eight Months Ended August 31, 1998 and for the
Period from May 7, 1984 (Date of Inception) to
August 31, 1998 F-5
Statement of Changes in Stockholders' Equity for the Period from
May 7, 1984 (Date of Inception) to August 31, 1998 F-6 through F-7
Statementof Cash Flows for the years ended August 31, 1998 and for the period
from May 7, 1984 (Date of Inception) to
August 31, 1998 F-8
Notes to Financial Statements F-9 through F-23
Independent Auditors' Report by Anderson, Anderson & Strong, L.C. F-24
Statementof Cash Flows for the Three Months Ended March 31, 1998 and the years
ended December 31, 1997, 1996 and 1995 and the Period from May 7, 1984
(Date of Inception) to
March 31, 1998 F-25
</TABLE>
22
<PAGE>
<TABLE>
<S> <C>
Statement of Changes In Stockholders' Equity for the Period from
May 7, 1984 (Date of Inception) to March 31, 1998 F-26
Balance Sheets as of March 31, 1998, December 31, 1997 and
December 31, 1996 F-27
Statementof Operations for the Three Months Ended March 31, 1998 and the Years
Ended December 31, 1997, 1996, and 1995 and the Period May 7, 1984
(Date of Inception) to
March 31, 1998 F-28
Notes to Financial Statements F-29 through F-30
</TABLE>
(b) Index to Exhibits
Copies of the following documents are filed with this Registration
Statement, Amendment No. 1 to Form 10-SB as Exhibits:
<TABLE>
<CAPTION>
Index to Exhibits
- -----------------
<S> <C> <C>
10.1 Option Agreement Regarding Negor RR Cement E-1 through E-30
Corporation Project
10.2 Agreement of Purchase and Sale of Assets between E-31 through E-61
Fenway Resources Ltd. and Nevada/Utah Gold, Inc.
dated August 10, 1998
10.3 Employment Agreement (H. John Wilson) E-62 through E-73
10.4 Employment Agreement (A. Leonard Taylor) E-74 through E-84
10.5 Employment Agreement (R. George Muscroft) E-85 through E-95
10.6 Employment Agreement (Laurie Maranda) E-96 through E-105
10.7 Memorandum of Agreement (Dated August 29, 1996 E-106 through E-136
by and between Central Palawan Mining & Industrial
Corporation and Fenway Resources Ltd.)
10.8 Memorandum of Agreement (Dated November 11, 1996 E-137 through E-169
by and between Palawan Star Mining Ventures, Inc. and
Fenway Resources Ltd.)
10.9 Memorandum of Agreement (Dated November 11, 1996 E-170 through E-203
by and between Pyramid Hill Mining & Industrial
Corporation and Fenway Resources Ltd.)
10.10 Amendment to MOA and other Agreements dated E-204 through E-207
March 21, 1997
21 Corporate Chart E-208
</TABLE>
23
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this Amendment to No. 1 to Registration
Statement on Form 10-SB to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, British Columbia, Canada, on August
__, 1999.
Fenway International Inc.,
a Nevada corporation
By:
-------------------------
Its: President
24
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AUGUST 31, 1998
<PAGE>
TABLE OF CONTENTS
Page No.
--------
INDEPENDENT AUDITORS' REPORT .......................................... 1
FINANCIAL STATEMENTS
Balance Sheet ......................................................... 2
Statement of Operations ............................................... 3
Statement of Changes in Stockholders' Equity .......................... 4-5
Statement of Cash Flows ............................................... 6
Notes to Financial Statements ......................................... 7-21
<PAGE>
Moffitt & Company, P.C.
- --------------------------------------------------------------------------------
Certified Public Accountants 5040 East Shea Blvd. Suite 270
Scottsdale, Arizona 85254
(480) 951-1416
Fax (480) 948-3510
[email protected]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Fenway International Inc.
(Formerly known as Nevada-Utah Gold, Inc.)
Newport Beach, California
We have audited the accompanying balance sheet of Fenway International Inc. (a
Nevada Corporation) as of August 31,1998, and the related statements of
operations, changes in stockholders' equity, and cash flows for the eight months
ended August 31, 1998 and for the period from May 7, 1984 (date of
incorporation) to August 31, 1998. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on the financial statements based on our audit. We did not audit the
financial statements of Nevada/Utah Gold, Inc. for the period from May 7, 1984
to March 31, 1998 nor did we audit the details in footnotes number 4,5,7,13 and
15. Those statements and footnotes were audited by other auditors whose reports
have been furnished to us, and our opinion, insofar as it relates to the amounts
included for Nevada-Utah Gold, Inc. and footnotes number 4,5,7,13 and 15 is
based solely on the reports of the other auditors.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects
the financial position of Fenway International Inc. as of August 31, 1998 and
the results of its operations and its cash flows for the period from May 7, 1984
to August 31, 1998, in conformity with generally accepted accounting principles.
The Company is developing mining properties in the Republic of the Philippines.
In is imperative that additional capital is received in order to develop the
projects.
/s/ MOFFITT & COMPANY, P.C.
Moffitt & Company, P.C.
Scottsdale, Arizona
November 30, 1998 except for footnote number 18 which is dated January 9, 1999
F-3
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AUGUST 31, 1998
ASSETS
Cash $ 41,800
Cash-held in lawyer's trust account (Note 4) 118,578
Accounts receivable 5,097
Advance royalty payments 160,813
Prepaid expenses 11,914
Investments in projects in The Republic of the Philippines
(Notes 5 and 6) 2,685,687
Loan receivable (Note 7) 83,344
Property and equipment (Note 8) 6,986
Deferred tax assets (Note 9) 0
----------
TOTAL ASSETS $3,114,219
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 66,254
Short term note payable (Note 11) 95,550
----------
TOTAL LIABILITIES $ 161,804
STOCKHOLDERS' EQUITY (NOTES 1, 12, 13 and 14)
Common stock, par value $0.001 per share
Authorized 100,000,000 shares
Issued and outstanding 19,358,157 shares 19,358
Paid in capital in excess of par value of stock 3,087,598
Deficit accumulated during the development stage (154,541)
----------
TOTAL STOCKHOLDERS' EQUITY 2,952,415
----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $3,114,219
==========
See Accompanying Notes and Independent Auditors' Report.
F-4
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1998 AND
FOR THE PERIOD FROM MAY 7, 1984 (DATE OF INCEPTION) TO
AUGUST 31, 1998
May 7, 1984
Eight Months (Date of
Ended Inception)
August to August
31, 1998 31, 1998
----------- -----------
REVENUE $ 0 $ 0
DEVELOPMENT COSTS 117,517 154,541
----------- -----------
NET (LOSS) $ (117,517) $ (154.541)
=========== ===========
NET LOSS PER COMMON SHARE
Basic $ 0.016
Diluted $ 0.016
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 7,130,756
Diluted 7,130,756
See Accompanying Notes and Independent Auditors' Report.
F-5
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MAY 7, 1984 (DATE OF INCEPTION) TO
AUGUST 31, 1998
<TABLE>
<CAPTION>
Paid In Accumulated
Capital in Deficit
Common stock Excess of During the
-------------------- Par Value Development
Shares Amount of Stock Stage
------- ------- ---------- -----------
<S> <C> <C> <C> <C>
BALANCE, MAY 7, 1984
(DATE OF INCEPTION) 0 $ 0 0 $ 0
Issuance of common stock for
mineral lease (unknown value)
and expenses at $.005 -
May 7, 1984 600,000 600 2,400 0
Issuance of common stock for
cash at $.267 - May 7, 1984 8,610 9 2,287 0
Net loss for the period ended
December 31, 1984 0 0 0 (5,296)
Issuance of common stock for
services at $.267 -
February 3, 1985 9,000 9 2,391 0
Issuance of common stock for
cash at $.267 - February 3, 1985 96,480 96 25,632 0
Net loss for the year ended
December 31, 1985 0 0 0 (28,128)
------- ------- ------- -------
BALANCE, DECEMBER 31, 1985 714,090 714 32,710 (33,424)
------- ------- ------- -------
BALANCE, DECEMBER 31, 1995 714,090 714 32,710 (33,424)
------- ------- ------- -------
BALANCE, DECEMBER 31, 1996 714,090 714 32,710 (33,424)
Contribution to capital -
expenses - 1997 0 0 3,600 0
Net loss for the year ended
December 31, 1997 0 0 0 (3,600)
------- ------- ------- -------
BALANCE, DECEMBER 31, 1997 714,090 714 36,310 (37,024)
</TABLE>
See Accompanying Notes and Independent Auditors' Report.
F-6
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
FOR THE PERIOD FROM MAY 7, 1984 (DATE OF INCEPTION) TO
AUGUST 31, 1998
<TABLE>
<CAPTION>
Paid In Accumulated
Capital in Deficit
Common stock Excess of During the
----------------------- Par Value Development
Shares Amount of Stock Stage
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Contribution to capital -
expenses - 1998 0 0 1,300 0
Issuance of common stock
for cash
$.01 - May 29, 1998 2,000,000 2,000 18,000 0
$.01 - June 9, 1998 9,000,000 9,000 81,000 0
Issuance of common stock for
net assets of Fenway
Resources Ltd - $.387 -
August 31, 1998 7,644,067 7,644 2,950,988 0
Net loss for the eight months
ended August 31, 1998 0 0 0 (117,517)
---------- ---------- ---------- ----------
BALANCE, AUGUST 31, 1998 19,358,157 $ 19,358 $3,087,598 $ (154,541)
========== ========== ========== ==========
</TABLE>
See Accompanying Notes and Independent Auditors' Report.
F-7
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1998 AND
FOR THE PERIOD FROM MAY 7, 1984 (DATE OF INCEPTION) TO
AUGUST 31, 1998
<TABLE>
<CAPTION>
May 7, 1984
Eight Months (Date of
Ended Inception)
to August 31, August 31,
1998 1998
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $ (117,517) $ (154,541)
ADJUSTMENTS TO RECONCILE NET (LOSS)
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Contribution to capital and stock issued
for expenses and services 1,300 10,300
INCREASES (DECREASES) IN:
Accounts payable 7,600 7,600
----------- -----------
NET CASH (USED) BY OPERATING
ACTIVITIES (108,617) (136,641)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 150,417 178,441
----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 150,417 178,441
----------- -----------
NET INCREASE IN CASH 41,800 41,800
CASH AT BEGINNING OF PERIOD 0 0
----------- -----------
CASH AT END OF PERIOD $ 41,800 $ 41,800
=========== ===========
SCHEDULE OF NON CASH INVESTING AND
FINANCING ACTIVITIES
Issuance of 400,000 shares of common stock for mineral
lease (unknown value) and expenses - 1984 $ 3,000
-----------
Issuance of 9,000 shares of common stock for
services - 1985 $ 2,400
-----------
Contribution to capital - expenses - 1997 $ 3,600
-----------
Contribution to capital - expenses - 1998 $ 1,300
-----------
Issuance of 7,644,067 shares of stock - August 31, 1998 $ 2,918,215
-----------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $ 0
===========
Taxes paid $ 0
===========
</TABLE>
See Accompanying Notes and Independent Auditors' Report.
F-8
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization and Nature of Business
The Company was incorporated under the laws of the State of Nevada on
May 7, 1984 for the primary purpose of developing mineral properties.
During 1985, the Company abandoned its remaining assets and settled
its liabilities and was inactive until 1998. In 1998, the Company
became active again by acquiring mineral properties in the Republic of
the Philippines. (See notes 3, 5 and 6).
Name Change
On September 2, 1998, the Company changed its name from Nevada-Utah
Gold, Inc. to Fenway International Inc.
Authorized Common Stock
On May 7, 1984, the Company was incorporated with authorized common
stock of 25,000 shares with a par value of $1.00. On July 10, 1997,
the authorized common stock was increased to 100,000,000 shares with a
change in par value to $0.001.
On July 26, 1997, the Company completed a forward stock split of its
outstanding common stock of one share for thirty shares. The financial
statements have been prepared showing after stock split shares with a
par value of $0.001 from its inception.
Accounting Estimates
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenues and expenses. Actual
results could vary from the estimates that were used.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
See Accompanying Notes and Independent Auditors' Report.
F-9
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
Income Taxes
Provisions for income taxes are based on taxes payable or refundable
for the current year and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and
between the tax bases of assets and liabilities and their reported
amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or
settled as prescribed in FASB Statement No. 109, Accounting for Income
Taxes. As changes in tax laws or rate are enacted, deferred tax assets
and liabilities are adjusted through the provision for income taxes.
Compensated Absences
Employees of the corporation are entitled to paid vacations, sick days
and other time off depending on job classification, length of service
and other factors. It is impractical to estimate the amount of
compensation for future absences, and accordingly, no liability has
been recorded in the accompanying financial statements. The
corporation's policy is to recognize the costs of compensated absences
when paid to employees.
Net Loss Per Share
Net loss per common share is computed by dividing net loss by the
weighted average number of shares outstanding during the period.
NOTE 2 DEVELOPMENT STAGE OPERATIONS
As of August 31, 1998, the Company was in the development stage of
operations. According to the Financial Accounting Standards Board of
the Financial Accounting Foundation, a development stage company is
defined as a company that devotes most of its activities to
establishing a new business activity. In addition, planned principle
activities have not commenced, or have commenced and have not yet
produced significant revenue.
FAS-7 requires that all development costs be expensed during the
development period. The Company expensed $117,517 of development costs
for the eight months ended August 31, 1998 and $154,541 from May 7,
1984(date of inception) to August 31, 1998.
See Accompanying Notes and Independent Auditors' Report.
F-10
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 3 PURCHASE OF NET ASSETS OF FENWAY RESOURCES LTD.
On August 31, 1998, the Company purchased the business which includes
all of the assets, less liabilities of Fenway Resources Ltd. The
Company is accounting for this acquisition under the purchase method
of accounting.
Business combinations accounted for by the purchase method are
recorded at cost. Cost is determined as the fair value of the net
assets acquired or as the fair value of the consideration given, which
ever is more objectively determinable.
In accordance with generally accepted accounting principles,
management allocated the cost of the shares issued based upon the fair
market value of the assets acquired. The fair market value of the
assets was determined by obtaining an independent appraisal of the
assets.
Fenway International Inc. issued 7,644,067 shares of its common stock
for the net assets acquired and valued the stock at $2,958,632.
The following is a summary of the net assets purchased and the common
stock issued.
United
States Canadian
Dollars Dollars
----------- -----------
Cash $ 40,417 $ 63,449
Cash-held in lawyer's trust account 118,578 186,151
Accounts receivable 5,097 8,001
Advance royalty payments 160,813 252,453
Prepaid expenses 11,914 18,704
Investments in projects in Palawan,
Philippines 2,685,687 4,216,149
Loan receivable 83,344 130,838
Property and equipment 6,986 10,967
Accounts payable (58,654) (92,078)
Short term loan (95,550) (150,000)
----------- -----------
Cost of acquired net assets purchased $ 2,958,632 $ 4,644,634
=========== ===========
See Accompanying Notes and Independent Auditors' Report.
F-11
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 3 PURCHASE OF NET ASSETS OF FENWAY RESOURCES LTD. (CONTINUED)
In addition to the net assets acquired, the Company assumed the
following obligations which are detailed in the accompanying
footnotes:
Assumed Obligations Footnote Number
------------------- ---------------
Consulting agreements 15
Incentive stock options and
warrants 13
Stock options and warrants to
Consortium members 5
All liabilities of the company
whether known or unknown,
contingent or absolute 2
NOTE 4 CASH - HELD IN LAWYER'S TRUST ACCOUNT
Palcan Mining Corporation
A. Incorporation
Palcan Mining Corporation was incorporated in the Republic of the
Philippines on August 13, 1998 under Republic of the Philippines
Sec Reg No A199811014. The term for which the corporation is to
exist is fifty years from and after the date of issuance of the
certificate of incorporation.
B. Incorporators and directors
Names and nationalities of the incorporators and directors are as
follows:
Name Nationality
--------------------------- -----------
Rene E. Cristobal Filipino
Carlos A. Fernandez Filipino
Dativa C. Dimaano-Sangalang Filipino
Arthur Leonard Taylor Canadian
Herbert John Wilson Canadian
See Accompanying Notes and Independent Auditors' Report.
F-12
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 4 CASH - HELD IN LAWYER'S TRUST ACCOUNT (CONTINUED)
C. Authorized capital
The authorized capital stock of the corporation is one million
pesos in lawful money of the Republic of the Philippines, divided
into one thousand shares with the par value of one thousand pesos
per share.
D. Subscribers and issued capital
25% of the authorized capital stock has been subscribed and at
least 25% of the total subscription has been paid as follows:
Number of
Shares Amount Amount
Name Subscribed Subscribed Paid
--------------------- ---------- ---------- ---------
Rene E. Cristobal 200 p 200,000 p 50,000
Carlos A. Fernandez 150 150,000 37,500
Dativa C. Dimaano-
Sangalang 250 250,000 62,500
Arthur Leonard Taylor 1 1,000 * 1,000
Herbert John Wilson 1 1,000 * 1,000
Fenway Resources Ltd. 398 398,000 * 398,000
---------- ----------- ----------
1,000 p 1,000,000 p 550,000
========== =========== ==========
*Equivalent Canadian Dollar investment by Fenway Resources Ltd.
and its nominee directors p400,000 at @ 0.038 CDN$15,200
E. The primary purpose of this corporation is to hold the mineral
claims of Central Palawan Mining and Ind. Corp. ("CPMIC"),
Palawan Star Mining Ventures, Inc. ("PSMVI") and Pyramid Hill
Mining & Ind. Corp. ("PHMIC"), their respective MPSA's, ECC's and
quarry shale and limestone and any other commercial minerals
found on the property and to prepare same market and to buy,
sell, on whole basis only, exchange or otherwise produce and deal
in all kinds of minerals and in their products and by-products of
every kind and description and by whatsoever process; to
purchase, lease, option, locate or otherwise acquire, own,
exchange, sell, assign or contract out the property and the
operation of the property, or otherwise dispose of, pledge,
mortgage, deed in trust, hypothecate and deal in mining claims,
land related to production from the mining claims, timber lands,
water, and water rights and other property, both real and
personal.
See Accompanying Notes and Independent Auditors' Report.
F-13
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 4 CASH - HELD IN LAWYER'S TRUST ACCOUNT (CONTINUED)
Palcan Cement Corporation
A. Palcan Cement Corporation was incorporated in the Republic of the
Philippines on August 12, 1998 under Philippines Sec Reg No
A199811013. The Company has a fiscal year end of December 31.
B. Incorporators and directors
Names and nationalities of the incorporators and directors are as
follows:
Name Nationality
--------------------------- -----------
Rene E. Cristobal Filipino
Carlos A. Fernandez Filipino
Dativa C. Dimaano-Sangalang Filipino
Arthur Leonard Taylor Canadian
Herbert John Wilson Canadian
C. Authorized capital
The authorized capital stock of the corporation is five million
pesos in lawful money of the Republic of the Philippines, divided
into five thousand shares with the par value of one thousand
pesos per share.
D. Subscribers and issued capital
The subscribers to the capital stock and the amounts paid-in to
their subscriptions are as follows
Number of
Shares Amount Amount
Name Subscribed Subscribed Paid
------------------------ ---------- ---------- ----------
Rene E. Cristobal 170 p 170,000 p 42,500
Carlos A. Fernandez 150 150,000 37,500
Dativa C. Dimaano-
Sangalang 180 180,000 45,000
Laurie G. Maranda 1 1,000 * 1,000
Robert George Muscroft 1 1,000 * 1,000
Arthur Leonard Taylor 1 1,000 * 1,000
Herbert John Wilson 1 1,000 * 1,000
Fenway Resources Ltd. 4,496 4,496,000 *4,496,000
---------- ---------- ----------
5,000 p5,000,000 p4,625,000
========== ========== ==========
*Equivalent Canadian Dollar investment by Fenway Resources Ltd.
and its nominee directors p4,500,000 at @ 0.038 CDN $170,951.
See Accompanying Notes and Independent Auditors' Report.
F-14
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 4 CASH - HELD IN LAWYER'S TRUST ACCOUNT (CONTINUED)
E. Foreign Investments Act of 1991
The Company has applied to do business under the Foreign
Investments Act of 1991, as amended by RA8179, with 90% foreign
equity, with the intention to operate an export enterprise with
the primary purpose of cement manufacturing.
Total amount held in lawyer's trust account as of August 31,1998, for
the above corporation is:
Equivalent Equivalent
in in
Philippine Canadian United States
Corporation Pesos Dollars Dollars
------------------------- ----------- --------- ---------
Palcan Mining Corporation p 400,000 $ 15,200 $ 9,682
Palcan Cement Corporation 4,500,000 170,951 108,896
----------- --------- ---------
p 4,900,000 $ 186,151 $ 118,578
=========== ========= =========
NOTE 5 INVESTMENT IN THE REPUBLIC OF PHILIPPINES - CONSORTIUM AGREEMENT
Consortium Agreement
By letter amendment agreement dated April 30, 1997, all prior
agreements between Fenway and Central Palawan Mining and Industrial
Corporation ("CPMIC"), Palawan Star Mining Ventures Inc. ("Palawan
Star") and Pyramid Hill Mining and Industrial Corp. ("Pyramid Hill"),
were amended in accordance with the terms and amendments below:
A. Reference and Interpretation
CPMIC, Palawan Star and Pyramid Hill shall be collectively
referred to as the "Consortium".
B. Joint Venture Mining Company ("JVMC")
I. A Joint Venture Mining Company shall be established.
III. Neither the Consortium nor each member of the Consortium
shall have any equity interest in the JVMC and each member
assigns and waives all right to own and subscribe to the
shares of the JVMC.
See Accompanying Notes and Independent Auditors' Report.
F-15
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 5 INVESTMENT IN THE REPUBLIC OF PHILIPPINES - CONSORTIUM AGREEMENT
(CONTINUED)
III. 10% of net profits of the JVMC shall be paid to the
Consortium as consideration for the transfer of their
respective interests in each of the properties, including
the mining claims, the MPSA and the ECC.
IV. Royalty payments applicable to raw material quarried or
mined from property belonging individually to CPMIC, Palawan
Star and Pyramid Hill will be waived and surrendered by each
member of the Consortium in favor of the Consortium.
V. The properties, consisting of mining claims, the MPSA, and
the ECC and all rights, title and interest thereto shall be
transferred by each member of the Consortium to the JVMC.
C. Advances in Relation to the Joint Venture Mining Company
I. In consideration of the amendments in the letter amendment
agreement, Fenway shall, upon signing, pay the Consortium
US$100,000 as an advance maintenance payment which shall be
deducted from the royalties payable to the Consortium.
II. JVMC is to advance US$100,000 to each member of the
Consortium per year payable prorata in quarterly payments as
advance royalty payments to be deducted from the royalties
of $0.35 per ton of raw material used in the manufacture of
cement from the properties. Advance royalty payments shall
cease upon commencement of commercial production of any one
of the properties of the Consortium.
D. Joint Venture Cement Manufacturing Company ("JVCC")
A joint venture cement manufacturing company will be formed for
the development of the Palawan Cement Project for the
manufacturing of cement and related cement products.
E. Interest in Net Profit of JVCC
10% interest in the net profit of the JVCC are to go to the
Consortium out of the interest of Fenway in the JVCC.
See Accompanying Notes and Independent Auditors' Report.
F-16
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 5 INVESTMENT IN THE REPUBLIC OF PHILIPPINES - CONSORTIUM AGREEMENT
(CONTINUED)
F. Conditions Precedent to this Agreement
Receipt of an Environmental Compliance Certificate ("ECC") and a
Mineral Production Sharing Agreement ("MPSA") shall be conditions
precedent to the establishment of JVMC and JVCC, and accordingly
the production funding deadline of June 30, 1997 will be extended
and the right to purchase 10% of Fenway's interest is waived.
G. Share Options and Warrants
I. The Consortium members will have options to purchase Fenway
shares, subject to regulatory approvals, as follows:
CPMIC PALAWAN STAR PYRAMID HILL
---------------------------- ------------ ------------
Nine hundred Thousand Shares 1 million shares 4 million shares
@ CAN $2.00/sh @ CAN $4.00/sh @ CAN $2.00/sh
With 1:1 warrant 1 million shares
@ CAN $3.00/sh @ CAN $5.00/sh
exercisable at any time exercisable at any time
II. The common conditions governing both Stock Options and
Warrants in G(I), above, are as follows.
a. The timing of the release of the shares is subject to
the release of the senior financing or funding;
b. They are exercisable only upon receipt of the
Production Funds;
c. The terms and payment are to be determined in a
separate agreement to be entered into between and among
Fenway and the individual members of the Consortium.
III. Subject to the approval by the relevant Securities
Regulatory Authorities, it is expressly understood that the
stock options and warrants referred to above may not be
exercised by the Consortium until such time as Fenway has
received the Acceptable Funding Commitment, provided
however, that Fenway may issue at any time all or a portion
of the warrants and Consortium may exercise at any time the
warrants in the event the issued and outstanding share
capital of Fenway is increased in order to facilitate and/or
meet the financing requirements to undertake the Palawan
Cement Project.
See Accompanying Notes and Independent Auditors' Report.
F-17
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 6 INVESTMENT IN THE REPUBLIC OF PHILIPPINES - OPTION AGREEMENT -NEGOR RR
CEMENT PROJECT
On July 16, 1998, the Company entered into an option agreement with
Negor RR Cement Corporation, a Philippine corporation, for the purpose
of forming and operating a mining and cement manufacturing company.
The following are the details of the option agreement:
A. For a period of four (4) years following the date of acceptance
by the Company of a commercial feasibility study and report for
the Project, which study and report are sufficient to enable the
Company to obtain any and all funds necessary or appropriate to
finance the development and operation of the Project, that number
of shares of the Company's $.001 par value common stock equal to
the lesser of (a) two million (2,000,000) such shares, or (b)
equal to ten percent (10%) of the then issued and outstanding
shares of that common stock, at a purchase price of Five United
States Dollars ($5.00) per share.
B. The Manufacturing Company shall prepare, sign and deliver to
Negor any and all documents and other instruments necessary or
appropriate to vest in Negor a free, carried ownership interest
in the manufacturing Company equal to ten percent (10%). As a
result of such ownership interest, Negor shall be entitled to
have allocated to it ten percent ( 10%) of the net profits,
losses and credits of the manufacturing company.
C. The Manufacturing Company shall prepare, sign and deliver, to the
Company any and all documents and other instruments necessary or
appropriate to vest in the Company an ownership interest in the
manufacturing Company equal to ninety percent (90%). As a result
of such ownership interest, the Company shall be entitled to have
allocated to it ninety percent (90%) of the net profits, losses
and credits of the manufacturing company.
D. The Mining Company shall prepare, sign and deliver to Negor any
and all documents and other instruments necessary or appropriate
to vest in Negor an ownership interest in the mining Company
equal to forty percent (40%). As a result of such ownership
interest, Negor shall be entitled to have allocated to it forty
percent (40%) of the net profits, losses and credits of the
mining company.
E. The Mining Company shall prepare, sign and deliver to the Company
any and all documents and other instruments necessary or
appropriate to vest in the Company an ownership interest in the
mining company equal to forty percent (40%). As a result
See Accompanying Notes and Independent Auditors' Report.
F-18
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 6 INVESTMENT IN THE REPUBLIC OF PHILIPPINES - OPTION AGREEMENT -NEGOR RR
CEMENT PROJECT (CONTINUED)
of such ownership interest the Company shall be entitled to have
allocated to it forty percent (40%) of the net profits, losses
and credits of the mining company.
F. The Mining Company shall prepare, sign and deliver to one or more
third party investors any and all documents and other instruments
necessary or appropriate to vest collectively in those third
party investors an ownership interest in the mining company equal
to twenty percent (20%). As a result of such ownership interest,
those third party investors shall be entitled to have allocated
to it twenty percent (20%) of the net profits, losses and credits
of the mining company.
G. Payment obligations
$50,000 at date of signing of the agreement
$50,000 no later than September 30, 1998
(Both payments were made)
At such time as all feasibility studies and similar studies and
reports are completed which are necessary or appropriate for the
construction and operation of the manufacturing facilities and
which will be required prior to the receipt of the funds required
to finance construction of the manufacturing facilities, which
funds may be contributions to capital and proceeds from one or
more borrowing transactions, or either of them, the manufacturing
company shall pay to Negor One Million United States Dollars
($1,000,000.00). In connection with any and all such borrowing
transactions, the acquired claims may be utilized as collateral
or otherwise be pledged to enhance the credit of the borrower.
NOTE 7 LOAN RECEIVABLE
The Company loaned $108,133 (US $80,000) to Central Palawan Mining &
Industrial Corp., Palawan Star Mining Ventures Inc. and Pyramid Hill
Mining & Industrial Corp. on September 6, 1995. This loan bears
interest at 7% per annum from date of signing until repaid in full.
Interest of $22,705 has been recorded.
NOTE 8 PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major renewals and
improvements are charged to the asset accounts while replacements,
maintenance and repairs, which do not improve or extend the lives of
respective assets, are expensed. At the time property and equipment
are
See Accompanying Notes and Independent Auditors' Report.
F-19
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 8 PROPERTY AND EQUIPMENT (CONTINUED)
retired or otherwise disposed of, the assets and related depreciation
accounts are relieved of the applicable amounts. Gains or losses from
retirements or sales are credited or charged to income.
The Company depreciates its property and equipment for financial
reporting purposes using the straight-line method based upon an
estimated useful life of five years.
NOTE 9 DEFERRED TAX ASSETS
Deferred tax assets arise from the net operating loss carryforwards
Total deferred tax asset $ 5,554
Less valuation allowance 5,554
-------
Net deferred tax asset $ 0
=======
NOTE 10 NET OPERATING LOSS CARRYFORWARD
The Company has the following net operating loss carryforwards:
Tax Year Amount Expiration date
-------- ------ ---------------
December 31, 1984 $ 5,296 December 31, 1999
December 31, 1985 28,128 December 31, 2000
December 31, 1987 3,600 December 31, 2001
--------
$ 37,024
========
NOTE 11 SHORT TERM NOTE PAYABLE
The short term loan is unsecured, has no maturity date and bears
interest at 12%
NOTE 12 MAY 27, 1998 PRIVATE PLACEMENT
On May 27,1998, the Company sold 9,000,000 shares of its $0.001 par
value common stock for $0.01 per share. The shares were issued
pursuant to the provisions of Rule 504 of Regulation D promulgated by
the Securities and Exchange Commission.
The net proceeds to the Company were $90,000.
See Accompanying Notes and Independent Auditors' Report.
F-20
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 13 STOCK OPTIONS AND WARRANTS OUTSTANDING
A. The Company has incentive stock options outstanding at August 31,
1998 as follows:
Number of Exercise Expiration
Name of Optionee Shares Price Date
---------------- ------ -------- ------------
Milton M. Schlesinger 200,000 US $3.00 July 4, 2004
Steven Sobolewski 250,000 US $3.00 July 4, 2004
H. John Wilson 500,000 US $3.00 July 4, 2004
A. Leonard Taylor 500,000 US $3.00 July 4, 2004
Laurie G. Maranda 300,000 US $3.00 July 4, 2004
R. George Muscroft 30O,000 US $3.00 July 4, 2004
Willi Magill 200,000 US $3.00 July 4, 2004
Detty Sangalang 200,000 US $3.00 July 4, 2004
Rene E. Cristobal 200,000 US $3.00 July 4, 2004
Carlos Fernandez 200,000 US $3.00 July 4, 2004
Robert Shoofey 200,000 US $3.00 July 4, 2004
---------
3,050,000
=========
In addition there are options outstanding applicable to investment in
Projects in Palawan, Philippine (see note 5).
B. Warrants outstanding as of August 31, 1998
45,750 Shares at a price of Canadian $5.50 per share if exercised
on or before December 5, 1999
25,250 Shares at a price of Canadian $5.50 per share if exercised
on or before February 25, 2000
28,901 Shares at a price of Canadian $5.50 per share if exercised
on or before May 29, 2000
25,000 Shares at a price of Canadian $5.50 per share if exercised
on or before June 2, 2000
27,000 Shares at a price of Canadian $5.50 per share if exercised
on or before June 6, 2000
-------
151,901
=======
NOTE 14 ISSUANCE OF 2,000,000 SHARES
On May 29, 1998, the Company issued 2,000,000 shares of common stock
to an officer and director of the Company for a total consideration of
$20,000.
See Accompanying Notes and Independent Auditors' Report.
F-21
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 15 CONSULTING AGREEMENT WITH RELATED PARTIES
The Company assumed two consulting agreements with former directors of
Fenway Resources Ltd as follows:
R. George Muscroft - $5,000 Canadian dollars payable quarterly
Laurie Maranda - $5,000 Canadian dollars payable quarterly
NOTE 16 OPERATING LEASES
The Company is leasing office facilities in Vancouver, British
Columbia, Canada and Manila, Philippines as follows:
Vancouver
5 year lease expiring February 28, 2001
Monthly rental of $308 plus occupancy costs
Manila
5 year lease expiring April 30, 2002
Monthly rental of $1,754 plus occupancy costs
Future minimum lease payments are as follows:
August 31, 1999 $ 24,744
August 31, 2000 24,744
August 31, 2001 23,204
August 31, 2002 15,786
--------
$ 88,478
========
NOTE 17 CONTINGENCIES
As explained in footnote number 3, the Company purchased all of the
assets of Fenway Resources Ltd. Fenway Resources Ltd also had a number
of employment contracts with corporation officers. As of the date of
this report, it is not known if the employment contracts with be
transferred to and honored by Fenway International Inc.
NOTE 18 SUBSEQUENT TRANSACTIONS
A. On December 1, 1998, the Company issued the following stock
options:
200,000 shares at $3.00 per share - 1 year life
200,000 shares at $3.00 - expiration date - July 4, 2004
See Accompanying Notes and Independent Auditors' Report.
F-22
<PAGE>
FENWAY INTERNATIONAL INC.
FORMERLY KNOWN AS NEVADA-UTAH GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AUGUST 3l, 1998
NOTE 18 SUBSEQUENT TRANSACTIONS (CONTINUED)
B. Issuance of 500,000 shares of common stock
On September 2, 1998, the Company entered into an agreement to
issue 500,000 shares of common stock to G.I. Joe Ltd., a United
Kingdom corporation, for $0.25 per share or $125,000.
These shares will be issued pursuant to the provisions of Rule
504 of Regulation D promulgated by the Securities and Exchange
Commission.
C. Short term loan
The Company obtained a $50,000 short term loan (Canadian
dollars). This loan is unsecured, bears no interest, and has no
specific terms of repayment.
See Accompanying Notes and Independent Auditors' Report.
F-23
ANDERSEN ANDERSEN & STRONG, L.C.
CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS
Member SEC Practice Section of the AICPA
941 East 3300 South, Suite 202
Salt Lake City, Utah 84106
Telephone 801-486-0096
Fax 801-486-0098
E-mail KAndersen @ men.com
Board of Directors
Nevada-Utah Gold, Inc.
Salt Lake City, Utah
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Nevada-Utah Gold, Inc. (a
development stage company) at March 31, 1998, December 31, 1997 and December 31,
1996 and the statements of operations, stockholders' equity and cash flows for
the three months ended March 31, 1998 and the years ended December 31, 1996 and
1995 and the period May 7, 1984 (date of inception) to March 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nevada-Utah Gold, Inc. at March
31, 1998, December 31, 1997, and December 31, 1996 and the results of operations
and cash flows for the three months ended March 31, 1998 and the years ended
December 31, 1997, 1996 and 1995 and the period May 7, 1984 (date of inception)
to March 31, 1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has been in the development stage since it's
inception and has suffered recurring losses from operations, which raises
substantial doubt about it's ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 4. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Andersen Andersen & Strong
Salt Lake City, Utah
April 8, 1998
A member of ACF International with affiliated offices worldwide
F-24
<PAGE>
NEVADA-UTAH GOLD, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1998 and the
Years Ended December 31, 1997, 1996, and 1995 and the Period from
May 7, 1984 (Date of Inception) to March 31, 1998
================================================================================
<TABLE>
<CAPTION>
May 7, 1984
(Date of Inception)
1998 1997 1996 1995 to March 31, 1998
---- ---- ---- ---- -------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (1,300) $ (3,600) $ -- $ -- $(38,324)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Contribution to capital and stock
issued for expenses and services 1,300 3,600 -- -- 10,300
-------- -------- -------- -------- --------
Net Cash From Operations -- -- -- -- (28,024)
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES: -- -- -- -- --
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
common stock -- -- -- -- 28,024
-------- -------- -------- -------- --------
Net Increase (Decrease) in Cash -- -- -- -- --
Cash at Beginning of Period -- -- -- -- --
-------- -------- -------- -------- --------
Cash at End of Period $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SCEHDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
<S> <C>
Issuance of 400,000 shares common stock for mineral lease (unknown value)
and expenses - 1984 $3,000
------
Issuance of 9,000 shares of common stock for services - 1985 $2,400
------
Contribution to capital - expenses - 1997 $3,600
------
Contribution to capital - expenses - 1998 $1,300
------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE>
NEVADA-UTAH GOLD, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 1998 and the
Period from May 7, 1984 (Date of Inception) to March 31, 1998
================================================================================
<TABLE>
<CAPTION>
Capital in
Common Stock Excess of Accumulated
Shares Amount Par Value Deficit
-------------------- ---------- -----------
<S> <C> <C> <C> <C>
Balance May 7, 1984 (date of inception) -- $ -- $ -- $ --
Issuance of common stock for mineral
lease (unknown value) and
expenses at $.005 - May 7, 1984 600,000 600 2,400 --
Issuance of common stock for cash at
$.267 - May 7, 1984 8,610 9 2,287 --
Net loss for the period ended December 31, 1984 -- -- -- (5,296)
Issuance of common stock for services at
$.267 - February 3, 1985 9,000 9 2,391 --
Net loss for the year ended December 31, 1985 -- -- -- (28,128)
-------- -------- -------- --------
Balance December 31, 1985 714,090 714 32,710 (33,424)
-------- -------- -------- --------
Balance December 31, 1995 714,090 714 32,710 (33,424)
-------- -------- -------- --------
Balance December 31, 1996 714,090 714 32,710 (33,424)
Contribution to capital - expenses - 1997 -- -- 3,600 --
Net loss for the year ended December 31, 1997 -- -- -- (3,600)
-------- -------- -------- --------
Balance December 31, 1997 714,090 714 36,310 (37,024)
Contribution to captial - expenses - 1998 -- -- 1,300 --
Net loss for three months ended March 31, 1998 -- -- -- (1,300)
-------- -------- -------- --------
Balance March 31, 1998 714,090 $ 714 $ 37,610 $(38,324)
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE>
NEVADA-UTAH GOLD, INC.
(A Development Stage Company)
BALANCE SHEETS
March 31, 1998, December 31, 1997 and December 31, 1996
================================================================================
<TABLE>
<CAPTION>
March 31, December 31, December 31,
1998 1997 1996
--------- ------------ ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ -- $ -- $ --
-------- -------- --------
Total Current Assets -- -- --
======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $ -- $ -- $ --
-------- -------- --------
Total Current Liabilities -- -- --
-------- -------- --------
STOCKHOLDERS' EQUITY
Common stock
100,000,000 shares authorized,
at $0.001 par value; 714,090
shares issued and outstanding 714 714 714
Capital in excess of par value 37,610 36,310 32,710
Deficit accumulated during the development stage (38,324) (37,024) (33,424)
-------- -------- --------
Total Stockholders' Equity (Deficiency) -- -- --
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE>
NEVADA-UTAH GOLD, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1998 and the
Years Ended December 31, 1997, 1996, and 1995 and the Period May 7, 1984
(Date of Inception) to March 31, 1998
================================================================================
<TABLE>
<CAPTION>
May 7, 1984
(Date of Inception) to
1998 1997 1996 1995 March 31, 1998
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ -- $ --
EXPENSES 1,300 3,600 -- -- 38,324
-------- -------- -------- -------- --------
NET LOSS $ (1,300) $ (3,600) $ -- $ -- $(38,324)
======== ======== ======== ======== ========
NET LOSS PER COMMON
SHARE $ -- $ -- $ -- $ --
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE>
NEVADA-UTAH GOLD, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the state of Nevada on May 7,
1984 with authorized common stock of 25,000 shares with a par value of $1.00. On
July 10, 1997 the authorized common capital stock was increased to 100,000,000
shares with a change in par value to $0.001.
On July 26, 1997 the Company completed a forward stock split of it's outstanding
common stock of one share for thirty shares. This report has been prepared
showing after stock split shares with a par value of $0.001 from it's inception.
The company has been in the development stage since inception and has been
primarily engaged in the business of developing mineral properties. During 1985
the company abandoned it's remaining assets the and settled it's liabilities and
since that date has remained inactive.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income taxes
At December 31, 1997, the Company had a net operating loss carry forward of
$37,024. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is undeterminable
since the Company has no operations. The loss carryforward will expire starting
in the year 2000 through 2013.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actuaslly outstanding after the stock split.
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<PAGE>
NEVADA-UTAH GOLD, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
3. RELATED PARTY TRANSACTIONS
Related parties received substantially all of the common stock issued by the
Company from it's inception. (see the Statement of Changes in Stockholders'
Equity)
The officers and directors of the Company are involved in other business
activities and they may, in the future, become involved in additional business
ventures which also may require their attention. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company has
formulated no policy for the resolution of such conflicts.
4. GOING CONCERN
The Company intends to acquire interests in various business opportunities
which, in the opinion of management, will provide a profit to the Company.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity funding which will enable the Company to continue operations into the
future.
Management recognizes that, if it is unable to raise additional capital, the
Company cannot conduct any operations in the future.
F-30
OPTION AGREEMENT REGARDING
NEGOR RR CEMENT CORPORATION PROJECT
THIS OPTION AGREEMENT REGARDING NEGOR RR CEMENT CORPORATION PROJECT
("Agreement") is made and entered into this 16th day of July, 1998, by and
between Nevada Utah Gold Inc., a Nevada corporation ("Company"), and Negor RR
Cement Corporation, a Philippine corporation ("Negor").
RECITALS
A. The Company and Negor, and each of them, desire that upon the occurrence
of certain events, which events will be specified later in this Agreement, that
they make certain of their resources available for the formation and operation
of (i) a mining company ("Mining Company") and (ii) a cement manufacturing
company ("Manufacturing Company"), on the terms and subject to the conditions
specified in this Agreement.
B. The exploitation and mining of the claims which will be assigned to the
Mining Company pursuant to the provisions of this Agreement and the
manufacturing of cement by the Manufacturing Company, for convenience, shall be
referred to in this Agreement as the "Project".
C. The Company and Negor, and each of them, desire that Negor contribute to
the Mining Company, at such time as the Mining Company is formed, all of the
Acquired Claims (as that term is defined by the provisions of Section 1.1 of
this Agreement).
D. The Company and Negor, and each of them, desire that the Company provide
the funds necessary to (i) cause the (a) Mining Company and (b) Manufacturing
Company to be formed and operated and (ii) finance the operations of the
Project.
E. The Company and Negor, and each of them, desire that the Acquired Claims
be used as collateral for credit enhancement purposes for any loan or other
indebtedness incurred for funds necessary or appropriate to finance the
operations of the Project.
NOW, THEREFORE, IN CONSIDERATION OF TUE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE
F-29
<PAGE>
HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED LEGALLY AND EQUITABLY,
THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT AND WARRANT AS
FOLLOWS:
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms specified below in this Article I
shall have the definitions and meanings specified immediately after those terms,
unless a different and common meaning of a term is clearly indicated by the
context, and variants and derivatives of the following terms shall have
correlative meanings. To the extent that certain of the definitions and meanings
specified below suggest, indicate, or express agreements between or among
parties to this Agreement, or specify representations or warranties or covenants
of a party, the parties agree to the same, by execution of this Agreement. The
parties to this Agreement agree that agreements, representations, warranties,
and covenants expressed in any part or provision of this Agreement shall for all
purposes of this Agreement be treated in the same manner as other such
agreements, representations, warranties, and covenants specified elsewhere in
this Agreement, and the article, section or paragraph of this Agreement within
which such an agreement, representation, warranty, or covenant is specified
shall have no separate meaning or effect on the same.
1.1 "Acquired Claims". The mining claims of Negor to be acquired by the
Mining Company pursuant to the provisions of this Agreement and all other
assets, properties and interests of Negor, tangible or intangible (including
contractual, warranty, and other rights), the use or value of which is
inextricably related to or connected with to those mining claims, or which
relate to or result from transactions of Negor involving those mining claims,
including, but not limited to, the ECC (as that term is defined by the
provisions of Section 1.13 of this Agreement) and the MPSA (as that term is
defined by the provisions of Section 1.17 of this Agreement)
1.2 "Affiliate". When used with respect to a person, an "affiliate" of that
person is a person controlling, controlled by, or under common Control with that
person.
1.3 "Agreement. This Option Agreement Regarding Negor RR Cement Corporation
Project, including all of its schedules and exhibits and all other documents
specifically referred to in this Agreement that have been or are to be delivered
by a party to this Agreement to the other party to this Agreement in connection
with the Transaction or this Agreement, and including all duly adopted
amendments, modifications, and supplements to or of this Agreement and such
schedules, exhibits and other documents.
F-30
<PAGE>
1.4 "BMG". The Bureau of Mines and Geosciences Division of the DENR.
1.5 "Business Day". Any day that is not a Saturday, Sunday, or a day on
which banks in Las Vegas, Nevada, are authorized to close.
1.6 "Closing". The completion and consummation of the Transaction, to occur
as contemplated by the provisions of Article II of this Agreement.
1.7 "Closing Date". The date on which the Closing actually occurs, which
shall not in any event be prior to satisfaction or waiver of the conditions to
Closing specified by the provisions of Article VIII of this Agreement.
1.8 "Closing Time". The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.9 "Commission". The United States of America Securities and Exchange
Commission.
1.10 "Control". Generally, the power to direct the management or affairs of
a person.
1.11 "DENR". The Philippine Department of Environment and Natural
Resources.
1.12 "ECC". The Environmental Compliance Certificate issued by the DENR.
1.13 "Financial Statements". The balance sheet, income statement, statement
of stockholders' equity and statement of cash flows or, in each instance,
equivalent statements as commonly provided to shareholders of Negor.
1.14 "GAAP". Generally Accepted Accounting Principles required by the
Commission, as in effect on the date of any statement, report or determination
that purports to be, or is required to be, prepared or made in accordance with
GAAP. All references in this Agreement to financial statements prepared in
accordance with GAAP shall be defined and mean in accordance with GAAP
consistently applied throughout the periods to which reference is made.
1.15 "Manufacturing Facilities". All easements, rights of way, licenses,
grants, rights, warehouses, stores, plants, production facilities, manufacturing
facilities,
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equipment, furniture, buildings, utility facilities, pumps, drains, pipes,
fittings, vehicles, tools, machinery, garages, out buildings, storage
facilities, processing facilities, fixtures and improvements owned or leased by
the Manufacturing Company or otherwise used by the Manufacturing Company in
connection with the operation of its business, or leased or subleased by the
Manufacturing Company to other persons.
1.16 "MPSA". The Mineral Production Sharing Agreement to which Negor and
the BMG are parties.
1.17 "Transaction". That series of transactions and events contemplated and
specified by the provisions of Section 2.1 of this Agreement.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, subject
in all instances to each of the terms, conditions, provisions and limitations
specified by the provisions of this Agreement:
2.1.1 Conveyance of Claims. Negor shall grant, transfer, convey, and
assign to the Mining Company, by instruments satisfactory in form and
substance to the Mining Company and its counsel, and the Mining Company
shall acquire from Negor, the Acquired Claims.
2.1.2 Appointment of Members of Board of Directors of the Mining
Company. Negor shall be entitled to appoint two (2) members of the Board of
Directors of the Mining Company, which Board of Directors shall have at
least six (6) members.
2.1.3 Appointment of Member of Board of Directors of the Manufacturing
Company. Negor shall be entitled to appoint one (1) member of the Board of
Directors of the Manufacturing Company, which Board of Directors shall have
at least eight (8) members.
2.1.4 Raw Material Supply Agreement. The Mining Company shall prepare,
sign and deliver, or cause to be prepared, signed and delivered, to the
Manufacturing Company, an agreement for the sale by the Mining Company to
the Manufacturing Company of limestone, shale and related products on the
terms and subject to the conditions satisfactory to the Mining Company
Manufacturing Company, and each of them.
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2.1.5 Assignment of Management of Mine Operations. The Mining Company
shall prepare, sign and deliver, or cause to be prepared, signed and
delivered, to the Manufacturing Company, any and all documents and other
instruments necessary or appropriate to assign to the Manufacturing Company
the sole and exclusive unfettered right and authority to finance, manage
and supervise mining operations for the Project.
2.1.6 Option to Acquire Common Stock. The Company shall enter into,
sign and deliver, or cause to be entered into, signed and delivered to
Negor, any and all documents and instruments necessary or appropriate to
vest in Negor the unfettered full and complete option to acquire, for and
during that period of four (4) years following the date of acceptance by
the Company of a commercial feasibility study and report for the Project,
which study and report are sufficient to enable the Company to obtain any
and all funds necessary or appropriate to finance the development and
operation of the Project, that number of shares of the Company's $.001 par
value common stock equal to the lesser of (a) two million (2,000,000) such
shares, or (b) equal to ten percent (10%) of the then issued and
outstanding shares of that common stock, at a purchase price of Five United
States Dollars ($5.00) per share.
2.1.7 Acquisition by Negor of Ownership Interest in the Manufacturing
Company. The Manufacturing Company shall prepare, sign and deliver, or
cause to be prepared, signed and delivered, to Negor any and all documents
and other instruments necessary or appropriate to vest in Negor a free,
carried ownership interest in the Manufacturing Company equal to ten
percent (10%). As a result of such ownership interest, Negor shall be
entitled to have allocated to it ten percent (10%) of the net profits,
losses and credits of the Manufacturing Company.
2.1.8 Acquisition by the Company of Ownership Interest iii the
Manufacturing Company by the Company. The Manufacturing Company shall
prepare, sign and deliver, or cause to be prepared, signed and delivered,
to the Company any and all documents and other instruments necessary or
appropriate to vest in the Company an ownership interest in the
Manufacturing Company equal to ninety percent (90%). As a result of such
ownership interest, the Company shall be entitled to have allocated to it
ninety percent (90%) of the net profits, losses and credits of the
Manufacturing Company.
2.1.9 Ownership Interest of Negor in the Mining Company. The Mining
Company shall prepare, sign and deliver, or cause to be prepared, signed
and delivered, to Negor any and all documents and other instruments
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appropriate to vest in Negor an ownership interest in the Mining Company
equal to forty percent (40%). As a result of such ownership interest, Negor
shall be entitled to have allocated to it forty percent (40%) of the net
profits, losses and credits of the Mining Company.
2.1.10 Ownership Interest of the Company in the Mining Company. The
Mining Company shall prepare, sign and deliver, or cause to be prepared,
signed and delivered, to the Company any and all documents and other
instruments necessary or appropriate to vest in the Company an ownership
interest in the Mining Company equal to forty percent (40%). As a result of
such ownership interest, the Company shall be entitled to have allocated to
it forty percent (40%) of the net profits, losses and credits of the Mining
Company.
2.1.11 Ownership Interest of Third Party in the Mining Company. The
Mining Company shall prepare, sign and deliver, or cause to be prepared,
signed and delivered, to one or more third party investors any and all
documents and other instruments necessary or appropriate to vest
collectively in those third party investors an ownership interest in the
Mining Company equal to twenty percent (20%). As a result of such ownership
interest, those third party investors shall be entitled to have allocated
to it twenty percent (20%) of the net profits, losses and credits of the
Manufacturing Company.
2.1.12 Supply Agreement. The Manufacturing Company and the Mining
Company, and each of them, shall prepare, sign and deliver, or cause to be
prepared, signed and delivered to each other, an agreement pursuant to
which the Mining Company will supply to the Manufacturing Company any and
all raw materials which the Manufacturing Company will require to
manufacture cement and related products ("Supply Agreement"). The amount
paid by the Manufacturing Company to the Mining Company for those raw
materials, pursuant to the provisions of the Supply Agreement, shall be the
costs of the Mining Company to mine and produce those raw materials, plus a
modest profit to be agreed upon by the Mining Company and the Manufacturing
Company, and each of them.
2.2 Calculation of Net Profits, Losses and Credits. For purposes of this
Agreement, any and all net profits, losses and credits shall be determined using
GAAP.
2.3 Closing. The Closing shall occur at the offices of Dativa Dimaano
Sangalang, 2201 0MM Citra Building, San Miguel Avenue, Ortigas Center, Pasig
City, Philippines, at 10:00 A.M., local time, on that date which is two (2)
business days immediately after the date upon which all conditions precedent to
the Closing shall occur, or at
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place and time as the Company and Negor may agree upon, on the Closing Date.
2.4 Relationships. The relationships and business affairs and dealings
between and among the Mining Company and the Manufacturing Company shall have a
term of fifty (50) years and shall be renewed for the maximum periods permitted
by law. Negor, the Company, the Mining Company, and the Manufacturing Company,
and each of them, are independent entities, with separate and independent
businesses and operations. Negor, the Company, the Mining Company and the
Manufacturing Company, and each of them, are interested only in the results
obtained by each other, and each shall have the sole control of the manner and
means of conducting is respective business and operations. Neither Negor, the
Company, the Mining Company nor the Manufacturing Company shall have the right
to require any person to take any action which would jeopardize the independent
relationships between Negor, the Company, the Mining Company and the
Manufacturing Company, and each of them.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants the following, the truth and accuracy
of each of which shall constitute a condition precedent to the obligations of
Negor created by the provisions of this Agreement.
4.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing, and in good standing pursuant to the laws of
Nevada. The Company has full and complete right, power, and authority to own its
properties and assets, and to carry on its business as a Nevada corporation. The
Articles of Incorporation and the Bylaws are in full force and effect, and the
Company is not in breach or violation of any of the provisions thereof.
4.2 Authority Relative to This Agreement. The Company has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations created by the provisions of this Agreement. The execution and
delivery of this Agreement and the consummation of the Transaction have been
duly authorized and approved by the requisite corporate authority of the Company
and no other corporate proceedings on the part of the Company are necessary to
approve and adopt this Agreement or to approve the consummation of the
Transaction. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable in accordance wit its terms, except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium and
similar laws relating to creditors' rights generally.
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4.3 Absence of Breach; No Consents. The execution, delivery and performance
of this Agreement, and the performance by the Company of its obligations created
by the provisions of this Agreement do not (a) conflict with, and will not
result in a breach of, any of the provisions of the Articles of Incorporation or
Bylaws of the Company; (b) contravene any law, rule or regulation of any State
or Commonwealth or of the United States of America, or of any applicable foreign
jurisdiction, or any order, writ, judgment, injunction, decree, determination,
or award affecting or obligating the Company in such a manner as to provide a
basis for enjoining or otherwise preventing consummation of the Transaction; (c)
conflict with or result in a material breach of or default pursuant to any
material indenture or loan or credit agreement or any other material agreement
or instrument to which the Company is a party, in such a manner as to provide a
basis for enjoining or otherwise preventing consummation of the Transaction; or
(d) require the authorization, consent, approval or license of any third party
of such a nature that the failure to obtain the same would provide a basis for
enjoining or otherwise preventing consummation of the Transaction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF NEGOR
Negor represents and warrants the following, the truth and accuracy of each
of which shall constitute a condition precedent to the obligations of the
Company created by the provisions of this Agreement.
5.1. Organization and Qualification. Negor is a corporation duly organized,
validly existing, and in good standing pursuant to laws of the Philippines and
has the requisite corporate power and authority to conduct its business as it is
now being conducted. The charter document and the Bylaws or similar documents of
and for Negor are in full force and effect, and Negor is not in breach or
violation of any of the provisions thereof.
5.2 Authority Relative to This Agreement. This Agreement has been duly and
validly executed and delivered by Negor and constitutes a valid and binding
obligation of Negor enforceable in accordance with its terms, except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditors' rights generally.
Negor has all requisite corporate power and authority to enter into this
Agreement and to consummate the Transaction, and its doing so has been duly and
sufficiently authorized, subject only to governmental regulatory approvals as
required by law. The execution and delivery of this Agreement and the
consummation of the Transaction have been duly authorized and approved by the
requisite corporate authority of Negor and no other corporate proceedings on the
part of Negor are
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necessary to approve and adopt this Agreement or to approve the consummation of
the Transaction.
5.3 Absence of Breach; No Consents. The execution, delivery, and
performance of this Agreement, and the performance by Negor of its obligations
created by the provisions of this Agreement, do not (a) conflict with or result
in a breach of any of the provisions of the charter document or Bylaws or
similar documents of Negor; (b) contravene any law, ordinance, rule, or
regulation of the Philippines any applicable jurisdiction, or contravene any
order, writ, judgment, injunction, decree, determination, or award of any court
or other authority having jurisdiction, or cause the suspension or revocation of
any authorization, consent, approval, or license, presently in effect, which
affects or obligates, Negor or all or any part of the Acquired Claims and will
not have a material adverse effect on the validity of this Agreement or on the
validity of the consummation the Transaction; (c) conflict with or result in a
material breach of or default pursuant to any material indenture or loan or
credit agreement or any other material agreement or instrument to which Negor is
a party or by which any of the Acquired Claims may be affected or obligated; (d)
require the authorization, consent, approval, or license of any third party; or
(e) constitute grounds for the loss or suspension of any permits, licenses, or
other authorizations used in connection with the Acquired Claims.
5.4 Financial Statements. All of the historical financial statements
presented in the Financial Statements were prepared from the books and records
of Negor. The Financial Statements fairly and accurately present the financial
condition of Negor as at the dates and for the periods indicated. Without
limiting the foregoing, at the date of the balance sheets included in the
Financial Statements Negor owned each of the assets included in preparation of
those balance sheets, and the valuation of such assets is not more than their
fair saleable value (on an item by item basis) at that date; and Negor had no
liabilities for which the Acquired Claims or any part of the Acquired Claims is
responsible or liable, other than those included in balance sheets. From the
date of this Agreement through the Closing Date Negor will continue to prepare
financial statements on the same basis that it has done so in the past, will
promptly deliver the same to the Company, and from and after such delivery the
foregoing representations will be applicable to each financial statement so
prepared and delivered.
5.5. No Undisclosed Liabilities. Negor has no liabilities relating to or
affecting the Acquired Claims which are not adequately presented or reserved
against those balance sheets included in the Financial Statements.
5.6 No Material Adverse Change, etc. Since the date of those balance sheets
included in the Financial Statements, there has not been (a) any material
adverse change
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in the condition of the Acquired Claims; (b) any damage, destruction or loss,
whether covered by insurance or not, having a material adverse effect on the
condition of the Acquired Claims, or adversely affecting the Acquired Claims;
(c) any entry into or termination of any material commitment, contract,
agreement or transaction affecting the Acquired Claims, other than this
Agreement; (d) any transfer of or right granted pursuant to any lease, license,
agreement, relating to the Acquired Claims; (e) any sale or other disposition of
any of the Acquired Claims, or any mortgage, pledge or imposition of any lien or
other encumbrance on any of the Acquired Claims, or any agreement relating to
any of the foregoing; or (f) any default or breach in any material respect
pursuant to any contract, license or permit held by or for or affecting the
Acquired Claims.
5.7 Taxes. Negor has properly filed or caused to be filed all appropriate
income, property and other tax returns, reports, and declarations that are
required by applicable law to be tiled by it and that relate to or in any way
affect the Acquired Claims and has paid, or made full and adequate provision for
the payment of, all appropriate income, property and other taxes properly due
for the periods covered by such returns, reports, and declarations, except such
taxes, if any, as are adequately reserved against in the Balance Sheets included
in the Financial Statements.
5.8 Litigation (a) No material investigation or review by any governmental
or similar agency or authority with respect to the Acquired Claims or the use
thereof is pending or, to the best of the knowledge of Negor, threatened, nor
has any governmental entity indicated to Negor an intention to conduct the same,
and (b) there is no action, suit or proceeding pending or, to the best of the
knowledge of Negor, threatened against or affecting the Acquired Claims at law
or in equity, or before any governmental department, commission, board, bureau,
agency, or instrumentality.
5.9 Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by Negor for the benefit of directors, officers or
employees of Negor whose principal responsibilities relate to the Acquired
Claims, and there are no employment, consulting, severance, or indemnification
arrangements, agreements, or understandings between Negor, on the one hand, and
any current or former directors, officers or other employees (or Affiliates
thereof) of Negor whose principal responsibilities relate to the Acquired
Claims, on the other hand. Negor is not, and following the Closing will not be,
obligated by any express or implied contract or agreement to employ, directly or
as consultant or otherwise, any person for any specific period of time or until
any specific age whose principal responsibilities relate to, and whose
compensation shall be derived from, the operation or exploitation of the
Acquired Claims.
5.10 Compliance With Laws. Each of the Acquired Claims is in substantial
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compliance with all, and has received no notice of any violation of any, laws or
regulations applicable to its operations and exploitation, including, without
limitation, the laws and regulations relevant to the use or utilization of
premises, or with respect to which compliance is a condition of operating,
mining or otherwise exploiting the Acquired Claims, and Negor has all permits,
licenses, rights, and other governmental authorizations necessary to conduct,
operate and exploit the Acquired Claims. All such permits, licenses, rights, and
other governmental authorizations will, as a part and consequence of the
Transaction, be transferred to the Mining Company at the Closing.
5.11 Ownership of Acquired Claims. Negor has good, marketable and insurable
title to all real property and all personal property owned by Negor and
comprising a part of the Acquired Claims in such a manner as to create the
appearance or reasonable expectation that the Acquired Claims are owned or
leased by it; such ownership is free and clear of all liens, claims,
encumbrances and charges; no other person has any ownership or similar right in,
or contractual or other right to acquire any such right in, any of the Acquired
Claims; and such ownership will be conveyed to the Mining Company at the Closing
pursuant to the Transaction. Negor does not know of any potential action by any
party, governmental or other, and no proceedings with respect thereto have been
instituted of which Negor has notice, that would materially affect the Mining
Company's ability to operate, mine and otherwise exploit each of the Acquired
Claims.
5.12 Contracts. The Acquired Claims are not affected by any contracts,
agreements or understandings, whether express or implied, written or verbal,
other than this Agreement. Negor is not a party to any executory contract to
sell or transfer any part of any of the Acquired Claims.
5.13 Labor Matters. There are no activities or controversies, including,
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the best
of the knowledge of Negor, threatened, affecting employees of Negor whose
principal activities relate to the Acquired Claims.
5.14 Title to and Utilization of Acquired Claims. Negor has the unfettered
right to operate, mine and otherwise exploit the Acquired Claims and is not
aware of any claim, notice or threat to the effect that its fight to operate,
mine and otherwise exploit the Acquired Claims is subject in any way to any
challenge, claim, assertion of rights, proceedings toward condemnation or
confiscation, in whole or in part, or is otherwise subject to challenge.
5.15 Full Disclosure. The documents, certificates, and other writings
furnished or
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to be furnished by or on behalf of Negor to the Company pursuant to the
provisions of this Agreement, taken together in the aggregate, do not and will
not contain any untrue statement of a material fact, or omit to state any
material fact necessary to make the statements made, considering the
circumstances pursuant to which they are made, not misleading.
5.16 Actions Since Balance Sheet Dates. Since the date of those balance
sheets included in the Financial Statements, Negor has taken no actions that
would be prohibited pursuant to the provisions of this Agreement (without the
prior consent of the Company) after the date of this Agreement.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company hereby affords Negor the following covenants, thereby agreeing
to do or not to do, as the case may be, the following, the fulfillment of each
of which shall constitute a condition precedent to the obligations of Negor
created by the provisions of this Agreement.
6.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Company will take every action reasonably required of it in
order to satisfy the conditions to Closing specified in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated, provided in all instances
that the representations and warranties of Negor in this Agreement are and
remain true and accurate and that the covenants and agreements of Negor in this
Agreement are honored and that the conditions to the obligations of the Company
specified in this Agreement are not incapable of satisfaction.
6.2 Cooperation. The Company shall cooperate with Negor and its counsel,
accountants and agents in every way in carrying out the Transaction and in
delivering all documents and instruments deemed reasonably necessary or useful
by counsel to Negor.
6.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Company in connection with this Agreement and the
Transaction shall be paid by the Company.
6.4 Updating of Exhibits and Disclosure Documents. The Company shall notify
Negor of any changes, additions or events which may cause any change in or
addition to any schedules or exhibits delivered by it pursuant to this
Agreement, promptly after the occurrence of the same and at the Closing by the
delivery of updates of all schedules and
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exhibits. No notification made pursuant to this section shall be deemed to cure
any breach of any representation or warranty made in this Agreement, unless
Negor specifically agrees thereto in writing nor shall any such notification be
considered to constitute or result in a waiver by Negor of any condition
specified in this Agreement.
ARTICLE VII
COVENANTS OF NEGOR
Negor hereby affords the Company the following covenants, thereby agreeing
to do or not to do, as the case may be, the following, the fulfillment of each
of which shall constitute a condition precedent to the obligations of the
Company created by the provisions of this Agreement.
7.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, Negor will take every action reasonably required of it to satisfy
the conditions to closing specified in this Agreement and otherwise to ensure
the prompt and expedient consummation of the Transaction substantially as
contemplated by the provisions of this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated, provided in all instances
that the representations and warranties of the Company in this Agreement are and
remain true and accurate and that the covenants and agreements of the Company in
this Agreement are correct and that the conditions to the obligations of Negor
specified in this Agreement are not incapable of satisfaction and subject, at
all times, to the right and ability of the directors of Negor to satisfy their
fiduciary obligations.
7.2 Access and Information. Negor shall afford to the Company and to the
Company's accountants, counsel, and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to all
of Negor's properties, books, instruments, documents, contracts, commitments,
records and other information and personnel relating to the Acquired Claims and,
during such period, Negor shall furnish promptly to the Company (a) all written
communications to its officers, directors, employees or to its shareholders
generally relating to the Acquired Claims, and (b) all other information
relating to the Acquired Claims as the Company may request, but no investigation
pursuant to this section shall affect any representations or warranties of
Negor, or the conditions to the obligations of the Company to consummate the
Transaction. In the event of the termination of this Agreement, the Company
will, and will cause its representatives to, deliver to Negor or destroy all
documents, work papers, and other material, and all copies thereof, obtained by
it or on its behalf from Negor as a result of this Agreement or in connection
with this Agreement, whether so obtained before or after the execution of this
Agreement, and will hold in confidence all confidential information that has
been designated as such by Negor in
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writing or by appropriate and obvious notation, and will not use any such
confidential information, except in connection with the Transaction, until such
time as such information is otherwise publicly available. The Company and its
representatives shall assert their rights created by the provisions of this
section in such manner as to minimize interference with the business of Negor.
7.3 No Solicitation. Negor and those persons acting on behalf of Negor will
not, and Negor will use its best efforts to cause its officers, employees,
agents, and representatives (including any investment banker) to not, directly
or indirectly, solicit, encourage, or initiate any discussions with, or
negotiate or otherwise deal with, or provide any information to, any person
other than the Company and its officers, employees, and agents, relating to the
Acquired Claims. Negor will notify the Company immediately upon receipt of any
inquiry, offer or proposal relating to any of the foregoing. None of the
foregoing shall prohibit providing information to other persons in a manner in
keeping with the ordinary conduct of Negor's business, or providing information
to government authorities.
7.4 Conduct of Business Pending Consummation of the Transaction. Prior to
the consummation of the Transaction or the termination of this Agreement
pursuant to its terms, unless the Company shall otherwise consent in writing,
and except as otherwise contemplated by this Agreement, Negor will comply with
each of the following:
7.4.1 Condition of Claims. Negor shall use its best efforts to keep
intact the Acquired Claims, keep available the services of the employees of
Negor whose principal activities relate to the Acquired Claims and Negor
shall notify the Company immediately of any event or occurrence or
emergency material to, or affecting any material part of, the Acquired
Claims.
7.4.2 Restriction on Borrowing. Negor shall not create, incur or
assume any long-term or short-term indebtedness for money borrowed or make
any expenditures or commitment for expenditures affecting the Acquired
Claims.
7.4.3 Restriction on Alienation. Negor shall not sell, lease,
mortgage, encumber, or otherwise dispose of or grant any interest in any of
the Acquired Claims.
7.4.4 Restriction on Contracts. Negor shall not enter into, or
terminate, any material right, contract, agreement, grant, commitment,
license, permit, or understanding relating to or affecting the Acquired
Claims.
7.4.5 Continued Restrictions. Negor shall not enter into any
agreement,
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commitment, or understanding, whether in writing or otherwise, with respect
to any of the matters referred to in Paragraphs 7.4.1 through 7.4.4,
inclusive, of this Agreement.
7.4.6 Tax Matters. Negor will continue to file properly and promptly
when due all tax returns, reports, and declarations required to be filed by
it relating to the Acquired Claims, and will pay, or make full and adequate
provision for the payment of, all taxes and governmental charges due from
or payable by it relating to the Acquired Claims.
7.4.7 Compliance with Laws. Negor will comply with all laws and
regulations relating to the Acquired Claims.
7.5 Cooperation. Negor will cooperate with the Company and its counsel,
accountants, and agents in every way in consummating and closing the Transaction
and in delivering all documents and instruments deemed reasonably necessary or
useful by the Company.
7.6 Expenses. Whether or not the transaction is consummated, all costs and
expenses incurred by Negor in connection with this Agreement and the Transaction
shall be paid by Negor.
7.7 Publicity. Prior to the Closing any written news releases by Negor
relating to this Agreement or the Transaction shall be submitted to the Company
for review and approval prior to release by Negor, and shall be released only in
a form approved by the Company.
7.8 Updating of Exhibits and Disclosure Documents. Negor shall notify the
Company of any changes, additions, or events which may cause any change in or
addition to any schedules or exhibits delivered by it pursuant to this Agreement
promptly after the occurrence of the same and again at the Closing by delivery
of appropriate updates to all such schedules and exhibits. No such notification
made pursuant to this section shall be deemed to cure any breach of any
representation or warranty made in this Agreement, unless the Company
specifically agrees thereto in writing nor shall any such notification be
considered to constitute or result in a waiver by the Company of any condition
specified in this Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING AND OBLIGATIONS OF PARTIES
8.1 Conditions to Obligation of the Company. The obligations of the Company
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to consummate the Transaction are subject to the satisfaction, at or before the
Closing, of all the following conditions. The Company may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by the Company of
any of its other rights or remedies, at law or in equity, if Negor should be in
default of any of its representations, warranties, or covenants specified by the
provisions of this Agreement.
8.1.1 Receipt of Approvals. This Agreement and the Transaction shall
have received all approvals, consents, authorizations, and waivers from
governmental and other regulatory agencies and other third parties required
to consummate the Transaction.
8.1.2 Absence of Litigation. There shall not be in effect a
preliminary or permanent injunction or other order by any court or similar
authority which prohibits the consummation of the Transaction.
8.1.3 Performance by Negor. Negor shall have performed in all material
respects each of its agreements and obligations specified in this Agreement
and required to be performed on or prior to the Closing and shall have
complied with all material requirements, rules, and regulations of all
regulatory authorities having jurisdiction relating to the Transaction.
8.1.4 Condition of Acquired Claims. No material adverse change shall,
in the judgment of the Company, have occurred regarding the condition of
the Acquired Claims since the date of those balance sheets included in the
Financial Statements, other than those, if any, that result from the
changes permitted by, and transactions contemplated by, this Agreement.
8.1.5 Correctness of Representations and Warranties. The
representations and warranties of Negor specified in this Agreement shall
be true in all material respects as of the date of this Agreement and,
except in such respects as, in the judgment of the Company, do not
materially and adversely affect the condition of the Acquired Claims, as of
the Closing Time as if made as of such time.
8.1.6 Approval by the Board of Directors of Negor. The entering into,
signing, and delivery of this Agreement by Negor and the consummation of
the Transaction have been approved by the Board of the Directors of Negor.
8.1.7 Receipt of Officer's Certificate. The Company shall have
received from Negor an officer's certificate, executed by the Chief
Executive Officer and
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the Chief Financial Officer of Negor (in their capacities as such) dated
the Closing Date, as to the satisfaction of the conditions in paragraphs
8.1.1 through 8.1.5, inclusive, of this Agreement.
8.1.8 Opinion of Counsel. The Company shall have received, on and as
of the Closing Date, an opinion of counsel to Negor, as to the matters set
forth in Sections 5.1. 5.2, 5.3, 5.8, 5.9, 1.10, 5.12, 5.13, 5.15 and 5.16
of this Agreement (to the best of the knowledge of such counsel, if
appropriate, all subject to customary limitations reasonably acceptable to
counsel to the Company; and such other closing documents and instruments as
the Company shall request, in each case reasonably satisfactory in form and
substance to the Company and its counsel.
8.1.9 Lessor's Certificate. The Company shall have received from each
lessor with whom Negor has a material (as reasonably determined by the
Company) lease of real property, which lease comprises part of the Acquired
Claims, certificates satisfactory in form and substance to the Company and
its counsel as to the continuing validity of such leases and the absence of
any basis for the termination thereof.
8.1.10 BMG Geological Evaluation Report. The Company shall have
received from Negor a copy of the official BMG Geological Evaluation
Report, satisfactory in form and substance to the Company and its counsel.
8.1.11 ECC. The Company shall have received from Negor a copy of the
ECC, satisfactory in form and substance to the Company and its counsel.
8.1.12 MPSA. The Company shall have received from Negor a copy of the
MPSA, satisfactory in form and substance to the Company and its counsel.
8.1.13 Negor's Charter Documents. The COmpany shall have received from
Negor a copy of Negor's Articles (or similar charter documents), certified
by the Philippine agency with which those charter documents are filed.
8.1.14 Certificate of Good Standing. The Company shall have received
from Negor a Certificate of Good Standing (or similar document) signed and
sealed by the Philippine regulatory agency with which Negor's charter
documents are filed, dated within sixty (60) days of the Closing Date.
8.1.15 Negor's Bylaws. The Company shall have received from Negor a
copy of Negor's Bylaws (or similar governing rules), accompanied by an
officer's
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certificate signed by the President and Secretary of Negor attesting to the
fact that such Bylaws (or similar governing rules) have been duly adopted
and serve as the Bylaws (or similar governing rules) of Negor.
8.1.16 Financial Statements. The Company shall have received from
Negor a copy of the Financial Statements.
8.2 Conditions to Obligation of Negor. The obligations of Negor to
consummate the Transaction are subject to the satisfaction, at or before the
Closing, of all the following conditions. Negor may waive any or all of these
conditions in whole or in part without prior notice; provided, however, that no
such waiver of a condition shall constitute a waiver by Negor of any of its
other rights or remedies, at law or in equity, if the Company should be in
default of any of its representations, warranties, or covenants specified by the
provisions of this Agreement.
8.2.1 Receipt of Approvals. This Agreement and the Transaction shall
have received all approvals, consents, authorizations, and waivers from
governmental and other regulatory agencies and other third parties required
by law to consummate the Transaction.
8.2.2 Absence of Litigation. There shall not be in effect a
preliminary or permanent injunction or other order by any court or similar
authority which prohibits the consummation of the Transaction.
8.2.3 Performance of Obligations. The Company shall have performed in
all material respects its agreements and obligations specified in this
Agreement required to be performed on or prior to the Closing.
8.2.4 Accuracy of Representations and Warranties. The representations
and warranties of the Company specified in this Agreement shall be true in
all material respects as of the date of this Agreement.
8.2.5 Receipt of Officers Certificate. Negor shall have received from
the Company an officers' certificate, executed by the Chief Financial
Officer and the Chief Executive Officer of the Company (in their capacities
as such), dated the Closing Date, as to the satisfaction of the conditions
of Sections 4.1 through 4.3, inclusive, of this Agreement.
8.2.6 Payment Upon Signing This Agreement. On the date that the
Company signs and delivers this Agreement to Negor, the Company shall pay
or cause to be paid to Negor the principal amount of Fifty Thousand United
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Dollars ($50,000.00).
8.2.7 Subsequent Payment by the Company. No later than September 30,
1998, from funds contributed to the capital of the Company for the purpose
of developing the Project, the Company shall pay or cause to be paid to
Negor the principal amount of Fifty Thousand United States Dollars
($50,000.00); provided, however, in the event that such payment is delayed
because of any review or other action taken by any regulatory agency having
jurisdiction of the method pursuant to which the Company anticipates
receiving those funds, the Company shall provide written notice to Negor
immediately of the occurrence of that event, and such amount shall be paid
by the Company no later than October 31, 1998.
8.2.8 Payment by the Manufacturing Company. At such time as all
feasibility studies and similar studies and reports are completed which are
necessary or appropriate for the construction and operation of the
Manufacturing Facilities and which will be required prior to the receipt of
the funds required to finance construction of the Manufacturing Facilities,
which funds may be contributions to capital and proceeds from one or more
borrowing transactions, or either or them, the Manufacturing Company shall
pay to Negor One Million United States Dollars ($1,000,000.00). In
connection with any and all such borrowing transactions, the Acquired
Claims may be utilized as collateral or otherwise be pledged to enhance the
credit of the borrower.
8.2.9 Approval by the Board of Directors of the Company. The entering
into, signing and delivery of this Agreement and the consummation of the
Transaction by the Company shall have been approved by the Board of
Directors of the Company.
8.3 Obligations of the Company to Negor upon the Signing and Delivery of
this Agreement. On the date that this Agreement is signed and delivered by the
Company and Negor, the Company shall deliver to Negor a certified or cashier's
checks payable to Negor in the principal amount of Fifty Thousand United States
Dollars ($50,000.00).
8.4 Obligations of Parties at Closing.
8.4.1 Negor to the Company. On the Closing Date, Negor shall deliver
to the Company the following instruments and documents:
8.4.1.1 Consents. All consents necessary to Transaction.
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8.4.1.2 Officers' Certificates. Officers' certificate pursuant to
the provisions of Paragraph 8.1.7 of this Agreement.
8.4.1.3 Opinion of Counsel. Opinion of counsel pursuant to the
provisions of Paragraph 8.1.8 of this Agreement.
8.4.1.4 Lessor's Certificate. The lessor's certificate
contemplated by the provisions of Paragraph 8.1.9 of this Agreement.
8.4.1.5 BMG Geological Evaluation Report. A copy of the official
BMG Geological Evaluation Report, satisfactory in form and substance
to the Company and its counsel.
8.4.1.6 ECC. A copy of the ECC, satisfactory in form and
substance to the Company and its counsel.
8.4.1.7 MPSA. A copy of the MPSA, satisfactory in form and
substance to the Company and its counsel.
8.4.1.8 Negor's Charter Document. A copy of Negor's Articles (or
similar charter document).
8.4.1.9 Negor's Bylaws. A copy of Negor's Bylaws (or similar
governing rules).
8.4.1.10 Financial Statements. A copy of the Financial
Statements.
8.4.1.11 Certificate of Good Standing. The Certificate of Good
Standing contemplated by the provisions of Paragraph 8.1.14 of this
Agreement.
8.4.2 The Company to Negor. On the Closing Date, the Company shall
deliver to Negor all consents necessary to consummate the Transaction.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification By The Company. The Company shall defend, indemnify
and hold harmless Negor, its officers, directors, stockholders, representatives,
agents, accountants, attorneys, servants and employees, and their respective
heirs, personal and legal representatives, guardians, successors and
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assigns, from and against any and all claims, threats, liabilities, taxes,
interest, fines, penalties, suits, actions, proceedings, demands, damages,
losses, costs and expenses (including attorneys and experts' fees and court
costs) of every kind and nature arising out of, resulting from, or in connection
with:
9.1.1. Failure of Representation or Warranty. Any misrepresentation or
breach by the Company of any representation or warranty specified in this
Agreement.
9.1.2. Breach of Agreement. Any nonfulfillment, failure to comply or
breach by the Company of or with any covenant, promise or agreement of the
Company specified in this Agreement.
9.2. Indemnification by Negor. Negor shall defend, indemnify and bold
harmless the Company and its respective heirs, personal and legal
representatives, guardians, successors and assigns, from and against any and all
claims, threats, liabilities, taxes, interest, fines, penalties, suits, actions,
proceedings, demands, damages, losses, costs and expenses (including attorneys'
and experts' fees and court costs) of every kind and nature arising out of,
resulting from, or in connection with:
9.2.1. Failure of Representation or Warranty. Any misrepresentation,
omission or breach by Negor of any representation or warranty specified in
this Agreement.
9.2.2. Breach of Agreement. Any nonfulfillment, failure to comply or
breach by Negor of or with any covenant, promise or agreement of Negor
specified in this Agreement.
ARTICLE X
TERMINATION, AMENDMENT WAIVER
10.1 Termination. This Agreement and the Transaction may be terminated at
any time prior to the Closing.
10.1.1 Mutual Consent. By mutual consent of the Company and Negor; or
10.1.2 Occurrence of Material Breach. By either Negor or the Company,
upon written notice to the other, if the conditions to such party's
obligations to consummate the Transaction, in the case of the Company, as
provided in Section
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8.1 of this Agreement, or, in the case of Negor, as provided in Section 8.2
of this Agreement, were not, or cannot reasonably be, satisfied on or
before December 31, 1999, unless the failure of condition is the result of
the material breach of this Agreement by the party seeking to terminate.
10.2 Waiver. At any time prior to the Closing Date, the Company or Negor,
by action taken by their respective Boards of Directors, may (a) extend the time
for the performance of any of the obligations or other acts of the other
specified in this Agreement, (b) waive any inaccuracies in the representations
and warranties specified in this Agreement or in any document delivered pursuant
to this Agreement, or (c) waive compliance with any of the agreements or
conditions specified in this Agreement. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if specified in an
instrument in writing signed on behalf of such party.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Notices. Any notice, direction or instrument required or permitted to
be given pursuant to this Agreement shall be given in writing by (a) telegram,
facsimile transmission or similar method, if confirmed by mail as herein
provided, by mail; (b) if mailed postage prepaid, by certified mail, return
receipt requested; or (iii) hand delivery to any party at the addresses of the
parties specified, below. If given by telegram or facsimile transmission or
similar method or by hand delivery, such notice, direction or instrument shall
be deemed to have been given or made on the day on which it was given, and if
mailed, shall be deemed to have been given or made on the second (2nd) business
day following the day after which it was mailed. Any party may, from time to
time by similar notice, give notice of any change of address, and in such event,
the address of such party shall be deemed to be changed accordingly. The
address, telephone number and facsimile transmission number for the notice of
each party are:
If to Company: Nevada Utah Gold Inc.
do Suite 800
411 Newport Place
Newport Beach, California 92660
If to Negor: Negor RR Cement Corporation c/o Fifth Floor
Cocolife Building
Ayala Avenue, Marati, Metro Manila
11.2. Recovery of Enforcement Costs. In the event either party incurs any
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expense, including attorneys' fees, by reason of any default or alleged default
by the other party, the party prevailing in any action or proceeding brought to
resolve the issue of any such default or alleged default shall be entitled to
recover such prevailing party's expenses incurred to prosecute or defend such
action or proceeding, including, without limitation, actual attorneys' fees and
costs incurred preparatory to such prosecution and defense. Moreover, while a
court of competent jurisdiction may assist in determining whether or not the
fees actually incurred are reasonable under the circumstances then existing,
that court shall not to be governed by any judicially or legislatively
established fee schedule, and said fees and costs are to include those as may be
incurred on appeal of any issue and all of which fees and costs shall be
included as part of any judgment, by cost bill or otherwise, and where
applicable, any appellate decision rendered in or arising out of such action or
proceeding. For purposes of this Agreement, in any action or proceeding
instituted by a party based upon any default or alleged default of this
Agreement by the other party, the prevailing party shall be that party in any
such action or proceeding (i) in whose favor a judgment is entered, or (ii)
prior to trial, hearing or judgment such other party shall pay all or any
portion of amounts claimed by the party seeking payment, or such other party
shall eliminate the condition, cease the act, or otherwise cure the omission
claimed by the party initiating such action or proceeding.
11.3. Assignment. Each party shall have the right, without the consent of
the other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
Agreement.
11.4. Captions and Interpretations. Captions of the articles, sections and
paragraphs of this Agreement are for convenience and reference only, and the
works specified therein shall in no way be held to explain, modify, amplify or
aid in the interpretation, construction, or meaning of the provisions of this
Agreement. The language in all parts to this Agreement, in all cases, shall be
construed in accordance with the fair meaning of that language as if prepared by
all parties and not strictly for or against any party. Each party and counsel
for such party have reviewed this Agreement. The rule of construction, which
requires a court to resolve any ambiguities against the drafting party, shall
not apply in interpreting the provisions of this Agreement.
11.5. Entire Agreement. This Agreement is the final written expression and
the complete and exclusive statement of all the agreements, conditions,
promises, representations, warranties and covenants between the parties with
respect to the subject matter of this Agreement, and this Agreement supersedes
all prior or contemporaneous agreements, negotiations, representations,
warranties, covenants, understandings and discussions by and between and among
the parties, their respective representatives, and any other person, with
respect to the subject matter specified in this Agreement. This
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Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically indicates that such instrument is intended to
amend this Agreement and is signed by each of the parties. Each parry
represents, warrants and covenants that in executing this Agreement that such
party has relied solely on the terms, conditions and provisions specified in
this Agreement. Each of the parties additionally represents, warrants and
covenants that in executing and delivering this Agreement that such parry has
placed no reliance whatsoever on any statement, representation, warranty,
covenant or promise of the other party, or any other person, not specified
expressly in this Agreement, or upon the failure of the other party or any other
person to make any statement, representation, warranty, covenant or disclosure
of any nature whatsoever. The parties have included this section to preclude (i)
any claim that either party was in any manner whatsoever induced fraudulently to
enter into, execute and deliver this Agreement, and (ii) the introduction of
parol evidence to vary, interpret, supersede, modify, amend, annul, supplement
or contradict the terms, conditions and provisions of this Agreement.
11.6. Choice of Law and Jurisdiction. The Company is a Nevada corporation
with publicly traded stock issued and outstanding. As a result, the Company is
subject to the jurisdiction of numerous regulatory agencies in the United States
of America, including, but not limited to, the Commission. In that regard, this
Agreement shall be deemed to have been entered into in the State of Nevada,
United States of America. All questions concerning the validity, interpretation,
or performance of any of the terms, conditions and provisions of this Agreement
or of any of the rights or obligations of the parties shall be governed by, and
resolved in accordance with, the laws of the State of Nevada without regard to
conflicts of law principles.
11.7. Waiver and Modification. No modification, supplement or amendment of
this Agreement or of any covenant, condition, or limitation specified in this
Agreement shall be valid unless the same is made in writing and duly executed by
both parties. No waiver of any covenant, condition, or limitation specified in
this Agreement shall be valid unless the same is made in writing and duty
executed by the party making the waiver. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
11.8. Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa, and the word "person" shall include individual,
company, sole proprietorship, corporation, joint venture, association, joint
stock company, fraternal order, cooperative, league, club, society,
organization, trust, estate, governmental agency, political
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subdivision or authority, firm, municipality, congregation, partnership, or
other form of entity.
11.9. Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this section, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
11.10. Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
11.11. Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
11.12. Governmental Rules and Regulations. The Transaction and the
relationships contemplated by the provisions of this Agreement are and shall
remain subject to any and all present and future orders, rules and regulations
of any duly constituted authority having jurisdiction of the Transaction and
those relationships.
11.13. Execution in Counterparts. This Agreement may be prepared in
multiple copies and forwarded to each of the parties for execution. All of the
signatures of the parties may be affixed to one copy or to separate copies of
this Agreement and when all such copies are received and signed by all the
parties, those copies shall constitute one agreement which is not otherwise
separable or divisible. Counsel for the Company shall keep all of such signed
copies and shall conform one copy to show all of those signatures and the dates
thereof and shall mail a copy of such conformed copy to each of the parties
within thirty (30) days after the receipt by such counsel of the last signed
copy, and such counsel shall cause one such conformed copy to be filed in the
principal office of such counsel.
11.14. Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties
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representations, covenants, terms, conditions and provisions specified in this
Agreement shall not waive, affect of diminish any right of such party failing to
require strict performance to demand strict compliance and performance therewith
and with respect to any other provisions, warranties, terms, and conditions
specified in this Agreement. Any waiver of any default shall not waive or affect
any other default, whether prior or subsequent thereto, and whether the same or
of a different type. None of the representations, warranties, covenants,
conditions, provisions and terms specified in this Agreement shall be deemed to
have been waived by any act or knowledge of any party, its agents, trustees,
officers, or employees and any such waiver shall be made only by an instrument
in writing, signed by the waiving party and directed to any non-waiving party
specifying such waiver, and each party reserves such party's rights to insist
upon strict compliance herewith at all times.
11.15. Survival of Covenants, Representations and Warranties. All
covenants, representations, and warranties made by each party to this Agreement
shall be deemed made for the purpose of inducing the other party to enter into
and execute this Agreement. The representations, warranties, and covenants
specified in this Agreement shall survive the Closing and shall survive any
investigation by either party whether before or after the execution of this
Agreement. The covenants, representations, and warranties of the Company and
Negor are made only to and for the benefit of the other and shall not create or
vest rights in other persons.
11.16. Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. The termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
11.17 Force Majeure. a. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (defined later in
this section) to perform such party's obligations created by the provisions of
this Agreement, such party shall give to the other party prompt written notice
of the event of "force majeure" with reasonably complete particulars concerning
such event; thereupon, the obligations of the party giving such notice, so far
as those obligations are affected by the event of "force majeure" shall be
suspended during, but no longer than, the continuance of the event of "force
majeure.' The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve) eliminate and terminate the event of "force
majeure" as quickly as practicable.
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b. The requirement that an event of "force majeure" shall be remedied with
all reasonable dispatch as hereinabove specified, shall not require the
settlement of strikes, lockouts or other labor difficulties by the party
involved, contrary to such party's wishes, and the resolution of any and all
such difficulties shall be handled entirely within the discretion of the party
concerned.
c. The term "force majeure" as used herein shall be defined as and mean any
act of God, strike, civil disturbance, lockout or other industrial disturbance,
act of the public enemy, war, blockage, public riot, earthquake, tornado,
hurricane, lightening, fire, public demonstration, storm, flood, explosion,
governmental action, governmental delay, restraint or inaction, unavailability
of equipment, and any other cause or event, whether of the kind enumerated
specifically herein, or otherwise, which is not reasonably within the control of
the party claiming such suspension.
11.18 Arbitration. In the event that there shall be a dispute arising out
of or relating to this Agreement, the Transaction, any document referred to
herein or related to the subject matter hereof, or the subject matter of any of
the same, the parties agree that such dispute shall be submitted to binding
arbitration, upon the written request of one party after the service of that
request on the other party, as follows:
a. Any dispute relating to the operations of the Mining Company in the
Philippines, the operations of the Manufacturing Company in the Philippines, or
the Project in the Philippines, or any dispute relating to the Acquired Claims,
shall be settled by arbitration in the Philippines. The parties shall each
appoint one person to hear and determine the dispute. If these two arbitrators
cannot agree, then the two arbitrators shall choose a third impartial arbitrator
whose decision shall be final and conclusive on both parties. The cost of the
arbitration shall be borne by the losing party or in such proportions as the
arbitrators decide.
b. Any other dispute shall be submitted to binding arbitration pursuant to
the auspices of, and pursuant to the rules of, the American Arbitration
Association and the Nevada arbitration rules and procedures then in effect, or
such other procedures as the parties may agree to at the time, before a tribunal
of three (3) arbitrators, one of which shall be selected by each of the parties
to the dispute, and the third of which shall be selected by the two arbitrators
so selected. Any award issued as a result of such arbitration shall be final and
obligate the parties, and shall be enforceable in any court having jurisdiction
over the party against whom enforcement is sought.
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IN WITNESS WHEREOF, the parties have executed this Option Agreement in
duplicate on the date specified in the preamble of this Agreement.
Negor RR Cement Corporation,
a Philippine corporation
By: /s/ ANTONIO ERNESTO RODRIGUEZ
-------------------------------
Antonio Ernesto Rodriguez
Its: President/Director
Nevada Utah Gold Inc.,
a Nevada corporation
By: /s/ DENNIS MILINE
-------------------------------
Dennis Milne
Its: President/Director
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ACKNOWLEDGEMENT
REPUBLIC OF THE PHIL. )
) ss.
CITY OF PASIG )
On 16th July 1998, before me, Notary Public, personally appeared Antonio Ernesto
Rodriguez (personally known to me or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to this
instrument, and acknowledged to me that he/she/they executed this instrument in
his/her/their authorized capacity/capacities, and that by his/her/their
signature(s) on the instrument the person(s), or the entity on behalf of which
the person(s) acted, executed the instrument.
[SEAL]
WITNESS my hand and official seal.
Signature: _______________________________
AGREEMENT OF PURCHASE AND SALE OF ASSETS
BETWEEN
FENWAY RESOURCES LTD.,
a Delaware corporation
("Seller"),
and
NEVADA/UTAH GOLD, INC.,
a Nevada corporation
("Purchaser")
THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS ("Agreement") is made and
entered into in duplicate this 10th day of August, 1998, by and among
Nevada/Utah Gold, Inc., a Nevada corporation ("Purchaser"), and Fenway Resources
Ltd., a Delaware corporation ("Seller"), and provides for the Purchaser to
acquire substantially all of the assets of the Seller, subject to the
liabilities assumed by the Purchaser pursuant to this Agreement and no other
liabilities.
RECITALS
A. The Purchaser desires to acquire, on the terms and subject to the
conditions specified in this Agreement, the business of the Seller, insofar as
that business is conducted by the use of the Acquired Assets.
B. The Seller believes that it is desirable and in the best interests of
the Seller that it sell the Acquired Assets to the Purchaser, on the terms and
subject to the conditions specified in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
ARTICLE I
DEFINITIONS
As used in this Agreement, the capitalized terms specified in this
Agreement shall have the meanings and definitions specified and indicated by the
provisions of this Article I, unless a different and common meaning of such a
term is clearly indicated by the context, and variants and derivatives of the
those terms shall have correlative meanings. To the extent that certain of the
definitions specified in this Article I suggest, indicate, or express agreements
between or
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among parties to this Agreement, or contain representations or warranties or
covenants of a party, the parties agree to the same, by execution of this
Agreement. Agreements, representations, warranties and covenants specified in
any part or provision of this Agreement shall for all purposes of this Agreement
be treated in the same manner as other such agreements, representations,
warranties and covenants specified elsewhere in this Agreement, and the article,
section or paragraph of this Agreement within which such an agreement,
representation, warranty, or covenant appears shall have no separate meaning or
effect on the same.
1.1 Accumulated Funding Deficiency: An "accumulated funding deficiency" as
defined in Section 302(a)(2) of ERISA or the last two sentences of Section
412(a)(2) of the Code, or, in the last two (2) sentences of Section 412(a)(2) of
the Code, or, in either case, successor provisions to such provisions adopted by
amendments to ERISA or the Code, as the case may be, and including, in each
case, other provisions of ERISA, of the Code, or of other law, and regulations
adopted pursuant to ERISA, or the Code, or such other law, modifying, amending,
interpreting or otherwise affecting the application of such provisions, either
in general or as applied to the nature or circumstances of a particular Entity
that is a party to, or is affected by, or is involved in, the Transaction and
with respect to which Entity the use of the term in this Agreement, or in the
particular portion of this Agreement, is relevant.
1.2 Acquired Assets: The assets of the Seller being acquired by the
Purchaser pursuant to the provisions of this Agreement, as identified on
Schedule 1.2 to this Agreement, which, by this reference, is made a part of this
Section 1.2, as though specified verbatim in this Section 1.2, and all other
assets of the Seller, tangible or intangible, including contractual, warranty,
and other rights, the use or value of which is an inherent part of the assets so
identified, or which relate to or result from transactions of the Seller
involving the assets so identified.
1.3 Acquired Business: The businesses conducted by the Seller in which the
Seller utilized the Acquired Assets, as described on Schedule 1.3 to this
Agreement, which, by this reference, is made a part of this Section 1.3, as
though specified verbatim in this Section 1.3.
1.4 Acquired Facilities: All warehouses, stores, plant, production
facilities, manufacturing facilities, processing facilities, fixtures, and
improvements owned or leased by the Seller, or otherwise used by the Seller, in
connection with the operation of its business or leased or subleased by the
Seller to others, but only to the extent that the same consist of Acquired
Assets.
1.5 Affiliate: As it relates to a person, a parent, spouse, brother or
sister, or natural or adopted lineal descendent or spouse of such descendent of
such person, and any proprietorship, corporation, partnership, congregation,
organization, firm, estate, association, league, club, society, joint venture,
trust or other form of entity in which such person or parent, spouse, brother or
sister, or natural or adopted lineal descendent or spouse of such descendent or
such person may have an equity interest or in which such person or parent,
spouse, brother or sister, or natural or adopted lineal descendent or spouse of
such descendent of such person is a proprietor, partner, officer, director,
shareholder, employee, consultant, independent contractor, owner, co-venturer,
employer, agent, representative, settlor or beneficiary.
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1.6 Agreement: This Agreement of Purchase and Sale of Assets, including all
of its schedules and exhibits and all other documents specifically referred to
in this Agreement that have been or are to be delivered by a party to this
Agreement to another such party in connection with the Transaction or this
Agreement, and including all duly adopted amendments, modifications, and
supplements to or of this Agreement and such schedules, exhibits and other
documents.
1.7 Assumed Liabilities: The Liabilities of the Seller being assumed by the
Purchaser pursuant to pursuant to this Agreement, as specifically identified in
Schedule 1.7 to this Agreement, which, by this reference, is made a part of this
Section 1.7, as though specified verbatim in this Section 1.7, and no other
Liabilities of the Seller.
1.8 Business Day: Any day that is not a Saturday, Sunday, day on which
banks in Carson City, Nevada or Wilmington, Delaware, are authorized to close.
1.9 Closing: The completion of the Transaction, to occur as described in
Article II of this Agreement.
1.10 Closing Date: The date on which the Closing actually occurs, which
shall be on that date which is exactly four (4) business days following the date
upon which the appropriate consent of the shareholders of the Seller approving
the Transaction is received by the Seller, unless otherwise agreed by the
parties, but shall not in any event be prior to satisfaction or waiver of the
conditions to Closing specified in Article VII of this Agreement.
1.11 Closing Time: The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.12 Code: The Internal Revenue Code of 1986, as amended and in effect on
the date the parties sign this Agreement.
1.13 Complete Withdrawal: A "complete withdrawal" from a Multiemployer Plan
as defined in Section 4203 of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations pursuant to ERISA or such other law, modifying,
amending, interpreting or otherwise affecting the application of such provision,
either in general or as applied to the nature or circumstances of a particular
Entity that is a party to, or is affected by, or is involved in, the Transaction
and with respect to which Entity the use of the term in this Agreement, or in
the particular location in this Agreement, is relevant.
1.14 Consent Statement: The document prepared by the Seller for submission
to its shareholders soliciting their written consents to the consummation of the
Transaction.
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1.15 Consideration: Seven million six hundred forty-four thousand
sixty-seven (7,644,067) shares of the Purchaser's $.001 par value common stock,
to be issued by the Purchaser to the Seller at the Closing, subject to
modification and adjustment as specified by the provisions of this Agreement.
1.16 Control: Generally, the power to direct the management or affairs of
an Entity.
1.17 Entity: A corporation, partnership, sole proprietorship, joint
venture, or other form of organization formed for the conduct of a business,
whether active or passive.
1.18 ERISA: The Employee Retirement Income Security Act of 1974, as amended
and in effect at the time of execution of this Agreement.
1.19 Exchange Act: The Securities Exchange Act of 1934, as amended to the
date as of which any reference thereto is relevant pursuant to this Agreement,
including any substitute or replacement statute adopted in place or lieu
therefor.
1.20 GAAP: Generally Accepted Accounting Principles, as in effect on the
date of any statement, report or determination that purports to be, or is
required to be, prepared or made in accordance with GAAP. All references in this
Agreement to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied throughout the periods to which
reference is made.
1.21 Inventories: The stock of raw materials, work-in-process and finished
goods, including, but not limited to, finished goods purchased for resale, held
by the Seller for manufacturing, assembly, processing, finishing, sale, or
resale to others from time to time in the ordinary course of the business of the
Seller, in the form in which such inventories then are held or after
manufacturing, assembling, finishing, processing, incorporating with other goods
or items, refining, or similar processes.
1.22 IRS: The Internal Revenue Service.
1.23 Liabilities: At any time ("Determination Time"), the obligations of a
person or Entity, whether known or unknown, contingent or absolute, recorded on
its books or not, resulting in any way from facts, events, agreements,
obligations or occurrences that existed, occurred or transpired at a prior point
in time, or resulted from the passage of time to the Determination Time, but not
including obligations accruing or payable after the Determination Time to the
extent (but only to the extent) that such obligations (a) result from previously
existing agreements for services, benefits, or other considerations, and (b)
accrue or become payable with respect to services, benefits, or other
considerations received by the person or Entity after the Determination Time.
1.24 Multiemployer Plan: A "multiemployer plan," as defined in Section
3(37) of ERISA or Section 414(f) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each case,
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other provisions of ERISA, of the Code, or of other law, and regulations adopted
pursuant to ERISA, or the Code, or such other law, modifying, amending,
interpreting, or otherwise affecting the application of such provisions, either
in general or as applied to the nature or circumstances of a particular Entity
that is a party to, or is affected by, or is involved in, the Transaction and
with respect to which Entity the use of the term in this Agreement, or in the
particular location in this Agreement, is relevant.
1.25 Partial Withdrawal: A "partial withdrawal" from a Multiemployer Plan,
as defined in Section 4205 of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of such
provision, either in general or as applied to the nature or circumstances of a
particular Entity that is a party to, or is affected by, or is involved in, the
Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
1.26 Payables: Liabilities of a party resulting from the borrowing of money
or the incurring of obligations for merchandise or goods purchased.
1.27 Plan Termination: A termination of a Pension Plan, whether partial or
complete, within the meaning of Title IV of ERISA.
1.28 PBGC: The Pension Benefit Guaranty Corporation.
1.29 Pension Plan: A "pension plan" or "employee pension benefit plan," as
defined in Section 3(2) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
1.30 Prohibited Transaction: A "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975(c) of the Code, or, in either case,
successor provisions to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other provisions of
ERISA, of the Code or of other law, and regulations adopted pursuant to ERISA,
or the Code, or such other law, modifying, amending, interpreting, or otherwise
affecting the application of such provisions, either in general or as applied to
the nature or circumstances of a particular Entity that is a party to, or is
affected by, or is involved in, the Transaction and with respect to which Entity
the use of the term in this Agreement, or in the particular location in this
Agreement, is relevant.
1.31 Proprietary Rights: Trade secrets, copyrights, patents, trademarks,
service marks, customer lists, and all similar types of intangible property
developed, created or owned by the
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Seller, or used by the Seller in connection with its business, whether or not
the same are entitled to legal protection.
1.32 Purchaser: Nevada/Utah Gold, Inc., a Nevada corporation, which,
pursuant to the terms of this Agreement, is purchasing the Acquired Assets.
1.33 Receivables: Accounts receivable, notes receivable, and other
obligations presented as assets on the books, records and financial statements
of the Seller, in accordance with GAAP, indicating moneys owed, due and payable
to the Entity or person on whose financial statements such receivables are
presented.
1.34 Reportable Event: A "reportable event," as defined in Section 4043(b)
of ERISA or successor provisions to such provision adopted by amendments to
ERISA and including other provisions of ERISA or of other law, and regulations
adopted pursuant to ERISA or such other law, modifying, amending, interpreting,
or otherwise affecting the application of such provision, either in general or
as applied to the nature or circumstances of a particular Entity that is a party
to, or is affected by, or is involved in, the Transaction and with respect to
which Entity the use of the term in this Agreement, or in the particular
location in this Agreement, is relevant.
1.35 SEC: The Securities and Exchange Commission.
1.36 Securities Act: The Securities Act of 1933, as amended to the date as
of which any reference thereto is relevant pursuant to this Agreement, including
any substitute or replacement statute adopted in place or lieu thereof.
1.37 Seller: Fenway Resources Ltd., a Delaware corporation, as the seller
of the Acquired Assets.
1.38 Subsidiary: With respect to any Entity, another Entity of which fifty
percent (50%) or more of the effective voting power, or the effective power to
elect a majority of the board of directors or similar governing body, or fifty
percent (50%) or more of the true equity interest, is owned by such first
Entity, directly or indirectly.
1.39 Transaction: The sale of the Acquired Assets, subject to the Assumed
Liabilities, for the Consideration as contemplated by, and on the terms and
subject to the conditions of, this Agreement.
1.40 Welfare Plan: A "welfare plan" or an "employee welfare benefit plan,"
as defined in Section 3(1) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
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ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, on, and
in all instances subject to, each of the terms, conditions, provisions and
limitations specified in this Agreement, the Seller shall sell, transfer,
convey, and assign to the Purchaser, by instruments satisfactory in form and
substance to the Purchaser, and the Purchaser shall acquire from the Seller, the
Acquired Assets, subject to the Assumed Liabilities, and only those Liabilities
and no others, in exchange for the Consideration. The Seller represents that the
assets described on Schedule 1.2 to this Agreement are all the assets reasonably
necessary for the conduct of the Acquired Business in the ordinary course in the
same manner as that in which such business has been conducted in the immediate
past, including, without limitation, all Proprietary Rights and all contract,
warranty, and other intangible rights relating to or resulting from the Acquired
Business. Neither the Purchaser nor any of its Affiliates is assuming, becoming
liable for, agreeing to discharge or in any manner becoming in any way
responsible for, any of the Liabilities of the Seller other than those expressly
identified on Schedule 1.7 to this Agreement and accepted by the Purchaser.
2.2 Manner of Payment. The certificate evidencing and representing the
Consideration shall be issued and delivered by the Purchaser to the Seller on
the Closing Date.
2.3 Closing. The Closing of the Transaction shall occur at the offices of
White and Stepp LLP, 4100 Newport Place, Suite 800, Newport Beach, California
92660 or at such other place as the Purchaser and the Seller may agree, on the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
The Purchaser represents and warrants the following, the truth and accuracy
of each of which shall constitute a condition precedent to the obligations of
the Seller created by the provisions of this Agreement:
3.1 Organization and Qualification. The Purchaser is a corporation duly
organized, validly existing, and in good standing pursuant to the laws of its
respective jurisdiction of incorporation and has the requisite corporate power
and authority to enter into and to perform this Agreement.
3.2 Authority Relative to This Agreement. The Purchaser has the requisite
corporate power and authority to carry out its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of Purchaser and no other corporate
proceedings on the part of the Purchaser are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction, including the
issuance and
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delivery of the Consideration. The Purchaser has, and any officer, director or
representative executing this Agreement for and on behalf of the Purchaser has;
the legal capacity and authority to enter into and deliver this Agreement. This
Agreement is a valid and legally binding obligation of the Purchaser and is
enforceable completely against the Purchaser in accordance with its terms,
except as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally, and subject to approval of any and all governmental regulatory
agencies and authorities having jurisdiction of the relationship between the
parties contemplated by the provisions of this Agreement and the Transaction.
3.3 Absence of Breach; No Consents. The execution, delivery and performance
of this Agreement, and the performance by Purchaser of its obligations specified
by the provisions of this Agreement (except for compliance with any regulatory
or licensing laws applicable to the business of the Purchaser, all of which, to
the extent applicable to Purchaser (and to the extent within its control), will
be satisfied in all material respects prior to the Closing) do not (a) conflict
with, and will not result in a breach of, any of the provisions of the Articles
of Incorporation or Bylaws of Purchaser; (b) contravene any law, rule or
regulation of any State or Commonwealth or of the United States, or of any
applicable foreign jurisdiction, or any order, writ, judgment, injunction,
decree, determination, or award affecting or binding upon the Purchaser, in such
a manner as to provide a basis for enjoining or otherwise preventing
consummation of the Transaction; (c) conflict with or result in a material
breach of or default pursuant to any material indenture or loan or credit
agreement or any other material agreement or instrument to which Purchaser is a
party, in such a manner as to provide a basis for enjoining or otherwise
preventing consummation of the Transaction; or (d) require the authorization,
consent, approval or license of any third party of such a nature that the
failure to obtain the same would provide a basis for enjoining or otherwise
preventing consummation of the Transaction.
3.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of Purchaser.
3.5 Legal Proceedings. There is no action, suit, proceeding, claim,
arbitration, or investigation by any government, governmental agency or other
person or Entity (i) pending to which the Purchaser is a party; (ii) threatened
against or relating to the Purchaser or any of its assets or businesses; or
(iii) challenging the Purchaser's right to execute, acknowledge, seal, deliver,
perform pursuant to this Agreement, or consummate the Transaction, and there is
no basis for any such action, suit, proceeding, claim, arbitration or
investigation.
3.6 Insider Transactions. Schedule 3.6 to this Agreement, which, by this
reference, made a part of this Section 3.6, as though specified verbatim in this
Section 3.6, is a true, correct and complete list of the following:
3.6.1 The amounts and other essential terms of indebtedness or other
obligations,
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agreements, undertakings, Liabilities or commitments (contingent or
otherwise) of the Purchaser to or from any past or present officer,
director, member, stockholder or any person related to, controlling,
controlled by or under common control with any of the foregoing
("Purchaser's Control Persons").
3.6.2 All transactions between each Purchaser's Control Person and the
Purchaser since the Purchaser's date of incorporation and during all times
thereafter, and all proposed or contemplated transactions with each
Purchaser's Control Person, together with the essential terms thereof.
3.7 Complete Disclosure. This Agreement (including the exhibits and
schedules attached to this Agreement) does not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained herein not misleading. There is no fact known to the
Purchaser which is not disclosed in this Agreement which materially adversely
affects the accuracy of the representations and warranties specified in this
Agreement.
3.8 No Bribes or Kickbacks. The Seller has not, directly or indirectly,
paid or delivered any fee, commission, or other money, funds, or property,
however characterized, to any person or Entity, in the United States or any
other country, and the Purchaser does not know and does not have reason to
believe that any conduct by the Purchaser, or any of its officers, directors,
employees, agents, or representatives, or any of them, is or has been illegal
pursuant to any federal, state, or local law of the United States or any other
country having jurisdiction of such conduct. Neither the Purchaser nor any of
its officers, directors, employees, agents, or representatives, has
participated, directly or indirectly, in any boycott or other similar practice
affecting any of the actual or potential customers of the Purchaser. The
Purchaser has at all times done business in an open and ethical manner.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants the following, the truth and accuracy of
each of which shall constitute a condition precedent to the obligations of
Purchaser created by the provisions of this Agreement.
4.1 Organization and Qualification. The Seller is a corporation duly
organized, validly existing, and in good standing pursuant to the laws of its
respective jurisdiction of incorporation and each has the requisite corporate
power and authority to conduct its business as it is now being conducted. The
Seller is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned or
leased by it, or the nature of its activities, is such that qualification as a
foreign corporation in that jurisdiction is required by law. No part of the
Acquired Business is separately incorporated, but the Acquired Business has been
conducted by Seller (none of which is being purchased pursuant to the
Transaction) by Entities qualified to do business to the extent required by
applicable law in connection with the activities of the Acquired Business.
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4.2 Authority Relative to This Agreement. The Seller has the requisite
corporate power and authority to carry out its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of Seller and no other corporate proceedings
on the part of the Seller are necessary to approve and adopt this Agreement or
to approve the consummation of the Transaction, including the issuance and
delivery of the Consideration, except for shareholder approval specified
elsewhere in this Agreement. The Seller has, and any officer, director or
representative executing this Agreement for and on behalf of the Seller has, the
legal capacity and authority to enter into and deliver this Agreement. This
Agreement is a valid and legally binding obligation of the Seller and is
enforceable completely against the Seller in accordance with its terms, except
as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally, and subject to approval of any and all governmental regulatory
agencies and authorities having jurisdiction of the relationship between the
parties contemplated by the provisions of this Agreement and the Transaction.
4.3 Absence of Breach; No Consents. The execution, delivery, and
performance of this Agreement, and the performance by the Seller of its
obligations created by the provisions of this Agreement, do not (a) conflict
with or result in a breach of any of the provisions of the Certificate of
Incorporation or Bylaws of the Seller; (b) contravene any law, ordinance, rule,
or regulation of any State or Commonwealth or political subdivision of either or
of the United States (except for compliance with regulatory or licensing laws
all of which, to the extent applicable to the Seller (and to the extent within
the control of the Seller), will be satisfied in all material respects prior to
the Closing), or of any applicable foreign jurisdiction, or contravene any
order, writ, judgment, injunction, decree, determination, or award of any court
or other authority having jurisdiction, or cause the suspension or revocation of
any authorization, consent, approval, or license, presently in effect, which
affects or obligates the Seller or all or any part of the Acquired Assets or any
material properties of the Acquired Business, except in any such case where such
contravention will not have a material adverse effect on the business, condition
(financial or otherwise), operations or prospects of the Acquired Business and
will not have a material adverse effect on the validity of this Agreement or on
the validity of the consummation the Transaction; (c) conflict with, or result
in a material breach of, or default pursuant to, any material indenture or loan
or credit agreement or any other material agreement or instrument to which the
Seller or any of part of the Acquired Business is a party or by which any of the
Acquired Assets may be affected or obligated; (d) require the authorization,
consent, approval, or license of any third party; or (5) constitute grounds for
the loss or suspension of any permits, licenses, or other authorizations used in
the Acquired Business.
4.4 Brokers. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of Seller. The Seller does not
have any obligation to pay finder's or broker's fees or commissions in
connection with the exercise of options to renew or extend real estate leases to
which the Seller is a party.
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4.5 Legal Proceedings. Schedule 4.5 to this Agreement, which, by this
reference, is made a part of this Section 4.5, as though specified verbatim in
this Section 4.5, specifies a complete and accurate list of all actions, suits,
proceedings, claims, arbitrations, and investigations by any government,
governmental agency or other person or entity (i) pending to which the Seller is
a party; (ii) threatened against or relating to the Seller or any or its assets
or businesses; (iii) challenging the Seller's right to execute, acknowledge,
seal, deliver, perform pursuant to, this Agreement, or consummate the
Transaction; or (iv) asserting any right with respect to any of the Acquired
Assets. Except as specified in that Schedule 4.5, there is no action, suit,
proceeding, claim, arbitration, or investigation by any government, governmental
agency or other person or Entity (a) pending to which the Seller is a party;
(ii) threatened against or relating to the Seller or any of its assets or
businesses; (iii) challenging the Seller's right to execute, acknowledge, seal,
deliver, perform pursuant to, this Agreement, or consummate the Transaction; or
(iv) asserting any right with respect to any of the Acquired Assets.
4.6 Inventory. The Inventory as of the date of this Agreement, and all
Inventory created after the date of this Agreement through the Closing Date,
consist of items of a quality and quantity usable and salable in the ordinary
course of business by the Seller, except for obsolete and slow-moving items and
items below standard quality, all of which on or prior to the date of this
Agreement have been written down on the books of the Seller to net realizable
market value or have been provided for by adequate reserves. All Inventory is
free from defects which might provide claims for breach of warranty or product
liability, except such items which have been identified and valued to specify
their defective condition. All items included in the Inventory are the property
of the Seller, except for sales made in the ordinary course of business since
the date of this Agreement, and for each of these sales either the purchaser has
made full and complete payment therefor or the purchaser's liability to make
full and complete payment therefor is specified on the books and records of the
Seller. No item included in such Inventory has been pledged as collateral or are
held by the Seller on consignment from other persons or are currently subject to
any such interest or claim. The Inventory specified on the Seller's books and
records is based on quantities determined by physical count or measurement and
are valued at the lower of cost, determined on a last-in, first-out basis, or
realizable market value.
4.7 Conduct of Business in Compliance with Regulatory and Contractual
Requirements. The Seller has conducted and is conducting its business in
compliance with all applicable laws. Neither the real or personal properties
owned, leased, operated or occupied by the Seller nor the use, operation or
maintenance thereof, nor any of the Acquired Assets, nor their use, operation or
maintenance (i) violates any laws, or (ii) violates any restrictive or similar
covenant, agreement, commitment, understanding or arrangement.
4.8 Real Property. Schedule 4.8 to this Agreement, which, by this
reference, is made a part of this Section 4.8, as though specified verbatim in
this Section 4.8, specifies a complete and accurate description of all interests
in real property owned or claimed by the Seller. Other than as specified in that
Schedule 4.8, the Seller does not own or have any interest in any real property.
4.9 Condition of Personal Property. The Seller has sole and exclusive, good
and
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merchantable title to all of the personal property owned by it, free and clear
of all pledges, claims, liens, restrictions, security interests, charges and
other encumbrances. All of such personal property is in good repair and good
operating condition, fit for its intended purposes, and is adequate for the
continuation of the Acquired Business.
4.10 Insider Transactions. Schedule 4.10 to this Agreement, which, by this
reference, is made a part of this Section 4.10, as though specified verbatim in
this Section 4.10, specifies a complete and accurate list of the following:
4.10.1 The amounts and other essential terms of indebtedness or other
obligations, agreements, undertakings, Liabilities or commitments
(contingent or otherwise) of the Seller to or from any past or present
officer, director, member, stockholder or any person related to,
controlling, controlled by or under common control with any of the
foregoing ("Seller's Control Persons").
4.10.2 All transactions between each Seller's Control Person and the
Seller since the Seller's date of incorporation and during all times
thereafter, and all proposed or contemplated transactions with each
Seller's Control Person, together with the essential terms thereof.
4.11 Adverse Conditions. The Seller has no knowledge of any present or
future condition, state of facts or circumstances which has affected or may
affect adversely the Acquired Business or prevent the Purchaser from conducting
the Acquired Business.
4.12 Complete Disclosure. This Agreement (including the exhibits and
schedules attached to this Agreement) does not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained herein not misleading. There is no fact known to the Seller
which is not disclosed in this Agreement which materially adversely affects the
accuracy of the representations and warranties specified in this Agreement or
the Acquired Assets. The Seller knows of no fact which has not been disclosed to
the Purchaser in writing with respect to the Acquired Assets, Liabilities,
financial condition or performance of the Seller which could reasonably be
anticipated to have a material adverse effect upon the Acquired Assets,
financial condition, operation, operating results, customer relations, employee
relations or business prospects of the Acquired Business.
4.13 No Bribes or Kickbacks. The Seller has not, directly or indirectly,
paid or delivered any fee, commission, or other money, funds, or property,
however characterized, to any person or Entity, in the United States or any
other country, and the Seller does not know and does not have reason to believe
that any conduct by the Seller, or any of its officers, directors, employees,
agents, or representatives, or any of them, is or has been illegal pursuant to
any federal, state, or local law of the United States or any other country
having jurisdiction of such conduct. Neither the Seller nor any of its officers,
directors, employees, agents, or representatives, has participated, directly or
indirectly, in any boycott or other similar practice affecting any of the actual
or potential customers of the Seller. The Seller has at all times done business
in an open and ethical manner.
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4.14 Uncollectible Receivables. All Receivables specified in the books and
records of the Seller are collectable completely in the ordinary course of the
Seller's business.
4.15 Liens on Assets and Properties. Schedule 4.15 to this Agreement,
which, by this reference, is made a part of this Section 4.15, as though
specified verbatim in this Section 4. 15, specifies a complete and accurate list
of all liens, leases, pledges, encumbrances, equities, claims pursuant to
bailment and storage requirements, charges and restrictions (except for liens,
if any, for personal property taxes not delinquent) regarding the Acquired
Assets. All of the Acquired Assets are in good operating condition, ordinary
wear and tear excepted, and are capable of utilization by the Purchaser in the
ordinary course of the Purchaser's business.
4.16 Governmental Investigations. No material investigation or review by
any governmental entity with respect to the Acquired Business or any of the
Acquired Assets or the use thereof is pending or, to the best of the knowledge
of the Seller, threatened (other than inspections and reviews customarily made
of businesses such as the Acquired Business, nor has any governmental entity
indicated to the Seller an intention to conduct the same.
4.17 Employees, Etc. Schedule 4.17 to this Agreement, which, by this
reference, is made a part of this Section 4.17, as though specified verbatim in
this Section 4.17, specifies and describes all employment and severance
agreements to which the Seller is a party. Other than as specified in that
Section 4.17, there are no collective bargaining, bonus, profit sharing,
compensation, or other plans, agreements, trusts, funds, or arrangements
maintained by the Seller for the benefit of directors, officers or employees of,
or whose principal responsibilities relate to, the Acquired Business, and there
are no employment, consulting, severance, or indemnification arrangements,
agreements, or understandings between the Seller, on the one hand, and any
current or former directors, officers or other employees (or Affiliates thereof)
of, or whose principal responsibilities relate to, the Acquired Business, on the
other hand. The Seller is not, and following the Closing will not be, obligated
by any express or implied contract or agreement to employ, directly or as a
consultant or otherwise, any person for any specific period of time or until any
specific age.
4.18 Compliance With Laws. The Acquired Business and each of the Acquired
Assets is in substantial compliance with all, and has received no notice of any
violation of any, laws or regulations applicable to its operations, including,
without limiting the generality of the foregoing, the laws and regulations
relevant to the use or utilization of premises, or with respect to which
compliance is a condition of engaging in any aspect of the business of the
Acquired Business, and the Acquired Business has all permits, licenses, zoning
rights, and other governmental authorizations necessary to conduct its business
as presently conducted. All such permits, licenses, zoning rights, and other
governmental authorizations will, as a part and consequence of the Transaction,
be transferred to the Purchaser at the Closing.
4.19 Ownership of Acquired Assets. The Seller has good, marketable and
insurable title, or valid, effective and continuing leasehold rights in the case
of leased property, to all real property (as to which, in the case of owned
property, such title is fee simple) and all personal property owned or leased by
it and comprising a part of the Acquired Assets or the Acquired
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Business, or used by it in the conduct of the Acquired Business in such a manner
as to create the appearance or reasonable expectation that the same is owned or
leased by it; such ownership is free and clear of all liens, claims,
encumbrances and charges, except liens for taxes not yet due and minor
imperfections of title and encumbrances, if any, which, singly and in the
aggregate, are not substantial in amount and do not materially detract from the
value of the property subject thereto or materially impair the use thereof; no
other person has any ownership or similar right in, or contractual or other
right to acquire any such right in, any of such assets; and such ownership will
be conveyed to the Purchaser at the Closing pursuant to the Transaction. The
Seller does not know of any potential action by any party, governmental or
other, and no proceedings with respect thereto have been instituted of which the
Seller has notice, that would materially affect the Purchaser's ability to use
and to utilize each of such assets in the business of the Acquired Business. The
Seller has received no notices from any mortgagee regarding any leased
properties of the Acquired Business, or the leasehold interest in which
comprises any part of the Acquired Assets.
4.20 Proprietary Rights. The Seller possesses full ownership of, or
adequate and enforceable long-term licenses or other rights to use (without
payment), all Proprietary Rights used in the Acquired Business or utilized in
conjunction with the Acquired Assets, and all such ownership, license or other
rights shall be conveyed to the Purchaser at the Closing pursuant to the
Transaction; the Seller has not received any notice of conflict which asserts
the rights of others with respect thereto; and Seller has in all material
respects performed all of the obligations required to be performed by it, and is
not in default in any material respect, pursuant to any agreement relating to
any such Proprietary Right.
4.21 Trade Names. Schedule 4.21 to this Agreement, which, by this
reference, is made a part of this Section 4.21, as though specified verbatim in
this Section 4.21, specifies accurately and completely each trade name,
fictitious business name, or other similar name pursuant to which the Seller has
conducted any part of the Acquired Business or in which the Seller and each of
its predecessors has utilized any of the Acquired Assets during the ten (10)
years preceding the date of this Agreement.
4.22 Employee Benefit Plans.
4.22.1 The Seller does not maintain or contribute to any Pension Plan
or any Welfare Plan, nor is the Seller presently, nor has it been within
the last six (6) years, a participating employer in any Multiemployer Plan,
affecting, in any case, employees of the Acquired Business or employees of
the Seller whose principal activities relate to the Acquired Business.
4.22.2 All Pension Plans and Welfare Plans of the Seller affecting
employees of the Acquired Business or employees of the Seller whose
principal activities relate to the Acquired Business, have been
administered in substantial compliance with their terms, ERISA and, where
applicable, the Code. The IRS has issued a favorable determination letter
with respect to the qualification of each such Pension Plan and the
exemption of any corresponding trust. A copy of the
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most recent determination letter for each such Pension Plan has been
furnished to Purchaser, and nothing has occurred since the date of any such
determination letter that could cause the relevant Pension Plan or trust to
lose such qualification or exemption.
4.22.3 With respect to each Pension Plan or Welfare Plan affecting
employees of the Acquired Business or employees of the Seller whose
principal activities relate to the Acquired Business: (i) there is no fact,
including, without limitation, any Reportable Event, that exists that would
constitute grounds for termination of such Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such plan, in each case as contemplated by ERISA; (ii) neither
the Seller nor any fiduciary, trustee or administrator of any such Pension
Plan or Welfare Plan, has engaged in a Prohibited Transaction that could
subject the Seller to any material tax or any material penalty imposed by
ERISA or the Code; (iii) the Seller has not incurred any material liability
to the PBGC (other than for payment of premiums); and (iv) there is no
material Accumulated Funding Deficiency with respect to any Pension Plan,
whether or not waived.
4.22.4 There has been no Plan Termination that has occurred during the
five-year period ending on the date of this Agreement affecting employees
of the Acquired Business or employees of the Seller whose principal
activities relate to the Acquired Business.
4.22.5 The Seller has no any knowledge of any material liability being
incurred under Title IV of ERISA by the Seller with respect to any Pension
Plan maintained by a trade or business (whether or not incorporated) which
is under common control with, or part of a controlled group of corporations
with, the Seller, within the meaning of Sections 414(b) or (c) of the Code
and affecting employees of the Acquired Business or employees of the Seller
whose principal activities relate to the Acquired Business.
4.22.6 No Welfare Plan affecting employees of the Acquired Business or
employees of the Seller whose principal activities relate to the Acquired
Business is funded with a trust or other funding vehicle, other than
insurance policies.
4.22.7 There has occurred no Complete Withdrawal or Partial Withdrawal
with respect to any Multiemployer Plan affecting employees of the Acquired
Business or employees of the Seller whose principal activities relate to
the Acquired Business that could cause the Acquired Business or any part
thereof or any of the Acquired Assets to be exposed or subjected to any
material liability, or any lien or similar charge in relation to any
liability, pursuant to or as a result of ERISA and all payments required to
be made to any such Plan by the Seller under any applicable collective
bargaining agreements have been made.
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4.23 Acquired Facilities. The Acquired Facilities are (as to physical plant
and structure) structurally sound and none of the Acquired Facilities, nor any
of the vehicles or other equipment used by the Acquired Business in connection
with its business, has any material defects and all of them are in all material
respects in good operating condition and repair and are adequate for the uses to
which they are being put; none of such Acquired Facilities, vehicles or other
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs which are not material in nature or cost. The Seller is
not in breach, violation or default of any lease affecting the Acquired Business
or the Acquired Assets with respect to, or as a result of, which the other party
(whether lessor, lessee, sublessor, or sublessee) thereto has the right to
terminate such lease, and the Seller has not received notice of any claim or
assertion that it is or may be in any such breach, violation or default.
4.24 Contracts. The Acquired Assets and the Acquired Business are not
parties to or affected by any contracts, agreements or understandings, whether
express or implied, written or verbal; provided, however, that the Acquired
Assets or the Acquired Business may be parties to or affected by any such
contracts, agreements, or understandings that fall into one of the following
categories: (a) those that are terminable on notice of less than thirty-two (32)
days and do not involve payments or obligations of more than Two Thousand Five
Hundred Dollars ($2,500.00) in any period of thirty-one (31) days or less (on
termination or otherwise); or (b) those that involve aggregate payment or
obligation remaining unpaid as of the date of the Agreement of less than Ten
Thousand Dollars ($10,000.00). The Seller is not a party to any executory
contract to sell or transfer any part of any leasehold interest included in the
Acquired Assets or utilized by the Acquired Business. True and accurate copies
of all such leases, and of all amendments, supplements, extensions and
modifications thereof, have heretofore been delivered to the Purchaser by the
Seller.
4.25 Accounts Payable. The accounts payable presented on the books of the
Seller at the time of the Closing will present all amounts owed by the Seller in
respect of trade accounts due and other Payables of the Acquired Business or
relating to the Acquired Assets, and the actual Liability of the Seller in
respect of such obligations was not, and will not be, on any of such dates, in
excess of the amounts so presented on the balance sheets or the books of the
Acquired Business, as the case may be.
4.26 Labor Matters. There are no activities or controversies, including,
but not limited to, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the best
of the knowledge of the Seller, threatened, affecting employees of the Acquired
Business or employees of the Seller.
4.27 Insurance. Schedule 4.27 to this Agreement, which, by this reference,
is made a part of this Section 4.27, as though specified verbatim in this
Section 4.27, is a complete and accurate description of all insurance policies
maintained by the Seller, which are in full force and effect and which insure
the Acquired Business, and such insurance policies provide for coverages which
are usual and customary in the business of the Acquired Business as to amount
and scope, and are adequate to protect the Acquired Business against any
reasonably foreseeable
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risk of loss, including business interruption. The Seller has not within the
past three (3) years received any notice of cancellation of any insurance
agreement affecting the Acquired Assets or the Acquired Business.
ARTICLE V
COVENANTS OF THE PURCHASER
The Purchaser hereby affords the Seller the following covenants, thereby
agreeing to do or not to do, as the case may be, the following, the fulfillment
of each of which shall constitute a condition precedent to the obligations of
the Seller created by the provisions of this Agreement.
5.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Purchaser will take every action reasonably required of it in
order to satisfy the conditions to Closing specified in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated, provided in all instances
that the representations and warranties of the Seller in this Agreement are and
remain true and accurate and that the covenants and agreements of the Seller in
this Agreement are performed and that the conditions to the obligations of the
Purchaser specified in this Agreement are not incapable of satisfaction.
5.2 Cooperation. The Purchaser shall cooperate with the Seller and its
counsel, accountants and agents in every way in consummating the Transaction,
and in delivering all documents and instruments deemed reasonably necessary or
useful by the Seller.
5.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Purchaser in connection with this Agreement and the
Transaction shall be paid by the Purchaser.
5.4 Publicity. Prior to the Closing any written news releases by the
Purchaser pertaining to this Agreement or the Transaction shall be submitted to
the Seller for review and approval prior to release by the Purchaser, and shall
be released only in a form approved by the Seller; provided, however, that (a)
such approval shall not be unreasonably withheld, and (b) such review and
approval shall not be required of releases by the Purchaser, if prior review and
approval would prevent the timely and accurate dissemination of such press
release as required to comply, in the judgment of counsel, with any applicable
law, rule or policy.
5.5 Updating of Exhibits and Schedules. The Purchaser shall notify the
Seller of any changes, additions or events which may cause any change in or
addition to any schedules or exhibits delivered by it pursuant to this
Agreement, promptly after the occurrence of the same and at the Closing by the
delivery of updates of all schedules and exhibits. No notification made pursuant
to this section shall be deemed to cure any breach of any representation or
warranty made in this Agreement, unless the Seller specifically agrees thereto
in writing nor shall any such notification be considered to constitute or result
in a waiver by the Seller of any condition
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specified in this Agreement.
5.6 Confidential Information. Unless and until the Closing has been
consummated, the Purchaser and its representatives will hold in strict
confidence, and will not use to the detriment of the Seller any data and
information with respect to the business of the Seller obtained in connection
with this Agreement. If the Transaction is not consummated, the Purchaser will
return to the Seller all that data and information that the Seller may
reasonably request, including, but not limited to, worksheets, test reports,
manuals, lists, memoranda, and other documents prepared by or made available to
the Purchaser in connection with the Transaction.
ARTICLE VI
COVENANTS OF THE SELLER
The Seller hereby affords the Purchaser the following covenants, thereby
agreeing to do or not to do, as the case may be, the following, the fulfillment
of each of which shall constitute a condition precedent to the obligations of
the Purchaser created by the provisions of this Agreement.
6.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Seller will take every action reasonably required of it to
satisfy the conditions to closing specified in this Agreement and otherwise to
ensure the prompt and expedient consummation of the Transaction substantially as
contemplated by the provisions of this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated, provided in all instances
that the representations and warranties of the Purchaser in this Agreement are
and remain true and accurate and that the covenants and agreements of the
Purchaser in this Agreement are performed and that the conditions to the
obligations of the Seller specified in this Agreement are not incapable of
satisfaction and subject, at all times, to the right and ability of the
directors of the Seller to satisfy their fiduciary obligations.
6.2 Name. The Seller agrees that following consummation of the Transaction,
neither it nor any Entity under its control or affiliated with it shall make any
attempt to make any use of any name pursuant to which the Acquired Business has
conducted business, or authorize others to do so, without the consent of the
Purchaser.
6.3 Access and Information. The Seller shall afford to the Purchaser and to
the Purchaser's representatives reasonable access during normal business hours
throughout the period prior to the Closing to all of its properties, books,
contracts, commitments, records, including, but not limited to, tax returns, and
personnel relating to the Acquired Assets or the Acquired Business and, during
such period, the Seller shall furnish promptly to the Purchaser (a) all written
communications to its directors or to its shareholders generally relating to the
Acquired Assets or the Acquired Business, (b) internal monthly financial
statements the Acquired Business when and as available, and (c) all other
information relating to the Acquired Assets or the Acquired Business as the
Purchaser may reasonably request, but no investigation pursuant to this section
shall affect any representations or warranties of the Seller, or the conditions
to the obligations of the Purchaser to consummate the Transaction specified by
the provisions of this Agreement. In the event of the termination of this
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Agreement, the Purchaser will, and will cause its representatives to, deliver to
the Seller or destroy all documents, work papers, and other material, and all
copies thereof, obtained by it or on its behalf from the Seller as a result of
this Agreement or in connection herewith, whether so obtained before or after
the execution hereof, and will hold in confidence all confidential information
that has been designated as such by the Seller in writing or by appropriate and
obvious notation, and will not use any such confidential information except in
connection with the Transaction, until such time as such information is
otherwise publicly available. Purchaser and its representatives shall assert
their rights created by this section in such manner as to minimize interference
with the business of the Seller.
6.4 No Solicitation. The Seller and those persons and Entities acting on
behalf of any of Seller will not, and the Seller will use its best efforts to
cause its officers, employees, agents, and representatives (including any
investment banker) not, directly or indirectly, to solicit, encourage, or
initiate any discussions with, or negotiate or otherwise deal with, or provide
any information to, any person or Entity, other than the Purchaser and its
officers, employees, and agents, relating to the Acquired Assets or the Acquired
Business. The Seller will notify the Purchaser immediately upon receipt of any
inquiry, offer or proposal relating to any of the foregoing. None of the
foregoing shall prohibit providing information to others in a manner in keeping
with the ordinary conduct of the Seller's business, or providing information to
government authorities.
6.5 Conduct of Acquired Business Pending the Transaction. Prior to the
consummation of the Transaction or the termination of this Agreement pursuant to
its terms, unless the Purchaser shall otherwise consent in writing, which
consent shall not be unreasonably withheld or delayed, and except as otherwise
contemplated by this Agreement, the Seller will comply with each of the
following:
6.5.1 The Acquired Business, and the other businesses of the Seller
that relate to, use or affect the Acquired Assets, if any, will be
conducted only in the ordinary and usual course, the Seller shall use
reasonable efforts to keep intact the business organization and goodwill of
the Acquired Business, keep available the services of the employees of the
Acquired Business and of the employees of the Seller whose principal
activities relate to the Acquired Business and maintain good relationships
with suppliers, lenders, creditors, distributors, employees, customers and
others having business or financial relationships with the Acquired
Business, and it shall immediately notify the Purchaser of any event or
occurrence or emergency material to, and not in the ordinary and usual
course of business of, the Acquired Business or affecting any material part
of the Acquired Assets.
6.5.2 The Seller shall not shall create, incur or assume any long-term
or short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting the Acquired
Business or any of the Acquired Assets.
6.5.3 The Seller shall not (a) adopt, enter into, or amend any bonus,
profit sharing, compensation, stock option, warrant, pension, retirement,
deferred compensation, employment, severance, termination, or other
employee benefit plan, agreement, trust fund, or arrangement for the
benefit or welfare of any employees of the Acquired Business or
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employees of the Seller, or (b) agree to any material (in relation to
historical compensation) increase in the compensation payable or to become
payable to, or any increase in the contractual term of employment of, any
such employee except, with respect to employees who are not officers or
directors, in the ordinary course of business in accordance with past
practice.
6.5.4 The Seller shall not sell, lease, mortgage, encumber, or
otherwise dispose of or grant any interest in any of the Acquired Assets
except for liens for taxes not yet due or liens or encumbrances that are
not material in amount or effect and do not impair the use of the Acquired
Assets, or as specifically provided for or permitted in this Agreement.
6.5.5 The Seller shall not enter into, or terminate, any material
contract, agreement, commitment, or understanding relating to or affecting
the Acquired Assets or the Acquired Business.
6.5.6 The Seller shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of the
matters referred to in Paragraphs 6.5.1 through 6.5.5, inclusive, of this
Section 6.5.
6.5.7 The Seller shall continue properly and promptly to file when due
all federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it relating to the Acquired Assets or
the Acquired Business, and will pay, or make full and adequate provision
for the payment of, all taxes and governmental charges due from or payable
by it relating to the Acquired Assets or the Acquired Business.
6.5.8 The Seller shall comply with all laws and regulations applicable
to the operations of the Acquired Business and the utilization of the
Acquired Assets.
6.5.9 The Seller shall maintain in full force and effect insurance
coverage relating to the Acquired Assets or the Acquired Business of a type
and amount customary in the business of the Acquired Business (but not less
than that presently in effect).
6.6 Cooperation. The Seller will cooperate with the Purchaser and its
agents in every way in consummating the Transaction and in delivering all
documents and instruments deemed reasonably necessary or useful by the
Purchaser.
6.7 Seller's Acquisition Intention. The Consideration will be acquired by
the Seller (a) for the Seller's own account as a principal and not as a nominee
or as an agent; (b) for investment purposes only; and (c) with no contemplation
of, or for resale regarding, any distribution or public offering of all or any
portion of the Consideration within the meaning of the Securities Act. The
Seller has no intention, agreement or arrangement to divide the Consideration
with any other person or Entity or to sell, assign, transfer, convey or
otherwise dispose of all or any part of the Consideration unless and until the
Seller determines, at some future date, changed circumstances, not in
contemplation at the time of the acquisition of the Consideration, make such
disposition advisable.
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6.8 Exemption from Registration. The Seller understands that the
Consideration (a) has not been registered pursuant to the provisions of the
Securities Act by reason of the issuance of the Subject Stock in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act pursuant to the provisions of Section 4(2) and Section 4(6) of
the Securities Act and the rules and regulations promulgated pursuant thereto;
(b) must be held by the Seller indefinitely, unless a subsequent disposition of
the Consideration is registered pursuant to the provisions of the Securities Act
or is exempt from such registration; and (c) has not been qualified pursuant to
the requirements of the applicable state securities laws ("Blue Sky Law") by
reason of the issuance of the Consideration in a transaction exempt from the
registration and qualification requirements of the Blue Sky Law. the rules and
regulations promulgated pursuant thereto.
6.9 Seller's Financial and Business Experience. By reason of the Seller's
financial and business experience, the Seller could be assumed reasonably to
have the capacity to protect the Seller's own interests in the Transaction.
6.10 Material and Information about the Purchaser. The Seller has had
access to such material and information about the Purchaser, the Purchaser's
financial condition and the Purchaser's business prospects as the Seller has
requested reasonably.
6.11 No Advertising. The Seller has not been furnished with any advertising
or offering literature regarding the acquisition of the Consideration.
6.12 Response to Inquiries. The officers and directors of the Purchaser
have answered all inquiries the Seller has asked of such officers and directors
concerning the Seller and the Purchaser's proposed activities and all other
matters regarding the acquisition of the Consideration.
6.13 Evaluation of Risks. The Seller has such knowledge and experience in
business and financial matters that the Seller is capable of evaluating the
Purchaser and the proposed activities thereof, the risks and merits of the
Consideration and of making an informed decision thereon, and the Seller is not
utilizing any other person regarding the evaluation of those risks and merits.
6.14 Continued Action Regarding Exemption. The Seller shall take any and
all additional action which is necessary or appropriate to maintain the
exemptions from registration and qualification provided by Section 4(2) and
Section 4(6) of the Securities Act and similar or applicable provisions of the
Blue Sky Law.
6.15 Negotiations with Other Persons. The Seller will not initiate,
encourage the initiation by any other person, or participate in any discussions
or negotiations with any other persons relating to the sale or other disposition
of any of the Acquired Assets, and will promptly notify the Purchaser if any
person initiates such discussions or negotiations with the Seller.
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6.16 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Seller in connection with this Agreement and the
Transaction shall be paid by the Seller.
6.17 Publicity. Prior to the Closing any written news releases by the
Seller pertaining to this Agreement or the Transaction shall be submitted to the
Purchaser for review and approval prior to release by the Seller, and shall be
released only in a form approved by the Purchaser; provided, however, that (1)
such approval shall not be unreasonably withheld and (2) such review and
approval shall not be fired of releases by the Seller if prior review and
approval would prevent the timely and accurate dissemination of such press
release required to comply, in the judgment of counsel, with any applicable rule
or policy.
6.18 Updating of Exhibits and Schedules. The Seller shall notify the
Purchaser of any changes, additions, or events which cause any change in or
addition to any schedules or exhibits delivered by it pursuant to the provisions
of this Agreement promptly after the occurrence of the same and again at the
Closing by delivery of appropriate updates to all such schedules and exhibits.
No such notification made pursuant to this section shall be deemed to cure any
breach of any representation or warranty such notification be considered by the
Purchaser of any
6.19 Payment of Unassumed Liabilities. The Seller agrees promptly to pay
when due, or otherwise to discharge, without cost or expense to the Purchaser,
each and every Liability of the Seller that it specifically assumed by the
Purchaser pursuant to this Agreement, as described in Section 2.1 of this
Agreement.
6.20 Further Assurances. On the Closing, the Seller shall deliver to the
Purchaser such additional instruments and documents as may be reasonably
necessary to close and consummate the Transaction and to evidence a fulfillment
of the obligations of the Seller specified by the provisions of this Agreement
and exhibits and schedules to this Agreement and the performance by the Seller
in all material respects of all conditions to the consummation of the
Transaction.
6.21 Taxes. The Seller has properly filed or caused to be filed all
federal, state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law to be filed by it and that
relate to or in any way affect the Acquired Business or the Acquired Assets, and
has paid, or made full and adequate provision for the payment of, all federal,
state, local, and foreign income and other taxes properly due for the periods
covered by such returns, reports, and declarations.
6.22 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Seller to the Purchaser
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made, in the light of
the circumstances under which they are made, not misleading.
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Purchaser. The obligations of the
Purchaser to purchase the Acquired Assets are subject to the satisfaction, at or
before the Closing, of all the conditions specified below in this Section 7.1.
The Purchaser may waive any or all of those conditions, in whole or in part,
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by the Purchaser of any of its other rights or
remedies, at law or in equity, if the Seller shall be in default of any of its
representations, warranties, or covenants specified by the provisions of this
Agreement.
7.1.1 This Agreement and the Transaction shall have received all
approvals, consents, authorizations, and waivers from governmental and
other regulatory agencies and other third parties, including lenders,
holders of debt securities and lessors, required to consummate the
Transaction.
7.1.2 There shall not be in effect a preliminary or permanent
injunction or other order by any federal or state court which prohibits the
consummation of the Transaction.
7.1.3 The Seller shall have performed in all material respects each of
its agreements and obligations specified by the provisions of this
Agreement and required to be performed on or prior to the Closing and shall
have complied with all material requirements, rules, and regulations of all
regulatory authorities having jurisdiction relating to the Transaction.
7.1.4 No material adverse change shall, in the reasonable judgment of
the Purchaser, have taken place in the business, condition, financial or
otherwise, operations, or prospects of the Acquired Business or the
Acquired Assets since the date of this Agreement other than those, if any,
that result from the changes permitted by this Agreement.
7. 1.5 The representations and warranties of the Seller specified in
this Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as, in the reasonable judgment
of the Purchaser, do not materially and adversely affect the business,
condition, financial or otherwise, operations, or prospects of the Acquired
Business or the Acquired Assets, as of the Closing Time as if made as of
such time.
7.1.6 The Purchaser shall have received from the Seller an officer's
certificate, executed by the Chief Executive Officer and the Chief
Financial Officer of the Seller, in their capacities as such, dated the
Closing Date, as to the satisfaction of the conditions in Paragraphs 7.1.3,
7.1.4, and 7.1.5 of this Agreement.
7.1.7 Purchaser shall have received from each lessor or lessee with
whom the Seller has a material (as reasonably determined by the Purchaser)
lease of real property,
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which lease or real property comprises part of the Acquired Assets,
certificates satisfactory in form and substance to the Purchaser as to the
continuing validity of such leases and the absence of any basis for the
termination thereof.
7.1.8 The number of shares of common stock of the Seller held by
persons who have evidenced an intent to exercise dissenters' rights of
appraisal, if such rights are available to them, shall not be in excess of
five percent (5 %) of the outstanding shares of the common stock of the
Seller.
7.1.9 No governmental agency or private party shall have threatened or
instituted any action, suit or proceeding before any court or
administrative body which seeks to enjoin, questions the legality of, or
may materially and adversely affect such transaction.
7.1.10 There shall exist no conditions, restrictions or reservations
affecting the title to or utility of Acquired Assets, including any
assignment of any lease, which would prevent the Purchaser from occupying
and utilizing the Purchaser's assets, or any portion thereof, to the same
full extent that Seller might continue to do if the Transaction did not
occur.
7.1.11 The Purchaser shall have received such additional instruments
and documents as may be reasonably necessary to close and consummate the
Transaction and to evidence the fulfillment by the Seller of the agreements
of the Seller specified by the provisions of this Agreement and the
exhibits to this Agreement and the performance in all material respects of
all conditions to the consummation of the Transaction.
7.2 Conditions to Obligation of the Seller. The obligations of the Seller
to issue, sell, assign, transfer, convey and deliver the Acquired Assets are
subject to the satisfaction, at or before the Closing, of all the following
conditions. The Seller may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by the Seller of any of its other rights or remedies,
at law or in equity, if the Purchaser should be in default of any of its
representations, warranties, or covenants specified by the provisions of this
Agreement.
7.2.1 This Agreement and the Transaction shall have received all
approvals, consents, authorizations, and waivers from governmental and
other regulatory agencies and other third parties, including lenders,
holders of debt securities, lessors, and the shareholders of the Seller,
required by law to consummate the Transaction.
7.2.2 There shall not be in effect a preliminary or permanent
injunction or other order by any federal or state authority which prohibits
the consummation of the Transaction.
7.2.3 The Purchaser shall have performed in all material respects its
agreements and obligations specified by the provisions of this Agreement
required to be performed on or prior to the Closing.
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7.2.4 The representations and warranties of the Purchaser specified in
this Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as do not materially and
adversely affect the business of the Purchaser, taken as a whole, as of the
Closing Date as if made as of such time.
7.2.5 The Seller shall have received from the Purchaser an officers'
certificate, executed by the Chief Financial Officer and the Chief
Executive Officer of the Purchaser, in their capacities as such, dated the
Closing Date, as to the satisfaction of the conditions of Paragraphs 7.2.3
and 7.2.4 of this Agreement.
7.3 Documents to be Delivered at Closing.
7.3.1 Purchaser to the Seller. On the Closing Date, the Purchaser
shall deliver the following instruments and documents to the Seller.
7.3.1.1 Certificate Representing the Consideration.
7.3.1.2 Officers' certificate pursuant to the provisions of
Paragraph 7.2.5 of this Agreement.
7.3.2 Seller to the Purchaser. On the Closing Date, the Seller shall
deliver to the Purchaser the following instruments and documents:
7.3.2.1 A Bill of Sale, executed by the President and the
Secretary of the Seller, pursuant to which title to the Acquired
Assets is transferred to and vested in the Purchaser.
7.3.2.2 All consents necessary to the Transaction.
7.3.2.3 Officers' certificate pursuant to the provisions of
Paragraph 7.1.6 of this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification By the Seller. The Seller shall defend, indemnify and
hold harmless the Purchaser, its officers, directors, stockholders,
representatives, agents, accountants, attorneys, servants and employees, and
their respective heirs, personal and legal representatives, guardians,
successors and assigns, from and against any and all claims, threats,
liabilities, taxes, interest, fines, penalties, suits, actions, proceedings,
demands, damages, losses, costs and expenses (including attorneys and experts'
fees and court costs) of every kind and nature arising out of, resulting from,
or in connection with:
8.1.1. Any misrepresentation or breach by the Seller of any
representation or warranty specified in this Agreement.
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8.1.2. Any nonfulfillment, failure to comply or breach by the Seller
of or with any covenant, promise or agreement of the Seller specified in
this Agreement.
8.1.3. Any act, matter or thing prior to the Closing Date.
8.2. Indemnification by the Purchaser. The Purchaser shall defend,
indemnify and hold harmless the Seller and its respective heirs, personal and
legal representatives, guardians, successors and assigns, from and against any
and all claims, threats, liabilities, taxes, interest, fines, penalties, suits,
actions, proceedings, demands, damages, losses, costs and expenses (including
attorneys' and experts' fees and court costs) of every kind and nature arising
out of, resulting from, or in connection with:
8.2.1. Any misrepresentation, omission or breach by the Purchaser of
any representation or warranty specified in this Agreement.
8.2.2. Any nonfulfillment, failure to comply or breach by the
Purchaser of or with any covenant, promise or agreement of the Purchaser
specified in this Agreement.
ARTICLE IX
SECURITIES AND SECURITY HOLDERS
9.1 Meeting of Shareholders. As soon as practicable after the execution of
this Agreement, the Seller will, in conjunction with the Purchaser, commence
activities toward soliciting from the shareholders of the Seller written
consents of such shareholders of the Transaction. Such activities shall include,
without limitation, preparation of the a written consent statement ("Consent
Statement"); establishing the date for shareholders entitled to consent
regarding the Transaction; complying with applicable legal requirements pursuant
to state law and the Exchange Act, if applicable, regarding the giving of notice
as to such date; mailing a Consent Statement and consent form (ballot) to
shareholders; and in all other respects taking all action required by law to
authorize the consummation of the Transaction insofar as authorization thereof
by shareholders is required.
9.2 Consent Statement. The Consent Statement, including, but not limited
to, the contents thereof, and the timing and manner of use thereof, will comply
with all requirements of the Exchange Act, if applicable, and of any state law
applicable thereto, and, without limiting the foregoing, will not, at the time
the same is mailed to shareholders, contain any untrue statement of a material
fact regarding the Seller or omit to state any material fact necessary to make
the statements regarding the Seller therein, considering the circumstances
pursuant to which they are made, not misleading.
ARTICLE X
TERMINATION, AMENDMENT, WAIVER
10.1 Termination. This Agreement and the Transaction may be terminated at
any time prior to the Closing, whether before or after any approval by
shareholders:
10.1.1 By mutual consent of the Purchaser and the Seller; or
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10.1.2 By either Purchaser or the Seller, upon written notice to the
other, if the conditions to such party's obligations to consummate the
Transaction, in the case of Purchaser, as specified in Section 7.1 of this
Agreement, or, in the case of the Seller, as specified in Section 7.2 of
this Agreement, were not, or cannot reasonably be, satisfied on or before
October 31, 1998, unless the failure of condition is the result of the
material breach of this Agreement by the party seeking to terminate.
10.2 Amendment. This Agreement may be amended by the Seller and the
Purchaser by action taken at any time, but after the Transaction has been
approved by the shareholders of the Seller no amendment shall be made which
materially reduces the Consideration or which in any way materially and
adversely affects the rights of the Seller or its shareholders without the
further approval of such shareholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of the Seller and the Purchaser.
10.3 Waiver. At any time prior to the Closing Date, the Purchaser or the
Seller, by action taken by their respective Boards of Directors may (a) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or (c)
waive compliance with any of the agreements or conditions specified by the
provisions of this Agreement. Any agreement on the part of a party to this
Agreement to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE XII
GENERAL PROVISIONS
11.1. Notices. Any notice, direction or instrument required or permitted to
be given pursuant to this Agreement shall be given in writing by (a) telegram,
facsimile transmission or similar method, if confirmed by mail as herein
provided, by mail; (b) if mailed postage prepaid, by certified mail, return
receipt requested; or (iii) hand delivery to any party at the addresses of the
parties specified, below. If given by telegram or facsimile transmission or
similar method or by hand delivery, such notice, direction or instrument shall
be deemed to have been given or made on the day on which it was given, and if
mailed, shall be deemed to have been given or made on the second (2nd) business
day following the day after which it was mailed. Any party may, from time to
time by similar notice, give notice of any change of address, and in such event,
the address of such party shall be deemed to be changed accordingly. The
address, telephone number and facsimile transmission number for the notice of
each party are:
If to Seller: Fenway Resources Ltd.
1013 Centre Road
Wilmington, Delaware 19899
If to Purchaser: Nevada/Utah Gold, Inc.
2485 East Lake Blvd.
Carson City, Nevada 89704
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11.2. Recovery of Enforcement Costs. In the event any party shall institute
any action or proceeding to enforce any provision of this Agreement to seek
relief from any violation of this Agreement, or to otherwise obtain any judgment
or order relating to or arising from the subject matter of this Agreement, each
prevailing party shall be entitled to receive from each losing party such
prevailing party's actual attorneys' fees and costs incurred to prosecute or
defend such action or proceeding.
11.3. Assignment. No party shall have the right, without the consent of the
other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer, or delegation shall be
null and void.
11.4. Captions and Interpretations. Captions of the articles, sections and
paragraphs of this Agreement are for convenience and reference only, and the
works specified therein shall in no way be held to explain, modify, amplify or
aid in the interpretation, construction, or meaning of the provisions of this
Agreement. The language in all parts to this Agreement, in all cases, shall be
construed in accordance with the fair meaning of that language as if prepared by
all parties and not strictly for or against any party. Each party and counsel
for such party have reviewed this Agreement. The rule of construction, which
requires a court to resolve any ambiguities against the drafting party, shall
not apply in interpreting the provisions of this Agreement.
11.5 Entire Agreement. This Agreement and the exhibits to this Agreement
are the final written expression and the complete and exclusive statement of all
the agreements, conditions, promises, representations, warranties and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person, with respect to the subject matter specified in this Agreement. No
provision of any exhibit or schedule to this Agreement shall supersede or annul
the terms and provisions of this Agreement, unless the matter specified in such
exhibit or schedule shall explicitly so provide to the contrary, in the event of
ambiguity in meaning or understanding between the provisions of this Agreement
proper and the appended exhibits or schedules, the provisions of this Agreement
shall prevail and control in all instances.
11.6 Choice of Law and Consent to Jurisdiction. This Agreement shall be
deemed to have been entered into in the State of Nevada. All questions
concerning the validity, interpretation, or performance of any of the terms,
conditions and provisions of this Agreement or of any of the rights or
obligations of the parties shall be governed by, and resolved in accordance
with, the laws of the State of Nevada without regard to conflicts of law
principles.
11.7 Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa.
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11.8 Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this article, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
11.9 Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
11.10 Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
11.11 Governmental Rules and Regulations. The transactions contemplated by
the provisions of this Agreement are and shall remain subject to any and all
present and future orders, rules and regulations of any duly constituted
authority having jurisdiction of that transaction.
11.12 Execution in Counterparts. This Agreement may be prepared in multiple
copies and forwarded to each of the parties for execution. All of the signatures
of the parties may be affixed to one copy or to separate copies of this
Agreement and when all such copies are received and signed by all the parties,
those copies shall constitute one agreement which is not otherwise separable or
divisible. Counsel for the Purchaser shall keep all of such signed copies and
shall conform one copy to show all of those signatures and the dates thereof and
shall mail a copy of such conformed copy to each of the parties within thirty
(30) days after the receipt by such counsel of the last signed copy, and such
counsel shall cause one such conformed copy to be filed in the principal office
of such counsel.
11.13 Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of any party, its agents, trustees, officers, or employees and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to any non-waiving party specifying such waiver, and
each party reserves such party's rights to insist upon strict compliance
herewith at all times.
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11.14 Survival of Covenants, Representations and Warranties. All covenants,
representations, and warranties made by each party to this Agreement shall be
deemed made for the purpose of inducing the other party to enter into and
execute this Agreement. The representations, warranties, and covenants specified
in this Agreement shall survive the Closing and shall survive any investigation
by either party whether before or after the execution of this Agreement. The
covenants, representations, and warranties of the Seller and the Purchaser are
made only to and for the benefit of the other and shall not create or vest
rights in other persons.
11.15 Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. the termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
11.16 De Minimis Claims. No party to this Agreement shall bring any action
against the other party with respect to the subject matter of this Agreement
unless the aggregate amount of all claims so brought in relation to the subject
matter of this Agreement exceeds One Hundred Thousand Dollars ($100,000.00);
provided, however, that the foregoing shall not prevent or preclude actions
seeking injunctive or other equitable forms of relief.
11.17 Force Majeure. a. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the continuance of the event of "force
majeure." The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve, eliminate and terminate the event of "force
majeure" as quickly as practicable.
b. The requirement that an event of "force majeure" shall be remedied with
all reasonable dispatch as hereinabove specified, shall not require the
settlement of strikes, lockouts or other labor difficulties by the party
involved, contrary to such party's wishes, and the resolution of any and all
such difficulties shall be handled entirely within the discretion of the party
concerned.
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c. The term "force majeure" as used herein shall be defined as and mean any
act of God, strike, civil disturbance, lockout or other industrial disturbance,
act of the public enemy, war, blockage, public riot, earthquake, tornado,
hurricane, lightening, fire, epidemics, quarantine restrictions, public
demonstration, storm, flood, explosion, freight embargoes, governmental action,
governmental delay, restraint or inaction, unavailability of equipment, default
of a party's subcontractors or suppliers, and any other cause or event, whether
of the kind enumerated specifically herein, or otherwise, which is not
reasonably within the control of the party claiming such suspension.
11.18 Consent to Agreement. By executing this Agreement, each party, for
itself represents such party has read or caused to be read this Agreement in all
particulars, and consents to the rights, conditions, duties and responsibilities
imposed upon such party as specified in this Agreement. Each party represents,
warrants and covenants that such party executes and delivers this Agreement of
its own free will and with no threat, undue influence, menace, coercion or
duress, whether economic or physical. Moreover, each party represents, warrants,
and covenants that such party executes this Agreement acting on such party's own
independent judgment.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed
on the date first written above by their respective officers thereunto duly
authorized.
The Purchaser:
Nevada/Utah Gold, Inc.,
a Nevada corporation
By: /s/ [ILLEGIBLE]
-------------------------
Its: President
By: /s/ [ILLEGIBLE]
-------------------------
Its: Secretary
The Seller:
Fenway Resources Ltd.,
a Delaware corporation
By: /s/ [ILLEGIBLE]
-------------------------
Its: President
By: /s/ [ILLEGIBLE]
-------------------------
Its: Secretary
31
FENWAY RESOURCES LTD.
(the "Company")
NOTICE OF DISCLOSURE
To: The Board of Directors of the Company
Notwithstanding execution of the attached Resolution by the undersigned in order
to comply with Section 149 of the Company Act (British Columbia), this Notice
shall serve to confirm that the undersigned has abstained from voting on the
said Resolution and hereby gives notice that the undersigned is a director of
the Company and as such is interested in the subject matter of the said
Resolution to which this Notice is attached.
Dated at Vancouver, British Columbia, this lst day of September, 1995.
/s/ H. John Wilson
- ------------------
H. John Wilson
<PAGE>
September 1, 1995
Fenway Resources Ltd.
#303-409 Granville Street
Vancouver, British Columbia
V6C 1T2
Dear Sirs:
Re: Fenway Resources Ltd. (the "Company");
Employment Agreement dated September 1, 1995
--------------------------------------------
With respect to the Employment Agreement dated as of September 1, 1995 between
ourselves, the undersigned hereby agrees that, with respect to the Compensation
and other benefits ("Benefits") payable to the undersigned, as defined and/or
set out in such Employment Agreement:
1. to defer such Compensation and Benefits until such time as the Board of
Directors of the Company, in its discretion, deems it appropriate to pay
the full amount of the Compensation and Benefits;
2. until such time as the Compensation and Benefits referred to in paragraph
#1 above are paid in full, the undersigned will accept such remuneration
from the Company as is acceptable to the Board of Directors of the Company
and is within the applicable guidelines of the regulatory authorities
having jurisdiction over the securities of the Company.
Yours very truly
/s/ H. John Wilson
- ---------------------------
H. John Wilson
Witness:
/s/ [ILLEGIBLE]
- ---------------------------
Agreed to and accepted by
FENWAY RESOURCES LTD. this
1st day September, 1995.
/s/ [ILLEGIBLE]
- ---------------------------
Authorized Signatory
/s/ [ILLEGIBLE]
- ---------------------------
Authorized Signatory
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 1st day of September, 1995.
BETWEEN:
FENWAY RESOURCES LTD., of
#303-409 Granville Street
Vancouver, British Columbia
V6C 1T2;
(hereinafter called the "Company")
OF THE FIRST PART
AND:
H. JOHN WILSON, of
574 Clearwater Way
Coquitlam, British Columbia
V3C 5W3;
(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. the Company has requested the Employee to act as a director, chief executive
officer and president of the Company;
B. the Employee has agreed to act as a director, chief executive officer and
president of the Company, upon the terms and conditions hereafter set out;
NOW THEREFORE this Agreement witnesseth that in consideration of the premises
and for other good and valuable consideration and the mutual covenants herein
contained, the Parties hereto hereby covenant and agree as follows:
1. INTERPRETATION
1.1 For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) "Company" shall mean Fenway Resources Ltd., or any successor company
however formed, whether as a result of merger, amalgamation, or other
action, and shall include any corporation associated with the Company
in any manner
<PAGE>
2
whatsoever which may require or receive any benefits from the Employee
in the nature described in this Agreement;
(b) "this Agreement" means this Employment Agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions hereof;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular paragraph, subparagraph or other subdivision;
1.2 The headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the scope, extent
or intent of this Agreement or any portion hereof.
1.3 A reference to a statute includes all regulations made pursuant thereto, all
amendments to such statute or regulations enforced from time to time and any
statute or regulation which supplements or supercedes such statute or
regulation.
1.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia, and in accordance with the rules and
guidelines of the governing securities regulatory bodies.
1.5 Wherever the singular or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine or neuter when the
context so requires.
1.6 All currency referred to herein is currency of Canada.
2. ENGAGEMENT AND TERM OF EMPLOYMENT
2.1 The Company hereby agrees to employ the Employee as President and Chief
Executive Officer of the Company to serve during the Term of Employment (as
hereinafter defined) upon and subject to the terms and conditions hereinafter
set out, and the Employee hereby accepts such employment upon such terms and
conditions.
2.2 The "Term of Employment" as used herein shall mean that period beginning on
September 1, 1995 and continuing to August 31, 2000 or until this Agreement is
terminated as defined in Paragraph 4 hereof, renewable by mutual consent of the
Employee and the Company for successive five (5) year periods.
<PAGE>
3
2.3 Subject as only herein provided, during the Term of Employment, the Employee
shall be appointed by the Company and shall act as President and Chief Executive
Officer of the Company to carry out the policies and programs as established by
the Board of Directors of the Company and the Employee shall have all such
powers and shall be entitled to exercise all such authority as are customarily
held and exercised by a president and/or chief executive officer of a company
carrying on similar types of businesses that are carried on by the Company.
2.4 The Employee shall at all times during the Term of Employment, excepting
during periods of vacation or when disabled by sickness or incapacity,
faithfully and diligently perform his duties and promote and advance the
business and affairs of the Company.
2.5 Nothing in this Agreement shall be construed as preventing the Employee from
providing management services and other services of any nature whatsoever to any
other person, firm or corporation during the Term of Employment.
3. REMUNERATION
3.1 During the Term of Employment, the Company shall pay or cause to be paid to
the Employee for his services hereunder the sum of $400,000 per annum (the
"Compensation"), payable in arrears in twelve (12) equal installments,
commencing September 1, 1995, until the Employee requests payment to be made on
some other basis. The Company shall pay the said sum to the Employee by way of
salary or bonus, as the Employee, in his sole discretion, may determine.
3.2 The Board of Directors of the Company shall in the month of August in each
year of the Term of Employment, review the Employee's total remuneration and
may, at its sole discretion, adjust his Compensation.
3.3 In addition to the said Compensation, the Employee shall receive from the
Company during the Term of Employment:
(a) payment or reimbursement of all approved out-of-pocket expenses
payable or incurred by the Employee in connection with his duties
under this Agreement. Such payments or reimbursements shall be made
immediately upon submission by the Employee of vouchers, bills or
receipts for such expenses;
(b) all reasonable travelling expenses incurred by the Employee in the
course of his duties as President and Chief Executive Officer of the
Company;
<PAGE>
4
(c) rights and benefits under any profit sharing, deferred compensation,
stock appreciation rights, stock option and other plans or programs
adopted by the Company comparable to rights and benefits under such
plans and programs as are customarily granted to persons holding
similar positions as that held by the Employee, or performing duties
similar to those performed by the Employee in corporations of similar
size that carry on a similar type of business as that carried on by
the Company.
3.4 If the Employee's ability to perform his duties hereunder has been impaired
by illness or mental or physical disability, which illness or disability has
been certified by a doctor's certificate, then the Company shall, unless the
Employee's employment hereunder has been terminated, pay the Employee the
following:
(a) the Compensation for the remainder of the Term of Employment, payable
monthly after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all of the benefits provided for pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4. TERMINATION
4.1 If at any time during the Employee's employment hereunder, the Board of
Directors of the Company shall determine that the Employee shall be guilty of
any misconduct that would constitute just cause for his dismissal, the Company
may terminate the Employee's employment on giving ninety (90) days previous
written notice or pay in lieu of such notice to the Employee and, upon such
termination, the Employee shall be entitled to any unpaid remuneration and
expenses (if any) provided herein.
4.2 Notwithstanding the provisions of Paragraph 3.4 hereof, the Employee's
employment hereunder may be terminated by the Company at any time upon six (6)
months previous written notice.
4.3 The Employee may terminate his employment with the Company at any time on
ninety (90) days written notice.
4.4 In the event of the Company terminating the Employee's employment pursuant
to the provisions of Paragraph 4.2 hereof, the Company shall pay to or provide
for the Employee the following:
(a) within thirty (30) days of such termination, the Compensation and
other remuneration for the remainder of
<PAGE>
5
the Term of Employment, plus Consideration for one (1) month's salary
for every year of service as damages and compensation for loss of
office and for the termination of this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
4.5 In the event of the Employee terminating his employment hereunder pursuant
to the provisions of Paragraph 4.3 hereof, the Company shall pay to or provide
for the Employee within thirty (30) days of such termination the Compensation
and other remuneration to the date of termination.
4.6 If the Employee's employment hereunder shall terminate by reason of the
death of the Employee, then the Compensation and other remuneration payable to
him as herein provided and any benefit or welfare plan extended to widows or to
the Employee's estate shall continue to be payable to the Employee's widow or
estate, as the case may be, for the remainder of the Term of Employment.
4.7 If the Employee's employment hereunder is terminated by illness or mental or
physical disability, which illness or disability has been certified by a
doctor's certificate, then the Company shall pay to or provide to the Employee
following:
(a) the Compensation for the remainder of the Term of Employment, payable
monthly, after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4.8 The Company shall not amalgamate, merge or consolidate with any other person
or corporation or undertake with any other person or corporation any corporate
change including the sale, transfer or other disposition of all the assets or
substantially all the assets of the Company unless or until such person or
corporation shall have expressly assumed the Compapy's obligations to the
Employee hereunder, or the Company pays to the Employee:
(a) within thirty (30) days of the closing of any such transaction, the
Compensation and other remuneration to the date of termination, plus
Consideration equal to five-years Compensation, payable immediately
upon the closing of any such transaction, or as otherwise directed
<PAGE>
6
by the Employee, in his sole discretion, as damages and compensation
for loss of office and for the termination of this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
5. LEGAL COSTS
The Company will pay, on a solicitor and client basis, all legal costs
(including fees and disbursements) incurred by the Employee in connection with
the preparation and negotiation of this Agreement.
6. SEVERABILITY
If any provision of this Agreement is unenforceable or invalid for any reason
whatsoever, such provision shall be severable from the remainder of this
Agreement and the validity of the remainder shall continue in full force and
effect and be construed as if this Agreement had been executed without the
invalid or unenforceable provision.
7. WAIVER
No consent or waiver, express or implied, by any Party to or of any breach or
default by any other Party of any or all of its obligations under this Agreement
will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this Paragraph;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this Paragraph in any other or subsequent instance.
<PAGE>
7
8. NOTICE
All notices, requests, payments, demands or directions to the Parties hereto
shall be in writing and delivered or sent by registered mail postage prepaid, or
by telex, telecopy, telegram or cable addressed as follows:
If to the Employee:
To his address set out on Page 1 of this Agreement
If to the Company:
To its address set out on Page 1 of this Agreement
or to such other address as may be specified by one Party to the other in a
notice given in the manner herein provided. Any notice, request, demand or
direction given in such manner shall be deemed to have been received by the
Party to whom it is given:
(a) On the 7th business day following the mailing thereof, if sent by
registered mail;
(b) On the 2nd business day following delivery, if delivered; or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
If normal mail service, telex service or telegraph service is interrupted by
strike, slowdown, force majeure or other cause, notice, request, demand or
direction sent by the impaired means of communication will not be deemed to be
received until actually received, and the Party sending the notice, request,
demand or direction shall utilize any other such services which have not been
interrupted or shall deliver such notice, request, demand or direction in order
to ensure prompt receipt thereof.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the Parties and there
are no representations or warranties, express or implied, statutory or otherwise
or no agreements collateral hereto other than expressly set forth or referred to
herein.
10. ASSIGNMENT
This Agreement is a personal services agreement and may not be assigned by
either Party without the prior written consent of the other Party; PROVIDED
HOWEVER, that during the Term of Employment
<PAGE>
8
the Employee may, by written assignment, assign all or any portion of the
Compensation to which he is entitled under this Agreement to any member of his
immediate family or to any corporation, partnership or other business entity
controlled by the Employee.
11. BINDING EFFECT
This Agreement shall be binding upon and enure to the benefit of the Parties and
their respective heirs, personal representatives, successors and assigns, except
as otherwise expressly provided herein.
12. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or any
breach of this Agreement shall be finally settled by arbitration in accordance
with the provisions of the Arbitration Act of British Columbia.
13. INDEMNITY
The Company shall at all times indemnify and save harmless the Employee and his
heirs and legal representatives, from and against all costs, legal and other
fees, charges and expenses as they occur or are agreed, including any amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director, President or
Chief Executive Officer of the Company, if he acted honestly and in good faith
with a view to the best interests of the Company, and otherwise in accordance
with the By-laws of the Company.
14. GENERAL PROVISIONS
14.1 The Parties hereto will, from time to time, at the request of the other,
execute and deliver all such other and additional instruments, notices,
releases, agreements, undertakings or other required documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the carrying out of the intent and purpose of the terms of this Agreement.
14.2 This Agreement may be amended by mutual consent of both Parties hereto and
any such amendment to be effective must be rendered to writing and executed by
the Parties.
<PAGE>
9
14.3 In the event that any Party is delayed or hindered in the performance of
its obligations hereunder by force majeure, this Agreement shall remain in
suspense until the cause thereof has ceased to delay or hinder performance. For
the purposes of this Agreement, but not by way of limitation, force majeure
shall mean any cause beyond the reasonable control of the Party liable to
perform, and shall include strikes, lockouts, civil commotion, riot, war, threat
of or preparation for war, fire, explosion, sabotage, storm, flood, earthquake
or other natural disaster.
14.4 The Parties hereto acknowledge that this Agreement was reached between
themselves directly with the form of agreement prepared by Sobolewski Anfield
acting as counsel to the Company, and that the Employee has been advised to
obtain independent legal advice with respect to his rights and obligations under
this Agreement.
15. EXECUTION IN COUNTERPART
This Agreement may be executed in several parts in the same form and such parts
as so executed shall together form one original agreement and such parts if more
than one shall be read together and construed as if all the signing Parties
hereto had executed one copy of this Agreement.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day
and year first above written.
THE CORPORATE SEAL OF )
FENWAY RESOURCES LTD )
was hereunto affixed in the )
presence of: )
)
)
/s/ A. Leonard Taylor ) c/s
- ---------------------- )
Authorized Signatory )
)
)
/s/ [ILLEGIBLE] )
- ---------------------- )
Authorized Signatory )
)
)
The Signature of )
The Employee )
was hereby witnessed by: )
)
/s/ [ILLEGIBLE] )
- ---------------------- ) /s/ H. JOHN WILSON
) ---------------------
) H. JOHN WILSON
<PAGE>
FENWAY RESOURCES LTD.
(the "Company")
NOTICE OF DISCLOSURE
To: The Board of Directors of the Company
Notwithstanding execution of the attached Resolution by the undersigned in order
to comply with Section 149 of the Company Act (British Columbia), this Notice
shall serve to confirm that the undersigned has abstained from voting on the
said Resolution and hereby gives notice that the undersigned is a director of
the Company and as such is interested in the subject matter of the said
Resolution to which this Notice is attached.
Dated at Vancouver British Columbia, this 1st day of September, 1995.
/s/ A. Leonard Taylor
- -----------------------------
A. Leonard Taylor
FENWAY RESOURCES LTD.
(the "Company")
NOTICE OF DISCLOSURE
To: The Board of Directors of the Company
Notwithstanding execution of the attached Resolution by the undersigned in order
to comply with Section 149 of the Company Act (British Columbia), this Notice
shall serve to confirm that the undersigned has abstained from voting on the
said Resolution and hereby gives notice that the undersigned is a director of
the Company and as such is interested in the subject matter of the said
Resolution to which this Notice is attached.
Dated at Vancouver, British Columbia, this 1st day of September, 1995.
/s/ A. Leonard Taylor
- -----------------------------
A. Leonard Taylor
<PAGE>
D1-13
September 1, 1995
Fenway Resources Ltd.
#303-409 Granville Street
Vancouver, British Columbia
V6C 1T2
Dear Sirs:
Re: Fenway Resources Ltd. (the "Company");
Employment Agreement dated September 1, 1995
- --------------------------------------------------------
With respect to the Employment Agreement dated as of September 1, 1995 between
ourselves, the undersigned hereby agrees that, with respect to the Compensation
and other benefits ("Benefits") payable to the undersigned, as defined and/or
set out in such Employment Agreement:
1. to defer such Compensation and Benefits until such time as the Board of
Directors of the Company, in its discretion, deems it appropriate to pay
the full amount of the Compensation and Benefits;
2. until such time as the Compensation and Benefits referred to in paragraph
#1 above are paid in full, the undersigned will accept such remuneration
from the Company as is acceptable to the Board of Directors of the Company
and is within the applicable guidelines of the regulatory authorities
having jurisdiction over the securities of the Company.
Yours very truly
/s/ A. Leonard Taylor
- -----------------------------
A. Leonard Taylor
Witness:
/s/ Arthur J. Magill
- -----------------------------
Agreed to and accepted by
FENWAY RESOURCES LTD. this
1st day of September, 1995.
/s/ H. John Wilson
- -----------------------------
Authorized Signatory
/s/ Laurie G. Maranda
- -----------------------------
Authorized Signatory
<PAGE>
D1-14
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 1st day of September, 1995.
BETWEEN:
FENWAY RESOURCES LTD., of
#303-409 Granville Street
Vancouver, British Columbia
V6C 1T2;
(hereinafter called the "Company")
OF THE FIRST PART
AND:
A. LEONARD TAYLOR, of
#4-2206 Folkstone Way
West Vancouver, British Columbia
V7S 2X7;
(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. the Company has requested the Employee to act as a director, chief financial
officer and secretary of the Company;
B. the Employee has agreed to act as a director, chief financial officer and
secretary of the Company, upon the terms and conditions hereafter set out;
NOW THEREFORE this Agreement witnesseth that in consideration of the premises
and for other good and valuable consideration and the mutual covenants herein
contained, the Parties hereto hereby covenant and agree as follows:
1. INTERPRETATION
1.1 For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) "Company" shall mean Fenway Resources Ltd., or any successor company
however formed, whether as a result of merger, amalgamation, or other
action, and shall include any corporation associated with the Company
in any manner
<PAGE>
D1-15
2
whatsoever which may require or receive any benefits from the Employee
in the nature described in this Agreement;
(b) "this Agreement" means this Employment Agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions hereof;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular paragraph, subparagraph or other subdivision;
1.2 The headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the scope, extent
or intent of this Agreement or any portion hereof.
1.3 A reference to a statute includes all regulations made pursuant thereto, all
amendments to such statute or regulations enforced from time to time and any
statute or regulation which supplements or supercedes such statute or
regulation.
1.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia, and in accordance with the rules and
guidelines of the governing securities regulatory bodies.
1.5 Wherever the singular or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine or neuter when the
context so requires.
1.6 All currency referred to herein is currency of Canada.
2. ENGAGEMENT AND TERM OF EMPLOYMENT
2.1 The Company hereby agrees to employ the Employee as Chief Financial Officer
and Secretary of the Company to serve during the Term of Employment (as
hereinafter defined) upon and subject to the terms and conditions hereinafter
set out, and the Employee hereby accepts such employment upon such terms and
conditions.
2.2 The "Term of Employment" as used herein shall mean that period beginning on
September 1, 1995 and continuing to August 31, 2000 or until this Agreement is
terminated as defined in Paragraph 4 hereof, renewable by mutual consent of the
Employee and the Company for successive five (5) year periods.
<PAGE>
D1-16
3
2.3 Subject as only herein provided, during the Term of Employment, the Employee
shall be appointed by the Company and shall act as Chief Financial Officer and
Secretary of the Company to carry out the policies and programs as established
by the Board of Directors of the Company and the Employee shall have all such
powers and shall be entitled to exercise all such authority as are customarily
held and exercised by a chief financial officer and/or secretary of a company
carrying on similar types of businesses that are carried on by the Company.
2.4 The Employee shall at all times during the Term of Employment, excepting
during periods of vacation or when disabled by sickness or incapacity,
faithfully and diligently perform his duties and promote and advance the
business and affairs of the Company.
2.5 Nothing in this Agreement shall be construed as preventing the Employee from
providing management services and other services of any nature whatsoever to any
other person, firm or corporation during the Term of Employment.
3. REMUNERATION
3.1 During the Term of Employment, the Company shall pay or cause to be paid to
the Employee for his services hereunder the sum of $300,000 per annum (the
"Compensation"), payable in arrears in twelve (12) equal installments,
commencing September 1, 1995, until the Employee requests payment to be made on
some other basis. The Company shall pay the said sum to the Employee by way of
salary or bonus, as the Employee, in his sole discretion, may determine.
3.2 The Board of Directors of the Company shall in the month of August in each
year of the Term of Employment, review the Employee's total remuneration and
may, at its sole discretion, adjust his Compensation.
3.3 In addition to the said Compensation, the Employee shall receive from the
Company during the Term of Employment:
(a) payment or reimbursement of all approved out-of-pocket expenses
payable or incurred by the Employee in connection with his duties
under this Agreement. Such payments or reimbursements shall be made
immediately upon submission by the Employee of vouchers, bills or
receipts for such expenses;
(b) all reasonable travelling expenses incurred by the Employee in the
course of his duties as Chief Financial Officer and Secretary of the
Company;
<PAGE>
D1-17
4
(c) rights and benefits under any profit sharing, deferred compensation,
stock appreciation rights, stock option and other plans or programs
adopted by the Company comparable to rights and benefits under such
plans and programs as are customarily granted to persons holding
similar positions as that held by the Employee, or performing duties
similar to those performed by the Employee in corporations of similar
size that carry on a similar type of business as that carried on by
the Company.
3.4 If the Employee's ability to perform his duties hereunder has been impaired
by illness or mental or physical disability, which illness or disability has
been certified by a doctor's certificate, then the Company shall, unless the
Employee's employment hereunder has been terminated, pay the Employee the
following:
(a) the Compensation for the remainder of the Term of Employment, payable
monthly after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all of the benefits provided for pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4. TERMINATION
4.1 If at any time during the Employee's employment hereunder, the Board of
Directors of the Company shall determine that the Employee shall be guilty of
any misconduct that would constitute just cause for his dismissal, the Company
may terminate the Employee's employment on giving ninety (90) days previous
written notice or pay in lieu of such notice to the Employee and, upon such
termination, the Employee shall be entitled to any unpaid remuneration and
expenses (if any) provided herein.
4.2 Notwithstanding the provisions of Paragraph 3.4 hereof, the Employee's
employment hereunder may be terminated by the Company at any time upon six (6)
months previous written notice.
4.3 The Employee may terminate his employment with the Company at any time on
ninety (90) days written notice.
4.4 In the event of the Company terminating the Employee's employment pursuant
to the provisions of Paragraph 4.2 hereof, the Company shall pay to or provide
for the Employee the following:
(a) within thirty (30) days of such termination, the Compensation and
other remuneration for the remainder of
<PAGE>
D1-18
5
the Term of Employment, plus Consideration for one (1) month's salary
for every year of service as damages and compensation for loss of
office and for the termination of this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
4.5 In the event of the Employee terminating his employment hereunder pursuant
to the provisions of Paragraph 4.3 hereof, the Company shall pay to or provide
for the Employee within thirty (30) days of such termination the Compensation
and other remuneration to the date of termination.
4.6 If the Employee's employment hereunder shall terminate by reason of the
death of the Employee, then the Compensation and other remuneration payable to
him as herein provided and any benefit or welfare plan extended to widows or to
the Employee's estate shall continue to be payable to the Employee's widow or
estate, as the case may be, for the remainder of the Term of Employment.
4.7 If the Employee's employment hereunder is terminated by illness or mental or
physical disability, which illness or disability has been certified by a
doctor's certificate, then the Company shall pay to or provide to the Employee
following:
(a) the Compensation for the remainder of the Term of Employment, payable
monthly, after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4.8 The Company shall not amalgamate, merge or consolidate with any other person
or corporation or undertake with any other person or corporation any corporate
change including the sale, transfer or other disposition of all the assets or
substantially all the assets of the Company unless or until such person or
corporation shall have expressly assumed the Company's obligations to the
Employee hereunder, or the Company pays to the Employee:
(a) within thirty (30) days of the closing of any such transaction, the
Compensation and other remuneration to the date of termination, plus
Consideration equal to five-years Compensation, payable immediately
upon the closing of any such transaction, or as otherwise directed
<PAGE>
D1-19
6
by the Employee, in his sole discretion, as damages and compensation
for loss of office and for the termination of this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
5. LEGAL COSTS
The Company will pay, on a solicitor and client basis, all legal costs
(including fees and disbursements) incurred by the Employee in connection with
the preparation and negotiation of this Agreement.
6. SEVERABILITY
If any provision of this Agreement is unenforceable or invalid for any reason
whatsoever, such provision shall be severable from the remainder of this
Agreement and the validity of the remainder shall continue in full force and
effect and be construed as if this Agreement had been executed without the
invalid or unenforceable provision.
7. WAIVER
No consent or waiver, express or implied, by any Party to or of any breach or
default by any other Party of any or all of its obligations under this Agreement
will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this Paragraph;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this Paragraph in any other or subsequent instance.
<PAGE>
D1-20
7
8. NOTICE
All notices, requests, payments, demands or directions to the Parties hereto
shall be in writing and delivered or sent by registered mail postage prepaid, or
by telex, telecopy, telegram or cable addressed as follows:
If to the Employee:
To his address set out on Page 1 of this Agreement
If to the Company:
To its address set out on Page 1 of this Agreement
or to such other address as may be specified by one Party to the other in a
notice given in the manner herein provided. Any notice, request, demand or
direction given in such manner shall be deemed to have been received by the
Party to whom it is given:
(a) On the 7th business day following the mailing thereof, if sent by
registered mail;
(b) On the 2nd business day following delivery, if delivered; or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
If normal mail service, telex service or telegraph service is interrupted by
strike, slowdown, force majeure or other cause, notice, request, demand or
direction sent by the impaired means of communication will not be deemed to be
received until actually received, and the Party sending the notice, request,
demand or direction shall utilize any other such services which have not been
interrupted or shall deliver such notice, request, demand or direction in order
to ensure prompt receipt thereof.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the Parties and there
are no representations or warranties, express or implied, statutory or otherwise
or no agreements collateral hereto other than expressly set forth or referred to
herein.
10. ASSIGNMENT
This Agreement is a personal services agreement and may not be assigned by
either Party without the prior written consent of the other Party; PROVIDED
HOWEVER, that during the Term of Employment
<PAGE>
D1-21
8
the Employee may, by written assignment, assign all or any portion of the
Compensation to which he is entitled under this Agreement to any member of his
immediate family or to any corporation, partnership or other business entity
controlled by the Employee.
11. BINDING EFFECT
This Agreement shall be binding upon and enure to the benefit of the Parties and
their respective heirs, personal representatives, successors and assigns, except
as otherwise expressly provided herein.
12. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or any
breach of this Agreement shall be finally settled by arbitration in accordance
with the provisions of the Arbitration Act of British Columbia.
13. INDEMNITY
The Company shall at all times indemnify and save harmless the Employee and his
heirs and legal representatives, from and against all costs, legal and other
fees, charges and expenses as they occur or are agreed, including any amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director, Chief Financial
Officer or Secretary of the Company, if he acted honestly and in good faith with
a view to the best interests of the Company, and otherwise in accordance with
the By-laws of the Company.
14. GENERAL PROVISIONS
14.1 The Parties hereto will, from time to time, at the request of the other,
execute and deliver all such other and additional instruments, notices,
releases, agreements, undertakings or other required documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the carrying out of the intent and purpose of the terms of this Agreement.
14.2 This Agreement may be amended by mutual consent of both Parties hereto and
any such amendment to be effective must be rendered to writing and executed by
the Parties.
14.3 In the event that any Party is delayed or hindered in the performance of
its obligations hereunder by force majeure, this
<PAGE>
D1-22
9
Agreement shall remain in suspense until the cause thereof has ceased to delay
or hinder performance. For the purposes of this Agreement, but not by way of
limitation, force majeure shall mean any cause beyond the reasonable control of
the Party liable to perform, and shall include strikes, lockouts, civil
commotion, riot, war, threat of or preparation for war, fire, explosion,
sabotage, storm, flood, earthquake or other natural disaster.
14.4 The Parties hereto acknowledge that this Agreement was reached between
themselves directly with the form of agreement prepared by Sobolewski Anfield
acting as counsel to the Company, and that the Employee has been advised to
obtain in dependent legal advice with respect to his rights and obligations
under this Agreement.
15. EXECUTION IN COUNTERPART
This Agreement may be executed in several parts in the same form and such parts
as so executed shall together form one original agreement and such parts if more
than one shall be read together and construed as if all the signing Parties
hereto had executed one copy of this Agreement.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day
and year first above written.
THE CORPORATE SEAL OF )
FENWAY RESOURCES LTD. )
was hereunto affixed in the )
presence of: )
)
) c/s
/s/ H. John Wilson )
- ----------------------------- )
Authorized Signatory )
)
/s/ Laurie G. Maranda )
- ----------------------------- )
Authorized Signatory )
)
The Signature of )
The Employee )
was hereby witnessed by: ) /s/ A. Leonard Taylor
) ----------------------------
/s/ Arthur J. Magill ) A. LEONARD TAYLOR
- ----------------------------- )
)
FENWAY RESOURCES LTD.
(the "Company")
NOTICE OF DISCLOSURE
To: The Board of Directors of the Company
Notwithstanding execution of the attached Resolution by the undersigned in order
to comply with Section 149 of the Company Act (British Columbia), this Notice
shall serve to confirm that the undersigned has abstained from voting on the
said Resolution and hereby gives notice that the undersigned is a director of
the Company and as such is interested in the subject matter of the said
Resolution to which this Notice is attached.
Dated at Vancouver, British Columbia, this 1st day of February, 1996.
/s/ R. George Muscroft
- ---------------------------
R. George Muscroft
<PAGE>
February 1, 1996
Fenway Resources Ltd.
#308-409 Granville Street
Vancouver, British Columbia
V6C 1T2
Dear Sirs:
Re: Fenway Resources Ltd. (the "Company");
Employment Agreement dated February 1, 1996
-------------------------------------------
With respect to the Employment Agreement dated as of February 1, 1996 between
ourselves, the undersigned hereby agrees that, with respect to the Compensation
and other benefits ("Benefits") payable to the undersigned, as defined and/or
set out in such Employment Agreement:
1. to defer such Compensation and Benefits until such time as the Board of
Directors of the Company, in its discretion, deems it appropriate to pay
the full amount of the Compensation and Benefits;
2. until such time as the Compensation and Benefits referred to in paragraph
#1 above are paid in full, the undersigned will accept such remuneration
from the Company as is acceptable to the Board of Directors of the Company
and is within the applicable guidelines of the regulatory authorities
having jurisdiction over the securities of the Company.
Yours very truly
/s/ R. George Muscroft
- --------------------------
R. George Muscroft
Witness:
/s/ [ILLEGIBLE]
- --------------------------
Agreed to and accepted by
FENWAY RESOURCES LTD. this
1st day of February 1991.
/s/ [ILLEGIBLE]
- --------------------------
Authorized Signatory
/s/ [ILLEGIBLE]
- --------------------------
Authorized Signatory
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 1st day of February, 1996
BETWEEN,.
FENWAY RESOURCES LTD., of
#308-409 Granville Street
Vancouver, British Columbia
V6C 1T12;
(hereinafter called the "Company")
OF THE FIRST PART
AND:
R. GEORGE MUSCROFT, of
13339 14A Avenue
Surrey, British Columbia
V4A 6116;
(hereinafter called the "Employee,,)
OF THE SECOND PART
WHEREAS:
A. the Company has requested the Employee to act as a director and
Project Manager, Quarrying and Production of the Company;
B. the Employee has agreed to act as a director and Project Manager,
Quarrying and Production, upon the terms and conditions hereafter set
out;
NOW THEREFORE this Agreement witnesseth that in consideration of the
premises and for other good and valuable consideration and the mutual
covenants herein contained, the Parties hereto hereby covenant and agree
as follows:
1. INTERPRETATION
1.1 For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) "Company" shall mean Fenway Resources Ltd., or any successor company
however formed, whether as a result of merger, amalgamation, or other
action, and shall include any corporation associated with the Company
in any manner
<PAGE>
2
whatsoever which may require or receive any benefits from the Employee in
the nature described in this Agreement;
(b) "this Agreement" means this Employment Agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions hereof;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular paragraph, subparagraph or other subdivision;
1.2 The headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the scope, extent
or intent of this Agreement or any portion hereof.
1.3 A reference to a statute includes all regulations made pursuant thereto, all
amendments to such statute or regulations enforced from time to time and any
statute or regulation which supplements or supercedes such statute or
regulation.
1.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia, and in accordance with the rules and
guidelines of the governing securities regulatory bodies.
1.5 Wherever the singular or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine or neuter when the
context so requires.
1.6 All currency referred to herein is currency of Canada.
2. ENGAGEMENT AND TERM OF EMPLOYMENT
2.1 The Company hereby agrees to employ the Employee as Project Manager,
Quarrying and Production to serve during the Term of Employment (as hereinafter
defined) upon and subject to the terms and conditions hereinafter set out, and
the Employee hereby accepts such employment upon such terms and conditions.
2.2 The "Term of Employment" as used herein shall mean that period beginning on
February 1,1996 and continuing to August 31, 2000 or until this Agreement is
terminated as defined in Paragraph 4 hereof renewable by mutual consent of the
Employee and the Company for successive five (5) year periods.
<PAGE>
3
2.3 Subject as only herein provided, during the Term of Employment, the Employee
shall be appointed by the Company and shall act as Project Manager, Quarrying
and Production to carry out the policies and programs as established by the
Board of Directors of the Company and the Employee shall have all such powers
and shall be entitled to exercise all such authority as are customarily held and
exercised by a manager of a company carrying on similar types of businesses that
are carried on by the Company.
2.4 The Employee shall at all times during the Term of Employment, excepting
during periods of vacation or when disabled by sickness or incapacity,
faithfully and diligently perform his duties and promote and advance the
business and affairs of the Company.
2.5 Nothing in this Agreement shall be construed as preventing the Employee from
providing management services and other services of any nature whatsoever to any
other person, firm or corporation during the Term of Employment.
3. REMUNERATION
3.1 During the Term of Employment, the Company shall pay or cause to be paid to
the Employee for his services hereunder the sum of $200,000 per annum (the
"Compensation"), payable in arrears in twelve (12) equal installments,
commencing February 29, 1996, until the Employee requests payment to be made on
some other basis. The Comnpany shall pay the said sum to the Employee by way of
salary or bonus, as the Employee, in his sole discretion, may determine.
3.2 The Board of Directors of the Company shall in the month of August in each
year of the Term of Employment, review the Employee's total remuneration and
may, at its sole discretion, adjust his Compensation.
3.3 In addition to the said Compensation, the Employee shall receive from the
Company during the Term of Employment
(a) payment or reimbursement of all approved out-of-pocket expenses
payable or incurred by the Employee in connection with his duties
under this Agreement. Such payments or reimbursements shall be made
immediately upon submission by the Employee of vouchers, bills or
receipts for such expenses;
(b) all reasonable travelling expenses incurred by the Employee in the
course of his duties as Project Manager, Quarrying and Production;
<PAGE>
4
(c) rights and benefits under any profit sharing, deferred compensation,
stock appreciation rights, stock option and other plans or programs
adopted by the Company comparable to rights and benefits under such
plans and programs as are customarily granted to persons holding
similar positions as that held by the Employee, or performing duties
similar to those performed by the Employee in corporations of similar
size that carry on a similar type of business as that carried on by
the Company.
3.4 If the Employee's ability to perform his duties hereunder has been impaired
by illness or mental or physical disability, which illness or disability has
been certified by a doctor's certificate, then the Company shall, unless the
Employee's employment hereunder has been terminated, pay the Employee the
following:
(a) the Compensation for the remainder of the Term of Employment, payable
monthly after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all of the benefits provided for pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4. TERMINATION
4.1 If at any time during the Employee's employment hereunder, the Board of
Directors of the Company shall determine that the Employee shall be guilty of
any misconduct that would constitute just cause for his dismissal, the Company
may terminate the Employee's employment on giving ninety (90) days previous
written notice or pay in lieu of such notice to the Employee and, upon such
termination, the Employee shall be entitled to any unpaid remuneration and
expenses (if any) provided herein.
4.2 Notwithstanding the provisions of Paragraph 3.4 hereof the Employee's
employment hereunder may be terminated by the Company at any time upon six (6)
months previous written notice.
4.3 The Employee may terminate his employment with the Company at any time on
ninety (90) days written notice.
4.4 in the event of the Company terminating the Employee's employment pursuant
to the provisions of Paragraph 4.2 hereof the Company shall pay to or provide
for the Employee the following:
<PAGE>
5
(a) within thirty (30) days of such termination, the Compensation and
other remuneration for the remainder of the Term of Employment, plus
Consideration for one (1) month's salary for every year of service as
damages and compensation for loss of office and for the termination of
this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
4.5 In the event of the Employee terminating his employment hereunder pursuant
to the provisions of Paragraph 4.3 hereof; the Company shall pay to or provide
for the Employee within thirty (30) days of such termination the Compensation
and other remuneration to the date of termination.
4.6 If the Employee's employment hereunder shall terminate by reason of the
death of the Employee, then the Compensation and other remuneration payable to
him as herein provided and any benefit or welfare plan extended to widows or to
the Employee's estate shall continue to be payable to the Employee's widow or
estate; as the case may be, for the remainder of the Term of Employment
4.7 If the Employee's employment hereunder is terminated by illness or mental or
physical disability, which illness or disability has been certified by a
doctor's certificate, then the Company shall pay to or provide to the Employee
following
(a) the Compensation for the remainder of the Term of Employment, payable
monthly, after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4.8 The Company shall not amalgamate, merge or consolidate with any other person
or corporation or undertake with any other person or corporation any corporate
change including the sale, transfer or other disposition of all the assets or
substantially all the assets of the Company unless or until such person or
corporation shall have expressly assumed the Company's obligations to the
Employee hereunder, or the Company pays to the Employee:
(a) within thirty (30) days of the closing of any such transaction, the
Compensation and other remuneration to the date of termination, plus
Consideration equal to
<PAGE>
6
five-years Compensation, payable immediately upon the closing of any
such transaction, or as otherwise directed by the Employee, in his
sole discretion, as damages and compensation for loss of office and
for the termination of this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
5. LEGAL COSTS
The Company will pay, on a solicitor and client basis, all legal costs
(including fees and disbursements) incurred by the Employee in connection with
the preparation and negotiation of this Agreement.
6. SEVERABILITY
If any provision of this Agreement is unenforceable or invalid for any reason
whatsoever, such provision shall be severable from the remainder of this
Agreement and the validity of the remainder shall continue in full force and
effect and be construed as if this Agreement had been executed without the
invalid or unenforceable provision.
7. WAIVER
No consent or waiver, express or implied, by any Party to or of any breach or
default by any other Party of any or all of its obligations under this Agreement
will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this Paragraph;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement, or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this Paragraph in any other or subsequent instance.
<PAGE>
7
8. NOTICE
All notices, requests, payments, demands or directions to the Parties hereto
shall be in writing and delivered or sent by registered mail postage prepaid, or
by telex, telecopy, telegram or cable addressed as follows:
If to the Employee:
To his address set out on Page 1 of this Agreement If to the
Company:
To its address set out on Page 1 of this Agreement
or to such other address as may be specified by one Party to the other in a
notice given in the manner herein provided. Any notice, request, demand or
direction given in such manner shall be deemed to have been received by the
Party to whom it is given:
(a) On the 7th business day following the mailing thereof; if sent by
registered mail;
(b) on the 2nd business day following delivery, if delivered; or
(c) On the business day following the transmittal thereof; if sent by
telex, telecopy, telegram or cable.
If normal mail service, telex service or telegraph service is interrupted by
strike, slowdown, force majeure or other cause, notice, request, demand or
direction sent by the impaired means of communication will not be deemed to be
received until actually received, and the Party sending the notice, request,
demand or direction shall utilize any other such services which have not been
interrupted or shall deliver such notice, request, demand or direction in order
to ensure prompt receipt thereof
9. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the Parties and there
are no representations or warranties, express or implied, statutory or otherwise
or no agreements collateral hereto other than expressly set forth or referred to
herein.
<PAGE>
8
10. ASSIGNMENT
This Agreement is a personal services agreement and may not be assigned by
either Party without the prior written consent of the other Party; PROVIDED
HOWEVER, that during the Term of Employment the Employee may, by written
assignment, assign all or any portion of the Compensation to which he is
entitled under this Agreement to any member of his immediate family or to any
corporation, partnership or other business entity controlled by the Employee.
11. BINDING EFFECT
This Agreement shall be binding upon and entire to the benefit of the Parties
and their respective heirs, personal representatives, successors and assigns,
except as otherwise expressly provided herein.
12. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or any
breach of this Agreement shall be finally settled by arbitration in accordance
with the provisions of the Arbitration Act of British Columbia.
13. INDEMNITY
The Company shall at all times indemnify and save harmless the Employee and his
heirs and legal representatives, from and against all costs, legal and other
fees, charges and expenses as they occur or are agreed, including any amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director, or Project
Manager, Quarrying and Production, if he acted honestly and in good faith with a
view to the best interests of the Company, and otherwise in accordance with the
By-laws of the Company.
14. GENERAL PROVISIONS
14.1 The Parties hereto will, from time to time, at the request of the other,
execute and deliver all such other and additional instruments, notices,
releases, agreements, undertakings or other required documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the carrying out of the intent and purpose of the terms of this Agreement.
<PAGE>
9
14.2 This Agreement may be amended by mutual consent of both Parties hereto and
any such amendment to be effective must be rendered to writing and executed by
the Parties.
14.3 In the event that any Party is delayed or hindered in the performance of
its obligations hereunder by force majeure, this Agreement shall remain in
suspense until the cause thereof has ceased to delay or hinder performance. For
the purposes of this Agreement, but not by way of limitation, force majeure
shall mean any cause beyond the reasonable control of the Party liable to
perform, and shall include strikes, lockouts, civil commotion, riot, war, threat
of or preparation for war, fire, explosion, sabotage, storm, flood, earthquake
or other natural disaster.
14.4 The Parties hereto acknowledge that this Agreement was reached between
themselves directly with the form of agreement prepared by Sobolewski Anfield
acting as counsel to the Company, and that the Employee has been advised to
obtain independent legal advice with respect to his rights and obligations under
this Agreement.
15. EXECUTION IN COUNTERPART
This Agreement may be executed in several parts in the same form and such parts
as so executed shall together form one original agreement and such parts if more
than one shall be read together and construed as if all the signing Parties
hereto had executed one copy of this Agreement.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day
and year first above written.
THE CORPORATE SEAL OF
FENWAY RESOURCES LTD.
was hereunto affixed in the
presence of:
/s/ [ILLEGIBLE] c/s
- ------------------------
Authorized Signatory
/s/ [ILLEGIBLE]
- ------------------------
Authorized Signatory
The Signature of
The Employee
was hereby witnessed by:
/s/ [ILLEGIBLE] /s/ R. GEORGE MUSCROFT
- ------------------------ ------------------------
R. GEORGE MUSCROFT
FENWAY RESOURCES LTD.
(the "Company")
NOTICE OF DISCLOSURE
To: The Board of Directors of the Company
Notwithstanding execution of the attached Resolution by the undersigned in order
to comply with Section 149 of the Company Act (British Columbia), this Notice
shall serve to confirm that the undersigned has abstained from voting on the
said Resolution and hereby gives notice that the undersigned is a director of
the Company and as such is interested in the subject matter of the said
Resolution to which this Notice is attached.
Dated at Vancouver, British Columbia, this 1st day of February, 1996.
/s/ Laurie G. Maranda
- -------------------------------
Laurie G. Maranda
<PAGE>
February 1, 1996
Fenway Resources Ltd.
#308-409 Granville Street
Vancouver, British Columbia
V6C 1T2
Dear Sirs:
Re: Fenway Resources Ltd. (the "Company");
Employment Agreement dated February 1, 1996
With respect to the Employment Agreement dated as of February 1, 1996 between
ourselves, the undersigned hereby agrees that, with respect to the Compensation
and other benefits ("Benefits") payable to the undersigned, as defined and/or
set out in such Employment Agreement:
1. to defer such Compensation and Benefits until such time as the Board of
Directors of the Company, in its discretion, deems it appropriate to pay
the full amount of the Compensation and Benefits;
2. until such time as the Compensation and Benefits referred to in paragraph
#1 above are paid in full, the undersigned will accept such remuneration
from the Company as is acceptable to the Board of Directors of the Company
and is within the applicable guidelines of the regulatory authorities
having jurisdiction over the securities of the Company.
Yours very truly
/s/ Laurie G. Maranda
- -------------------------------
Laurie G. Maranda
Witness:
/s/ [ILLEGIBLE]
- -------------------------------
Agreed to and accepted by
FENWAY RESOURCES LTD. this
1st day of February, 1996.
/s/ [ILLEGIBLE]
- -------------------------------
Authorized Signatory
/s/ [ILLEGIBLE]
- -------------------------------
Authorized Signatory
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 1st day of February, 1996
BETWEEN:
FENWAY RESOURCES LTD., of
#308-409 Granville Street
Vancouver, British Columbia
V6C 1T2;
(hereinafter called the "Company")
OF THE FIRST PART
AND:
LAURIE C. MARANDA, of
#58-5531 Cornwall Drive
Richmond, British Columbia
V7C 5N7;
(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. the Company has requested the Employee to act as a director and Project
Manager, Quarrying and Production of the Company;
B. the Employee has agreed to act as a director and Project Manager, Quarrying
and Production, upon the terms and conditions hereafter set out;
NOW THEREFORE this Agreement witnesseth that in consideration of the premises
and for other good and valuable consideration and the mutual covenants herein
contained, the Parties hereto hereby covenant and agree as follows:
1. INTERPRETATION
1.1 For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) "Company" shall mean Fenway Resources Ltd., or any successor company
however formed, whether as a result of merger, amalgamation, or other
action, and shall include
<PAGE>
2
any corporation associated with the Company in any manner whatsoever
which may require or receive any benefits from the Employee in the
nature described in this Agreement;
(b) "this Agreement" means this Employment Agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions hereof;
(c) the words "herein" , "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular paragraph, subparagraph or other subdivision;
1.2 The headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the scope, extent
or intent of this Agreement or any portion hereof.
1.3 A reference to a statute includes all regulations made pursuant thereto, all
amendments to such statute or regulations enforced from time to time and any
statute or regulation which supplements or supercedes such statute or
regulation.
1.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia, and in accordance with the rules and
guidelines of the governing securities regulatory bodies.
1.5 Wherever the singulat or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine or neuter when the
context so requires.
1.6 All currency referred to herein is currency of Canada.
2. ENGAGEMENT AND TERM OF EMPLOYMENT
2.1 The Company hereby agrees to employ the Employee as Project Manager,
Quarrying and Production to serve during the Term of Employment (as hereinafter
defined) upon and subject to the terms and conditions hereinafter set out, and
the Employee hereby accepts such employment upon such terms and conditions.
2.2 The "Term of Employment" as used herein shall mean that period beginning on
February 1, 1996 and continuing to August 31, 2000 or until this Agreement is
terminated as defined in Paragraph 4 hereof, renewable by mutual consent of the
Employee and the Company for successive five (5) year periods.
<PAGE>
3
2.3 Subject as only herein provided, during the Term of Employment, the Employee
shall be appointed by the Company and shall act as Project Manager, Quarrying
and Production to carry out the policies and programs as established by the
Board of Directors of the Company and the Employee shall have all such powers
and shall be entitled to exercise all such authority as are customarily held and
exercised by a manager of a company carrying on similar types of businesses that
are carried on by the Company.
2.4 The Employee shall at all times during othe Term of Employment, excepting
during periods of vacation or when disabled by sickness or incapacity,
faithfully and diligently perform his duties and promote and advance the
business and affairs of the Company.
2.5 Nothing in this Agreement shall be construed as preventing the Employee from
providing management services and other services of any nature whatsoever to any
other person, firm or corporation during the Term of Employment.
3. REMUNERATION
3.1 During the Term of Employment, the Company shall pay or cause to be paid to
the Employee for his services hereunder the sum of $200,000 per annum (the
"Compensation"), payable in arrears in twelve (12) equal installments,
commencing February 29, 1996, until the Employee requests payment to be made on
some other basis. The Company shall pay the said sum to the Employee by way of
salary or bonus, as the Employee, in his sole discretion, may determine.
3.2 The Board of Directors of the Company shall in the month of August in each
year of the Term of Employment, review the Employee's total remuneration and
may, at its sole discretion, adjust his Compensation.
3.3 In addition to the said Compensation, the Employee shall receive from the
Company during the Term of Employment:
(a) payment or reimbursement of all approved out-of-pocket expenses
payable or incurred by the Employee in connection with his duties
under this Agreement. Such payments or reimbursements shall be made
immediately upon submission by the Employee of vouchers, bills or
receipts for such expenses;
(b) all reasonable travelling expenses incurred by the Employee in the
course of his duties as Project Manager, Quarrying and Production;
<PAGE>
4
(c) rights and benefits under any profit sharing, deferred compensation,
stock appreciation rights, stock option and other plans or programs
adopted by the Company comparable to rights and benefits under such
plans and programs as are customarily granted to persons holding
similar positions as that held by the Employee, or performing duties
similar to those performed by the Employee in corporations of similar
size that carry on a similar type of business as that carried on by
the Company.
3.4 If the Employee's ability to perform his duties hereunder has been impaired
by illness or mental or physical disability, which illness or disability has
been certified by a doctor's certificate, then the Company shall, unless the
Employee's employment hereunder has been terminated, pay the Employee the
following:
(a) the Compensation for the remainder of the Term of Employment, payable
monthly after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all of the benefits provided for pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4. TERMINATION
4.1 If at any time during the Employee's employment hereunder, the Board of
Directors of the Company shall determine that the Employee shall be guilty of
any misconduct that would constitute just cause for his dismissal, the Company
may terminate the Employee's employment on giving ninety (90) days previous
written notice or pay in lieu of such notice to the Employee and, upon such
termination, the Employee shall be entitled to any unpaid remuneration and
expenses (if any) provided herein.
4.2 Notwithstanding the provisions of Paragraph 3.4 hereof, the Employee's
employment hereunder may be terminated by the Company at any time upon six (6)
months previous written notice.
4.3 The Employee may terminate his employment with the Company at any time on
ninety (90) days written notice.
4.4 In the event of the Company terminating the Employee's employment pursuant
to the provisions of Paragraph 4.2 hereof, the Company shall pay to or provide
for the Employee the following:
<PAGE>
5
(a) within thirty (30) days of such termination, the Compensation and
other remuneration for the remainder of the Term of Employment, plus
Consideration for one (1) month's salary for every year of service as
damages and compensation for loss of office and for the termination of
this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
4.5 In the event of the Employee terminating his employment hereunder pursuant
to the provisions of Paragraph 4.3 hereof, the Company shall pay to or provide
for the Employee within thirty (30) days of such termination the Compensation
and other remuneration to the date of termination.
4.6 If the Employee's employment hereunder shall terminate by reason of the
death of the Employee, then the Compensation and other remuneration payable to
him as herein provided and any benefit or welfare plan extended to widows or to
the Employee's estate shall continue to be payable to the Employee's widow or
estate, as the case may be, for the remainder of the Term of Employment.
4.7 If the Employee's employment hereunder is terminated by illness or mental or
physical disability, which illness or disability has been certified by a
doctor's certificate, then the Company shall pay to or provide to the Employee
following:
(a) the Compensation for the remainder of the Term of Employment, payable
monthly, after deducting therefrom an amount equal to any sickness or
disability payments received by the Employee under the Company's
sickness and disability plan;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment.
4.8 The Company shall not amalgamate, merge or consolidate with any other person
or corporation or undertake with any other person or corporation any corporate
change including the sale, transfer or other disposition of all the assets or
substantially all the assets of the Company unless or until such person or
corporation shall have expressly assumed the Company's obligations to the
Employee hereunder, or the Company pays to the Employee:
(a) within thirty (30) days of the closing of any such transaction, the
Compensation and other remuneration to the date of termination, plus
Consideration equal to
<PAGE>
6
five-years Compensation, payable immediately upon the closing of any
such transaction, or as otherwise directed by the Employee, in his
sole discretion, as damages and compensation for loss of office and
for the termination of this Agreement;
(b) the continuation of all the benefits provided pursuant to the
provisions of Paragraph 3.3 hereof for the remainder of the Term of
Employment or until the Employee obtains employment elsewhere,
whichever occurs first.
5. LEGAL COSTS
The Company will pay, on a solicitor and client basis, all legal costs
(including fees and disbursements) incurred by the Employee in connection with
the preparation and negotiation of this Agreement.
6. SEVERABILITY
If any provision of this Agreement is unenforceable or invalid for any reason
whatsoever, such provision shall be severable from the remainder of this
Agreement and the validity of the remainder shall continue in full force and
effect and be construed as if this Agreement had been executed without the
invalid or unenforceable provision.
7. WAIVER
No consent or waiver, express or implied, by any Party to or of any breach or
default by any other Party of any or all of its obligations under this Agreement
will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this Paragraph;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this Paragraph in any other or subsequent instance.
<PAGE>
7
8. NOTICE
All notices, requests, payments, demands or directions to the Parties hereto
shall be in writing and delivered or sent by registered mail postage prepaid, or
by telex, telecopy, telegram or cable addressed as follows:
If to the Employee:
To his address set out on Page 1 of this Agreement
If to the Company:
To its address set out on Page 1 of this Agreement
or to such other address as may be specified by one Party to the other in a
notice given in the manner herein provided. Any notice, request, demand or
direction given in such manner shall be deemed to have been received by the
Party to whom it is given:
(a) On the 7th business day following the mailing thereof, if sent by
registered mail;
(b) On the 2nd business day following delivery, if delivered; or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
If normal mail service, telex service or telegraph service is interrupted by
strike, slowdown, force majeure or other cause, notice, request, demand or
direction sent by the impaired means of communication will not be deemed to be
received until actually received, and the Party sending the notice, request,
demand or direction shall utilize any other such services which have not been
interrupted or shall deliver such notice, request, demand or direction in order
to ensure prompt receipt thereof.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the Parties and there
are no representations or warranties, express or implied, statutory or otherwise
or no agreements collateral hereto other than expressly set forth or referred to
herein.
<PAGE>
8
10. ASSIGNMENT
This Agreement is a personal services agreement and may not be assigned by
either Party without the prior written consent of the other Party; PROVIDED
HOWEVER, that during the Term of Employment the Employee may, by written
assignment, assign all or any portion of the Compensation to which he is
entitled under this Agreement to any member of his immediate family or to any
corporation, partnership or other business entity controlled by the Employee.
11. BINDING EFFECT
This Agreement shall be binding upon and enure to the benefit of the Parties and
their respective heirs, personal representatives, successors and assigns, except
as otherwise expressly provided herein.
12. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or any
breach of this Agreement shall be finally settled by arbitration in accordance
with the provisions of the Arbitration Act of British Columbia.
13. INDEMNITY
The Company shall at all times indemnify and save harmless the Employee and his
heirs and legal representatives, from and against all costs, legal and other
fees, charges and expenses as they occur or are agreed, including any amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director, or Project
Manager, Quarrying and Production, if he acted honestly and in good faith with a
view to the best interests of the Company, and otherwise in accordance with the
By-laws of the Company.
14. GENERAL PROVISIONS
14.1 The Parties hereto will, from time to time, at the request of the other,
execute and deliver all such other and additional instruments, notices,
releases, agreements, undertakings or other required documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the carrying out of the intent and purpose of the terms of this Agreement.
<PAGE>
9
14.2 This Agreement may be amended by mutual consent of both Parties hereto and
any such amendment to be effective must be rendered to writing and executed by
the Parties.
14.3 In the event that any Party is delayed or hindered in the performance of
its obligations hereunder by force majeure, this Agreement shall remain in
suspense until the cause thereof has ceased to delay or hinder performance. For
the purposes of this Agreement, but not by way of limitation, force majeure
shall mean any cause beyond the reasonable control of the Party liable to
perform, and shall include strikes, lockouts, civil commotion, riot, war, threat
of or preparation for war, fire, explosion, sabotage, storm, flood, earthquake
or other natural disaster.
14.4 The Parties hereto acknowledge that this Agreement was reached between
themselves directly with the form of agreement prepared by Sobolewski Anfield
acting as counsel to the Company, and that the Employee has been advised to
obtain independent legal advice with respect to his rights and obligations under
this Agreement.
15. EXECUTION IN COUNTERPART
This Agreement may be executed in several parts in the same form and such parts
as so executed shall together form one original agreement and such parts if more
than one shall be read together and construed as if all the signing Parties
hereto had executed one copy of this Agreement.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day
and year first above written.
THE CORPORATE SEAL OF )
FENWAY RESOURCES LTD. )
was hereunto affixed in the )
presence of: ) c/s
)
/s/ [ILLEGIBLE] )
- ------------------------------- )
Authorized Signatory )
)
/s/ [ILLEGIBLE] )
- ------------------------------- )
Authorized Signatory )
The Signature of )
The Employee )
was hereby witnessed by: ) /s/ Laurie G. Maranda
) -------------------------------
/s/ [ILLEGIBLE] ) LAURIE G. MARANDA
- ------------------------------- )
MEMORANDUM OF AGREEMENT
THIS AGREEMENT made as of this 29th day of August, 1996 by and between:
CENTRAL PALAWAN MINING & INDUSTRIAL CORPORATION, with address at 5885 Zobel
Roxas Street, Palanan, Makati, Metro Manila, Philippines, represented in this
act by its duly authorized President, Engineer Fernando B. Esguerra,
(hereinafter referred to as "CPMIC");
AND
FENWAY RESOURCES LTD., of #308-409 Granville Street, Vancouver, British
Columbia, V6C 1T2, represented in this act by its duly authorized officers H.
John Wilson and A. Leonard Taylor, (hereinafter referred to as "Fenway");
WHEREAS:
A. CPMIC and Fenway entered into an option agreement dated March 21, 1992, as
amended June 2, 1992, June 30, 1994, November 17, 1995, May 27, 1996 and June
28, 1996 and other related agreements between the parties herein (collectively
the "Original Agreement"), pursuant to which CPMIC granted to Fenway an option
to particiapte, with others, in a joint operation for the purpose of quarrying
and mining raw materials for the production of cement, lime, clinker and all
other rock and mineral products derived from the Central Property, and to
establish a cement plant for the purposes of manufacturing cement in the
territory located in the Province of Palawan, Republic of the Philippines;
B. Pursuant to the terms of the Original Agreement, CPMIC received valuable
consideration and concessions from Fenway;
C. Pursuant to the terms of the Original Agreement, a pre-feasibility study on
the viability of the Palawan Cement Project was concluded;
D. Pursuant to the terms of the Original Agreement, a Feasibility Study was
prepard for Fenway, which Feasibility Study established the viability of the
Palawan Cement
<PAGE>
2
Project;
E. After consultation with CPMIC, the directors of Fenway passed a director's
resolution dated March 4,1996 accepting the Feasibility Study;
F. The Philippine government, through BMG-DENR, conducted an official geological
evaluation of the Central Property, which evaluation reported a reserve of more
than 230 million tons of suitable cement raw materials thereon;
G. By Deeds of Assignment notarized on February 25, 1990, CPMIC acquired from
the then claim owners the sole and exclusive right to and interest in the
beneficial use of the Central Property, which Deeds of Assignment were
registered on February 17, 1992 with BMG-DENR, Puerto Princesa, Palawan,
Philippines;
H. Whereas CPMIC has already brought the Central Property, in accordance with
Philippine laws, within the coverage of Executive Order No. 279 which requires
the execution of a Mineral Production Sharing Agreement with the Philippine
government covering the said mining claims and also within the coverage of
Republic Act No. 7942, otherwise known as the "Philippine Mining Act of 1995"
and has applied for the MPSA as hereinafter defined;
I. Fenway is a technically and financially capable resource company in the
Province of British Columbia, Canada; Fenway has advanced the necessary funds to
successfully undertake among others, the activities described on Recital (C),
(D). and 14.2 (d);
J. The parties wish to restate their rights, duties and obligations with respect
to the subject matter of the Original Agreement, to amend, modify and supersede
the same to the extent provided herein, and to implement the activities
contemplated and described under this Agreement;
NOW THEREFORE in consideration of the premises, the performance of the mutual
covenants contained herein and other good and valuable consideration given by
each party to the others, The receipt and sufficiency of which is hereby
conclusively acknowledged, it is hereby agreed as follows:
1. ENTIRE AGREEMENT
1.1 This Agreement, when executed, constitutes the whole agreement between all
the parties hereto and supersedes all the Original Agreements written, oral or
otherwise, and there are no representations or warranties, express or implied,
statutory or otherwise
<PAGE>
3
other than expressly set forth or referred to herein.
1.2 It is specifically acknowledged by the parties hereto that the Original
Agreement is superseded and cancelled and of no further force or effect.
1.3 This Agreement may not be amended, modified, released or discharged, in
whole or in part, except by an instrument in writing signed by all parties
hereto.
2. INTERPRETATION
2.1 For purposes of this Agreement, except as otherwise expressly provided, or
unless the context otherwise requires:
(a) "Acceptable Funding Commitment" means a bona fide commitment to provide
the Production Funds;
(b) "Activities" means all activities and operations relating to the
Central Property in accordance with this Agreement and within the scope and
purpose of CPCC as referred to in this Agreement.
(c) "Agreement" means this Memorandum of Agreement as from time to time
supplemented or amended by one or more agreements entered into pursuant to
the applicable provisions hereof, and includes every Schedule or Annex
attached hereto, if any;
(d) "BMG-DENR" means the Philippine Bureau of Mines and Geo-Sciences,
Department of Environment and Natural Resources;
(e) "Business Days" means any day during which Philippine chartered banks
are open for business in Metro Manila, Republic of the Philippines;
(f) "CPCC" means Central Palawan Cement Corporation, a company to be
incorporated pursuant to the laws of the Republic of the Philippines, or
any successor company however formed, whether as a result of merger,
amalgamation, in accordance with the terms of Paragraphs 4 and 10 of this
Agreement;
(g) "CPMIC" moans Central Palawan Mining & Industrial Corporation, a
company incorporated pursuant to the laws of The Republic of the
Philippines, or any successor company however formed, whether as a result
of merger, amalgamation, or other action;
<PAGE>
4
(h) "Central Property" means all existing mining claims and rights/quarrying
rights, mining right applications and Mineral Production Sharing Agreements as
defined in Republic Act 7942 (Philippine Mining Act of 1995) covering 4,941
hectares of land and more particularly described in Schedule "A" hereto and all
tenures in substitution or replacement therefor including, without restricting
the generality, all rights to enter upon the Central Property, explore, develop
and remove any minerals therefrom;
(i) "Closing Date" means the day ten (10) Business Days following the receipt of
Regulatory Approval, or such other date as the parties hereto shall mutually
agree;
(j) "Commercial Production" means:
i) the last day of a period of forty (40) consecutive days in which
Venture Products have been processed from the Central Property at not less
than 60% of its rated operating capacity; or
ii) the last day of a period of thirty (30) consecutive days during
which ore has been shipped from the Central Property for the purpose of
earning revenues, but not period of time during which ore or concentrate is
shipped from the Central Property for testing purposes, and no period of
time during which milling operations are undertaken as initial tune-up,
shall be taken into account in determining the date of Commercial
Production as determined by CPCC;
(k) "Effective Date" means March 21, 1992;
(1) "Exchange" means the Vancouver Stock Exchange;
(m) "Fair Market Value" means the highest price available in the open and
unrestricted market between informed, prudent parties acting at arm's length,
under no compulsion to act, expressed in terms of money or money's worth;
(n) "Feasibility Study" mcans the comprehensive report dated December 1995
prepared by Kilborn Engineering Pacific Ltd., which provides a definite
technical, environmental and commercial base for determining the viability of
the Palawan Cement Project and which was accepted by both Fenway and CPMIC;
(o) "Fenway" means Penway Resources Ltd., a company incorporated pursuant to the
laws of the Province of British Columbia, Canada, or any successor company
however formed, whether as a result of merger, amalgamation, or other action;
(p) "Gross Proceeds" means, for any period, the aggregate gross proceeds
received by CPCC during the period from the sale of Venture Products derived
from the Central Property and any cash proceeds received during the period from
the disposition of any capital assets the cost of which has been treated as an
Operating Cost;
<PAGE>
5
(q) "Joint Venture" means the joint venture company to be formed as a result of
this Agreement or CPCC as defined in this Agreement;
(r) "Joint Venture Agreement" means the agreement governing the relationship
among the Parties herein and as to any third-party Participant with CPCC with
respect to the Palawan Cement Project, and the Central Property, as more fully
described in Paragraph 10 of this Agreement;
(s) "MPSA" means mineral production sharing agreement MPSA-IV(1)-13, as amended,
which brought the Central Property within the coverage of Executive Order No.
279 and also under coverage of the Philippine Mining Act of 1995, and which
confers upon CPMIC the priority right to the beneficial use of the Central
Property;
(t) "Mining and Production Facilities" means all mines, roads, structures,
buildings, machinery, equipment and other facilities necessary to mine, remove
and process ores from the Central Property and all mines and plants, including
without limitation, all pits, shafts, haulageways and other underground workings
and all buildings, plants, facilities and other structures, fixtures and
improvements and all other property, whether fixed or moveable, as the same may
exist at any time in, on or outside the Central Property and relating to the
production of Venture Products;
(u) "Net Profits" means, for any period, the excess, if any, of Gross Proceeds
for the period over the aggregate of:
i) Operating Costs for the period;
ii) Operating Costs for all previous periods to the extent that they
have exceeded Gross Proceeds from such periods and have not previously been
deducted in computing Net Profits; and
iii) such amount of cash as is required for the ensuing three month
period for working capital as, in the opinion of CPCC, is required for
CPCC, provided that this amount shall be added to Gross Proceeds when
calculating Net Profits for the next ensuing period;
(v) "Operating Costs" means, for any period, all costs, expenses, obligations,
liabilities and charges of whatsoever kind and nature incurred or chargeable,
directly or indirectly, by CPCC, after commencement of Commercial Production in
connection with CPCC during the period, which costs, expenses, obligations,
liabilities and charges shall include, without limiting the generality of the
foregoing, the following:
<PAGE>
6
i) all costs of or related to CPCC;
ii) all costs of or related to the quarrying, processing and marketing
of Venture Products including, without limitation, transportation, storage,
commissions, royalties and/or discounts;
iii) all costs of or related to providing and/or operating employee
facilities, including housing;
iv) all duties, charges, levies, royalties, taxes (excluding any act
of legislation which taxes the income of the parties hereto individual) and
other payments imposed upon or in connection with CPCC by any government or
municipality or department or agency thereof;
v) all actual costs of CPCC for providing technical, management and/or
supervisory services, the intent being that CPCC will neither realize a
profit nor suffer a loss as a result of its management activity;
vi) all costs of consulting, legal, accounting, insurance and other
services;
vii) all interest expenditures incurred after commencement of
Commercial Production;
viii) all costs of construction, equipment and mine development after
commencement of Commercial Production;
ix) all costs for pollution control, reclamation or any other similar
costs incurred or to be incurred by CPCC;
x) any cost or expense incurred or to be incurred relating to the
termination of this Agreement;
except where specific provision is made otherwise, all Operating Costs shall be
determined in accordance with generally accepted accounting principles
consistently applied;
(w) "Original Agreement" means the option agreement dated March 21, 1992, the
amended option agreements dated June 2, 1992, June 30, 1994, November 17, 1995,
May 27, 1996 and June 28, 1996 and other related agreements between the parties
herein.
(x) "Palawan Cement Project" means the joint operation for the purposes of,
without limitation:
i) quarrying and mining raw materials for the production of cement,
lime, clinker and all other rock and mineral products derived from the
Central Property; and
<PAGE>
7
ii) manufacturing cement from raw materials extracted from the Central
Property;
(y) "Participant(s)" means a Filipino third party or parties, acceptable to
Fenway, which party or parties shall provide Production Funds;
(z) "Party or Parties" means the parties to this Agreement and their respective
successors and permitted assigns which become parties pursuant to this
Agreement;
aa) "Philippine Mining Act of 1995" means Republic Act No. 7942 of the
government of the Philippines;
ab) "Production Funds" means the funds required in order to finance the Palawan
Cement Project, from sources whether domestic or foreign, which Production Funds
are to be obtained by Fenway, at its sole discretion;
ac) "Regulatory Approval" means filing and approval of mineral agreements and
their transfer or assignment as provided for in Sections 29 and 30 of Republic
Act No. 7942 enacted by the Philippine legislature in 1995 and as contemplated
in this Agreement as well as approval of this Agreement by all Regulatory
Authorities.
ad) "Regulatory Authorities" means both the Philippine Regulatory Authorities
and the British Columbia Regulatory Authorities;
(i) "British Columbia Regulatory Authorities" means the Exchange and,
where applicable, the British Columbia Securities Commission.
(ii)"Philippine Regulatory Authorities" means the BMG-DENR, the
Philippine Securities and Exchange Commission, local government units and
any governmental authorities located in the Republic of the Philippines;
ae) "Schedules" means those schedules attached hereto and forming part of this
Agreement which are more particularly described as follows:
Schedule "A": Description of the Central Property
at) "Venture Products" means all ores, minerals, concentrates or other products
mined or produced from the Central Property and without limitation, all products
produced by CPCC.
2.2 Tnc words "paragraph", "subparagraph", "herein", "hereof" and "hereunder"
refer to the provision of this Agreement.
<PAGE>
8
2.3 The headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the scope; extent
or intent of this Agreement or any portion hereof.
2.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and in accordance with the rules and
guidelines of the governing Regulatory Authorities, if applicable; PROVIDED that
the laws of the Republic of the Philippines shall govern all matters relating to
the transfers of the interests provided for in this Agreement as well as the
development and operation of the joint venture company.
2.5 A reference to a statute includes all regulations made pursuant thereto, all
amendments to such statute or regulations enforced from time to time and any
statute or regulation which supplements or supersedes such statute or
regulation.
2.6 Wherever the singular or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine or neuter when the
context so requires.
2.7 All accounting terms not defined in this Agreement shall have those meanings
generally ascribed to them in accordance with generally accepted accounting
principles, applied consistently.
2.8 All currency referred to herein is currency of the United States of America,
unless otherwise stated.
3. TRANSFER
3.1 Upon and subject to the terms and conditions of this Agreement, CPMIC hereby
agrees to transfer and set over to CPCC (the "Transfer") the Central Property
including the MPSA, in such form and by way of instruments authorized by the
Philippine Mining Law of 1995; to have and to hold the same, together with all
benefit and advantage to be derived therefrom.
3.2 The rights of the parties hereto may only be assigned with the prior written
consent of the other party hereto and with the approval of the Regulatory
Authorities, if required.
4. CENTRAL PALAWAN CEMENT CORPORATION
4.1 Upon receipt of an acceptable EIA report (as defined below) and the
Acceptable Funding Commitment, the parties hereto agree to the incorporation of
CPCC as a new Philippine company, the sole purpose of which shall be to act as
operator of the Joint Venture to undertake the Palawan Cement Project and to
hold all of the rights and interests of CPMIC and Fenway in and to the Central
Property, including the MPSA for the benefit of the parties hereto and the
Participant(s).
<PAGE>
9
4.2 The equity of CPCC shall be owned by Fenway (as to 40%), The Participant(s)
(as to 50%) and CPMIC (as to 10%).
4.3 Within ten (10) years of the Effective Date, the present stockholders of
CPMIC shall have the non-transferable right to purchase a further ten percent
(10%) equity interest in and to CPCC from Fenway's equity interest in CPCC at
the Fair Market Value thereof, such Fair Market Value of the shares to be
determined by any of the top six internationally recognized accounting firms,
and which option may only be exercised in its entirety.
4.4 The terms and principles governing the operation of CPCC shall be as set
forth in Paragraph 10 hereof.
5. CONSIDERATION
5.1 Subject to Paragraph 5.2 hereof, as consideration for the Transfer referred
to in Paragraph 3 of this Agreement, Fenway hereby agrees to issue to CPMIC
non-transferable share purchase warrants to purchase, either in whole or in
part, up to an aggregate of 2,000,000 common shares of Fenway (the "Shares") on
the following basis (the "Warrants"):
(a) 100,000 Shares, exercisable at a price of Canadian $2.00 per Share, at
any time commencing June 28, 1996 and for a period of one (1) year thereafter;
The receipt of which is hereby acknowledged through the delivery of the Shares
to a Trustee.
(b) 900,000 Shares, exercisable at a price of Canadian $2.00 per Share, at
any time on or before one (1) year from the date of acceptance by Fenway of the
Acceptable Funding Commitment;
(c) 1,000,000 Shares, exercisable at a price of Canadian $3.00 per Share,
at any time one within (1) year from the date of exercise of the Warrant
referred to in Paragraph 5.1(b) above.
5.2 It is expressly u r1derstood that the Warrants referred to in Paragraph
5.1(b) and (c) hereof may not be exercised by CPMIC until such time as Fenway
has received the Acceptable Funding Commitment.
5.3 Commencing upon receipt of the Production Funds, CPCC shall make maintenance
payments to CPMIC, subject to Paragraph 7, in the amount of CDN$1O0,000 per
annum (the "Maintenance Payments"), such payments to be paid quarterly
commencing ten (10) days after the end of CPCC's first quarterly period ended,
or as otherwise mutually agreed between CPMIC and Fenway.
<PAGE>
10
6. ROYALTY
6.1 If CPCC commences Commercial Production from the Central Property, CPMIC
shall be entitled to receive and CPCC shall pay to CPMIC a royalty equal to
$0.35 per tonne of raw materials extracted from the Central Property (the
"Royalty").
6.2 Subject to the provisions of Paragraph 5.3 hereof, CPCC shall be under no
obligation whatever to place the Central Property into Commercial Production
and, in the event it is placed into Commercial Production, CPCC shall have the
right at any time to curtail or suspend such production as it, in its absolute
discretion, may determine.
6.3 The Royalty payable to CPMIC hereunder shall be paid quarterly commencing
thirty (30) days after the end of CPCC'S first quarterly period ended, or as
otherwise mutually agreed between CPMIC and Fenway, the records relating to the
calculation of such Royalty during that quarterly period shall be audited and
any adjustments shall be audited and any adjustments shall be made forthwith and
the audited statements shall be delivered to CPMIC who shall have sixty (60)
days after receipt of such statements to question in writing the accuracy and
failing such question, the statements shall be deemed correct. All taxes on
royalties shall be the sole responsibility of CPMIC.
6.4 CPMIC or its representatives, duly appointed in writing, shall have the
right at all reasonable times, upon written request, to inspect those books and
financial records of CPCC as are relevant to the determination of the Royalty
and, at its own expense, to make copies thereof.
7. ADVANCE OF FUNDS
7.1 CPMIC acknowledges having received certain advances and monies from Fenway
from time to time (the "Funds"), which Funds were to be specifically used for
the purposes of furthering the Palawan Cement Project, as described in the
Original Agreement, and that a portion of the Funds so advanced were spent for
purposes other than the aforementioned objectives of furthering The Palawan
Cement Project.
7.2 CPMIC agrees that any Funds previously advanced or to be advanced in the
future, including the interest that has accrued or that will accrue thereon, for
purposes other than for the objectives of furthering the Palawan Cement Project,
as determined by Fenway's auditors, is hereby recognized and acknowledged by
CPMIC as a loan and shall be considered as loans to CPMIC and shall be repayable
with interest at the rate of 7% per annum for loans previously advanced, and
repayable to Fenway, at the sole discretion of Fenway, from proceeds due to
CPMIC from either the Maintenance Payments in paragraph 5.3 and/or the Royalty
in paragraph 6.
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8. CONDITIONS PRECEDENT
8.1 Fenway shall within thirty (30) days of the date of this Agreement, commence
an environment impact assessment ("EIA") at its own cost.
8.2 Closing (as hereinafter defined) shall be conditional upon:
(a) receipt by the government of the Philippines, CPMIC and Fenway of an
acceptable EIA report;
(b) the acceptance of the Acceptable Funding Commitment by Fenway;
(c) signing and execution of a Joint Venture Agreement in accordance with
the terms and conditions in Articles 4 and 10 of this Agreement.
(d) the incorporation of CPCC pursuant to the laws of the Republic of the
Philippines;
(e) submission by CPMIC of proof of the government-approvals for the
transfer of the Central Property including the MPSA to CPCC;
9. THE CLOSING
9.1 Completion (the "Closing") of the transactions contemplated by this
Agreement shall take place on the Closing Date, or such other date as the
parties hereto shall mutually agree, and shall take place at the offices of
CPMIC as set out on Page 1 of this Agreement.
9.2 Subject to the terms and conditions of this Agreement, on Closing CPMIC will
execute and deliver to CPCC the following:
(a) a deed of assignment, or other necessary documents, in recordable form,
to absolutely transfer and vest the Central Property and the MPSA to CPCC;
(b) evidence that the transfers, including the MPSA, is validly existing
and approved in accordance with the Philippine Mining Act of 1995;
(c) a certified true copy of the resolutions of the directors and
stockholders of CPMIC approving this Agreement, the transactions
contemplated under this Agreement and the authorized signatories;
(d) a certified true copy of the last audited financial statements of
CPMIC.
(e) submission of evidence of Philippine Regulatory Approvals from the
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12
proper Philippine Regulatory Authorities.
9.3 Subject to the terms and conditions of this Agreement, on the Closing Date,
Fenway will execute and deliver to CPMIC or to a Trustee, the following:
(a) evidence of Regulatory Approval from British Columbia Regulatory
Authorities;
(b) the Warrants referred to in Paragraph 5.1(b) and (c) hereof;
(c) a certified true copy of the last audited financial statements of
Fenway.
10. JOINT VENTURE
Formation of CPCC
10.1 Prior to Closing Date, the parties hereto agree to sign and conclude with a
suitable Participant(s) a Joint Venture Agreement leading to the formation of
CPCC, the Joint Venture corporation in accordance with Paragraphs 4 and 10 of
this Agreement.
10.2 The parties agree that the relationships between themselves and the
Participant(s) in CPCC will be governed in accordance with the terms of a full
and formal joint venture operating agreement, which will be drawn and finalized
by the parties and the Participant(s) acting in good faith, which agreement
shall cover all terms and conditions of CPCC (the "JV Agreement").
10.3 In addition to the provisions set out in this Paragraph 10, the Joint
Venture Agreement shall also set out terms governing the following:
(a) rights of first refusal with respect to the disposition of
participating interests in CPCC;
(b) rights and limitations with respect to the assignment of participating
interests in CPCC;
(c) default and termination.
Contributions to CPCC
10.4 CPMIC shall, by way of the Transfer of the Central Property including the
MPSA to CPCC, thereby effectively contribute The Central Property to CPCC.
10.5 Fenway and the Participant(s) will provide CPCC with the funds necessary to
finance CPCC.
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13
10.6 CPCC will fund each Approved Program and Budget.
10.7 All funds expended with respect to the Central Property after the formation
of CPCC shall be required to be made by CPCC.
Purposes of CPCC
10.8 CPCC shall have the following scope and primary and secondary purposes:
(a) exploring for and developing ores, minerals and other products from
the Central Property, including opening, developing and operating
mines and/or quarries on the Central Property;
(b) processing (including beneficiating, leaching, concentrating,
smelting, refining or otherwise treating) ores, minerals or other
products mined or produced from the Central Property for the purposes,
without limitation, of producing Venture Products;
(c) designing, engineering, constructing and operating Mining and
Production Facilities to mine and remove ores, minerals or other
products from the Central Property and to process such ores, minerals
or other products mined front the Central Property into Venture
Products;
(d) marketing, selling and delivering Venture Products;
(e) performing any other operation or activity necessary, appropriate or
incidental to any of the foregoing.
10.9 Unless the parties otherwise agree, CPCC shall be limited to its stated
scope and purposes and nothing in this Agreement shall be construed as to
enlarge the stated scope and purposes of CPCC.
Board of Directors
10.10 The affairs of CPCC will be governed by the direction and control of a
Board of Directors (the " Board") to be comprised of ten (10) members with the
following representation:
(a) From Fenway: 40% of total representatives
(b) From the Participant(s): 50% of total representatives
(c) From CPMIC: 10% of total representatives
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14
10.11 Voting will be on the basis of one (1) vote for each representative and,
unless otherwise provided, a decision or an action of the Board will require the
concurrence of at least six (6) representatives.
Operator
10.12 CPCC will be the operator of the Joint Venture.
Approved Programs and Budgets
10.13 All activities will be performed under programs and budgets approved in
advance by the Board of Directors ("Approved Programs and Budgets"). The Board
of Directors will meet initially to approve a program and budget for each
calendar quarterly period as may be necessary in order to have each program and
budget approved by at least one (1) month prior to the date of implementation.
Interests in Net Profits
10.14 Participation in the Net Profits of CPCC shall be as follows:
(a) to Fenway, 40% of Net Profits derived from the Central Property;
(b) to the Participant(s) 50% of Net Profits derived from the Central
Property.
(c) to CPMIC, 10% of Net Profits derived from The Central Property.
10.15 of this parties Any party may, at any time upon notice in accordance with
the notice provisions of this Agreement, surrender all or a portion of its
interest in Net Profits to the other by giving those parties notice of
surrender.
11. RIGHTS OF FENWAY PRIOR TO CLOSING
11.1 At all times from the Effective Date until the Closing Date, Fenway, its
employees, agents and independent contractors shall, subject to CPMIC giving
prior notice to the proper authorities, have the sole and exclusive right to:
(a) to enter upon the Central Property with full rights of access and
egress;
(b) to carry on all such other exploration activities including, without
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15
limitation, the right to remove from the Central Property, minerals,
metals, broken rock, samples; bulk samples and other material as Fenway
deems necessary or desirable to assess the potential of the Central
Property and the recoverability of ore and minerals therefrom.
12. COVENANTS
12.1 At all times during the currency of this Agreement, CPMIC shall:
(a) not do or permit or suffer to be done any act or thing which would or
might in any way adversely affect the rights of Fenway and CPCC hereunder;
(b) continue to make available to Fenway and its representatives all
records and files relating to the Central Property and will permit Fenway and
its representatives at their own expense to take abstracts therefrom and make
copies thereof;
(c) prior to the incorporation of CPCC with all government agencies and
institutions, at Fenway's expense, obtain all government incentives which may be
available for the Palawan Cement Project, obtain all rights from landholders or
any other rights holders as well as required licenses, work permits and other
necessary documents to develop the Central Property for the Palawan Cement
Project with the involvement of foreign partners, secure, without limitation,
water rights, plant site, pier site and warehouse site, from national and local
Philippine governments;
(d) prior to, during and after incorporation of CPCC and the Transfer,
promptly provide Fenway and/or CPCC with any and all notices and correspondence
from government agencies in respect of the Central Property;
(e) obtain the approval of the Philippine Regulatory authorities to this
Agreement where necessary; use its best efforts to expeditiously assist Fenway
in doing all things reasonably required to obtain the acceptance of the British
Columbia Regulatory Authorities to the terms of this Agreement;
(t) cooperate frilly with Fenway and/or CPCC in obtaining any additional
rights on or related to the Central Property as Fenway deems desirable;
(g) immediately notify Fenway and/or CPCC of any claims, actions, demands
of a civil, legal or judicial nature, filed against CPMIC in respect of the
Central Property as well as disclose any anticipated litigation or adverse
claims as set forth in the representations and warranties provision of this
Agreement.
(h) maintain in good standing all the rights comprising the Central
Property such as but not limited to the mineral claims and rights, renewals and
continuances thereof, by the doing and filing of any assessment work or the
making of payments in
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16
lieu thereof, by the payment of taxes and rentals, and the performance of all
other actions which may be necessary in that regard and in order to keep the
Central Property free and clear of all liens and encumbrances;
12.2 At all times during the currency of this Agreement, Fenway shall:
(a) not do or permit or suffer to be done any act or thing which would or
might in any way adversely affect the rights of CPMIC and CPCC hereunder;
(b) conduct all work on or with respect to the Central Property in a
careful and minerlike manner, including any reclamation work required in respect
of work performed by Fenway on the Central Property, and in accordance with the
applicable laws;
(c) permit CPMIC and its representatives, duly authorized by CPMIC in
writing, at their own risk and expense access to the Central Property at all
reasonable times and to the records prepared by Fenway in connection with work
done on or with respect to the Central Property;
(d) at its own expense, carry out any environmental cleanup which might be
required as a result of work performed by Fenway on the Central Property;
(e) obtain and maintain for itself and cause any contractor engaged
hereunder to obtain and maintain during any period in which active work is out
hereunder, adequate insurance and worker's compensation coverage, if applicable;
(t) use its best efforts to assist CPMIC in doing all things reasonably
required to obtain the approval of the Philippine Regulatory Authorities to the
terms of this Agreement;
(g) promptly provide CPMIC with any and all notices and correspondence from
government agencies in respect of the Central Property;
(h) cooperate fully with CPMIC in obtaining any additional rights on or
related to the Central Property as CPMIC deems desirable;
(i) immediately notify CPMIC of any claims, actions, demands of a civil,
legal or judicial nature, filed against Fenway in respect of the Central
Property;
(j) obtain the Production Funds;
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17
13. DEFAULT AND TERMINATION
13.1 It is an event of default ("Default") if:
(a) the Production Funds are not received by Fenway by not later than the
close of business (Vancouver time) on June 30, 1997, unless otherwise extended
by the parties hereto in writing;
(b) either Fenway or CPCC fail to make any of the payments as and when
required pursuant to the terms hereof, or under any documents delivered in
connection herewith, except for the consideration in Par. 5.1(a) which has been
paid through a Trustee;
(c) CPMIC fails to take reasonable action to prevent or defend assiduously,
any action or proceeding which claims:
i) possession;
ii) sale;
iii) foreclosure;
iv) the appointment of a receiver or receiver-manager of the
Company's assets; or
v) forfeiture or termination;
of the Central Property, CPCC.
(d) any party becomes bankrupt or commits an act of bankruptcy or if a
receiver or receiver-manager of its assets is appointed or makes an assignment
for the benefit of creditors or otherwise;
(e) any party is unable or unwilling or otherwise fails to perform their
obligations as and when required hereunder; or
(f) if Fenway and CPMIC mutually consent in writing to the termination
hereof.
13.2 Subject to the provisions hereof, a notice of Default by the non-defaulting
party must be given to the defaulting party pursuant to the notice provisions of
this Agreement within thirty (30) days of the time when the non-defaulting party
is made aware of the event of Default and the defaulting party shall have ninety
(90) days from the notice of Default to cure such Default.
13.3 In the event that the defaulting party does not cure such Default within
the time provided for in Paragraph 13.2 hereof, then this Agreement shall
terminate forthwith and absolutely unless otherwise agreed to between the
parties.
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13.4 In the event of a Default by Fenway, CPMIC shall have the right to obtain
its own financing to ensure the construction and/or operation of the cement
plant and/or the quarry, provided that Fenway shall first be reimbursed by CPMIC
and its stockholders for all of its costs and expenses, advances and loans to
CPMIC or any of its stockholders or officers to the date of Default. In no event
however, will the proportion of ownership and representation of Fenway be
reduced below the percentage referred to in Section 10.10 and 10.14.
13.5 In the event of a material breach of the terms of this Agreement or of the
warranties, covenants and representations contained herein by either of the
parties hereto it shall be open to the aggrieved party to seek its remedy in
damages and it also shall be open to the parties to rescind the terms of this
Agreement upon the terms as herein set forth.
14. REPRESENTATIONS AND WARRANTIES
14.1 Each of the parties represents and warrants to the other that:
(a) it is a company duly incorporated, organized and validly subsisting and
in good standing under the laws of its incorporating jurisdiction and that it is
qualified to do business in those jurisdictions where it is necessary to fulfil
its obligations under this Agreement;
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or contemplated
by this Agreement;
(c) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby contemplated conflict with or result in any breach of or
accelerate performance under any covenants or agreements or constitute a
default, or result in the creation of any encumbrance under the provision of any
shareholders' or directors' resolution, indenture, agreement or other instrument
whatsoever to which it is a party or by which it is bound or to be which it is
subject;
(d) the execution and delivery of this Agreement and the agreements
contemplated hereby have been duly authorized by all necessary corporate action
on its part and will not violate or result in the breach of the laws of any
jurisdiction applicable or pertaining thereto or of its constitutive documents;
(e) except for the approval of this Agreement by the Exchange, if required,
there are no consents, approvals or conditions precedent to the signing and
execution of this Agreement which have not been obtained;
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19
(f) no proceedings are pending, and the parties are unaware of any basis
for the institution of any proceedings leading to their respective dissolution
or winding up, or the placing of each of them in bankruptcy or any other laws
governing the affairs of insolvent corporations.
14.2 CPMIC hereby represents and warrants to Fenway that:
(a) it is, and will be at Closing, the 100% recorded and beneficial owner
of the Central Property including all MPSAs found thereon and has the exclusive
right to enter into this Agreement and all necessary authority to dispose of its
interests in and to the Central Property in accordance with the terms of this
Agreement. Further, CPMIC received warranties that in the event of a change in
the composition of stockholders of CPMIC, it will promptly notify Fenway in
writing;
(b) other than a royalty payable to the Republic of the Philippines, no
stockholder of CPMIC, other person, firm, corporation or entity has any
proprietary or possessory interest in the Central Property including the MPSA
other than CPMIC and no person is entitled to any royalty or other payment in
the nature of rent or royalty on any minerals, ores, metals or concentrates, or
any such other products removed from the Central Property;
(c) there are no actual, pending or threatened actions, suits, claims or
proceedings regarding the Central Property or any basis therefor of which it is
aware;
(d) the Central Property is accurately described in Schedule "A" to this
Agreement. As a result of advances made by Fenway, the Central Property and all
interests related thereto have been duly and validly staked, located, recorded
and registered in accordance with all applicable laws of the Philippines and all
such interests are free and clear of all liens, charges, encumbrances and third
party interest whatsoever;
(e) the corresponding licenses and permits covering the Central Property
and all interests therein including the MPSAs have been duly and validly issued
pursuant to the mining laws of the Republic of the Philippines and are in good
standing by the proper doing and filing of assessment work and the payment of
all fees, taxes and rentals in accordance with the requirements of the mining
laws of the Republic of the Philippines and the performance of all other actions
necessary in that regard;
(f) conditions on and relating to the Central Property and operations
conducted thereon by or on behalf of CPMIC are in compliance with all applicable
laws, regulations or orders;
(g) at the date hereof, there are no outstanding orders or directions
relating to environmental matters requiring any compliance, work, repairs,
construction or capital expenditures with respect to the Central Property and
the conduct of the operations related thereto, nor has CPMIC received any notice
of same;
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20
(h) it has delivered and will continue to deliver to Fenway all available
geological information in its possession or control relating to the Central
Property and copies of all available permits, permit applications and
applications for exploration and exploitation rights respecting the Central
Property;
(i) it is not aware of any fact or circumstance which makes the
representations and warranties in this Agreement incomplete, inaccurate,
misleading and untrue or which would likely affect the decision of Fenway to
enter into this Agreement.
(j) it undertakes to cause its stockholders, directors, officers, assigns,
successors-in-interest and all relatives or third parties who may have any
interest in the subject matter Area of Interest referred to in paragraph 16
which conflicts with the interest of the Palawan Cement Project , to sell their
interest to CPCC at original acquisition cost.
(k) it is prohibited from selling, disposing, transferring, or creating any
encumbrance on any interest or rights in the Central Property;
(1) it obtained advise of counsel with respect to its rights and
obligations herein.
14.3 Fenway hereby represents and warrants to CPMIC that Fenway will allot and
issue the Shares free of all liens, claims, charges and encumbrances whatsoever
upon exercise of the Warrants.
14.4 The representations and warranties hereinbefore set out are conditions upon
which the parties have relied in entering into this Agreement and shall be true
and correct on the Closing Date and shall survive after the Closing Date.
14.5 Except for fraud and gross negligence, 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, warranty,
covenant, agreement or condition made by it and contained in this Agreement.
14.6 The parties acknowledge and agree with each other that they have entered
into this Agreement relying on the warranties and representations and other
terms and conditions of this Agreement and that no information which is now
known or which may hereafter become known to the parties shall limit or
extinguish the right to indemnify hereunder and in addition to any other
remedies it may pursue; PROVIDED that Fenway may deduct the amount of any such
loss or damage from any amounts payable by it or CPCC to CPMIC hereunder.
14.7 The parties shall each give all undertakings and assurances and shall each
make such filings as are reasonably required by the Regulatory Authorities as a
condition of any approval contemplated by this Agreement. All such undertakings,
assurances and filings shall be prepared at Fenway's sole expense.
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21
15. DELIVERY OF INFORMATlON
All data and information regarding the Central Property coming into the
possession of any party under this Agreement shall be disclosed to the other
parties.
16. AREA OF INTEREST
CPMIC, its stockholders, directors, officers, assigns,
successors-in-interests including its nominees (the "Others"), hereby agree that
the Area of Interest shall cover a radius of three (3) kilometers from the
outside boundaries of the Central Property and the Plant Site (the "Area of
Interest") and shall be subject to paragraph 14.2 (j) of this Agreement.
17. RELATIONSHIP OF THE PARTIES
17.1 The rights, duties, obligations and liabilities of the parties shall be
several and not joint.
17.2 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 the other party for any purpose.
17.3 This Agreement shall not be construed so as to render the parties liable as
partners or as creating a mining, commercial or other partnership, or as
imposing upon any party any obligation or liability to the other party hereto
other than with respect to CPCC.
17.4 Without consulting the other party, both parties shall have the right
independently to engage in and receive full benefits from business activities
which are not in any way in conflict with, adverse to, or in competition with
CPCC. The doctrines of "corporate opportunity or business opportunity" shall not
be applied to any other activity, venture or operation of the parties and all
parties shall not be obliged to the other parties with respect to any
opportunity to acquire any mineral property available to it:
(a) outside the boundaries of the Area of Interest at any time; or
(b) within the boundaries of the Area of Interest after the termination of
this Agreement.
18. TERM
18.1 The corporate life of the Joint Venture company shall be for fifty (50)
years, renewable at the option of CPCC for further fifty (50) year period.
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18.2 If any right, power or interest of any part of the Central Property would
violate the rule against perpetuities then such right, power or interest shall
continue for as long as may be permitted by Philippine law.
19. REGULATORY AND OTHER CONSIDERATIONS
19.1 It is hereby expressly acknowledged that Fenway is a company subject to the
discretionary jurisdiction of the British Columbia Regulatory Authorities and
that this Agreement may be subject to the prior approval of such British
Columbia Regulatory Authorities.
19.2 It is also hereby expressly acknowledged that CPMIC is a company subject to
the discretionary jurisdiction of the Philippine Regulatory Authorities and that
this Agreement may be subject to the prior approval of such Philippine
Regulatory Authorities.
19.3 This Agreement is subject to both Canadian and Philippine Regulatory
Authorities and may be subject to the prior approval of such Regulatory
Authorities.
19.4 The parties will file all such notices, agreements, forms or reports with
the proper Regulatory Authorities as may be necessary in furtherance of the
transaction contemplated herein, and shall supply copies of all such notices,
agreements, forms or reports as filed with the proper Regulatory Authorities for
the corporate files of Fenway and CPMIC, as the case may be. Any such notice
shall be made in accordance with the notice provisions of this Agreement.
20. CONFIDENTIAL INFORMATION
No information furnished by the parties hereunder in respect of this
Agreement shall be published by either party without the prior written consent
of the other party hereto, but such consent in respect of the reporting of
factual data shall not be unreasonably withheld, and shall not be withheld in
respect of information required to be publicly disclosed pursuant to applicable
laws of the Regulatory Authorities.
21. ARBITRATION
21.1 The parties hereto agree to refer any dispute arising between the parties
hereunder, as to interpretation of any provisions of this Agreement, to binding
arbitration (the "Arbitration").
21.2 All disputes, controversies or differences which may arise between the
Parties out of or in relation to or in connection with this Agreement, including
any issue as to this Agreement's validity or enforceability, or for the
construction, termination or breach thereof, shall be decided amicably by the
Parties. If such dispute, controversy or
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23
difference cannot be amicably settled within thirty (30) calendar days of notice
by one Party to the other, the matter shall be finally settled by arbitration
conducted in accordance with the Rules of Conciliation and Arbitration of the
International Chamber of Commerce.
21.3 The place of the arbitration shall be Vancouver, Canada.
21.4 The Parties together shall appoint one (1) arbitrator and if they are
unable to agree upon the appointment of a single arbitrator within fourteen (14)
calendar days from receipt of the arbitration notice, each of the Parties shall
appoint one (1) arbitrator within twenty-one (21) calendar days of receipt of
the arbitration notice. The two (2) arbitrators thus appointed shall appoint a
third arbitrator within thirty-five (35) calendar days from receipt of the
arbitration notice and the third arbitrator thus shall be a lawyer experienced
in matters of international, financial and commercial matters and without
affiliation of any kind to any of the Parties.
21.5 The board of arbitration shall not be required to observe judicial
formality and shall not be bound by strict rules of evidence. The board of
arbitration shall render its award applying commercially reasonable principles
consistent with the terms of this Agreement and shall have the authority to
include in such award a decision binding upon the Parties, enjoining them to
take or refrain from taking specific action with respect to the matter in
dispute or disagreement. The arbitration award shall be issued in Vancouver,
Canada and shall be agreed by each Party to be a foreign arbitral award in
respect of the Philippines. The award of the board of arbitration shall be final
and binding on the Parties. The costs of arbitration shall be borne in
accordance with the determination of the board of arbitration. Except in the
case of termination, the Parties shall continue to perform all their obligations
under this Agreement pending the arbitration award.
21.6 All communications and testimonies, whether oral or written, during the
arbitration proceedings shall be in the English language.
21.7 The arbitral award may be enforced by proceedings in any court having
jurisdiction over any of the Parties. If enforcement is sought in the
Philippines, the award shall be enforced by judgement of the Regional Trial
Court of Makati City only. In this connection, the Parties agree to
submit themselves to the jurisdiction of the proper court for a non-arbitrable
dispute, or if enforcement of the arbitral award is sought.
22. BINDING EFFECT & ASSIGNMENT
22.1 This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, personal representatives, successors and
assigns, except as otherwise expressly provided herein.
22.2 CPMIC may not assign this Agreement or grant any participation without the
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24
prior written consent of Fenway.
23. EXPENSES
Each party will be responsible for and bear its own costs and expenses,
including legal fees, whether or not the transaction contemplated by this
Agreement is completed or not.
24. NOTICE
24.1 All notices, requests, payments, demands or directions to the parties
hereto shall be in writing and delivered or sent by registered mail postage
prepaid, or by telex, telecopy, telegram or cable addressed to the parties
hereto at their addresses set out on the first page of this Agreement, or to
such other address(es) as may be specified by one party to the other in a notice
given in the manner herein provided. Any notice, request, demand or direction
given in such manner shall be deemed to have been received by the party to whom
it is given.
(a) On the 7th business day following the mailing thereof, if sent by
registered mail;
(b) On the 2nd business day following delivery, if personally delivered; or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
24.2 If normal mail service, telex service or telegraph service is interrupted
by strike, slowdown, force majeure or other cause, then any notice, request,
demand or direction sent by the impaired means of communication will not be
deemed to be received until actually received, and the party sending the notice,
request, demand or direction shall utilize any other such services which have
not been interrupted or shall deliver such notice, request, demand or direction
in order to ensure prompt receipt thereof;
25. FORCE MAJEURE
25.1 In the event that any party is delayed or hindered in the performance of
their obligations hereunder by force majeure, this Agreement shall remain in
suspense until the cause thereof has ceased to delay or hinder performance. For
purposes of This Agreement, but not by way of limitation, force majeure shall
mean any cause beyond the reasonable control of the party liable to perform, and
shall include strikes, lockouts, civil
<PAGE>
25
commotion; riot, war, threat of or preparation for war, fire; explosion,
sabotage, storm, flood, earthquake or other natural disaster.
25.2 Any party hereto claiming suspension of its obligations as aforesaid shall
promptly notify the other parties to that effect and shall take all reasonable
steps to remove or remedy the cause and effect of the force majeure described in
the said notice insofar as it is reasonably able so to do and as soon as
possible; Provided that the terms of settlement of any labor disturbance or
dispute, strike or lockout shall be wholly in the discretion of the party
claiming suspension of its obligations by reason thereof, and that said party
shall not be required to accede to the demands of its opponents in any such
labor disturbance or dispute, strike, or lockout solely to remedy or remove the
force majeure thereby constituted.
26. WAIVER
26.1 No consent or waiver, express or implied, by any party to or of any breach
or default by the other party of any or all of its obligations nnder this
Agreement will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this Paragraph;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this Paragraph in any other or subsequent instance.
26.2 In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable, such illegality, invalidity or
unenforceability shall to the extent practicable not affect the validity of this
Agreement.
27. GENERAL PROVISIONS
27.1 All parties hereto will, from time to time, at the request of the others,
execute and deliver all such other and additional instruments, notices,
releases, agreements, undertakings or other required documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the carrying out of the intent and puipose of the terms of this Agreement.
27.2 Time is of the essence of this Agreement.
<PAGE>
26
27.3 The parties acknowledge that although this Agreement was prepared by
Sobolewski Anfield acting as counsel to Fenway, CPMIC and its stockholders
throughout the discussions and negotiations between the parties has been advised
by independent legal counsel with respect to its rights and obligations under
this Agreement.
27.4 The governing law of this Agreement shall be the laws of British Columbia,
Canada.
28. EXECUTION
28.1 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument. The Parties may each execute this Agreement by signing any
such counterpart.
28.2 A facsimile copy of this Agreement shall be considered as an original and
shall, in all respects, be legally binding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
CENTRAL PALAWAN MINING & FENWAY RESOURCES LTD.
INDUSTRIAL CORPORATION
By: /s/ Fernanda B. Esguerra By: /s/ H. John Wilson
- ------------------------------- ---------------------------------
Engineer Fernando B. Esguerra H. John Wilson
President President & CEO
/s/ A. Leonard Taylor
---------------------------------
A. Leonard Taylor
Secretary & CFO
<PAGE>
27
The Corporate Seal of
CENTRAL PALAWAN MINING &
INDUSTRIAL CORPORATION
was hereunto affixed in the
presence of:
/s/ [ILLEGIBLE]
- -------------------------------
The Corporate Seal of
FENWAY RESOURCES LTD.
was hereunto affixed in the
presence of:
/s/ [ILLEGIBLE]
- -------------------------------
<PAGE>
28
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES)
MAKATI, METRO MANILA )S.S.
Before me on the 29th of August 1996 in Makati, Metro Manila, personally
appeared the following:
Name CTC/Passport Date & Place of Issue
A. Leonard Taylor for: BCO15961 7/25/94 - Vancouver
FENWAY RESOURCES LTD. Canada
Fernando B. Esguerra for: 80957630 4/2/96 - Makati
CENTRAL PALAWAN MINING
INDUSTRIAL CORPORATION
to me known and known to me to be the same persons who executed the foregoing
Memorandum of Agreement consisting of __ pages, including this page, and they
acknowledged to me that the same is their free and voluntary act and deed and
the free and voluntary act and deed of the corporations they respectively
represent.
IN WITNESS WHEREOF, I have hereunto set my seal on the date and at the
place abovewritten.
/s/ SUSANA C. FONG
Susana C. Fong
Notary Public
until 31 December 1997
PTR No. 0276071
IBP #405858
Doc. No. 438;
Page No. 089;
Book No. III;
Series of 1996.
<PAGE>
TECHNICAL DESCRIPTION
CONTRACTOR: CENTRAL PALAWAN MINING & INDUSTRIAL CORP.
5885 Zobel Roxas St., Palanan,
Makati, Metro Manila
CONTRACT AREA
Location: Barangay Isugod-Pinaglabanan Area
Municipality of Quezon
Province of Palawan
Shape: Bounded by Coordinates
Longitude 117 58'30" to 118 05'30"
Latitude 9 12'00" to 9 18'30"
See attached map, marked Figure 2.
Size: Four Thousand Nine Hundred Forty One
Hectares (4,941)
ECONOMIC GEOLOGY
Sufficient reserves of cement raw materials, consisting of limestone and
shale, have been evaluated in the Isugod-Pinaglabanan area along the coast of
Quezon town facing South China Sea by the Bureau of Mines & Geosciences which
confirmed the feasibility of establishing a commercial plant therein. Chemical
ananlysis indicated the suitability of the materials for the manufacture of
portland cement.
<PAGE>
[GRAPHIC OMITTED]
<PAGE>
[GRAPHIC OMITTED]
MEMORANDUM OF AGREEMENT
THIS AGREEMENT made as of this 11th day of November, 1996 by and between:
PALAWAN STAR MINING VENTURES, INC., with address at 5885
Zobel Roxas Street, Palanan, Makati, Metro Manila,
Philippines, represented in this act by its duly authorized
President, Higinio C. Mendoza, Jr., (hereinafter referred to
as "STAR");
-and-
FENWAY RESOURCES LTD., of #308-409 Granville Street,
Vancouver, British Columbia, V6C 1T2, represented in this
act by its duly authorized officer H. John Wilson,
(hereinafter referred to as "Fenway");
WHEREAS:
A. STAR and Fenway entered into an option agreement dated June 30, 1992, as
amended June 30, 1994, August 24, 1994, November 17, 1995 and June 28, 1996 and
other related agreements between the parties herein (collectively the "Original
Agreement"), pursuant to which STAR granted to Fenway an option to participate,
with others, in a joint operation for the purpose of quarrying and mining raw
materials for the production of cement, lime, clinker and all other rock and
mineral products derived from the STAR Property, and to establish a cement plant
for the purposes of manufacturing cement in the territory located in the
Province of Palawan, Republic of the Philippines;
B. Pursuant to the terms of the Original Agreement, STAR received valuable
consideration and concessions from Fenway;
C. Pursuant to the terms of the Original Agreement, a pre-feasibility study on
the viability of the Palawan. Cement Project was concluded;
D. Pursuant to the terms of the Original Agreement, a Feasibility Study was
prepared for Fenway, which Feasibility Study established the viability of the
Palawan Cement Project;
B. After consultation with STAR, the directors of Fenway passed a director's
resolution dated March 4,1996 accepting the Feasibility Study;
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F. The Philippine government, through BMG-DENR, conducted an official geological
evaluation of the STAR Property, which evaluation reported a reserve of more
than 1.7 billion tons of suitable cement raw materials thereon;
G. By virtue of an application made for a Mineral Production Sharing Agreement
(MPSA-IV(1)-12) by STAR registered on April 20, 1992, STAR will be sole claim
owner for the sole and exclusive right to and interest in the beneficial use of
the STAR Property in the event the MPSA application is approved by the BMG-DENR;
H. Whereas STAR has already brought the STAR Property, in accordance with
Philippine laws, within the coverage of Executive Order No. 279 which requires
the execution of a Mineral Production Sharing Agreement with the Philippine
government covering the said mining claims and also within the coverage of
Republic Act No. 7942, otherwise known as the "Philippine Mining Act of 1995"
and has applied for the MPSA as hereinafter defined;
I. Fenway is a technically and financially capable resource company in the
Province of British Columbia, Canada; Fenway has advanced the necessary funds to
successfully undertake among others, the activities described or Recital (C),
(D), and 13.2 (d);
J. The parties wish to restate their rights, duties and obligations with respect
to the subject matter of the Original Agreement, to amend, modify and supersede
the same to the extent provided herein, and to implement the activities
contemplated and described under this Agreement;
NOW THEREFORE in consideration of the premises, the performance of the mutual
covenants contained herein and other good and valuable consideration given by
each party to the others, the receipt and sufficiency of which is hereby
conclusively acknowledged, it is hereby agreed as follows:
1. ENTIRE AGREEMENT
1.1 This Agreement, when executed, constitutes the whole agreement between all
the parties hereto and supersedes all the Original Agreements written, oral or
otherwise, and there are no representations or warranties, express or implied,
statutory or otherwise other than expressly set forth or referred to herein.
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1.2 It is specifically acknowledged by the parties hereto that the Original
Agreement is superseded and cancelled and of no further force or effect.
1.3 This Agreement may not be amended, modified, released or discharged, in
whole or in part, except by an instrument in writing signed by all parties
hereto.
2. INTERPRETATION
2.1 For purposes of this Agreement, except as otherwise expressly provided, or
unless the context otherwise requires:
(a) "Acceptable Funding Commitment" means a bona fide commitment to
provide the Production Funds;
(b) "Activities" means all activities and operations relating to the STAR
Property in accordance with this Agreement and within the scope and
purpose of CPCC as referred to in this Agreement.
(c) "Agreement" means this Memorandum of Agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions hereof, and includes every
Schedule or Annex attached hereto, if any;
(d) "BMG-DENR" means the Philippine Bureau of Mines and Geo-Sciences,
Department of Environment and Natural Resources;
(e) "Business Days" means any day during which Philippine chartered banks
are open for business in Metro Manila, Republic of the Philippines;
(f) "CPCC" means Central Palawan Cement Corporation, a company to be
incorporated pursuant to the laws of the Republic of the Philippines,
or any successor company however formed, whether as a result of
merger, amalgamation, in accordance with the terms of Paragraphs 4 and
9 of this Agreement;
Page -3-
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(g) "CPMIC" means Central Palawan Mining & Industrial Corporation, a
company incorporated pursuant to the laws of the Republic of the
Philippines, or any successor company however formed, whether as a
result of merger, amalgamation, or other action;
(h) "Closing Date" means the day ten (10) Business Days following the
receipt of Regulatory Approval, or such other date as the parties
hereto shall mutually agree;
(i) "Commercial Production" means:
i) the last day of a period of forty (40) consecutive days in
which Venture Products have been processed from the STAR Property at
not less than 60% of its rated operating capacity; or
ii) the last day of a period of thirty (30) consecutive days
during which ore has been shipped from the STAR Property for the
purpose of earning revenues, but not period of time during which ore
or concentrate is shipped from the STAR Property for testing purposes,
and no period of lime during which milling operations are undertaken
as initial tune-up, shall be taken into account in determining the
date of Commercial Production as determined by CPCC;
(j) "Effective Date" means June 30, 1992;
(k) "Exchange" means the Vancouver Stock Exchange;
(l) "Fair Market Value" means the highest price available in the open and
unrestricted market between informed, prudent parties acting at arm's
length, under no compulsion to act, expressed in terms of money or
money's worth;
(m) "Feasibility Study" means the comprehensive report dated December 1995
prepared by Kilborn Engineering Pacific Ltd., which provides a
definite technical, environmental and commercial base for determining
the viability of the Palawan Cement Project and which was accepted by
both Fenway and STAR;
Page -4-
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PALAWAN STAR - FENWAY
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(n) "Fenway" means Fenway Resources Ltd., a company incorporated pursuant
to the laws of the Province of British Columbia, Canada, or any
successor company however formed, whether as a result of merger,
amalgamation, or other action;
(o) "Gross Proceeds" means, for any period, the aggregate gross proceeds
received by CPCC during the period from the sale of Venture Products
derived from the STAR Property and any cash proceeds received during
the period from the disposition of any capital assets the cost of
which has been treated as an Operating Cost;
(p) "Joint Venture" means the joint venture company to be formed as a
result of this Agreement or CPCC as defined in this Agreement;
(q) "Joint Venture Agreement" means the agreement governing the
relationship among the Parties herein and as to any third-party
Participant with CPCC with respect to the Palawan Cement Project, and
the STAR Property, as more fully described in Paragraph 9 of this
Agreement;
(r) "MPSA" means mineral production sharing agreement MPSA-IV(1)-12, as
amended, which brought the STAR Property within the coverage of
Executive Order No. 279 and also under coverage of the Philippine
Mining Act of 1995, and which confers upon STAR the priority right to
the beneficial use of the STAR Property;
(s) "Mining and Production Facilities" means all mines, roads, structures,
buildings, machinery, equipment and other facilities necessary to
mine, remove and process ores from the STAR Property and all mines and
plants, including without limitation, all pits, shafts, haulageways
and other underground workings and all buildings, plants, facilities
and other structures, fixtures and improvements and all other
property, whether fixed or moveable, as the same may exist at any time
in, on or outside the STAR Property and relating to the production of
Venture Products;
(t) "Net Profits" means, for any period, the excess, if any, of Gross
Proceeds for the period over the aggregate of:
i) Operating Costs for the period;
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ii) Operating Costs for all previous periods to the extent that
they have exceeded Gross Proceeds from such periods and have not
previously been deducted in computing Net Profits; and
iii) such amount of cash as is required for the ensuing three
month period for working capital as, in the opinion of CPCC, is
required for CPCC, provided that this amount shall be added to Gross
Proceeds when calculating Net Profits for the next ensuing period;
(u) "Operating Costs" means, for any period, all costs, expenses,
obligations, liabilities and charges of whatsoever kind and nature
incurred or chargeable, directly or indirectly, by CPCC, after
commencement of Commercial Production in connection with CPCC during
the period, which costs, expenses, obligations, liabilities and
charges shall include, without limiting the generality of the
foregoing, the following:
i) all costs of or related to CPCC;
ii) all costs of or related to the quarrying, processing and
marketing of Venture Products including, without limitation,
transportation, storage, commissions, royalties and/or discounts;
iii) all costs of or related to providing and/or operating
employee facilities, including housing;
iv) all duties, charges, levies, royalties, taxes (excluding any
act of legislation which taxes the income of the parties hereto
individual) and other payments imposed upon or in connection with CPCC
by any government or municipality or department or agency thereof;
v) all actual costs of CPCC for providing technical, management
and/or supervisory services, the intent being that CPCC will neither
realize a profit nor suffer a loss as a result of its management
activity;
vi) all costs of consulting, legal, accounting, insurance and
other services;
vii) all interest expenditures incurred after commencement of
Commercial Production;
viii) all costs of construction, equipment and mine development
after commencement of Commercial Production;
ix) all costs for pollution control, reclamation or any other
similar costs incurred or to be incurred by CPCC;
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x) any cost or expense incurred or to be incurred relating to the
termination of this Agreement;
except where specific provision is made otherwise, all Operating Costs shall be
determined in accordance with generally accepted accounting principles
consistently applied;
(v) "Original Agreement" means the option agreement dated June 30, 1992,
the amended option agreements dated June 30, 1994, August 24, 1994,
November 20, 1995 and June 28, 1996 and other related agreements
between the parties herein. -
(w) "Palawan Cement Project" means the joint operation for the purposes
of, without limitation:
i) quarrying and mining raw materials for the production of
cement, lime, clinker and all other rock and mineral products derived
from the STAR Property; and
ii) manufacturing cement from raw materials extracted from the
STAR Property;
(x) "Participant(s)" means a Filipino third party or parties, acceptable
to Fenway, which party or parties shall provide Production Funds;
(y) "Party or Parties" means the parties to this Agreement and their
respective successors and permitted assigns which become parties
pursuant to this Agreement;
(z) "Philippine Mining Act of 1995" means Republic Act No. 7942 of the
government of the Philippines;
aa) "Production Funds" means the funds required in order to finance the
Palawan Cement Project, from sources whether domestic or foreign,
which Production Funds are to be obtained by Fenway, at its sole
discretion;
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ab) "Regulatory Approval" means filing and approval of mineral agreements
and their transfer or assignment as provided for in Sections 29 and 30
of Republic Act No. 7942 enacted by the Philippine legislature in 1995
and as contemplated. in this Agreement as well as approval of this
Agreement by all Regulatory Authorities.
ac) "Regulatory Authorities" means both the Philippine Regulatory
Authorities and the British Columbia Regulatory Authorities;
(i) "British Columbia Regulatory Authorities" means the Exchange
and, where applicable, the British Columbia Securities Commission.
(ii) "Philippine Regulatory Authorities" means the BMG-DENR, the
Philippine Securities and Exchange Commission, local government units
and any governmental authorities located in the Republic of the
Philippines;
ad) "Schedules" means those schedules attached hereto and forming part of
this Agreement which are more particularly described as follows:
Schedule "A": Description of the STAR Property
ae) "STAR" means Palawan Star Mining Ventures Inc., a company incorporated
pursuant to the laws of the Republic of the Philippines, or any
successor company however formed, whether as a result of merger,
amalgamation, or other action;
af) "STAR Property" means all existing mining claims and rights/quarrying
rights, mining right applications and Mineral Production Sharing
Agreements as defined in Republic Act 7942 (Philippine Mining Act of
1995) covering 4,941 hectares of land and more particularly described
in Schedule "A" hereto and all tenures in substitution or replacement
therefor including, without restricting the generality, all rights to
enter upon the STAR Property, explore, develop and remove any minerals
therefrom;
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ag) "Venture Products" means all ores, minerals, concentrates or other
products mined or produced from the STAR Property and without
limitation, all products produced by CPCC.
2.2 The words "paragraph", "subparagraph", "herein", "hereof' and "hereunder"
refer to the provision of this Agreement.
2.3 The headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the scope, extent
or intent of this Agreement or any portion hereof
2.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and in accordance with the rules and
guidelines of the governing Regulatory Authorities, if applicable; PROVIDED that
the laws of the Republic of the Philippines shall govern all matters relating to
the transfers of the interests provided for in this Agreement as well as the
development and operation of the joint venture company.
2.5 A reference to a statute includes all regulations made pursuant thereto, all
amendments to such statute or regulations enforced from time to time and any
statute or regulation which supplements or supersedes such statute or
regulation.
2.6 Wherever the singular or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine or neuter when the
context so requires.
2.7 All accounting terms not defined in this Agreement shall have those meanings
generally ascribed to them in accordance with generally accepted accounting
principles, applied consistently.
2.8 All currency referred to herein is currency of the United States of America,
unless otherwise stated.
3. TRANSFER
3.1 Upon and subject to the terms and conditions of this Agreement, STAR hereby
agrees to transfer and set over to CPCC (the "Transfer") the STAR Property and
the MPSA or any application thereof, in such form and by way of instruments
authorized by the
Page -9-
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MEMORANDUM OF AGREEMENT
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Philippine Mining Law of 1995; to have and to hold the same, together with all
benefit and advantage to be derived therefrom.
3.2 The rights of the parties hereto may only be assigned with the prior written
consent of the other party hereto and with the approval of the Regulatory
Authorities, if required.
4. CENTRAL PALAWAN CEMENT CORPORATION
4.1 Upon receipt of the Environmental Compliance Certificate (ECC) (as defined
in RA 7942) and the mandate to Fund, CPCC shall be incorporated as a new
Philippine company, the sole purpose of which shall be to act as operator of the
Joint Venture to undertake the Palawan Cement Project and to hold all of the
rights and interests of STAR and Fenway in and to the STAR Property, including
the MPSA for the benefit of the parties hereto and the Participant(s).
4.2 The equity of CPCC shall be owned by Fenway (as to 40%), the Participant(s)
(as to 50%) and CPMIC (as to 10%).
4.3 The terms and principles governing the operation of CPCC shall be as set
forth in Paragraph 9 hereof
5. CONSIDERATION
5.1 Subject to Paragraph 5.2 hereof, as consideration for the Transfer, Fenway
hereby agrees to issue to STAR non-transferable share purchase warrants to
purchase, either in whole or in part, up to an aggregate of 2,000,000 common
shares of Fenway (the "Shares") on the following basis (the "Warrants"):
(a) 1,000,000 Shares, exercisable at a price of Canadian $4.00 per Share,
at any time on or before two (2) years from the date of receipt of the necessary
Environmental Compliance Certificate (the "Certificate") from the Philippine
Regulatory Authorities;
(b) 1,000,000 Shares, exercisable at a price of Canadian $5.00 per Share,
at any time one (1) year from the date of exercise of the Warrant referred to in
Paragraph 5.1(a) above.
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5.2 It is expressly understood that the Warrants referred to in Paragraph 5.1(a)
and (b) hereof may not be exercised by STAR until such time as Fenway has
received the Acceptable Funding Commitment.
5.3 Commencing upon receipt of the Production Funds, CPCC shall make maintenance
payments to STAR, in the amount of CDN$100,000 per annum (the "Maintenance
Payments"), such payments to be paid quarterly commencing ten (10) days after
the end of CPCC's first quarterly period ended, or as otherwise mutually agreed
between STAR and Fenway.
5.4 It is hereby expressly acknowledged that a total of 100,000 shares of Fenway
were previously issued to STAR by Fenway, which shares were issued by Fenway to
STAR pursuant to the terms of the Original Agreement.
6. ROYALTY
6.1 If CPCC commences Commercial Production from the STAR Property, STAR shall
be entitled to receive and CPCC shall pay to STAR a royalty equal to $0.35 per
tonne of raw materials extracted from the STAR Property (the "Royalty").
6.2 Subject to the provisions of Paragraph 5.3 hereof, CPCC shall be under no
obligation whatever to place the STAR Property into Commercial Production and,
in the event it is placed into Commercial Production, CPCC shall have the right
at any time to curtail or suspend such production as it, in its absolute
discretion, may determine.
6.3 The Royalty payable to STAR hereunder shall be paid quarterly commencing
thirty (30) days after the end of CPCC's first quarterly period ended, or as
otherwise mutually agreed between STAR and Fenway, the records relating to the
calculation of such Royalty during that quarterly period shall be audited and
any adjustments shall be audited and any adjustments shall be made forthwith and
the audited statements shall be delivered to STAR who shall have sixty (60) days
after receipt of such statements to question in writing the accuracy and failing
such question, the statements shall be deemed correct. All taxes on royalties
shall be the sole responsibility of STAR.
6.4 STAR or its representatives, duly appointed in writing, shall have the right
at all reasonable times, upon written request, to inspect those books and
financial records of
Page -11-
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CPCC as are relevant to the determination of the Royalty and, at its own
expense, to make copies thereof
7. CONDITIONS PRECEDENT
7.1 Fenway shall within thirty (30) days of the date of this Agreement, commence
an Environment Impact Assessment ("EIA') at its own cost.
7.2 Closing (as hereinafter defined) shall be conditional upon:
(a) receipt by STAR and Fenway of an acceptable ECC;
(b) the acceptance of the Acceptable Funding Commitment by Fenway;
(c) signing and execution of a Joint Venture Agreement in accordance with
the terms and conditions in Articles 4 and 9 of this Agreement.
(d) the incorporation of CPCC pursuant to the laws of the Republic of the
Philippines;
(e) submission by STAR of proof of the government approvals for the
transfer of the STAR Property including the MPSA, or any application
thereof, to CPCC;
8. THE CLOSING
8.1 Completion (the "Closing") of the transactions contemplated by this
Agreement shall take place on the Closing Date, or such other date as the
parties hereto shall mutually agree, and shall take place at the offices of STAR
as set out on Page 1 of this Agreement.
8.2 Subject to the terms and conditions of this Agreement, on Closing STAR will
execute and deliver to CPCC the following:
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(a) a deed of assignment, or other necessary documents, in recordable
form, to absolutely transfer and vest the STAR Property and the MPSA
or any application for an MPSA over the STAR Property, to CPCC;
(b) evidence that the transfers, including the MPSA, is validly existing
and approved in accordance with the Philippine Mining Act of 1995;
(c) a certified true copy of the resolutions of the directors and
stockholders of STAR approving this Agreement, the transactions
contemplated under this Agreement and the authorized signatories;
(d) a certified true copy of the last audited financial statements of
STAR.
(e) submission of evidence of Philippine Regulatory Approvals from the
proper Philippine Regulatory Authorities.
8.3 Subject to the terms and conditions of this Agreement, on the Closing Date,
Fenway will execute and deliver to STAR or to a Trustee, the following:
(a) evidence of Regulatory Approval from British Columbia Regulatory
Authorities;
(b) the Warrants referred to in Paragraph 5.1(a) and (b) hereof
(c) a certified true copy of the last audited financial statements of
Fenway.
9. JOINT VENTURE
Formation of CPCC
9.1 Prior to Closing Date, the parties hereto agree to sign and conclude with a
suitable Participant(s) a Joint Venture Agreement leading to the formation of
[CPCC,] the Joint Venture [corporation in accordance with Paragraphs 4 and 9 of
this Agreement.]
9.2 The parties agree that the relationships between themselves and the
Participant(s) in CPCC will be governed in accordance with the terms of a full
and formal joint venture operating agreement, which will be drawn and finalized
by the parties and the Participant(s)
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acting in good faith, which agreement shall cover all terms and conditions of
CPCC (the "JV Agreement").
9.3 In addition to the provisions set out in this Paragraph 9, the Joint Venture
Agreement shall also set out terms governing the following:
(a) rights of first refusal with respect to the disposition of
participating interests in CPCC;
(b) rights and limitations with respect to the assignment of participating
interests in CPCC;
(c) default and termination.
Contributions to CPCC
9.4 STAR shall, by way of the Transfer of the STAR Property including the MPSA
to CPCC, thereby effectively contribute the STAR Property to CPCC.
9.5 Fenway and the Participant(s) will provide CPCC with the funds necessary to
finance CPCC.
9.6 CPCC will fund each Approved Program and Budget.
9.7 All funds expended with respect to the STAR Property after the formation of
CPCC shall be required to be made by CPCC.
Purposes of CPCC
9.8 CPCC shall have the following scope and primary and secondary purposes:
(a) exploring for and developing ores, minerals and other products from
the STAR Property, including opening, developing and operating mines
and/or quarries on the STAR Property;
(b) processing (including beneficiating, leaching, concentrating,
smelting, refining or otherwise treating) ores, minerals or other
products mined or
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produced from the STAR Property for the purposes, without limitation,
of producing Venture Products;
(c) designing, engineering, constructing and operating Mining and
Production Facilities to mine and remove ores, minerals or other
products from the STAR Property and to process such ores, minerals or
other products mined from the STAR Property into Venture Products;
(d) marketing, selling and delivering Venture Products;
(e) performing any other operation or activity necessary, appropriate or
incidental to any of the foregoing.
9.9 Unless the parties otherwise agree, CPCC shall be limited to its stated
scope and purposes and nothing in this Agreement shall be construed as to
enlarge the stated scope and purposes of CPCC.
Board of Directors
9.10 The affairs of CPCC will be governed by the direction and control of a
Board of Directors (the " Board") to be comprised of ten (10) members with the
following representation:
(a) From Fenway: 40% of total representatives
(b) From the Participant(s): 50% of total representatives
(c) From CPMIC: 10% of total representatives
9.11 Voting will be on the basis of one (1) vote for each representative and,
unless otherwise provided, a decision or an action of the Board will require the
concurrence of at least six (6) representatives.
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Operator
9.12 CPCC will be the operator of the Joint Venture.
Approved Programs and Budgets
9.13 All activities will be performed under programs and budgets approved in
advance by the Board of Directors ("Approved Programs and Budgets"). The Board
of Directors will meet initially to approve a program and budget for each
calendar quarterly period as may be necessary in order to have each program and
budget approved by at least one (1) month prior to the date of implementation.
Interests in Net Profits
9.14 Participation in the Net Profits of CPCC shall be as follows:
(a) to Fenway, 40% of Net Profits derived from the STAR Property;
(b) to the Participant(s) 50% of Net Profits derived from the STAR
Property.
(c) to STAR, 10% of Net Profits derived from the STAR Property.
9.15 Any party may, at any time upon notice in accordance with the notice
provisions of this Agreement, surrender all or a portion of its interest in Net
Profits to the other parties by giving those parties notice of surrender.
10. RIGHTS OF FENWAY PRIOR TO CLOSING
10.1 At all times from the Effective Date until the Closing Date, Fenway, its
employees, agents and independent contractors shall, subject to STAR giving
prior notice to the proper authorities, have the sole and exclusive right to:
(a) to enter upon the STAR Property with full rights of access and egress;
(b) to carry on all such other exploration activities including, without
limitation, the right to remove from the STAR Property, minerals,
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metals, broken rock, samples, bulk samples and other material as
Fenway deems necessary or desirable to asses's the potential of the
STAR Property and the recoverability of ore and minerals therefrom.
11. COVENANTS
11.1 At all times during the currency of this Agreement, STAR shall:
(a) not do or permit or suffer to be done any act or thing which would or
might in any way adversely affect the rights of Fenway and CPCC hereunder;
(b) continue to make available to Fenway and its representatives all
records and files relating to the STAR Property and will permit Fenway and its
representatives at their own expense to take abstracts therefrom and make copies
thereof;
(c) prior to the incorporation of CPCC with all government agencies and
institutions, at Fenway's expense, obtain all government incentives which may be
available for the Palawan Cement Project, obtain all rights from landholders or
any other rights holders as well as required licenses, work permits and other
necessary documents to develop the STAR Property for the Palawan Cement Project
with the involvement of foreign partners, secure, without limitation, water
rights, plant site, pier site and warehouse site, from national and local
Philippine governments;
(d) prior to, during and after incorporation of CPCC and the Transfer,
promptly provide Fenway and/or CPCC with any and all notices and correspondence
from government agencies in respect of the STAR Property;
(e) obtain the approval of the Philippine Regulatory authorities to this
Agreement where necessary; use its best efforts to expeditiously assist Fenway
in doing all things reasonably required to obtain the acceptance of the British
Columbia Regulatory Authorities to the terms of this Agreement;
(f) cooperate fully with Fenway and/or CPCC in obtaining any additional
rights on or related to the STAR Property as Fenway deems desirable;
(g) immediately notify Fenway and/or CPCC of any claims, actions, demands
of a civil, legal or judicial nature, filed against STAR in respect of the STAR
Property as well
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as disclose any anticipated litigation or adverse claims as set forth in the
representations and warranties provision of this Agreement.
(h) maintain in good standing all the rights comprising the STAR Property
such as but not limited to the mineral claims and rights, renewals and
continuances thereof, by the doing and filing of any assessment work or the
making of payments in lieu thereof, by the payment of taxes and rentals, and the
performance of all other actions which may be necessary in that regard and in
order to keep the STAR Property free and clear of all liens and encumbrances;
11.2 At all times during the currency of this Agreement, Fenway shall:
(a) not do or permit or suffer to be done any act or thing which would or
might in any way adversely affect the rights of STAR and CPCC hereunder;
(b) conduct all work on or with respect to the STAR Property in a careful
and minerlike manner, including any reclamation work required in respect of work
performed by Fenway on the STAR Property, and in accordance with the applicable
laws;
(c) permit STAR and its representatives, duly authorized by STAR in
writing, at their own risk and expense access to the STAR Property at all
reasonable times and to the records prepared by Fenway in connection with work
done on or with respect to the STAR Property;
(d) at its own expense, carry out any environmental cleanup which might be
required as a result of work performed by Fenway on the STAR Property;
(e) obtain and maintain for itself and cause any contractor engaged
hereunder to obtain and maintain during any period in which active work is out
hereunder, adequate insurance and worker's compensation coverage, if applicable;
(f) use its best efforts to assist STAR in doing all things reasonably
required to obtain the approval of the Philippine Regulatory Authorities to the
terms of this Agreement;
(g) promptly provide STAR with any and all notices and correspondence from
government agencies in respect of the STAR Property;
(h) cooperate fully with STAR in obtaining any additional rights on or
related to the STAR Property as STAR deems desirable;
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(i) immediately notify STAR of any claims, actions, demands of a civil,
legal or judicial nature, filed against Fenway in respect of the STAR Property;
(j) obtain the Production Funds;
12. DEFAULT AND TERMINATION
12.1 It is an event of default ("Default") if:
(a) the Production Funds are not received by Fenway by not later than the
close of business (Vancouver time) on June 30, 1997, unless otherwise extended
by the parties hereto in writing;
(b) either Fenway or CPCC fail to make any of the payments as and when
required pursuant to the terms hereof, or under any documents delivered in
connection herewith, except for the consideration in Par. 5.1 (a) which has been
paid through a Trustee;
(c) STAR fails to take reasonable action to prevent or defend assiduously,
any action or proceeding which claims:
i) possession;
ii) sale;
iii) foreclosure;
iv) the appointment of a receiver or receiver-manager of the
Company's assets; or
v) forfeiture or termination;
of the STAR Property.
(d) any party becomes bankrupt or commits an act of bankruptcy or if a
receiver or receiver-manager of its assets is appointed or makes an assignment
for the benefit of creditors or otherwise;
(e) any party is unable or unwilling or otherwise fails to perform their
obligations as and when required hereunder; or
(f) if Fenway and STAR mutually consent in writing to the termination
hereof.
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12.2 Subject to the provisions hereof, a notice of Default by the non-defaulting
party must be given to the defaulting party pursuant to the notice provisions of
this Agreement within thirty (30) days of the time when the non-defaulting party
is made aware of the event of Default and the defaulting party shall have ninety
(90) days from the notice of Default to cure such Default.
12.3 In the event that the defaulting party does not cure such Default within
the time provided for in Paragraph 12.2 hereof, then this Agreement shall
terminate forthwith and absolutely unless otherwise agreed to between the
parties.
12.4 In the event of a Default by Fenway, STAR shall have the right to obtain
its own financing to ensure the construction and/or operation of the cement
plant and/or the quarry, provided that Fenway shall first be reimbursed by STAR
and its stockholders for all of its costs and expenses, advances and loans to
STAR or any of its stockholders or officers to the date of Default.
12.5 In the event of a material breach of the terms of this Agreement or of the
warranties, covenants and representations contained herein by either of the
parties hereto it shall be open to the aggrieved party to seek its remedy in
damages and it also shall be open to the parties to rescind the terms of this
Agreement upon the terms as herein set forth.
13. REPRESENTATIONS AND WARRANTIES
13.1 Each of the parties represents and warrants to the other that:
(a) it is a company duly incorporated, organized and validly subsisting and
in good standing under the laws of its incorporating jurisdiction and that it is
qualified to do business in those jurisdictions where it is necessary to fulfill
its obligations under this Agreement;
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or contemplated
by this Agreement;
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(c) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby contemplated conflict with or result in any breach of or
accelerate performance under any covenants or agreements or constitute a
default, or result in the creation of any encumbrance under the provision of any
shareholders' or directors' resolution, indenture, agreement or other instrument
whatsoever to which it is a party or by which it is bound or to be which it is
subject;
(d) the execution and delivery of this Agreement and the agreements
contemplated hereby have been duly authorized by all necessary corporate action
on its part and will not violate or result in the breach of the laws of any
jurisdiction applicable or pertaining thereto or of its constitutive documents;
(e) except for the approval of this Agreement by the Exchange, if required,
there are no consents, approvals or conditions precedent to the signing and
execution of this Agreement which have not been obtained;
(f) no proceedings are pending, and the parties are unaware of any basis
for the institution of any proceedings leading to their respective dissolution
or winding up, or the placing of each of them in bankruptcy or any other laws
governing the affairs of insolvent corporations.
13.2 STAR hereby represents and warrants to Fenway that:
(a) it is, and will be at Closing, the 100% recorded and beneficial owner
of the STAR Property including all MPSAs or applications for MPSAs found thereon
and has the exclusive right to enter into this Agreement and all necessary
authority to dispose of its interests in and to the STAR Property in accordance
with the terms of this Agreement. Further, STAR received warranties that in the
event of a change in the composition of stockholders of STAR, it will promptly
notify Fenway in writing;
(b) other than a royalty payable to the Republic of the Philippines, no
stockholder of STAR, other person, firm, corporation or entity has any
proprietary or possessory interest in the STAR Property including the MPSA or
applications for an MPSA other than STAR and no person is entitled to any
royalty or other payment in the nature of rent or royalty on any minerals, ores,
metals or concentrates, or any such other products removed from the STAR
Property;
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(c) there are no actual, pending or threatened actions, suits; claims or
proceedings regarding the STAR Property or any basis therefor of which it is
aware;
(d) the STAR Property is accurately described in Schedule "A" to this
Agreement. As a result of advances made by Fenway, the STAR Property and all
interests related thereto have been duly and validly staked, located, recorded
and registered in accordance with all applicable laws of the Philippines and all
such interests are free and clear of all liens, charges, encumbrances and third
party interest whatsoever;
(e) the corresponding licenses and permits covering the STAR Property and
all interests therein including the MPSAs or any applications thereof have been
duly and validly issued pursuant to the mining laws of the Republic of the
Philippines and are in good standing by the proper doing and filing of
assessment work and the payment of all fees, taxes and rentals in accordance
with the requirements of the mining laws of the Republic of the Philippines and
the performance of all other actions necessary in that regard; Provided however,
that in the case of the MPSA-IV-(I)12 application, STAR and its stockholders and
successors-in-interest undertake to procure approval from the proper authorities
as set forth in Section 7.2 (e);
(f) conditions on and relating to the STAR Property and operations
conducted thereon by or on behalf of STAR are in compliance with all applicable
laws, regulations or orders;
(g) at the date hereof, there are no outstanding orders or directions
relating to environmental matters requiring any compliance, work, repairs,
construction or capital expenditures with respect to the STAR Property and the
conduct of the operations related thereto, nor has STAR received any notice of
same;
(h) it has delivered and will continue to deliver to Fenway all available
geological information in its possession or control relating to the STAR
Property and copies of all available permits, permit applications and
applications for exploration and exploitation rights respecting the STAR
Property;
(i) it is not aware of any fact or circumstance which makes the
representations and warranties in this Agreement incomplete, inaccurate,
misleading and untrue or which would likely affect the decision of Fenway to
enter into this Agreement.
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(j) it undertakes to cause its stockholders, directors, officers, assigns,
successors-in-interest and all relatives or third parties who may have any
interest in the subject matter Area of Interest referred to in paragraph 15
which conflicts with the interest of the Palawan Cement Project, to sell their
interest to CPCC at original acquisition cost.
(k) it is prohibited from selling, disposing, transferring, or creating any
encumbrance on any interest or rights in the STAR Property;
(l) it obtained advise of counsel with respect to its rights and
obligations herein
13.3 Fenway hereby represents and warrants to STAR that Fenway will allot and
issue the Shares free of all liens, claims, charges and encumbrances whatsoever
upon exercise of the Warrants.
13.4 The representations and warranties hereinbefore set out are conditions upon
which the parties have relied in entering into this Agreement and shall be true
and correct on the Closing Date and shall survive after the Closing Date.
13.5 Except for fraud and gross negligence, 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, warranty,
covenant, agreement or condition made by it and contained in this Agreement.
13.6 The parties acknowledge and agree with each other that they have entered
into this Agreement relying on the warranties and representations and other
terms and conditions of this Agreement and that no information which is now
known or which may hereafter become known to the parties shall limit or
extinguish the right to indemnify hereunder and in addition to any other
remedies it may pursue; PROVIDED that Fenway may deduct the amount of any such
loss or damage from any amounts payable by it or CPCC to STAR hereunder.
13.7 The parties shall each give all undertakings and assurances and shall each
make such filings as are reasonably required by the Regulatory Authorities as a
condition of any approval contemplated by this Agreement. All such undertakings,
assurances and filings shall be prepared at Fenway's sole expense.
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14. DELIVERY OF INFORMATION
All data and information regarding the STAR Property coming into the possession
of any party under this Agreement shall be disclosed to the other parties.
15. AREA OF INTEREST
STAR, its stockholders, directors, officers, assigns,
successors-in-interests including its nominees (the "Others"), hereby agree that
the Area of Interest shall cover a radius of three (3) kilometers from the
outside boundaries of the STAR Property and the Plant Site (the "Area of
Interest") and shall be subject to paragraph 13.2 (j) of this Agreement.
16. RELATIONSHIP OF THE PARTIES
16.1 The rights, duties, obligations and liabilities of the parties shall be
several and not joint.
16.2 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 the other party for any purpose.
16.3 This Agreement shall not be construed so as to render the parties liable as
partners or as creating a mining, commercial or other partnership, or as
imposing upon any party any obligation or liability to the other party hereto
other than with respect to CPCC.
16.4 Without consulting the other party, both parties shall have the right
independently to engage in and receive full benefits from business activities
which are not in any way in conflict with, adverse to, or in competition with
CPCC. The doctrines of "corporate opportunity" or "business opportunity" shall
not be applied to any other activity, venture or operation of the parties and
all parties shall not be obliged to the other parties with respect to any
opportunity to acquire any mineral property available to it:
(a) outside the boundaries of the Area of Interest at any time; or
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(b) within the boundaries of the Area of Interest after the termination of
this Agreement.
17. TERM
17.1 The corporate life of the Joint Venture company shall be for fifty (50)
years, renewable at the option of CPCC for further fifty (50) year period.
17.2 If any right, power or interest of any part of the STAR Property would
violate the rule against perpetuities then such right, power or interest shall
continue for as long as may be permitted by Philippine law.
18. REGULATORY AND OTHER CONSIDERATIONS
18.1 It is hereby expressly acknowledged that Fenway is a company subject to the
discretionary jurisdiction of the British Columbia Regulatory Authorities and
that this Agreement may be subject to the prior approval of such British
Columbia Regulatory Authorities.
18.2 It is also hereby expressly acknowledged that STAR is a company subject to
the discretionary jurisdiction of the Philippine Regulatory Authorities and that
this Agreement may be subject to the prior approval of such Philippine
Regulatory Authorities.
18.3 This Agreement is subject to both Canadian and Philippine Regulatory
Authorities and may be subject to the prior approval of such Regulatory
Authorities.
18.4 The parties will file all such notices, agreements, forms or reports with
the proper Regulatory Authorities as may be necessary in furtherance of the
transaction contemplated herein, and shall supply copies of all such notices,
agreements, forms or reports as filed with the proper Regulatory Authorities for
the corporate files of Fenway and STAR, as the case may be. Any such notice
shall be made in accordance with the notice provisions of this Agreement.
19. CONFIDENTIAL INFORMATION
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No information furnished by the parties hereunder in respect of this
Agreement shall be published by either party without the prior written consent
of the other party hereto, but such consent in respect of the reporting of
factual data shall not be unreasonably withheld, and shall not be withheld in
respect of information required to be publicly disclosed pursuant to applicable
laws of the Regulatory Authorities.
20. ARBITRATION
20.1 The parties hereto agree to refer any dispute arising between the parties
hereunder, as to .interpretation of any provisions of this Agreement, to binding
arbitration (the "Arbitration")
20.2 All disputes, controversies or differences which may arise between the
Parties out of or in relation to or in connection with this Agreement, including
any issue as to this Agreement's validity or enforceability, or for the
construction, termination or breach thereof, shall be decided amicably by the
Parties. If such dispute, controversy or difference cannot be amicably settled
within thirty (30) calendar days of notice by one Party to the other, the matter
shall be finally settled by arbitration conducted in accordance with the Rules
of Conciliation and Arbitration of the International Chamber of Commerce.
20.3 The place of the arbitration shall be Vancouver, Canada.
20.4 The Parties together shall appoint one (1) arbitrator and if they are
unable to agree upon the appointment of a single arbitrator within fourteen (14)
calendar days from receipt of the arbitration notice, each of the Parties shall
appoint one (1) arbitrator within twenty-one (21) calendar days of receipt of
the arbitration notice. The two (2) arbitrators thus appointed shall appoint a
third arbitrator within thirty-five (35) calendar days from receipt of the
arbitration notice and the third arbitrator thus shall be a lawyer experienced
in matters of international, financial and commercial matters and without
affiliation of any kind to any of the Parties.
20.5 The board of arbitration shall not be required to observe judicial
formality and shall not be bound by strict rules of evidence. The board of
arbitration shall render its award applying commercially reasonable principles
consistent with the terms of this Agreement and shall have the authority to
include in such award a decision binding upon the Parties, enjoining them to
take or refrain from taking specific action with respect to the matter in
dispute or disagreement The arbitration award shall be issued in Vancouver,
Canada and shall be agreed by each Party to be a foreign arbitral award in
respect of the Philippines.
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The award of the board of arbitration shall be final and binding on the Parties.
The costs of arbitration shall be borne in accordance with the determination of
the board of arbitration. Except in the case of termination, the Parties shall
continue to perform all their obligations under this Agreement pending the
arbitration award.
20.6 All communications and testimonies, whether oral or written, during the
arbitration proceedings shall be in the English language.
20.7 The arbitral award may be enforced by proceedings in any court having
jurisdiction over any of the Parties. If enforcement is sought in the
Philippines, the award shall be enforced by judgement of the Regional Trial
Court of Makati City only. In this connection, the Parties agree to submit
themselves to the jurisdiction of the proper court for a non-arbitrable dispute,
or if enforcement of the arbitral award is sought.
21. BINDING EFFECT & ASSIGNMENT
21.1 This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, personal representatives, successors and
assigns, except as otherwise expressly provided herein.
21.2 STAR may not assign this Agreement or grant any participation without the
prior written consent of Fenway.
23. EXPENSES
Each party will be responsible for and bear its own costs and expenses,
including legal fees, whether or not the transaction contemplated by this
Agreement is completed or not.
23. NOTICE
23.1 All notices, requests, payments, demands or directions to the parties
hereto shall be in writing and delivered or sent by registered mail postage
prepaid, or by telex, telecopy, telegram or cable addressed to the parties
hereto at their addresses set out on the first page of this Agreement, or to
such other address(es) as may be specified by one party to the other in a notice
given in the manner herein provided. Any notice, request, demand or direction
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given in such manner shall be deemed to have been received by the party to whom
it is given.
(a) On the 7th business day following the mailing thereof, if sent by
registered mail;
(b) On the 2nd business day following delivery, if personally delivered;
or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
23.2 If normal mail service, telex service or telegraph service is interrupted
by strike, slowdown, force majeure or other cause, then any notice, request,
demand or direction sent by the impaired means of communication will not be
deemed to be received until actually received, and the party sending the notice,
request, demand or direction shall utilize any other such services which have
not been interrupted or shall deliver such notice, request, demand or direction
in order to ensure prompt receipt thereof;
24. FORCE MAJEURE
24.1 In the event that any party is delayed or hindered in the performance of
their obligations hereunder by force majeure, this Agreement shall remain in
suspense until the cause thereof has ceased to delay or hinder performance. For
purposes of this Agreement, but not by way of limitation, force majeure shall
mean any cause beyond the reasonable control of the party liable to perform, and
shall include strikes, lockouts, civil commotion, riot, war, threat of or
preparation for war, fire, explosion, sabotage, storm, flood, earthquake or
other natural disaster.
24.2 Any party hereto claiming suspension of its obligations as aforesaid shall
promptly notify the other parties to that effect and shall take all reasonable
steps to remove or remedy the cause and effect of the force majeure described in
the said notice insofar as it is reasonably able so to do and as soon as
possible; Provided that the terms of settlement of any labor disturbance or
dispute, strike or lockout shall be wholly in the discretion of the party
claiming suspension of its obligations by reason thereof, and that said party
shall not be required to accede to the demands of its opponents in any such
labor disturbance or dispute, strike, or lockout solely to remedy or remove the
force majeure thereby constituted.
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25. WAIVER
25.1 No consent or waiver, express or implied, by any party to or of any breach
or default by the other party of any or all of its obligations under this
Agreement will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this Paragraph;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this Paragraph in any other or subsequent instance.
25.2 In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable, such illegality, invalidity or
unenforceability shall to the extent practicable not affect the validity of this
Agreement.
26. GENERAL PROVISIONS
26.1 All parties hereto will, from time to time, at the request of the others,
execute and deliver all such other and additional instruments, notices,
releases, agreements, undertakings or other required documents and shall do all
such other acts and things as may be reasonably necessary to more frilly assure
the carrying out of the intent and purpose of the terms of this Agreement
26.2 Time is of the essence of this Agreement.
26.3 The parties acknowledge that although this Agreement was prepared by
Sobolewski Anfield acting as counsel to Fenway, STAR, throughout the discussions
and negotiations between the parties has been advised by independent legal
counsel with respect to its rights and obligations under this Agreement.
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26.4 The governing law of this Agreement shall be the laws of British Columbia,
Canada.
27. EXECUTION
27.1 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument. The Parties may each execute this Agreement by signing any
such counterpart.
27.2 A facsimile copy of this Agreement shall be considered as an original and
shall, in all respects, be legally binding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PALAWAN STAR MINING FENWAY RESOURCES LTD.
VENTURES, INC.
By: By:
/s/ HIGINIO C. MENDOZA, JR. /s/ H. John Wilson
- --------------------------- ---------------------------
Higinio C. Mendoza, Jr. H. John Wilson
President President & CEO
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The Corporate Seal of
PALAWAN STAR MINING
VENTURES, INC.
was hereunto affixed in the
presence of:
- ----------------------------------
The Corporate Seal of
FENWAY RESOURCES LTD.
was hereunto affixed in
the presence of:
/s/ [ILLEGIBLE]
- ----------------------------------
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ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES)
MAKATI, METRO MANILA ) S.S.
Before me on the NOV 11 1996 th of October 1996 in Makati, Metro Manila,
personally appeared the following:
Name CTC / Passport Date & Place of Issue
Higinio C. Mendoza, Jr. for:
PALAWAN STAR MINING
VENTURES, INC.
H. John Wilson for:
FENWAY RESOURCES LTD. FV908355 Vancouver, Canada
8 March 93
to me known and known to me to be the same persons who executed the foregoing
Memorandum of Agreement consisting of 32 pages, including this page, and they
acknowledged to me that the same is their free and voluntary act and deed and
the free and voluntary act and deed of the corporations they respectively
represent.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal on the date and at the place abovewritten.
/s/ SUSANA C. FONG
-----------------------------
Susana C. Fong
Notary Public
until 31 December 1997
PTR No 0276071
IBP #405858
Doc. No. 169;
Page No. 055;
Book No. IV;
Series of 1996.
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SCHEDULE "A"
Description of the Property
Acquisition
Name of No. of Date Date by
Name of Claimowner Claims Claims Registered Star
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PALAWAN STAR
MINING VENTURES, INC. MPSA-IV(1)-12 April 20, 1992
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Technical Description
Location : Barangay Pinaglabanan
Municipality of Quezon
Province of Palawan
Philippines
Gegraphic
Coordinates &
Shape : Longitude 117(degree)58'00" to 118(degree)05'30"
Latitude 9(degree)10'00" to 9(degree)16'30"
See attached map.
Size : 4,941 Hectares
MEMORANDUM OF AGREEMENT
THIS AGREEMENT made as of this 11th day of November, 1996 by and between:
PYRAMID HILL MINING & INDUSTRIAL CORPORATION, with address at 5885 Zobel
Roxas Street, Palanan, Makati, Metro Manila, Philippines, represented in
this act by its duly authorized Chairman, James D. Tan, (hereinafter
referred to as "Pyramid");
-and-
FENWAY RESOURCES LTD., of #308-409 Granville Street, Vancouver, British
Columbia, V6C lT2, represented in this act by its duly authorized officer
H. John Wilson, (hereinafter referred to as "Fenway");
WHEREAS:
A. Pyramid and Fenway entered into an option agreement dated January 30, 1996,
as amended June 28, 1996 and other related agreements between the parties herein
(collectively the "Original Agreement"), pursuant to which Pyramid granted to
Fenway an option to participate, with others, in a joint operation for the
purpose of quarrying and mining raw materials for the production of cement,
lime, clinker and all other rock and mineral products derived from the Pyramid
Property, and to establish a cement plant for the purposes of manufacturing
cement in the territory located in the Province of Palawan, Republic of the
Philippines;
B. Pursuant to the terms of the Original Agreement, Pyramid received valuable
consideration and concessions from Fenway;
C. Pursuant to the terms of the Original Agreement, a pre-feasibility study on
the viability of the Palawan Cement Project was concluded;
D. Pursuant to the terms of the Original Agreement, a Feasibility Study was
prepared for Fenway, which Feasibility Study established the viability of the
Palawan Cement Project;
E. After consultation with Pyramid, the directors of Fenway passed a director's
resolution dated March 4,1996 accepting the Feasibility Study;
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F. The Philippine government, through BMG-DENR, conducted an official geological
evaluation of the Pyramid Property, which evaluation reported a reserve of more
than 1.7 billion tons of suitable cement raw materials thereon;
G. By virtue of an application made for a Mineral Production Sharing Agreement
(MPSA-IV-126) by Pyramid and registered on June 27, 1994, Pyramid will be the
sole claim owners for the sole and exclusive right to and interest in the
beneficial use of the Pyramid Property in the event the MPSA application is
approved by the BMG-DENR;
H. Whereas Pyramid has already brought the Pyramid Property, in accordance with
Philippine laws, within the coverage of Executive Order No. 279 which requires
the execution of a Mineral Production Sharing Agreement with the Philippine
government covering the said mining claims and also within the coverage of
Republic Act No. 7942, otherwise known as the "Philippine Mining Act of 1995"
and has applied for the MPSA as hereinafter defined;
I. Fenway is a technically and financially capable resource company in the
Province of British Columbia, Canada; Fenway has advanced the necessary funds to
successfully undertake among others, the activities described on Recital (C),
(D), and 13.2 (d);
J. The parties wish to restate their rights, duties and obligations with respect
to the subject matter of the Original Agreement, to amend, modify" and supersede
the same to the extent provided herein, and to implement the activities
contemplated and described under this Agreement;
NOW THEREFORE in consideration of the premises, the performance of the mutual
covenants contained herein and other good and valuable consideration given by
each party to the others, the receipt and sufficiency of which is hereby
conclusively acknowledged, it is hereby agreed as follows:
1. ENTIRE AGREEMENT
1.1 This Agreement, when executed, constitutes the whole agreement between all
the parties hereto and supersedes all the Original Agreements written, oral or
otherwise, and there are no representations or warranties, express or implied,
statutory or otherwise other than expressly set forth or referred to herein.
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1.2 It is specifically acknowledged by the parties hereto that the Original
Agreement is superseded and cancelled and of no further force or effect.
1.3 This Agreement may not be amended, modified, released or discharged, in
whole or in part, except by an instrument in writing signed by all parties
hereto.
2. INTERPRETATION
2.1 For purposes of this Agreement, except as otherwise expressly provided, or
unless the context otherwise requires:
(a) "Acceptable Funding Commitment" means a bona fide commitment to provide
the Production Funds;
(b) "Activities" means all activities and operations relating to the
Pyramid Property in accordance with this Agreement and within the scope and
purpose of CPCC as referred to in this Agreement.
(c) "Agreement" means this Memorandum of Agreement as from time to time
supplemented or amended by one or more agreements entered into pursuant to
the applicable provisions hereof, and includes every Schedule or Annex
attached hereto, if any;
(d) "BMG-DENR" means the Philippine Bureau of Mines and Geo-Sciences,
Department of Environment and Natural Resources;
(e) "Business Days" means any day during which Philippine chartered banks
are open for business in Metro Manila, Republic of the Philippines;
(f) "CPCC" means Central Palawan Cement Corporation, a company to be
incorporated pursuant to the laws of the Republic of the Philippines, or
any successor company however formed, whether as a result of merger,
amalgamation, in accordance with the terms of Paragraphs 4 and 9 of this
Agreement;
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(g) "CPMIC" means Central Palawan Mining & Industrial Corporation, a
company incorporated pursuant to the laws of the Republic of the
Philippines, or any successor company however formed, whether as a result
of merger, amalgamation, or other action;
(h) "Closing Date" means the day ten (10) Business Days following the
receipt of Regulatory Approval, or such other date as the parties hereto
shall mutually agree;
(i) "Commercial Production" means:
i) the last day of a period of forty (40) consecutive days in
which Venture Products have been processed from the Pyramid Property
at not less than 60% of its rated operating capacity; or
ii) the last day of a period of thirty (30) consecutive days
during which ore has been shipped from the Pyramid Property for the
purpose of earning revenues, but not period of time during which ore
or concentrate is shipped from the Pyramid Property for testing
purposes, and no period of time during which milling operations are
undertaken as initial tune-up, shall be taken into account in
determining the date of Commercial Production as determined by CPCC;
(j) "Effective Date" means January 30, 1996;
(k) "Exchange" means the Vancouver Stock Exchange;
(l) "Fair Market Value" means the highest price available in the open and
unrestricted market between informed, prudent parties acting at arm's
length, under no compulsion to act, expressed in terms of money or money's
worth;
(m) "Feasibility Study" means the comprehensive report dated December 1995
prepared by Kilborn Engineering Pacific Ltd., which provides a definite
technical, environmental and commercial base for determining the viability
of the Palawan Cement Project and which was accepted by both Fenway and
Pyramid;
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(n) "Fenway" means Fenway Resources Ltd., a company incorporated pursuant
to the laws of the Province of British Columbia, Canada, or any successor
company however formed, whether as a result of merger, amalgamation, or
other action;
(o) "Gross Proceeds" means, for any period, the aggregate gross proceeds
received by CPCC during the period from the sale of Venture Products
derived from the Pyramid Property and any cash proceeds received during the
period from the disposition of any capital assets the cost of which has
been treated as an Operating Cost;
(p) "Joint Venture" means the joint venture company to be formed as a
result of this Agreement or CPCC as defined in this Agreement;
(q) "Joint Venture Agreement" means the agreement governing the
relationship among the Parties herein and as to any third-party Participant
with CPCC with respect to the Palawan Cement Project, and the Pyramid
Property, as more fully described in Paragraph 9 of this Agreement;
(r) "MPSA" means mineral production sharing agreement MLIPSA-IV(l)-126, as
amended, which brought the Pyramid Property within the coverage of
Executive Order No. 279 and also under coverage of the Philippine Mining
Act of 1995, and which confers upon Pyramid the priority right to the
beneficial use of the Pyramid Property;
(s) "Mining and Production Facilities" means all mines, roads, structures,
buildings, machinery, equipment and other facilities necessary to mine,
remove and process ores from the Pyramid Property and all mines and plants,
including without limitation, all pits, shafts, haulageways and other
underground workings and all buildings, plants, facilities and other
structures, fixtures and improvements and all other property, whether fixed
or moveable, as the same may exist at any time in, on or outside the
Pyramid Property and relating to the production of Venture Products;
(t) "Net Profits" means, for any period, the excess, if any, of Gross
Proceeds for the period over the aggregate of:
i) Operating Costs for the period;
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ii) Operating Costs for all previous periods to the extent that
they have exceeded Gross Proceeds from such periods and have not
previously been deducted in computing Net Profits; and
iii) such amount of cash as is required for the ensuing three
month period for working capital as, in the opinion of CPCC, is
required for CPCC, provided that this amount shall be added to
Gross Proceeds when calculating Net Profits for the next ensuing
period;
(u) "Operating Costs" means, for any period, all costs, expenses,
obligations, liabilities and charges of whatsoever kind and nature incurred
or chargeable, directly or indirectly, by CPCC, after commencement of
Commercial Production in connection with CPCC during the period, which
costs, expenses, obligations, liabilities and charges shall include,
without limiting the generality of the foregoing, the following:
i) all costs of or related to CPCC;
ii) all costs of or related to the quarrying, processing and
marketing of Venture Products including, without limitation,
transportation, storage, commissions, royalties and/or discounts;
iii) all costs of or related to providing and/or operating
employee facilities, including housing;
iv) all duties, charges, levies, royalties, taxes (excluding any
act of legislation which taxes the income of the parties hereto
individual) and other payments imposed upon or in connection with CPCC
by any government or municipality or department or agency thereof;
v) all actual costs of CPCC for providing technical, management
and/or supervisory services, the intent being that CPCC will neither
realize a profit nor suffer a loss as a result of its management
activity;
vi) all costs of consulting, legal, accounting, insurance and
other services;
vii) all interest expenditures incurred after commencement of
Commercial Production;
viii) all costs of construction, equipment and mine development
after commencement of Commercial Production;
ix) all costs for pollution control, reclamation or any other
similar costs incurred or to be incurred by CPCC;
x) any cost or expense incurred or to be incurred relating to the
termination of this Agreement;
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except where specific provision is made otherwise, all Operating Costs
shall be determined in accordance with generally accepted accounting
principles consistently applied;
(v) "Original Agreement" means the option agreement dated June 30, 1992,
the amended option agreements dated June 30, 1994, August 24, 1994,
November 20, 1995 and June 28, 1996 and other related agreements between
the parties herein.
(w) "Palawan Cement Project" means the joint operation for the purposes of,
without limitation:
i) quarrying and mining raw materials for the production of
cement, lime, clinker and all other rock and mineral products derived
from the Pyramid Property; and
ii) manufacturing cement from raw materials extracted from the
Pyramid Property;
(x) "Participant(s)" means a Filipino third party or parties, acceptable to
Fenway, which party or parties shall provide Production Funds;
(y) "Party or Parties" means the parties to this Agreement and their
respective successors and permitted assigns which become parties pursuant
to this Agreement;
(z) "Philippine Mining Act of 1995" means Republic Act No. 7942 of the
government of the Philippines;
aa) "Production Funds" means the funds required in order to finance the Palawan
Cement Project, from sources whether domestic or foreign, which Production
Funds are to be obtained by Fenway, at its sole discretion;
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ab) "Pyramid" means Pyramid Hill Mining & Industrial Corporation, a company
incorporated pursuant to the laws of the Republic of the Philippines, or
any successor company however formed, whether as a result of merger,
amalgamation, or other action;
ac) "Pyramid Property" means all existing mining claims and rights/quarrying
rights, mining right applications and Mineral Production Sharing Agreements
as defined in Republic Act 7942 (Philippine Mining Act of 1995) covering
3,159 hectares of land and more particularly described in Schedule "A"
hereto and all tenures in substitution or replacement therefor including,
without restricting the generality, all rights to enter upon the Pyramid
Property, explore, develop and remove any minerals therefrom;
ad) "Regulatory Approval" means filing and approval of mineral agreements and
their transfer or assignment as provided for in Sections 29 and 30 of
Republic Act No. 7942 enacted by the Philippine legislature in 1995 and as
contemplated in this Agreement as well as approval of this Agreement by all
Regulatory Authorities.
ae) "Regulatory Authorities" means both the Philippine Regulatory Authorities
and the British Columbia Regulatory Authorities;
(i) "British Columbia Regulatory Authorities" means the Exchange and,
where applicable, the British Columbia Securities Commission.
(ii) "Philippine Regulatory Authorities" means the BMG-DENR, the
Philippine Securities and Exchange Commission, local government units and
any governmental authorities located in the Republic of the Philippines;
af) "Schedules" means those schedules attached hereto and forming part of this
Agreement which are more particularly described as follows:
Schedule "A": Description of the Pyramid Property
ag) "Venture Products" means all ores, minerals, concentrates or other products
mined or produced from the Pyramid Property and without limitation, all
products produced by CPCC.
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2.2 The words "paragraph", "subparagraph", "herein", "hereof" and "hereunder"
refer to the provision of this Agreement.
2.3 The headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the scope, extent
or intent of this Agreement or any portion hereof.
2.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and in accordance with the rules and
guidelines of the governing Regulatory Authorities, if applicable; PROVIDED that
the laws of the Republic of the Philippines shall govern all matters relating to
the transfers of the interests provided for in this Agreement as well as the
development and operation of the joint venture company.
2.5 A reference to a statute includes all regulations made pursuant thereto, all
amendments to such statute or regulations enforced from time to time and any
statute or regulation which supplements or supersedes such statute or
regulation.
2.6 Wherever the singular or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine cr neuter when the
context so requires.
2.7 All accounting terms not defined in this Agreement shall have those meanings
generally ascribed to them in accordance with generally accepted accounting
principles, applied consistently.
2.8 All currency referred to herein is currency of the United States of America,
unless otherwise stated.
3. TRANSFER
3.1 Upon and subject to the terms and conditions of this Agreement, Pyramid
hereby agrees to transfer and set over to CPCC (the "Transfer") the Pyramid
Property including the MPSA or any application thereof, in such form and by way
of instruments authorized by the Philippine Mining Law of 1995; to have and to
hold the same, together with all benefit and advantage to be derived therefrom.
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3.2 The rights of the parties hereto may only be assigned with the prior written
consent of the other party hereto and with the approval of the Regulatory
Authorities, if required.
4. CENTRAL PALAWAN CEMENT CORPORATION
4.1 Upon receipt of the Environmental Compliance Certificate (ECC) (as defined
in RA 7942) and the mandate to fund, CPCC shall be incorporated as a new
Philippine company, the sole purpose of which shall be to act as operator of the
Joint Venture to undertake the Palawan Cement Project and to hold all of the
rights and interests of Pyramid and Fenway in and to the Pyramid Property,
including the MPSA for the benefit of the parties hereto and the Participant(s).
4.2 The equity of CPCC shall be owned by Fenway (as to 40%), the Participant(s)
(as to 50%) and CPMIC (as to 10%).
4.3 The terms and principles governing the operation of CPCC shall be as set
forth in Paragraph 9 hereof.
5. CONSIDERATION
5.1 Subject to Paragraph 5.2 hereof, and subject to Regulatory Approval of the
British Columbia Regulatory Authorities, as consideration for the Transfer,
Fenway hereby agrees to allot but not to issue to Pyramid Hill, up to an
aggregate of 4,000,000 common shares of Fenway (the "Shares"), such shares to be
issued to Pyramid Hill as fully paid and non-assessable on the following basis:
(a) 1,000,000 Shares upon receipt of the Environmental Compliance
Certificate (the "Certificate") from the Philippine Regulatory
Authorities;
(b) 1,000,000 Shares within ten (10) Business Days of acceptance by Fenway
of the Acceptable Funding Commitment;
(c) 1,000,000 Shares within ten (10) Business Days of the commencement of
construction of the main cement plant production facility;
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(d) 1,000,000 Shares within ten (10) Business Days of the commencement of
Commercial Production;
5.2 The deemed price per Share shall be caluculated in accordance with the rules
and policies of the Exchange.
5.3 Commencing upon receipt of the Production Funds, CPCC shall make maintenance
payments to Pyramid, in the amount of CDN$ 100,000 per annum (the "Maintenance
Payments"), such payments to be paid quarterly commencing ten (10) days after
the end of CPCC's first quarterly period ended, or as otherwise mutually agreed
between Pyramid and Fenway.
6. ROYALTY
6.1 If CPCC commences Commercial Production from the Pyramid Property, Pyramid
shall be entitled to receive and CPCC shall pay to Pyramid a royalty equal to
$0.35 per tonne of raw materials extracted from the Pyramid Property (the
"Royalty").
6.2 Subject to the provisions of Paragraph 5.3 hereof, CPCC shall be under no
obligation whatever to place the Pyramid Property into Commercial Production
and, in the event it is placed into Commercial Production, CPCC shall have the
right at any time to curtail or suspend such production as it, in its absolute
discretion, may determine.
6.3 The Royalty payable to Pyramid hereunder shall be paid quarterly commencing
thirty (30) days after the end of CPCC's first quarterly period ended, or as
otherwise mutually agreed between Pyramid and Fenway, the records relating to
the calculation of such Royalty during that quarterly period shall be audited
and any adjustments shall be audited and any adjustments shall be made forthwith
and the audited statements shall be delivered to Pyramid who shall have sixty
(60) days after receipt of such statements to question in writing the accuracy
and failing such question, the statements shall be deemed correct. All taxes on
royalties shall be the sole responsibility of Pyramid.
6.4 Pyramid or its representatives, duly appointed in writing, shall have the
right at all reasonable times, upon wntten request, to inspect those books and
financial records of CPCC as are relevant to the determination of the Royalty
and, at its own expense, to make copies thereof.
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7. CONDITIONS PRECEDENT
7.1 Fenway shall within thirty (30) days of the date of this Agreement, commence
an environment impact assessment ("EIA") at its own cost.
7.2 Closing (as hereinafter defined) shall be conditional upon:
(a) receipt by Pyramid and Fenway of an acceptable ECC report;
(b) the acceptance of the Acceptable Funding Commitment by Fenway;
(c) signing and execution of a Joint Venture Agreement in accordance with
the terms and conditions in Articles 4 and 9 of this Agreement.
(d) the incorporation of CPCC pursuant to the laws of the Republic of the
Philippines;
(e) submission by Pyramid of proof of the government approvals for the
transfer of the Pyramid Property including the MPSA or any application
thereof, to CPCC;
8. THE CLOSING
8.1 Completion (the "Closing") of the transactions contemplated by this
Agreement shall take place on the Closing Date, or such other date as the
parties hereto shall mutually agree, and shall take place at the offices of
Pyramid as set out on Page 1 of this Agreement.
8.2 Subject to the terms and conditions of this Agreement, on Closing, Pyramid
will execute and deliver to CPCC the following:
(a) a deed of assignment, or other necessary documents, in recordable
form, to absolutely transfer and vest the Pyramid Property and the
MPSA or any application for an MPSA over the STAR Property to CPCC;
(b) evidence that the transfers, including the MPSA, is validly existing
and approved in accordance with the Philippine Mining Act of 1995;
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(c) a certified true copy of the resolutions of the directors and
stockholders of Pyramid approving this Agreement, the transactions
contemplated under this Agreement and the authorized signatories;
(d) a certified true copy of the last audited financial statements of
Pyramid.
(e) submission of evidence of Philippine Regulatory Approvals from the
proper Philippine Regulatory Authorities.
8.3 Subject to the terms and conditions of this Agreement, on the Closing Date,
Fenway will execute and deliver to Pyramid or to a Trustee, the following:
(a) evidence of Regulatory Approval from British Columbia Regulatory
Authorities;
(b) a certified true copy of the last audited financial statements of
Fenway.
9. JOINT VENTURE
Formation of CPCC
9.1 Prior to Closing Date, the parties hereto agree to sign and conclude with a
suitable Participant(s) a Joint Venture Agreement leading to the formation of
CPCC, the Joint Venture corporation in accordance with Paragraphs 4 and 9 of
this Agreement.
9.2 The parties agree that the relationships between themselves and the
Participant(s) in CPCC will be governed in accordance with the terms of a full
and formal joint venture operating agreement, which will be drawn and finalized
by the parties and the Participant(s) acting in good faith, which agreement
shall cover all terms and conditions of CPCC (the "JV Agreement").
9.3 In addition to the provisions set out in this Paragraph 9, the Joint Venture
Agreement shall also set out terms governing the following:
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(a) rights of first refusal with respect to the disposition of
participating interests in CPCC;
(b) rights and limitations with respect to the assignment of participating
interests in CPCC;
(c) default and termination.
Contributions to CPCC
9.4 Pyramid shall, by way of the Transfer of the Pyramid Property including the
MPSA to CPCC, thereby effectively contribute the Pyramid Property to CPCC.
9.5 Fenway and the Participant(s) will provide CPCC with the funds necessary to
finance CPCC.
9.6 CPCC will fund each Approved Program and Budget.
9.7 All funds expended with respect to the Pyramid Property after the formation
of CPCC shall be required to be made by CPCC.
Purposes of CPCC
9.8 CPCC shall have the following scope and primary and secondary purposes:
(a) exploring for and developing ores, minerals and other products from
the Pyramid Property, including opening, developing and operating
mines and/or quarries on the Pyramid Property;
(b) processing (including beneficiating, leaching, concentrating,
smelting, refining or otherwise treating) ores, minerals or other
products mined or produced from the Pyramid Property for the purposes,
without limitation, of producing Venture Products;
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(c) designing, engineering, constructing and operating Mining and
Production Facilities to mine and remove ores, minerals or other
products from the Pyramid Property and to process such ores, minerals
or other products mined from the Pyramid Property into Venture
Products;
(d) marketing, selling and delivering Venture Products;
(e) performing any other operation or activity necessary, appropriate or
incidental to any of the foregoing.
9.9 Unless the parties otherwise agree, CPCC shall be limited to its stated
scope and purposes and nothing in this Agreement shall be construed as to
enlarge the stated scope and purposes of CPCC.
Board of Directors
9.10 The affairs of CPCC will be governed by the direction and control of a
Board of Directors (the " Board") to be comprised of ten (10) members with the
following representation:
(a) From Fenway: 40% of total representatives
(b) From the Participant(s): 50% of total representatives
(c) From CPMIC: 10% of total representatives
9.11 Voting will be on the basis of one (1) vote for each representative and,
unless otherwise provided, a decision or an action of the Board will require the
concurrence of at least six (6) representatives.
Operator
9.12 CPCC will be the operator of the Joint Venture.
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Approved Programs and Budgets
9.13 All activities will be performed under programs and budgets approved in
advance by the. Board of Directors ("Approved Programs and Budgets"). The Board
of Directors will meet initially to approve a program and budget for each
calendar quarterly period as may be necessary in order to have each program and
budget approved by at least one (1) month prior to the date of implementation.
Interests in Net Profits
9.14 Participation in the Net Profits of CPCC shall be as follows:
(a) to Fenway, 40% of Net Profits derived from the Pyramid Property;
(b) to the Participant(s) 50% of Net Profits derived from the Pyramid
Property.
(c) to Pyramid, 10% of Net Profits derived from the Pyramid Property.
9.15 Any party may, at any time upon notice in accordance with the notice
provisions of this Agreement, surrender all or a portion of its interest in Net
Profits to the other parties by giving those parties notice of surrender.
10. RIGHTS OF FENWAY PRIOR TO CLOSING
10.1 At all times from the Effective Date until the Closing Date, Fenway, its
employees, agents and independent contractors shall , subject to Pyramid giving
prior notice to the proper authorities, have the sole and exclusive right to:
(a) to enter upon the Pyramid Property with full rights of access and
egress;
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(b) to carry on all such other exploration activities including, without
limitation, the right to remove from the Pyramid Property, minerals,
metals, broken rock, samples, bulk samples and other material as
Fenway deems necessary or desirable to assess the potential of the
Pyramid Property and the recoverability of ore and minerals therefrom.
11. COVENANTS
11.1 At all times during the currency of this Agreement, Pyramid shall:
(a) not do or permit or suffer to be done any act or thing which would or
might in any way adversely affect the rights of Fenway and CPCC hereunder;
(b) continue to make available to Fenway and its representatives all
records and files relating to the Pyramid Property and will permit Fenway and
its representatives at their own expense to take abstracts therefrom and make
copies thereof;
(c) prior to the incorporation of CFCC with all government agencies and
institutions, at Fenway's expense, obtain all government incentives which may be
available for the Palawan Cement Project, obtain all rights from landholders or
any other rights holders as well as required licenses, work permits and other
necessary documents to develop the Pyramid Property for the Palawan Cement
Project with the involvement of foreign partners, secure, without limitation,
water rights, plant site, pier site and warehouse site, from national and local
Philippine governments;
(d) prior to, during and after incorporation of CPCC and the Transfer,
promptly provide Fenway and/or CPCC with any and all notices and correspondence
from government agencies in respect of the Pyramid Property;
(e) obtain the approval of the Philippine Regulatory authorities to this
Agreement where necessary; use its best efforts to expeditiously assist Fenway
in doing all things reasonably required to obtain the acceptance of the British
Columbia Regulatory Authorities to the terms of this Agreement;
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(f) cooperate fully with Fenway and/or CPCC in obtaining any additional
rights on or related to the Pyramid Property as Fenway deems desirable;
(g) immediately notify Fenway and/or CPCC of any claims, actions, demands
of a civil, legal or judicial nature, filed against Pyramid in respect of the
Pyramid Property as well as disclose any anticipated litigation or adverse
claims as set forth in the representations and warranties provision of this
Agreement.
(h) maintain in good standing all the rights comprising the Pyramid
Property such as but not limited to the mineral claims and rights, renewals and
continuances thereof, by the doing and filing of any assessment work or the
making of payments in lieu thereof, by the payment of taxes and rentals, and the
performance of all other actions which may be necessary in that regard and in
order to keep the Pyramid Property free and clear of all liens and encumbrances;
11.2 At all times during the currency of this Agreement, Fenway shall:
(a) not do or permit or suffer to be done any act or thing which would or
might in any way adversely affect the rights of Pyramid and CPCC hereunder;
(b) conduct all work on or with respect to the Pyramid Property in a
careful and minerlike manner, including any reclamation work required in respect
of work performed by Fenway on the Pyramid Property, and in accordance with the
applicable laws;
(c) permit Pyramid and its representatives, duly authorized by Pyramid in
writing, at their own risk and expense access to the Pyramid Property at all
reasonable times and to the records prepared by Fenway in connection with work
done on or with respect to the Pyramid Property;
(d) at its own expense, carry out any environmental cleanup which might be
required as a result of work performed by Fenway on the Pyramid Property;
(e) obtain and maintain for itself and cause any contractor engaged
hereunder to obtain and maintain during any period in which active work is out
hereunder, adequate insurance and worker's compensation coverage, if applicable;
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(f) use its best efforts to assist Pyramid in doing all things reasonably
required to obtain the approval of the Philippine Regulatory Authorities to the
terms of this Agreement;
(g) promptly provide Pyramid with any and all notices and correspondence
from government agencies in respect of the Pyramid Property;
(h) cooperate fully with Pyramid in obtaining any additional rights on or
related to the Pyramid Property as Pyramid deems desirable;
(i) immediately notify Pyramid of any claims, actions, demands of a civil,
legal or judicial nature, filed against Fenway in respect of the Pyramid
Property;
g) obtain the Production Funds;
12. DEFAULT AND TERMINATION
12.1 It is an event of default ("Default") if:
(a) the Production Funds are not received by Fenway by not later than the
close of business (Vancouver time) on June 30, 1997, unless otherwise extended
by the parties hereto in writing;
(b) either Fenway or CPCC fail to make any of the payments as and when
required pursuant to the terms hereof, or under any documents delivered in
connection herewith, except for the consideration in Par. 5.1(a) which has been
paid through a Trustee;
(c) Pyramid fails to take reasonable action to prevent or defend
assiduously, any action or proceeding which claims:
i) possession;
ii) sale;
iii) foreclosure;
iv) the appointment of a receiver or receiver-manager of the
Company's assets; or
v) forfeiture or termination;
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of the Pyramid Property.
(d) any party becomes bankrupt or commits an act of bankruptcy or if a
receiver or receiver-manager of its assets is appointed or makes an assignment
for the benefit of creditors or otherwise;
(e) any party is unable or unwilling or otherwise fails to perform their
obligations as and when required hereunder; or
(f) if Fenway and Pyramid mutually consent in writing to the termination
hereof.
12.2 Subject to the provisions hereof, a notice of Default by the non-defaulting
party must be given to the defaulting party pursuant to the notice provisions of
this Agreement within thirty (30) days of the time when the non-defaulting party
is made aware of the event of Default and the defaulting party shall have ninety
(90) days from the notice of Default to cure such Default.
12.3 In the event that the defaulting party does not cure such Default within
the time provided for in Paragraph 12.2 hereof then this Agreement shall
terminate forthwith and absolutely unless otherwise agreed to between the
parties.
12.4 In the event of a Default by Fenway, Pyramid shall have the right to obtain
its own financing to ensure the construction and/or operation of the cement
plant and/or the quarry, provided that Fenway shall first be reimbursed by
Pyramid and its stockholders for all of its costs and expenses, advances and
loans to Pyramid or any of its stockholders or officers to the date of Default.
12.5 In the event of a material breach of the terms of this Agreement or of the
warranties, covenants and representations contained herein by either of the
parties hereto it shall be open to the aggrieved party to seek its remedy in
damages and it also shall be open to the parties to rescind the terms of this
Agreement upon the terms as herein set forth.
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13. REPRESENTATIONS AND WARRANTIES
13.1 Each of the parties represents and warrants to the other that:
(a) it is a company duly incorporated, organized and validly subsisting and
in good standing under the laws of its incorporating jurisdiction and that it is
qualified to do business in those jurisdictions where it is necessary to fulfill
its obligations under this Agreement;
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or contemplated
by this Agreement;
(c) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby contemplated conflict with or result in any breach of or
accelerate performance under any covenants or agreements or constitute a
default, or result in the creation of any encumbrance under the provision of any
shareholders' or directors' resolution, indenture, agreement or other instrument
whatsoever to which it is a party or by which it is bound or to be which it is
subject;
(d) the execution and delivery of this Agreement and the agreements
contemplated hereby have been duly authorized by all necessary corporate action
on its part and will not violate or result in the breach of the laws of any
jurisdiction applicable or pertaining thereto or of its constitutive documents;
(e) except for the approval of this Agreement by the Exchange, if required,
there are no consents, approvals or conditions precedent to the signing and
execution of this Agreement which have not been obtained;
(f) no proceedings are pending, and the parties are unaware of any basis
for the institution of any proceedings leading to their respective dissolution
or winding up, or the placing of each of them in bankruptcy or any other laws
governing the affairs of insolvent corporations.
13.2 Pyramid hereby represents and warrants to Fenway that:
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(a) it is, and will be at Closing, the 100% recorded and beneficial owner
of the Pyramid Property, all MPSAs or applications for MPSAs found thereon and
has the exclusive right to enter into this Agreement and all necessary authority
to dispose of its interests in and to the Pyramid Property in accordance with
the terms of this Agreement. Further, Pyramid received warranties that in the
event of a change in the composition of stockholders of Pyramid, it will
promptly notify Fenway in writing;
(b) other than a royalty payable to the Republic of the Philippines, no
stockholder of Pyramid, other person, firm, corporation or entity has any
proprietary or possesory interest in the Pyramid Property including the MPSA or
any application thereof other than Pyramid and no person is entitled to any
royalty or other payment in the nature of rent or royalty on any minerals, ores,
metals or concentrates, or any such other products removed from the Pyramid
Property;
(c) there are no actual, pending or threatened actions, suits, claims or
proceedings regarding the Pyramid Property or any basis therefor of which it is
aware;
(d) the Pyramid Property is accurately described in Schedule "A" to this
Agreement. As a result of advances made by Fenway, the Pyramid Property and all
interests related thereto have been duly and validly staked, located, recorded
and registered in accordance with all applicable laws of the Philippines and all
such interests are free and clear of all liens, charges, encumbrances and third
party interest whatsoever;
(e) the corresponding licenses and permits covering the Pyramid Property
and all interests therein including the MPSAs have been duly and validly issued
pursuant to the mining laws of the Republic of the Philippines and are in good
standing by the proper doing and filing of assessment work and the payment of
all fees, taxes and rentals in accordance with the requirements of the mining
laws of the Republic of the Philippines and the performance of all other actions
necessary in that regard; Provided however, that in the case of the MPSA-IV-126
application, Pyramid and its stockholders and successors-in-interest undertake
to procure approval from the proper authorities as set forth in Section 7.2 (e);
(f) conditions on and relating to the Pyramid Property and operations
conducted thereon by or on behalf of Pyramid are in compliance with all
applicable laws, regulations or orders;
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(g) at the date hereof, there are no outstanding orders or directions
relating to environmental matters requiring any compliance, work, repairs,
construction or capital expenditures with respect to the Pyramid Property and
the conduct of the operations related thereto, nor has Pyramid received any
notice of same;
(h) it has delivered and will continue to deliver to Fenway all available
geological information in its possession or control relating to the Pyramid
Property and copies of all available permits, permit applications and
applications for exploration and exploitation rights respecting the Pyramid
Property;
(i) it is not aware of any fact or circumstance which makes the
representations and warranties in this Agreement incomplete, inaccurate,
misleading and untrue or which would likely affect the decision of Fenway to
enter into this Agreement.
(j) it undertakes to cause its stockholders, directors, officers, assigns,
successors-in-interest and all relatives or third parties who may have any
interest in the subject matter Area of Interest referred to in paragraph 15
which conflicts with the interest of the Palawan Cement Project , to sell their
interest to CPCC at original acquisition cost.
(k) it is prohibited from selling, disposing, transferring, or creating any
encumbrance on any interest or rights in the Pyramid Property;
(1) it obtained advise of counsel with respect to its rights and
obligations herein.
13.3 Fenway hereby represents and warrants to Pyramid that Fenway will allot and
issue the Shares free of all liens, claims, charges and encumbrances whatsoever.
13.4 The representations and warranties hereinbefore set out are conditions upon
which the parties have relied in entering into this Agreement and shall be true
and correct on the Closing Date and shall survive after the Closing Date.
13.5 Except for fraud and gross negligence, 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, warranty,
covenant, agreement or condition made by it and contained in this Agreement.
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13.6 The parties acknowledge and agree with each other that they have entered
into this Agreement relying on the warranties and representations and other
terms and conditions of this Agreement and that no information which is now
known or which may hereafter become known to the parties shall limit or
extinguish the right to indemnify hereunder and in addition to any other
remedies it may pursue; PROVIDED that Fenway may deduct the amount of any such
loss or damage from any amounts payable by it or CPCC to Pyramid hereunder.
13.7 The parties shall each give all undertakings and assurances and shall each
make such ftlings as are reasonably required by the Regulatory Authorities as a
condition of any approval contemplated by this Agreement. All such undertakings,
assurances and filings shall be prepared at Fenway's sole expense.
14. DELIVERY OF INFORMATION
All data and information regarding the Pyramid Property coming into the
possession of any party under this Agreement shall be disclosed to the other
parties.
15. AREA OF INTEREST
Pyramid, its stockholders, directors, officers, assigns,
successors-in-interests including its nominees (the "Others"), hereby agree that
the Area of Interest shall cover a radius of three (3) kilometers from the
outside boundaries of the Pyramid Property and the Plant Site (the "Area of
Interest") and shall be subject to paragraph 13.2 (j) of this Agreement.
16 RELATIONSHIP OF THE PARTIES
16.1 The rights, duties, obligations and liabilities of the parties shall be
several and not joint.
16.2 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 the other party for any purpose.
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16.3 This Agreement shall not be construed so as to render the parties liable as
partners or as creating a mining, commercial or other partnership, or as
imposing upon any party any obligation or liability to the other party hereto
other than with respect to CPCC.
16.4 Without consulting the other party, both parties shall have the right
independently to engage in and receive full benefits from business activities
which are not in any way in conflict with, adverse to, or in competition with
CPCC. The doctrines of "corporate opportunity" or "business opportunity" shall
not be applied to any other activity, venture or operation of the parties and
all parties shall not be obliged to the other parties with respect to any
opportunity to acquire any mineral property available to it:
(a) outside the boundaries of the Area of Interest at any time; or
(b) within the boundaries of the Area of Interest after the termination of
this Agreement.
17. TERM
17.1 The corporate life of the Joint Venture company shall be for fifty (50)
years, renewable at the option of CPCC for further fifty (50) year period.
17.2 If any right, power or interest of any part of the Pyramid Property would
violate the rule against perpetuities then such right, power or interest shall
continue for as long as may be permitted by Philippine law.
18. REGULATORY AND OTHER CONSIDERATIONS
18.1 It is hereby expressly acknowledged that Fenway is a company subject to the
discretionary jurisdiction of the British Columbia Regulatory Authorities and
that this Agreement may be subject to the prior approval of such British
Columbia Regulatory Authorities.
18.2 It is also hereby expressly acknowledged that Pyramid is a company subject
to the discretionary jurisdiction of the Philippine Regulatory Authorities and
that this Agreement may be subject to the prior approval of such Philippine
Regulatory Authorities.
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18.3 This Agreement is subject to both Canadian and Philippine Regulatory
Authorities and may be subject to the prior approval of such Regulatory
Authorities.
18.4 The parties will file all such notices, agreements, forms or reports with
the proper Regulatory Authorities as may be necessary in furtherance of the
transaction contemplated herein, and shall supply copies of all such notices,
agreements, forms or reports as filed with the proper Regulatory Authorities for
the corporate files of Fenway and Pyramid, as the case may be. Any such notice
shall be made in accordance with the notice provisions of this Agreement.
19. CONFIDENTIAL INFORMATION
No information furnished by the parties hereunder in respect of this
Agreement shall be published by either party without the prior written consent
of the other party hereto, but such consent in respect of the reporting of
factual data shall not be unreasonably withheld, and shall not be withheld in
respect of information required to be publicly disclosed pursuant to applicable
laws of the Regulatory Authorities.
20. ARBITRATION
20.1 The parties hereto agree to refer any dispute arising between the parties
hereunder, as to interpretation of any provisions of this Agreement, to binding
arbitration (the "Arbitration").
20.2 All disputes, controversies or differences which may arise between the
Parties out of or in relation to or in connection with this Agreement, including
any issue as to this Agreement's validity or enforceability, or for the
construction, termination or breach thereof, shall be decided amicably by the
Parties. If such dispute, controversy or difference cannot be amicably settled
within thirty (30) calendar days of notice by one Party to the other, the matter
shall be finally settled by arbitration conducted in accordance with the Rules
of Conciliation and Arbitration of the International Chamber of Commerce.
20.3 The place of the arbitration shall be Vancouver, Canada.
20.4 The Parties together shall appoint one (1) arbitrator and if they are
unable to agree upon the appointment of a single arbitrator within fourteen (14)
calendar days from receipt
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of the arbitration notice, each of the Parties shall appoint one (1) arbitrator
within twenty-one (21) calendar days of receipt of the arbitration notice. The
two (2) arbitrators thus appointed shall appoint a third arbitrator within
thirty-five (35) calendar days from receipt of the arbitration notice and the
third arbitrator thus shall be a lawyer experienced in matters of international,
financial and commercial matters and without affiliation of any kind to any of
the Parties.
20.5 The board of arbitration shall not be required to observe judicial
formality and shall not be bound by strict rules of evidence. The board of
arbitration shall render its award applying commercially reasonable principles
consistent with the terms of this Agreement and shall have the authority to
include in such award a decision binding upon the Parties, enjoining them to
take or refrain from taking specific action with respect to the matter in
dispute or disagreement. The arbitration award shall be issued in Vancouver,
Canada and shall be agreed by each Party to be a foreign arbitral award in
respect of the Philippines. The award of the board of arbitration shall be final
and binding on the Parties. The costs of arbitration shall be borne in
accordance with the determination of the board of arbitration. Except in the
case of termination, the Parties shall continue to perform all their obligations
under this Agreement pending the arbitration award.
20.6 All communications and testimonies, whether oral or written, during the
arbitration proceedings shall be in the English language.
20.7 The arbitral award may be enforced by proceedings in any court having
jurisdiction over any of the Parties. If enforcement is sought in the
Philippines, the award shall be enforced by judgement of the Regional Trial
Court of Makati City only. In this connection, the Parties agree to submit
themselves to the jurisdiction of the proper court for a nonarbitrable dispute,
or if enforcement of the arbitral award is sought.
21. BINDING EFFECT & ASSIGNMENT
21.1 This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, personal representatives, successors and
assigns, except as otherwise expressly provided herein.
21.2 Pyramid may not assign this Agreement or grant any participation without
the prior written consent of Fenway.
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23. EXPENSES
Each party will be responsible for and bear its own costs and expenses,
including legal fees, whether or not the transaction contemplated by this
Agreement is completed or not.
23. NOTICE
23.1 All notices, requests, payments, demands or directions to the parties
hereto shall be in writing and delivered or sent by registered mail postage
prepaid, or by telex, telecopy, telegram or cable addressed to the parties
hereto at their addresses set out on the first page of this Agreement, or to
such other address(es) as may be specified by one party to the other in a notice
given in the manner herein provided. Any notice, request, demand or direction
given in such manner shall be deemed to have been received by the party to whom
it is given.
(a) On the 7th business day following the mailing thereof, if sent by
registered mail;
(b) On the 2nd business day following delivery, if personally delivered; or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
23.2 If normal mail service, telex service or telegraph service is interrupted
by strike, slowdown, force majeure or other cause, then any notice, request,
demand or direction sent by the impaired means of communication will not be
deemed to be received until actually received, and the party sending the notice,
request, demand or direction shall utilize any other such services which have
not been interrupted or shall deliver such notice, request, demand or direction
in order to ensure prompt receipt thereof;
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24. FORCE MAJEURE
24.1 In the event that any party is delayed or hindered in the performance of
their obligations hereunder by force majeure, this Agreement shall remain in
suspense until the cause thereof has ceased to delay or hinder performance. For
purposes of this Agreement, but not by way of limitation, force majeure shall
mean any cause beyond the reasonable control of the party liable to perform, and
shall include strikes, lockouts, civil commotion, riot, war, threat of or
preparation for war, fire, explosion, sabotage, storm, flood, earthquake or
other natural disaster.
24.2 Any party hereto claiming suspension of its obligations as aforesaid shall
promptly notify the other parties to that effect and shall take all reasonable
steps to remove or remedy the cause and effect of the force majeure described in
the said notice insofar as it is reasonably able so to do and as soon as
possible; Provided that the terms of settlement of any labor disturbance or
dispute, strike or lockout shall be wholly in the discretion of the party
claiming suspension of its obligations by reason thereof, and that said party
shall not be required to accede to the demands of its opponents in any such
labor disturbance or dispute, strike, or lockout solely to remedy or remove the
force majeure thereby constituted.
25. WAIVER
25.1 No consent or waiver, express or implied, by any party to or of any breach
or default by the other party of any or all of its obligations under this
Agreement will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this Paragraph;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this Paragraph in any other or subsequent instance.
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25.2 In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable, such illegality, invalidity or
unenforceability shall to the extent practicable not affect the validity of this
Agreement.
26. GENERAL PROVISIONS
26.1 All parties hereto will, from time to time, at the request of the others,
execute and deliver all such other and additional instruments, notices,
releases, agreements, undertakings or other required documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the carrying out of the intent and purpose of the terms of this Agreement.
26.2 Time is of the essence of thig Agreement.
26.3 The parties acknowledge that although this Agreement was prepared by
Sobolewski Anfield acting as counsel to Fenway, Pyramid, throughout the
discussions and negotiations between the parties has been advised by independent
legal counsel with respect to its rights and obligations under this Agreement.
26.4 The governing law of this Agreement shall be the laws of British Columbia,
Canada.
27. EXECUTION
27.1 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument. The Parties may each execute this Agreement by signing any
such counterpart.
27.2 A facsimile copy of this Agreement shall be considered as an original and
shall, in all respects, be legally binding.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PYRAMID HILL MINING FENWAY RESOURCES LTD.
AND INDUSTRIAL CORPORATION
By: /s/ James D. Tan By: /s/ H. John Wilson
-------------------------------- ---------------------------------
James D. Tan H. John Wilson
Chairman President & CEO
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The Corporate Seal of
PYRAMID HILL MINING
AND INDUSTRIAL CORPORATION
was hereunto affixed in the
presence of:
[ILLEGIBLE]
- -----------------------------------
The Corporate Seal of
FENWAY RESOURCES LTD.
was hereunto affixed in the
presence of:
[ILLEGIBLE]
- -----------------------------------
<PAGE>
PYRAMID HILL - FENWAY
MEMORANDUM OF AGREEMENT
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ACKNOWLEDGEMENT
REPUBLIC OF THE PHILIPPINES)
MAKATI, METRO MANILA ) S.S.
Before me on the 11th of November 1996 in Makati, Metro Manila, personally
appeared the following:
Name CTC/Passport Date & Place of Issue
H. John Wilson for: FV908355 Vancouver, Canada 8 March 93
FENWAY RESOURCES LTD.
James D. Tan for:
PYRAMID HILL MINING &
INDUSTRIAL CORP.
to me known and known to me to be the same persons who executed the foregoing
Memorandum of Agreement consisting of 33 pages, including this page, and they
acknowledged to me that the same is their free and voluntary act and deed and
the free and voluntary act and deed of the corporations they respectively
represent.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal on the date and at the place abovewritten.
/s/ Susana C. Fong
Susana C. Fong
Notary Public
until 31 December 1997
PTR No 0276071
IBP #405858
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SCHEDULE "A"
Description of Pyramid Property
Claimowner: Pyramid Hill Mining & Industrial Corporation
MPSA No. IV-126
June 27, 1994
Location: Municipality of Quezon and Brookes Point
Province of Palawan
Philippines
Geographic
Coordinates &
Shape: Longitude 117 57' 00" to 118 04' 30"
Latitaude 9 09' 00" to 9 14' 00"
Size: approximately 3,159 hectares
21 March 1997
Fenway Resources, Ltd.
Suite 308, 409 Granville Street
Vancouver BC
Canada
Re: Amendment to MOA and other Agreements
Gentlemen:
This is to confirm and acknowledge that we hereby amend any and all prior
agreements between Fenway Resources Ltd. ("Fenway") and Central Palawan Mining
and Industrial Corporation ("CPMIC"), Palawan Star Mining Ventures Inc.
("Palawan Star") and Pyramid Hill Mining and Industrial Corp. ("Pyramid Hill"),
insofar as and in accordance with the terms and amendments set forth below:
(A) Reference and Interpretation
CPMIC, Palawan Star and Pyramid Hill shall be collectively referred to as the
"Consortium". For all purposes of this Amending Agreement, all defined terms
have the same meanings as those set out in the Memoranda of Agreement and other
original agreements, except as otherwise expressly provided or unless the
context otherwise requires.
(B) Joint Venture Mining Company
It is agreed that a Joint Venture Mining Company ("JVMC") will be established as
a joint venture between Stradec (60% equity) and Fenway (40% equity). Neither
the Consortium nor each member of the Consortium will have any equity interest
in the JVMC and each member assigns and waives all rights to own and subscribe
to the shares of the JVMC. However, it shall be the sole responsibility of
Fenway to pay the Consortium 9% of Net Profits of the Joint Venture Mining
Company as consideration for the transfer of their interest in the each of the
Properties, including the mining claims, the MPSA and the ECC.
The Consortium shall have entitlement to royalty payments per tonne of raw
material quarried or mined from the Property belonging individually to CPMIC,
Palawan Star, Pyramid Hill and in turn each member of the Consortium waives and
surrenders their individual entitlement to such royalty payments in favour of
the Consortium.
The Property consisting of the mining claims, the MPSA and the ECC and all
rights, title and interest thereto shall be transferred by each member of the
Consortium to the JVMC and/or any entity it designates as consideration for the
royalty from the JVMC and the net profit interest in the JVCC. It is hereby
understood that each of the members of the Consortium agrees to be substituted
by the JVMC or any entity it designates in the MPSA filed for each Property
(C) Advances in relation to the Joint Venture Mining Company
For and in consideration of this Letter Amendment Agreement, Fenway shall upon
signing hereof pay the Consortium the amount of CANS$100,000.00 as advance
maintenance payment which shall be deducted from the royalty payable to the
Consortium. In addition, the JVMC hereby undertakes to advance to each member of
the Consortium the amount of CANS$100,000.00 as maintenance payment per year
payable in quarterly tranches as advance royalties, to be deducted from the
royalty of US$0.35 cents per tonne of raw material used in the manufacture of
cement from the Property belonging individually to CPMIC, Palawan Star and
Pyramid Hill. It is hereby understood that upon commencement of commercial
production of any one of the Properties of the Consortium, the advance royalty
payable by Fenway shall cease.
<PAGE>
2
For this purpose, CPMIC is hereby appointed by Palawan Star and Pyramid Hill as
its duly authorised and sole representative to receive for and in behalf of the
Consortium the foregoing advance royalty.
The advance of the royalty and the royalty itself are obligations of the JVMC.
(D) Joint Venture Cement Manufacturing Company
Each member of the Consortium hereby assigns to and gives their unconditional
approval and consent to allow Strategic Alliance Development Corp. ("Stradec")
to be the sole Participant (who shall provide Production Funds) in a joint
venture cement manufacturing company (the "JVCC") which will be formed together
with Fenway for the development of the Palawan Cement Project as to the
manufacturing of cement and cement products. A Joint Venture Agreement will be
signed on or before 30 April 1997 between Stradec and Fenway with the conforme
of the Consortium, wherein Stradec will own 51% equity and Fenway will own 49%
equity in the JVCC. The Consortium agrees that it foregoes any representation in
the JVCC and in any project decision making.
(E) Interest in Net Profits of the Joint Venture Cement Manufacturing Company
The Consortium is entitled to 9% interest in the net profits of the JVCC,
payable to CPMIC as representative of the Consortium by Fenway out of its 49%
equity interest in the JVCC. The computation of the 9% net profit interest in
the JVCC shall be based on audited Financial Statements of the JVCC. CPMIC is
hereby appointed by Palawan Star and Pyramid Hill as its duly authorised and
sole representative to receive the Consortium's 9% interest in the net profits
of the JVCC. CPMIC warrants and represents that it is the duly authorised and
sole agent of Palawan Start and Pyramid Hill and acknowledges authority to
manage any properties or assets owned by Palawan Star and Pyramid Hill.
(F) Conditions Precedent
The parties also agree that the procurement of an Environmental Compliance
Certificate ("ECC") and a Mineral Production Sharing Agreement (AMPSA@) shall
be pre-conditions to the establishment of the JVMC and the JVCC for the
manufacturing of cement and that the June 30, 1997 production funding deadline
and the right to purchase 10% of Fenway's interest be waived in consideration of
Fenway's obligation in paragraph C and the Joint Venture Agreement in paragraph
D of this letter agreement.
(G) Share Options and Warrants
The Consortium members will have an option to purchase Fenway shares in the
manner described below, subject to the approval of the Vancouver Stock Exchange,
the British Columbia Securities Commission and any other Regulatory Authority.
The terms and conditions governing the release, the quantity and the pricing of
the options and warrants are:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CPMIC PALAWAN STAR PYRAMID HILL
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
1 million shares @CAN$2.00/sh 1 million shares @CAN$4.00/sh 4 million shares @CAN$2.0O/sh
- ------------------------------------------------------------------------------------------------
with 1:1 warrant @CAN$3.00/sh 1 million shares @CAN$5.00/sh
- ------------------------------------------------------------------------------------------------
exercisable at any time exercisable at any time exercisable at any time
- ------------------------------------------------------------------------------------------------
</TABLE>
The common conditions governing both Stock Options and Warrants are as follows:
a) The timing of the release of the shares is subject to the release of the
senior financing or funding;
b) They are exercisable only upon receipt of the Production Funds;
c) The terms and payment are to be determined in a separate agreement to be
entered into between and among Fenway and the individual members of the
Consortium.
<PAGE>
3
Subject to the approval by the relevant Securities Regulatory Authorities, it is
expressly understood that the stock options and warrants referred to above may
not be exercised by the Consortium until such time as Fenway has received the
Acceptable Funding Commitment, provided however, that Fenway may issue at any
time all or a portion of the warrants and the Consortium may exercise at any
time the warrants in the event the issued and outstanding share capital of
Fenway is increased in order to facilitate and/or meet the financing
requirements to undertake the Palawan Cement Project.
This agreement amends and supersedes all previous agreements, provisions or
contracts regarding the Palawan Cement Project only to the extent of the
amendments made herein. The obligations of each member of the Consortium under
the Memoranda of Agreement such as but not limited to any mining claims, the
MPSA and the ECC shall continue to be in force. All other terms and conditions
of the Memoranda of Agreement remain unaltered and in full force and effect.
This agreement shall be subject to the approval of the relevant Regulatory
Authorities.
CPMIC, Palawan Star and Pyramid Hill agree to conform to the joint venture
agreement to be signed and executed by Fenway and Stradec on or before 30 April
1997.
Very truly yours,
CENTRAL PALAWAN MINING AND INDUSTRIAL CORPORATION
By: /s/ Henry E. Fernandez
-----------------------------------
[Name of Authorized Signatory]
as authorized by Board Resolution No._____dated____________1997 and notarized by
[Name of Notary Public], Document No.____, Page No.___, Book No.__, Series 1997.
PALAWAN STAR MINING VENTURES INC.
By: /s/ Higinio C. Mendoza, Jr.
-----------------------------------
[Name of Authorized Signatory]
as authorized by Board Resolution No._____dated____________1997 and notarized by
[Name of Notary Public], Document No.____, Page No.___, Book No.__, Series 1997.
PYRAMID HILL MINING AND INDUSTRIAL CORP.
By: /s/ Fernando B. Esguerra
-----------------------------------
[Name of Authorized Signatory]
as authorized by Board Resolution No._____dated____________1997 and notarized by
[Name of Notary Public], Document No.____, Page No.___, Book No.__, Series 1997.
<PAGE>
4
Conformed To By:
FENWAY RESOURCES LTD.
By: H. John Wilson
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES)
Makati City )S.S.
BEFORE ME, this ___day of_____________1997, personally appeared the
following with their Passports/Community Tax Certificates, to wit:
NAME PASSPORT/CTC NO. DATE/PLACE ISSUED
CPMIC
HENRY E. FERNANDEZ Passport#AA.718589
CTC No. 12862552C 2-21-96/Paranaque
Palawan Star
HIGINIO C. MEDOZA, JR. CTC No. 4993552 1-01-97/Puerto Princesa City
Pyramid Hill
FERNANDO B. ESGUERRA Passport#J740786/Manila
CTC No. 8095763D 4-2-96/Manila
Fenway Resources Ltd.
H. John Wilson Passport#FV9038355 3-8-93/Vancouver, Canada
known to me and to me known to be the same person who executed the foregoing
Letter Amendment Agreement and acknowledged that the same is their own free and
voluntary act and deed, and those of the entities they represent.
IN WITNESS WHEREOF, I have hereunto set my hand and notarial seal on the
date and in the place hereinbefore stated.
SUSANA C. FONG
Notary Public
Until December 31, 1997
PTR No. 8004952/1-16-97/Makati City
IBP No. 430572/1-24-97/Makati City
CORPORATE CHART
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Company Directors Officers Controlling Shareholders Percent
Held
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Fenway International Inc. H. John Wilson H. John Wilson, President Raghbir Kahbra 10.0
A. Leonard Taylor A. Leonard Taylor, CEO/
Laurie Maranda Secretary
R. George Muscroft Laurie Maranda, Vice
Rene Cristobel President
Carlos A. Fernandez R. George Muscroft, Vice
Raghbir Kahbra President
- ---------------------------------------------------------------------------------------------------------------------------------
2 Palcan Mining Corporation H. John Wilson Rene Cristobel, President Fenway International, Inc. 39.8
A. Leonard Taylor Dativa C.D. Sangalang, Dativa C.D. Sangalang 25.0
Rene Cristobel Secretary/Treasurer Rene Cristobel 20.0
Carlos A. Fernandez
Dativa C.D. Sangalang
- ---------------------------------------------------------------------------------------------------------------------------------
3 Palcan Cement Corporation H. John Wilson H. John Wilson, President Fenway International, Inc. 89.9
A. Leonard Taylor Dativa C.D. Sangalang,
Laurie Maranda Secretary/Treasury
R. George Muscroft
Rene Cristobel
Carlos A. Fernandez
Dativa C.D. Sangalang
- ---------------------------------------------------------------------------------------------------------------------------------
4 Central Palawan Mining Benigno Bengson Benigno Bengson, President
and Industrial Corporation Higinio Mendoza Emmanuel Ferrer, Secretary
Fernando Esguerra
Roland Rodriquez
Henry Fernandez
- ---------------------------------------------------------------------------------------------------------------------------------
5 Palawan Star Mining Higinio Mendoza Jr. Higinio Mendoza Jr.,
Ventures Fernando Esguerra President
Henry Fernandez Emmanuel Ferrer, Secretary
Roberto Diaducae
Benigno Ignacio
Laureno Glorio
Basilio Ayson
- ---------------------------------------------------------------------------------------------------------------------------------
6 Pyramid Hill Mining and James Tan James D. Tan, President
Industrial Manual Pasetes Emmanuel Ferrer, Secretary
Basilio Ayson
Venancio Racosa
Emmanuel Ferrer
- ---------------------------------------------------------------------------------------------------------------------------------
7 Negor RR Cement Antonio Ernesto Rodriguez Antonio Ernesto Rodriguez
Corporation Ernesto Jose Rodriguez, Sr. President
Santiago Sargon VI Santiago Sameon, Secretary
Ma. Buena Rabe
Lourdes Sameon
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
