<PAGE>
FORM 20-F
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended:
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number:
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STIRRUP CREEK GOLD LTD.
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(Exact name of Registrant as specified in its charter)
BRITISH COLUMBIA, CANADA
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(Jurisdiction of incorporation or organization)
310-1959 152ND STREET
SURREY, BRITISH COLUMBIA, CANADA V4A 9E3
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
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Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of a recent date: at February 28,
1997, 7,125,201 shares of the issuer's Common Stock were outstanding.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days: Yes No X .
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Indicate by check mark which financial statement item the registrant has
elected to follow: Item 17 X Item 18 .
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STIRRUP CREEK GOLD LTD.
FORM 20-F
TABLE OF CONTENTS
NOTE: ALL REFERENCES TO DOLLARS ($) IN THIS FORM 20-F ARE TO CANADIAN DOLLARS
UNLESS OTHERWISE NOTED.
PART I PAGE
- - ------ ----
Item 1 Description of Business. . . . . . . . . . . . . . . . . . . . . . 3
Item 2 Description of Property. . . . . . . . . . . . . . . . . . . . . . 6
Item 3 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4 Control of Registrant. . . . . . . . . . . . . . . . . . . . . . . 9
Item 5 Nature of Trading Market . . . . . . . . . . . . . . . . . . . . . 10
Item 6 Exchange Controls and Other Limitations Affecting
Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 7 Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 8 Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . 12
Item 9 Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . . 13
Item 10 Directors and Officers of Registrant . . . . . . . . . . . . . . . 15
Item 11 Compensation of Directors and Officers . . . . . . . . . . . . . . 16
Item 12 Options to Purchase Securities from Registrant or Subsidiaries . . 16
Item 13 Interest of Management in Certain Transactions . . . . . . . . . . 17
PART II
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Item 14 Description of Securities to be Registered . . . . . . . . . . . . 18
PART IV
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Item 17 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 18
Item 19 Financial Statements and Exhibits. . . . . . . . . . . . . . . . . 18
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Stirrup Creek Gold Ltd. ("Stirrup Creek" or the "Company") was
incorporated under the British Columbia Company Act on April 21, 1992. The
Company's principal executive office is 310-1959 152nd Street, Surrey,
British Columbia, Canada, V4A 9E3. Its Registered and Records Office is
1600-777 Dunsmuir Street, Vancouver, British Columbia, Canada V7Y-1K4.
Stirrup Creek is a Vancouver Stock Exchange listed company.
The Company has been principally engaged in the acquisition and
exploration of resource properties and currently holds interests in mineral
properties in British Columbia, Canada, Nevada, U.S., and Indonesia. Since
the Company is currently in the exploration stage, the Company has not
generated revenues from principal operations.
Larry Reaugh, President and a Director of Stirrup Creek, is President
and Director of Verdstone Gold Corporation, a British Columbia corporation
("Verdstone"). Stirrup Creek and Verdstone have other directors and
shareholders in common. In addition, Mr. Reaugh is a Director of Forefront
Ventures, Ltd. See Item 13. These companies carry on business as mining
exploration and development contractors. Stirrup Creek is currently engaged
in a separate joint venture agreement with each company. Verde Management is
a privately owned corporation controlled by Verdstone, which has been
employed under an operating agreement by Stirrup Creek to carry out its
administrative and management services. Stirrup Creek has no full time
employees.
Stirrup Creek entered into a joint venture agreement on October 1, 1992
with Verdstone, for an undivided 50% participating interest in a mining
lease consisting of three unpatented and two patented lode mining claims
covering approximately 94 acres, located in the Kingston Mining District,
Nevada (Victorine Mine property). The Company acquired its 50% interest by
agreeing to pay 50% of the past and future expenditures on and in connection
with the property. The joint venture agreement provides for the dilution of
a party's interest in the property for failure to contribute to ongoing
expenditures, such that a party's percentage interest in the property is
always equivalent to that party's percentage contribution to the expenditures
on the property of both parties. In the event that a party's interest is
diluted to less than 5%, that party shall have relinquished all interest in
the property. Verdstone is appointed under the agreement as the initial
operator of the joint venture and, in that capacity, is entitled to receive
an amount equal to 5% of allowable costs, as defined therein, as
reimbursement for office overhead and general and administrative expenses.
As of April 30, 1996, the Company had expended $290,122 in respect of its
joint venture interest, of which $240,068 is attributable to exploration and
$50,054 is attributable to lease payments. The joint venture is operated
through Verdstone-Stirrup Creek
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Minerals, Inc. ("VSC"), a Nevada corporation wholly-owned by the Company and
Verdstone, each as to 50%.
In February, 1997 Verdstone - Stirrup Creek Minerals Ltd. entered into
an agreement with New Concept Mining, Inc., a California corporation
("NCM"), for the sale of certain waste dumps at the Victorine Mine which were
created by previous mining operations. NCM paid the Company US$1,000 to bind
the agreement. Verdstone - Stirrup Creek Minerals Ltd will receive U.S.$8.00
per ton of waste dump material removed from the mining property. The tonnage
is not specified but may exceed 20,000 tons. NCM is not affliated with the
Company or Verdstone.
In addition, Stirrup Creek has a 100% interest in 13 unpatented lode
mining claims covering approximately 260 acres located in the Cox Canyon
Mining District of west-central Nevada ("Revenue Property"). Due to the
decreased demand for fluorspar, the major mineral located on the Revenue
Property, future exploration may become unwarranted. The Company anticipates
that the Revenue Property will be dropped in fiscal year ending April 30,
1997.
In the fiscal year ending April 30, 1996 Stirrup Creek obtained
permission from the government of Indonesia in the form of a Contract of Work
("COW") for exploration of three mining interests located in Indonesia. The
Company submitted an application and a deposit of funds to the Indonesian
government. After the COWs were granted, the funds were returned to the
Company. The Company's Indonesian mining interests consist of two properties
located in the Kalimantan area ("Timur Property" and "Brey Property") and
additional mining interests located in Irian Jaya, Indonesia ("Puncak").
- - - On March 26, 1996 Stirrup Creek entered into the Timur Property joint
venture with International Silver Ridge Resources Inc. ("International").
To earn a 50% participating interest in the 12,000 acres of mining claims,
the Company contributed $41,825 and issued 20,000 shares of the Company's
common stock to International. Pursuant to the agreement, Stirrup Creek
will be required to pay the first $150,000 toward exploration and
development of the property. The Company is the operator of the Timur
property.
- - - Subsequently, on April 18, 1996 Stirrup Creek entered into the Brey Joint
Venture with Forefront Ventures, covering 35,000 acres of mining claims in
Kalimantan, Indonesia. To earn a 75% participating interest in the joint
venture, the Company contributed $10,750 to Forefront and paid US$72,100
for the costs of obtaining the Contract of Work. Stirrup Creek must
contribute an additional $250,000 in exploration and development costs
to Forefront.
- - - In addition, Stirrup Creek obtained a 100% interest in mining property
located on Irian Jaya, Indonesia ("Puncak Property"). Exploration is
expected to begin on the Indonesian properties in early 1997.
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Stirrup Creek entered into a joint venture agreement on April 15, 1996
with Rudolf M. Durfeld for a 50% mining interest in six mineral claims
located in Clinton, British Columbia ("Watson Bar Property"). To earn its
interest, the Company must pay $300,000 as option payments and up to
$1,000,000 in exploration expenditures over a four-year period. The Company
has the right to earn an additional 20% interest by expending an additional
$1,000,000 on exploration and $300,000 on option payments over 10 years. As
of February 28, 1997, approximately $350,000 has been expended on exploration
and $25,000 on option payments. Exploration is expected to resume on the
property in early 1997.
(b) 1997 PLAN OF OPERATION
Stirrup Creek is actively exploring and developing five properties in
three geographical regions: Kalimantan and Irian Jaya, Indonesia; Nevada,
USA and British Columbia, Canada. These properties are anticipated to be the
focus of the Company's efforts for the next few years. To maintain the
Company's interest in these properties, the minimum required expenditure
levels (the majority of which are for exploration and development of the
properties) have been estimated for the following years as:
Year Ending April 30, Expenditure
-------------------- -----------
1997 $ 310,000
1998 420,000
1999 395,000
2000 415,000
2001 207,000
----------
$1,747,000
The Company's cash balance at April 30, 1996 of $370,938 was considered
sufficient to meet its working capital requirements for fiscal 1997. Should
the Company require further funds it will have to raise funds by the issue of
share capital. Share purchase warrants and director and employee stock
options outstanding could provide an additional $695,650 if exercised before
their expiry dates. A further source of liquidity exists in the form of the
Company's joint venture partners. Two of the Company's three Indonesian
projects are joint ventures. Once the Company has earned its interest in
these projects, the joint venture partners will share 50% and 25% in the
future expenditures and revenues generated by these projects.
At the Company's fiscal 1996 level of activity administrative and
overhead costs for the same five-year period are estimated to aggregate
$575,000. The combined requirements for the next five years, for project
investment as well as general and administrative expenses, total $2,322,000.
The Company will have to fund these costs by issuing share capital or
acquiring joint venture partners to share these costs.
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Significant activity in fiscal 1996 included expenditures toward
securing Contracts of Work on three prospects in Indonesia. Two of these
prospects are the subject of joint venture agreements where the Company is in
the process of earning its participating interests. The Company is optimistic
that it and its joint venture partners will be able to take development of
these prospects to at least a pre-feasibility stage, at which point the
project will be vended in whole or in part to a major mining company for
development to the production stage.
(c) FACTORS WHICH MAY ADVERSELY AFFECT PLAN OF OPERATIONS
There are a number of risks associated with the exploration for economic
deposits of minerals including the possible inability of the Company to
obtain sufficient financing in the future, government regulation,
fluctuations in the market for precious metals, competition from companies
with greater resources, and potential liability for significant uninsured
risks. The Company's Revenue Property claims are located within a Federal
Wilderness Study Area in the State of Nevada which will affect the
development of claims. Title to the Company's mineral properties may be
affected by defects which have not been detected. The precise area and
location of the Company's properties may be in doubt. The Company's
Victorine Mine property requires further exploration and development before a
production decision can be reached.
The Company's operations in Canada, Indonesia and the United States are
subject to extensive regulations. To the extent of the Company's mineral
interests in Indonesia, its operations and assets are subject to significant
political, economic, legal, and other uncertainties. Changes in policies by
the Indonesian government resulting in changes in laws, regulations, or the
interpretation thereof, confiscatory taxation, restrictions on imports and
sources of supply, currency devaluations or the expropriation of private
enterprise could materially adversely affect the Company. The Company's
activities in Indonesia are subject to necessary Contracts of Work and
licenses which are subject to administrative review and approval by various
national, provincial and local agencies.
ITEM 2. DESCRIPTION OF PROPERTY
(a) REGISTRANT'S INTEREST
Stirrup Creek holds interests in mineral properties in Kalimantan and
Irian Jaya, Indonesia, Nevada, USA and British Columbia, Canada. All work to
date has been exploratory in nature. The Company has conducted sufficient
exploration to delineate proven and probable ore reserves on the Victorine
Mining Interests only. All other properties are without a known body of
commercial ore. The following indicates the location and the Company's
interest in each of these properties:
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Property Location Ownership Interest
- - -------- -------- ------------------
Victorine Mine Nevada, U.S. 50% - Stirrup Creek
50% - Verdstone Gold
Revenue Property Nevada, U.S. 100% Stirrup Creek
Watson Bar Property Clinton, British Columbia Stirrup Creek has right to
earn up to 70% Interest
Brey Property Kalimantan, Indonesia 75% - Stirrup Creek
25% - Forefront Ventures
Timur Property Kalimantan, Indonesia 50% - Stirrup Creek
50% - International
Puncak Property Irian Jaya, Indonesia 100% - Stirrup Creek
(b) GENERAL DESCRIPTION OF EACH PROPERTY
VICTORINE MINE PROPERTY, NEVADA
As a joint venture with Verdstone, Stirrup Creek owns an undivided 50%
interest in and to the Victorine Mine property, comprising three unpatented
and two patented lode mining claims covering approximately 94 acres, located
in the Kingston Mining District, Nevada. The property is leased from
Centerville Gold Partnership of Marion, Ohio, under a Mineral Lease dated
August 4, 1992. Centerville Gold Partnership and each of its partners are at
arms' length to the Company and Verdstone. The lease is renewable annually
for a period not to exceed 88 years by making annual lease payments of US
$25,000. The lease also provides for the payment to the lessor of a royalty
equivalent to 5% of net smelter returns from operations on the property,
which may be credited against the annual lease payments.
On July 26, 1994, VSC acquired from Tim E. Neal of San Rafael, CA, a
100% interest in 25 mining claim sites, located approximately three miles
east of the main property, for total consideration of $12,500. Mr. Neal is
not affiliated with the Company or Verdstone.
Gold and silver-bearing mineralization was first discovered at the
Victorine Mine in 1862 and the property has been produced intermittently
since that time. Most recently, Nevada Goldfields, Inc. reportedly recovered
78,000 ounces of gold from 1986 to 1989, before ceasing operation. According
to a report of P.H. Cowdery, M.B.A., P.Eng., the two most recent operators,
U.S. Energy/Crested Corp.(USE/CC) and Nevada Goldfields (NGF) have mined
approximately 500,000 tons grading 0.185 opt Au from the deposit.
Two reports have been prepared on the Victorine Mine property. H.H.
Cowdery, M.B.A., P.Eng. of CORE Engineering & Associates has prepared a
Mineable Reserve Estimate dated May 1995 (the "Cowdery Report") and J.
Douglas Blanchflower, P.Geo., of Minorex Consulting Ltd. has prepared an
Exploration Report dated May 18, 1993 and amended May 4, 1995, (the
"Blanchflower Report"). Core Engineering & Associates prepared a mineable
reserve estimate based upon their
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previous experience with NGI during and after the latest mining operation on
the subject property, the results of a 1992 reverse circulation drilling
program, and their representatives' visit to the property in October, 1992.
They incorporated information from previous geological works and reserve
estimates on the Victorine deposit. The following is summary of the reserve
estimates derived from the Summary section of "A Technical Report on the
Victorine Gold Project Claim Block" which was prepared for the Company and
Verdstone by Mr. Peter H. Cowdery of CORE Engineering & Associates, dated May
1995.
Proven/Probable
--------------------------
Cut-Off Grade Tons (Short) Grade (Opt)
------------- ----------- -----------
0.029 opt 793,327 0.162
0.058 opt 617,147 0.196
0.088 opt 395,577 0.270
0.117 opt 315,561 0.313
0.146 opt 256,268 0.357
0.175 opt 199,582 0.414
REVENUE PROPERTY, NEVADA
The Company owns 13 unpatented lode mining claims covering approximately
260 acres located in the Cox Canyon Mining District of west-central Nevada.
The property covers the surface and underground workings of the Revenue
fluorspar mine which operated intermittently from 1942 to 1957 and reportedly
produced 1,900 tons of acid-grade fluorspar. Due to the decreased demand for
fluorspar, the Company expects to drop this property as no further work can
be warranted for this commodity.
BREY PROPERTY, KALIMANTAN, INDONESIA
In a joint venture agreement with Forefront Ventures, the Company has
the right to acquire a 75% participating interest on 35,000 acres of mining
claims located in Kalimantan, Indonesia. Stirrup Creek has paid Forefront
$10,750, and an additional US $72,100 for the costs of obtaining the Contract
of Work which has been issued by the Indonesian Mines Ministry. Tectonic
studies show the Brey Property contains semicircular subsidence zone (Graben
structure measuring approximately 16 km x 8 km) in surface dimensions.
Exploration began on the property in February 1997. It will include more
detailed mapping, soil and stream sediment sampling of the targets identified
by the interpretation of radarsat imagery analysis to test for anomalous gold
value over relatively large areas of land.
TIMUR PROPERTY, KALIMANTAN, INDONESIA
In a joint venture with International, Stirrup Creek has the right to
acquire a 50% interest in 12,400 acres located in Kalimantan, Indonesia.
The Company is the operator of the Timur property. Currently, work is being
conducted by IndoGold Exploration Services of Jakarta.
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Exploration began on the property in November 1996. Results from the work
done in November-December 1996 have shown at least two large areas contain
regions with anomalous gold values. Further tests are planned to confirm and
expand the data.
IRIAN JAYA, INDONESIA
The Company has a 100% interest in the Puncak property which consists of
25,640 acres. Exploration will begin on the property in early 1997.
WATSON BAR GOLD PROPERTY, BRITISH COLUMBIA
In April 1996, the Company entered into a joint venture agreement with
Rudolf M. Durfeld whereby the Company can acquire a 50% mining interest in
six mineral claims located in Clinton, British Columbia. Results in 1996
include a surface trench measuring 200 ft. X 10 ft. averaging .63 opt. gold
as well as drill holes ranging from 68 feet of .042 to 12 feet of .764 opt
gold contained in an area measuring 200 ft x 500 ft. Exploration is expected
to continue on the property in early 1997. Five thousand feet of diamond
drilling is planned.
EXPIRED MINERAL INTERESTS
The two-year mineral interests on the Quartz Creek, Alaska and Sawpit,
Alaska properties expired in February, 1996 and December, 1996 respectively.
The Company chose not to renew the mineral interests.
ITEM 3. LEGAL PROCEEDINGS
To the best knowledge of management, there are no pending legal
proceedings to which the Company or any of its subsidiaries is a party or of
which any of their property is the subject.
ITEM 4. CONTROL OF REGISTRANT
(a) Larry Reaugh, President and a Director of Stirrup Creek, is
President and Director of Verdstone Gold Corporation, a British Columbia
corporation ("Verdstone"). Stirrup Creek and Verdstone have other directors
and shareholders in common. In addition, Mr. Reaugh is a Director of
Forefront Ventures, Ltd. See Item 13. These companies carry on business as
mining exploration and development contractors. Stirrup Creek is currently
engaged in a separate joint venture agreement with each company. Verde
Management is a privately owned corporation controlled by Verdstone, which
has been employed under an operating agreement by Stirrup Creek to carry out
its administrative and management services. Except as described above, the
Company, to the best of its knowledge, is neither directly nor indirectly
owned or controlled by another corporation or any foreign government.
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(b) The following table sets forth certain information regarding the
ownership of the Company's Common Shares as of February 28, 1997 by: (i)
each person who beneficially owns more than 10% of the Registrant's Common
Shares; and (ii) all directors and officers as a group.
<TABLE>
Title of Class Identity of Person or Group Amount owned Percent of Class
- - -------------- --------------------------- ------------ ----------------
<S> <C> <C> <C>
Common Shares, no par value Larry W. Reaugh 968,076 13.59%
Common Shares, no par value All directors and officers 1,869,132 26.23%
as a group (four persons)
</TABLE>
- - ----------------------
(c) Currently, 750,000 shares are held in escrow by Montreal Trust
Company of Canada. The shares were escrowed pursuant to an agreement dated
August 15, 1994 imposed in connection with an initial public offering
conducted in British Columbia. The escrow restrictions contained in the
agreement provide that the shares may not be traded in, dealt with in any
manner whatsoever, or released, nor may the Issuer, its transfer agent, or
escrow holder make any transfer or record any trading of the shares without
the consent of the Superintendent of Brokers for British Columbia (the
"Superintendent") or, while the shares are listed on the Exchange, the
consent of the Exchange.
The Superintendent or Exchange may permit the release of all or a
portion of the escrow shares based, among other things, upon the amount of
exploration expenditures incurred by the Company on its mineral properties.
Any shares not released at the expiration of ten years from the Effective
Date will be automatically canceled.
ITEM 5. NATURE OF TRADING MARKET
The Company is a Vancouver Stock Exchange listed company. The Company's
Common Shares trade under the symbol SGU.V.
The following table sets forth the quarterly high and low sales prices
of the Company's Common Shares on the Vancouver Stock Exchange. All prices
are shown in Canadian dollars.
Fiscal 1996: High Low
- - ------------ ----- -----
3rd Quarter (11/21/95 - 1/31/96)* $0.47 $0.35
4th Quarter (02/01/96 - 04/30/96) $1.25 $0.43
Fiscal 1997:
- - ------------
1st Quarter (05/01/96 - 07/31/96) $1.58 $0.98
2nd Quarter (08/01/96 - 10/31/96) $1.14 $0.60
3rd Quarter (11/01/96 - 1/31/97) $1.17 $0.66
4th Quarter (02/01/97 - 2/28/97) $1.72 $1.01
- - ----------------------
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* The Company was accepted for filing by the Vancouver Stock Exchange on
November 21, 1995.
As of February 28, 1997, the Company had 7,125,201 outstanding shares of
Common Stock, and approximately 39 record shareholders. As that date,
approximately 30.77% of the outstanding Common Shares were held in the United
States and there were approximately 12 record holders of the Common Shares in
the United States.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
(a) There are no governmental laws, decrees or regulations in Canada
restricting the import or export of capital or affecting the remittance of
dividends, interest or other payments to holders of the Company's securities
who are nonresidents of Canada, except for tax treaties governing withholding
taxes which exist between Canada and various countries.
(b) There are no limitations relating only to nonresidents under
Canadian law or the Company's Memorandum of Incorporation on the right to be
a registered holder of and to vote the Company's Common Shares.
ITEM 7. TAXATION
The Company has not declared dividends on its Common Shares in the two
most recent fiscal years.
The Canadian Income Tax Act (the "Tax Act") provides in subsection
212(2) that dividends paid or deemed to be paid by a Canadian resident
company to a nonresident person shall be subject to a nonresident withholding
tax of 25 percent of the gross amount of the dividend. Subject to certain
exceptions, paragraph 212(1)(b) of the Tax Act similarly imposes a 25 percent
withholding tax of the gross amount of interest paid by a Canadian resident
to a nonresident person.
Subsection 115(1) and Subsection 2(3) of the Tax Act provide that a
nonresident person is subject to tax at the rates generally applicable to
persons resident in Canada on any "Taxable capital gain" arising on the
disposition of shares of a Canadian public corporation if:
(i) such nonresident, together with persons with whom he does not deal at
arms' length, has held 25% or more of the outstanding shares of any
class of stock of the corporation at any time during the five years
preceding such disposition; or
(ii) the shares disposed of were used by such nonresident in carrying on a
business in Canada.
Provisions in the Tax Act relating to dividend and interest payments by
Canadian residents to persons resident in the United States are subject to
the 1980 Canada - United States Income Tax Convention (the "1980
Convention"). Article X of the 1980 Convention provides that the rate of
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nonresident withholding tax on dividends shall not exceed 10 percent of the
gross amount of the dividends where the nonresident who is the beneficial
owner of the shares is a corporation which owns at least 10 percent of the
voting stock of the corporation paying the dividend. In other cases, the
rate of nonresident withholding tax shall not exceed 15 percent.
Article XI of the 1980 Convention provides that the rate of nonresident
withholding tax on interest shall not generally exceed 15 percent of the
gross amount of the interest.
The reduced rates of nonresident withholding relating to dividends and
interest provided by the 1980 Convention do not apply if the recipient
carries on business or provides independent personal services through a
permanent establishment situated in Canada, and the shareholding or debt
claim is effectively connected with that permanent establishment. In that
case, the dividends and interest as the case may be, are subject to tax at
the rates generally applicable to persons resident in Canada.
Article XIII of the 1980 Convention provides that gains realized by a
United States resident on the sale of shares such as those of the Company may
be taxed only in the United States.
Except as described above, there are no government laws, decrees,
regulations or treaties that materially restrict the export or import of
capital, including foreign exchange controls, or which impose taxes,
including withholding provisions, to which United States shareholders of the
Company are subject.
ITEM 8. SELECTED FINANCIAL DATA
CURRENCY MATTERS
Dollar amounts set forth in this registration statement are expressed in
Canadian Dollars unless otherwise indicated. The following table sets forth
the exchange rates for one U.S. dollar expressed in terms of one Canadian
dollar for the past four calendar years.
Year Average Low-High Year End
---- ------- --------------- --------
1992 1.2083 1.1401 - 1.2938 1.2709
1993 1.2890 1.2400 - 1.3484 1.3217
1994 1.3659 1.3085 - 1.4090 1.4018
1995 1.3771 1.3275 - 1.4267 1.3640
The noon rate of exchange on December 31, 1996, reported by the Bank of
Canada, Vancouver, British Columbia, Canada for the conversion of Canadian
dollars into United States dollars was Cdn. $1.3922 (U.S. $1.00 = Cdn. $0.74).
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SELECTED FINANCIAL DATA
STIRRUP CREEK GOLD LTD.
AS OF APRIL 30, AS OF OCTOBER 31,
--------------------- ---------------------
1995 1996 1995 1996
-------- ---------- -------- ----------
Total assets $306,333 $1,016,312 $338,753 $1,213,671
Long-term obligations $100,888 $72,909 $177,795 $198,469
<TABLE>
SIX- MONTH
FOR THE PERIOD PERIOD ENDED
FROM INCEPTION ON YEAR ENDED APRIL 30 OCTOBER 31
APRIL 21, 1992 -------------------- ----------------------
TO APRIL 30, 1992 1993 1994 1995 1996 1995 1996
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue $ -- $ -- $ -- $ -- $ -- $ -- $ --
Operating Interest
Income $ 6 $ 45 $ 38 $ 5,186 $ 22 $ 2,674
Net income (loss) $ (1,500) $(69,287) $(85,148) $(94,695) $(119,399) $ (44,487) $(184,201)
Net income (loss)
per share $ (1,500) $ (.16) $ (.05) $ (.04) $ (.04) $ (.02) $ (.04)
Dividends paid $ -- $ -- $ -- $ -- $ -- $ -- $ --
</TABLE>
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Stirrup Creek Gold Ltd. ("the Company") was incorporated in 1992 as a
mining company. In fiscal 1996, the Company conducted a public offering in
Vancouver, British Columbia, Canada whereby 1,500,000 units consisting of one
share of the Company's common stock and one warrant to purchase one share of
common stock were sold for $0.40 per unit. The Company received $540,000 net
proceeds from the public offering.
LIQUIDITY AND CAPITAL RESOURCES
APRIL 30, 1996
At April 30, 1996, the Company had a positive working capital position
of $363,608, compared with a negative $98,553 as of April 30, 1995 and
near-zero levels for the three previous fiscal years ended April 30. The net
increase is a result of the cash provided by the Company's Initial Public
Offering upon commencement of trading in the Company's shares on the
Vancouver Stock Exchange in November of 1995.
The Company's cash balance at April 30, 1996 of $370,938 was considered
sufficient to meet its working capital requirements for the upcoming year.
Should the Company require further funds it will have to raise funds by the
issue of share capital. Share purchase warrants and
-13-
<PAGE>
director and employee stock options outstanding could provide an additional
$1,566,550 if exercised before their expiry dates.
A further source of liquidity exists in the form of the Company's joint
venture partners. Two of the Company's three Indonesian projects are joint
ventures. Once the Company has earned its interest in these projects, the
joint venture partners will share 50% and 25% in the future expenditures and
revenues generated by these projects. The Company's Victorine property in
Nevada, USA is a joint venture with costs borne equally by the Company and
its joint venture partner.
OCTOBER 31, 1996
At October 31, 1996, the Company's working capital position was a
negative $77,303 compared with a positive $363,608 as of April 30, 1996. The
net decrease is primarily the result of investment by the Company in
exploration and development in its mineral properties. During the period the
Company's expenditures on the Watson Bar (British Columbia) property and the
Indonesian properties were $226,160 and $129,530 respectively.
The Company funded this working capital shortfall by the issue of share
capital. During the six months ended October 31, 1996 the Company has
received $190,600 from the sale of 278,334 units, consisting of one share of
common stock and one warrant to purchase an additional share. Further, the
Company received $46,400 from the exercise of 101,250 options and warrants to
purchase shares exercisable from $0.40 to $0.58 per share. Share purchase
warrants and director and employee stock options outstanding as of October
31, 1996 could provide an additional $777,650 if exercised prior to their
expiry dates.
Subsequent to October 31, 1996 in January, 1997 the exercise of some of
these stock purchase warrants and director and employee options have raised
Canadian $447,333 and US $100,349. In November, 1996, the Company conducted
a private placement of 416,667 units at a price of $0.72 per unit to realize
total proceeds of $300,000. In February, 1997 the Company conducted a
private placement of 300,000 units at a price of $0.80 per unit to realize
total proceeds of $240,000. Each unit is comprised of one share of the
Company's common stock and a warrant to purchase an additional share.
RESULTS OF OPERATIONS
The Company's level of activities for the years 1993 and 1994 were
similar, except for salary costs, as the Company was at a private stage and
had not yet raised its funding from its initial public offering. Salary
costs had increased in 1994 over 1993 by 68% as the company had been
anticipating an increased level of activity due to its impending public
financing.
During 1995 the Company had not yet arranged its public financing and
accordingly reduced salaries by $36,000, from $40,554 (1994) to $4,500 (1995)
in order to reduce costs and
-14-
<PAGE>
incurred only expenditures required in order to complete its initial public
offering. Professional fees increased in 1995 by $43,932 (24%) over 1994 and
trust and filing fees increased by $16,066 from $167 (1993) which reflected
the expenditures necessary to complete its public offering, and list its
shares on the Vancouver Stock Exchange (VSE).
The Company attained its listing on the VSE in June 1995 and the
resultant activity increased administrative costs by $29,852 from $94,733
(1994) to $124,585 (1995).
The most significant cost increases were an additional $27,425 in
shareholder communication costs ($0 for 1994). Salaries and benefits
increased by $15,659 to $20,159 from $4,500 (1993) and office and sundry
costs increased by $14,643 to $17,035 from $2,392 in 1995. Professional fees
declined $12,941 from $62,043 (1995) to $49,102 (1996) and trust and filing
fees declined $11,054 from $16,203 (1995) to $5,145 (1996). During 1995
costs had been heavy due to the initial public offering and subsequent to
listing the resultant expenditures declined.
MINERAL PROPERTY EXPENDITURES
The Company commenced activities in 1993 by acquiring an interest in the
Victorine property and expended $130,249 in acquiring it. The balance of the
funds of $24,450 was expended on the Revenue property and Sawpit properties.
In 1994 the Company spent $17,755 on Quartz Creek and the Sawpit property
acquisitions and spent almost all of the exploration costs of $84,854 on the
Victorine property.
In 1995 mineral property expenditures declined to $41,061 because the
Company's initial public offering had not been completed. In 1996, the
Sawpit and Quartz Creek properties were dropped. In 1996 upon the completion
of its public funding, the Company acquired the Brey and Puncak properties in
Indonesia and expended approximately $250,000 on them; the balance of mineral
property expenditures of approximately $66,000 was spent on the Victorine
property.
Annual loss per share calculated for the periods from inception on April
21, 1992 to April 30, 1996 have limited information value as the Company had
not attained a consistent level of operations.
ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT
(a) Identification of Directors and Executive Officers.
The Registrant's directors are elected at annual shareholders' meetings
for a one-year term and until their successors have been selected and shall
have been qualified. Executive officers are elected or reelected at the
annual meeting of the Board of Directors for a term of one year and until
their respective successors are elected and qualified. The current directors
and executive officers of the Company are identified below.
-15-
<PAGE>
Positions held
Name with Registrant
---- ----------------
Larry W. Reaugh Director since April 21, 1992
President and Chief Financial Officer
since April 21, 1992
Ronald Morehead Director since April 25, 1992
Leanne M. Reaugh Director since April 25, 1994
Secretary since May 1, 1995
John W. Fisher Director since November 9, 1994
Elston Johnston Director since March 1, 1996
Dr. Garth Dorman Director since June 21, 1996
(b) Family Relationships.
Larry W. Reaugh, director and the Company's president, is the husband of
Leanne M. Reaugh, a director and secretary of the Company. There are no
additional family relationships among any of the Registrant's executive
officers and directors.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
(a) During the fiscal year ended April 30, 1996 the directors and
executive officers of the Registrant and its subsidiaries received an aggregate
of $17,718 in compensation for services to the Registrant and its subsidiaries
during fiscal 1996.
(b) During the fiscal year ended April 30,1996, no funds were set aside
or accrued by the Registrant or its subsidiaries to provide pension,
retirement or similar benefits for directors and officers of the Registrant
pursuant to any plan.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
As of February 28, 1997, the Company had outstanding options and
warrants exercisable to purchase an aggregate of 2,121,501 Common Shares
exercisable as follows:
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<PAGE>
No. of shares underlying
options and warrants Exercise price per share Expiration Date
------------------------ ------------------------ ---------------
225,000 $0.40 July 29, 1999
300,000 $0.48 March 22, 1998
70,000 $0.58 April 22, 1998
208,334 $0.72 October 11, 1998
416,667 $0.72 November 22, 1998
300,000 $0.80 January 31, 1999
75,500 $0.90 September 24, 1998
486,000 $1.00 January 6, 2000
40,000 $1.20 June 21, 1999
Included in the above table are options held by officers and directors
of the Company to purchase an aggregate of 751,000 Common Shares exercisable
as follows: 225,000 options exercisable through July 29, 1999 at $0.40 per
share; 40,000 options exercisable through June 21, 1999 at $1.20 per share;
and 486,000 options exercisable through January 6, 2000 at $1.00 per share.
523,749 Warrants were held by officers or directors of the Company at
February 28, 1997.
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
(a) Transactions with management and others.
None of the directors or officers of the Company, nor any person who
beneficially owns, directly or indirectly, 10% or more of the outstanding
Common Shares of the Company, nor any relative, associate or affiliate of the
foregoing persons, has had or has any material interest, direct or indirect,
in any transactions to which the Company or any of its subsidiaries was or is
to be a party during the Company's last three fiscal years, or in any
proposed transactions, except as follows:
(i) Larry Reaugh, Leanne Reaugh, John Fisher and Ronald Morehead are
Directors and shareholders of Stirrup Creek and Verdstone. The
common directors do not own more than 10% of the outstanding shares
of Verdstone. The Company and Verdstone operate the Victorine Joint
Venture.
(ii) Larry Reaugh, a Director and President of Stirrup Creek, is also a
Director of Forefront Ventures. The Company and Forefront Ventures
are involved in the Brey Joint Venture.
-17-
<PAGE>
(iii) Because Mr. Reaugh is a Director of the Company, Verdstone and
Forefront Ventures, as well as an officer and shareholder of the
Company and Verdstone, and because each company conducts exploration
and development work on its own, opportunities for conflict of
interest among these companies may arise with respect to allocation
of resources, efforts and expenses. Stirrup Creek believes that its
arrangements with the Verdstone Group are at least as favorable to
Stirrup Creek as could be obtained from unrelated parties having
similar capability.
(b) Indebtedness of management.
The President and employees and related companies owe the Company $24,122
at April 30, 1996 and the Company owes Verdstone $17,864. Amounts due to and
from related parties are unsecured, non-interest bearing and have no specific
terms for repayment, except for $7,200 which is secured by promissory notes.
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
The Company is authorized to issue 20,000,000 Common Shares, no par value.
Holders of the Company's Common Shares are entitled to receive dividends
as, if and when declared by the Board of Directors from funds legally
available therefor. Management does not intend to declare dividends in the
foreseeable future, since earnings, if any, will be retained by the Company
to fund its operations. Holders of Common Shares are entitled to one vote
per share on all matters submitted to shareholder vote. Upon any liquidation
or dissolution of the Company, holders of Common Shares will participate
equally in such assets of the Company as are distributable to the holders of
Common Shares upon winding up or liquidation of the Company. Holders of
Common Shares have no preemptive right to subscribe for or purchase
additional shares and no right to convert Common Shares to any other class of
securities (of which none is authorized.) Once the subscription price for
Common Shares has been received by the Company, the Common Shares are not
subject to further calls or assessments.
PART IV
ITEM 17. FINANCIAL STATEMENTS
Financial statements follow the signature page and are listed in
Item 19(a).
ITEM 18. FINANCIAL STATEMENTS. See Item 17.
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS.
-18-
<PAGE>
(a) The following financial statements are filed as a part of this
registration statement:
INDEPENDENT AUDITOR'S REPORT
Balance Sheets - April 30, 1995 and 1996
Statements of Loss and Deficit - Period from Inception to April 30,
1992 and for the Years Ended April 30, 1993, 1994, 1995, and 1996
Statements of Cash Flows - Period from Inception to April 30, 1992 and
for the Years Ended April 30, 1993, 1994, 1995, and 1996
Statements of Mineral Property Costs - Period from Inception to
April 30, 1992 and for the Years Ended April 30, 1993, 1994,
1995, and 1996
Notes to the Financial Statements
UNAUDITED FINANCIAL STATEMENTS
Balance Sheets - October 31, 1995 and 1996
Statement of Loss and Deficit - For the Six Month Period Ended
October 31, 1995 and 1996
Statement of Cash Flows - For the Six Month Period
Ended October 31, 1995 and 1996
Statement of Mineral Property Costs - for the Six Month Period
Ended October 31, 1995 and 1996.
Supplementary Information to Unaudited Financial Statements.
(b) The following exhibits are filed as part of this registration
statement:
Exhibit No. 1.1 Memorandum of Incorporation as currently in effect
(corresponding to Articles of Incorporation)
Exhibit No. 1.2 Articles as currently in effect (corresponding to
Bylaws)
Exhibit No. 3.1 Joint Venture Agreement respecting the Victorine
Mine Property, Nevada dated October 1, 1992
Exhibit No. 3.2 Acquisition Agreement respecting the 25 mill site
claims located in proximity to the Victorine Mine
Property, Nevada, dated July 26, 1994
Exhibit No. 3.3 Acquisition Agreement respecting the Quartz Creek
Property, Alaska, dated October 15, 1993
Exhibit No. 3.4 Acquisition Agreement respecting the Revenue
Property, Nevada, dated July 10, 1992
Exhibit No. 3.5 Management Services Agreement dated July 19, 1994
-19-
<PAGE>
Exhibit No. 3.6 Incentive Stock Option Agreements dated July 29,
1994
Exhibit No. 3.7 Escrow Agreement dated August 15, 1994
Exhibit No. 3.8 Acquisition Agreement respecting the Watson Bar
Property, British Columbia dated April 15, 1996
Exhibit No. 3.9 Joint Venture Agreement respecting the Brey
Property, Indonesia dated April 18, 1996
Exhibit No. 3.10 Joint Venture Agreement respecting the Timur
Property, Indonesia dated March 26, 1996
Exhibit No. 4.1 Purchase Agreement respecting the waste dumps at
Victorine Mine dated January 31, 1997
Exhibit No. 99.1 Consent of J. Douglas Blanchflower, P. Geo. of
Minorex Consulting Ltd.
-20-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant certifies that it meets all of the requirements
for filing on Form 20-F and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date:
STIRRUP CREEK GOLD, LTD.
/s/ Larry W. Reaugh
-------------------------------
Larry W. Reaugh, President
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<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
FINANCIAL STATEMENTS
APRIL 30, 1996
APRIL 30, 1995
(Expressed in Canadian dollars)
<PAGE>
[LETTERHEAD]
AUDITORS' REPORT
To the Shareholders of Stirrup Creek Gold Ltd.
We have audited the balance sheets of Stirrup Creek Gold Ltd. as at April 30,
1996 and 1995 and the statements of loss and deficit, cash flows and mineral
property costs for the period from inception to April 30, 1992 and for each of
the years in the four year period ended April 30, 1996. 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 an audit to obtain
reasonable assurance 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 significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at April 30, 1996 and 1995
and the results of its operations and its cash flows for the period from
inception to April 30, 1992 and for each of the years in the four year period
ended April 30, 1996 in accordance with generally accepted accounting principles
in Canada. As required by the Company Act (British Columbia), we report that,
in our opinion, these principles have been applied on a consistent basis.
/s/ DE VISSER & CO.
- - -----------------------------
CHARTERED ACCOUNTANTS
Vancouver, B.C.
July 16, 1996
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING CONFLICT
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant uncertainties and contingencies such as
those referred to in note 1 to these financial statements. Our report to the
shareholders dated July 16, 1996 is expressed in accordance with Canadian
reporting standards which do not require a reference to such matters when the
uncertainties are adequately disclosed in the financial statements.
/s/ DE VISSER & CO.
- - -----------------------------
CHARTERED ACCOUNTANTS
Vancouver, B.C.
July 16, 1996
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
BALANCE SHEETS AT APRIL 30,
(Expressed in Canadian dollars)
1996 1995
--------- -------
$ $
A S S E T S
CURRENT
Cash 370,938 54
Accounts receivable 857 2,281
Due from related parties (note 3) 24,122 -
--------- -------
Total current assets 395,917 2,335
RECLAMATION BOND 5,629 5,629
MINERAL PROPERTIES (see Statement) (note 4) 614,766 298,369
--------- -------
1,016,312 306,333
--------- -------
--------- -------
L I A B I L I T I E S
CURRENT
Accounts payable 14,445 83,925
Due to related parties (note 3) 17,864 16,963
--------- -------
Total current liabilities 32,309 100,888
LIABILITY TO ISSUE SHARES (note 12) 40,600 -
--------- -------
72,909 100,888
--------- -------
S H A R E H O L D E R S' E Q U I T Y
SHARE CAPITAL (note 5) 1,313,432 456,075
Authorized: 20,000,000 shares no par value
Issued: 4,865,550 shares (1995 - 2,544,300)
DEFICIT ACCUMULATED DURING THE
THE DEVELOPMENT STAGE (370,029) (250,630)
--------- -------
943,403 205,445
--------- -------
1,016,312 306,333
--------- -------
--------- -------
APPROVED BY THE DIRECTORS:
/s/ [NAME ILLEGIBLE] /s/ [NAME ILLEGIBLE]
- - ----------------------------------- ----------------------------------
See accompanying notes to the financial statements
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
STATEMENTS OF LOSS AND DEFICIT
(Expressed in Canadian dollars)
<TABLE>
For the
period from
inception on
Cumulative For the years ended April 30, April 21, 1992
since --------------------------------------------------- to April 30,
inception 1996 1995 1994 1993 1992
---------- --------- --------- --------- --------- -------------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME 5,275 5,186 38 45 6 -
-------- --------- --------- --------- --------- ----------
EXPENSES
Professional fees 139,497 49,102 62,043 18,111 10,241 -
Shareholder communication 27,425 27,425 - - - -
Foreign exchange loss 12,084 3,321 595 5,114 3,054 -
Office and sundry 32,832 17,035 2,392 3,277 10,128 -
Property investigations 4,056 - - - 4,056 -
Rent 43,798 2,398 9,000 18,000 14,400 -
Travel 1,919 - - - 1,919 -
Trust and filing fees 21,485 5,145 16,203 137 - -
Salaries and benefits 90,713 20,159 4,500 40,554 24,000 1,500
Loss on disposal of capital assets 1,495 - - - 1,495 -
-------- --------- --------- --------- --------- ----------
375,304 124,585 94,733 85,193 69,293 1,500
-------- --------- --------- --------- --------- ----------
NET LOSS FOR THE YEAR (370,029) (119,399) (94,695) (85,148) (69,287) (1,500)
DEFICIT - BEGINNING OF YEAR (250,630) (155,935) (70,787) (1,500) -
-------- --------- --------- --------- --------- ----------
DEFICIT - END OF YEAR (370,029) (370,029) (250,630) (155,935) (70,787) (1,500)
-------- --------- --------- --------- --------- ----------
-------- --------- --------- --------- --------- ----------
LOSS PER SHARE (note 6) $ (0.04) $ (0.04) $ (0.05) $ (0.16) $(1,500.00)
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
WEIGHTED-AVERAGE NUMBER OF
SHARES OUTSTANDING 3,399,358 2,526,152 1,679,223 443,072 1
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
</TABLE>
See accompanying notes to the financial statements
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
<TABLE>
For the
period from
inception on
Cumulative For the years ended April 30, April 21, 1992
since --------------------------------------------------- to April 30,
inception 1996 1995 1994 1993 1992
---------- --------- --------- --------- --------- -------------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net loss for the year (370,029) (119,399) (94,695) (85,148) (69,287) (1,500)
Adjustments to reconcile net loss to
cash provided by (used for) operating
activities
Loss on disposal of capital assets 1,495 - - - 1,495 -
Goods and services tax receivable (857) 1,424 (456) (637) (1,188) -
Due from related parties (24,122) (24,122) 20,226 10,046 (30,272) -
Subscriptions receivable - - 11,776 (11,776) - -
Accounts payable 14,445 (69,480) 62,297 (5,582) 27,210 -
Due to related parties 17,864 901 16,619 (15,656) 14,500 1,500
--------- -------- ------- -------- -------- ------
Net cash provided by (used
for) operating activities (361,204) (210,676) 15,767 (108,753) (57,542) -
--------- -------- ------- -------- -------- ------
INVESTING ACTIVITIES
Reclamation bond (5,629) - (3,405) - (2,224) -
Mineral property expenditures (614,766) (316,397) (41,061) (102,609) (154,699) -
Purchase of capital assets (1,495) - - - (1,495) -
--------- -------- ------- -------- -------- ------
Net cash used for
investing activities (621,890) (316,397) (44,466) (102,609) (158,418) -
--------- -------- ------- -------- -------- ------
FINANCING ACTIVITIES
Issue of share capital 1,313,432 857,357 18,000 216,538 221,536 1
Share subscriptions received 40,600 40,600 - - - -
--------- -------- ------- -------- -------- ------
Net cash provided by
financing activities 1,354,032 897,957 18,000 216,538 221,536 1
--------- -------- ------- -------- -------- ------
INCREASE (DECREASE) IN CASH 370,938 370,884 (10,699) 5,176 5,576 1
CASH - BEGINNING OF YEAR 54 10,753 5,577 1 -
--------- -------- ------- -------- -------- ------
CASH - END OF YEAR 370,938 370,938 54 10,753 5,577 1
--------- -------- ------- -------- -------- ------
--------- -------- ------- -------- -------- ------
SUPPLEMENTAL INFORMATION:
Shares issued for non-cash
consideration - share issue costs 12,000 12,000 - - - -
--------- -------- ------- -------- -------- ------
--------- -------- ------- -------- -------- ------
</TABLE>
See accompanying notes to the financial statements
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
STATEMENTS OF MINERAL PROPERTY COSTS
(Expressed in Canadian dollars)
<TABLE>
For the
period from
inception on
For the years ended April 30, April 21, 1992
Cumulative ---------------------------------------------------- to April 30,
since inception 1996 1995 1994 1993 1992
$ $ $ $ $ $
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
DEFERRED ACQUISITION COSTS 322,887 277,900 6,250 17,755 20,982 -
---------- ---------- ---------- ---------- ---------- ----------
DEFERRED EXPLORATION AND
DEVELOPMENT COSTS
Advance royalty payments 50,054 17,000 17,280 15,774 - -
Assays 16,927 167 3,965 11,984 811 -
Camp and supplies 19,618 - 10,038 3,041 6,539 -
Travel and accommodation 13,093 1,631 - 7,662 3,800 -
Drilling 44,150 - - 44,150 - -
Equipment rentals and maintenance 2,092 - - (29) 2,121 -
Geological and geophysical 140,826 14,580 3,528 2,272 120,446 -
Property maintenance fees 5,119 5,119 - - - -
---------- ---------- ---------- ---------- ---------- ----------
DEFERRED EXPLORATION AND DEVELOPMENT
COSTS INCURRED DURING THE YEAR 291,879 38,497 34,811 84,854 133,717 -
---------- ---------- ---------- ---------- ---------- ----------
MINERAL PROPERTY COSTS INCURRED
DURING THE YEAR 316,397 41,061 102,609 154,699 -
MINERAL PROPERTY COSTS - BEGINNING
OF YEAR 298,369 257,308 154,699 - -
---------- ---------- ---------- ---------- ---------- ----------
MINERAL PROPERTY COSTS - END
OF YEAR 614,766 614,766 298,369 257,308 154,699 -
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to the financial statements
<PAGE>
STIRRUP CREEK GOLD LTD.
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1996
(Expressed in Canadian dollars)
1. NATURE OF OPERATIONS
The Company was incorporated under the Company Act (British Columbia) on
April 21, 1992 and is involved in the acquisition, exploration and
development of mineral properties and is currently in the exploratory stage
of development of its mineral properties.
The underlying value and recoverability of the amounts shown for mineral
property interests are entirely dependent upon the existence of
economically recoverable mineral reserves, the ability of the Company to
obtain the necessary financing to complete the exploration and development
of the mineral property interests, and on future profitable production or
proceeds from the disposition of the mineral property interests.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION
These financial statements are presented in accordance with generally
accepted accounting principles applicable in Canada and have been
reconciled to generally accepted accounting principles in the United States
as disclosed in note 8.
MINERAL PROPERTIES AND DEFERRED COSTS
The cost of mineral properties and related exploration costs are deferred
until the properties are placed into production, sold or abandoned. These
costs will be amortized over the estimated useful lives of the properties
following the commencement of production or written off if the properties
are sold, allowed to lapse, or abandoned.
Cost includes the cash consideration, advance royalties and the fair market
value of shares as they are issued, if any, on the acquisition of mineral
properties. Properties acquired under option agreements whereby payments
are made at the sole discretion of the Company, are recorded in the
accounts at such time as the payments are made. The recorded costs of
mineral claims and deferred exploration and development costs represent
costs incurred and are not intended to reflect present or future values.
The ultimate recovery of such capitalized costs is dependent upon the
discovery and development of economic ore reserves or the sale of mineral
rights.
The Company has entered into agreements with respect to several of its
properties and is satisfied that evidence of title to each of its mineral
properties is adequate and acceptable by prevailing industry standards with
respect to the current stage of exploration on these properties.
TRANSLATION OF FOREIGN CURRENCY
The accounts of foreign operations are translated into Canadian dollars as
follows: monetary assets and liabilities at the rate of exchange
prevailing at the balance sheet date; other assets and liabilities at their
applicable historical exchange rates; revenues and expenses at the rate of
exchange when incurred except for non-monetary expenses which are at the
rates used for the translation of the related assets; foreign exchange
translation gains and losses are included in earnings in the period in
which they were incurred.
SHARE CAPITAL
Costs incurred to issue shares are deducted from share capital.
<PAGE>
3. RELATED PARTY TRANSACTIONS
The Company has directors in common with Verdstone Gold Corporation
("Verdstone"). The Company and Verdstone operate the Victorine Joint
Venture and Verdstone holds a 51% beneficial interest in the Quartz Creek
Property.
The Company also has a director in common with Forefront Ventures Ltd.
("Forefront"). The Company and Forefront operate the Brey Joint Venture.
After earn-in, the Company will hold a 75% interest in the property.
The President, employees and related companies owe the Company $24,122 at
April 30, 1996 and the Company owes Verdstone $17,864 (1995 - $344).
Amounts due to and from related parties are unsecured, non-interest
bearing, and have no specific terms for repayment except for $7,200 which
is secured by promissory notes.
Refer to note 4.
4. MINERAL PROPERTIES
ALASKA, U.S.A.
CIRCLE MINING DISTRICT
QUARTZ CREEK PROPERTY
The Company has a 29% beneficial interest in 92 prospecting sites.
NEVADA, U.S.A.
VICTORINE JOINT VENTURE
BUNKER HILL MINING DISTRICT
LANDER COUNTY
The Company has a joint venture agreement with Verdstone whereby the
Company has a 50% participating interest in a mining lease consisting of
two patented and three unpatented mining claims. The lease requires annual
payments of U.S.$25,000.
The property is subject to a 5% net smelter returns (NSR) royalty which is
to be credited against the annual lease payments. The NSR royalty may only
be credited to each year's payment and cannot be applied cumulatively.
The initial lease commenced August 4, 1992 and can be extended for any
number of successive one year periods not to exceed 88 years.
The Company also has a 50% interest in 25 patented mill site claims.
REVENUE PROPERTY
COX CANYON MINING DISTRICT
CHURCHILL COUNTY
The Company has a 100% interest in 13 unpatented mining claims.
KALIMANTAN, INDONESIA
BREY JOINT VENTURE
The Company entered into a joint venture agreement with Forefront on April
18, 1996, whereby the Company can acquire a 75% participating interest in a
Contract of Work covering 14,420 hectares of mining claims.
To earn its interest under the joint venture agreement, the Company is
required to:
i) pay Forefront $10,750 (paid subsequent to the statement date);
ii) pay the costs of acquiring the property, including US$72,100 for the
Contract of Work (paid); and
iii) pay the first $250,000 towards exploration and development of the
property.
<PAGE>
4. MINERAL PROPERTIES (continued)
A finder's fee is payable, subject to regulatory acceptance, equal to 10%
of all payments and expenditures made and to be made by the Company under
the Brey Joint Venture agreement.
Refer to note 3.
TIMUR JOINT VENTURE
The Company entered into a joint venture agreement with International
Silver Ridge Resources Inc. ("International") on March 26, 1996, whereby
the Company can acquire a 50% participating interest in a Contract of Work
covering 5,023 hectares of mining claims.
To earn its interest in the property, the Company is required to:
i) pay International $41,825;
ii) issue to International 20,000 common shares of the Company (issued
subsequent to the statement date); and
iii) pay the first $150,000 towards exploration and development of the
property.
A finder's fee is payable equal to 10% of the cash value of all payments,
share issues and expenditures made and to be made by the Company under the
Timur Joint Venture agreement.
The Company has made no expenditures relating to the property as at April
30, 1996.
IRIAN JAYA, INDONESIA
PUNCAK PROPERTY
The Company has entered into an agreement to acquire a Contract of Work
covering 10,380 hectares of mining claims.
BRITISH COLUMBIA, CANADA
WATSON BAR PROPERTY
CLINTON MINING DIVISION
The Company entered into a Joint Venture agreement dated April 15, 1996,
whereby the Company can acquire a 50% interest in six mineral claims, by
making option payments and incurring exploration expenditures as follows:
Option Exploration
Payments Expenditures Date
---------- ------------ ----
$ $
25,000 75,000 At signing
50,000 125,000 First anniversary
50,000 200,000 Second anniversary
75,000 300,000 Third anniversary
100,000 300,000 Fourth anniversary
---------- ----------
300,000 1,000,000
---------- ----------
---------- ----------
The Company can earn an additional 20% in the property by paying an
additional $300,000 in option payments and incurring an additional
$1,000,000 in exploration expenditures.
<PAGE>
5. SHARE CAPITAL
Authorized share capital of the Company consists of 20,000,000 common
shares with no par value.
<TABLE>
Price per Number of
Share Shares Amount
--------- ---------- ----------
$ $
<S> <C> <C> <C>
Issued and outstanding at April 30, 1992 1 1
Cash 0.25 886,144 221,536
---------- ----------
Issued and outstanding at April 30, 1993 886,145 221,537
---------- ----------
Cash 0.25 836,156 209,038
(2) 0.01 749,999 7,500
---------- ----------
1,586,155 216,538
---------- ----------
Issued and outstanding at April 30, 1994 2,472,300 438,075
Cash 0.25 72,000 18,000
---------- ----------
Issued at April 30, 1995 2,544,300 456,075
---------- ----------
Issued for
Cash (1) 0.40 1,710,000 588,857
Cash 0.48 300,000 144,000
Commissions for sale of shares (1) 0.40 30,000 12,000
Exercise of stock options 0.40 60,000 24,000
Exercise of warrants 0.40 221,250 88,500
---------- ----------
2,321,250 857,357
---------- ----------
Issued at April 30, 1996 4,865,550 1,313,432
---------- ----------
---------- ----------
</TABLE>
(1) Proceeds are shown net of an aggregate $95,143 of share issue costs.
(2) Held in escrow.
5. SHARE CAPITAL (continued)
Director and employee stock options outstanding:
Number of Exercise Expiry
Shares Price Date
---------- -------- --------
$
265,000 0.40 07/29/99
75,000 0.58 02/07/99
----------
340,000
----------
----------
<PAGE>
5. SHARE CAPITAL (continued)
Share purchase warrants outstanding:
Number of Exercise Expiry
Shares Price Date
---------- -------- ------
$
831,750 Two warrants + 0.40 11/22/96
177,000 0.40 11/22/96
300,000 0.48/0.55 04/11/98
----------
1,308,750
----------
----------
6. LOSS PER SHARE
Loss per share has been calculated using the weighted-average number of
shares outstanding during the year.
7. COMPARATIVE FIGURES
Certain accounts have been restated to conform to the current year's
presentation.
8. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES.
Under Canadian accounting principles in the Statement of Cash Flows all
important aspects of financing and investing activities should be disclosed
while under U.S. accounting principles, only those transactions that
involve cash are included.
1996
--------
$
Cash provided by financing activities (Cdn. GAAP) 897,957
Shares issued for commissions for sale of shares (12,000)
--------
Cash provided by financing activities (US GAAP) 885,957
--------
--------
9. JOINT VENTURE
The Company's proportionate share of the Victorine Joint Venture balances
and results included in the financial statements are summarized below.
1996 1995
---------- ----------
$ $
ASSETS
Current assets 23 12,153
Mineral properties 248,564 213,107
Reclamation deposits 5,629 5,629
---------- ----------
254,216 230,889
---------- ----------
---------- ----------
<PAGE>
9. JOINT VENTURE (continued)
LIABILITIES AND PARTICIPANTS' EQUITY
Current liabilities 974 1,318
Participants' equity 253,242 229,571
---------- ----------
254,216 230,889
---------- ----------
---------- ----------
INTEREST INCOME - 38
---------- ----------
EXPENSES
Foreign exchange (gain) loss 4,109 (200)
General and administrative 360 3,077
---------- ----------
4,469 2,877
---------- ----------
Net loss for the year (4,469) (2,839)
---------- ----------
---------- ----------
10. INCOME TAXES
The Company has incurred non-capital losses which are available to be
offset against future taxable income. The benefits of these non-capital
losses are not reflected in these financial statements since there is no
certainty that they will be realized.
11. SEGMENTED INFORMATION
Assets by geographic segment:
1996 1995
---------- ----------
$ $
Canada 423,230 2,319
United States of America 341,372 304,014
Indonesia 251,710 -
---------- ----------
1,016,312 306,333
---------- ----------
---------- ----------
12. SUBSEQUENT EVENTS
The Company advanced $100,000 to its joint venture partner towards
exploration expenditures on the Watson Bar property.
The Company made option payments of $52,575 and issued 20,000 common shares
to its joint venture partners towards its earn-in on the Brey and Timur
properties in Indonesia.
The Company completed a private placement of 70,000 units at a price of
$0.58 per unit for proceeds of $40,600, which amount had been received
prior to the year end. Each unit is comprised of one common share and a
warrant to purchase an additional share at a price of $0.58 during the
first year and $0.67 during the second year.
Stock options were exercised for 15,000 common shares at a price of $0.40
per share and 35,000 common shares at a price of $0.58 per share and
warrants were exercised for 50,250 common shares at a price of $0.40 per
share.
The Company granted stock options to a director to purchase 40,000 common
shares exercisable at a price of $1.20 per share prior to June 21, 1999.
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
FINANCIAL STATEMENTS
OCTOBER 31, 1996
OCTOBER 31, 1995
(Expressed in Canadian Dollars)
<PAGE>
NOTICE TO READER
We have compiled the balance sheet of Stirrup Creek Gold Ltd. as at October 31,
1996 and the statements of loss and deficit and cash flows for the six month
period then ended from information provided by management. We have not audited,
reviewed or otherwise attempted to verify the accuracy or completeness of such
information. Readers are cautioned that these statements may not be appropriate
for their purposes.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
December 17, 1996
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
BALANCE SHEETS AT OCTOBER 31,
(Expressed in Canadian dollars)
1996 1995
$ $
A S S E T S
CURRENT
Cash 6,162 1,237
Accounts receivable 13,178 -
Due from related parties 2,400 -
Due for shares issued 99,426
---------- ----------
121,166 1,237
RECLAMATION DEPOSITS 19,171 5,629
MINERAL PROPERTIES 1,073,334 331,887
---------- ----------
1,213,671 338,753
---------- ----------
---------- ----------
L I A B I L I T I E S
CURRENT
Accounts payable 69,361 132,730
Due to related parties 129,108 45,065
---------- ----------
198,469 177,795
---------- ----------
S H A R E H O L D E R S' E Q U I T Y
SHARE CAPITAL
Authorized: 20,000,000 shares no par value
Issued: 5,272,634 shares
(1995-4,044,300 shares) 1,569,432 456,075
DEFICIT - ACCUMULATED DURING THE
DEVELOPMENT STAGE (554,230) (295,117)
---------- ----------
1,015,202 160,958
---------- ----------
1,213,671 338,753
---------- ----------
---------- ----------
<PAGE>
Unaudited - see Notice to Reader
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
STATEMENTS OF LOSS AND DEFICIT
FOR THE SIX MONTH PERIODS ENDED OCTOBER 31,
(Expressed in Canadian dollars)
1996 1995
$ $
REVENUE
Interest income 2,674 22
--------- ---------
EXPENSES
Bank charges and interest 150 35
Equipment rentals 1,651 -
Foreign exchange 8,285 (1,213)
Legal, accounting and audit 21,875 40,649
Office and miscellaneous 25,427 (136)
Rent 5,623 -
Shareholder communications 55,070 -
Travel and accommodations 8,126 -
Trust and filing fees 16,308 5,174
Wages and benefits 44,360 -
--------- ---------
186,875 44,509
--------- ---------
NET LOSS FOR THE PERIOD (184,201) (44,487)
DEFICIT - BEGINNING OF PERIOD (370,029) (250,630)
--------- ---------
DEFICIT - END OF PERIOD (554,230) (295,117)
--------- ---------
--------- ---------
LOSS PER SHARE $ (0.04) $ (0.02)
--------- ---------
--------- ---------
WEIGHTED-AVERAGE SHARES OUTSTANDING 5,033,093 2,544,300
--------- ---------
--------- ---------
<PAGE>
Unaudited - see Notice to Reader
<PAGE>
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED OCTOBER 31,
(Expressed in Canadian dollars)
1996 1995
$ $
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net loss for the period (184,201) (44,487)
Adjustments to reconcile net loss to cash
provided by (used for) operating activities:
Accounts receivable (73,322) 2,281
Related parties 94,541 28,102
Accounts payable 54,916 48,805
-------- -------
Net cash provided (used for)
operating activities (108,066) 34,701
-------- -------
INVESTING ACTIVITIES
Reclamation deposits (13,542) -
Mineral property expenditures:
Exploration costs (442,968) (33,518)
Acquisition costs (15,600) -
-------- -------
Net cash used for investing activities (472,110) (33,518)
-------- -------
FINANCING ACTIVITIES
Liability to issue shares (40,600) -
Issue of common shares
Cash 240,400 -
Mineral property acquisition 15,600 -
-------- -------
Net cash provided for financing activities 215,400 -
-------- -------
INCREASE (DECREASE) IN CASH (364,776) 1,183
CASH - BEGINNING OF PERIOD 370,938 54
-------- -------
CASH - END OF PERIOD 6,162 1,237
-------- -------
-------- -------
SUPPLEMENTARY INFORMATION:
Mineral property acquisition costs paid
by issuance of share capital 15,600 -
-------- -------
-------- -------
<PAGE>
Unaudited - see Notice to Reader
STIRRUP CREEK GOLD LTD.
(A Development Stage Company)
STATEMENTS OF MINERAL PROPERTY COSTS
FOR THE SIX MONTH PERIODS ENDED OCTOBER 31,
(Expressed in Canadian dollars)
1996 1995
$ $
DEFERRED ACQUISITION COSTS 157,104 -
--------- -------
DEFERRED EXPLORATION AND DEVELOPMENT COSTS
Advance royalty payments 18,117 17,125
Assays 800 3,917
Camp and supplies - -
Drilling 17,073 -
Equipment 2,000 -
Geological and geophysical 254,922 12,476
Property maintenance fees 8,552 -
Travel and accommodations - -
--------- -------
DEFERRED EXPLORATION AND DEVELOPMENT COSTS
INCURRED DURING THE PERIOD 301,464 33,518
--------- -------
MINERAL PROPERTY COSTS INCURRED DURING THE PERIOD 458,568 33,518
MINERAL PROPERTY COSTS - BEGINNING OF PERIOD 614,766 298,369
--------- -------
MINERAL PROPERTY COSTS - END OF PERIOD 1,073,334 331,887
--------- -------
--------- -------
<PAGE>
Unaudited - see Notice to Reader
<PAGE>
STIRRUP CREEK GOLD LTD.
QUARTERLY REPORT
OCTOBER 31, 1996
SCHEDULE B: SUPPLEMENTARY INFORMATION
(a) DEFERRED EXPLORATION AND DEVELOPMENT EXPENDITURES:
April 30, October 31,
1996 Additions 1996
$ $ $
Deferred acquisition costs 322,887 157,104 479,991
------- ------- ---------
Deferred Exploration costs:
Advance royalty payments 50,054 18,117 68,171
Assays 16,927 800 17,727
Camp and supplies 19,618 - 19,618
Drilling 44,150 17,073 61,223
Equipment 2,092 2,000 4,092
Geological and geophysical 140,826 254,922 395,748
Property maintenance fees 5,119 8,552 13,671
Travel and accommodations 13,093 - 13,093
------- ------- ---------
291,879 301,464 593,343
------- ------- ---------
614,766 458,568 1,073,334
------- ------- ---------
------- ------- ---------
(b) Aggregate expenditures made to parties not at arm's length: NIL
2. FOR QUARTER UNDER REVIEW:
(a) Summary of securities issued during the period:
<TABLE>
Date of Type of Number of Price Per Total Type of
Issue Issue Shares Share Proceeds Consideration
----- ----- ------ ----- -------- -------------
$ $
<S> <C> <C> <C> <C> <C>
10/18/96 Warrants 5,000 0.40 2,000 Cash
10/28/96 Private placement 208,334 0.72 150,000 Cash
10/29/96 Warrants 2,500 0.40 1,000 Cash
------- -------
215,834 153,000
------- -------
------- -------
</TABLE>
(b) Summary of options granted during the period:
Date Number Exercise Expiry
Granted of Options Price Date
------- ---------- -------- ------
$
09/24/96 75,500 0.90 09/24/98
3. AS AT THE END OF THE QUARTER:
<PAGE>
(a) Authorized share capital: 20,000,000 common shares
Shares issued and outstanding: 5,272,634 common shares
<PAGE>
STIRRUP CREEK GOLD LTD.
QUARTERLY REPORT
OCTOBER 31, 1996
SCHEDULE B: SUPPLEMENTARY INFORMATION (continued)
3. AS AT THE END OF THE QUARTER:
(b) Summary of options, warrants and convertible securities outstanding:
Summary of options outstanding:
Number Exercise Expiry
Outstanding Price Date
----------- ----- -----
$
225,000 0.40 07/29/99
40,000 0.58 02/07/99
40,000 1.20 06/21/99
75,500 0.90 09/24/98
-------
380,500
-------
-------
Summary of share purchase warrants outstanding:
Number Exercise Expiry
Outstanding Price Date
----------- ----- -----
$
815,500 2 warrants + 0.40 11/22/96
127,000 0.40 11/22/96
300,000 0.48/0.55 04/11/98
70,000 0.58/0.67 04/22/97 / 04/22/98
208,334 0.72/0.83 10/11/97 / 10/11/98
---------
1,520,834
---------
---------
(c) Number of common shares held in escrow: 750,000
Number of common shares subject to pooling: NIL
(d) Directors: John Fisher Larry Reaugh
Ronald Morehead Leanne Reaugh
Elston Johnston Garth Dorman
<PAGE>
EXHIBIT NO. 1.1
===============================================================================
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 424380
Province of British Columbia
Ministry of Finance and Corporate Relations
REGISTRAR OF COMPANIES
COMPANY ACT
CERTIFICATE OF INCORPORATION
I HEREBY CERTIFY THAT
STIRRUP CREEK GOLD LTD.
HAS THIS DAY BEEN INCORPORATED UNDER THE COMPANY ACT
GIVEN UNDER MY HAND AND SEAL OF OFFICE
AT VICTORIA, BRITISH COLUMBIA
THIS 21ST DAY OF APRIL, 1992
===============================================================================
<PAGE>
LIZ MUELLER
A/DEPUTY REGISTRAR OF COMPANIES
Province of Ministry of Corporate and Personal
British Columbia Finance and Property Registries
Corporate 940 Blanchard Street
Victoria, B.C.
British Columbia
V8W 3E8
- - --------------------------------------------------------------------------------
FILE NUMBER: 424380
STIRRUP CREEK GOLD LTD.
I hereby certify that the documents attached hereto are copies of
documents filed with the Registrar of Companies on April 21, 1992.
LIZ MUELLER
A/DEPUTY REGISTRAR OF COMPANIES
<PAGE>
- - --------------------------------------------------------------------------------
FORM 1
(SECTION 5)
COMPANY ACT
MEMORANDUM
I wish to be formed into a Company with limited liability under the Company Act
in pursuance of the Memorandum.
1. The name of the Company is STIRRUP CREEK GOLD LTD.
2. The authorized capital of the Company consists of Twenty million
(20,000,000) common share without par value.
3. I agree to take the number of shares in the Company set opposite my name.
- - --------------------------------------------------------------------------------
FULL NAME, RESIDENT ADDRESS NUMBER OF SHARES
& OCCUPATION OF SUBSCRIBER TAKEN BY SUBSCRIBER
- - --------------------------------------------------------------------------------
ONE (1) COMMON SHARE
- - -----------------------
CLIVE V. FORTH
5548 Westhaven Road
West Vancouver, B.C.
Solicitor
TOTAL SHARES TAKEN: ONE (1) COMMON SHARE
- - --------------------------------------------------------------------------------
DATED at Vancouver, B.C., this 10th day of April, 1992.
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
PART ARTICLE SUBJECT
8 BORROWING POWERS
8.1 Powers of Director
8.2 Features of Debt Obligations
8.3 Branch Register of Debenture holders
8.4 Mechanically Reproduced Signatures
9 GENERAL MEETINGS
9.1 Extraordinary General Meetings
9.2 Calling of Extraordinary General Meetings
9.3 Notice of General Meeting
9.4 Postponement of Meeting Following Advance Notice
9.5 Notice of General Meeting at which Document to be
Considered
10 PROCEEDINGS AT
GENERAL MEETINGS
10.1 Special Business
10.2 Requirement for Quorum
10.3 Quorum
10.4 Lack of Quorum
10.5 Chairman
10.6 Alternate Chairman
10.7 Solicitor as Chairman
10.8 Adjournments
10.9 Resolutions Need Not be Seconded
10.10 Decisions by Show of Hands or Poll
10.11 Casting Vote
10.12 Chairman to Determine Disputes
10.13 Polls
10.14 Casting of Votes
10.15 Ordinary Resolution Sufficient
11 VOTES OF MEMBERS
11.1 Number of Votes Per Share or Member
11.2 Representative of Corporate Member
11.3 Corporate Member May Appoint Proxyholder
11.4 Votes by Joint Holders
11.5 Votes by Committee for a Member
11.6 Committee May Appoint Proxyholder
11.7 Appointment of Proxyholders
11.8 Execution of Form of Proxy
11.9 Deposit of Proxy
11.10 Chairman to Determine Validity
11.11 Form of Proxy
11.12 Revocation of Proxy
12 CLASS AND
SERIES MEETINGS
12.1 General Meeting Provisions Apply
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
PART ARTICLE SUBJECT
13 DIRECTORS
13.1 First and Succeeding Directors
13.2 Remuneration and Expenses of Directors
13.3 Qualification of Directors
14 ELECTION AND
REMOVAL OF DIRECTORS
14.1 Election at Annual General Meetings
14.2 Eligibility of Retiring Directors
14.3 Continuance of Directors
14.4 Election of Less than Fixed number of Directors
14.5 Filing & Casual Vacancy
14.6 Additional Directors
14.7 Alternate Directors
14.8 Termination of Directorship
15 POWERS AND DUTIES
OF DIRECTORS
15.1 Management of Affairs and Business
15.2 Appointment of Attorney
16 DISCLOSURE OF
INTEREST OF DIRECTORS
16.1 Quorum re Proposed Contract
16.2 Director May Hold Office or Place of Profit with
Company
16.3 Director Acting in Professional Capacity
16.4 Director Receiving Remuneration from Other
Interests
17 PROCEEDINGS OF
DIRECTORS
17.1 Chairman and Alternate
17.2 Meetings - Procedure
17.3 Meetings by Conference Telephone
17.4 Notice of Meeting
17.5 Waiver of Notice of Meetings
17.6 Quorum
17.7 Continuing Directors May Act During Vacancy
17.8 Validity of Acts of Directors
17.9 Resolution in Writing
18 EXECUTIVE AND
OTHER COMMITTEES
18.1 Appointment of Executive Committee
18.2 Appointment of Committees
18.3 Procedure at Meetings
19 OFFICERS
19.1 President and Secretary Required
19.2 Qualification, Remuneration and Duties of Officers
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
PART ARTICLE SUBJECT
20 INDEMNITY AND
PROTECTION OF
DIRECTORS,
AND EMPLOYEES
20.1 Indemnification of Directors
20.2 Indemnification of Officer, Employees and Agents
20.3 Indemnification not Invalidated by Non-compliance
20.4 Insurance
21 DIVIDENDS AND
RESERVES
21.1 Declaration of Dividends
21.2 Date for Payment
21.3 Proportionate to Number of Shares Held
21.4 Reserves
21.5 Receipts from Joint Holders
21.6 No Interest on Dividends
21.7 Payment of Dividends
21.8 Capitalization of Undistributed Surplus
22 ACCOUNTING
RECORDS
22.1 Accounts to be Kept
22.2 Inspection of Accounts
23 NOTICES
23.1 Method of Giving Notice
23.2 Notice to Joint Holder
23.3 Notice to Personal Representative
23.4 Persons to Receive Notice
24 SEAL
24.1 Affixation of Seal to Documents
24.2 Reproduction of Seal
25 MECHANICAL
REPRODUCTION
OF SIGNATURES
25.1 Mechanical Reproduction of Signatures
25.2 Instrument Defined
- - --------------------------------------------------------------------------------
<PAGE>
EXHIBIT NO. 1.2
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
OF
STIRRUP CREEK GOLD LTD.
PART I
INTERPRETATION
1.1 In these articles, unless there is something in the subject or context
inconsistent therewith:
"Board", "Board of Directors" and "directors" mean the directors or sole
director of the company for the time being.
"company" means the company named at the head of these articles.
"COMPANY ACT" means the COMPANY ACT of the Province of British Columbia as
from time to time enacted and all amendments thereto and includes the
regulations made pursuant thereto.
"registered owner" or "registered holder" when used with respect to a share
in the authorized capital of the company means the person registered in the
register of members in respect of such share.
"solicitor of the company" means any partner, associate or articled student
of the law firm retained by the company in respect of the matter in
connection with which the term is used.
1.2 References in these articles to writing shall be construed as
including references to printing, lithography, typewriting, photography and
other modes of representing or reproducing words in a visible form.
1.3 Words in these articles importing the singular include the plural,
and vice versa, and words importing a male person include a female person and
a corporation.
1.4 Any words or phrases defined in the COMPANY ACT shall, if not
inconsistent with the subject or context, bear the same meaning when used in
these articles.
1.5 The rules of construction contained in the INTERPRETATION ACT of
the Province of British Columbia shall apply, mutatis mutandis, to the
interpretation of these articles.
<PAGE>
2
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Subject to the requirements of the COMPANY ACT, every share
certificate issued by the company shall be in such form as the directors
approve.
2.2 In respect of shares held jointly by several persons, the company
shall not be bound to issue more than one certificate, and delivery of a
certificate for such shares to one of several joint registered holders or to
his duly authorized agent shall be sufficient delivery to all.
2.3 The company shall not be bound to issue certificates representing
redeemable shares if such shares are to be redeemed within one month of the
date on which they were allotted.
2.4 Any share certificate may be sent through the mail by registered
prepaid mail to the member entitled thereto, and neither the company nor any
transfer agent shall be liable for any loss occasioned to the member owing to
any such share certificate so sent being lost in the mail or stolen.
2.5 A share certificate which contains printed or otherwise
mechanically reproduced signatures, as may be permitted by the COMPANY ACT,
is as valid as if signed manually, notwithstanding that any person whose
signature is so printed or mechanically reproduced shall have ceased to hold
the office that he is stated on such certificate to hold at the date of the
issue of such certificate.
2.6 Except as required by law, statute or these articles, no person
shall be recognized by the company as holding any share upon any trust, and
the company shall not be bound by or compelled in any way to recognize (even
when having notice thereof) any equitable, contingent, future or partial
interest in any share or in any fractional part of a share (except only as by
law, statute or these articles provided or as ordered by a court of competent
jurisdiction) or any other rights in respect of any share, except an absolute
right to the entirety thereof in its registered holder.
PART 3
ISSUE OF SHARES
3.1 Subject to the requirements of the COMPANY ACT with respect to PRO
RATA offerings and otherwise and to any direction to the contrary, save for a
direction which, at the discretion of the directors, may not be proceeded
with, contained in a resolution passed at a general meeting authorizing any
increase or alteration of capital, the shares shall be under the control of
the directors who may, subject to the rights of the holders of the shares of
the company for the time
<PAGE>
3
being outstanding, issue, allot, sell or otherwise dispose of and grant
options on or otherwise deal in shares authorized but not outstanding, and
outstanding shares held by the company, at such times, to such persons
(including directors), in such manner, upon such terms and conditions and at
such prices or for such consideration, as the directors, in their absolute
discretion, may determine.
3.2 Subject to the provisions of the COMPANY ACT, the company, or the
directors on behalf of the company, may pay a commission or allow a discount
to any person in consideration of his subscribing or agreeing to subscribe,
or procuring or agreeing to procure subscriptions, whether absolutely or
conditionally, for any shares in the company.
PART 4
SHARE REGISTERS
4.1 Subject to the provisions of the COMPANY ACT, the company may keep
or cause to be kept within British Columbia by a trust company one or more
branch registers of members and may cause to be kept outside British Columbia
one or more branch registers of members.
PART 5
TRANSFER OF SHARES
5.1 Notwithstanding any other provision of these articles, if the
company is, or becomes:
(a) a company which is not a reporting company;
(b) a reporting company that has not, with respect to any of its
securities, filed a prospectus with the Superintendent of Brokers for
British Columbia or any similar securities regulatory body within or
outside British Columbia and obtained therefor a receipt or its equivalent;
or
(c) a reporting company that does not have any of its securities listed for
trading on any stock exchange;
then no shares shall be transferred without the previous consent of the
directors expressed by a resolution of the Board and the directors shall not be
required to give any reason for refusing to consent to any such proposed
transfer. The consent of the Board required by this article may be in respect
of a specified proposed trade or trades or trading generally, whether or not
over a specific period of time, or by specific persons or with such other
restrictions or requirements as the directors may determine.
5.2 Subject to the provisions of the memorandum and these articles, any
member may transfer any of his shares by instrument in writing executed by or
on behalf of such member and
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4
delivered to the company or its transfer agent. The instrument of transfer of
any share shall be in the form, if any, on the back of the company's share
certificates or in such other form as the directors may from time to time
approve. Except to the extent that the COMPANY ACT may otherwise provide,
the transferor shall be deemed to remain the holder of any share until the
name of the transferee is entered in the register of members or a branch of
members in respect thereof.
5.3 The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall
constitute a complete and sufficient authority to the company, its directors,
officers and agents to register, in the name of the transferee as named in
the instrument of transfer, the number of shares specified therein or, if no
number is specified, all the shares of the registered owner represented by
share certificates deposited with the instrument of transfer. If no
transferee is named in the instrument of transfer, the instrument of transfer
shall constitute a complete and sufficient authority to the company, its
directors, officers and agents to register, in the name of the person
designated in writing by the person depositing the instrument of transfer
with the company, the number of shares specified therein or, if no number is
specified, all the shares of the registered owner represented by share
certificates deposited with the instrument of transfer.
5.4 Neither the company nor any director, officer or agent thereof
shall be bound to enquire into the title of the person named in the form of
transfer as transferee, or if no person is named therein as transferee, of
the person designated in writing by the person depositing the instrument of
transfer with the company, or be liable to any claim by the registered owner
or by any intermediate owner or holder of the certificate or of any of the
shares represented thereby or any interest therein for registering the
transfer, and the transfer, when registered, shall confer upon the person in
whose name the shares have been registered a valid title to such shares.
5.5 Every instrument of transfer shall be executed by the transferor,
or his duly authorized attorney, and left at the registered office of the
company or at the office of its transfer agent or registrar for registration
together with the share certificate for the shares to be transferred and such
other evidence, if any, as the directors or the transfer agent or registrar
may require to prove the authority of any such attorney, the title of the
transferor or his right to transfer the shares, and the right of the
transferee to have the transfer registered. All instruments of transfer,
where the transfer is registered, shall be retained by the company or its
transfer agent or registrar and any instrument of transfer, where the
transfer is not registered, shall be returned to the person depositing the
same together with the share certificate which accompanied the some when
tendered for registration.
5.6 There shall be paid to the company in respect of the registration
of any transfer such sum, if any, as the directors may from time to time
determine.
PART 6
ALTERATION OF CAPITAL
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6.1 The company may by ordinary resolution filed with the registrar
alter its memorandum to increase the authorized capital of the company by:
(a) creating shares with par value or shares without par value, or both;
(b) increasing the number of shares with par value or shares without par
value, or both; or
(c) increasing the par value of a class of shares with par value, if no
shares of that class are issued.
6.2 Any new shares of the company created pursuant to an increase in
the authorized capital of the company shall be subject to the provisions of
these articles.
PART 7
PURCHASE AND REDEMPTION OF SHARES
7.1 Subject to the special rights or restrictions attached to any class
or series of shares, the company may, by a resolution of the directors and in
compliance with the COMPANY ACT, purchase any of its shares at the price and
upon the terms specified in such resolution.
7.2 If the company proposes at its option to redeem some but not all of
the shares of any class or series, the directors may by resolution, subject
to the special rights or restrictions attached to such shares, decide the
manner in which the shares to be redeemed shall be selected.
PART 8
BORROWING POWERS
8.1 The directors may from time to time authorize the company to:
(a) borrow money in such manner and amount, on such security, from such
sources and upon such terms and conditions as they in their absolute
discretion think fit;
(b) issue bonds, debentures, and other debt obligations either outright or
as security for any liability or obligation of the company or any other
person; and
(c) mortgage, charge, whether by way of specific or floating charge, or
give other security on the undertaking, or on the whole or any part of the
property and assets of the company, both present and future.
8.2 Any bonds, debentures or other debt obligations of the company may
be issued at a discount, premium or otherwise, and with any special
privileges as to redemption,
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6
surrender, drawing, allotment of or conversion into or exchange for shares or
other securities, attending and voting at general meetings of the company,
appointment of directors or otherwise and may by their terms be assignable
free from any equities between the company and the person to whom they were
issued or any subsequent holder thereof, all as the directors may determine.
8.3 The company may keep or cause to be kept one or more branch
registers of its debentureholders at such place or places as the directors
may from time to time determine.
8.4 A bond, debenture or other debt obligation which contains printed
or otherwise mechanically reproduced signatures, as may be permitted by the
COMPANY ACT, is as valid as if signed manually notwithstanding that any
person whose signature is so printed or mechanically reproduced shall have
ceased to hold the office that he is stated on such bond, debenture or other
debt obligation to hold at the date of the issue thereof.
PART 9
GENERAL MEETINGS
9.1 Any general meeting other than an annual general meeting is herein
referred to as an extraordinary general meeting.
9.2 The directors may, whenever they think fit, convene an
extraordinary general meeting for whatever purpose the directors may
determine.
9.3 A notice convening a general meeting specifying the place, the day
and the hour of the meeting, and, in case of special business as defined in
article 10.1, the general nature of that business, shall be given as provided
in the COMPANY ACT to members entitled to receive such notice from the
company. No notice need be given of business that is not special business.
Accidental omission to give notice of a meeting to, or the non-receipt of
notice of a meeting by, any member shall not invalidate the proceedings at
that meeting.
9.4 Where, in accordance with the COMPANY ACT, the company has
published in prescribed manner a 56 day advance notice of a general meeting
at which directors are to be elected, the company may, notwithstanding such
notice, postpone the general meeting to a date other than that specified in
such notice. In the event of such a postponement, the company shall publish,
in the same manner prescribed for the original notice, a notice of the
postponement of the meeting which notice shall include, if the date to which
the meeting is postponed is known, the same information as is required by the
COMPANY ACT to be included in the original notice. If the date to which the
meeting is postponed is not known, the notice of postponement need state only
that the meeting is postponed until further notice, provided however that
once such date is known, the company shall publish a new 56 day notice which
shall comply with the COMPANY ACT. The date to which any such meeting is
postponed shall be deemed to be the date of the meeting for the purpose of
complying with any time limitations in respect of general meetings prescribed
by the COMPANY ACT.
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7
9.5 Except as otherwise provided by the COMPANY ACT, where special
business at a general meeting includes considering, approving, ratifying,
adopting or authorizing any document or the execution thereof or the giving of
effect thereto, the notice convening the meeting shall, with respect to such
document, be sufficient if it states that a copy of the document or proposed
document is or will be available for inspection by members at the registered
office or records office of the company or at some other place in British
Columbia designated in the notice during normal business hours up to the date of
such general meeting.
PART 10
PROCEEDINGS AT GENERAL MEETINGS
10.1 All business shall be deemed special business which is transacted
at:
(a) an extraordinary general meeting; and
(b) an annual general meeting other than the consideration of the reports
of the directors and the auditor, fixing or changing the number of
directors, the election of directors, the appointment of the auditor, the
fixing of the remuneration of the auditor and such other business as by
these articles or the COMPANY ACT may be transacted at a general meeting
without prior notice thereof being given to the members or any business
which is brought under consideration by the report of the directors.
10.2 No business, other than the election of the chairman or the
adjournment of the meeting, shall be transacted at any general meeting unless a
quorum of members is present at the commencement of the meeting, but the quorum
need not be present throughout the meeting.
10.3 Subject to article 10.4, a quorum shall be one member, or one
proxyholder representing members, holding not less than one-twentieth of the
issued shares entitled to be voted at the meeting. If there is only one member
of the company, the quorum is one person present and being, or representing by
proxy, such member. The directors, the Secretary or, in his absence, an
Assistant Secretary, and the solicitor of the company shall be entitled to
attend at any general meeting but no such person shall be counted in the quorum
or be entitled to vote at any general meeting unless he is a member or
proxyholder or is otherwise entitled to vote thereat.
10.4 If within half an hour from the time appointed for a general
meeting a quorum is not present, the meeting, if convened upon the requisition
of members, shall be dissolved. In any other case it shall stand adjourned to
the same day in the next week, at the same time and place, and, if at the
adjourned meeting a quorum is not present within half an hour from the time
appointed for the meeting, the person or persons present and being, or
representing by proxy, a member or members entitled to attend and vote at the
meeting shall be a quorum.
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8
10.5 The Chairman of the Board, if any, or in his absence the
President of the company or in his absence a Vice-President of the company, if
any, shall be entitled to preside as chairman at every general meeting of the
company.
10.6 If none of the persons referred to in article 10.5 is present
within fifteen minutes after the time appointed for holding the meeting or is
willing to act as chairman, the directors present shall choose one of their
number or the solicitor of the company to be chairman or, if all the directors
present and the solicitor of the company decline to take the chair or the
directors shall fail to so choose or if no director be present, the persons
present and entitled to vote shall choose one of their number to be chairman.
10.7 Notwithstanding articles 10.5 and 10.6, with the consent of the
meeting, which consent may be expressed by the failure of any person present and
entitled to vote to object, the solicitor of the company may act as chairman of
the meeting.
10.8 The chairman may and shall, if so directed by the meeting,
adjourn the meeting from time to time and from place to place, but no business
shall be transacted at any adjourned meeting other than the business left
unfinished at the meeting from which the adjournment took place. When a meeting
is adjourned for thirty days or more, notice, but not the advance notice
otherwise required with respect to the election of directors, of the adjourned
meeting shall be given as in the case of an original meeting. Save as
aforesaid, it shall not be necessary to give any notice of an adjourned meeting
or of the business to be transacted at an adjourned meeting.
10.9 No motion proposed at a general meeting need be seconded and the
chairman may propose or second a motion.
10.10 Subject to the provisions of the COMPANY ACT, at any general
meeting a resolution put to the vote of the meeting shall be decided on a show
of hands, unless, before or on the declaration of the result of the show of
hands, a poll is directed by the chairman or demanded by at least one member
entitled to vote who is present in person or by proxy. The chairman shall
declare to the meeting the decision on every question in accordance with the
result of the show of hands or the poll, unless the poll is to be taken at some
later time pursuant to article 10.13, and such decision shall be entered in the
book of proceedings of the company. A declaration by the chairman that a
resolution has been carried, or carried unanimously, or by a particular
majority, or lost or not carried by a particular majority and an entry to that
effect in the book of the proceedings of the company shall be conclusive
evidence of the fact, without proof of the number or proportion of the votes
recorded in favour of, or against, that resolution.
10.11 In the case of an equality of votes, whether on a show of
hands or on a poll, the chairman of the meeting at which the show of hands takes
place or at which the poll is demanded shall not be entitled to a casting vote
in addition to the vote or votes to which he may be entitled as a member or
proxyholder.
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9
10.12 In the case of any disputes as to the admission or rejection
of a vote, whether by show of hands or on a poll, the chairman shall determine
the same, and his determination made in good faith shall be final and
conclusive.
10.13 No poll may be demanded on the election of a chairman. A
poll demanded on a question of adjournment shall be taken forthwith. A poll
demanded on any other question shall be taken as soon as, in the opinion of the
chairman, reasonably convenient, but in no event later than seven days after the
meeting and at such time and place and in such manner as the chairman of the
meeting directs. When the result of a poll indicates that a particular motion
has carried by the requisite majority or failed, that result shall be deemed to
be the result of the meeting at which the poll was demanded, taken at the time
of such meeting, and such result shall be entered in the book of the proceedings
of the company, which entry following destruction of the ballots cast on the
poll, shall be conclusive evidence of such result. The demand for a poll shall
not, unless the chairman so rules, prevent the continuance of a meeting for the
transaction of any business other than the question on which a poll has been
demanded.
10.14 On a poll, a person entitled to cast more than one vote need
not, if he votes, use all his votes or cast all the votes he uses in the same
way.
10.15 Unless the COMPANY ACT, the memorandum or these articles
otherwise provide, any action to be taken by a resolution of the members may be
taken by an ordinary resolution.
PART 11
VOTES OF MEMBERS
11.1 Subject to any special voting rights or restrictions attached to
any class or series of shares and the restrictions on joint registered holders
of shares, on a show of hands every member who is present in person at a general
meeting and entitled to vote thereat shall have one vote and on a poll every
member shall have one vote for each share of which he is the registered holder
and may exercise such vote either in person or by proxy.
11.2 Any corporation, not being a subsidiary of the company, which is
a member of the company may by resolution of its directors or other governing
body authorize such person as it thinks fit to act as its representative at any
general meeting, class meeting or series meeting. The person so authorized
shall be entitled, subject to producing satisfactory evidence of his authority
as hereinafter provided, to exercise in respect of and at such meeting the same
powers on behalf of the corporation which he represents as that corporation
could exercise if it were an individual member of the company personally
present, including, without limitation, the right, unless restricted by such
resolution, to appoint a proxyholder to represent such corporation, and shall be
counted for the purpose of forming a quorum if present at the meeting. Evidence
of the appointment of any such representative shall be demonstrated by
presenting to the chairman of the meeting prior to
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10
commencement of the meeting, a copy of the authorizing resolution certified
under seal by the Secretary of the member corporation and by presenting
evidence acceptable to the chairman of the identity of the person presenting
himself as the representative. In the absence of such evidence, the chairman
shall determine whether of not any such person shall be entitled to attend and
vote at the meeting and such determination made in good faith shall be final
and conclusive.
11.3 A corporation, not being a subsidiary of the company, which is a
member of the company may appoint a proxyholder.
11.4 Where there are joint members registered in respect of any share,
any one of the joint members may vote at any meeting, either personally or by
proxy, in respect of the share as if he were solely entitled to it. If more
than one of the joint members is present at any meeting, personally or by proxy,
the joint member present whose name stands first on the register in respect of
the share shall alone be entitled to vote in respect of that share. Several
executors or administrators of a deceased member in whose sole name any share
stands shall, for the purpose of this article, be deemed joint members.
11.5 A member of unsound mind entitled to attend and vote, in respect
of whom an order has been made by any court having jurisdiction, may vote,
whether on a show of hands or on a poll, by his committee, CURATOR BONIS, or
other person in the nature of a committee or CURATOR BONIS appointed by that
court. Evidence of the appointment of any such committee, CURATOR BONIS of
other person shall be demonstrated by presenting to the chairman of the meeting,
prior to commencement of the meeting, a notarially certified copy of the court
order by which he was appointed and by presenting evidence acceptable to the
chairman that he is the person named in the order as the appointee. In the
absence of such evidence, the chairman shall determine whether or not any such
committee, CURATOR BONIS or other person shall be entitled to attend and vote at
the meeting and such determination made in good faith shall be final and
conclusive.
11.6 A committee, CURATOR BONIS or other person appointed in respect
of a member of unsound mind and entitled to vote as aforesaid may appoint a
proxyholder.
11.7 A member holding more than one share in respect of which he is
entitled to vote shall be entitled to appoint one or more, but not more than
five, proxyholders to attend, act and vote for him on the same occasion. If
such a member should appoint more than one proxyholder for the same occasion he
shall specify the number of shares each proxyholder shall be entitled to vote.
A member may also appoint one or more alternate proxyholders to act in the place
and stead of an absent proxyholder. A proxyholder need not be a member of the
company.
11.8 A proxy shall be in writing executed by the member or his
attorney duly authorized in writing, or, where the member is a corporation, by a
duly authorized officer, attorney or representative appointed pursuant to
article 11.2, of the corporation, or, where a proxy is given by a committee,
CURATOR BONIS or other person appointed by court order on behalf of a member of
unsound mind, by such committee, CURATOR BONIS or other person. A proxy
executed on behalf of
<PAGE>
11
a member by his attorney duly authorized in writing or on behalf of a
corporate member by a duly authorized officer or corporate representative or
on behalf of a member of unsound mind by his committee, CURATOR BONIS or other
person duly appointed by court order, shall be accompanied by the power of
attorney, the document whereby the officer or corporate representative derives
his authority or the court order, as the case may be, or a notarially
certified copy thereof.
11.9 Unless some other time by which proxies must be deposited has
been fixed by the directors, a proxy and the power of attorney or other
authority, if any, under which it is signed or a notarially certified copy
thereof shall be deposited at the place specified for that purpose in the notice
convening the meeting, not less than 48 hours, excluding Saturdays and holidays,
before the time for holding the meeting or adjourned meeting in respect of which
the person named in the proxy is appointed. In addition to any other method of
depositing proxies provided for in these articles, the directors may from time
to time by resolution make regulations relating to the depositing of proxies at
any place or places and, subject to the COMPANY ACT, fixing the time or times
for depositing the proxies preceding the meeting or adjourned meeting specified
in the notice calling the meeting, and providing for particulars of such
proxies to be sent to the company or any agent of the company in writing or by
letter, telegram, telex or any method of transmitting legibly recorded messages
so as to arrive before the commencement of the meeting or adjourned meeting at
the office of the company or of any agent of the company appointed for the
purpose of receiving such particulars, and providing that proxies so deposited
may be acted upon as though the proxies themselves were deposited as required by
this Part, and votes given in accordance with such regulations shall be valid
and shall be counted.
11.10 The chairman of the meeting shall determine whether or not a
proxy, deposited for use at such meeting, which may not strictly comply with the
requirements of this Part as to form, execution, accompanying documentation,
time of filing or otherwise shall be valid for use at such meeting and any such
determination made in good faith shall be final and conclusive.
11.11 Unless the COMPANY ACT or any other statute or law which is
applicable to the company or to any class or series of its shares requires any
other form of proxy, a proxy, whether for a specified meeting or otherwise,
shall be in the form following, but may also be in any other form that the
directors or the chairman of the meeting shall approve:
(Name of Company)
The undersigned, being a member of the above named company, hereby
appoints ___________________________________________________ or
failing him, __________________________________________ as proxyholder
for the
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12
undersigned to attend, act and vote for and on behalf of the
undersigned at the general meeting of the company to be held on the
________________ day of ____________________ and at any adjournment
thereof.
Signed this _______________ day of ___________________, ________.
__________________________________
(Signature of Member)
11.12 Every proxy may be revoked by an instrument in writing,
(a) executed by the member giving the same or by his attorney authorized in
writing or, where the member is a corporation, by a duly authorized officer
or attorney of the corporation; and
(b) delivered either to the registered office of the company at any time up
to and including the last business day preceding the day of the meeting, or
any adjournment thereof, at which the proxy is to be used, or to the
chairman of the meeting on the day of the meeting or any adjournment
thereof before any vote in respect of which the proxy is to be used shall
have been taken,
or in any other manner provided by law. The provisions of this article shall
apply MUTATIS MUTANDIS to a proxy executed by a corporate representative or by a
committee, CURATOR BONIS or other person duly appointed by court order in
respect of a member of unsound mind.
PART 12
CLASS AND SERIES MEETINGS
12.1 In the event of a meeting of the members of any class or series
of shares of the company, the provisions of these articles relating to the call
and conduct of and voting at general meetings shall apply to the extent
applicable; provided however that the quorum for a class or series meeting,
unless otherwise specified in the special rights or restrictions attached to the
shares of the class or series, shall be one person holding or representing by
proxy at least one-third of the issued shares of that class or series.
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13
13.1 The subscribers to the memorandum of the company are the first
directors. The directors, if any, to succeed the first directors may be
appointed in writing by a majority of the subscribers to the memorandum or at
a meeting of the subscribers or, if not so appointed, shall be elected by the
members entitled to vote on the election of directors. The number of
directors, excluding additional directors, may be fixed or changed from time
to time by ordinary resolution, whether previous notice thereof has been
given or not.
13.2 The remuneration of the directors as such may from time to time be
determined by the directors or, if the directors shall so decide, by the
members. Such remuneration may be in addition to any salary or other
remuneration paid to any officer or employee of the company as such who is
also a director. The directors shall be repaid such reasonable travelling,
hotel and other expenses as they incur in and about the business of the
company and if any director shall perform any professional or other services
for the company that in the opinion of the directors are outside the ordinary
duties of a director or shall otherwise be specially occupied in or about the
company's business, he may be paid a remuneration to be fixed by the Board,
or, at the option of such director, by the company in general meeting, and
such remuneration may be either in addition to, or in substitution for any
other remuneration that he may be entitled to receive. The directors on
behalf of the company, unless otherwise determined by ordinary resolution,
may pay a gratuity, pension or allowance on retirement to any director who
has held any salaried office or place of profit with the company or to his
spouse or dependants and may make contributions to any fund and pay premiums
for the purchase or provision of any such gratuity, pension or allowance.
13.3 A director shall not be required to hold a share in the capital of
the company as qualification for his directorship.
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14
PART 14
ELECTION AND REMOVAL OF DIRECTORS
14.1 At each annual general meeting of the company all the directors
shall retire and the members entitled to vote thereat shall elect a Board of
Directors.
14.2 A retiring director shall be eligible for re-election
14.3 Where the company fails to hold an annual general meeting in
accordance with the COMPANY ACT, the directors then in office shall be deemed
to have been elected or appointed as directors pursuant to these articles on
the last day on which the annual general meeting could have been held, and
they may hold office until other directors are appointed or elected or until
the day on which the next annual general meeting is held.
14.4 Where the number of directors of the company has been fixed by
ordinary resolution, the Board elected at any annual general meeting shall,
if the number of nominees is sufficient, consist of that number. If the
Board elected consists of fewer directors than the number so fixed, the
vacancies remaining on the Board shall be deemed to be casual vacancies.
14.5 Any casual vacancy occurring in the Board of Directors may be
filled by the remaining directors or director.
14.6 Regardless of the number of directors of the company as may have
been fixed by ordinary resolution, between annual general meetings the
directors shall have the power to appoint one or more additional directors
but not more than one-third of the number of directors elected or appointed
at the last general meeting.
14.7 Any director may by instrument in writing delivered to the company
appoint any person to be his alternate to act in his place at meetings of the
directors at which he is not present unless the directors shall have
reasonably disapproved the appointment of such person as an alternate
director and shall have given notice to that effect to the director
appointing the alternate director within a reasonable time after delivery of
such instrument to the company. Every such alternate shall be entitled to
notice of meetings of the directors and to attend and vote as a director at a
meeting at which the person appointing him is not personally present, and, if
he is a director, to have a separate vote on behalf of the director he is
representing in addition to his own vote. A director may at any time by
instrument, telegram, telex or any method of transmitting legibly recorded
messages delivered to the company revoke the appointment of an alternate
appointed by him. The remuneration payable to such an alternate, if any,
shall be payable out of the remuneration of the director appointing him.
14.8 In addition to the applicable provisions of the COMPANY ACT, a
director ceases to hold office when he is convicted of an indictable offense
and the other directors have unanimously resolved to remove him.
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15
PART 15
POWERS AND DUTIES OF DIRECTORS
15.1 The directors shall manage or supervise the management of the
affairs and business of the company and shall have the authority to exercise
all such powers of the company as are not, by the COMPANY ACT or by the
memorandum or these articles, required to be exercised by the company in
general meeting.
15.2 The directors may from time to time, by power of attorney, appoint
any person to be the attorney of the company for such purposes, and with such
powers, authorities and discretions (not exceeding those vested in or
exercisable by the directors under these articles and excepting the powers of
the directors relating to the constitution of the Board and of any of its
committees and the appointment or removal of officers and the power to
declare dividends) and for such period, with such remuneration and subject to
such conditions as the directors may think fit, and any such appointment may
be made in favour of any of the directors or any of the members of the
company or in favour of any corporation, or of any of the members, directors,
nominees or managers of any corporation, firm or joint venture and any such
power of attorney may contain such provisions for the protection or
convenience of persons dealing with such attorney as the directors think fit.
Any such attorney may be authorized by the directors to sub-delegate all or
any of the powers, authorities and discretions for the time being vested in
them.
PART 16
DISCLOSURE OF INTEREST OF DIRECTORS
16.1 A director who is, in any way, directly or indirectly, interested
in a proposed contract or transaction with the company shall be counted in
the quorum at any meeting of the directors at which the proposed contract or
transaction is approved.
16.2 A director may hold any office or place of profit with the
company, other than the office of auditor of the company, in conjunction with
his directorship for such period and on such terms, as to remuneration or
otherwise, as the directors may determine and no director or intended
director shall be disqualified by his directorship from contracting with the
company either with regard to his tenure of any such other office or place of
profit or as vendor, purchaser or otherwise, and, subject to compliance with
the provisions of the COMPANY ACT, no contract or transaction entered into by
or on behalf of the company in which a director is in any way interested
shall be liable to be voided by reason thereof.
16.3 Subject to compliance with the provisions of the COMPANY ACT, a
director or his firm may act in a professional capacity for the company and
he or his firm shall be entitled to remuneration for professional services as
if he were not a director.
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16.4 A director may be or become a director or other officer or
employee of, or otherwise interested in, any other corporation or firm,
whether or not the company is interested therein as a shareholder or
otherwise, and, subject to compliance with the provisions of the COMPANY ACT,
such director shall not be accountable to the company for any remuneration or
other benefits received by him as a director, officer or employee of, or from
his interest in, such other corporation or firm.
PART 17
PROCEEDINGS OF DIRECTORS
17.1 The Chairman of the Board, if any, or in his absence, the
President shall preside as chairman at every meeting of the directors, or if
there is no Chairman of the Board or neither the Chairman of the Board nor
the President is present within fifteen minutes of the time appointed for
holding the meeting or is willing to act as chairman, or, if the Chairman of
the Board, if any, and the President have advised the Secretary that they
will not be present at the meeting, the directors present shall choose one of
their number to be chairman of the meeting. With the consent of the meeting,
the solicitor of the company, if present, may act as chairman of a meeting of
the directors.
17.2 The directors may meet together for the dispatch of business,
adjourn and otherwise regulate their meetings as they think fit. Questions
arising at any meeting shall be decided by a majority of votes. In case of
an equality of votes the chairman shall not have a second or casting vote.
Meetings of the Board held at regular intervals may be held at such place, at
such time and upon such notice, if any, as the Board may by resolution from
time to time determine.
17.3 A director may participate in a meeting of the Board or of any
committee of the directors by means of conference telephone or other
communications facility by means of which all directors participating in the
meeting can hear each other and provided that no director objects to such
participation. A director participating in a meeting in accordance with this
article shall be deemed to be present at the meeting and shall be counted in
the quorum therefor and be entitled to speak and vote thereat.
17.4 A director may, and the Secretary or an Assistant Secretary upon
request of a director shall, call a meeting of the Board at any time.
Reasonable notice of such meeting specifying the place, day and hour of such
meeting shall be given by mail, postage prepaid, addressed to each director
and alternate director at his address as it appears on the books of the
company or by leaving it at his usual business or residential address or by
telephone, telegram, telex, or any method of transmitting legibly recorded
messages. It shall not be necessary to give notice of a meeting of directors
to any director or alternate director (a) who is at the time not in the
Province of British Columbia or (b) if such meeting is to be held immediately
following a general meeting at which such director shall have been elected or
is the meeting of directors at which such director is appointed.
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17
17.5 Any director of the company may file with the Secretary a document
executed by him waiving notice of any past, present or future meeting or
meetings of the directors being, or required to have been, sent to him and
may at any time withdraw such waiver with respect to meetings held
thereafter. After filing such waiver with respect to future meetings and
until such waiver is withdrawn, no notice need by given to such director and,
unless the director otherwise requires in writing to the Secretary, to his
alternate director of any meeting of directors, and all meetings of the
directors so held shall not be deemed to have been improperly called or
constituted by reason of notice not having been given to such director or
alternate director.
17.6 The quorum necessary for the transaction of the business of the
directors may be fixed by the directors and if not so fixed shall be a
majority of the directors holding office at the time or, if the company shall
have only one director, shall be one director.
17.7 The continuing directors may act notwithstanding any vacancy in
their body, but if and so long as their number is reduced below the number,
if any, fixed pursuant to these articles as the necessary quorum of
directors, the continuing directors may act for the purpose of increasing the
number of directors to that number, or of summoning a general meeting of the
company, but for no other purpose.
17.8 Subject to the provisions of the COMPANY ACT, all acts done by any
meeting of the directors or a committee of directors, or by any person acting
as a director, shall, notwithstanding that it be afterwards discovered that
there was some defect in the qualification, election or appointment of any
such director or of the members of such committee or person acting as
aforesaid, or that they or any of them were disqualified, be as valid as if
every such person had been duly elected or appointed and was qualified to be
a director.
17.9 A resolution consented to in writing, whether by document,
telegram, telex or any method of transmitting legibly recorded messages or
other means, by all of the directors or their alternates shall be as valid
and effectual as if it had been passed at a meeting of the directors duly
called and held. Such resolution may be in two or more counterparts which
together shall be deemed to constitute one resolution in writing. Such
resolution shall be filed with the minutes of the proceedings of the
directors and shall be effective on the date stated thereon or on the latest
date stated on any counterpart.
PART 18
EXECUTIVE AND OTHER COMMITTEES
18.1 The directors may by resolution appoint an Executive Committee to
consist of such member or members of their body as they think fit, which
committee shall have, and may exercise during the intervals between the
meetings of the Board, all the powers vested in the Board except the power to
fill vacancies in the Board, the power to change the membership of, or fill
vacancies in, the Executive Committee or any other committee of the Board and
such other powers,
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18
if any, as may be specified in the resolution. The Executive Committee shall
keep regular minutes of its business and shall cause them to be recorded in
books kept for that purpose, and shall report the same to the Board of
Directors at such times as the Board of Directors may from time to time
require. The Board shall have the power at any time to revoke or override the
authority given to or acts proposed by the Executive Committee, except as to
acts done before such revocation or overriding, and to terminate the
appointment or change the membership of such committee and to fill vacancies
in it. The Executive Committee may make rules for the conduct of its
business and may appoint such assistants as it may deem necessary. The
quorum necessary for the transaction of business of the Executive Committee
shall be a majority of its members.
18.2 The directors may by resolution appoint one or more committees
consisting of such member or members of their body as they think fit and may
delegate to any such committee between meetings of the Board such powers of
the Board as they think fit (except the power to fill vacancies in the Board,
the power to change the membership of or fill vacancies in any committee of
the Board and the power to appoint or remove officers appointed by the Board)
subject to such conditions as may be prescribed in such resolution. All
committees so appointed shall keep regular minutes of their business and
shall cause them to be recorded in books kept for that purpose, and shall
report the same to the Board of Directors at such times as the Board of
Directors may from time to time require. The directors shall have the power
at any time to revoke or override any authority given to or acts proposed by
any such committee, except as to acts done before such revocation or
overriding, and to terminate the appointment or change the membership of a
committee and to fill vacancies in it. Committees may make rules for the
conduct of their business and may appoint such assistants as they may deem
necessary. The quorum necessary for the transaction of business of any such
committee shall be a majority of its members.
18.3 The Executive Committee and any other committee may meet and
adjourn as it thinks proper. Questions arising at any meeting shall be
determined by a majority of votes of the members of the committee present
and, in the case of an equality of votes, the chairman shall not have a
second or casting vote. A resolution approved in writing by all the members
of the Executive Committee or any other committee shall be as valid and
effective as if it had been passed at a meeting of such committee duly called
and constituted. Such resolution may be in two or more counterparts which
together shall be deemed to constitute one resolution in writing. Such
resolution shall be filed with the minutes of the proceedings of the
committee and shall be effective on the date stated thereon or on the latest
date stated on any counterpart.
PART 19
OFFICERS
19.1 The directors shall, from time to time, appoint a President and a
Secretary and such other officers, if any, as the directors shall determine
and the directors may, at any time, terminate any such appointment. No
officer shall be appointed unless he is qualified in accordance with the
provisions of the COMPANY ACT.
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19
19.2 One person may hold more than one of such offices except that
the offices of President and Secretary must be held by different persons
unless the company has only one member. Any person appointed as the Chairman
of the Board, the President or the Managing Director shall be a director.
The other officers need not be directors. The remuneration of the officers
of the company as such and the terms and conditions of their tenure of office
or employment shall from time to time be determined by the directors. Such
remuneration may be by way of salary, fees, wages, commission or
participation in profits or any other means or all of these modes and an
officer may, in addition to such remuneration, be entitled to receive, after
he ceases to hold such office or leaves the employment of the company, a
pension or gratuity. The directors may decide what functions and duties each
officer shall perform and may entrust to and confer upon him any of the
powers exercisable by them upon such terms and conditions and with such
restrictions as they think fit and may from time to time revoke, withdraw,
alter or vary all or any of such functions, duties and powers.
Notwithstanding the foregoing, the Secretary shall, inter alia, perform such
functions of the Secretary as may be specified in the COMPANY ACT.
PART 20
INDEMNITY AND PROTECTION OF
DIRECTORS, OFFICERS AND EMPLOYEES
20.1 Subject to the provisions of the COMPANY ACT, the directors
shall cause the company to indemnify a director or former director of the
company and the directors may cause the company to indemnify a director or
former director of a corporation of which the company is or was a
shareholder, and in either case the heirs and personal representatives of any
such person, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, actually and reasonably
incurred by him or them including an amount paid to settle an action or
satisfy a judgment in a civil, criminal or administrative action or
proceeding to which he is or they are made a party by reason of his being or
having been a director of the company or a director of such corporation,
including any action brought by the company or any such corporation. Each
director of the company on being elected or appointed shall be deemed to have
contracted with the company on the terms of the foregoing indemnity.
20.2 Subject to the provisions of the COMPANY ACT, the directors
may cause the company to indemnify any officer, employee or agent of the
company or of a corporation of which the company is or was a shareholder
(notwithstanding that he is also a director), and his heirs and personal
representatives, against all costs, charges and expenses whatsoever incurred
by him or them and resulting from his acting as an officer, employee or agent
of the company or such corporation. In addition, the company shall indemnify
the Secretary or an Assistant Secretary of the company (if he shall not be a
full time employee of the company and notwithstanding that he is also a
director), and his heirs and legal representatives, against all costs,
charges and expenses whatsoever incurred by him or them and arising out of
the functions assigned to the Secretary by the COMPANY ACT and each such
Secretary and Assistant Secretary shall on being appointed be deemed to have
contracted with the company on the terms of the foregoing indemnity.
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20
20.3 The failure of a director or officer of the company to comply
with the provisions of the COMPANY ACT or of the memorandum or these articles
shall not invalidate any indemnity to which he is entitled under this Part.
20.4 The directors may cause the company to purchase and maintain
insurance for the benefit of any person who is or was serving as a director,
officer, employee or agent of the company or as a director, officer, employee
or agent of any corporation of which the company is or was a shareholder, and
his heirs, or personal representatives, against any liability incurred by him
as a director, officer, employee or agent, as the case may be.
PART 21
DIVIDENDS AND RESERVE
21.1 The directors may from time to time declare and authorize
payment of such dividends, if any, as they may deem advisable and need not
give notice of such declaration to any member. No dividend shall be paid
otherwise than out of funds or assets properly available for the payment of
dividends and a declaration by the directors as to the amount of such funds
or assets available for dividends shall be conclusive. The company may pay
any such dividend wholly or in part by the distribution of specific assets
and in particular by paid up shares, bonds, debentures or other securities of
the company or any other corporation or in any one or more such ways as may
be authorized by the company or the directors. Where any difficulty arises
with regard to such a distribution, the directors may settle the same as they
think expedient, and in particular may fix the value for distribution of such
specific assets or any part thereof, and may determine that cash payments, in
substitution for all or any part of the specific assets to which any members
may otherwise be entitled, shall be made to any members on the basis of the
value so fixed in order to adjust the rights of all parties and may vest any
such specific assets in trustees for the persons entitled to the dividend as
may seem expedient to the directors.
21.2 Any dividend declared on shares of any class by the directors
may be made payable on such date as is fixed by the directors.
21.3 Subject to the rights of members, if any, holding shares with
specific rights as to dividends, all dividends on shares of any class shall
be declared and paid according to the number of such shares held.
21.4 The directors may, before declaring any dividend, set aside
out of funds properly available for the payment of dividends such sums as
they think proper as a reserve or reserves, which shall, at the discretion of
the directors, be applicable for meeting contingencies, or for equalizing
dividends, or for any other purpose to which such funds of the company may be
properly applied, and pending such application may, at the like discretion,
either be employed in the business of the company or be invested in such
investments as the directors may from time to
<PAGE>
21
time think fit. The directors may also, without placing the same in reserve,
carry forward such funds as they consider prudent not to divide.
21.5 If several persons are registered as joint holders of any
share, any one of them may give an effective receipt for any dividend, bonus
or other monies payable in respect of the share.
21.6 No dividend shall bear interest against the company. Where
the dividend to which a member is entitled includes a fraction of a cent,
such fraction shall be disregarded in making payment thereof and such payment
shall be deemed to be payment in full.
21.7 Any dividend, bonus or other monies payable in cash in respect
of shares may be paid by cheque or warrant sent through the post directed to
the registered address of the holder, or in the case of joint holders, to the
registered address of that one of the joint holders who is first named on the
register of members, or to such person and to such address as the holder or
joint holders may direct in writing. Every such cheque or warrant shall be
made payable to the order of the person to whom it is sent. The mailing of
such cheque or warrant shall, to the extent of the sum represented thereby,
plus the amount of any tax required by law to be deducted, discharge all
liability for the dividend, unless such cheque or warrant shall not be paid
on presentation or the amount of tax so deducted shall not be paid to the
appropriate taxing authority.
21.8 Notwithstanding anything contained in these articles,
a) the directors may from time to time capitalize any undistributed
surplus on hand of the company and may from time to time issue
as fully paid and non-assessable any unissued shares, or any
bonds, debentures or debt obligations of the company as a dividend
representing such undistributed surplus on hand or any part thereof;
and
b) the directors may in their sole discretion subject only to the
provisions of the COMPANY ACT declare and pay dividends, in cash,
IN SPECIE or otherwise, out of the capital of the company.
PART 22
ACCOUNTING RECORDS
22.1 The company shall cause to be kept proper books of account and
accounting records in respect of all financial and other transactions of the
company in order properly to record the financial affairs and condition of
the company and to comply with the COMPANY ACT.
22.2 Unless the directors determine otherwise, or unless otherwise
determined by an ordinary resolution, no member of the company shall be
entitled to inspect the accounting records of the company.
<PAGE>
22
PART 23
NOTICES
23.1 A notice, statement or report may be given or delivered by the
company to any member either by delivery to him personally or by sending it
by mail to him to his address as recorded in the register of members. Where
a notice, statement or report is sent by mail, service or delivery of the
notice, statement or report shall be deemed to be effected by properly
addressing, prepaying and mailing the notice, statement or report and to have
been given on the day, Saturdays and holidays excepted, following the date of
mailing. A certificate, signed by the Secretary or other officer of the
company or of any other corporation acting in that behalf for the company
stating that the letter, envelope or wrapper containing the notice, statement
or report was so addressed, prepaid and mailed shall be conclusive evidence
thereof.
23.2 A notice, statement or report may be given or delivered by the
company to the joint holders of a share by giving the notice to the joint
holder first named in the register of members in respect of the share.
23.3 A notice, statement or report may be given or delivered by the
company to the persons entitled to a share in consequence of the death,
bankruptcy or incapacity of a member by sending it by mail, prepaid,
addressed to them by name or by the title of representatives of the deceased
or incapacitated person or trustee of the bankrupt, or by any like
description, at the address, if any, supplied to the company for such purpose
by the persons claiming to be so entitled, or, until such address has been so
supplied, by giving the notice in a manner in which the same might have been
given if the death, bankruptcy or incapacity had not occurred.
23.4 Notice of every general meeting or meeting of members holding
shares of a particular class or series shall be given in a manner
hereinbefore authorized to every member holding, at the time of the issue of
the notice or the date fixed for determining the members entitled to such
notice, whichever is the earlier, shares which confer the right to notice of
and to attend and vote at any such meeting. No other person except the
auditor of the company and the directors of the company shall be entitled to
receive notice of any such meeting.
PART 24
SEAL
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23
24.1 The directors may provide a seal for the company and, if they
do so, shall provide for the safe custody of the seal which shall not be
affixed to any instrument except in the presence of the following persons,
namely:
(a) any two directors; or
(b) one of the Chairman of the Board, the President, the Managing
Director, a director and a Vice-President together with one of the
Secretary, the Treasurer, the Secretary-Treasurer, an Assistant
Secretary, an Assistant Treasurer and an Assistant Secretary-
Treasurer; or
(c) if the company shall have only one member, the President or the
Secretary; or
(d) such person or persons as the directors may from time to time by
resolution appoint,
and the said directors, officers, person or persons in whose presence the
seal is so affixed to an instrument shall sign such instrument. For the
purpose of certifying under seal true copies of any document or resolution,
the seal may be affixed in the presence of any one director or officer. Any
document to which the seal of the company is affixed in accordance with the
provisions of this article shall be deemed for all purposes to be a valid and
binding obligation of the company in accordance with its terms.
24.2 To enable the seal of the company to be affixed to any bonds,
debentures, share certificates, or other securities of the company, whether
in definitive or interim form, on which facsimiles of any of the signatures
of the directors or officers of the company are, in accordance with the
COMPANY ACT or these articles, printed or otherwise mechanically reproduced,
there may be delivered to the firm or person employed to engrave, lithograph
or print such definitive or interim bonds, debentures, share certificates or
other securities one or more unmounted dies reproducing the company's seal
and the Chairman of the Board, the President, the Managing Director or a
Vice-President and the Secretary, Treasurer, Secretary-Treasurer, an
Assistant Secretary, an Assistant treasurer or an Assistant
Secretary-Treasurer may by a document authorize such firm or person to cause
the company's seal to be affixed to such definitive or interim bonds,
debentures, share certificates or other securities by the use of such dies.
Bonds, debentures, share certificates or other securities to which the
company's seal has been so affixed shall for all purposes be deemed to be
under and to bear the company's seal lawfully affixed thereto.
PART 25
MECHANICAL REPRODUCTION OF SIGNATURES
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24
25.1 The signature of any officer, director, registrar, branch
registrar, transfer agent or branch agent of the company, unless otherwise
required by the COMPANY ACT or by these articles, may, if authorized by the
directors, be printed, lithographed, engraved or otherwise mechanically
reproduced upon all instruments executed or issued by the company or any
officer thereof. Any instrument on which the signature of any such person is
so reproduced shall be deemed to have been manually signed by such person
whose signature is so reproduced and shall be as valid to all intents and
purposes as if such instrument had been signed manually, and notwithstanding
that the person whose signature is so reproduced may have ceased to hold the
office that he is stated on such instrument to hold at the date of the
delivery or issue of such instrument.
25.2 The term "instrument" as used in article 25.1, shall include
deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments
of property, real or personal, agreements, releases, receipts and discharges
for the payment of money or other obligations, shares and share warrants of
the company, bonds, debentures and other debt obligations of the company, and
all paper writings.
<PAGE>
EXHIBIT NO. 3.1
JOINT VENTURE AGREEMENT
THIS AGREEMENT is made as of the 1st day of October, 1992
BETWEEN: VERDSTONE GOLD CORPORATION
310 - 1959 152nd Street
Surrey, British Columbia
V4A 9E3
("Verdstone") OF THE FIRST PART
AND: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, British Columbia
V4A 9E3
("Stirrup") OF THE SECOND PART
RECITALS
A. Pursuant to the Mining Lease, as hereinafter defined, Verdstone holds a
lease over and the right to explore, develop and mine the Property as described
in Exhibit A and defined in Section 1.22.
B. Stirrup wishes to acquire an interest in and to the Mining Lease and
thereafter Verdstone and Stirrup wish to participate jointly in the
exploration, evaluation, development and mining of mineral resources within
the Property or any other properties acquired pursuant to the terms of this
Agreement.
C. Verdstone has agreed to act as the Operator of the Venture as defined
hereafter.
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, Verdstone and Stirrup agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Accounting Procedure" means the procedures set forth in Exhibit B.
1.2 "Affiliate" means any person, partnership, joint venture,
corporation or other form of enterprise which directly or indirectly
controls, is controlled by, or is under common control with,
<PAGE>
2
a Participant. For purposes of the preceding sentence, "control" means
possession, directly or indirectly, of the power to direct or cause direction
of management and policies through ownership of voting securities, contract,
voting trust or otherwise.
1.3 "Agreement" means this Joint Venture Agreement, including all
amendments and modifications thereof, and all schedules and exhibits, which
are incorporated herein by this reference.
1.4 "Area of Interest" means the area described in Part 2 of Exhibit A.
1.5 "Assets" means the Property, Products and all other real and
personal property, tangible and intangible, held for the benefit of the
Participants hereunder.
1.6 "Budget" means a detailed estimate of all costs to be incurred by
the Participants with respect to a Program and a schedule of cash advances to
be made by the Participants.
1.7 "Development" means all preparation for the removal and recovery of
Products, including the construction or installation of a mill or any other
improvements to be used for the mining, handling, milling, processing or
other beneficiation of Products.
1.8 "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Products.
1.9 "Initial Contribution" means that contribution each Participant has
made or agrees to make pursuant to Section 5.1.
1.10 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.
1.11 "Management Committee" means the committee established under
Article VII.
1.12 "Mining" means the mining, extracting, producing, handling, milling
or other processing of Products.
1.13 "Mining Lease" means that certain mining lease dated August 4, 1992
and entered into between Verdstone and Centerville Gold Partnership, a copy
of which is attached hereto as Exhibit F.
1.14 "Net Proceeds" means certain amounts calculated as provided in
Exhibit C, which may be payable to a Participant under Section 6.4(b)(2).
1.15 "Operations" means the activities carried out under this Agreement.
<PAGE>
3
1.16 "Operator" means the person or entity appointed under Article VIII
to manage Operations, or any successor Operator.
1.17 "Participant" and "Participants" mean the persons or entities that
from time to time have Participating Interests.
1.18 "Participating Interest" means the percentage interest representing
the operating ownership interest of a Participant in Assets, and all other
rights and obligations arising under this Agreement, as such interest may
from time to time be adjusted hereunder. Participating Interests shall be
calculated to three decimal places and rounded to two (e.g., 1.519% rounded
to 1.52%). Decimals of .005 or more shall be rounded up to .01, decimals of
less than .005 shall be rounded down. The initial Participating Interests of
the Participants are set forth in Section 6.1.
1.19 "Prime Rate" means the interest rate quoted as "Prime" by the
Royal Bank of Canada, at its Canada Place Branch in Vancouver, British
Columbia, as said rate may change from day to day (which quoted rate may not
be the lowest rate at which the Bank loans funds).
1.20 "Products" means all ores, minerals and mineral resources produced
from the Property under this Agreement.
1.21 "Program" means a description in reasonable detail of Operations to
be conducted and objectives to be accomplished by the Operator for a year or
any longer period.
1.22 "Property" means those interests in real property described in Part
I of Exhibit A and all other interests in real property within the Area of
Interest which are acquired and held subject to this Agreement.
1.23 "Transfer" means sell, grant, assign, encumber, pledge or otherwise
commit or dispose of.
1.25 "Venture" means the business arrangement of the Participants under
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS
2.1 CAPACITY OF PARTICIPANTS. Each of the Participants represents and
warrants as follows:
(a) that it is a corporation duly incorporated and in good standing in the
Province of British Columbia and that it is qualified to do business
and is in good standing in those jurisdictions where necessary in
order to carry out the purposes of this
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4
Agreement;
(b) that it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this
Agreement have been properly taken;
(c) that it will not breach any other agreement or arrangement by entering
into or performing this Agreement;
(d) that this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms; and
(e) that it is resident in Canada within the meaning of Section 116 of the
INCOME TAX ACT (Canada).
2.2 REPRESENTATIONS AND WARRANTIES. Verdstone makes the following
representations and warranties effective the date hereof:
(a) to the best of its knowledge and belief, the patented and unpatented
mining claims comprising the Property have been properly located and
recorded in compliance with the laws of the State of Nevada, there are
no disputes over the title, the location or recording of such mineral
claims, and the mineral claims are in good standing and are free and
clear of any liens, charges or encumbrances of any nature or kind
whatsoever;
(b) Verdstone has not done anything whereby the mining claims comprising
the Property may be encumbered in any manner whatsoever;
(c) the Mining Lease is in good standing, no party thereto is in breach
thereof and Verdstone has no reason to believe that the transfer of
the mineral interests provided for therein is in any way jeopardized.
2.3 DISCLOSURES. Each of the Participants represents and warrants that it
is unaware of any material facts or circumstances which have not been disclosed
in this Agreement, which should be disclosed to the other Participant in order
to prevent the representations in this Article II from being materially
misleading.
2.4 RECORD TITLE. Title to the Property is held by Centerville Gold
Partnership pursuant to the Mining Lease.
<PAGE>
5
2.5 JOINT LOSS OF TITLE. Any failure or loss of title to the Assets,
and all costs of defending title, shall be charged to the Joint Account,
except that all costs and losses arising out of or resulting from breach of
the representations and warranties of a Participant shall be charged to that
Participant.
ARTICLE III
ACQUISITION, NAME AND TERM
3.1 ACQUISITION OF INTEREST. The parties acknowledge that Verdstone
has to date expended the sum of $16,000 in the acquisition and development of
the Mining Lease and the Property. In consideration of Stirrup's agreement
to expend the first $16,000 in expenditures pursuant to the initial Program
and Budget, set forth in Exhibit E, Verdstone hereby grants, sells and
transfers to Stirrup an undivided 50% interest in and to the Mining Lease and
the Property, such that the initial Participating Interests of the
Participants shall be as set forth in Section 6.1. Following the expenditure
by Stirrup of $16,000 in accordance with the foregoing, all further
expenditures shall be made as between the Participants in accordance with the
other provisions of this Agreement.
3.2 NAME. The name of the Venture shall be the Victorine Joint
Venture.
3.3 PURPOSES. This Agreement is entered into for the following
purposes and for no others, and shall serve as the exclusive means by which
the Participants, or either of them, accomplish such purposes:
(a) to conduct Exploration with the Area of Interest;
(b) to acquire additional properties within the Area of Interest;
(c) to engage in Development and Mining Operations on the Property;
(d) to engage in marketing Products, to the extent permitted by Article
XI; and
(f) to perform any other activity necessary, appropriate, or incidental to
any of the foregoing.
3.4 LIMITATION. Unless the Participants otherwise agree in writing,
the Operations shall be limited to the purposes described in Section 3.3, and
nothing in this Agreement shall be construed to enlarge such purposes.
3.5 EFFECTIVE DATE AND TERM. The effective date of this Agreement
shall be the date first recited above. The term of this Agreement shall be
for 20 years from the effective date and for so long thereafter as Products
are produced from the Property, unless the Agreement is earlier
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6
terminated as herein provided.
ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS
4.1 NO PARTNERSHIP. Nothing contained in this Agreement shall be
deemed to constitute either Participant the partner of the other, nor,
except as otherwise herein expressly provided, to constitute either
Participant the agent or legal representative of the other, nor to create any
fiduciary relationship between them. It is not the intention of the
Participants to create, nor shall this Agreement be construed to create, any
mining, commercial or other partnership. Neither Participant shall have any
authority to act for or to assume any obligation or responsibility on behalf
of the other Participant, except as otherwise expressly provided herein. The
rights, duties, obligations and liabilities of the Participants shall be
several and not joint or collective. Each Participant shall be responsible
only for its obligations as herein set out and shall be liable only for its
share of the costs and expenses as provided herein, it being the express
purpose and intention of the Participants that their ownership of Assets and
the rights acquired hereunder shall be as tenants in common. Each
Participant shall indemnify, defend and hold harmless the other Participant,
its directors, officers, employees, agents and attorneys from and against any
and all losses, claims, damages and liabilities arising out of any act or any
assumption of liability by the indemnifying Participant, or any of its
directors, officers, agents and attorneys done or undertaken, or apparently
done or undertaken, on behalf of the other Participant, except pursuant to
the authority expressly granted herein or as otherwise agreed in writing
between the Participants.
4.2 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this
Agreement, each Participant shall have the right independently to engage in
and receive full benefits from business activities, whether or not
competitive with the Operations, without consulting the other. The doctrines
of "corporate opportunity" or "business opportunity" shall not be applied to
any other activity, venture, or operation of either Participant, and, except
as otherwise provided in Section 12.6, neither Participant shall have any
obligation to the other with respect to any opportunity to acquire any
property outside the Area of Interest at any time, or within the Area of
Interest after the termination of this Agreement. Unless otherwise agreed in
writing, no Participant shall have any obligation to mill, beneficiate or
otherwise treat any Products or any other Participant's share of Products in
any facility owned or controlled by such Participant.
4.3 WAIVER OF RIGHT TO PARTITION. The Participants hereby waive and
release all rights of partition, or of sale in lieu thereof, or other
division of Assets, including any such rights provided by statute.
4.4 TRANSFER OR TERMINATION OF RIGHTS TO PROPERTY. Except as otherwise
provided in this Agreement, neither Participant shall Transfer all or any
part of its interest in the Assets or this
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7
Agreement or otherwise permit or cause such interests to terminate.
4.5 IMPLIED COVENANTS. There are no implied covenants contained in
this Agreement other than those of good faith and fair dealing.
ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS
5.1 PARTICIPANTS' INITIAL CONTRIBUTIONS. Pursuant to Section 3.1 the
initial Participating Interests of the parties are as set forth in Section
6.1. The agreed value of each party's Initial Contribution is $16,000 and the
receipt by the Venture of the Initial Contribution of each Participant is
hereby acknowledged by the parties hereto.
5.2 ADDITIONAL CASH CONTRIBUTIONS. Subject to any election permitted
by Section 6.3, the Participants shall hereafter be obligated to contribute
funds to adopted Programs in proportion to their respective Participating
Interests.
ARTICLE VI
INTERESTS OF PARTICIPANTS
6.1 INITIAL PARTICIPATING INTERESTS. The Participants shall have the
following initial Participating Interests:
Verdstone - 50%
Stirrup - 50%
6.2 CHANGES IN PARTICIPATING INTERESTS. A Participant's Participating
Interest shall be changed as follows:
(a) as provided in Section 6.5; or
(b) upon an election by a Participant pursuant to Section 6.3 to
contribute less to an adopted Program and Budget than the percentage
reflected by its Participating Interest; or
(c) in the event of default by a Participant in making its agreed upon
contribution to an adopted Program and Budget, followed by an election
by the other Participant to invoke Section 6.4(b); or
(d) transfer by a Participant of less than all its Participating Interest
in accordance with Article XV; or
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8
(e) acquisition of less than all of the Participating Interest of the
other Participant, however arising.
6.3. VOLUNTARY REDUCTION IN PARTICIPATION. A Participant may elect, as
provided in Section 9.5, to limit its contributions to an adopted Program and
Budget as follows:
(a) to some lesser amount than its respective Participating Interest; or
(b) not at all.
If a Participant elects to contribute to an adopted Program and Budget some
lesser amount than its respective Participating Interest, or not at all, the
Participating Interest of that Participant shall be recalculated at the time
of election by dividing: (i) the sum of (a) the agreed value of the
Participant's Initial Contribution under Section 5.1, (b) the total of all of
the Participant's contributions under Section 5.3, and (c) the amount, if
any, the Participant elects to contribute to the adopted Program and Budget;
by (ii) the sum of (a), (b) and (c) above for all Participants; and then
multiplying the result by one hundred. The Participating Interest of the
other Participant shall thereupon become the difference between 100% and the
recalculated Participating Interest.
6.4 DEFAULT IN MAKING CONTRIBUTIONS.
(a) If a Participant defaults in making a contribution or cash call
required by an approved Program and Budget, the non-defaulting
Participant may advance the defaulted contribution on behalf of the
defaulting Participant and treat the same, together with any accrued
interest, as a demand loan bearing interest from the date of the
advance at the rate provided in Section 10.3. The failure to repay
said loan upon demand shall be a default. Each Participant hereby
grants to the other a lien upon its interest in the Property and a
security interest in its rights under this Agreement and in its
Participating Interest in other Assets, and the proceeds therefrom, to
secure any loan made hereunder, including interest thereon, reasonable
attorneys fees and all other reasonable costs and expenses incurred in
recovering the loan with interest and in enforcing such lien or
security interest, or both. A non-defaulting Participant may elect
the applicable remedy under this Section 6.4(a) or under 6.4(b), or,
to the extent a Participant has a lien or security interest under
applicable law, it shall be entitled to its rights and remedies at law
and in equity. All such remedies shall be cumulative. The election
of one or more remedies shall not waive the election of any other
remedies. Each Participant hereby irrevocably appoints the other its
attorney-in-fact to execute, file and record all instruments necessary
to perfect or effectuate the provisions hereof.
(b) The Participants acknowledge that if a Participant defaults in making
a contribution, or a cash call, or in repaying a loan, as required
hereunder, it will be difficult to
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9
measure the damages resulting from such default. In the event of
such default, as reasonable liquidated damages, the non-defaulting
Participant may, with respect to any such default not cured within
30 days after notice to the defaulting Participant of such default,
elect one of the following remedies by giving notice to the
defaulting Participant:
(i) For a default relating exclusively to an Exploration Program and
Budget, the non-defaulting Participant may elect to have the
defaulting Participant's Participating Interest permanently
reduced as provided in Section 6.3 and further reduced by
multiplying the result by the following percentage: 60%.
Amounts treated as a loan pursuant to Section 6.4(a) and interest
thereon shall be included in the calculation of the defaulting
Participant's reduced Participating Interest. The non-
defaulting Participant's Participating Interest shall, at such
time, become the difference between 100% and the further reduced
Participating Interest. Such reductions shall be effective as of
the date of the default.
(ii) For a default relating to a Program and Budget covering in whole
or in part Development or Mining, at the non-defaulting
Participant's election, the defaulting Participant shall be
deemed to have withdrawn from the Venture and to have
automatically relinquished its Participating Interest to the non-
defaulting Participant; provided, however, the defaulting
Participant shall have the right to receive only from 10% of Net
Proceeds, if any, and not from any other source, an amount equal
to the defaulting Participant's aggregate contributions pursuant
to Sections 5.1 and 5.2. Upon receipt of such amount the
defaulting Participant shall thereafter have no further right,
title or interest in Assets or under this Agreement.
6.5 ELIMINATION OF MINORITY INTEREST. Upon the reduction of its
Participating Interest to less than 5%, a Participant shall be deemed to have
withdrawn from this Agreement and shall relinquish its entire Participating
Interest. Such relinquished Participating Interest shall be deemed to have
accrued automatically to the other Participant.
6.6 CONTINUING LIABILITIES UPON ADJUSTMENTS OF PARTICIPATING INTERESTS.
Any reduction of a Participant's Participating Interest under this Article VI
shall not relieve such Participant of its share of any liability, whether it
accrues before or after such reduction, arising out of Operations conducted
prior to such reduction. For purposes of this Article VI, such Participant's
share of such liability shall be equal to its Participating Interest at the time
such liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of the other Participant's
Participating Interest shall be free of royalties, liens or other encumbrances
arising by, through or under such other Participant, other than those existing
at the time the Property was acquired or those to which both Participants have
given their written consent. An adjustment to a Participating Interest need not
be evidenced during the term of this Agreement by the execution and
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10
recording of appropriate instruments, but each Participant's Participating
Interest shall be shown in the books of the Operator. However, either
Participant, at any time upon the request of the other Participant, shall
execute and acknowledge instruments necessary to evidence such adjustment in
form sufficient for recording in the jurisdiction where the Property are
located.
ARTICLE VII
MANAGEMENT COMMITTEE
7.1 ORGANIZATION AND COMPOSITION. The Participants hereby establish a
Management Committee to determine overall policies, objectives, procedures,
methods and actions under this Agreement. The Management Committee shall
consist of two members appointed by Verdstone and two members appointed by
Stirrup. Each Participant may appoint one or more alternates to act in the
absence of a regular member. Any alternate so acting shall be deemed a
member. Appointments shall be made or changed by notice to the other
Participants.
7.2 DECISIONS. Each Participant, acting through its appointed members,
shall have one vote on the Management Committee. Unless otherwise provided
in this Agreement, the vote of the Participant with a Participating Interest
over 50% shall determine the decisions of the Management Committee. In the
event of a tie vote as between the Participants on any matter, the casting
vote on such matter shall be exercised by Mr. Larry Reaugh who the
Participants by this Agreement hereby appoint for such purpose.
7.3 MEETINGS. The Management Committee shall hold regular meetings at
least annually in Vancouver, British Columbia, or at other mutually agreed
places. The Operator shall give 30 days' notice to the Participants of such
regular meetings. Additionally, either Participant may call a special
meeting upon 60 day's notice to the Operator and the other Participants. In
case of emergency, reasonable notice of a special meeting shall suffice.
There shall be a quorum if at least one member representing each Participant
is present. Each notice of a meeting shall include an itemized agenda
prepared by the Operator in the case of a regular meeting, or by the
Participant calling the meeting in the case of a special meeting, but any
matters may be considered with the consent of all Participants. The Operator
shall prepare minutes of all meetings and shall distribute copies of such
minutes to the Participants within 15 days after the meeting. The minutes,
when signed by all Participants, shall be the official record of the
decisions made by the Management Committee and shall be binding on the
Operator and the Participants. If personnel employed in Operations are
required to attend a Management Committee meeting, reasonable costs incurred
in connection with such attendance shall be a Venture cost. All other costs
shall be paid by the Participants individually.
7.4 ACTION WITHOUT MEETING. In lieu of meetings, the Management
Committee may hold telephone conferences, so long as all decisions are
immediately confirmed in writing by the Participants.
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11
7.5 MATTERS REQUIRING APPROVAL. Except as otherwise delegated to the
Operator in Section 8.2, the Management Committee shall have exclusive
authority to determine all management matters related to this Agreement.
ARTICLE VIII
OPERATOR
8.1 APPOINTMENT. The Participants hereby appoint Verdstone as the Operator
with overall management responsibility for Operations. Verdstone hereby
agrees to serve as Operator until it resigns as provided in Section 8.4.
8.2 POWERS AND DUTIES OF OPERATOR. Subject to the terms and provisions of
this Agreement, the Operator shall have the following powers and duties which
shall be discharged in accordance with adopted Programs and Budgets:
(a) The Operator shall manage, direct and control Operations.
(b) The Operator shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out adopted
Programs, and shall promptly advise the Management Committee if it
lacks sufficient funds to carry out its responsibilities under this
Agreement.
(c) The Operator shall:
(i) purchase or otherwise acquire all material, supplies, equipment,
water, utility and transportation services required for
Operations, such purchases and acquisitions to be made on the
best terms available, taking into account all of the
circumstances;
(ii) obtain such customary warranties and guarantees as are available
in connection with such purchases and acquisitions; and
(iii) keep the Assets free and clear of all liens and encumbrances,
except for those existing at the time of, or created concurrent
with, the acquisition of such Assets, or mechanic's or
materialmen's liens which shall be released or discharged in a
diligent manner, or liens and encumbrances specifically approved
by the Management Committee.
(d) The Operator shall conduct such title examinations and cure such title
defects as may be advisable in the reasonable judgment of the
Operator.
(e) The Operator shall:
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12
(i) make or arrange for all payments required by leases, licenses,
permits, contracts and other agreements related to the Assets;
(ii) pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a Participant's
sales revenue or net income.
If authorized by the Management Committee, the Operator shall
have the right to contest in the courts or otherwise, the
validity or amount of any taxes, assessments or charges if the
Operator deems them to be unlawful, unjust, unequal or excessive,
or to undertake such other steps or proceedings as the Operator
may deem reasonably necessary to secure a cancellation,
reduction, readjustment or equalization thereof before the
Operator shall be required to pay them, but in no event shall the
Operator permit or allow title to the Assets to be lost as the
result of the nonpayment of any taxes, assessments or like
charges; and
(iii) shall do all other acts reasonably necessary to maintain the
Assets.
(f) The Operator shall:
(i) apply for all necessary permits, licenses and approvals;
(ii) comply with applicable federal, provincial and local laws and
regulations;
(iii) notify promptly the Management Committee of any allegations of
substantial violation thereof; and
(iv) prepare and file all reports or notices required for Operations.
The Operator shall not be in breach of this provision if a violation
has occurred in spite of the Operator's good faith efforts to comply,
and the Operator has timely cured or disposed of such violation
through performance, or payment of fines and penalties.
(g) The Operator shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings arising out of Operations. A Participant
shall have the right to participate, at its own expense, in such
litigation or administrative proceedings. The Management Committee
shall approve in advance any settlement involving payments,
commitments or obligations in excess of $10,000.00 in cash or value.
(h) The Operator shall provide insurance for the benefit of the
Participants as provided in Exhibit D.
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13
(i) The Operator may dispose of Assets, whether by abandonment, surrender
or Transfer in the ordinary course of business, except that Property
may be abandoned or surrendered only as provided in Article XIV.
However, without prior authorization from the Management Committee,
the Operator shall not:
(i) dispose of Assets in any one transaction having a value in excess
of $50,000.00;
(ii) enter into any sales contracts or commitments for Product, except
permitted in Section 11.2;
(iii) begin a liquidation of the Venture; or
(iv) dispose of all or a substantial part of the Assets necessary to
achieve the purposes of the Venture.
(j) The Operator shall have the right to carry out its responsibilities
hereunder through a corporate representative, agents, Affiliates or
independent contractors.
(k) The Operator shall perform or cause to be performed and record or
cause to be recorded during the term of this Agreement all assessment
and other work required to maintain in good standing mineral claims
and other mineral rights included within the Property, unless
prevented from so doing by an action or the inaction of the Management
Committee.
(l) If authorized by the Management Committee, the Operator may stake or
restake or abandon any mineral claims or other interests comprising
the Property, apply for mining leases or other forms of mineral tenure
for any mineral claims or other interests comprising the Property and
generally deal with the claims and other interests comprising the
Property as may be considered prudent.
(m) The Operator shall keep and maintain all required accounting and
financial records pursuant to the Accounting Procedure and in
accordance with customary cost accounting practices in the mining
industry.
(n) The Operator shall keep the Management Committee advised of all
Operations by submitting in writing to the Management Committee:
(i) monthly progress reports which include statements of expenditures
and comparisons of such expenditures to the adopted Budget;
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14
(ii) periodic summaries of data acquired;
(iii) copies of reports concerning Operations;
(iv) a detailed final report within 90 days after completion of each
Program and Budget, which shall include comparisons between the
objectives and results of Programs; and
(v) such other reports as the Management Committee may reasonably
request.
At all reasonable times the Operator shall provide the Management
Committee or the representative of any Participant, upon the request
of any member of the Management Committee, access to, and the right to
inspect and copy all maps, drill logs, core tests, reports, surveys,
assays, analyses, production reports, operations, technical,
accounting and financial records, and other information acquired in
Operations. In addition, the Operator shall allow any Participant, at
its sole risk and expense, and subject to reasonable safety
regulations, to inspect the Assets and Operations at all reasonable
times, so long as the inspecting Participant does not unreasonably
interfere with Operations.
(o) The Operator shall undertake all other activities reasonably necessary
to fulfil the foregoing.
The Operator shall not be in default of any duty under this Section 8.2 if its
failure to perform results from the failure of a Participant to perform acts or
to contribute amounts required of it by this Agreement.
8.3 STANDARD OF CARE. The Operator shall conduct all Operations in a good,
workmanlike and efficient manner, in accordance with sound mining and other
applicable industry standards and practices, and in accordance with the terms
and provisions of leases, licenses, permits, contracts and other agreements
pertaining to Assets. The Operator shall not be liable to any Participant
for any act or omission resulting in damage or loss except to the extent
caused by or attributable to the Operator's wilful misconduct or gross
negligence.
8.4 RESIGNATION; DEEMED OFFER TO RESIGN. The Operator may resign upon 60
days prior notice to the Management Committee, in which case the Management
Committee shall appoint an Operator. If any of the following shall occur,
the Operator shall be deemed to have offered to resign, which offer may be
accepted by the Management Committee, if at all, within 60 days following
such deemed offer:
(a) The Operator fails to perform a material obligation imposed upon it
under this
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15
Agreement and such failure continues for a period of 30 days after
notice from the Management Committee demanding performance; or
(b) A receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for a substantial part of its assets is appointed and
such appointment is neither made ineffective nor discharged within
60 days after the making thereof, or such appointment is consented to,
requested by, or acquiesced in by the Operator; or
(c) The Operator commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or
consents to the entry of an order for relief in an involuntary case
under any such law or to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
other similar official of any substantial part of its assets; or makes
a general assignment for the benefit of creditors; or fails generally
to pay its debts as such debts become due; or takes corporate or other
action in furtherance of any of the foregoing; or
(d) Entry is made against the Operator of a judgment decree or order for
relief affecting a substantial part of its assets by a court of
competent jurisdiction in an involuntary case commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect.
8.5 PAYMENTS TO OPERATOR. The Operator shall be compensated for its
services and reimbursed for its costs hereunder in accordance with the
Accounting Procedure.
8.6 TRANSACTIONS WITH AFFILIATES. If the Operator engages Affiliates to
provide services hereunder, it shall do so on terms no less favourable than
would be the case with unrelated persons in arm's-length transactions.
8.7 ACTIVITIES DURING DEADLOCK. If the Management Committee for any reason
fails to adopt a Program and Budget, subject to the contrary direction of the
Management Committee and to the receipt of necessary funds, the Operator
shall continue Operations at levels comparable with the last adopted Program
and Budget. For purposes of determining the required contributions of the
Participants and their respective Participating Interests, the last adopted
Program and Budget shall be deemed extended.
ARTICLE IX
PROGRAMS AND BUDGETS
9.1 INITIAL PROGRAM AND BUDGET. The initial Program and Budget, which has
been adopted by the Participants, is attached as Exhibit E.
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16
9.2 OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS. Except as otherwise
provided in Section 9.8 and Article XIII, Operations shall be conducted,
expenses shall be incurred, and Assets shall be acquired only pursuant to
approved Programs and Budgets.
9.3 PRESENTATION OF PROGRAMS AND BUDGETS. Proposed Programs and Budgets
shall be prepared by the Operator for a period of one year or any longer
period. Each adopted Program and Budget, regardless of length, shall be
reviewed at least once a year at the annual meeting of the Management
Committee. During the period encompassed by any Program and Budget, and at
least three months prior to its expiration, a proposed Program and Budget for
the succeeding period shall be prepared by the Operator and submitted to the
Participants. Each such proposed Program and Budget shall be in a form and
degree of detail substantially similar to Exhibit E.
9.4 REVIEW AND APPROVAL OF PROPOSED PROGRAMS AND BUDGETS. Within 45 days
after submission of a proposed Program and Budget, each Participant shall
submit to the Management Committee:
(a) Notice that the Participant approves the proposed Program and Budget;
or
(b) Proposed modifications of the proposed Program and Budget; or
(c) Notice that the Participant rejects the proposed Program and Budget.
If a Participant fails to give any of the foregoing responses within the
allotted time, the failure shall be deemed to be an approval by the Participant
of the Operator's proposed Program and Budget. If a Participant makes a timely
submission to the Management Committee pursuant to Section 9.4(b) or (c), then
the Management Committee shall seek to develop a Program and Budget acceptable
to the Participants.
9.5 ELECTION TO PARTICIPATE. By notice to the Management Committee within
20 days after the final vote adopting a Program and Budget, a Participant may
elect to contribute to such Program and Budget in some lesser amount than its
respective Participating Interest, or not at all, in which cases its
Participating Interest shall be recalculated as provided in Article VI. If a
Participant fails to so notify the Management Committee, the Participant
shall be deemed to have elected to contribute to such Program and Budget in
proportion to its respective Participating Interest as of the beginning of
the period covered by the Program and Budget.
9.6 DEADLOCK ON PROPOSED PROGRAMS AND BUDGETS. If the Participants, acting
through the Management Committee, fail to approve a Program and Budget by the
beginning of the period to which the proposed Program and Budget applies, the
provisions of Sections 8.7 and 12.2 shall apply.
9.7 BUDGET OVERRUNS; PROGRAM CHANGES. The Operator shall immediately notify
the Management Committee of any material departure from an adopted Program
and Budget. The
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17
Operator shall not exceed an adopted Budget by more than 10% unless directly
caused by an emergency or unexpected expenditure made pursuant to Section 9.8
or unless otherwise authorized by the Management Committee. Budget overruns
shall be borne by the Participants in proportion to their respective
Participating Interests as of the time the overrun occurs.
9.8 EMERGENCY OR UNEXPECTED EXPENDITURES. In case of emergency, the
Operator may take any reasonable action it deems necessary to protect life,
limb or property, to protect the Assets or to comply with law or government
regulation. The Operator may also make reasonable expenditures for
unexpected events which are beyond its reasonable control and which do not
result from a breach by it of its standard of care. The Operator shall
promptly notify the Participants of the emergency or unexpected expenditure,
and the Operator shall be reimbursed for all resulting costs by the
Participants in proportion to their respective Participating Interests at the
time the emergency or unexpected expenditures are incurred.
ARTICLE X
ACCOUNTS AND SETTLEMENTS
10.1 MONTHLY STATEMENTS. The Operator shall promptly submit to the
Management Committee monthly statements of account reflecting in reasonable
detail the charges and credits to the Joint Account during the preceding
month.
10.2 CASH CALLS. On the basis of the adopted Program and Budget, the
Operator shall submit to each Participant prior to the last day of the month,
a billing for estimated cash requirements for the next month. Within 10 days
after receipt of each billing, each Participant shall advance to the Operator
its proportionate share of the estimated amount. Time is of the essence of
payment of such billings. The Operator shall at all times maintain a cash
balance sufficient to meet disbursement obligations for up to 21 days. All
funds in excess of immediate cash requirements shall be invested in
interest-bearing accounts with the Royal Bank of Canada, for the benefit of
the Joint Account.
10.3 FAILURE TO MEET CASH CALLS. A Participant that fails to meet cash
calls in the amount and at the times specified in Section 10.2 shall be in
default, and the amounts of the defaulted cash call shall bear interest from
the date due at an annual rate equal to 5 percentage points over the Prime
Rate, but in no event shall said rate of interest exceed the maximum
permitted by law. The non-defaulting Participant shall have those rights,
remedies and elections specified in Section 6.4.
10.4 AUDITS. Upon request made by any Participant within 24 months
following the end of any calendar year (or, if the Management Committee has
adopted an accounting period other than the calendar year, within 24 months
after the end of such period), the Operator shall order an audit of the
accounting and financial records for such calendar year (or other accounting
period). All written exceptions to and claims upon the Operator for
discrepancies disclosed by such audit shall be made not more than 3 months
after receipt of the audit report. Failure to make any such exception
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18
or claim within the 3 month period shall mean the audit is correct and binding
upon the Participants. The audits shall be conducted by a firm of Chartered
Accountants selected by the Operator, unless otherwise agreed by the
Management Committee.
ARTICLE XI
DISPOSITION OF PRODUCTION
11.1 TAKING IN KIND. Each Participant shall take in kind or separately
dispose of its share of all Products in accordance with its Participating
Interest. Any extra expenditure incurred in the taking in kind or separate
disposition by any Participant of its proportionate share of Products shall be
borne by such Participant. Nothing in this Agreement shall be construed as
providing, directly or indirectly, for any joint or cooperative marketing or
selling of Products or permitting the processing of Products of any parties
other than the Participants at any processing facilities constructed by the
Participants pursuant to this Agreement. The Operator shall give the
Participants notice at least 10 days in advance of the delivery date upon which
their respective shares of Products will be available.
11.2 FAILURE OF PARTICIPANT TO TAKE IN KIND. If a Participant fails to
take in kind, the Operator shall have the right, but not the obligation, for a
period of time consistent with the minimum needs of the industry, but not to
exceed one year, to purchase the Participant's share for its own account or to
sell such share as agent for the Participant to the other Participant or any
third party at not less than the prevailing market price in the area. Subject
to the terms of any such contracts of sale then outstanding, during any period
that the Operator is purchasing or selling a Participant's share of production,
the Participant may elect by notice to the Operator to take in kind. The
Operator shall be entitled to deduct from proceeds of any sale by it for the
account of a Participant reasonable expenses incurred in such a sale.
ARTICLE XII
WITHDRAWAL AND TERMINATION
12.1 TERMINATION BY EXPIRATION OR AGREEMENT. This Agreement shall
terminate as expressly provided in this Agreement, unless earlier terminated by
written agreement.
12.2 TERMINATION BY DEADLOCK. If the Management Committee fails to adopt a
Program and Budget for 12 months after the expiration of the latest adopted
Program and Budget, either Participant may elect to terminate this Agreement by
giving notice of termination to the other Participant.
12.3 WITHDRAWAL. A Participant may elect to withdraw as a Participant from
this Agreement by giving notice to the other Participant of the effective date
of withdrawal, which shall be the later of the end of the then current Program
and Budget or at least 30 days after the date of
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19
the notice. Upon such withdrawal, this Agreement shall terminate, and the
withdrawing Participant shall be deemed to have transferred to the remaining
Participant, without cost and free and clear of royalties, liens or other
encumbrances arising by, through or under such withdrawing Participant, except
those exceptions to title described in Part 1 of Exhibit A and those to which
both Participants have given their written consent after the date of this
Agreement, all of its Participating Interest in the Assets and in this
Agreement. Any withdrawal under this Section 12.3 shall not relieve the
withdrawing Participant of its share of liabilities to third persons (whether
such accrues before or after such withdrawal) arising out of Operations
conducted prior to such withdrawal. For purposes of this Section 12.3, the
withdrawing Participant's share of such liabilities shall be equal to its
Participating Interest at the time such liability was incurred.
12.4 CONTINUING OBLIGATIONS. On termination of this Agreement under
Section 12.1 or 12.2, the Participants shall remain liable for continuing
obligations hereunder until final settlement of all accounts and for any
liability, whether it accrues before or after termination, if it arises out of
Operations during the term of the Agreement.
12.5 DISPOSITION OF ASSETS ON TERMINATION. Promptly after termination
under Section 12.1 or 12.2, the Operator shall take all action necessary to wind
up the activities of the Venture, and all costs and expenses incurred in
connection with the termination of the Venture shall be expenses chargeable to
the Venture. The Assets shall first be paid, applied, or distributed in
satisfaction of all liabilities of the Venture to third parties and then to
satisfy any debts, obligations, or liabilities owed to the Participants. Before
distributing any funds or Assets to Participants, the Operator shall have the
right to segregate amounts which, in the Operator's reasonable judgment, are
necessary to discharge continuing obligations or to purchase for the account of
the Participants, bonds or other securities for the performance of such
obligations. The foregoing shall not be construed to include the repayment of
any Participant's capital contributions. Thereafter, any remaining cash and all
other Assets shall be distributed (in undivided interests unless otherwise
agreed) to the Participants, in proportion to their respective Participating
Interests, subject to any dilution, reduction, or termination of such
Participating Interests as may have occurred pursuant to the terms of this
Agreement. No Participant shall receive a distribution of any interest in
Products or proceeds from the sale thereof if such Participant's Participating
Interest therein has been terminated pursuant to this Agreement.
12.6 NON-COMPETE COVENANTS. A Participant that withdraws pursuant to
Section 12.3, or is deemed to have withdrawn pursuant to Section 6.5, shall not
directly or indirectly acquire any interest in property within the Area of
Interest for 12 months after the effective date of withdrawal. If a withdrawing
Participant, or the Affiliate of a withdrawing Participant, breaches this
Section 12.6, such Participant or Affiliate shall be obligated to offer to
convey to the non-withdrawing Participant, without cost, any such property or
interest so acquired. Such offer shall be made in writing and can be accepted
by the non-withdrawing Participant at any time within 45 days after it is
received by such non-withdrawing Participant.
12.7 RIGHT TO DATA AFTER TERMINATION. After termination of this Agreement
pursuant to Section 12.1 or 12.2, each Participant shall be entitled to copies
of all information acquired
<PAGE>
20
hereunder before the effective date of termination not previously furnished to
it, but a terminating or withdrawing Participant shall not be entitled to any
such copies after any other termination or any withdrawal.
12.8 CONTINUING AUTHORITY. On termination of this Agreement under
Section 12.1 or 12.2 or the deemed withdrawal of a Participant pursuant to
Section 6.4(b)(2) or 6.5 or the withdrawal of a Participant pursuant to
Section 12.3, the Operator shall have the power and authority, subject to
control of the Management Committee, if any, to do all things on behalf of the
Participants which are reasonably necessary or convenient to:
(a) wind up Operations; and
(b) complete any transaction and satisfy any obligation, unfinished or
unsatisfied, at the time of such termination or withdrawal, if the
transaction or obligation arises out of Operations prior to such
termination or withdrawal. The Operator shall have the power and
authority to grant or receive extensions of time or change the method
of payment of an already existing liability or obligation, prosecute
and defend actions on behalf of the Participants and the Venture,
mortgage Assets, and take any other reasonable action in any matter
with respect to which the former Participants continue to have, or
appear or are alleged to have, a common interest or a common
liability.
ARTICLE XIII
ACQUISITIONS WITHIN AREA OF INTEREST
13.1 GENERAL. Any interest or right to acquire any interest in real
property within the Area of Interest acquired during the term of this Agreement
by or on behalf of a Participant or any Affiliate shall be subject to the terms
and provisions of this Agreement.
13.2 NOTICE TO NONACQUIRING PARTICIPANT. Within 10 days after the
acquisition of any interest or the right to acquire any interest in real
property wholly or partially within the Area of Interest (except real property
acquired by the Operator pursuant to a Program), the acquiring Participant shall
notify the other Participant of such acquisition. The acquiring Participant's
notice shall describe in detail the acquisition, the lands and minerals covered
thereby, the cost thereof, and the reasons why the acquiring Participant
believes that the acquisition of the interest is in the best interests of the
Participants under this Agreement. In addition to such notice, the acquiring
Participant shall make any and all information concerning the acquired interest
available for inspection by the other Participant.
13.3 OPTION EXERCISED. If, within 30 days after receiving the acquiring
Participant's notice, the other Participant notifies the acquiring Participant
of its election to accept a proportionate interest in the acquired interest
equal to its Participating Interest, the acquiring Participant shall convey to
<PAGE>
21
the other Participant such a proportionate undivided interest therein. The
acquired interest shall become a part of the Property for all purposes of this
Agreement immediately upon the notice of such other Participant's election to
accept the proportionate interest therein. Such other Participant shall
promptly pay to the acquiring Participant its proportionate share of the
latter's actual out-of-pocket acquisition costs.
13.4 OPTION NOT EXERCISED. If the other Participant does not give such
notice within the 30 day period set forth in Section 13.3, it shall have no
interest in the acquired interest, and the acquired interest shall not be a part
of the Property or be subject to this Agreement.
ARTICLE XIV
ABANDONMENT AND SURRENDER OF PROPERTY
14.1 SURRENDER OR ABANDONMENT OF PROPERTY. The Management Committee may
authorize the Operator to surrender or abandon part or all of the Property. If
the Management Committee authorizes any such surrender or abandonment over the
objection of a Participant, the Participant that desires to abandon or surrender
shall assign to the objecting Participant, without cost to the surrendering
Participant, all of the surrendering Participant's interest in the property to
be abandoned or surrendered, and the abandoned or surrendered property shall
cease to be part of the Property.
14.2 REACQUISITION. If any Property are abandoned or surrendered under the
provisions of this Article XIV, then, unless this Agreement is earlier
terminated, neither Participant nor any Affiliate thereof shall acquire any
interest in such Property or a right to acquire such Property for a period of
five years following the date of such abandonment or surrender. If a
Participant reacquires any Property in violation of this Section 14.2, the other
Participant may elect by notice to the reacquiring Participant within 45 days
after it has actual notice of such reacquisition, to have such properties made
subject to the terms of this Agreement. In the event such an election is made,
the reacquired properties shall thereafter be treated as Property, and the costs
of reacquisition shall be borne solely by the reacquiring Participant and shall
not be included for purposes of calculating the Participants' respective
Participating Interests.
ARTICLE XV
TRANSFER OF INTEREST
15.1 GENERAL. A Participant shall have the right to Transfer to any third
party all or any part of its interest in or to this Agreement, its Participating
Interest, or the Assets solely as provided in this Article XV.
15.2 LIMITATIONS ON FREE TRANSFERABILITY. The Transfer right of a
Participant in
<PAGE>
22
Section 15.1 shall be subject to the following terms and conditions:
(a) No transferee of all or any part of the interest of a Participant in
this Agreement, any Participating Interest, or the Assets shall have
the rights of a Participant unless and until the transferring
Participant has provided to the other Participant notice of the
Transfer, and except as provided in Sections 15.2(g) and 15.2(h), the
transferee, as of the effective date of the Transfer, has committed in
writing to be bound by this Agreement to the same extent as the
transferring Participant;
(b) No transfer permitted by this Article XV shall relieve the
transferring Participant of its share of any liability, whether
accruing before or after such Transfer, which arises out of Operations
conducted prior to such Transfer;
(c) The transferring Participant and the transferee shall bear all tax
consequences of the Transfer;
(d) In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee shall act
and be treated as one Participant;
(e) No Participant shall Transfer any interest in this Agreement or the
Assets except by Transfer of part or all of its Participating
Interest;
(f) If the Transfer is the grant of a security interest by mortgage, deed
of trust, pledge, lien or other encumbrance of any interest in this
Agreement, any Participating Interest or the Assets to secure a loan
or other indebtedness of a Participant in a bona fide transaction,
such security interest shall be subordinate to the terms of this
Agreement and the rights and interests of the other Participant
hereunder. Upon any foreclosure or other enforcement of rights in the
security interest the acquiring third party shall be deemed to have
assumed the position of the encumbering Participant with respect to
this Agreement and the other Participant, and it shall comply with and
be bound by the terms and conditions of this Agreement; and
(g) If a sale or other commitment or disposition of Products or proceeds
from the sale of Products by a Participant upon distribution to it
pursuant to Article XI creates in a third party a security interest in
Products or proceeds therefrom prior to such distribution, such sales,
commitment or disposition shall be subject to the terms and conditions
of this Agreement.
15.3 PREEMPTIVE RIGHT. Except as otherwise provided in Section 15.4, if a
Participant desires to Transfer all or any part of its interest in this
Agreement, any Participating Interest, or the Assets, the other Participant
shall have a preemptive right to acquire such interests as provided in this
Section 15.3.
<PAGE>
23
(a) A Participant intending to Transfer all or any part of its interest in
this Agreement, any Participating Interest, or the Assets shall
promptly notify the other Participant of its intentions. The notice
shall state the price and all other pertinent terms and conditions of
the intended Transfer, and shall be accompanied by a copy of the offer
or contract for sale. The other Participant shall have 45 days from
the date such notice is delivered to notify the transferring
Participant whether it elects to acquire the offered interest at the
same price and on the same terms and conditions as set forth in the
notice. If it does so elect, the Transfer shall be consummated
promptly after notice of such election is delivered to the
transferring Participant.
(b) If the other Participant fails to so elect within the period provided
for in Section 15.3(a), the transferring Participant shall have
90 days following the expiration of such period to consummate the
Transfer to a third party at a price and on terms no less favourable
than those offered by the transferring Participant to the other
Participant in the notice required in Section 15.3(a).
(c) If the transferring Participant fails to consummate the Transfer to a
third party within the period set forth in Section 15.3(b), the
preemptive right of the other Participant in such offered interest
shall be deemed to be revived. Any subsequent proposal to Transfer
such interest shall be conducted in accordance with all of the
procedures set forth in this Section 15.3.
15.4 EXCEPTIONS TO PREEMPTIVE RIGHTS. Section 15.3 shall not apply to the
following:
(a) Transfer by a Participant of all or any part of its interest in this
Agreement, any Participating Interest, or the Assets to an Affiliate;
(b) The corporate merger, consolidation, amalgamation or reorganization of
a Participant by which the surviving entity shall possess
substantially all of the stock, or all of the property rights and
interests, and be subject to substantially all of the liabilities and
obligations of that Participant;
(c) The grant by a Participant of a security interest in any interest in
this Agreement, any Participating Interest, or the Assets by mortgage,
deed of trust, pledge, lien or other encumbrance; or
(d) A sale or other commitment or disposition of Products or proceeds from
sale of Products by a Participant upon distribution to it pursuant to
Article XI.
ARTICLE XVI
CONFIDENTIALITY
<PAGE>
24
16.1 GENERAL. The financial terms of this Agreement and all information
obtained in connection with the performance of this Agreement shall be the
exclusive property of the Participants and, except as provided in Section 16.2,
shall not be disclosed to any third party or the public without the prior
written consent of the other Participant, which consent shall not be
unreasonably withheld.
16.2 EXCEPTIONS. The consent required by Section 16.1 shall not apply to a
disclosure:
(a) to an Affiliate, consultant, contractor or subcontractor that has a
bona fide need to be informed;
(b) to any third party to whom the disclosing Participant contemplates a
Transfer of all or any part of its interest in or to this Agreement,
its Participating Interest, or the Assets; or
(c) to a governmental agency or to the public which the disclosing
Participant believes in good faith is required by pertinent law or
regulation or the rules of any stock exchange.
In any case to which this Section 16.2 is applicable, the disclosing Participant
shall give notice to the other Participant concurrently with the making of such
disclosure. As to any disclosure pursuant to Section 16.2(a) or (b), only such
confidential information as such third party shall have a legitimate business
need to know shall be disclosed and such third party shall first agree in
writing to protect the confidential information from further disclosure to the
same extent as the Participants are obligated under this Article XVII.
16.3 DURATION OF CONFIDENTIALITY. The provisions of this Article XVII
shall apply during the term of this Agreement and for two years following
termination of this Agreement pursuant to Section 12.1 or 12.2, and shall
continue to apply to any Participant who withdraws, who is deemed to have
withdrawn, or who Transfers its Participating Interest, for two years following
the date of such occurrence.
ARTICLE XVII
GENERAL PROVISIONS
17.1 NOTICES. All notices, payments and other required communications
("Notices") to a Participant shall be in writing, and shall be addressed to the
Participant at its address set forth on the first page of this Agreement. All
Notices shall be given:
(a) by personal delivery to the Participant, or
(b) by electronic communication, with a confirmation sent by registered or
certified mail
<PAGE>
25
return receipt requested, or
(b) by registered or certified mail return receipt requested.
All Notices shall be effective and shall be deemed delivered
(a) if by personal delivery on the date of delivery if delivered during
normal business hours, and, if not delivered during normal business
hours, on the next business day following delivery,
(b) if by electronic communication on the next business day following
receipt of the electronic communication, and
(c) if solely by mail on the next business day after actual receipt.
A Participant may change its address by Notice to the other Participant.
17.2 WAIVER. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Participant's right thereafter to enforce any
provision or exercise any right.
17.3 MODIFICATION. No modification of this Agreement shall be valid unless
made in writing and duly executed by the Participants.
17.3 FORCE MAJEURE. Except for the obligation to make payments when due
hereunder, the obligations of a Participant shall be suspended to the extent
and for the period that performance is prevented by any cause, whether
foreseeable or unforeseeable, beyond its reasonable control, including, without
limitation, labour disputes (however arising and whether or not employee demands
are reasonable or within the power of the participant to grant); acts of God;
laws, regulations, orders, proclamations, instructions or requests of any
government or governmental entity; judgments or orders of any court; inability
to obtain on reasonably acceptable terms any public or private license, permit
or other authorization; curtailment or suspension of activities to remedy or
avoid an actual or alleged, present or prospective violation of federal,
provincial or local environmental standards; acts of war or conditions arising
out of or attributable to war, whether declared or undeclared; riot, civil
strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood,
sink holes, drought or other adverse weather condition; delay or failure by
suppliers or transporters of materials, parts, supplies, services or equipment
or by contractors' or subcontractors' shortage of, or inability to obtain,
labour, transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; or any
other cause whether similar or dissimilar to the foregoing. The affected
Participant shall promptly give notice to the other Participant of the
suspension of performance, stating therein the nature of the suspension, the
reasons therefor, and the expected duration thereof. The affected Participant
shall resume
<PAGE>
26
performance as soon as reasonably possible. During the period of suspension
the obligations of the Participants to advance funds pursuant to Section 10.2
shall be reduced to levels consistent with Operations.
17.5 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of British Columbia.
17.6 RULE AGAINST PERPETUITIES. If any right, power or interest of any
party in any property under this Agreement would violate the rule against
perpetuities, then such right, power or interest shall terminate at the
expiration of 20 years after the death of the last survivor of all the lineal
descendants of Her Majesty, Queen Elizabeth II of England, living on the date of
this Agreement.
17.7 FURTHER ASSURANCES. Each of the Participants agrees to take from time
to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
17.8 SURVIVAL OF TERMS AND CONDITIONS. The following Sections shall
survive the termination of this Agreement to the full extent necessary for their
enforcement and the protection of the Participant in whose favour they
run: Sections 2.1, 2.2, 2.3, 4.2, 6.4, 6.6, 10.3, 12.3, 12.4, 12.5, 12.6, 12.7
and 12.8.
17.9 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement contains the
entire understanding of the Participants and supersedes all prior agreements and
understandings between the Participants, including the Prior Agreements,
relating to the subject matter hereof. This Agreement shall be binding upon and
enure to the benefit of the respective successors and permitted assigns of the
Participants. In the event of any conflict between this Agreement and any
Exhibit attached hereto, the terms of this Agreement shall be controlling.
17.10 MEMORANDUM. At the request of either Participant, a Memorandum or
short form of this Agreement, as appropriate, which shall not disclose
financial information contained herein, shall be prepared and recorded by the
Operator. This Agreement shall not be recorded.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
THE COMMON SEAL of VERDSTONE
GOLD CORPORATION was hereunto
affixed in the presence of: c/s
_____________________________
_____________________________
<PAGE>
27
THE COMMON SEAL of STIRRUP
CREEK GOLD LTD. was hereunto
affixed in the presence of: c/s
_____________________________
_____________________________
<PAGE>
EXHIBIT NO. 3.2
QUIT CLAIM
BILL OF SALE
I James N. Marin, do hereby sale, release, indemnify, convey, assign, transfer
and quit claim 100% undivided interest in the "Vic" No.s 1-25 Mill Site claims,
situated in Ladner County, Nevada, U.S.A., hereunto attached and described in
Exhibit "A".
A 50% undivided interest:
UNTO: VERDSTONE GOLD CORPORATION
310-1959 152ND STREET
SURREY, BRITISH COLUMBIA
V4A 9E3
FOR: the sum of $6,250.00 Cdn. dollars and other valuable considerations;
AND:
A 50% undivided interest:
UNTO: STIRRUP-CREEK GOLD LTD.
310-1959 152ND STREET
SURREY, BRITISH COLUMBIA
V4A 9E3
For: the sum of $6,250.00 Cdn. dollars and other valuable considerations;
DATED at Surrey, B.C. this 26th day of July 1994.
VERDSTONE GOLD CORPORATION
- - -----------------------------------
Larry W. Reaugh, President
STIRRUP CREEK GOLD LTD. JAMES N. MARIN
- - ----------------------------------- -----------------------------------
Larry W. Reaugh, President James N. Marin, Businessman
<PAGE>
- 2 -
EXHIBIT "A"
VERDSTONE GOLD CORPORATION
VERDSTONE-STIRRUP CREEK MINERALS, INC.
"VIC" MILL SITE CLAIMS
Nos. 1 - 25
25 - UNPATENTED, 5 ACRE MILL SITE CLAIMS, KNOWN AS THE "VIC" MILL SITES, NOS.
1 - 25, LOCATED IN LANDER COUNTRY, NEVADA U.S.A. THESE MILL SITE CLAIMS ARE
SITUATED IN SECTIONS 5 AND 6, TOWNSHIP 15 NORTH, RANGE 44 EAST, MT. DIABLO
BASE & MERIDIAN.
- - ------------------------------------------------------------------------------
CLAIM NAME COUNTY INSTRUMENT NUMBER BLM-NMC NUMBER
- - ------------------------------------------------------------------------------
Vic No. 1 188511 700376
- - ------------------------------------------------------------------------------
Vic No. 2 188512 700377
- - ------------------------------------------------------------------------------
Vic No. 3 188513 700378
- - ------------------------------------------------------------------------------
Vic No. 4 188514 700379
- - ------------------------------------------------------------------------------
Vic No. 5 188515 700380
- - ------------------------------------------------------------------------------
Vic No. 6 188516 700381
- - ------------------------------------------------------------------------------
Vic No. 7 188517 700382
- - ------------------------------------------------------------------------------
Vic No. 8 188518 700383
- - ------------------------------------------------------------------------------
Vic No. 9 188519 700384
- - ------------------------------------------------------------------------------
Vic No. 10 188520 700385
- - ------------------------------------------------------------------------------
Vic No. 11 188521 700386
- - ------------------------------------------------------------------------------
Vic No. 12 188522 700387
- - ------------------------------------------------------------------------------
Vic No. 13 188523 700388
- - ------------------------------------------------------------------------------
Vic No. 14 188524 700389
- - ------------------------------------------------------------------------------
Vic No. 15 188525 700390
- - ------------------------------------------------------------------------------
<PAGE>
- - ------------------------------------------------------------------------------
Vic No. 16 188526 700391
- - ------------------------------------------------------------------------------
Vic No. 17 188527 700392
- - ------------------------------------------------------------------------------
Vic No. 18 188528 700393
- - ------------------------------------------------------------------------------
Vic No. 19 188529 700394
- - ------------------------------------------------------------------------------
Vic No. 20 188530 700395
- - ------------------------------------------------------------------------------
Vic No. 21 188531 700396
- - ------------------------------------------------------------------------------
Vic No. 22 188532 700397
- - ------------------------------------------------------------------------------
Vic No. 23 188533 700398
- - ------------------------------------------------------------------------------
Vic No. 24 188534 700399
- - ------------------------------------------------------------------------------
Vic No. 25 188535 700400
- - ------------------------------------------------------------------------------
<PAGE>
EXHIBIT NO. 3.3
THIS AGREEMENT is made as of the 15th day of October, 1993.
BETWEEN: LARRY W. REAUGH
1011 Balsam Street
White Rock, B.C.
V4B 2J3 OF THE FIRST PART
(the "Vendor")
AND: STIRRUP CREEK GOLD LTD.
310-1959-152nd Street
Surrey, B.C.
V4A 9E3 OF THE SECOND PART
(the "Purchaser")
WHEREAS the vendor is the registered and/or beneficial owner of an undivided
29% interest in 92 Prospecting Sites of 160 acres each, located in the
Fairbanks Meridian, Circle Quadrangle of the State of Alaska, all as more
particularly described in Schedule A hereto (a 100% interest in such
Prospecting Sites being hereinafter called the "Property");
AND WHEREAS the purchaser wishes to acquire and the Vendor wishes to sell 29%
interest in and to the Property upon the terms and conditions hereinafter set
forth;
NOW THEREFORE the parties hereto agree as follows:
1. SALE AND PURCHASE
1.1 The Purchaser hereby purchases from the Vendor an undivided 29% interest
in and to the Property.
1.2 The purchase price for the said interest shall be payment to the Vendor
of the sum of $17,755.00 Cdn. representing the Vendor's out-of-pocket costs
of the interest.
2. REPRESENTATIONS OF THE VENDOR
2.1 The Vendor hereby covenants, represents and warrants that:
(a) he is the registered and/or beneficial owner of an undivided 29%
interest in the Property;
(b) the Property is free of any and all charges, encumbrances, adverse
interest, claims or liens whatsoever; and
(c) he has the right, power and authority to enter into this Agreement and
to dispose of the Property in the manner contemplated herein.
3. DEALING WITH THE PROPERTY
3.1 All costs and expenses which arise in connection with the Property after
the date hereof shall be shares pro rata in accordance with the interests of the
parties therein from time to time.
<PAGE>
- 2 -
3.2 If and when warranted by the results of the initial exploration on the
Property, further exploration and possible development work on the Property
will be carried out by the parties hereto pursuant to a joint venture
arrangement to be entered into on terms and conditions to be agreed upon
between them.
4. GENERAL PROVISIONS
4.1 The parties hereto may assign their respective interests in this
Agreement.
4.2 All notices, payments and other required communications given hereunder
shall be in writing, and shall be addressed to the addresses set forth on the
first page of this Agreement. All notices shall be given by personal
delivery, or by electronic communication, with a confirmation sent by
registered or certified mail return receipt requested, or by registered or
certified mail return receipt requested. All notices shall be effective and
shall be deemed delivered if by personal delivery on the date of delivery if
delivered during normal business hours, and, if not delivered during normal
business hours, on the next business day following delivery, if by electronic
communication on the next business day following receipt of the electronic
communication, and if solely by mail on the next business day after actual
receipt. Either party may change its address by notice given to the other in
the manner herein provided.
4.3 This Agreement shall be interpreted in accordance with the laws of the
Province of British Columbia.
4.4 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their heirs, executors, administrators, successors and
assigns.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
SIGNED, SEALED AND DELIVERED
by LARRY REAUGH in the presence of:
Per:
- - -------------------------- -----------------------
Witness LARRY W. REAUGH
STIRRUP CREEK GOLD LTD.
By: C/S
-----------------------
Larry Reaugh, President
<PAGE>
EXHIBIT NO. 3.4
THIS AGREEMENT made this 10th day of July, 1992.
BETWEEN: JAMES N. MARIN
3600 Hartstrand Gulch
Etna, CA 96027
U.S.A.
(THE "VENDOR") OF THE FIRST PART
AND: STIRRUP CREEK GOLD LTD.
310-1959-152nd Street
Surrey, British Columbia
V4A 9E3
(THE "PURCHASER") OF THE SECOND PART
WHEREAS the Vendor is the beneficial owner of or has the right to dispose of
a 100% right, title and interest in certain mining claims located in the
Pike Hollow - Cox Canyon Mining District, Churchill County, in the State of
Nevada, in the United States of America, as more particularly described in
Schedule A to this Agreement (the "Property");
AND WHEREAS the Vendor wishes to sell and the Purchaser wishes to acquire
100% of the Property;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of
$14,000.00, the parties hereto agree as follows:
1. The Vendor agrees to sell and the Purchaser agrees to buy the property.
2. The consideration payable to the Vendor shall be a total of $14,000.00
cdn. (the "Dollars").
3. The Vendor agrees to deliver a recordable Quit Claim Deed for the
transfer of the Property to the Purchaser against the Purchase Price.
4. The Vendor hereby covenants, represents and warrants that:
(a) he has the right to enter into this Agreement and to dispose of a full
interest in the Property in the manner contemplated herein;
<PAGE>
- 2 -
(b) the mining claims comprising the Property have all been properly
located, staked and are valid and subsisting under the laws and
regulations of the State of Nevada;
(c) the Property is free of any and all charges, encumbrances, adverse
interests, claims or liens whatsoever; and
(d) upon the payment of the $14,000.00 to the Vendor, the Purchaser will
acquire good and marketable title to the Property.
5. The parties agree to execute such further and other deeds, documents and
assurances and do such further and other acts as may be necessary to fully
and effectually carry out the intent of this Agreement.
6. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
SIGNED, SEALED AND DELIVERED
by JAMES N. MARIN in the
presence of:
- - ----------------------------- -----------------------------
Witness JAMES N. MARIN
THE COMMON SEAL OF STIRRUP CREEK
LTD. was hereunto affixed
in the presence of:
- - ----------------------------- C/S
AUTHORIZED SIGNATORY
<PAGE>
EXHIBIT NO. 3.5
MANAGEMENT SERVICES CONTRACT
THIS AGREEMENT is dated for reference the 19th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310-1959-152nd Street
Surrey, British Columbia
V4A 9E3
(the "Company") OF THE FIRST PART
AND: LARRY W. REAUGH
1011 Balsam Street
White Rock, British Columbia
V4B 4J3
("Reaugh") OF THE SECOND PART
WHEREAS the Company wishes to retain Reaugh to provide management services to
it on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises
and of the covenants and agreements hereinafter contained, the parties hereto
have agreed as follows:
1. APPOINTMENT
1.01 The Company hereby retains Reaugh to provide general management
services to the Company under the direction of the Company's board of
directors, and Reaugh hereby agrees to provide such services and perform the
duties required of it in accordance with the terms of this Agreement.
2. TERM
2.01 The term of this Agreement shall commence on the first day of the
month in which the shares of the Company are listed, posted and called for
trading on the Vancouver Stock Exchange, and shall continue on a
month-to-month basis thereafter until terminated in accordance with the terms
hereof.
2.02 This Agreement may be terminated by either party upon 30 days'
written notice to the other party.
3. REMUNERATION
<PAGE>
2
3.01 The Company shall pay to Reaugh for all services rendered hereunder:
(a) the sum of $2,000 per month commencing with the first month of term
of this agreement as set forth in paragraph 2.01; and
(b) the sum of all out-of-pocket expenses incurred on behalf of the
Company.
3.02 The amount payable to Reaugh hereunder may be altered from time to
time during the term of this Agreement by mutual agreement between the
parties, provided however that any upward adjustment to the amount payable is
subject to the prior approval of the Vancouver Stock Exchange.
3.03 In addition to payments referred to in paragraphs 3.01 and 3.02,
Reaugh may receive, subject to Vancouver Stock Exchange approval, such
bonuses or other additional payments for performance, merit and the like as
may be determined from time to time by the board of directors of the Company,
in its absolute discretion.
4. POWERS AND RESPONSIBILITIES
4.01 Reaugh agrees to devote to the Company such time as may be
necessary during normal business hours to faithfully, industriously, and to
the best of his abilities, perform the responsibilities, duties and powers
required of him, and without limiting the generality of the foregoing, Reaugh
shall have the primary responsibility for the overall management and
administration of the Company.
5. NOTICE
5.01 Any notice to be given under this Agreement shall be in writing and
shall be deemed to have been given if delivered to, or sent by prepaid
registered post addressed to the respective addresses of the parties
appearing on the first page of this Agreement (or to such other address as
one party provides to the other in a notice given according to this
paragraph). Where a notice is given by registered post, it shall be
conclusively deemed to be given and received on the fifth day after its
deposit in a post office at any place in Canada.
6. MISCELLANEOUS
6.01 This Agreement may not be assigned by either party without the
prior written consent of the other.
6.02 The titles or headings to the respective paragraphs of this
Agreement are for reference and convenience only.
<PAGE>
3
6.03 This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
6.04 This Agreement shall be governed by and interpreted in accordance
with the laws of British Columbia.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-------------------------
LARRY REAUGH
Per:
-------------------------
<PAGE>
EXHIBIT NO. 3.6
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is dated for reference the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: LARRY W. REAUGH
1011 Balsam Street
White Rock, B.C.
V4B 4J3
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is a director of the Company and the parties have agreed to
enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection with
the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be a director
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 105,000 common shares of the Company at
the Exercise Price per share (the "Option").
<PAGE>
-2-
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then purchased. When such
payment is received, the Company covenants and agrees to issue and deliver to
the Optionee share certificates for the number of shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while a director of the Company, the Option may
then be exercised by the Optionee's legal heirs or personal representatives to
the same extent as if the Optionee were alive and acting in such capacity, for a
period of six months after the Optionee's death but only for such shares as the
Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null and
void 30 days following the day upon which the Optionee ceases to be a director
of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment, listed
on the Vancouver Stock Exchange, such amendment shall be subject to approval by
the Vancouver Stock Exchange and, if the Optionee is an insider of the Company
on the date hereof or is an insider of the Company at the date of the amendment,
the members of the Company.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Optionee and the price thereof shall be
deemed adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the Optionee
in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
<PAGE>
-3-
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's personal
representatives to the extent provided in paragraph 6.
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
----------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------------
Larry W. Reaugh
- - --------------------------------------
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: LEANNE REAUGH
1011 Balsam Street
White Rock, B.C.
V4B 4J3
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is a director of the Company and the parties have agreed to
enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection with
the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be a director
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 40,000 common shares of the Company at
the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while a director of the Company, the Option may
then be exercised by the Optionee's legal heirs or personal representatives to
the same extent as if the Optionee were alive and acting in such capacity, for a
period of six months after the Optionee's death but only for such shares as the
Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null and
void 30 days following the day upon which the Optionee ceases to be a director
of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment, listed
on the Vancouver Stock Exchange, such amendment shall be subject to approval by
the Vancouver Stock Exchange and, if the Optionee is an insider of the Company
on the date hereof or is an insider of the Company at the date of the amendment,
the members of the Company.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Optionee and the price thereof shall be
deemed adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the Optionee
in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's personal
representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-----------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------------
- - ----------------------------------- Leanne Reaugh
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: RONALD MOREHEAD
P.O. Box 246
Mariposa, California
95338
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is a director of the Company and the parties have agreed to
enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection with
the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be a director
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 40,000 common shares of the Company at
the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while a director of the Company, the Option may
then be exercised by the Optionee's legal heirs or personal representatives to
the same extent as if the Optionee were alive and acting in such capacity, for a
period of six months after the Optionee's death but only for such shares as the
Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null and
void 30 days following the day upon which the Optionee ceases to be a director
of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment, listed
on the Vancouver Stock Exchange, such amendment shall be subject to approval by
the Vancouver Stock Exchange and, if the Optionee is an insider of the Company
on the date hereof or is an insider of the Company at the date of the amendment,
the members of the Company.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Optionee and the price thereof shall be
deemed adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the Optionee
in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's personal
representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-----------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------------
- - ----------------------------------- Ronald Morehead
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: SANDRA BETTIS
#78-1973 Winfield
Abbotsford, B.C.
V3G 1K6
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is a director of the Company and the parties have agreed to
enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection with
the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be a director
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 40,000 common shares of the Company at
the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while a director of the Company, the Option may
then be exercised by the Optionee's legal heirs or personal representatives to
the same extent as if the Optionee were alive and acting in such capacity, for a
period of six months after the Optionee's death but only for such shares as the
Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null and
void 30 days following the day upon which the Optionee ceases to be a director
of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment, listed
on the Vancouver Stock Exchange, such amendment shall be subject to approval by
the Vancouver Stock Exchange and, if the Optionee is an insider of the Company
on the date hereof or is an insider of the Company at the date of the amendment,
the members of the Company.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Optionee and the price thereof shall be
deemed adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the Optionee
in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's personal
representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------------
- - ----------------------------------- Sandra Bettis
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: ERIC GILSTEAD
7965 Rosewood Street
Burnaby, B.C.
V5E 2H4
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is an employee of the Company and the parties have agreed
to enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection with
the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be an employee
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 25,000 common shares of the Company at
the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while an employee of the Company, the Option may
then be exercised by the Optionee's legal heirs or personal representatives to
the same extent as if the Optionee were alive and acting in such capacity, for a
period of six months after the Optionee's death but only for such shares as the
Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null and
void 30 days following the day upon which the Optionee ceases to be an employee
of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment, listed
on the Vancouver Stock Exchange, such amendment shall be subject to approval by
the Vancouver Stock Exchange and, if the Optionee is an insider of the Company
on the date hereof or is an insider of the Company at the date of the amendment,
the members of the Company.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Optionee and the price thereof shall be
deemed adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the Optionee
in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's personal
representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------------
- - ----------------------------------- Eric Gilstead
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: PETER MACLEAN
1222 Harwood Street
Vancouver, B.C.
V6E 1S2
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is an employee of the Company and the parties have agreed
to enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection with
the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be an employee
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 25,000 common shares of the Company at
the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee otherwise
than by Will or the law of intestacy and the Option may be exercised during the
lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while an employee of the Company, the Option may
then be exercised by the Optionee's legal heirs or personal representatives to
the same extent as if the Optionee were alive and acting in such capacity, for a
period of six months after the Optionee's death but only for such shares as the
Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null and
void 30 days following the day upon which the Optionee ceases to be an employee
of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment, listed
on the Vancouver Stock Exchange, such amendment shall be subject to approval by
the Vancouver Stock Exchange and, if the Optionee is an insider of the Company
on the date hereof or is an insider of the Company at the date of the amendment,
the members of the Company.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the Option is outstanding, the
number of shares under option to the Optionee and the price thereof shall be
deemed adjusted in accordance with such subdivision, consolidation or other
change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the Optionee
in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's personal
representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------------
- - ----------------------------------- Peter MacLean
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: ROSS MCNAUGHTON
301 - 5558 - 208 Street
Langley, B.C.
V3A 2K3
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is an employee of the Company and the parties have
agreed to enter into this Incentive Stock Option Agreement on the terms and
conditions hereinafter set forth to provide incentive to the Optionee in
acting in such capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises
and of the covenants and agreements herein contained the parties hereto
covenant and agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection
with the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be an
employee of the Company, the Optionee shall have and be entitled to and the
Company hereby grants to the Optionee an option to purchase from treasury, on
or before the Expiry Date, all or any portion of 20,000 common shares of the
Company at the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by
notice in writing to the Company accompanied by a certified cheque, or other
form of payment satisfactory to the Company, in favour of the Company for the
full amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee
any obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee
otherwise than by Will or the law of intestacy and the Option may be
exercised during the lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while an employee of the Company, the Option
may then be exercised by the Optionee's legal heirs or personal
representatives to the same extent as if the Optionee were alive and acting
in such capacity, for a period of six months after the Optionee's death but
only for such shares as the Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null
and void 30 days following the day upon which the Optionee ceases to be an
employee of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment,
listed on the Vancouver Stock Exchange, such amendment shall be subject to
approval by the Vancouver Stock Exchange and, if the Optionee is an insider
of the Company on the date hereof or is an insider of the Company at the date
of the amendment, the members of the Company.
10. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under option to the Optionee and the price thereof shall
be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the
Optionee in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's
personal representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------
- - ---------------------------------- Ross McNaughton
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: RODNEY MCCULLOCH
#11 - 831 W. 10th Avenue
Vancouver, B.C.
V5Z 1L7
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is an employee of the Company and the parties have agreed
to enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection
with the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be an employee
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 20,000 common shares of the Company at
the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee
any obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee
otherwise than by Will or the law of intestacy and the Option may be
exercised during the lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while an employee of the Company, the Option
may then be exercised by the Optionee's legal heirs or personal
representatives to the same extent as if the Optionee were alive and acting
in such capacity, for a period of six months after the Optionee's death but
only for such shares as the Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null
and void 30 days following the day upon which the Optionee ceases to be an
employee of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment,
listed on the Vancouver Stock Exchange, such amendment shall be subject to
approval by the Vancouver Stock Exchange and, if the Optionee is an insider
of the Company on the date hereof or is an insider of the Company at the date
of the amendment, the members of the Company.
10. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under option to the Optionee and the price thereof shall
be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the
Optionee in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's
personal representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------
- - ----------------------------------- Rodney McCulloch
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: TERESA PIORUN
10237 Wilkinson
Mission, B.C.
V2V 4J1
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is an employee of the Company and the parties have
agreed to enter into this Incentive Stock Option Agreement on the terms and
conditions hereinafter set forth to provide incentive to the Optionee in
acting in such capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises
and of the covenants and agreements herein contained the parties hereto
covenant and agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection
with the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be an
employee of the Company, the Optionee shall have and be entitled to and the
Company hereby grants to the Optionee an option to purchase from treasury, on
or before the Expiry Date, all or any portion of 15,000 common shares of the
Company at the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by
notice in writing to the Company accompanied by a certified cheque, or other
form of payment satisfactory to the Company, in favour of the Company for the
full amount of the purchase price of the shares being then
<PAGE>
-2-
purchased. When such payment is received, the Company covenants and agrees
to issue and deliver to the Optionee share certificates for the number of
shares so purchased.
4. This is an Option Agreement only and does not impose upon the Optionee
any obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee
otherwise than by Will or the law of intestacy and the Option may be
exercised during the lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while an employee of the Company, the Option
may then be exercised by the Optionee's legal heirs or personal
representatives to the same extent as if the Optionee were alive and acting
in such capacity, for a period of six months after the Optionee's death but
only for such shares as the Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null
and void 30 days following the day upon which the Optionee ceases to be an
employee of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment,
listed on the Vancouver Stock Exchange, such amendment shall be subject to
approval by the Vancouver Stock Exchange and, if the Optionee is an insider
of the Company on the date hereof or is an insider of the Company at the date
of the amendment, the members of the Company.
10. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under option to the Optionee and the price thereof shall
be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the
Optionee in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's
personal representatives to the extent provided in paragraph 6.
<PAGE>
-3-
<PAGE>
-4-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------
- - ----------------------------------- Teresa Piorun
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is dated for reference the 29th day of July, 1994.
BETWEEN: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
(the "Company") OF THE FIRST PART
AND: JOHN W. FISHER
4704 Wesley Drive
Delta, B.C.
V4M 1W6
(the "Optionee") OF THE SECOND PART
WHEREAS the Optionee is a director of the Company and the parties have agreed to
enter into this Incentive Stock Option Agreement on the terms and conditions
hereinafter set forth to provide incentive to the Optionee in acting in such
capacity;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants and agreements herein contained the parties hereto covenant and
agree as follows:
1. In this Agreement, the following terms shall have the following meanings:
(a) "Exercise Price" shall be equivalent to the price at which shares of
the Company are offered for sale to the public under the Prospectus;
(b) "Expiry Date" shall mean the date that is five years from the date a
receipt is issued by the B.C. Securities Commission for the
Prospectus;
(c) "Prospectus" shall mean the final prospectus issued in connection
with the currently contemplated public offering of securities of the
Company, as receipted by the B.C. Securities Commission.
2. From the date hereof, and for so long as the Optionee shall be a director
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase from treasury, on or before
the Expiry Date, all or any portion of 40,000 common shares of the Company at
the Exercise Price per share (the "Option").
3. The right to take up shares pursuant to the Option is exercisable by notice
in writing to the Company accompanied by a certified cheque, or other form of
payment satisfactory to the Company, in favour of the Company for the full
amount of the purchase price of the shares being then purchased. When such
payment is received, the Company covenants and agrees to issue and deliver to
the Optionee share certificates for the number of shares so purchased.
<PAGE>
-2-
4. This is an Option Agreement only and does not impose upon the Optionee
any obligation to take up and pay for any of the shares under the Option.
5. The Option is non-assignable and non-transferable by the Optionee
otherwise than by Will or the law of intestacy and the Option may be
exercised during the lifetime of the Optionee only by the Optionee.
6. If the Optionee should die while a director of the Company, the Option
may then be exercised by the Optionee's legal heirs or personal
representatives to the same extent as if the Optionee were alive and acting
in such capacity, for a period of six months after the Optionee's death but
only for such shares as the Optionee was entitled to at the date of death.
7. Subject to paragraph 5 hereof, the Option shall cease and become null
and void 30 days following the day upon which the Optionee ceases to be a
director of the Company.
8. The provisions of this Agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approval of the B.C.
Securities Commission as evidenced by the issuance of a receipt for the
Prospectus; provided, however, that in the event this Agreement is not so
approved within one year of the date of this Agreement, this Agreement shall
thereafter be null and void and of no further force and effect.
9. This Agreement may only be amended by an instrument in writing signed by
the parties hereto, and if the Company is, at the time of such amendment,
listed on the Vancouver Stock Exchange, such amendment shall be subject to
approval by the Vancouver Stock Exchange and, if the Optionee is an insider
of the Company on the date hereof or is an insider of the Company at the date
of the amendment, the members of the Company.
10. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the Option is outstanding,
the number of shares under option to the Optionee and the price thereof shall
be deemed adjusted in accordance with such subdivision, consolidation or
other change in the share capital of the Company.
11. The Company hereby covenants and agrees to reserve in its treasury
sufficient shares to permit the issuance and allotment of shares to the
Optionee in the event the Optionee exercises the Option.
12. Time shall be of the essence of this Agreement.
13. This Agreement shall enure to the benefit of and be binding upon the
Company, its successors and assigns and the Optionee and the Optionee's
personal representatives to the extent provided in paragraph 6.
<PAGE>
-3-
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
STIRRUP CREEK GOLD LTD.
Per:
-------------------------------
SIGNED, SEALED AND DELIVERED
by the Optionee in the presence of:
----------------------------
- - ----------------------------------- John W. Fisher
<PAGE>
EXHIBIT NO. 3.7
ESCROW AGREEMENT
THIS AGREEMENT is dated for reference the 15th day of August, 1994.
BETWEEN: MONTREAL TRUST COMPANY, having an office located
at 4th Floor, 510 Burrard Street, Vancouver,
British Columbia
(the "Escrow Agent")
AND: STIRRUP CREEK GOLD LTD., having an office
located at 310-1959 152nd Street, Surrey,
British Columbia V4A 9E3
(the "Issuer")
AND: EACH SHAREHOLDER, as defined in this Agreement
(individually referred to as the "Shareholder" and collectively
referred to as the "Shareholders")
(the Escrow Agent, Issuer and Shareholders are herein
collectively referred to as the "Parties")
WHEREAS the Shareholders have acquired or are about to acquire shares of the
Issuer;
AND WHEREAS the Escrow Agent has agreed to act as escrow agent in respect of the
shares upon the acquisition of the shares by the Shareholders;
NOW THEREFORE in consideration of the covenants contained in this Agreement and
other good and valuable consideration (the receipt and sufficiency of which is
acknowledged), the Parties agree as follows:
1. INTERPRETATION
In this Agreement:
(a) "Acknowledgement" means the acknowledgment and agreement to be bound in
the form attached as Schedule "A" to this Agreement;
(b) "Act" means the SECURITIES ACT, S.B.C. 1985, c.83;
(c) "Exchange" means the Vancouver Stock Exchange;
<PAGE>
2
(d) "IPO" means the initial public offering of common shares of the Issuer
under a prospectus which has been filed with, and for which a receipt
has been obtained from, the Superintendent under section 42 of the Act;
(e) "Local Policy Statement 3-07" means the Local Policy Statement 3-07 in
effect as of the date of reference of this Agreement and attached as
Schedule "B" to this Agreement;
(f) "Shareholder" means a holder of shares of the Issuer who executes this
Agreement or an Acknowledgement;
(g) "Shares" means the shares of the Shareholder described in Schedule "C"
to this Agreement, as amended from time to time in accordance with
Section 9;
(h) "Superintendent" means the Superintendent of Brokers appointed under the
Act; and
(i) "Superintendent or the Exchange" means the Superintendent, if the shares
of the Issuer are not listed on the Exchange, or the Exchange, if the
shares of the Issuer are listed on the Exchange.
1.02 Any reference in this Agreement to a designated "Paragraph", "Section",
"Schedule" or other subdivision refers to the designated Paragraph, Section,
Schedule or subdivision of this Agreement.
2. PLACEMENT OF SHARES IN ESCROW
2.01 The Shareholders place the Shares in escrow with the Escrow Agent and
shall deliver the certificates representing the Shares to the Escrow Agent as
soon as practicable.
3. VOTING OF SHARES IN ESCROW
3.01 Except as provided by Paragraph 4.01(a), the Shareholders may exercise
all voting rights attached to the Shares.
4. WAIVER OF SHAREHOLDERS' RIGHTS
4.01 The Shareholders waive the rights attached to the Shares:
(a) to vote the Shares on a resolution to cancel any of the Shares;
(b) to receive dividends; and
(c) to participate in the assets and property of the Issuer on a winding up
or dissolution of the Issuer.
<PAGE>
3
5. ABSTENTION FROM VOTING AS A DIRECTOR
5.01 A Shareholder that is or becomes a director of the Issuer shall
abstain from voting on a directors' resolution to cancel any of the Shares.
6. TRANSFER WITHIN ESCROW
6.01 The Shareholders shall not transfer any of the Shares except in
accordance with Local Policy 3-07 and with the consent of the Superintendent
or the Exchange.
6.02 The Escrow Agent shall not effect a transfer of the Shares within
escrow unless the Escrow Agent has received:
(a) a copy of an Acknowledgment executed by the person to whom the Shares
are to be transferred; and
(b) a letter from the Superintendent or the Exchange consenting to the
transfer.
6.03 Upon the death or bankruptcy of a Shareholder, the Escrow Agent shall
hold the Shares subject to this Agreement for the person that is legally
entitled to become the registered owner of the Shares.
7. RELEASE FROM ESCROW
7.01 The Shareholders irrevocably direct the Escrow Agent to retain the
Shares until the Shares are released from escrow pursuant to Paragraph 7.02
or surrendered for cancellation pursuant to Section 8.
7.02 The Escrow Agent shall not release the Shares from escrow unless the
Escrow Agent has received a letter from the Superintendent or the Exchange
consenting to the release.
7.03 The approval of the Superintendent or the Exchange to a release from
escrow of any of the Shares shall terminate this Agreement only in respect of
the Shares so released.
8. SURRENDER FOR CANCELLATION
8.01 The Shareholder shall surrender the Shares for cancellation and the
Escrow Agent shall deliver the certificates representing the Shares to the
Issuer:
(a) at the time of a major reorganization of the Issuer, if required as a
condition of the consent to the reorganization by the Superintendent or
the Exchange;
(b) where the Issuer's shares have been subject to a cease trade order
issued under the Act for a period of two consecutive years; or
<PAGE>
4
(c) 10 years from the later of the date of issue of the Shares and the date
of the receipt for the Issuer's prospectus on its IPO.
9. AMENDMENT OF AGREEMENT
9.01 Subject to Paragraph 9.02, this Agreement may be amended only by a
written agreement among the Parties and with the written consent of the
Superintendent or the Exchange.
9.02 Schedule "C" to this agreement shall be amended upon:
(a) a transfer of Shares pursuant to Section 6;
(b) a release of Shares from escrow pursuant to Section 7; or
(c) a surrender of Shares for cancellation pursuant to Section 8,
and the Escrow Agent shall note the amendment on the Schedule "C" in its
possession.
10. INDEMNIFICATION OF ESCROW AGENT
10.01 The Issuer and the Shareholders, jointly and severally, release,
indemnify and save harmless the Escrow Agent from all costs, charges, claims,
demands, damages, losses and expenses resulting from the Escrow Agent's
compliance in good faith with this Agreement.
11. RESIGNATION OF ESCROW AGENT
11.01 If the Escrow Agent wishes to resign as escrow agent in respect of the
Shares, the Escrow Agent shall give notice to the Issuer.
11.02 If the Issuer wishes the Escrow Agent to resign as escrow agent in
respect of the Shares, the Issuer shall give notice to the Escrow Agent.
11.03 A notice referred to in Paragraphs 11.01 and 11.02 shall be in writing
and delivered to:
(a) the Issuer at the address specified on the first page of this agreement,
with a copy to Forth & Company, Barristers and Solicitors, 1600 - 777
Dunsmuir Street, Vancouver, British Columbia, V7Y 1K4; or
(b) the Escrow Agent at 4th Floor, 510 Burrard Street, Vancouver, British
Columbia, V6C 3B9, and notice shall be deemed to have been received
on the date of delivery. The Issuer or the Escrow Agent may change
its address for notice by giving notice to the other party in
accordance with this Paragraph.
<PAGE>
5
11.04 A copy of a notice referred to in Paragraph 11.01 shall concurrently
be delivered to the Superintendent or the Exchange.
11.05 The resignation of the Escrow Agent shall be effective and the Escrow
Agent shall cease to be bound by this Agreement on the date that is 180 days
after the date of receipt of the notice referred to in Paragraph 11.01 or
11.02 or on such other date as the Escrow Agent and the Issuer may agree upon
(the "Resignation Date").
11.06 The Issuer shall, before the Resignation Date and with the written
consent of the Superintendent or the Exchange, appoint another escrow agent
and that appointment shall be binding on the Issuer and the Shareholders.
12. FURTHER ASSURANCES
12.01 The Parties shall execute and deliver any documents and perform any
acts necessary to carry out the intent of this Agreement.
13. TIME
13.01 Time is of the essence of this Agreement.
14. GOVERNING LAWS
14.01 This Agreement shall be construed in accordance with and governed by
the laws of British Columbia and the laws of Canada applicable in British
Columbia.
15. COUNTERPARTS
15.01 This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which shall constitute one
agreement.
16. LANGUAGE
16.01 Wherever a singular expression is used in this Agreement, that
expression is deemed to include the plural or the body corporate where
required by the context.
17. ENUREMENT
17.01 This Agreement enures to the benefit of and is binding on the Parties
and their heirs, executors, administrators, successors and permitted assigns.
<PAGE>
6
IN WITNESS WHEREOF the Parties have executed and delivered this Agreement as
of the date of reference of this Agreement notwithstanding its actual date of
execution.
THE CORPORATE SEAL of MONTREAL
TRUST COMPANY was hereunto affixed
in the presence of:
C/S
- - ------------------------------------
THE CORPORATE SEAL of STIRRUP
CREEK GOLD LTD. was hereunto affixed
in the presence of:
C/S
- - ------------------------------------
SIGNED, SEALED AND DELIVERED
BY THE SHAREHOLDERS BY THEIR
EXECUTION OF SCHEDULE "C"
HERETO.
<PAGE>
SCHEDULE "A" TO ESCROW AGREEMENT
ACKNOWLEDGMENT AND AGREEMENT TO BE BOUND
To: Vancouver Stock Exchange
4th Floor, 609 Granville Street
Vancouver, B.C. V7Y 1H1
I acknowledge that:
(a) I have entered into an Agreement with _________________ under which
_________ shares of _____________________ (the "Shares") will be
transferred to me upon receipt of regulatory approval; and
(b) the Shares are held in escrow subject to an escrow agreement dated for
reference ___________, 19__ (the "Escrow Agreement"), a copy of which is
attached as Schedule "A" to this Acknowledgement.
In consideration of $1.00 and other good and valuable consideration (the
receipt and sufficiency of which is acknowledged) I agree, effective upon
receipt of regulatory approval of the transfer to me of the Shares, to be
bound by the Escrow Agreement in respect of the Shares as if I were an
original signatory to the Escrow Agreement.
Dated at on , 19 .
--------- --------- ----
Where the transferee is an individual:
SIGNED, SEALED AND DELIVERED by
in the presence of:
- - -----------------
-----------------------------
- - -------------------------------------
Name
- - -------------------------------------
Address
- - -------------------------------------
Occupation
<PAGE>
SCHEDULE "B" - LOCAL POLICY 3-07
<PAGE>
SCHEDULE "C" TO ESCROW AGREEMENT
- - --------------------------------------------------------------------------------
NAME OF SHAREHOLDER NO. OF SHARES SIGNATURE OF SHAREHOLDER
- - --------------------------------------------------------------------------------
Larry Reaugh 480,000
--------------------------------------
Larry Reaugh
Ronald Morehead 200,000
--------------------------------------
Ronald Morehead
Leanne Reaugh 50,000
--------------------------------------
Leanne Reaugh
Sandra Bettis 20,000
--------------------------------------
Sandra Bettis
<PAGE>
EXHIBIT NO. 3.8
MINERAL PROPERTY OPTION AGREEMENT
THIS AGREEMENT is dated for reference the 15th day of April, 1996.
BETWEEN: RUDOLF M. DURFELD
P.O. Box 4438, Station Main
Williams Lake, B.C.
V2G 2V5
(the "Optionor") OF THE FIRST PART
AND: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
("Stirrup Creek") OF THE SECOND PART
WHEREAS the Optionor is the registered and beneficial owner of a 100% right,
title and interest in and to certain mineral claims as hereinafter described;
AND WHEREAS Stirrup Creek is desirous of acquiring an interest in such mineral
claims on the terms and conditions contained in this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual covenants and agreements hereinafter contained, the parties hereto
agree as follows:
1. DEFINITIONS
1.01 In this Agreement:
(a) "Exchange" means the Vancouver Stock Exchange;
(b) "Exploration and Development" means any and all activities
comprising or undertaken in connection with the exploration and
development of the Property, the construction of a mine and mining
facilities on or in proximity to the Property and placing the
Property into commercial production;
<PAGE>
2
(c) "Property" means and includes:
(i) the mining claims more particularly described in Schedule A
attached hereto and forming part hereof; and
(ii) all rights and appurtenances pertaining to the mining
claims more particularly described in Schedule A including
all water and water rights, rights of way and easements,
both recorded and unrecorded, to which the Optionor is
entitled in respect thereof;
(d) "Property Expenditures" means all reasonable and necessary monies
expended on or in connection with Exploration and Development as
determined in accordance with generally accepted accounting
principles including, without limiting the generality of the
foregoing:
(i) the cost of entering upon, surveying, prospecting and
drilling on the Property;
(ii) the cost of any geophysical, geochemical and geological
surveys relating to the Property;
(iii) all filing and other fees and charges necessary or
advisable to keep the Property or any part or parts thereof
in good standing with any regulatory authorities having
jurisdiction;
(iv) all rentals, royalties, taxes (exclusive of all income
taxes and mining taxes based on income and which are or may
be assessed against the parties hereto) and any assessments
whatsoever, whether the same constitute charges on the
Property or arise as a result of the operations thereon;
(v) the cost, including rent and finance charges, of all
buildings, machinery, tools, appliances and equipment and
related capital items that may be erected, installed and
used from time to time directly in connection with
Exploration and Development;
(vi) the cost of construction and maintenance of camps required
for Exploration and Development;
(vii) the cost of transporting persons, supplies, machinery and
equipment in connection with Exploration and Development;
<PAGE>
3
(viii) all wages and salaries (including fringe benefits as
are usually paid in the Canadian mineral exploration
business) of persons engaged in the Exploration and
Development and any assessments or levies made under
the authority of any regulatory body having
jurisdiction with respect to such persons or
supplying food, lodging and other reasonable needs
for such persons;
(ix) all costs of consulting and other engineering services
including report preparation;
(x) the cost of compliance with all statutes, orders and
regulations respecting environmental reclamation,
restoration and other like work required as a result of
conducting Exploration and Development; and
(xi) all costs of searching for, digging, working, sampling,
transporting, mining and procuring ores, minerals, and
metals from and out of the Property.
2. ACQUISITION OF INTEREST
2.01 The Optionor hereby grants to Stirrup Creek the exclusive right and
option to acquire an undivided 50% right, title and interest in and to the
Property for total consideration consisting of cash payments to the Optionor
totalling $300,000 and the incurrence of Property Expenditures totalling
$1,000,000 to be made as follows:
(a) upon execution of this Agreement, the payment to the Optionor of
$25,000;
(b) on or before April 15, 1997, the payment to the Optionor of an
additional $50,000 and the incurrence of Property Expenditures in
the amount of $200,000;
(c) on or before April 15, 1998, the payment to the Optionor of an
additional $50,000 and the incurrence of Property Expenditures in
the cumulative amount of $400,000;
(d) on or before April 15, 1999, the payment to the Optionor of an
additional $75,000 and the incurrence of Property Expenditures in
the cumulative amount of $700,000; and
(e) on or before April 15, 2000, the payment to the Optionor of an
additional $100,000 and the incurrence of Property Expenditures in
the cumulative amount of $1,000,000.
<PAGE>
4
2.02 Upon earning a 50% interest in the Property pursuant to this article, and
on providing the Optionor with written notice on or before June 15, 2000,
Stirrup Creek may elect to earn an additional 20% interest in the Property for
total consideration of cash payments to the Optionor totalling $300,000 and the
incurrence of Property Expenditures totalling $1,000,000 to be made as follows:
(a) on or before April 15, 2001, the payment to the Optionor of
$75,000 and the incurrence of Property Expenditures in the amount
of $200,000;
(b) on or before April 15, 2002, the payment to the Optionor of an
additional $50,000 and the incurrence of Property Expenditures in
the cumulative amount of $400,000;
(c) on or before April 15, 2003, the payment to the Optionor of an
additional $75,000 and the incurrence of Property Expenditures in
the cumulative amount of $700,000; and
(d) on or before April 15, 2004, the payment to the Optionor of an
additional $100,000 and the incurrence of Property Expenditures in
the cumulative amount of $1,000,000.
2.03 The acquisition of a further 20% interest in the Property pursuant to
paragraph 2.02 shall be subject to the prior approval of the Exchange.
2.04 The Optionee shall be the operator of the Property with respect to the
incurrence of all Property Expenditures pursuant to paragraphs 2.01 and 2.02.
2.05 This Agreement is an option only and the doing of any act or the
incurrence of any, cash payments or Property Expenditures by Stirrup Creek
shall not obligate Stirrup Creek to do any further acts or make any further
payments or Property Expenditures.
3. TRANSFER OF TITLE
3.01 Upon execution of this Agreement, Stirrup Creek shall be entitled to
record this Agreement against title to the Property.
3.02 Upon Stirrup Creek acquiring an interest in the Property pursuant to
paragraph 2.01 or 2.02, the Optionor shall deliver to Stirrup Creek duly
executed transfers for the transfer to Stirrup Creek of the interest in and to
the Property then acquired.
4. JOINT VENTURE
<PAGE>
5
4.01 Upon Stirrup Creek acquiring the greatest interest in the Property that
it may acquire pursuant to paragraphs 2.01 and 2.02, the Optionor and Stirrup
Creek agree to join and participate in a single purpose joint venture (the
"Joint Venture") for the purpose of further exploring and developing and, if
economically and politically feasible, constructing and operating a mine on the
Property. The Joint Venture shall be governed by the principles outlined in
Schedule B hereto, which the parties agree to incorporate in a formal joint
venture agreement between them.
5. RIGHT OF ENTRY
5.01 During the currency of this Agreement, Stirrup Creek, its servants,
agents and workmen and any persons duly authorized by Stirrup Creek, shall have
the right of access to and from and to enter upon and take possession of and
prospect, explore and develop the Property in such manner as Stirrup Creek in
its sole discretion may deem advisable for the purpose of incurring Property
Expenditures as contemplated by article 2, and shall have the right to remove
and ship therefrom ores, minerals, metals, or other products recovered in any
manner therefrom for testing or sampling purposes only.
5.02 Stirrup Creek shall be provided access to all maps, reports, assay
results and other technical data in the possession or under the control of the
Optionor with respect to the Property and shall be entitled to take copies
thereof.
6. COVENANTS OF STIRRUP CREEK
6.01 Stirrup Creek covenants and agrees with the Optionor that during the term
of this Agreement:
(a) Stirrup Creek shall record or cause to be recorded as assessment
work all work conducted on the Property pursuant to paragraphs
2.01 and 2.02 hereof and otherwise shall maintain the Property in
good standing at all times during the currency of this Agreement;
(b) Stirrup Creek shall keep the Property clear of liens, encumbrances
and other charges and shall keep the Optionor indemnified in
respect thereof;
(c) Stirrup Creek shall carry on all operations on the Property in a
good and workmanlike manner and in compliance with all applicable
governmental regulations and restrictions including but not
limited to the posting of any reclamation bonds as may be required
by any governmental regulations or regulatory authorities;
(d) Stirrup Creek shall pay or cause to be paid any rates, taxes,
duties, royalties, Workers' Compensation or other assessments or
fees levied with respect to the Property or Stirrup Creek's
operations thereon;
<PAGE>
6
(e) Stirrup Creek shall maintain books of account in respect of its
expenditures and operations on the Property and, upon two business
days' notice, shall make such books available for inspection by
representatives of the Optionor;
(f) Stirrup Creek shall allow any duly authorized agent or
representative of the Optionor to inspect the Property at
reasonable times and intervals and upon reasonable notice given to
Stirrup Creek, provided however that it is agreed and understood
that any such agent or representative shall be at his own risk in
respect of, and Stirrup Creek shall not be liable for, any injury
incurred while on the Property, howsoever caused;
(g) Stirrup Creek shall allow the Optionor access at reasonable times
to all maps, reports, sample results and other technical data
prepared or obtained by Stirrup Creek in connection with its
operations on the Property and shall report annually to the
Optionor the results of its operations on the Property; and
(h) Stirrup Creek shall indemnify and save the Optionor harmless of
and from any and all costs, claims, loss and damages whatsoever
incidental to or arising out of or in connection with any work or
operations carried out by or on behalf of Stirrup Creek on the
Property, including any liability arising from environmental or
reclamation issues.
7. REPRESENTATIONS AND WARRANTIES
7.01 The Optionor hereby represents and warrants that:
(a) the Optionor is the sole and exclusive registered and beneficial
owner of the mineral claims comprising the Property and has the
right to enter into this Agreement to sell and assign an interest
in the Property absolutely in accordance with the terms of this
Agreement;
(b) the mineral claims comprising the Property have been properly
staked and recorded in compliance with the laws of British
Columbia, as applicable, and there are no disputes over the title,
staking or recording of such mineral claims;
(c) the mineral claims comprising the Property are in good standing
and are free and clear of any liens, charges or encumbrances of
any nature or kind whatsoever; and
(d) the Optionor has not done anything whereby the mineral claims
comprising the Property may be in any way encumbered.
7.02 Stirrup Creek hereby represents and warrants that:
<PAGE>
7
(a) Stirrup Creek has full corporate power and authority to enter into
this Agreement and the entering into of this Agreement does not
conflict with any applicable laws or with the charter documents of
Stirrup Creek or any contract or other commitment to which Stirrup
Creek is party; and
(b) the execution of this Agreement and the performance of its terms
have been duly authorized by all necessary corporate actions
including the resolution of the Board of Directors of Stirrup
Creek.
8. CONFIDENTIALITY OF INFORMATION
8.01 The Optionor shall treat all data, reports, records and other information
of any nature whatsoever relating to this Agreement and the Property as
confidential. While this Agreement is in effect, the Optionor shall not,
without the express written consent of Stirrup Creek, which consent shall not be
unreasonably withheld, disclose to any third party any information concerning
the Property or any operations thereon. The Optionor shall not buy, sell or
otherwise deal in the shares of Stirrup Creek while any material, confidential
information in its possession relating to this Agreement or the Property remains
undisclosed to the general public.
9. ASSIGNMENT
9.01 With the consent of the other party, which consent shall not be
unreasonably withheld, each party has the right to assign all or any part of its
interest in this Agreement and in the Property, subject to the terms and
conditions of this Agreement. It shall be a condition precedent to any such
assignment that the assignee of the interest being transferred agrees to be
bound by the terms of this Agreement, insofar as they are applicable.
10. FIRST RIGHT OF REFUSAL
10.01 Notwithstanding article 9, in the event that a party (the "Selling
Party") wishes to sell the whole or any part of its interest in this Agreement
or the Property it shall first give to the other party (the "Other Party") a
notice in writing containing an offer to sell to the Other Party such interest
specifying the price and terms and conditions for such sale and, if not for
cash, the cash equivalent thereof (the "Offer"). If within a period of 30 days
of the receipt of such notice, the Other Party notifies the Selling Party in
writing that it will accept the Offer, the Selling Party shall be bound to sell
such interest to the Other Party at such price and on the terms and conditions
of the Offer. If the Other Party shall fail to notify the Selling Party before
the expiration of the time herein limited that it will purchase the interest
offered or notifies the Selling Party that it does not intend to purchase the
interest offered, the Selling Party may sell and transfer such interest offered
to any third party or parties, subject to article 9, at a price and upon terms
and conditions no more favourable than as specified in the Offer, for a period
of 60 days, and if it fails to do so, such interest shall again be subject to
this paragraph 10.01.
<PAGE>
8
Notwithstanding the foregoing, a party may transfer the whole or part of its
interest in this Agreement or the Property to some other party with which it is
related if notice of such proposed transfer is given to the other party
specifying the nature of the relationship and the other party gives its consent
in writing, which consent shall not be unreasonably withheld.
11. TERMINATION
11.01 This Agreement shall terminate upon the occurrence of one of the
following events:
(a) in the event that Stirrup Creek, not being at the time in default
under any provision of this Agreement, gives 30 days' written
notice to the Optionor of the termination of this Agreement;
(b) in the event that Stirrup Creek shall fail to comply with any of
the requirements to make cash payments and incur Property
Expenditures in the amounts and within the time limits set forth
in paragraph 2.01;
(c) in the event that Stirrup Creek shall fail to comply with any of
its obligations hereunder, other than the obligations referred to
in subparagraph 11.01(b), and, subject to paragraph 12.01, within
30 days of receipt by Stirrup Creek of written notice from the
Optionor of such default, Stirrup Creek has not:
(i) cured such default, or commenced proceedings to cure such
default and prosecuted same to completion without undue
delay; or
(ii) given the Optionor notice that it denies that such default
has occurred.
In the event that Stirrup Creek gives notice that it denies that a default has
occurred, Stirrup Creek shall not be deemed in default until the matter shall
have been determined finally through such means of dispute resolution as such
matter has been subjected to by either party.
11.02 Upon termination of this Agreement under paragraph 11.01, Stirrup Creek
shall:
(a) have completed and either recorded or delivered to the Optionor,
in a form satisfactory for filing, sufficient assessment work on
the Property to maintain the Property in good standing for a
period of at least one year from the date of termination;
(b) where applicable, transfer title to the Property to the Optionor
free and clear of all liens, charges and encumbrances;
<PAGE>
9
(c) within 30 days of termination, turn over to the Optionor copies of
all maps, reports, sample results, contracts and other data and
documentation in the possession of Stirrup Creek or, to the extent
within Stirrup Creek's control, in the possession of its agents,
employees or independent contractors, in connection with its
operations on the Property; and
(d) ensure that the Property is in a safe condition and complies with
all environmental and safety standards imposed by any duly
authorized regulatory authority.
11.03 Upon the termination of this Agreement under paragraph 11.01, Stirrup
Creek shall cease to be liable to the Optionor in debt, damages or otherwise
save for the performance of those obligations in paragraph 11.02 and such other
obligations as it has incurred prior to the date of termination which remain
unsatisfied.
11.04 Upon termination of this Agreement under paragraph 11.01, Stirrup Creek
shall vacate the Property within a reasonable time after such termination, but
shall have the right of access to the Property for a period of six months
thereafter for the purpose of removing its chattels, machinery, equipment and
fixtures.
12. FORCE MAJEURE
12.01 The time for performance of any act or making any payment or any
expenditure required under this Agreement shall be extended by the period of any
delay or inability to perform due to fire, strikes, labour disturbances, riots,
civil commotion, wars, acts of God, any present or future law or governmental
regulation, any shortages of labour, equipment or materials, or any other cause
not reasonably within the control of the party in default, other than lack of
finances.
13. AFTER-ACQUIRED PROPERTY
13.01 In the event that at any time hereafter either the Optionor or Stirrup
Creek shall acquire any mining claim, lease, or other mineral right or interest
within a three kilometre radius of the outside boundary of the Property as
constituted on the date of this Agreement, such interest shall be deemed to have
been acquired on behalf of and for the benefit of the parties, pursuant to the
terms of this Agreement and such after-acquired interest as aforesaid shall be
included in and shall form a part of the definition of "Property" contained in
paragraph 1.01 and shall be subject to this Agreement as if it had been
originally so included.
14. NOTICES
14.01 Any notice, election, consent or other writing required or permitted to
be given hereunder shall be deemed to be sufficiently given if delivered or
mailed postage prepaid or if given by telegram, telex or telecopier, addressed
as follows:
<PAGE>
10
In the case of the Optionor: RUDOLF M. DURFELD
P.O. Box 4438, Station Main
Williams Lake, B.C.
V2G 2V5
Telecopier: (604) 392-3070
In the case of Stirrup Creek: STIRRUP CREEK GOLD LTD.
310 - 1959 152nd Street
Surrey, B.C.
V4A 9E3
Telecopier: (604) 531-9634
and any such notice given as aforesaid shall be deemed to have been given to the
parties hereto if delivered, when delivered, or if mailed, on the third business
day following the date of mailing, or, if telegraphed, telexed or telecopied, on
the same day as the telegraphing, telexing or telecopying thereof provided
however that during the period of any postal interruption in Canada any notice
given hereunder by mail shall be deemed to have been given only as of the date
of actual delivery of the same. Any party may from time to time by notice in
writing change its address for the purposes of this paragraph 14.01.
15. GENERAL TERMS AND CONDITIONS
15.01 The parties hereto hereby covenant and agree that they will execute such
further agreements, conveyances and assurances as may be requisite, or which
counsel for the parties may deem necessary to effectually carry out the intent
of this Agreement.
15.02 This Agreement shall constitute the entire agreement between the parties
with respect to the Property. No representations or inducements have been made
save as herein set forth. No changes, alterations or modifications of this
Agreement shall be binding upon either party until and unless a memorandum in
writing to such effect shall have been signed by all parties hereto. This
Agreement shall supersede all previous written, oral or implied understandings
between the parties with respect to the matters covered hereby.
15.03 Time shall be of the essence of this Agreement.
15.04 The titles to the articles in this Agreement shall not be deemed to form
part of this Agreement but shall be regarded as having been used for convenience
of reference only.
15.05 All currency references contained in this Agreement shall be deemed to be
references to Canadian funds.
<PAGE>
11
15.06 Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision shall be prohibited by or be invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
15.07 The Schedules to this Agreement shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein. Defined terms contained in this Agreement shall have the same
meanings where used in the Schedules.
15.08 This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of British Columbia and the laws of Canada applicable
therein.
15.09 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the day and year first above written.
SIGNED, SEALED AND DELIVERED
by RUDOLF M. DURFELD in the presence of:
-----------------------------------
- - ---------------------------------- RUDOLF M. DURFELD
THE COMMON SEAL of STIRRUP
CREEK GOLD LTD was hereunto
affixed in the presence of: c/s
- - ----------------------------------
<PAGE>
SCHEDULE A
The "Property", as defined in paragraph 1.01 includes the following mineral
claims located in the Clinton Mining Division, British Columbia:
=============================================================================
Claim Name Tenure Number Number of Units Date of Expiry
- - -----------------------------------------------------------------------------
Second 1 208238 20 September 19, 1996
- - -----------------------------------------------------------------------------
Second 2 208239 20 September 19, 1996
- - -----------------------------------------------------------------------------
Second 3 208243 10 October 16, 1996
- - -----------------------------------------------------------------------------
Second 4 208244 12 October 16, 1996
- - -----------------------------------------------------------------------------
Second 5 208290 18 June 29, 1998
- - -----------------------------------------------------------------------------
Ulcer 208304 15 August 12, 1998
- - -----------------------------------------------------------------------------
Total Number of Units 95
=============================================================================
<PAGE>
SCHEDULE B
PRINCIPLES TO BE INCORPORATED IN
JOINT VENTURE AGREEMENT
1. If Stirrup Creek earns a 50% interest only in the Property pursuant to
paragraph 2.01 of the Agreement, the initial beneficial interest of the parties
(the "Joint Venturers") in the Joint Venture, including the mineral claims
comprising the Property, any mining leases, surface rights, buildings,
equipment, plant, installations, infrastructure, housing, airport and all other
facilities, rights and interests, shall be Stirrup Creek as to 50% and the
Optionor as to 50%. The deemed contribution of each party to the Joint Venture
shall be $1,000,000.
2. If Stirrup Creek earns a 70% interest in the Property pursuant to
paragraph 2.02 of the Agreement, the initial beneficial interest of the parties
(the "Joint Venturers") in the Joint Venture, including the mineral claims
comprising the Property, any mining leases, surface rights, buildings,
equipment, plant, installations, infrastructure, housing, airport and all other
facilities, rights and interests, shall be Stirrup Creek as to 70% and the
Optionor as to 30%. The deemed contribution of each party to the Joint Venture
shall be Stirrup Creek as to $2,000,000 and the Optionor as to $857,143.
3. Upon the formation of the Joint Venture, a Management Committee
consisting of a representative of each Joint Venturer shall be formed to manage
the activities of the Operator on the Property or in relation thereto, including
but not limited to production decisions and considering and approving all work
programs.
4. Each Joint Venturer's representative to the Management Committee shall be
entitled to cast that number of votes which is equal in number to the percentage
beneficial interest in the Joint Venture held by the respective Joint Venturer
in accordance with this Schedule B. All decisions and approvals shall be made
by a simple majority of the votes cast. Notwithstanding the foregoing, if a
Joint Venturer at any time fails to contribute, pro rata according to its
beneficial interest in the Joint Venture, to any annual work program other than
one to which it has elected not to contribute pursuant to paragraph 6 of this
Schedule B, the Management Committee shall immediately be deemed to be and shall
be composed only of the representative of the other Joint Venturer.
5. The initial Operator of the Joint Venture shall be Stirrup Creek unless
and until such time as Stirrup Creek's beneficial interest in the Joint Venture
is reduced below 50%, at which point the Management Committee shall appoint an
Operator. The Operator shall report to and take instructions from the
Management Committee.
6. After formation of the Joint Venture, unless a Joint Venturer has elected
not to participate or has elected to participate to a lesser extent than its
then existing beneficial interest in a program pursuant to paragraph 6 of this
Schedule B, each Joint Venturer shall participate in funding future Property
Costs in proportion to its respective beneficial interest in the Joint Venture.
A Joint Venturer may elect to participate in a program to a lesser extent than
its then existing respective beneficial interest in the Joint Venture. For the
purposes of this Schedule B, "Property Costs" shall mean all funds required
following formation of the Joint Venture to acquire, explore for, develop,
<PAGE>
-2-
build, operate and maintain an efficient mine or mines on the Property as called
for by the Operator in accordance with the directives of the Management
Committee of the Joint Venture.
7. The Operator shall submit to the Management Committee for approval an
annual work program calling for the expenditure of at least $100,000. If the
Operator fails to submit such a program, the Non-Operator may submit such a
program, to which the Operator may elect to contribute. Before a production
decision is made with respect to the Property, a Joint Venturer may elect not to
participate or to participate to a lesser extent than its then existing
beneficial interest in any annual work program before costs have been incurred
thereunder, in which event the provisions of paragraphs 7 and 8 of this Schedule
B shall govern. The election of any party to participate must be made within 30
days of the submission of an annual work program and budget, failing which such
party shall be deemed to have elected not to participate in such program.
8. If the Joint Venturer elects not to participate or to participate to a
lesser extent than its then existing beneficial interest in any annual work
program pursuant to paragraph 6 of this Schedule B, that Joint Venturer's
beneficial interest in the Joint Venture shall be reduced while that of the
other Joint Venturer is increased so that, subject to paragraphs 9 and 10 of
this Schedule B, the beneficial interest of each Joint Venturer shall be at all
times proportionate to the sum of the total Property Costs of both Joint
Venturers. In the event that a Joint Venturer elects not to participate or to
participate to a lesser extent in an annual work program which program is not
subsequently completed to the extent of at least 90%, that Venturer may elect to
back into the program, to the extent that it was completed, by paying to the
other Joint Venturer such portion of the costs as represents that portion of the
program for which it wishes to receive credit. Such payment must be accompanied
by written notice to the other Joint Venturer, within 60 days of the completion
of work on the program.
9. If a Joint Venturer elects not to participate or to participate to a
lesser extent than its then existing beneficial interest in any annual work
program pursuant to paragraph 6 of this Schedule B, and provided that its
beneficial interest has not been reduced below 5%, that Joint Venturer may elect
to participate in the funding of future Property Costs, commencing with the next
annual work program, to the extent of its then existing beneficial interest in
the Joint Venture.
10. If the beneficial interest of a Joint Venturer (the "Diluted Venturer")
is reduced below 5%, the Diluted Venturer shall be deemed to have assigned and
conveyed its beneficial and legal interest in the Joint Venture to the other
Joint Venturer and shall be entitled thereafter, in lieu of a Joint Venture
interest, only to the return of its contribution to Property Costs, without
interest, payable only from 2% of net smelter returns from the Property. The
Property shall be immediately transferred into the other Joint Venturer's name
alone and the Joint Venture Agreement shall thereby be terminated subject to any
then outstanding liabilities between the parties.
11. If a Joint Venturer (the "Non-Contributing Venturer") at any time fails
to contribute, pro rata according to its beneficial interest in the Joint
Venture, to any annual work program other than one to which it has elected not
to contribute pursuant to paragraph 6 of this Schedule B, the Non-Contributing
Venturer shall be deemed to have assigned and conveyed its beneficial and legal
interest in the Joint Venture to the other Joint Venturer and shall be entitled
thereafter, in lieu of a
<PAGE>
Joint Venture interest, only to the return of its contribution to Property
Costs, without interest, payable only from 2% of net smelter returns from the
Property. The Property shall be immediately transferred into the other Joint
Venturer's name alone and the Joint Venture Agreement shall thereby be
terminated subject to any then outstanding liabilities between the parties.
12. Each Joint Venturer shall provide to the other all reports, maps, logs or
other data whatsoever relating to the Property in their possession or otherwise
under their control.
13. Any dispute arising under this agreement shall be forthwith submitted to
a single arbitrator in accordance with the provisions of the COMMERCIAL
ARBITRATION ACT (British Columbia).
<PAGE>
EXHIBIT NO. 3.9
JOINT VENTURE AGREEMENT
THIS AGREEMENT is made as of the 18th day of April, 1996
BETWEEN: FOREFRONT VENTURES LTD.
Suite 1007 - 736 Granville Street
Vancouver, B.C.
V6Z 1G3
("Forefront") OF THE FIRST PART
AND: STIRRUP CREEK GOLD LTD.
Suite 310, 1959 152nd Street
Surrey, B.C.
V4A 9E3
("Stirrup Creek") OF THE SECOND PART
RECITALS
WHEREAS:
A. Forefront currently holds the rights to acquire an undivided 100% interest
in the Property as described in Exhibit A and defined in Section 1.21;
B. Stirrup Creek wishes to acquire an undivided 75% interest in the Property
and the parties wish to participate jointly in the exploration, evaluation,
development and mining of mineral resources within the Property or any other
properties acquired pursuant to the terms of this Agreement; and
C. Stirrup Creek has agreed to act as the Operator of the Venture as defined
hereafter.
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Accounting Procedure" means the procedures set forth in Exhibit B.
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1.2 "Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is
controlled by, or is under common control with, a Participant. For purposes
of the preceding sentence, "control" means possession, directly or
indirectly, of the power to direct or cause direction of management and
policies through ownership of voting securities, contract, voting trust or
otherwise.
1.3 "Agreement" means this Joint Venture Agreement, including all
amendments and modifications thereof, and all schedules and exhibits, which
are incorporated herein by this reference.
1.4 "Area of Interest" means the area described in Part 2 of Exhibit A.
1.5 "Assets" means the Property, Products and all other real and personal
property, tangible and intangible, held for the benefit of the Participants
hereunder.
1.6 "Budget" means a detailed estimate of all costs to be incurred by the
Participants with respect to a Program and a schedule of cash advances to be
made by the Participants.
1.7 "Development" means all preparation for the removal and recovery of
Products, including the construction or installation of a mill or any other
improvements to be used for the mining, handling, milling, processing or
other benefication of Products.
1.8 "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Products.
1.9 "Initial Contribution" means that contribution each Participant has
made or agrees to make pursuant to Section 5.1.
1.10 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.
1.11 "Management Committee" means the committee established under Article
VII.
1.12 "Mining" means the mining, extracting, producing, handling, milling or
other processing of Products.
1.13 "Net Proceeds" means certain amounts calculated as provided in Exhibit
C, which may be payable to a Participant under Section 6.4.
1.14 "Operations" means the activities carried out under this Agreement.
1.15 "Operator" means the person or entity appointed under Article VIII to
manage Operations, or any successor Operator.
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1.16 "Participant" and "Participants" mean the persons or entities that from
time to time have Participating Interests.
1.17 "Participating Interest" means the percentage interest representing the
operating ownership interest of a Participant in Assets, and all other rights
and obligations arising under this Agreement, as such interest may from time
to time be adjusted hereunder. Participating Interests shall be calculated
to three decimal places and rounded to two (e.g., 1.519% rounded to 1.52%).
Decimals of .005 or more shall be rounded up to .01, decimals of less than
.005 shall be rounded down. The initial Participating Interests of the
Participants are set forth in Section 6.1.
1.18 "Prime Rate" means the interest rate quoted as "Prime" by the Royal
Bank of Canada, at its Royal Centre Branch in Vancouver, British Columbia, as
said rate may change from day to day (which quoted rate may not be the lowest
rate at which the Bank loans funds).
1.19 "Products" means all ores, minerals and mineral resources produced from
the Property under this Agreement.
1.20 "Program" means a description in reasonable detail of Operations to be
conducted and objectives to be accomplished by the Operator for a year or any
longer period.
1.21 "Property" means those interests in real property described in Part I
of Exhibit A and all other interests in real property within the Area of
Interest which are acquired and held subject to this Agreement.
1.22 "Transfer" means sell, grant, assign, encumber, pledge or otherwise
commit or dispose of.
1.23 "Venture" means the business arrangement of the Participants under this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS
2.1 CAPACITY OF PARTICIPANTS. Each of the Participants represents and
warrants as follows:
a) that it is a corporation duly incorporated and in good standing in the
Province of British Columbia and that it is qualified to do business
and is in good standing in those jurisdictions where necessary in
order to carry out the purposes of this Agreement;
b) that it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this
Agreement have been properly taken;
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c) that it will not breach any other agreement or arrangement by entering
into or performing this Agreement;
d) that this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms; and
e) that it is resident in Canada within the meaning of Section 116 of the
INCOME TAX ACT (Canada).
2.2 DISCLOSURES. Each of the Participants represents and warrants that it
is unaware of any material facts or circumstances which have not been disclosed
in this Agreement, which should be disclosed to the other Participants in order
to prevent the representations in this Article II from being materially
misleading.
2.3 JOINT LOSS OF TITLE. Any failure or loss of title to the Assets, and
all costs of defending title, shall be charged to the Joint Account, except that
all costs and losses arising out of or resulting from breach of the
representations and warranties of a Participant shall be charged to that
Participant.
ARTICLE III
ACQUISITION, NAME AND TERM
3.1 ACQUISITION OF INTEREST. Concurrent with the execution of this
Agreement, and by the execution hereof, Forefront hereby grants to Stirrup Creek
the option to acquire an undivided 75% interest in and to the Property for the
following consideration:
a) the payment to Forefront of the sum of $10,750, the receipt of which
Forefront hereby acknowledges;
b) the payment by Stirrup Creek to the appropriate persons and agencies
of all costs of acquiring the Property, including $72,100 U.S. for the
necessary Contracts of Work; and
c) the payment by Stirrup Creek of the first $250,000 towards a Program
or Programs carried out hereunder.
3.2 NAME. The name of the Venture shall be the Brey Joint Venture.
3.3 PURPOSES. This Agreement is entered into for the following purposes
and for no others, and shall serve as the exclusive means by which the
Participants, or any of them, accomplish such purposes:
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a) to conduct Exploration within the Area of Interest;
b) to acquire additional properties within the Area of Interest;
c) to engage in Development and Mining Operations on the Property;
d) to engage in marketing Products, to the extent permitted by Article
XI; and
e) to perform any other activity necessary, appropriate, or incidental to
any of the foregoing.
3.4 LIMITATION. Unless the Participants otherwise agree in writing, the
Operations shall be limited to the purposes described in Section 3.3, and
nothing in this Agreement shall be construed to enlarge such purposes.
3.5 EFFECTIVE DATE AND TERM. The effective date of this Agreement shall
be the date first recited above. The term of this Agreement shall be for 20
years from the effective date and for so long thereafter as Products are
produced from the Property, unless the Agreement is earlier terminated as herein
provided.
ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS
4.1 NO PARTNERSHIP. Nothing contained in this Agreement shall be deemed
to constitute any Participant the partner of the other, nor, except as otherwise
herein expressly provided, to constitute any Participant the agent or legal
representative of the other, nor to create any fiduciary relationship between
them. It is not the intention of the Participants to create, nor shall this
Agreement be construed to create, any mining, commercial or other partnership.
No Participant shall have any authority to act for or to assume any obligation
or responsibility on behalf of the other Participants, except as otherwise
expressly provided herein. The rights, duties, obligations and liabilities of
the Participants shall be several and not joint or collective. Each Participant
shall be responsible only for its obligations as herein set out and shall be
liable only for its share of the costs and expenses as provided herein, it being
the express purpose and intention of the Participants that their ownership of
Assets and the rights acquired hereunder shall be as tenants in common. Each
Participant shall indemnify, defend and hold harmless the other Participants,
its directors, officers, employees, agents and attorneys from and against any
and all losses, claims, damages and liabilities arising out of any act or any
assumption of liability by the indemnifying Participant, or any of its
directors, officers, agents and attorneys done or undertaken, or apparently done
or undertaken, on behalf of the other Participants, except pursuant to the
authority expressly granted herein or as otherwise agreed in writing between the
Participants.
4.2 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this
Agreement, each
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Participant shall have the right independently to engage in and receive full
benefits from business activities, whether or not competitive with the
Operations, without consulting the other. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any other
activity, venture, or operation of any Participant, and, except as otherwise
provided in Section 12.6, no Participant shall have any obligation to the
other with respect to any opportunity to acquire any property outside the
Area of Interest at any time, or within the Area of Interest after the
termination of this Agreement. Unless otherwise agreed in writing, no
Participant shall have any obligation to mill, beneficiate or otherwise treat
any Products or any other Participant's share of Products in any facility
owned or controlled by such Participant.
4.3 WAIVER OF RIGHT TO PARTITION. The Participants hereby waive and
release all rights of partition, or of sale in lieu thereof, or other division
of Assets, including any such rights provided by statute.
4.4 TRANSFER OR TERMINATION OF RIGHTS TO PROPERTY. Except as otherwise
provided in this Agreement, no Participant shall Transfer all or any part of its
interest in the Assets or this Agreement or otherwise permit or cause such
interests to terminate.
4.5 IMPLIED COVENANTS. There are no implied covenants contained in this
Agreement other than those of good faith and fair dealing.
ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS
5.1 PARTICIPANTS' INITIAL CONTRIBUTIONS. The initial Participating
Interests of the parties are as set forth in Section 6.1. Upon Stirrup Creek
completing the expenditure contemplated by subsection 3.1(c) the agreed value
of each party's Initial Contribution will be $300,000 for Stirrup Creek and
$100,000 for Forefront and the receipt by the Venture of the Initial
Contribution of each Participant shall thereupon be deemed to be acknowledged
by the parties hereto.
5.2 ADDITIONAL CASH CONTRIBUTIONS. Subject to the obligation of Stirrup
Creek to expend the first $250,000 as set forth in Section 3.1 and any election
permitted by Section 6.3, the Participants shall hereafter be obligated to
contribute funds to adopted Programs in proportion to their respective
Participating Interests.
ARTICLE VI
INTERESTS OF PARTICIPANTS
6.1 INITIAL PARTICIPATING INTERESTS. The Participants shall have the
following initial Participating Interests:
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Stirrup Creek - 75%
Forefront - 25%
6.2 CHANGES IN PARTICIPATING INTERESTS. A Participant's Participating
Interest shall be changed as follows:
a) upon an election by a Participant pursuant to Section 6.3 to
contribute less to an adopted Program and Budget than the percentage
reflected by its Participating Interest; or
b) pursuant to the operation of Section 6.4; or
c) transfer by a Participant of less than all its Participating Interest
in accordance with Article XV; or
d) acquisition of less than all of the Participating Interest of the
other Participant, however arising.
6.3 REDUCTION IN PARTICIPATION. A Participant may elect, as provided in
Section 9.5, to limit its contributions to an adopted Program and Budget as
follows:
a) to some lesser amount than its respective Participating Interest; or
b) not at all.
If a Participant elects to contribute to an adopted Program and Budget some
lesser amount than its respective Participating Interest, or not at all, the
Participating Interest of that Participant shall be recalculated, subject to
Section 6.4, at the time of election by dividing: (i) the sum of (a) the agreed
value of the Participant's Initial Contribution under Section 5.1, (b) the total
of all of the Participant's contributions under Section 5.3, and (c) the amount,
if any, the Participant elects to contribute to the adopted Program and Budget;
by (ii) the sum of (a), (b) and (c) above for all Participants; and then
multiplying the result by one hundred. The combined Participating Interests of
the other Participants shall thereupon become the difference between 100% and
the recalculated Participating Interest.
6.4 FOREFRONT'S DEFAULT POSITION. As a result of the operation of Section
6.3, the interest of Forefront in the Venture shall not become less than 20%
and in the event of the reduction of Forefront's interest to 20% or lower as a
result of the application of Section 6.3, Forefront shall for all purposes be
deemed to hold the 20% carried interest described herein (the "Carried
Interest"). In the event that Forefront is reduced to the Carried Interest,
then Stirrup Creek may thereafter expend all monies necessary to place the
Property into commercial production in accordance with the terms of this
Agreement. Forefront shall not be required, in that event, to expend any
further monies hereunder. Upon the Property being placed into commercial
production, all of the Net Proceeds therefrom shall be paid to Stirrup Creek
until such time as 20% of Net Proceeds is
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equivalent to twice the amount of money that Forefront would have had to
contribute to the Venture, plus interest at the Prime Rate calculated from
the date such monies should have been contributed, in order to maintain a 20%
Participating Interest in the Venture. Once Stirrup Creek has received such
payment, Forefront shall thereafter, for all purposes including the
distribution of profits, be deemed to have a 20% Participating Interest in
the Venture, until such time as the interests of the parties may be further
altered in accordance with the terms of this Agreement. Stirrup Creek's
receipt of Net Proceeds as described in the foregoing shall constitute its
sole remedy with respect to a failure in the part of Forefront to contribute
to a Program or Budget. Notwithstanding the fact that Forefront may be
reduced to a Carried Interest hereunder, Forefront shall continue to be
deemed a Participant for the purposes of Articles XII, XIII, XIV, XV, XVI and
XVII of this Agreement.
6.5 CONTINUING LIABILITIES UPON ADJUSTMENTS OF PARTICIPATING INTERESTS.
Any reduction of a Participant's Participating Interest under this Article VI
shall not relieve such Participant of its share of any liability, whether it
accrues before or after such reduction, arising out of Operations conducted
prior to such reduction. For purposes of this Article VI, such Participant's
share of such liability shall be equal to its Participating Interest at the time
such liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of another Participant's Participating
Interest shall be free of royalties, liens or other encumbrances arising by,
through or under such other Participant, other than those existing at the time
the Property was acquired or those to which all Participants have given their
written consent. An adjustment to a Participating Interest need not be
evidenced during the term of this Agreement by the execution and recording of
appropriate instruments, but each Participant's Participating Interest shall be
shown in the books of the Operator. However, any Participant, at any time upon
the request of another Participant, shall execute and acknowledge instruments
necessary to evidence such adjustment in form sufficient for recording in the
jurisdiction where the Property is located.
ARTICLE VII
MANAGEMENT COMMITTEE
7.1 ORGANIZATION AND COMPOSITION. The Participants hereby establish a
Management Committee to determine overall policies, objectives, procedures,
methods and actions under this Agreement. The Management Committee shall
consist of one member appointed by each Participant, unless a Participant is
reduced to a Carried Interest pursuant to Section 6.4 in which event the
Management Committee shall consist only of the member appointed by the other
Participant. Each Participant may appoint one or more alternates to act in the
absence of a regular member. Any alternate so acting shall be deemed a member.
Appointments shall be made or changed by notice to the other Participants.
7.2 DECISIONS. Each Participant, acting through its appointed members,
shall have one vote on the Management Committee. Unless otherwise provided in
this Agreement, the vote of the Participant with a Participating Interest over
50% shall determine the decisions of the Management Committee. In the event of
a tie vote as between the Participants on any matter, the casting vote on
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such matter shall be exercised by the member representing the Operator.
7.3 MEETINGS. The Management Committee shall hold regular meetings at
least annually in Vancouver, British Columbia, or at other mutually agreed
places. The Operator shall give 30 days' notice to the Participants of such
regular meetings. Additionally, a Participant may call a special meeting upon
60 day's notice to the Operator and the other Participants. In case of
emergency, reasonable notice of a special meeting shall suffice. There shall be
a quorum if at least one member representing each Participant is present. Each
notice of a meeting shall include an itemized agenda prepared by the Operator in
the case of a regular meeting, or by the Participant calling the meeting in the
case of a special meeting, but any matters may be considered with the consent of
all Participants. The Operator shall prepare minutes of all meetings and shall
distribute copies of such minutes to the Participants within 15 days after the
meeting. The minutes, when signed by all Participants, shall be the official
record of the decisions made by the Management Committee and shall be binding on
the Operator and the Participants. If personnel employed in Operations are
required to attend a Management Committee meeting, reasonable costs incurred in
connection with such attendance shall be a Venture cost. All other costs shall
be paid by the Participants individually.
7.4 ACTION WITHOUT MEETING. In lieu of meetings, the Management Committee
may hold telephone conferences, so long as all decisions are immediately
confirmed in writing by the Participants.
7.5 MATTERS REQUIRING APPROVAL. Except as otherwise delegated to the
Operator in Section 8.2, the Management Committee shall have exclusive authority
to determine all management matters related to this Agreement.
ARTICLE VIII
OPERATOR
8.1 APPOINTMENT. The Participants hereby appoint Stirrup Creek as the
Operator with overall management responsibility for Operations. Stirrup Creek
hereby agrees to serve as Operator until it resigns as provided in Section 8.4.
8.2 POWERS AND DUTIES OF OPERATOR. Subject to the terms and provisions of
this Agreement, the Operator shall have the following powers and duties which
shall be discharged in accordance with adopted Programs and Budgets:
a) The Operator shall manage, direct and control Operations.
b) The Operator shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out adopted
Programs, and shall promptly advise the Management Committee if it
lacks sufficient funds to carry out its
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responsibilities under this Agreement.
c) The Operator shall:
i) purchase or otherwise acquire all material, supplies, equipment,
water, utility and transportation services required for
Operations, such purchases and acquisitions to be made on the
best terms available, taking into account all of the
circumstances;
ii) obtain such customary warranties and guarantees as are available
in connection with such purchases and acquisitions; and
iii) keep the Assets free and clear of all liens and encumbrances,
except for those existing at the time of, or created concurrent
with, the acquisition of such Assets, or mechanic's or
materialmen's liens which shall be released or discharged in a
diligent manner, or liens and encumbrances specifically approved
by the Management Committee.
d) The Operator shall conduct such title examinations and cure such title
defects as may be advisable in the reasonable judgment of the
Operator.
e) The Operator shall:
i) make or arrange for all payments required by leases, licenses,
permits, contracts and other agreements related to the Assets;
ii) pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a Participant's
sales revenue or net income.
If authorized by the Management Committee, the Operator shall
have the right to contest in the courts or otherwise, the
validity or amount of any taxes, assessments or charges if the
Operator deems them to be unlawful, unjust, unequal or excessive,
or to undertake such other steps or proceedings as the Operator
may deem reasonably necessary to secure a cancellation,
reduction, readjustment or equalization thereof before the
Operator shall be required to pay them, but in no event shall the
Operator permit or allow title to the Assets to be lost as the
result of the nonpayment of any taxes, assessments or like
charges;
iii) shall do all other acts reasonably necessary to maintain the
Assets.
f) The Operator shall:
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i) apply for all necessary permits, licenses and approvals;
ii) comply with applicable federal, provincial and local laws and
regulations;
iii) notify promptly the Management Committee of any allegations of
substantial violation thereof; and
iv) prepare and file all reports or notices required for Operations.
The Operator shall not be in breach of this provision if a
violation has occurred in spite of the Operator's good faith
efforts to comply, and the Operator has timely cured or
disposed of such violation through performance, or payment
of fines and penalties.
g) The Operator shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings arising out of Operations. A Participant
shall have the right to participate, at its own expense, in such
litigation or administrative proceedings. The Management Committee
shall approve in advance any settlement involving payments,
commitments or obligations in excess of $10,000.00 in cash or value.
h) The Operator may dispose of Assets, whether by abandonment, surrender
or Transfer in the ordinary course of business, except that Property
may be abandoned or surrendered only as provided in Article XIV.
However, without prior authorization from the Management Committee,
the Operator shall not:
i) dispose of Assets in any one transaction having a value in excess
of $50,000.00;
ii) enter into any sales contracts or commitments for Products,
except as permitted in Section 11.2;
iii) begin a liquidation of the Venture; or
iv) dispose of all or a substantial part of the Assets necessary to
achieve the purposes of the Venture.
i) The Operator shall have the right to carry out its responsibilities
hereunder through a corporate representative, agents, Affiliates or
independent contractors.
j) The Operator shall perform or cause to be performed and record or
cause to be recorded during the term of this Agreement all assessment
and other work required to maintain in good standing mineral claims
and other mineral rights included within
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the Property, unless prevented from so doing by an action or the
inaction of the Management Committee.
k) If authorized by the Management Committee, the Operator may stake or
restake or abandon any mineral claims or other interests comprising
the Property, apply for mining leases or other forms of mineral tenure
for any mineral claims or other interests comprising the Property and
generally deal with the claims and other interests comprising the
Property as may be considered prudent.
l) The Operator shall keep and maintain all required accounting and
financial records pursuant to the Accounting Procedure and in
accordance with customary cost accounting practices in the mining
industry.
m) The Operator shall keep the Management Committee advised of all
Operations by submitting in writing to the Management Committee:
i) monthly progress reports which include statements of expenditures
and comparisons of such expenditures to the adopted Budget;
ii) periodic summaries of data acquired;
iii) copies of reports concerning Operations;
iv) a detailed final report within 90 days after completion of each
Program and Budget, which shall include comparisons between the
objectives and results of Programs; and
v) such other reports as the Management Committee may reasonably
request.
At all reasonable times the Operator shall provide the Management
Committee or the representative of any Participant, upon the request
of any member of the Management Committee, access to, and the right to
inspect and copy all maps, drill logs, core tests, reports, surveys,
assays, analyses, production reports, operations, technical,
accounting and financial records, and other information acquired in
Operations. In addition, the Operator shall allow any Participant, at
its sole risk and expense, and subject to reasonable safety
regulations, to inspect the Assets and Operations at all reasonable
times, so long as the inspecting Participant does not unreasonably
interfere with Operations.
n) The Operator shall undertake all other activities reasonably necessary
to fulfil the foregoing.
The Operator shall not be in default of any duty under this Section 8.2 if its
failure to perform results
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from the failure of a Participant to perform acts or to contribute amounts
required of it by this Agreement.
8.3 STANDARD OF CARE. The Operator shall conduct all Operations in a
good, workmanlike and efficient manner, in accordance with sound mining and
other applicable industry standards and practices, and in accordance with the
terms and provisions of leases, licenses, permits, contracts and other
agreements pertaining to Assets. The Operator shall not be liable to any
Participant for any act or omission resulting in damage or loss except to the
extent caused by or attributable to the Operator's wilful misconduct or gross
negligence.
8.4 RESIGNATION; DEEMED OFFER TO RESIGN. The Operator may resign upon
60 days prior notice to the Management Committee, in which case the Management
Committee shall appoint an Operator. If any of the following shall occur, the
Operator shall be deemed to have offered to resign, which offer may be accepted
by the Management Committee, if at all, within 60 days following such deemed
offer:
a) The Operator fails to perform a material obligation imposed upon it
under this Agreement and such failure continues for a period of
30 days after notice from the Management Committee demanding
performance; or
b) A receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for a substantial part of its assets is appointed and
such appointment is neither made ineffective nor discharged within
60 days after the making thereof, or such appointment is consented to,
requested by, or acquiesced in by the Operator; or
c) The Operator commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or
consents to the entry of an order for relief in an involuntary case
under any such law or to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
other similar official of any substantial part of its assets; or makes
a general assignment for the benefit of creditors; or fails generally
to pay its debts as such debts become due; or takes corporate or other
action in furtherance of any of the foregoing; or
d) Entry is made against the Operator of a judgment decree or order for
relief affecting a substantial part of its assets by a court of
competent jurisdiction in an involuntary case commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect.
8.5 PAYMENTS TO OPERATOR. The Operator shall be compensated for its
services and reimbursed for its costs hereunder in accordance with the
Accounting Procedure.
8.6 TRANSACTIONS WITH AFFILIATES. If the Operator engages Affiliates to
provide services
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hereunder, it shall do so on terms no less favourable than would be the case
with unrelated persons in arm's-length transactions.
8.7 ACTIVITIES DURING DEADLOCK. If the Management Committee for any
reason fails to adopt a Program and Budget, subject to the contrary direction of
the Management Committee and to the receipt of necessary funds, the Operator
shall continue Operations at levels comparable with the last adopted Program and
Budget. For purposes of determining the required contributions of the
Participants and their respective Participating Interests, the last adopted
Program and Budget shall be deemed extended.
ARTICLE IX
PROGRAMS AND BUDGETS
9.1 INITIAL PROGRAM AND BUDGET. The initial Program and Budget, which is
deemed to have been adopted by the Participants, shall not exceed $250,000 and
shall be in the sole discretion of Stirrup Creek. The following provisions of
this Article IX shall not apply to the first $250,000 in expenditures, required
to be made solely by Stirrup Creek pursuant to subsection 3.1(c), which
expenditures shall be in the sole discretion of Stirrup Creek.
9.2 OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS. All Operations shall be
conducted, expenses shall be incurred, and Assets shall be acquired only
pursuant to approved Programs and Budgets, except as otherwise provided in
Section 9.8 and Article XIII, and except in the case of Forefront's reduction to
a Carried Interest as provided in Section 6.4, in which event the conduct of
Operations shall be in the sole discretion of Stirrup Creek.
9.3 PRESENTATION OF PROGRAMS AND BUDGETS. Proposed Programs and Budgets
shall be prepared by the Operator for a period of one year or any longer
period. Each adopted Program and Budget, regardless of length, shall be
reviewed at least once a year at the annual meeting of the Management
Committee. During the period encompassed by any Program and Budget, and at
least three months prior to its expiration, a proposed Program and Budget for
the succeeding period shall be prepared by the Operator and submitted to the
Participants.
9.4 REVIEW AND APPROVAL OF PROPOSED PROGRAMS AND BUDGETS. Within 45 days
after submission of a proposed Program and Budget, each Participant shall submit
to the Management Committee:
a) Notice that the Participant approves the proposed Program and Budget;
or
b) Proposed modifications of the proposed Program and Budget; or
c) Notice that the Participant rejects the proposed Program and Budget.
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If a Participant fails to give any of the foregoing responses within the
allotted time, the failure shall be deemed to be an approval by the Participant
of the Operator's proposed Program and Budget. If a Participant makes a timely
submission to the Management Committee pursuant to Section 9.4(b) or (c), then
the Management Committee shall seek to develop a Program and Budget acceptable
to the Participants.
9.5 ELECTION TO PARTICIPATE. By notice to the Management Committee within
20 days after the final vote adopting a Program and Budget, a Participant may
elect to contribute to such Program and Budget in some lesser amount than its
respective Participating Interest, or not at all, in which cases its
Participating Interest shall be recalculated as provided in Article VI. If a
Participant fails to so notify the Management Committee, the Participant shall
be deemed to have elected to contribute to such Program and Budget in proportion
to its respective Participating Interest as of the beginning of the period
covered by the Program and Budget.
9.6 DEADLOCK ON PROPOSED PROGRAMS AND BUDGETS. If the Participants,
acting through the Management Committee, fail to approve a Program and Budget by
the beginning of the period to which the proposed Program and Budget applies,
the provisions of Sections 8.7 and 12.2 shall apply.
9.7 BUDGET OVERRUNS; PROGRAM CHANGES. The Operator shall immediately
notify the Management Committee of any material departure from an adopted
Program and Budget. The Operator shall not exceed an adopted Budget by more
than 10% unless directly caused by an emergency or unexpected expenditure made
pursuant to Section 9.8 or unless otherwise authorized by the Management
Committee. Budget overruns shall be borne by the Participants in proportion to
their respective Participating Interests as of the time the overrun occurs.
9.8 EMERGENCY OR UNEXPECTED EXPENDITURES. In case of emergency, the
Operator may take any reasonable action it deems necessary to protect life,
limb or property, to protect the Assets or to comply with law or government
regulation. The Operator may also make reasonable expenditures for
unexpected events which are beyond its reasonable control and which do not
result from a breach by it of its standard of care. The Operator shall
promptly notify the Participants of the emergency or unexpected expenditure,
and the Operator shall be reimbursed for all resulting costs by the
Participants in proportion to their respective Participating Interests at the
time the emergency or unexpected expenditures are incurred.
ARTICLE X
ACCOUNTS AND SETTLEMENTS
10.1 MONTHLY STATEMENTS. The Operator shall promptly submit to the
Management Committee monthly statements of account reflecting in reasonable
detail the charges and credits to the Joint Account during the preceding month.
10.2 CASH CALLS. On the basis of the adopted Program and Budget, the
Operator shall
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submit to each Participant prior to commencing the Program, a
billing for estimated cash requirements for the Program. Within 10 days after
receipt of each billing, each Participant shall advance to the Operator its
proportionate share of the estimated amount. Time is of the essence of payment
of such billings. The Operator shall at all times maintain a cash balance
sufficient to meet disbursement obligations for up to 21 days. All funds in
excess of immediate cash requirements shall be invested in interest-bearing
accounts with the Royal Bank of Canada, for the benefit of the Joint Account.
10.3 FAILURE TO MEET CASH CALLS. A Participant that fails to meet cash
calls in the amount and at the times specified in Section 10.2 shall be in
default, and shall be deemed to have elected to reduce its Participating
Interest pursuant to Section 6.3.
10.4 AUDITS. Upon request made by any Participant within 24 months
following the end of any calendar year (or, if the Management Committee has
adopted an accounting period other than the calendar year, within 24 months
after the end of such period), the Operator shall order an audit of the
accounting and financial records for such calendar year (or other accounting
period). All written exceptions to and claims upon the Operator for
discrepancies disclosed by such audit shall be made not more than 3 months after
receipt of the audit report. Failure to make any such exception or claim within
the 3 month period shall mean the audit is correct and binding upon the
Participants. The audits shall be conducted by a firm of Chartered Accountants
selected by the Operator, unless otherwise agreed by the Management Committee.
ARTICLE XI
DISPOSITION OF PRODUCTION
11.1 TAKING IN KIND. Each Participant shall take in kind or separately
dispose of its share of all Products in accordance with its Participating
Interest. Any extra expenditure incurred in the taking in kind or separate
disposition by any Participant of its proportionate share of Products shall be
borne by such Participant. Nothing in this Agreement shall be construed as
providing, directly or indirectly, for any joint or cooperative marketing or
selling of Products or permitting the processing of Products of any parties
other than the Participants at any processing facilities constructed by the
Participants pursuant to this Agreement. The Operator shall give the
Participants notice at least 10 days in advance of the delivery date upon which
their respective shares of Products will be available.
11.2 FAILURE OF PARTICIPANT TO TAKE IN KIND. If a Participant fails to
take in kind, the Operator shall have the right, but not the obligation, for a
period of time consistent with the minimum needs of the industry, but not to
exceed one year, to purchase the Participant's share for its own account or to
sell such share as agent for the Participant to the other Participants or any
third party at not less than the prevailing market price in the area. Subject
to the terms of any such contracts of sale then outstanding, during any period
that the Operator is purchasing or selling a Participant's share of production,
the Participant may elect by notice to the Operator to take in kind.
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The Operator shall be entitled to deduct from proceeds of any sale by it for
the account of a Participant reasonable expenses incurred in such a sale.
ARTICLE XII
WITHDRAWAL AND TERMINATION
12.1 TERMINATION BY EXPIRATION OR AGREEMENT. This Agreement shall
terminate as expressly provided in this Agreement, unless earlier terminated by
written agreement.
12.2 TERMINATION BY DEADLOCK. If the Management Committee fails to adopt a
Program and Budget for 12 months after the expiration of the latest adopted
Program and Budget, any Participant may elect to terminate this Agreement by
giving notice of termination to the other Participants.
12.3 WITHDRAWAL. A Participant may elect to withdraw as a Participant from
this Agreement by giving notice to the other Participants of the effective date
of withdrawal, which shall be the later of the end of the then current Program
and Budget or at least 30 days after the date of the notice. Upon such
withdrawal, this Agreement shall terminate, and the withdrawing Participant
shall be deemed to have transferred to the remaining Participants, without cost
and free and clear of royalties, liens or other encumbrances arising by, through
or under such withdrawing Participant, except those exceptions to title
described in Part 1 of Exhibit A and those to which all Participants have given
their written consent after the date of this Agreement, all of its Participating
Interest in the Assets and in this Agreement. Any withdrawal under this
Section 12.3 shall not relieve the withdrawing Participant of its share of
liabilities to third persons (whether such accrues before or after such
withdrawal) arising out of Operations conducted prior to such withdrawal. For
purposes of this Section 12.3, the withdrawing Participant's share of such
liabilities shall be equal to its Participating Interest at the time such
liability was incurred.
12.4 CONTINUING OBLIGATIONS. On termination of this Agreement under
Section 12.1 or 12.2, the Participants shall remain liable for continuing
obligations hereunder until final settlement of all accounts and for any
liability, whether it accrues before or after termination, if it arises out of
Operations during the term of the Agreement.
12.5 DISPOSITION OF ASSETS ON TERMINATION. Promptly after termination
under Section 12.1 or 12.2, the Operator shall take all action necessary to wind
up the activities of the Venture, and all costs and expenses incurred in
connection with the termination of the Venture shall be expenses chargeable to
the Venture. The Assets shall first be paid, applied, or distributed in
satisfaction of all liabilities of the Venture to third parties and then to
satisfy any debts, obligations, or liabilities owed to the Participants. Before
distributing any funds or Assets to Participants, the Operator shall have the
right to segregate amounts which, in the Operator's reasonable judgment, are
necessary to discharge continuing obligations or to purchase for the account of
the Participants, bonds or other securities for the performance of such
obligations. The foregoing shall not be construed to include
<PAGE>
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the repayment of any Participant's capital contributions. Thereafter, any
remaining cash and all other Assets shall be distributed (in undivided
interests unless otherwise agreed) to the Participants, in proportion to
their respective Participating Interests, subject to any dilution, reduction,
or termination of such Participating Interests as may have occurred pursuant
to the terms of this Agreement. No Participant shall receive a distribution
of any interest in Products or proceeds from the sale thereof if such
Participant's Participating Interest therein has been terminated pursuant to
this Agreement.
12.6 NON-COMPETE COVENANTS. A Participant that withdraws pursuant to the
terms of this Agreement shall not directly or indirectly acquire any interest in
property within the Area of Interest for 12 months after the effective date of
withdrawal. If a withdrawing Participants, or the Affiliate of a withdrawing
Participant, breaches this Section 12.6, such Participant or Affiliate shall be
obligated to offer to convey to the non-withdrawing Participants, without cost,
any such property or interest so acquired. Such offer shall be made in writing
and can be accepted by the non-withdrawing Participants at any time within
45 days after it is received by such non-withdrawing Participants.
12.7 RIGHT TO DATA AFTER TERMINATION. After termination of this Agreement
pursuant to Section 12.1 or 12.2, each Participant shall be entitled to copies
of all information acquired hereunder before the effective date of termination
not previously furnished to it, but a terminating or withdrawing Participant
shall not be entitled to any such copies after any other termination or any
withdrawal.
12.8 CONTINUING AUTHORITY. On termination of this Agreement, the Operator
shall have the power and authority, subject to control of the Management
Committee, if any, to do all things on behalf of the Participants which are
reasonably necessary or convenient to:
a) wind up Operations; and
b) complete any transaction and satisfy any obligation, unfinished or
unsatisfied, at the time of such termination or withdrawal, if the
transaction or obligation arises out of Operations prior to such
termination or withdrawal. The Operator shall have the power and
authority to grant or receive extensions of time or change the method
of payment of an already existing liability or obligation, prosecute
and defend actions on behalf of the Participants and the Venture,
mortgage Assets, and take any other reasonable action in any matter
with respect to which the former Participants continue to have, or
appear or are alleged to have, a common interest or a common
liability.
ARTICLE XIII
ACQUISITIONS WITHIN AREA OF INTEREST
13.1 GENERAL. Any interest or right to acquire any interest in real
property within the Area
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of Interest acquired during the term of this Agreement by or on behalf of a
Participant or any Affiliate shall be subject to the terms and provisions of
this Agreement.
13.2 NOTICE TO NONACQUIRING PARTICIPANT. Within 10 days after the
acquisition of any interest or the right to acquire any interest in real
property wholly or partially within the Area of Interest (except real property
acquired by the Operator pursuant to a Program), the acquiring Participant shall
notify the other Participants of such acquisition. The acquiring Participant's
notice shall describe in detail the acquisition, the lands and minerals covered
thereby, the cost thereof, and the reasons why the acquiring Participant
believes that the acquisition of the interest is in the best interests of the
Participants under this Agreement. In addition to such notice, the acquiring
Participant shall make any and all information concerning the acquired interest
available for inspection by the other Participants.
13.3 OPTION EXERCISED. If, within 30 days after receiving the acquiring
Participant's notice, the other Participants notify the acquiring Participant of
their election to accept a proportionate interest in the acquired interest equal
to their Participating Interests, the acquiring Participant shall convey to the
other Participants such a proportionate undivided interest therein. The
acquired interest shall become a part of the Property for all purposes of this
Agreement immediately upon the notice of such other Participants election to
accept the proportionate interest therein. Such other Participants shall
promptly pay to the acquiring Participant their proportionate share of the
latter's actual out-of-pocket acquisition costs.
13.4 OPTION NOT EXERCISED. If the other Participants do not give such
notice within the 30 day period set forth in Section 13.3, they shall have no
interest in the acquired interest, and the acquired interest shall not be a part
of the Property or be subject to this Agreement.
ARTICLE XIV
ABANDONMENT AND SURRENDER OF PROPERTY
14.1 SURRENDER OR ABANDONMENT OF PROPERTY. The Management Committee may
authorize the Operator to surrender or abandon part or all of the Property. If
the Management Committee authorizes any such surrender or abandonment over the
objection of a Participant, the Participants that desire to abandon or surrender
shall assign to the objecting Participant, without cost to the surrendering
Participants, all of the surrendering Participants' interest in the Property to
be abandoned or surrendered, and the abandoned or surrendered property shall
cease to be part of the Property.
14.2 REACQUISITION. If any Property is abandoned or surrendered under the
provisions of this Article XIV, then, unless this Agreement is earlier
terminated, no Participant nor any Affiliate thereof shall acquire any interest
in such Property or a right to acquire such Property for a period of five years
following the date of such abandonment or surrender. If a Participant
reacquires any Property in violation of this Section 14.2, the other
Participants may elect by notice to the
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reacquiring Participant within 45 days after they have actual notice of such
reacquisition, to have such properties made subject to the terms of this
Agreement. In the event such an election is made, the reacquired properties
shall thereafter be treated as Property, and the costs of reacquisition shall
be borne solely by the reacquiring Participant and shall not be included for
purposes of calculating the Participants' respective Participating Interests.
ARTICLE XV
TRANSFER OF INTEREST
15.1 GENERAL. A Participant shall have the right to Transfer to any third
party all or any part of its interest in or to this Agreement, its Participating
Interest, or the Assets solely as provided in this Article XV.
15.2 LIMITATIONS ON FREE TRANSFERABILITY. The Transfer right of a
Participant in Section 15.1 shall be subject to the following terms and
conditions:
a) No transferee of all or any part of the interest of a Participant in
this Agreement, any Participating Interest, or the Assets shall have
the rights of a Participant unless and until the transferring
Participant has provided to the other Participants notice of the
Transfer, and except as provided in Sections 15.2(g) and 15.2(h), the
transferee, as of the effective date of the Transfer, has committed in
writing to be bound by this Agreement to the same extent as the
transferring Participant;
b) No transfer permitted by this Article XV shall relieve the
transferring Participant of its share of any liability, whether
accruing before or after such Transfer, which arises out of Operations
conducted prior to such Transfer;
c) The transferring Participant and the transferee shall bear all tax
consequences of the Transfer;
d) In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee shall act
and be treated as one Participant;
e) No Participant shall Transfer any interest in this Agreement or the
Assets except by Transfer of part or all of its Participating
Interest;
f) If the Transfer is the grant of a security interest by mortgage, deed
of trust, pledge, lien or other encumbrance of any interest in this
Agreement, any Participating Interest or the Assets to secure a loan
or other indebtedness of a Participant in a bona fide transaction,
such security interest shall be subordinate to the terms of this
Agreement and the rights and interests of the other Participants
hereunder. Upon any foreclosure or other enforcement of rights in the
security interest the acquiring third
<PAGE>
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party shall be deemed to have assumed the position of the encumbering
Participant with respect to this Agreement and the other Participants,
and it shall comply with and be bound by the terms and conditions of
this Agreement; and
g) If a sale or other commitment or disposition of Products or proceeds
from the sale of Products by a Participant upon distribution to it
pursuant to Article XI creates in a third party a security interest in
Products or proceeds therefrom prior to such distribution, such sale,
commitment or disposition shall be subject to the terms and conditions
of this Agreement.
15.3 PREEMPTIVE RIGHT. Except as otherwise provided in Section 15.4, if a
Participant desires to Transfer all or any part of its interest in this
Agreement, any Participating Interest, or the Assets, the other Participants
shall have a preemptive right to acquire such interests as provided in this
Section 15.3.
a) A Participant intending to Transfer all or any part of its interest in
this Agreement, any Participating Interest, or the Assets shall
promptly notify the other Participants of its intentions. The notice
shall state the price and all other pertinent terms and conditions of
the intended Transfer, and shall be accompanied by a copy of the offer
or contract for sale. Each of the other Participants shall have
45 days from the date such notice is delivered to notify the
transferring Participant whether it elects to acquire its
proportionate share, based on its Participating Interest, of the
offered interest at the same price and on the same terms and
conditions as set forth in the notice. If it does so elect, the
Transfer shall be consummated promptly after notice of such election
is delivered to the transferring Participant.
b) If either of the other Participants fails to so elect within the
period provided for in Section 15.3(a), the transferring Participant
shall have 90 days following the expiration of such period to
consummate the Transfer to a third party of that interest in respect
of which no election has occurred at a price and on terms no less
favourable than those offered by the transferring Participant to the
other Participants in the notice required in Section 15.3(a).
c) If the transferring Participant fails to consummate the Transfer to a
third party within the period set forth in Section 15.3(b), the
preemptive right of the other Participants in such offered interest
shall be deemed to be revived. Any subsequent proposal to Transfer
such interest shall be conducted in accordance with all of the
procedures set forth in this Section 15.3.
15.4 EXCEPTIONS TO PREEMPTIVE RIGHTS. Section 15.3 shall not apply to the
following:
a) Transfer by a Participant of all or any part of its interest in this
Agreement, any Participating Interest, or the Assets to an Affiliate;
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b) The corporate merger, consolidation, amalgamation or reorganization of
a Participant by which the surviving entity shall possess
substantially all of the stock, or all of the property rights and
interests, and be subject to substantially all of the liabilities and
obligations of that Participant;
c) The grant by a Participant of a security interest in any interest in
this Agreement, any Participating Interest, or the Assets by mortgage,
deed of trust, pledge, lien or other encumbrance; or
d) A sale or other commitment or disposition of Products or proceeds from
sale of Products by a Participant upon distribution to it pursuant to
Article XI.
ARTICLE XVI
CONFIDENTIALITY
16.1 GENERAL. The financial terms of this Agreement and all information
obtained in connection with the performance of this Agreement shall be the
exclusive property of the Participants and, except as provided in Section 16.2,
shall not be disclosed to any third party or the public without the prior
written consent of the other Participants, which consent shall not be
unreasonably withheld.
16.2 EXCEPTIONS. The consent required by Section 16.1 shall not apply to a
disclosure:
a) to an Affiliate, consultant, contractor or subcontractor that has a
bona fide need to be informed;
b) to any third party to whom the disclosing Participant contemplates a
Transfer of all or any part of its interest in or to this Agreement,
its Participating Interest, or the Assets; or
c) to a governmental agency or to the public which the disclosing
Participant believes in good faith is required by pertinent law or
regulation or the rules of any stock exchange.
In any case to which this Section 16.2 is applicable, the disclosing Participant
shall give notice to the other Participants concurrently with the making of such
disclosure. As to any disclosure pursuant to Section 16.2(a) or (b), only such
confidential information as such third party shall have a legitimate business
need to know shall be disclosed and such third party shall first agree in
writing to protect the confidential information from further disclosure to the
same extent as the Participants are obligated under this Article XVII.
16.3 DURATION OF CONFIDENTIALITY. The provisions of this Article XVII
shall apply during
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the term of this Agreement and for two years following termination of this
Agreement pursuant to Section 12.1 or 12.2, and shall continue to apply to
any Participant who withdraws, who is deemed to have withdrawn, or who
Transfers its Participating Interest, for two years following the date of
such occurrence.
ARTICLE XVII
GENERAL PROVISIONS
17.1 NOTICES. All notices, payments and other required communications
("Notices") to a Participant shall be in writing, and shall be addressed to the
Participant at its address set forth on the first page of this Agreement. All
Notices shall be given:
a) by personal delivery to the Participant; or
b) by electronic communication, with a confirmation sent by registered or
certified mail return receipt requested; or
c) by registered or certified mail return receipt requested.
All Notices shall be effective and shall be deemed delivered
a) if by personal delivery on the date of delivery if delivered during
normal business hours, and, if not delivered during normal business
hours, on the next business day following delivery,
b) if by electronic communication on the next business day following
receipt of the electronic communication; and
c) if solely by mail on the next business day after actual receipt.
A Participant may change its address by Notice to the other Participants.
17.2 WAIVER. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Participant's right thereafter to enforce any
provision or exercise any right.
17.3 MODIFICATION. No modification of this Agreement shall be valid unless
made in writing and duly executed by the Participants.
17.4 FORCE MAJEURE. Except for the obligation to make payments when due
hereunder, the obligations of a Participant shall be suspended to the extent and
for the period that performance is
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prevented by any cause, whether foreseeable or unforeseeable, beyond its
reasonable control, including, without limitation, labour disputes (however
arising and whether or not employee demands are reasonable or within the
power of the Participant to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit or other
authorization; curtailment or suspension of activities to remedy or avoid an
actual or alleged, present or prospective violation of federal, provincial or
local environmental standards; acts of war or conditions arising out of or
attributable to war, whether declared or undeclared; riot, civil strife,
insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink
holes, drought or other adverse weather condition; delay or failure by
suppliers or transporters of materials, parts, supplies, services or
equipment or by contractors' or subcontractors' shortage of, or inability to
obtain, labour, transportation, materials, machinery, equipment, supplies,
utilities or services; accidents; breakdown of equipment, machinery or
facilities; or any other cause whether similar or dissimilar to the
foregoing. The affected Participant shall promptly give notice to the other
Participant of the suspension of performance, stating therein the nature of
the suspension, the reasons therefor, and the expected duration thereof. The
affected Participant shall resume performance as soon as reasonably possible.
During the period of suspension the obligations of the Participants to
advance funds pursuant to Section 10.2 shall be reduced to levels consistent
with Operations.
17.5 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of British Columbia.
17.6 RULE AGAINST PERPETUITIES. If any right, power or interest of any
party in any property under this Agreement would violate the rule against
perpetuities, then such right, power or interest shall terminate at the
expiration of 20 years after the death of the last survivor of all the lineal
descendants of Her Majesty, Queen Elizabeth II of England, living on the date of
this Agreement.
17.7 FURTHER ASSURANCES. Each of the Participants agrees to take from time
to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
17.8 SURVIVAL OF TERMS AND CONDITIONS. The following Sections shall
survive the termination of this Agreement to the full extent necessary for their
enforcement and the protection of the Participant in whose favour they
run: Sections 2.1, 2.2, 2.3, 4.2, 6.5, 10.3, 12.3, 12.4, 12.5, 12.6, 12.7 and
12.8.
17.9 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement contains the
entire understanding of the Participants and supersedes all prior agreements and
understandings between the Participants relating to the subject matter hereof.
This Agreement shall be binding upon and enure to the benefit of the respective
successors and permitted assigns of the Participants. In the event of any
conflict between this Agreement and any Exhibit attached hereto, the terms of
this Agreement shall be controlling.
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17.10 MEMORANDUM. At the request of any Participant, a Memorandum or
short form of this Agreement, as appropriate, which shall not disclose financial
information contained herein, shall be prepared and recorded by the Operator.
This Agreement shall not be recorded.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
THE COMMON SEAL of FOREFRONT
VENTURES LTD. was hereunto
affixed in the presence of: c/s
- - ----------------------------
- - ----------------------------
THE COMMON SEAL of STIRRUP CREEK
GOLD LTD. was hereunto affixed in
the presence of: c/s
- - ----------------------------
- - ----------------------------
<PAGE>
EXHIBIT A
PART 1
DESCRIPTION OF PROPERTY
14,420 hectares of mining claims located on the island of
Kalimantan, Indonesia, more particularly described in the
following documentation.
PART 2
AREA OF INTEREST
The Area of Interest shall comprise all interests in real
property located within three kilometres of the boundaries
of the Property as they exist on the date of execution of
this Agreement.
<PAGE>
EXHIBIT B
ACCOUNTING PROCEDURE
The financial and accounting procedures to be followed by the Operator and the
Participants under the Agreement are set forth below. References in this
Accounting Procedure to Sections and Articles are to those located in this
Accounting Procedure unless it is expressly stated that they are references to
the Venture Agreement. All capitalized words and terms used herein and not
otherwise defined herein have the same meaning as in the Agreement to which this
Exhibit B is attached.
ARTICLE I
GENERAL PROVISIONS
1.1 GENERAL ACCOUNTING RECORDS. The Operator shall maintain detailed and
comprehensive cost accounting records in accordance with this Accounting
Procedure, including general ledgers, supporting and subsidiary journals,
invoices, cheques and other customary documentation, sufficient to provide a
record of revenues and expenditures and periodic statements of financial
position and the results of operations for managerial, tax, regulatory or other
financial reporting purposes. Such records shall be retained for the duration
of the period allowed the Participants for audit or the period necessary to
comply with tax or other regulatory requirements. The records shall reflect all
obligations, advances and credits of the Participants.
1.2 BANK ACCOUNTS. The Operator shall maintain one or more separate bank
accounts for the payment of all expenses and the deposit of all cash receipts
for the Venture.
1.3 STATEMENTS AND BILLINGS. The Operator shall prepare statements and
bill the Participants as provided in Article X of the Agreement. Payment of any
such billings by any Participant, including the Operator, shall not prejudice
such Participant's right to protest or question the correctness thereof for a
period not to exceed twenty-four (24) months following the calendar year during
which such billings were received by the Participant. All written exceptions to
and claims upon the Operator for incorrect charges, billings or statements shall
be made upon the Operator within such twenty-four (24) month period. The time
period permitted for adjustments hereunder shall not apply to adjustments
resulting from periodic inventories as provided in Article V.
ARTICLE II
CHARGES TO JOINT ACCOUNT
Subject to the limitations hereinafter set forth, the Operator shall charge the
Joint Account with the following:
2.1 RENTALS, ROYALTIES AND OTHER PAYMENTS. All property acquisition and
holding costs, including filing fees, license fees, costs of permits and
assessment work, delay rentals, productionroyalties, including any required
advances, and all other payments made by the Operator
<PAGE>
which are necessary to acquire or maintain title to the Assets.
2.2 LABOUR AND EMPLOYEE BENEFITS.
a) Salaries and wages of the Operator's employees directly engaged in
Operations, including salaries or wages of employees who are
temporarily assigned to and directly employed by same;
b) The Operator's cost of holiday, vacation, sickness and disability
benefits, and other customary allowances applicable to the salaries
and wages chargeable under Sections 2.2(a) and 2.12. Such costs may
be charged on a "when and as paid basis" or by "percentage assessment"
on the amount of salaries and wages. If percentage assessment is
used, the rate shall be applied to wages or salaries excluding
overtime and bonuses. Such rate shall be based on the Operator's cost
experience and it shall be periodically adjusted at least annually to
ensure that the total of such charges does not exceed the actual cost
thereof to the Operator.
c) The Operator's actual cost of established plans for employees' group
life insurance, hospitalization, pension, retirement, stock purchase,
thrift, bonus (except production or incentive bonus plans under a
union contract based on actual rates of production, cost savings and
other production factors, and similar non-union bonus plans customary
in the industry or necessary to attract competent employees, which
bonus payments shall be considered salaries and wages under
Sections 2.2(a) or 2.12; rather than employees' benefit plans) and
other benefit plans of a like nature applicable to salaries and wages
chargeable under Sections 2.2(a) or 2.12, provided that the plans are
limited to the extent feasible to those customary in the industry;
d) Cost of assessments imposed by governmental authority which are
applicable to salaries and wages chargeable under Sections 2.2(a) and
2.12, including all penalties except those resulting from the wilful
misconduct or gross negligence of the Operator.
2.3 MATERIALS, EQUIPMENT AND SUPPLIES. The cost of materials, equipment
and supplies (herein called "Material") purchased from unaffiliated third
parties or furnished by the Operator or any Participant as provided in
Article III. The Operator shall purchase or furnish only so much Material as
may be required for immediate use in efficient and economical Operations. The
Operator shall also maintain inventory levels of Material at reasonable levels
to avoid unnecessary accumulation of surplus stock.
2.4 EQUIPMENT AND FACILITIES FURNISHED BY OPERATOR. The cost of
machinery, equipment and facilities owned by the Operator and used in Operations
or used to provide support or utility services to Operations charged at rates
commensurate with the actual costs of ownership and operation of such machinery,
equipment and facilities. Such rates shall include costs of maintenance,
repairs, other operating expenses, insurance, taxes, depreciation and interest
at a rate not to exceed fifteen percent (15%) per annum. Such rates shall not
exceed the average commercial
<PAGE>
rates currently prevailing in the vicinity of the Operations.
2.5 TRANSPORTATION. Reasonable transportation costs incurred in
connection with the transportation of employees and material necessary for the
Operations.
2.6 CONTRACT SERVICES AND UTILITIES. The cost of contract services and
utilities procured from outside sources, other than services described in
Sections 2.9 and 2.13. If contract services are performed by the Operator or an
Affiliate thereof, the cost charged to the Joint Account shall not be greater
than that for which comparable services and utilities are available in the open
market within the vicinity of the Operations. The cost of professional
consultant services procured from outside sources in excess of $25,000 shall not
be charged to the Joint Account unless approved by the Management Committee.
2.7 INSURANCE PREMIUMS. Net premiums paid for insurance required to be
carried for Operations for the protection of the Participants.
2.8 DAMAGES AND LOSSES. All costs in excess of insurance proceeds
necessary to repair or replace damage or losses to any Assets resulting from any
cause other than the wilful misconduct or gross negligence of the Operator. The
Operator shall furnish the Management Committee with written notice of damages
or losses as soon as practicable after a report thereof has been received by the
Operator.
2.9 LEGAL AND REGULATORY EXPENSE. Except as otherwise provided in
Section 2.13, all legal and regulatory costs and expenses incurred in or
resulting from the Operations or necessary to protect or recover the Assets of
the Venture. All attorney's fees and other legal costs to handle, investigate
and settle litigation or claims, including the cost of legal services provided
by the Operator's legal staff, and amounts paid in settlement of such litigation
or claims in excess of $25,000 shall not be charged to the Joint Account unless
approved by the Management Committee.
2.10 AUDIT. Cost of annual audits under Section 10.4 of the Venture
Agreement if approved by all of the Participants.
2.11 TAXES. All taxes (except income taxes) of every kind and nature
assessed or levied upon or in connection with the Assets, the production of
Products or Operations, which have been paid by the Operator for the benefit of
the Participants. Each Participant is separately responsible for income taxes
which are attributable to its respective Participating Interest.
2.12 DISTRICT AND CAMP EXPENSE (FIELD SUPERVISION AND CAMP EXPENSES). A
PRO RATA portion of (i) the salaries and expenses of the Operator's
superintendent and other employees serving Operations whose time is not
allocated directly to such Operations, and (ii) the costs of maintaining and
operating an office (herein called "the Operator's Project Office") and any
necessary suboffice and (iii) all necessary camps, including housing facilities
for employees, used for Operations. The expense of those facilities, less any
revenue therefrom, shall include depreciation or a fair monthly rental in lieu
of depreciation of the investment. The total of such charges for all properties
served by the Operator's employees and facilities shall be apportioned to the
Joint Account on the basis of
<PAGE>
a ratio, the numerator of which is the direct labour costs of the Operations
and the denominator of which is the total direct labour costs incurred for
all activities served by the Operator.
2.13 ADMINISTRATIVE CHARGE.
a) Each month, the Operator shall charge the Joint Account a sum of 5% of
Allowable Costs for exploration, development, major construction and
mining, which shall be a liquidated amount to reimburse the Operator
for its home office overhead and general and administrative expenses
to conduct each said phase of the Operations, and which shall be in
lieu of any management fee.
b) The term "Allowable Costs" as used in this Section 2.13 for a
particular phase of Operations shall mean all charges to the Joint
Account excluding (i) the administrative charge referred to herein;
(ii) depreciation, depletion or amortization of tangible or intangible
assets; (iii) amounts charged in accordance with Sections 2.1 and
2.9. The Operator shall attribute such Allowable Costs to a
particular phase of Operations by applying the following guidelines:
i) The exploration phase shall cover those activities conducted to
ascertain the existence, location, extent or quantity of any
deposit of ore or mineral. Such phase shall cease when a
commercially recoverable reserve is determined to exist.
ii) The development phase shall cover those activities conducted to
access a commercially feasible ore body or to extend production
of an existing ore body, and to construct or install related
fixed assets.
iii) The major construction phase shall include all activities
involved in the construction of a mill, smelter or other ore
processing facilities.
iv) The mining phase shall include all other activities not otherwise
covered above, including activities conducted after mining
operations have ceased.
(c) The following is a representative list of items comprising the
Operator's principal business office expenses that are expressly
covered by the administrative charge provided in this Section 2.13:
i) Administrative supervision, which includes services rendered by
managers, department supervisors, officers and directors of the
Operator for Operations, except to the extent that such services
represent a direct charge to the Joint Account, as provided for
in Section 2.2;
ii) Accounting, data processing, personnel administration, billing
and record keeping in accordance with governmental regulations
and the provisions of the Venture Agreement, and preparation of
reports;
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iii) The services of tax counsel and tax administration employees for
all tax matters, including any protests, except any outside
professional fees which the Management Committee may approve as a
direct charge to the Joint Account;
iv) Routine legal services rendered by outside sources and the
Operator's legal staff not otherwise charged to the Joint Account
under Section 2.9; and
v) Rentals and other charges for office and records storage space,
telephone service, office equipment and supplies.
d) The Management Committee shall annually review the administration
charges and may, with the consent of the Operator, amend the
methodology or rates used to determine such charges if they are found
to be insufficient or excessive.
2.14 OTHER EXPENDITURES. Any reasonable direct expenditure, other than
expenditures which are covered by the foregoing provisions, incurred by the
Operator for the necessary and proper conduct of Operations.
ARTICLE III
BASIS OF CHARGES TO JOINT ACCOUNT
3.1 PURCHASES. Material purchased and services procured from third
parties shall be charged to the Joint Account by the Operator at invoiced cost,
including applicable transfer taxes, less all discounts taken. If any Material
is determined to be defective or is returned to a vendor for any other reason,
the Operator shall credit the Joint Account when an adjustment is received from
the vendor.
3.2 MATERIAL FURNISHED BY OR TRANSFERRED TO THE OPERATOR OR A
PARTICIPANT. Any Material furnished by the Operator or a Participant from its
stocks or transferred to the Operator or Participant shall be priced on the
following basis:
a) NEW MATERIAL: New Material transferred from the Operator or
Participant shall be priced F.O.B. the nearest reputable supply store
or railway receiving point, where like Material is available, at the
current replacement cost of the same kind of Material, exclusive of
any available cash discounts, at the time of the transfer (herein
called, "New Price").
b) USED MATERIAL.
1) Used Material in sound and serviceable condition and suitable for
reuse without reconditioning shall be priced as follows:
i) Used Material transferred by the Operator or Participant
shall be
<PAGE>
priced at seventy-five percent (75%) of the New Price;
ii) Used Material transferred to the Operator or Participant
shall be priced (i) at seventy-five percent (75%) of the New
Price if such Material was originally charged to the Joint
Account as new Material, or (ii) at sixty-five percent (65%)
of the New Price if such Material was originally charged to
the Joint Account as good used Material at seventy-five
percent (75%) of the New Price.
2) Other used Material which, after reconditioning will be further
serviceable for original function as good secondhand Material, or
which is serviceable for original function but not substantially
suitable for reconditioning shall be priced at fifty percent
(50%) of New Price. The cost of any reconditioning shall be
borne by the transferee.
3) All other Material, including junk, shall be priced at a value
commensurate with its use or at prevailing prices. Material no
longer suitable for its original purpose but usable for some
other purpose shall be priced on a basis comparable with items
normally used for such other purposes.
c) OBSOLETE MATERIAL. Any Material which is serviceable and usable for
its original function, but its condition is not equivalent to that
which would justify a price as provided above shall be priced by the
Management Committee. Such price shall be set at a level which will
result in a charge to the Joint Account equal to the value of the
service to be rendered by such Material.
3.3 PREMIUM PRICES. Whenever Material is not readily obtainable at
published or listed prices because of national emergencies, strikes or other
unusual circumstances over which the Operator has no control, the Operator may
charge the Joint Account for the required Material on the basis of the
Operator's direct cost and expenses incurred in procuring such Material and
making it suitable for use. The Operator shall give written notice of the
proposed charge to the Participants prior to the time when such charge is to be
billed, whereupon any Participant shall have the right, by notifying the
Operator within ten days of the delivery of the notice from the Operator, to
furnish at the usual receiving point all or part of its share of Material
suitable for use and acceptable to the Operator.
3.4 WARRANTY OF MATERIAL FURNISHED BY THE OPERATOR OR PARTICIPANTS.
Neither the Operator nor any Participant warrants the Material furnished beyond
any dealer's or manufacturer's warranty and no credits shall be made to the
Joint Account for defective Material until adjustments are received by the
Operator from the dealer, manufacturer or their respective agents.
<PAGE>
ARTICLE IV
DISPOSAL OF MATERIAL
4.1 DISPOSITION GENERALLY. The Operator shall have no obligation to
purchase a Participant's interest in Material. The Management Committee
shall determine the disposition of major items of surplus Material, provided
the Operator shall have the right to dispose of normal accumulations of junk
and scrap Material either by sale or by transfer to the Participants as
provided in Section 4.2.
4.2 DISTRIBUTION TO PARTICIPANTS. Any Material to be distributed to
the Participants shall be made in proportion to their respective
Participating Interests, and corresponding credits shall be made to the Joint
Account on the basis provided in Section 3.2.
4.3 SALES. Sales of Material to third parties shall be credited to the
Joint Account at the net amount received. Any damages or claims by the
Purchaser shall be charged back to the Joint Account if and when paid.
ARTICLE V
INVENTORIES
5.1 PERIODIC INVENTORIES, NOTICE AND REPRESENTATIONS. At reasonable
intervals, inventories shall be taken by the Operator, which shall include
all such Material as is ordinarily considered controllable by operators of
mining properties and the expense of conducting such periodic inventories
shall be charged to the Joint Account. The Operator shall give written
notice to the Participants of its intent to take any inventory at least
thirty (30) days before such inventory is scheduled to take place. A
Participant shall be deemed to have accepted the results of any inventory
taken by the Operator if the Participant fails to be represented at such
inventory.
5.2 RECONCILIATION AND ADJUSTMENT OF INVENTORIES. Reconciliation of
inventory with charges to the Joint Account shall be made, and a list of
overages and shortages shall be furnished to the Management Committee within
six (6) months after the inventory is taken. Inventory adjustments shall be
made by the Operator to the Joint Account for overages and shortages, but the
Operator shall be held accountable to the Venture only for shortages due to
lack of reasonable diligence.
<PAGE>
EXHIBIT C
NET PROCEEDS CALCULATION
1. INCOME AND EXPENSE. Net Proceeds shall be calculated by deducting
from the gross revenues realized (or deemed to be realized) from the sale (or
deemed sale) of Products, such costs and expenses attributable to
Exploration, Development, Mining and the marketing of Products as would be
deductible under generally accepted accounting principles and the practices
consistently applied as employed by the Operator, including without
limitation:
a) All costs and expenses of replacing, expanding, modifying,
altering or changing from time to time the Mining facilities.
Costs and expenses of improvements (such as haulage ways or mill
facilities) that are also used in connection with workings other
than the Property shall be charged to the Property only in the
proportion that their use in connection with the Property bears
to their total use.
b) AD VALOREM real property and unsecured personal property taxes,
and all taxes, other than income taxes, applicable to Mining of
the Property, including without limitation all provincial mining
taxes, sales taxes, severance taxes, royalties, license fees and
governmental levies of a similar nature.
c) Allowance for overhead in accordance with Section 2.13 of the
Accounting Procedure.
d) All expenses incurred relative to the sale of Products,
including an allowance for commissions at rates which are normal
and customary in the industry.
e) All amounts payable to the Operator of the Property during
Mining pursuant to any applicable operating or similar agreement
in force with respect thereto.
f) The actual cost of investment prior to beginning of Mining which
shall include all expenditures for Exploration and Development
of the Property incurred by the nonwithdrawing Participant
subsequent to the withdrawing Participant acquiring a Net
Proceeds interest.
g) Interest on monies borrowed or advanced for costs and expenses,
at an annual rate equal to two (2) percentage points above the
Prime Rate, but in no event in excess of the maximum permitted
by law.
h) An allowance for reasonable working capital and inventory.
i) Reasonably anticipated reclamation costs.
It is intended that the Operator and the nonwithdrawing Participants shall
recoup from net cash flow all of their contributions for Exploration,
Development, Mining, and marketing Products before any Net Proceeds are
distributed to any person holding a Net Proceeds interest. No deduction
shall be
<PAGE>
made for income taxes, depreciation, amortization or depletion. If in any
year after the beginning of Mining of the Property an operating loss relative
thereto is incurred, the amount thereof shall be considered as and be
included with outstanding costs and expenses and carried forward in
determining Net Proceeds for subsequent periods. If products are processed
by the Operator or a Participant, or are sold to an Affiliate of the Operator
or a Participant, then, for purposes of calculating Net Proceeds, such
Products shall be deemed conclusively to have been sold at a price equal to
fair market value to arm's length purchasers FOB the concentrator for the
Property, and Net Proceeds relative thereto shall be calculated without
reference to any profits or losses attributable to smelting or refining.
2. PAYMENT OF NET PROCEEDS. Payment of Net Proceeds shall commence in
the calendar year next following the calendar year in which Net Proceeds are
first realized, and shall be made 45 days following the end of each calendar
quarter during which Net Proceeds are realized, and shall be subject to
adjustment, if required, at the end of each calendar year. The recipient of
such Net Proceeds payments shall have the right to audit such payments within
the time and in the manner provided in Section 10.4 of the Agreement.
3. DEFINITIONS. All capitalized words and terms used herein have the
same meaning as in the Agreement to which this Exhibit C is attached.
<PAGE>
EXHIBIT NO. 3.10
JOINT VENTURE AGREEMENT
THIS AGREEMENT is made as of the 26th day of March, 1996
BETWEEN: INTERNATIONAL SILVER RIDGE RESOURCES INC.
Suite 200 - 580 Hornby Street
Vancouver, B.C.
V6C 3B6
("Silver Ridge") OF THE FIRST PART
AND: STIRRUP CREEK GOLD LTD.
Suite 310, 1959 152nd Street
Surrey, B.C.
V4A 9E3
("Stirrup Creek") OF THE SECOND PART
RECITALS
WHEREAS:
A. Silver Ridge currently owns an undivided 100% interest in the Property as
described in Exhibit A and defined in Section 1.21;
B. Stirrup Creek wishes to acquire an undivided 50% interest in the Property
and the parties wish to participate jointly in the exploration, evaluation,
development and mining of mineral resources within the Property or any other
properties acquired pursuant to the terms of this Agreement; and
C. Stirrup Creek has agreed to act as the Operator of the Venture as defined
hereafter.
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Accounting Procedure" means the procedures set forth in Exhibit B.
<PAGE>
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1.2 "Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with, a Participant. For purposes of the
preceding sentence, "control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract, voting trust or otherwise.
1.3 "Agreement" means this Joint Venture Agreement, including all
amendments and modifications thereof, and all schedules and exhibits, which are
incorporated herein by this reference.
1.4 "Area of Interest" means the area described in Part 2 of Exhibit A.
1.5 "Assets" means the Property, Products and all other real and personal
property, tangible and intangible, held for the benefit of the Participants
hereunder.
1.6 "Budget" means a detailed estimate of all costs to be incurred by the
Participants with respect to a Program and a schedule of cash advances to be
made by the Participants.
1.7 "Development" means all preparation for the removal and recovery of
Products, including the construction or installation of a mill or any other
improvements to be used for the mining, handling, milling, processing or other
benefication of Products.
1.8 "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits of
Products.
1.9 "Initial Contribution" means that contribution each Participant has
made or agrees to make pursuant to Section 5.1.
1.10 "Joint Account" means the account maintained in accordance with the
Accounting Procedure showing the charges and credits accruing to the
Participants.
1.11 "Management Committee" means the committee established under Article
VII.
1.12 "Mining" means the mining, extracting, producing, handling, milling or
other processing of Products.
1.13 "Net Proceeds" means certain amounts calculated as provided in Exhibit
C, which may be payable to a Participant under Section 6.4(b)(2).
1.14 "Operations" means the activities carried out under this Agreement.
1.15 "Operator" means the person or entity appointed under Article VIII to
manage Operations, or any successor Operator.
<PAGE>
-3-
1.16 "Participant" and "Participants" mean the persons or entities that
from time to time have Participating Interests.
1.17 "Participating Interest" means the percentage interest representing
the operating ownership interest of a Participant in Assets, and all other
rights and obligations arising under this Agreement, as such interest may from
time to time be adjusted hereunder. Participating Interests shall be calculated
to three decimal places and rounded to two (e.g., 1.519% rounded to 1.52%).
Decimals of .005 or more shall be rounded up to .01, decimals of less than .005
shall be rounded down. The initial Participating Interests of the Participants
are set forth in Section 6.1.
1.18 "Prime Rate" means the interest rate quoted as "Prime" by the Royal
Bank of Canada, at its Royal Centre Branch in Vancouver, British Columbia, as
said rate may change from day to day (which quoted rate may not be the lowest
rate at which the Bank loans funds).
1.19 "Products" means all ores, minerals and mineral resources produced
from the Property under this Agreement.
1.20 "Program" means a description in reasonable detail of Operations to be
conducted and objectives to be accomplished by the Operator for a year or any
longer period.
1.21 "Property" means those interests in real property described in Part I
of Exhibit A and all other interests in real property within the Area of
Interest which are acquired and held subject to this Agreement.
1.22 "Transfer" means sell, grant, assign, encumber, pledge or otherwise
commit or dispose of.
1.23 "Venture" means the business arrangement of the Participants under
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS
2.1 CAPACITY OF PARTICIPANTS. Each of the Participants represents and
warrants as follows:
a) that it is a corporation duly incorporated and in good standing in the
Province of British Columbia and that it is qualified to do business
and is in good standing in those jurisdictions where necessary in
order to carry out the purposes of this Agreement;
b) that it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and that all corporate and other
actions required to authorize it to enter into and perform this
Agreement have been properly taken;
<PAGE>
-4-
c) that it will not breach any other agreement or arrangement by entering
into or performing this Agreement;
d) that this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms; and
e) that it is resident in Canada within the meaning of Section 116 of the
INCOME TAX ACT (Canada).
2.2 DISCLOSURES. Each of the Participants represents and warrants that it
is unaware of any material facts or circumstances which have not been disclosed
in this Agreement, which should be disclosed to the other Participants in order
to prevent the representations in this Article II from being materially
misleading.
2.3 JOINT LOSS OF TITLE. Any failure or loss of title to the Assets, and
all costs of defending title, shall be charged to the Joint Account, except that
all costs and losses arising out of or resulting from breach of the
representations and warranties of a Participant shall be charged to that
Participant.
ARTICLE III
ACQUISITION, NAME AND TERM
3.1 ACQUISITION OF INTEREST. Concurrent with the execution of this
agreement, and by the execution hereof, Silver Ridge hereby sells and assigns to
Stirrup Creek an undivided 50% interest in and to the Property for the following
consideration:
a) the payment to Silver Ridge of the sum of $41,825.29, representing
100% of the expenditures incurred by Silver Ridge to date in
connection with the acquisition of the Property, to be made within
10 business days of the receipt of Vancouver Stock Exchange approval
referred to hereafter;
b) the issuance to Silver Ridge of 20,000 common shares of Stirrup Creek,
to be issued within 10 business days of the receipt of Vancouver Stock
Exchange approval referred to hereafter; and
c) the payment by Stirrup Creek of the first $150,000 towards a Program
or Programs carried out hereunder, to be incurred within two years of
the date of the receipt of Vancouver Stock Exchange approval referred
to hereafter.
Stirrup Creek's acquisition of an interest in the Property, in accordance with
the foregoing, shall be subject to the prior approval of the Vancouver Stock
Exchange. In the event that such approval is not obtained by June 28, 1996 or
in the event that Stirrup Creek shall fail to pay, issue or incur any
<PAGE>
-5-
of the consideration set forth in the foregoing within the prescribed times,
then notwithstanding Sections 5.1 and 6.1 this agreement shall terminate,
Stirrup Creek shall not have obtained an interest in the Property and the
parties shall have no further obligation to one another arising out of this
agreement. Notwithstanding subparagraph c) above, in the event that any
portion of the $150,000 referred to therein remains unexpended at the
expiration of the two year period referred to therein, Stirrup Creek may
nevertheless earn its interest in the Property by paying the unexpended
portion to Silver Ridge within 10 business days of the expiration of the two
year period. Silver Ridge acknowledges that the shares referred to in
subparagraph b) above will be subject to such hold period as may be imposed
by the SECURITIES ACT (British Columbia) or the policies of the Vancouver
Stock Exchange.
3.2 NAME. The name of the Venture shall be the Timur Joint Venture.
3.3 PURPOSES. This Agreement is entered into for the following purposes
and for no others, and shall serve as the exclusive means by which the
Participants, or any of them, accomplish such purposes:
a) to conduct Exploration within the Area of Interest;
b) to acquire additional properties within the Area of Interest;
c) to engage in Development and Mining Operations on the Property;
d) to engage in marketing Products, to the extent permitted by Article
XI; and
e) to perform any other activity necessary, appropriate, or incidental to
any of the foregoing.
3.4 LIMITATION. Unless the Participants otherwise agree in writing, the
Operations shall be limited to the purposes described in Section 3.3, and
nothing in this Agreement shall be construed to enlarge such purposes.
3.5 EFFECTIVE DATE AND TERM. The effective date of this Agreement shall
be the date first recited above. The term of this Agreement shall be for 20
years from the effective date and for so long thereafter as Products are
produced from the Property, unless the Agreement is earlier terminated as herein
provided.
ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS
4.1 NO PARTNERSHIP. Nothing contained in this Agreement shall be deemed
to constitute any Participant the partner of the other, nor, except as otherwise
herein expressly provided, to
<PAGE>
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constitute any Participant the agent or legal representative of the other,
nor to create any fiduciary relationship between them. It is not the
intention of the Participants to create, nor shall this Agreement be
construed to create, any mining, commercial or other partnership. No
Participant shall have any authority to act for or to assume any obligation
or responsibility on behalf of the other Participants, except as otherwise
expressly provided herein. The rights, duties, obligations and liabilities
of the Participants shall be several and not joint or collective. Each
Participant shall be responsible only for its obligations as herein set out
and shall be liable only for its share of the costs and expenses as provided
herein, it being the express purpose and intention of the Participants that
their ownership of Assets and the rights acquired hereunder shall be as
tenants in common. Each Participant shall indemnify, defend and hold
harmless the other Participants, its directors, officers, employees, agents
and attorneys from and against any and all losses, claims, damages and
liabilities arising out of any act or any assumption of liability by the
indemnifying Participant, or any of its directors, officers, agents and
attorneys done or undertaken, or apparently done or undertaken, on behalf of
the other Participants, except pursuant to the authority expressly granted
herein or as otherwise agreed in writing between the Participants.
4.2 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this
Agreement, each Participant shall have the right independently to engage in and
receive full benefits from business activities, whether or not competitive with
the Operations, without consulting the other. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any other
activity, venture, or operation of any Participant, and, except as otherwise
provided in Section 12.6, no Participant shall have any obligation to the other
with respect to any opportunity to acquire any property outside the Area of
Interest at any time, or within the Area of Interest after the termination of
this Agreement. Unless otherwise agreed in writing, no Participant shall have
any obligation to mill, beneficiate or otherwise treat any Products or any other
Participant's share of Products in any facility owned or controlled by such
Participant.
4.3 WAIVER OF RIGHT TO PARTITION. The Participants hereby waive and
release all rights of partition, or of sale in lieu thereof, or other division
of Assets, including any such rights provided by statute.
4.4 TRANSFER OR TERMINATION OF RIGHTS TO PROPERTY. Except as otherwise
provided in this Agreement, no Participant shall Transfer all or any part of its
interest in the Assets or this Agreement or otherwise permit or cause such
interests to terminate.
4.5 IMPLIED COVENANTS. There are no implied covenants contained in this
Agreement other than those of good faith and fair dealing.
ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS
5.1 PARTICIPANTS' INITIAL CONTRIBUTIONS. The initial Participating
Interests of the parties are
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as set forth in Section 6.1. Upon Stirrup Creek completing the expenditure
contemplated by subparagraph 3.1c) the agreed value of each party's Initial
Contribution will be $150,000 and the receipt by the Venture of the Initial
Contribution of each Participant shall thereupon be deemed to be acknowledged
by the parties hereto.
5.2 ADDITIONAL CASH CONTRIBUTIONS. Subject to the obligation of Stirrup
Creek to expend the first $150,000 as set forth in Section 3.1 and any election
permitted by Section 6.3, the Participants shall hereafter be obligated to
contribute funds to adopted Programs in proportion to their respective
Participating Interests.
ARTICLE VI
INTERESTS OF PARTICIPANTS
6.1 INITIAL PARTICIPATING INTERESTS. The Participants shall have the
following initial Participating Interests:
Silver Ridge - 50%
Stirrup Creek - 50%
6.2 CHANGES IN PARTICIPATING INTERESTS. A Participant's Participating
Interest shall be changed as follows:
a) as provided in Section 6.5; or
b) upon an election by a Participant pursuant to Section 6.3 to
contribute less to an adopted Program and Budget than the percentage
reflected by its Participating Interest; or
c) in the event of default by a Participant in making its agreed upon
contribution to an adopted Program and Budget, followed by an election
by the other Participant to invoke Section 6.4(b); or
d) transfer by a Participant of less than all its Participating Interest
in accordance with Article XV; or
e) acquisition of less than all of the Participating Interest of the
other Participant, however arising.
6.3 VOLUNTARY REDUCTION IN PARTICIPATION. A Participant may elect, as
provided in Section 9.5, to limit its contributions to an adopted Program and
Budget as follows:
a) to some lesser amount than its respective Participating Interest; or
<PAGE>
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b) not at all.
If a Participant elects to contribute to an adopted Program and Budget some
lesser amount than its respective Participating Interest, or not at all, the
Participating Interest of that Participant shall be recalculated at the time of
election by dividing: (i) the sum of (a) the agreed value of the Participant's
Initial Contribution under Section 5.1, (b) the total of all of the
Participant's contributions under Section 5.3, and (c) the amount, if any, the
Participant elects to contribute to the adopted Program and Budget; by (ii) the
sum of (a), (b) and (c) above for all Participants; and then multiplying the
result by one hundred. The combined Participating Interests of the other
Participants shall thereupon become the difference between 100% and the
recalculated Participating Interest.
6.4 DEFAULT IN MAKING CONTRIBUTIONS.
a) If a Participant defaults in making a contribution or cash call
required by an approved Program and Budget, the non-defaulting
Participant may advance the defaulted contribution on behalf of the
defaulting Participant and treat the same, together with any accrued
interest, as a demand loan bearing interest from the date of the
advance at the rate provided in Section 10.3. The failure to repay
said loan upon demand shall be a default. Each Participant hereby
grants to the other a lien upon its interest in the Property and a
security interest in its rights under this Agreement and in its
Participating Interest in other Assets, and the proceeds therefrom, to
secure any loan made hereunder, including interest thereon, reasonable
attorneys fees and all other reasonable costs and expenses incurred in
recovering the loan with interest and in enforcing such lien or
security interest, or both. A non-defaulting Participant may elect
the applicable remedy under this Section 6.4(a) or under 6.4(b), or,
to the extent a Participant has a lien or security interest under
applicable law, it shall be entitled to its rights and remedies at law
and in equity. All such remedies shall be cumulative. The election
of one or more remedies shall not waive the election of any other
remedies. Each Participant hereby irrevocably appoints the others its
attorney-in-fact to execute, file and record all instruments necessary
to perfect or effectuate the provisions hereof.
b) The Participants acknowledge that if a Participant defaults in making
a contribution, or a cash call, or in repaying a loan, as required
hereunder, it will be difficult to measure the damages resulting from
such default. In the event of such default, as reasonable liquidated
damages, the non-defaulting Participants may, with respect to any such
default not cured within 30 days after notice to the defaulting
Participant of such default, elect one of the following remedies by
giving notice to the defaulting Participant:
i) For a default relating exclusively to an Exploration Program and
Budget, the non-defaulting Participant may elect to have the
defaulting Participant's Participating Interest permanently
reduced as provided in Section 6.3 and
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further reduced by multiplying the result by the following
percentage: 60%. Amounts treated as a loan pursuant to Section
6.4(a) and interest thereon shall be included in the calculation
of the defaulting Participant's reduced Participating Interest.
The non-defaulting Participants' combined Participating Interests
shall, at such time, become the difference between 100% and the
further reduced Participating Interest. Such reductions shall be
effective as of the date of the default.
ii) For a default relating to a Program and Budget covering in whole
or in part Development or Mining, at the non-defaulting
Participants' election, the defaulting Participant shall be
deemed to have withdrawn from the Venture and to have
automatically relinquished its Participating Interest to the non-
defaulting Participants PRO RATA according to the Participating
Interests of the remaining Participants; provided, however, the
defaulting Participant shall have the right to receive only from
10% of Net Proceeds, if any, and not from any other source, an
amount equal to the defaulting Participant's aggregate
contributions pursuant to Sections 5.1 and 5.2. Upon receipt of
such amount the defaulting Participant shall thereafter have no
further right, title or interest in Assets or under this
Agreement.
6.5 ELIMINATION OF MINORITY INTEREST. Upon the reduction of its
Participating Interest to less than 5%, a Participant shall be deemed to have
withdrawn from this Agreement and shall relinquish its entire Participating
Interest. Such relinquished Participating Interest shall be deemed to have
accrued automatically to the other Participants PRO RATA according to the
Participating Interests of the remaining Participants.
6.6 CONTINUING LIABILITIES UPON ADJUSTMENTS OF PARTICIPATING INTERESTS.
Any reduction of a Participant's Participating Interest under this Article VI
shall not relieve such Participant of its share of any liability, whether it
accrues before or after such reduction, arising out of Operations conducted
prior to such reduction. For purposes of this Article VI, such Participant's
share of such liability shall be equal to its Participating Interest at the time
such liability was incurred. The increased Participating Interest accruing to a
Participant as a result of the reduction of another Participant's Participating
Interest shall be free of royalties, liens or other encumbrances arising by,
through or under such other Participant, other than those existing at the time
the Property was acquired or those to which all Participants have given their
written consent. An adjustment to a Participating Interest need not be
evidenced during the term of this Agreement by the execution and recording of
appropriate instruments, but each Participant's Participating Interest shall be
shown in the books of the Operator. However, any Participant, at any time upon
the request of another Participant, shall execute and acknowledge instruments
necessary to evidence such adjustment in form sufficient for recording in the
jurisdiction where the Property is located.
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ARTICLE VII
MANAGEMENT COMMITTEE
7.1 ORGANIZATION AND COMPOSITION. The Participants hereby establish a
Management Committee to determine overall policies, objectives, procedures,
methods and actions under this Agreement. The Management Committee shall
consist of one member appointed by each Participant. Each Participant may
appoint one or more alternates to act in the absence of a regular member. Any
alternate so acting shall be deemed a member. Appointments shall be made or
changed by notice to the other Participants.
7.2 DECISIONS. Each Participant, acting through its appointed members,
shall have one vote on the Management Committee. Unless otherwise provided in
this Agreement, the vote of the Participant with a Participating Interest over
50% shall determine the decisions of the Management Committee. In the event of
a tie vote as between the Participants on any matter, the casting vote on such
matter shall be exercised by the member representing the Operator.
7.3 MEETINGS. The Management Committee shall hold regular meetings at
least annually in Vancouver, British Columbia, or at other mutually agreed
places. The Operator shall give 30 days' notice to the Participants of such
regular meetings. Additionally, a Participant may call a special meeting upon
60 day's notice to the Operator and the other Participants. In case of
emergency, reasonable notice of a special meeting shall suffice. There shall be
a quorum if at least one member representing each Participant is present. Each
notice of a meeting shall include an itemized agenda prepared by the Operator in
the case of a regular meeting, or by the Participant calling the meeting in the
case of a special meeting, but any matters may be considered with the consent of
all Participants. The Operator shall prepare minutes of all meetings and shall
distribute copies of such minutes to the Participants within 15 days after the
meeting. The minutes, when signed by all Participants, shall be the official
record of the decisions made by the Management Committee and shall be binding on
the Operator and the Participants. If personnel employed in Operations are
required to attend a Management Committee meeting, reasonable costs incurred in
connection with such attendance shall be a Venture cost. All other costs shall
be paid by the Participants individually.
7.4 ACTION WITHOUT MEETING. In lieu of meetings, the Management Committee
may hold telephone conferences, so long as all decisions are immediately
confirmed in writing by the Participants.
7.5 MATTERS REQUIRING APPROVAL. Except as otherwise delegated to the
Operator in Section 8.2, the Management Committee shall have exclusive authority
to determine all management matters related to this Agreement.
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ARTICLE VIII
OPERATOR
8.1 APPOINTMENT. The Participants hereby appoint Stirrup Creek as the
Operator with overall management responsibility for Operations. Stirrup Creek
hereby agrees to serve as Operator until it resigns as provided in Section 8.4.
8.2 POWERS AND DUTIES OF OPERATOR. Subject to the terms and provisions of
this Agreement, the Operator shall have the following powers and duties which
shall be discharged in accordance with adopted Programs and Budgets:
a) The Operator shall manage, direct and control Operations.
b) The Operator shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out adopted
Programs, and shall promptly advise the Management Committee if it
lacks sufficient funds to carry out its responsibilities under this
Agreement.
c) The Operator shall:
i) purchase or otherwise acquire all material, supplies, equipment,
water, utility and transportation services required for
Operations, such purchases and acquisitions to be made on the
best terms available, taking into account all of the
circumstances;
ii) obtain such customary warranties and guarantees as are available
in connection with such purchases and acquisitions; and
iii) keep the Assets free and clear of all liens and encumbrances,
except for those existing at the time of, or created concurrent
with, the acquisition of such Assets, or mechanic's or
materialmen's liens which shall be released or discharged in a
diligent manner, or liens and encumbrances specifically approved
by the Management Committee.
d) The Operator shall conduct such title examinations and cure such title
defects as may be advisable in the reasonable judgment of the
Operator.
e) The Operator shall:
i) make or arrange for all payments required by leases, licenses,
permits, contracts and other agreements related to the Assets;
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ii) pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a Participant's
sales revenue or net income.
If authorized by the Management Committee, the Operator shall
have the right to contest in the courts or otherwise, the
validity or amount of any taxes, assessments or charges if the
Operator deems them to be unlawful, unjust, unequal or excessive,
or to undertake such other steps or proceedings as the Operator
may deem reasonably necessary to secure a cancellation,
reduction, readjustment or equalization thereof before the
Operator shall be required to pay them, but in no event shall the
Operator permit or allow title to the Assets to be lost as the
result of the nonpayment of any taxes, assessments or like
charges;
iii) shall do all other acts reasonably necessary to maintain the
Assets.
f) The Operator shall:
i) apply for all necessary permits, licenses and approvals;
ii) comply with applicable federal, provincial and local laws and
regulations;
iii) notify promptly the Management Committee of any allegations of
substantial violation thereof; and
iv) prepare and file all reports or notices required for Operations.
The Operator shall not be in breach of this provision if a
violation has occurred in spite of the Operator's good faith
efforts to comply, and the Operator has timely cured or
disposed of such violation through performance, or payment
of fines and penalties.
g) The Operator shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or
administrative proceedings arising out of Operations. A Participant
shall have the right to participate, at its own expense, in such
litigation or administrative proceedings. The Management Committee
shall approve in advance any settlement involving payments,
commitments or obligations in excess of $10,000.00 in cash or value.
h) The Operator may dispose of Assets, whether by abandonment, surrender
or Transfer in the ordinary course of business, except that Property
may be abandoned or surrendered only as provided in Article XIV.
However, without prior authorization from the Management Committee,
the Operator shall not:
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i) dispose of Assets in any one transaction having a value in excess
of $50,000.00;
ii) enter into any sales contracts or commitments for Products,
except as permitted in Section 11.2;
iii) begin a liquidation of the Venture; or
iv) dispose of all or a substantial part of the Assets necessary to
achieve the purposes of the Venture.
i) The Operator shall have the right to carry out its responsibilities
hereunder through a corporate representative, agents, Affiliates or
independent contractors.
j) The Operator shall perform or cause to be performed and record or
cause to be recorded during the term of this Agreement all assessment
and other work required to maintain in good standing mineral claims
and other mineral rights included within the Property, unless
prevented from so doing by an action or the inaction of the Management
Committee.
k) If authorized by the Management Committee, the Operator may stake or
restake or abandon any mineral claims or other interests comprising
the Property, apply for mining leases or other forms of mineral tenure
for any mineral claims or other interests comprising the Property and
generally deal with the claims and other interests comprising the
Property as may be considered prudent.
l) The Operator shall keep and maintain all required accounting and
financial records pursuant to the Accounting Procedure and in
accordance with customary cost accounting practices in the mining
industry.
m) The Operator shall keep the Management Committee advised of all
Operations by submitting in writing to the Management Committee:
i) monthly progress reports which include statements of expenditures
and comparisons of such expenditures to the adopted Budget;
ii) periodic summaries of data acquired;
iii) copies of reports concerning Operations;
iv) a detailed final report within 90 days after completion of each
Program and Budget, which shall include comparisons between the
objectives and results of Programs; and
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v) such other reports as the Management Committee may reasonably
request.
At all reasonable times the Operator shall provide the Management
Committee or the representative of any Participant, upon the request
of any member of the Management Committee, access to, and the right to
inspect and copy all maps, drill logs, core tests, reports, surveys,
assays, analyses, production reports, operations, technical,
accounting and financial records, and other information acquired in
Operations. In addition, the Operator shall allow any Participant, at
its sole risk and expense, and subject to reasonable safety
regulations, to inspect the Assets and Operations at all reasonable
times, so long as the inspecting Participant does not unreasonably
interfere with Operations.
n) The Operator shall undertake all other activities reasonably necessary
to fulfil the foregoing.
The Operator shall not be in default of any duty under this Section 8.2 if its
failure to perform results from the failure of a Participant to perform acts or
to contribute amounts required of it by this Agreement.
8.3 STANDARD OF CARE. The Operator shall conduct all Operations in a
good, workmanlike and efficient manner, in accordance with sound mining and
other applicable industry standards and practices, and in accordance with the
terms and provisions of leases, licenses, permits, contracts and other
agreements pertaining to Assets. The Operator shall not be liable to any
Participant for any act or omission resulting in damage or loss except to the
extent caused by or attributable to the Operator's wilful misconduct or gross
negligence.
8.4 RESIGNATION; DEEMED OFFER TO RESIGN. The Operator may resign upon
60 days prior notice to the Management Committee, in which case the Management
Committee shall appoint an Operator. If any of the following shall occur, the
Operator shall be deemed to have offered to resign, which offer may be accepted
by the Management Committee, if at all, within 60 days following such deemed
offer:
a) The Operator fails to perform a material obligation imposed upon it
under this Agreement and such failure continues for a period of
30 days after notice from the Management Committee demanding
performance; or
b) A receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for a substantial part of its assets is appointed and
such appointment is neither made ineffective nor discharged within
60 days after the making thereof, or such appointment is consented to,
requested by, or acquiesced in by the Operator; or
c) The Operator commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or
consents to the entry of an
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order for relief in an involuntary case under any such law or to
the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or other similar official
of any substantial part of its assets; or makes a general assignment
for the benefit of creditors; or fails generally to pay its debts as
such debts become due; or takes corporate or other action in
furtherance of any of the foregoing; or
d) Entry is made against the Operator of a judgment decree or order for
relief affecting a substantial part of its assets by a court of
competent jurisdiction in an involuntary case commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect.
8.5 PAYMENTS TO OPERATOR. The Operator shall be compensated for its
services and reimbursed for its costs hereunder in accordance with the
Accounting Procedure.
8.6 TRANSACTIONS WITH AFFILIATES. If the Operator engages Affiliates to
provide services hereunder, it shall do so on terms no less favourable than
would be the case with unrelated persons in arm's-length transactions.
8.7 ACTIVITIES DURING DEADLOCK. If the Management Committee for any
reason fails to adopt a Program and Budget, subject to the contrary direction of
the Management Committee and to the receipt of necessary funds, the Operator
shall continue Operations at levels comparable with the last adopted Program and
Budget. For purposes of determining the required contributions of the
Participants and their respective Participating Interests, the last adopted
Program and Budget shall be deemed extended.
ARTICLE IX
PROGRAMS AND BUDGETS
9.1 INITIAL PROGRAM AND BUDGET. The initial Program and Budget, which is
deemed to have been adopted by the Participants, shall not exceed $150,000 and
shall be in the sole discretion of Stirrup Creek. The following provisions of
this Article IX shall not apply to the initial Program and Budget.
9.2 OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS. Except as otherwise
provided in Section 9.8 and Article XIII, Operations shall be conducted,
expenses shall be incurred, and Assets shall be acquired only pursuant to
approved Programs and Budgets.
9.3 PRESENTATION OF PROGRAMS AND BUDGETS. Proposed Programs and Budgets
shall be prepared by the Operator for a period of one year or any longer
period. Each adopted Program and Budget, regardless of length, shall be
reviewed at least once a year at the annual meeting of the Management
Committee. During the period encompassed by any Program and Budget, and at
least
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three months prior to its expiration, a proposed Program and Budget for the
succeeding period shall be prepared by the Operator and submitted to the
Participants.
9.4 REVIEW AND APPROVAL OF PROPOSED PROGRAMS AND BUDGETS. Within 45 days
after submission of a proposed Program and Budget, each Participant shall submit
to the Management Committee:
a) Notice that the Participant approves the proposed Program and Budget;
or
b) Proposed modifications of the proposed Program and Budget; or
c) Notice that the Participant rejects the proposed Program and Budget.
If a Participant fails to give any of the foregoing responses within the
allotted time, the failure shall be deemed to be an approval by the Participant
of the Operator's proposed Program and Budget. If a Participant makes a timely
submission to the Management Committee pursuant to Section 9.4(b) or (c), then
the Management Committee shall seek to develop a Program and Budget acceptable
to the Participants.
9.5 ELECTION TO PARTICIPATE. By notice to the Management Committee within
20 days after the final vote adopting a Program and Budget, a Participant may
elect to contribute to such Program and Budget in some lesser amount than its
respective Participating Interest, or not at all, in which cases its
Participating Interest shall be recalculated as provided in Article VI. If a
Participant fails to so notify the Management Committee, the Participant shall
be deemed to have elected to contribute to such Program and Budget in proportion
to its respective Participating Interest as of the beginning of the period
covered by the Program and Budget.
9.6 DEADLOCK ON PROPOSED PROGRAMS AND BUDGETS. If the Participants,
acting through the Management Committee, fail to approve a Program and Budget by
the beginning of the period to which the proposed Program and Budget applies,
the provisions of Sections 8.7 and 12.2 shall apply.
9.7 BUDGET OVERRUNS; PROGRAM CHANGES. The Operator shall immediately
notify the Management Committee of any material departure from an adopted
Program and Budget. The Operator shall not exceed an adopted Budget by more
than 10% unless directly caused by an emergency or unexpected expenditure made
pursuant to Section 9.8 or unless otherwise authorized by the Management
Committee. Budget overruns shall be borne by the Participants in proportion to
their respective Participating Interests as of the time the overrun occurs.
9.8 EMERGENCY OR UNEXPECTED EXPENDITURES. In case of emergency, the
Operator may take any reasonable action it deems necessary to protect life, limb
or property, to protect the Assets or to comply with law or government
regulation. The Operator may also make reasonable expenditures for unexpected
events which are beyond its reasonable control and which do not result from a
breach by it of its standard of care. The Operator shall promptly notify the
Participants of
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the emergency or unexpected expenditure, and the Operator shall be reimbursed
for all resulting costs by the Participants in proportion to their respective
Participating Interests at the time the emergency or unexpected expenditures
are incurred.
ARTICLE X
ACCOUNTS AND SETTLEMENTS
10.1 MONTHLY STATEMENTS. The Operator shall promptly submit to the
Management Committee monthly statements of account reflecting in reasonable
detail the charges and credits to the Joint Account during the preceding month.
10.2 CASH CALLS. On the basis of the adopted Program and Budget, the
Operator shall submit to each Participant prior to commencing the Program, a
billing for estimated cash requirements for the Program. Within 10 days after
receipt of each billing, each Participant shall advance to the Operator its
proportionate share of the estimated amount. Time is of the essence of payment
of such billings. The Operator shall at all times maintain a cash balance
sufficient to meet disbursement obligations for up to 21 days. All funds in
excess of immediate cash requirements shall be invested in interest-bearing
accounts with the Royal Bank of Canada, for the benefit of the Joint Account.
10.3 FAILURE TO MEET CASH CALLS. A Participant that fails to meet cash
calls in the amount and at the times specified in Section 10.2 shall be in
default, and the amounts of the defaulted cash call shall bear interest from the
date due at an annual rate equal to 5 percentage points over the Prime Rate, but
in no event shall said rate of interest exceed the maximum permitted by law.
The non-defaulting Participants shall have those rights, remedies and elections
specified in Section 6.4.
10.4 AUDITS. Upon request made by any Participant within 24 months
following the end of any calendar year (or, if the Management Committee has
adopted an accounting period other than the calendar year, within 24 months
after the end of such period), the Operator shall order an audit of the
accounting and financial records for such calendar year (or other accounting
period). All written exceptions to and claims upon the Operator for
discrepancies disclosed by such audit shall be made not more than 3 months after
receipt of the audit report. Failure to make any such exception or claim within
the 3 month period shall mean the audit is correct and binding upon the
Participants. The audits shall be conducted by a firm of Chartered Accountants
selected by the Operator, unless otherwise agreed by the Management Committee.
ARTICLE XI
DISPOSITION OF PRODUCTION
11.1 TAKING IN KIND. Each Participant shall take in kind or separately
dispose of its share of all Products in accordance with its Participating
Interest. Any extra expenditure incurred in the
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taking in kind or separate disposition by any Participant of its
proportionate share of Products shall be borne by such Participant. Nothing
in this Agreement shall be construed as providing, directly or indirectly,
for any joint or cooperative marketing or selling of Products or permitting
the processing of Products of any parties other than the Participants at any
processing facilities constructed by the Participants pursuant to this
Agreement. The Operator shall give the Participants notice at least 10 days
in advance of the delivery date upon which their respective shares of
Products will be available.
11.2 FAILURE OF PARTICIPANT TO TAKE IN KIND. If a Participant fails to
take in kind, the Operator shall have the right, but not the obligation, for a
period of time consistent with the minimum needs of the industry, but not to
exceed one year, to purchase the Participant's share for its own account or to
sell such share as agent for the Participant to the other Participants or any
third party at not less than the prevailing market price in the area. Subject
to the terms of any such contracts of sale then outstanding, during any period
that the Operator is purchasing or selling a Participant's share of production,
the Participant may elect by notice to the Operator to take in kind. The
Operator shall be entitled to deduct from proceeds of any sale by it for the
account of a Participant reasonable expenses incurred in such a sale.
ARTICLE XII
WITHDRAWAL AND TERMINATION
12.1 TERMINATION BY EXPIRATION OR AGREEMENT. This Agreement shall
terminate as expressly provided in this Agreement, unless earlier terminated by
written agreement.
12.2 TERMINATION BY DEADLOCK. If the Management Committee fails to adopt a
Program and Budget for 12 months after the expiration of the latest adopted
Program and Budget, any Participant may elect to terminate this Agreement by
giving notice of termination to the other Participants.
12.3 WITHDRAWAL. A Participant may elect to withdraw as a Participant from
this Agreement by giving notice to the other Participants of the effective date
of withdrawal, which shall be the later of the end of the then current Program
and Budget or at least 30 days after the date of the notice. Upon such
withdrawal, this Agreement shall terminate, and the withdrawing Participant
shall be deemed to have transferred to the remaining Participants, without cost
and free and clear of royalties, liens or other encumbrances arising by, through
or under such withdrawing Participant, except those exceptions to title
described in Part 1 of Exhibit A and those to which all Participants have given
their written consent after the date of this Agreement, all of its Participating
Interest in the Assets and in this Agreement. Any withdrawal under this
Section 12.3 shall not relieve the withdrawing Participant of its share of
liabilities to third persons (whether such accrues before or after such
withdrawal) arising out of Operations conducted prior to such withdrawal. For
purposes of this Section 12.3, the withdrawing Participant's share of such
liabilities shall be equal to its Participating Interest at the time such
liability was incurred.
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12.4 CONTINUING OBLIGATIONS. On termination of this Agreement under
Section 12.1 or 12.2, the Participants shall remain liable for continuing
obligations hereunder until final settlement of all accounts and for any
liability, whether it accrues before or after termination, if it arises out of
Operations during the term of the Agreement.
12.5 DISPOSITION OF ASSETS ON TERMINATION. Promptly after termination
under Section 12.1 or 12.2, the Operator shall take all action necessary to wind
up the activities of the Venture, and all costs and expenses incurred in
connection with the termination of the Venture shall be expenses chargeable to
the Venture. The Assets shall first be paid, applied, or distributed in
satisfaction of all liabilities of the Venture to third parties and then to
satisfy any debts, obligations, or liabilities owed to the Participants. Before
distributing any funds or Assets to Participants, the Operator shall have the
right to segregate amounts which, in the Operator's reasonable judgment, are
necessary to discharge continuing obligations or to purchase for the account of
the Participants, bonds or other securities for the performance of such
obligations. The foregoing shall not be construed to include the repayment of
any Participant's capital contributions. Thereafter, any remaining cash and all
other Assets shall be distributed (in undivided interests unless otherwise
agreed) to the Participants, in proportion to their respective Participating
Interests, subject to any dilution, reduction, or termination of such
Participating Interests as may have occurred pursuant to the terms of this
Agreement. No Participant shall receive a distribution of any interest in
Products or proceeds from the sale thereof if such Participant's Participating
Interest therein has been terminated pursuant to this Agreement.
12.6 NON-COMPETE COVENANTS. A Participant that withdraws pursuant to
Section 12.3, or is deemed to have withdrawn pursuant to Section 6.5, shall not
directly or indirectly acquire any interest in property within the Area of
Interest for 12 months after the effective date of withdrawal. If a withdrawing
Participants, or the Affiliate of a withdrawing Participant, breaches this
Section 12.6, such Participant or Affiliate shall be obligated to offer to
convey to the non-withdrawing Participants, without cost, any such property or
interest so acquired. Such offer shall be made in writing and can be accepted
by the non-withdrawing Participants at any time within 45 days after it is
received by such non-withdrawing Participants.
12.7 RIGHT TO DATA AFTER TERMINATION. After termination of this Agreement
pursuant to Section 12.1 or 12.2, each Participant shall be entitled to copies
of all information acquired hereunder before the effective date of termination
not previously furnished to it, but a terminating or withdrawing Participant
shall not be entitled to any such copies after any other termination or any
withdrawal.
12.8 CONTINUING AUTHORITY. On termination of this Agreement under
Section 12.1 or 12.2 or the deemed withdrawal of a Participant pursuant to
Section 6.4(b)(2) or 6.5 or the withdrawal of a Participant pursuant to
Section 12.3, the Operator shall have the power and authority, subject to
control of the Management Committee, if any, to do all things on behalf of the
Participants which are reasonably necessary or convenient to:
a) wind up Operations; and
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b) complete any transaction and satisfy any obligation, unfinished or
unsatisfied, at the time of such termination or withdrawal, if the
transaction or obligation arises out of Operations prior to such
termination or withdrawal. The Operator shall have the power and
authority to grant or receive extensions of time or change the method
of payment of an already existing liability or obligation, prosecute
and defend actions on behalf of the Participants and the Venture,
mortgage Assets, and take any other reasonable action in any matter
with respect to which the former Participants continue to have, or
appear or are alleged to have, a common interest or a common
liability.
ARTICLE XIII
ACQUISITIONS WITHIN AREA OF INTEREST
13.1 GENERAL. Any interest or right to acquire any interest in real
property within the Area of Interest acquired during the term of this Agreement
by or on behalf of a Participant or any Affiliate shall be subject to the terms
and provisions of this Agreement.
13.2 NOTICE TO NONACQUIRING PARTICIPANT. Within 10 days after the
acquisition of any interest or the right to acquire any interest in real
property wholly or partially within the Area of Interest (except real property
acquired by the Operator pursuant to a Program), the acquiring Participant shall
notify the other Participants of such acquisition. The acquiring Participant's
notice shall describe in detail the acquisition, the lands and minerals covered
thereby, the cost thereof, and the reasons why the acquiring Participant
believes that the acquisition of the interest is in the best interests of the
Participants under this Agreement. In addition to such notice, the acquiring
Participant shall make any and all information concerning the acquired interest
available for inspection by the other Participants.
13.3 OPTION EXERCISED. If, within 30 days after receiving the acquiring
Participant's notice, the other Participants notify the acquiring Participant of
their election to accept a proportionate interest in the acquired interest equal
to their Participating Interests, the acquiring Participant shall convey to the
other Participants such a proportionate undivided interest therein. The
acquired interest shall become a part of the Property for all purposes of this
Agreement immediately upon the notice of such other Participants election to
accept the proportionate interest therein. Such other Participants shall
promptly pay to the acquiring Participant their proportionate share of the
latter's actual out-of-pocket acquisition costs.
13.4 OPTION NOT EXERCISED. If the other Participants do not give such
notice within the 30 day period set forth in Section 13.3, they shall have no
interest in the acquired interest, and the acquired interest shall not be a part
of the Property or be subject to this Agreement.
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ARTICLE XIV
ABANDONMENT AND SURRENDER OF PROPERTY
14.1 SURRENDER OR ABANDONMENT OF PROPERTY. The Management Committee may
authorize the Operator to surrender or abandon part or all of the Property. If
the Management Committee authorizes any such surrender or abandonment over the
objection of a Participant, the Participants that desire to abandon or surrender
shall assign to the objecting Participant, without cost to the surrendering
Participants, all of the surrendering Participants' interest in the Property to
be abandoned or surrendered, and the abandoned or surrendered property shall
cease to be part of the Property.
14.2 REACQUISITION. If any Property is abandoned or surrendered under the
provisions of this Article XIV, then, unless this Agreement is earlier
terminated, no Participant nor any Affiliate thereof shall acquire any interest
in such Property or a right to acquire such Property for a period of five years
following the date of such abandonment or surrender. If a Participant
reacquires any Property in violation of this Section 14.2, the other
Participants may elect by notice to the reacquiring Participant within 45 days
after they have actual notice of such reacquisition, to have such properties
made subject to the terms of this Agreement. In the event such an election is
made, the reacquired properties shall thereafter be treated as Property, and the
costs of reacquisition shall be borne solely by the reacquiring Participant and
shall not be included for purposes of calculating the Participants' respective
Participating Interests.
ARTICLE XV
TRANSFER OF INTEREST
15.1 GENERAL. A Participant shall have the right to Transfer to any third
party all or any part of its interest in or to this Agreement, its Participating
Interest, or the Assets solely as provided in this Article XV.
15.2 LIMITATIONS ON FREE TRANSFERABILITY. The Transfer right of a
Participant in Section 15.1 shall be subject to the following terms and
conditions:
a) No transferee of all or any part of the interest of a Participant in
this Agreement, any Participating Interest, or the Assets shall have
the rights of a Participant unless and until the transferring
Participant has provided to the other Participants notice of the
Transfer, and except as provided in Sections 15.2(g) and 15.2(h), the
transferee, as of the effective date of the Transfer, has committed in
writing to be bound by this Agreement to the same extent as the
transferring Participant;
b) No transfer permitted by this Article XV shall relieve the
transferring Participant of its share of any liability, whether
accruing before or after such Transfer, which arises
<PAGE>
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out of Operations conducted prior to such Transfer;
c) The transferring Participant and the transferee shall bear all tax
consequences of the Transfer;
d) In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee shall act
and be treated as one Participant;
e) No Participant shall Transfer any interest in this Agreement or the
Assets except by Transfer of part or all of its Participating
Interest;
f) If the Transfer is the grant of a security interest by mortgage, deed
of trust, pledge, lien or other encumbrance of any interest in this
Agreement, any Participating Interest or the Assets to secure a loan
or other indebtedness of a Participant in a bona fide transaction,
such security interest shall be subordinate to the terms of this
Agreement and the rights and interests of the other Participants
hereunder. Upon any foreclosure or other enforcement of rights in the
security interest the acquiring third party shall be deemed to have
assumed the position of the encumbering Participant with respect to
this Agreement and the other Participants, and it shall comply with
and be bound by the terms and conditions of this Agreement; and
g) If a sale or other commitment or disposition of Products or proceeds
from the sale of Products by a Participant upon distribution to it
pursuant to Article XI creates in a third party a security interest in
Products or proceeds therefrom prior to such distribution, such sale,
commitment or disposition shall be subject to the terms and conditions
of this Agreement.
15.3 PREEMPTIVE RIGHT. Except as otherwise provided in Section 15.4, if a
Participant desires to Transfer all or any part of its interest in this
Agreement, any Participating Interest, or the Assets, the other Participants
shall have a preemptive right to acquire such interests as provided in this
Section 15.3.
a) A Participant intending to Transfer all or any part of its interest in
this Agreement, any Participating Interest, or the Assets shall
promptly notify the other Participants of its intentions. The notice
shall state the price and all other pertinent terms and conditions of
the intended Transfer, and shall be accompanied by a copy of the offer
or contract for sale. Each of the other Participants shall have
45 days from the date such notice is delivered to notify the
transferring Participant whether it elects to acquire its
proportionate share, based on its Participating Interest, of the
offered interest at the same price and on the same terms and
conditions as set forth in the notice. If it does so elect, the
Transfer shall be consummated promptly after notice of such election
is delivered to the transferring Participant.
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b) If either of the other Participants fails to so elect within the
period provided for in Section 15.3(a), the transferring Participant
shall have 90 days following the expiration of such period to
consummate the Transfer to a third party of that interest in respect
of which no election has occurred at a price and on terms no less
favourable than those offered by the transferring Participant to the
other Participants in the notice required in Section 15.3(a).
c) If the transferring Participant fails to consummate the Transfer to a
third party within the period set forth in Section 15.3(b), the
preemptive right of the other Participants in such offered interest
shall be deemed to be revived. Any subsequent proposal to Transfer
such interest shall be conducted in accordance with all of the
procedures set forth in this Section 15.3.
15.4 EXCEPTIONS TO PREEMPTIVE RIGHTS. Section 15.3 shall not apply to the
following:
a) Transfer by a Participant of all or any part of its interest in this
Agreement, any Participating Interest, or the Assets to an Affiliate;
b) The corporate merger, consolidation, amalgamation or reorganization of
a Participant by which the surviving entity shall possess
substantially all of the stock, or all of the property rights and
interests, and be subject to substantially all of the liabilities and
obligations of that Participant;
c) The grant by a Participant of a security interest in any interest in
this Agreement, any Participating Interest, or the Assets by mortgage,
deed of trust, pledge, lien or other encumbrance; or
d) A sale or other commitment or disposition of Products or proceeds from
sale of Products by a Participant upon distribution to it pursuant to
Article XI.
ARTICLE XVI
CONFIDENTIALITY
16.1 GENERAL. The financial terms of this Agreement and all information
obtained in connection with the performance of this Agreement shall be the
exclusive property of the Participants and, except as provided in Section 16.2,
shall not be disclosed to any third party or the public without the prior
written consent of the other Participants, which consent shall not be
unreasonably withheld.
16.2 EXCEPTIONS. The consent required by Section 16.1 shall not apply to a
disclosure:
a) to an Affiliate, consultant, contractor or subcontractor that has a
bona fide need to be
<PAGE>
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informed;
b) to any third party to whom the disclosing Participant contemplates a
Transfer of all or any part of its interest in or to this Agreement,
its Participating Interest, or the Assets; or
c) to a governmental agency or to the public which the disclosing
Participant believes in good faith is required by pertinent law or
regulation or the rules of any stock exchange.
In any case to which this Section 16.2 is applicable, the disclosing Participant
shall give notice to the other Participants concurrently with the making of such
disclosure. As to any disclosure pursuant to Section 16.2(a) or (b), only such
confidential information as such third party shall have a legitimate business
need to know shall be disclosed and such third party shall first agree in
writing to protect the confidential information from further disclosure to the
same extent as the Participants are obligated under this Article XVII.
16.3 DURATION OF CONFIDENTIALITY. The provisions of this Article XVII
shall apply during the term of this Agreement and for two years following
termination of this Agreement pursuant to Section 12.1 or 12.2, and shall
continue to apply to any Participant who withdraws, who is deemed to have
withdrawn, or who Transfers its Participating Interest, for two years following
the date of such occurrence.
ARTICLE XVII
GENERAL PROVISIONS
17.1 NOTICES. All notices, payments and other required communications
("Notices") to a Participant shall be in writing, and shall be addressed to the
Participant at its address set forth on the first page of this Agreement. All
Notices shall be given:
a) by personal delivery to the Participant; or
b) by electronic communication, with a confirmation sent by registered or
certified mail return receipt requested; or
c) by registered or certified mail return receipt requested.
All Notices shall be effective and shall be deemed delivered
a) if by personal delivery on the date of delivery if delivered during
normal business hours, and, if not delivered during normal business
hours, on the next business day following delivery,
<PAGE>
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b) if by electronic communication on the next business day following
receipt of the electronic communication; and
c) if solely by mail on the next business day after actual receipt.
A Participant may change its address by Notice to the other Participants.
17.2 WAIVER. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Participant's right thereafter to enforce any
provision or exercise any right.
17.3 MODIFICATION. No modification of this Agreement shall be valid unless
made in writing and duly executed by the Participants.
17.4 FORCE MAJEURE. Except for the obligation to make payments when due
hereunder, the obligations of a Participant shall be suspended to the extent and
for the period that performance is prevented by any cause, whether foreseeable
or unforeseeable, beyond its reasonable control, including, without limitation,
labour disputes (however arising and whether or not employee demands are
reasonable or within the power of the Participant to grant); acts of God; laws,
regulations, orders, proclamations, instructions or requests of any government
or governmental entity; judgments or orders of any court; inability to obtain on
reasonably acceptable terms any public or private license, permit or other
authorization; curtailment or suspension of activities to remedy or avoid an
actual or alleged, present or prospective violation of federal, provincial or
local environmental standards; acts of war or conditions arising out of or
attributable to war, whether declared or undeclared; riot, civil strife,
insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink
holes, drought or other adverse weather condition; delay or failure by suppliers
or transporters of materials, parts, supplies, services or equipment or by
contractors' or subcontractors' shortage of, or inability to obtain, labour,
transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; or any
other cause whether similar or dissimilar to the foregoing. The affected
Participant shall promptly give notice to the other Participant of the
suspension of performance, stating therein the nature of the suspension, the
reasons therefor, and the expected duration thereof. The affected Participant
shall resume performance as soon as reasonably possible. During the period of
suspension the obligations of the Participants to advance funds pursuant to
Section 10.2 shall be reduced to levels consistent with Operations.
17.5 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of British Columbia.
17.6 RULE AGAINST PERPETUITIES. If any right, power or interest of any
party in any property under this Agreement would violate the rule against
perpetuities, then such right, power or interest shall terminate at the
expiration of 20 years after the death of the last survivor of all the lineal
<PAGE>
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descendants of Her Majesty, Queen Elizabeth II of England, living on the date of
this Agreement.
17.7 FURTHER ASSURANCES. Each of the Participants agrees to take from time
to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
17.8 SURVIVAL OF TERMS AND CONDITIONS. The following Sections shall
survive the termination of this Agreement to the full extent necessary for their
enforcement and the protection of the Participant in whose favour they
run: Sections 2.1, 2.2, 2.3, 4.2, 6.4, 6.6, 10.3, 12.3, 12.4, 12.5, 12.6, 12.7
and 12.8.
17.9 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement contains the
entire understanding of the Participants and supersedes all prior agreements and
understandings between the Participants relating to the subject matter hereof.
This Agreement shall be binding upon and enure to the benefit of the respective
successors and permitted assigns of the Participants. In the event of any
conflict between this Agreement and any Exhibit attached hereto, the terms of
this Agreement shall be controlling.
17.10 MEMORANDUM. At the request of any Participant, a Memorandum or
short form of this Agreement, as appropriate, which shall not disclose financial
information contained herein, shall be prepared and recorded by the Operator.
This Agreement shall not be recorded.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
THE COMMON SEAL of INTERNATIONAL SILVER
RIDGE RESOURCES INC. was hereunto
affixed in the presence of: c/s
- - ------------------------------
- - ------------------------------
THE COMMON SEAL of STIRRUP CREEK
GOLD LTD. was hereunto affixed in
the presence of: c/s
- - ------------------------------
<PAGE>
EXHIBIT A
PART 1
DESCRIPTION OF PROPERTY
5,023 hectares of mining claims located on the island of
Kalimantan, Indonesia, more particularly described in the
following documentation.
PART 2
AREA OF INTEREST
The Area of Interest shall comprise all interests in real
property located within three kilometres of the boundaries
of the Property as they exist on the date of execution of
this Agreement.
<PAGE>
EXHIBIT B
ACCOUNTING PROCEDURE
The financial and accounting procedures to be followed by the Operator and the
Participants under the Agreement are set forth below. References in this
Accounting Procedure to Sections and Articles are to those located in this
Accounting Procedure unless it is expressly stated that they are references to
the Venture Agreement. All capitalized words and terms used herein and not
otherwise defined herein have the same meaning as in the Agreement to which this
Exhibit B is attached.
ARTICLE I
GENERAL PROVISIONS
1.1 GENERAL ACCOUNTING RECORDS. The Operator shall maintain detailed and
comprehensive cost accounting records in accordance with this Accounting
Procedure, including general ledgers, supporting and subsidiary journals,
invoices, cheques and other customary documentation, sufficient to provide a
record of revenues and expenditures and periodic statements of financial
position and the results of operations for managerial, tax, regulatory or other
financial reporting purposes. Such records shall be retained for the duration
of the period allowed the Participants for audit or the period necessary to
comply with tax or other regulatory requirements. The records shall reflect all
obligations, advances and credits of the Participants.
1.2 BANK ACCOUNTS. The Operator shall maintain one or more separate bank
accounts for the payment of all expenses and the deposit of all cash receipts
for the Venture.
1.3 STATEMENTS AND BILLINGS. The Operator shall prepare statements and
bill the Participants as provided in Article X of the Agreement. Payment of any
such billings by any Participant, including the Operator, shall not prejudice
such Participant's right to protest or question the correctness thereof for a
period not to exceed twenty-four (24) months following the calendar year during
which such billings were received by the Participant. All written exceptions to
and claims upon the Operator for incorrect charges, billings or statements shall
be made upon the Operator within such twenty-four (24) month period. The time
period permitted for adjustments hereunder shall not apply to adjustments
resulting from periodic inventories as provided in Article V.
ARTICLE II
CHARGES TO JOINT ACCOUNT
Subject to the limitations hereinafter set forth, the Operator shall charge the
Joint Account with the following:
2.1 RENTALS, ROYALTIES AND OTHER PAYMENTS. All property acquisition and
holding costs, including filing fees, license fees, costs of permits and
assessment work, delay rentals, production royalties, including any required
advances, and all other payments made by the Operator which are
<PAGE>
necessary to acquire or maintain title to the Assets.
2.2 LABOUR AND EMPLOYEE BENEFITS.
a) Salaries and wages of the Operator's employees directly engaged in
Operations, including salaries or wages of employees who are
temporarily assigned to and directly employed by same;
b) The Operator's cost of holiday, vacation, sickness and disability
benefits, and other customary allowances applicable to the salaries
and wages chargeable under Sections 2.2(a) and 2.12. Such costs may
be charged on a "when and as paid basis" or by "percentage assessment"
on the amount of salaries and wages. If percentage assessment is
used, the rate shall be applied to wages or salaries excluding
overtime and bonuses. Such rate shall be based on the Operator's cost
experience and it shall be periodically adjusted at least annually to
ensure that the total of such charges does not exceed the actual cost
thereof to the Operator.
c) The Operator's actual cost of established plans for employees' group
life insurance, hospitalization, pension, retirement, stock purchase,
thrift, bonus (except production or incentive bonus plans under a
union contract based on actual rates of production, cost savings and
other production factors, and similar non-union bonus plans customary
in the industry or necessary to attract competent employees, which
bonus payments shall be considered salaries and wages under
Sections 2.2(a) or 2.12; rather than employees' benefit plans) and
other benefit plans of a like nature applicable to salaries and wages
chargeable under Sections 2.2(a) or 2.12, provided that the plans are
limited to the extent feasible to those customary in the industry;
d) Cost of assessments imposed by governmental authority which are
applicable to salaries and wages chargeable under Sections 2.2(a) and
2.12, including all penalties except those resulting from the wilful
misconduct or gross negligence of the Operator.
2.3 MATERIALS, EQUIPMENT AND SUPPLIES. The cost of materials, equipment
and supplies (herein called "Material") purchased from unaffiliated third
parties or furnished by the Operator or any Participant as provided in
Article III. The Operator shall purchase or furnish only so much Material as
may be required for immediate use in efficient and economical Operations. The
Operator shall also maintain inventory levels of Material at reasonable levels
to avoid unnecessary accumulation of surplus stock.
2.4 EQUIPMENT AND FACILITIES FURNISHED BY OPERATOR. The cost of
machinery, equipment and facilities owned by the Operator and used in Operations
or used to provide support or utility services to Operations charged at rates
commensurate with the actual costs of ownership and operation of such machinery,
equipment and facilities. Such rates shall include costs of maintenance,
repairs, other operating expenses, insurance, taxes, depreciation and interest
at a rate not to exceed fifteen percent (15%) per annum. Such rates shall not
exceed the average commercial
<PAGE>
rates currently prevailing in the vicinity of the Operations.
2.5 TRANSPORTATION. Reasonable transportation costs incurred in
connection with the transportation of employees and material necessary for the
Operations.
2.6 CONTRACT SERVICES AND UTILITIES. The cost of contract services and
utilities procured from outside sources, other than services described in
Sections 2.9 and 2.13. If contract services are performed by the Operator or an
Affiliate thereof, the cost charged to the Joint Account shall not be greater
than that for which comparable services and utilities are available in the open
market within the vicinity of the Operations. The cost of professional
consultant services procured from outside sources in excess of $25,000 shall not
be charged to the Joint Account unless approved by the Management Committee.
2.7 INSURANCE PREMIUMS. Net premiums paid for insurance required to be
carried for Operations for the protection of the Participants.
2.8 DAMAGES AND LOSSES. All costs in excess of insurance proceeds
necessary to repair or replace damage or losses to any Assets resulting from any
cause other than the wilful misconduct or gross negligence of the Operator. The
Operator shall furnish the Management Committee with written notice of damages
or losses as soon as practicable after a report thereof has been received by the
Operator.
2.9 LEGAL AND REGULATORY EXPENSE. Except as otherwise provided in
Section 2.13, all legal and regulatory costs and expenses incurred in or
resulting from the Operations or necessary to protect or recover the Assets of
the Venture. All attorney's fees and other legal costs to handle, investigate
and settle litigation or claims, including the cost of legal services provided
by the Operator's legal staff, and amounts paid in settlement of such litigation
or claims in excess of $25,000 shall not be charged to the Joint Account unless
approved by the Management Committee.
2.10 AUDIT. Cost of annual audits under Section 10.4 of the Venture
Agreement if approved by all of the Participants.
2.11 TAXES. All taxes (except income taxes) of every kind and nature
assessed or levied upon or in connection with the Assets, the production of
Products or Operations, which have been paid by the Operator for the benefit of
the Participants. Each Participant is separately responsible for income taxes
which are attributable to its respective Participating Interest.
2.12 DISTRICT AND CAMP EXPENSE (FIELD SUPERVISION AND CAMP EXPENSES.) A
PRO RATA portion of (i) the salaries and expenses of the Operator's
superintendent and other employees serving Operations whose time is not
allocated directly to such Operations, and (ii) the costs of maintaining and
operating an office (herein called "the Operator's Project Office") and any
necessary suboffice and (iii) all necessary camps, including housing
facilities for employees, used for Operations. The expense of those
facilities, less any revenue therefrom, shall include depreciation or a fair
monthly rental in lieu of depreciation of the investment. The total of such
charges for all properties served by the Operator's employees and facilities
shall be apportioned to the Joint Account on the basis of
<PAGE>
a ratio, the numerator of which is the direct labour costs of the Operations
and the denominator of which is the total direct labour costs incurred for all
activities served by the Operator.
2.13 ADMINISTRATIVE CHARGE.
a) Each month, the Operator shall charge the Joint Account a sum of 5% of
Allowable Costs for exploration, development, major construction and
mining, which shall be a liquidated amount to reimburse the Operator
for its home office overhead and general and administrative expenses
to conduct each said phase of the Operations, and which shall be in
lieu of any management fee.
b) The term "Allowable Costs" as used in this Section 2.13 for a
particular phase of Operations shall mean all charges to the Joint
Account excluding (i) the administrative charge referred to herein;
(ii) depreciation, depletion or amortization of tangible or intangible
assets; (iii) amounts charged in accordance with Sections 2.1 and
2.9. The Operator shall attribute such Allowable Costs to a
particular phase of Operations by applying the following guidelines:
i) The exploration phase shall cover those activities conducted to
ascertain the existence, location, extent or quantity of any
deposit of ore or mineral. Such phase shall cease when a
commercially recoverable reserve is determined to exist.
ii) The development phase shall cover those activities conducted to
access a commercially feasible ore body or to extend production
of an existing ore body, and to construct or install related
fixed assets.
iii) The major construction phase shall include all activities
involved in the construction of a mill, smelter or other ore
processing facilities.
iv) The mining phase shall include all other activities not otherwise
covered above, including activities conducted after mining
operations have ceased.
(c) The following is a representative list of items comprising the
Operator's principal business office expenses that are expressly
covered by the administrative charge provided in this Section 2.13:
i) Administrative supervision, which includes services rendered by
managers, department supervisors, officers and directors of the
Operator for Operations, except to the extent that such services
represent a direct charge to the Joint Account, as provided for
in Section 2.2;
ii) Accounting, data processing, personnel administration, billing
and record keeping in accordance with governmental regulations
and the provisions of the Venture Agreement, and preparation of
reports;
<PAGE>
iii) The services of tax counsel and tax administration employees for
all tax matters, including any protests, except any outside
professional fees which the Management Committee may approve as a
direct charge to the Joint Account;
iv) Routine legal services rendered by outside sources and the
Operator's legal staff not otherwise charged to the Joint Account
under Section 2.9; and
v) Rentals and other charges for office and records storage space,
telephone service, office equipment and supplies.
d) The Management Committee shall annually review the administration
charges and may, with the consent of the Operator, amend the
methodology or rates used to determine such charges if they are found
to be insufficient or excessive.
2.14 OTHER EXPENDITURES. Any reasonable direct expenditure, other than
expenditures which are covered by the foregoing provisions, incurred by the
Operator for the necessary and proper conduct of Operations.
ARTICLE III
BASIS OF CHARGES TO JOINT ACCOUNT
3.1 PURCHASES. Material purchased and services procured from third
parties shall be charged to the Joint Account by the Operator at invoiced cost,
including applicable transfer taxes, less all discounts taken. If any Material
is determined to be defective or is returned to a vendor for any other reason,
the Operator shall credit the Joint Account when an adjustment is received from
the vendor.
3.2 MATERIAL FURNISHED BY OR TRANSFERRED TO THE OPERATOR OR A
PARTICIPANT. Any Material furnished by the Operator or a Participant from its
stocks or transferred to the Operator or Participant shall be priced on the
following basis:
a) NEW MATERIAL: New Material transferred from the Operator or
Participant shall be priced F.O.B. the nearest reputable supply store
or railway receiving point, where like Material is available, at the
current replacement cost of the same kind of Material, exclusive of
any available cash discounts, at the time of the transfer (herein
called, "New Price").
b) USED MATERIAL.
1) Used Material in sound and serviceable condition and suitable for
reuse without reconditioning shall be priced as follows:
i) Used Material transferred by the Operator or Participant
shall be
<PAGE>
priced at seventy-five percent (75%) of the New Price;
ii) Used Material transferred to the Operator or Participant
shall be priced (i) at seventy-five percent (75%) of the New
Price if such Material was originally charged to the Joint
Account as new Material, or (ii) at sixty-five percent (65%)
of the New Price if such Material was originally charged to
the Joint Account as good used Material at seventy-five
percent (75%) of the New Price.
2) Other used Material which, after reconditioning will be further
serviceable for original function as good secondhand Material, or
which is serviceable for original function but not substantially
suitable for reconditioning shall be priced at fifty percent
(50%) of New Price. The cost of any reconditioning shall be
borne by the transferee.
3) All other Material, including junk, shall be priced at a value
commensurate with its use or at prevailing prices. Material no
longer suitable for its original purpose but usable for some
other purpose shall be priced on a basis comparable with items
normally used for such other purposes.
c) OBSOLETE MATERIAL. Any Material which is serviceable and usable for
its original function, but its condition is not equivalent to that
which would justify a price as provided above shall be priced by the
Management Committee. Such price shall be set at a level which will
result in a charge to the Joint Account equal to the value of the
service to be rendered by such Material.
3.3 PREMIUM PRICES. Whenever Material is not readily obtainable at
published or listed prices because of national emergencies, strikes or other
unusual circumstances over which the Operator has no control, the Operator may
charge the Joint Account for the required Material on the basis of the
Operator's direct cost and expenses incurred in procuring such Material and
making it suitable for use. The Operator shall give written notice of the
proposed charge to the Participants prior to the time when such charge is to be
billed, whereupon any Participant shall have the right, by notifying the
Operator within ten days of the delivery of the notice from the Operator, to
furnish at the usual receiving point all or part of its share of Material
suitable for use and acceptable to the Operator.
3.4 WARRANTY OF MATERIAL FURNISHED BY THE OPERATOR OR PARTICIPANTS.
Neither the Operator nor any Participant warrants the Material furnished beyond
any dealer's or manufacturer's warranty and no credits shall be made to the
Joint Account for defective Material until adjustments are received by the
Operator from the dealer, manufacturer or their respective agents.
ARTICLE IV
<PAGE>
DISPOSAL OF MATERIAL
4.1 DISPOSITION GENERALLY. The Operator shall have no obligation to
purchase a Participant's interest in Material. The Management Committee
shall determine the disposition of major items of surplus Material, provided
the Operator shall have the right to dispose of normal accumulations of junk
and scrap Material either by sale or by transfer to the Participants as
provided in Section 4.2.
4.2 DISTRIBUTION TO PARTICIPANTS. Any Material to be distributed to
the Participants shall be made in proportion to their respective
Participating Interests, and corresponding credits shall be made to the Joint
Account on the basis provided in Section 3.2.
4.3 SALES. Sales of Material to third parties shall be credited to the
Joint Account at the net amount received. Any damages or claims by the
Purchaser shall be charged back to the Joint Account if and when paid.
ARTICLE V
INVENTORIES
5.1 PERIODIC INVENTORIES, NOTICE AND REPRESENTATIONS. At reasonable
intervals, inventories shall be taken by the Operator, which shall include all
such Material as is ordinarily considered controllable by operators of mining
properties and the expense of conducting such periodic inventories shall be
charged to the Joint Account. The Operator shall give written notice to the
Participants of its intent to take any inventory at least thirty (30) days
before such inventory is scheduled to take place. A Participant shall be deemed
to have accepted the results of any inventory taken by the Operator if the
Participant fails to be represented at such inventory.
5.2 RECONCILIATION AND ADJUSTMENT OF INVENTORIES. Reconciliation of
inventory with charges to the Joint Account shall be made, and a list of
overages and shortages shall be furnished to the Management Committee within six
(6) months after the inventory is taken. Inventory adjustments shall be made by
the Operator to the Joint Account for overages and shortages, but the Operator
shall be held accountable to the Venture only for shortages due to lack of
reasonable diligence.
<PAGE>
EXHIBIT C
NET PROCEEDS CALCULATION
1. INCOME AND EXPENSE. Net Proceeds shall be calculated by
deducting from the gross revenues realized (or deemed to be realized) from the
sale (or deemed sale) of Products, such costs and expenses attributable to
Exploration, Development, Mining and the marketing of Products as would be
deductible under generally accepted accounting principles and the practices
consistently applied as employed by the Operator, including without limitation:
a) All costs and expenses of replacing, expanding, modifying,
altering or changing from time to time the Mining facilities.
Costs and expenses of improvements (such as haulage ways or mill
facilities) that are also used in connection with workings other
than the Property shall be charged to the Property only in the
proportion that their use in connection with the Property bears
to their total use.
b) AD VALOREM real property and unsecured personal property taxes,
and all taxes, other than income taxes, applicable to Mining of
the Property, including without limitation all provincial mining
taxes, sales taxes, severance taxes, royalties, license fees and
governmental levies of a similar nature.
c) Allowance for overhead in accordance with Section 2.13 of the
Accounting Procedure.
d) All expenses incurred relative to the sale of Products,
including an allowance for commissions at rates which are normal
and customary in the industry.
e) All amounts payable to the Operator of the Property during
Mining pursuant to any applicable operating or similar agreement
in force with respect thereto.
f) The actual cost of investment prior to beginning of Mining which
shall include all expenditures for Exploration and Development
of the Property incurred by the nonwithdrawing Participant
subsequent to the withdrawing Participant acquiring a Net
Proceeds interest.
g) Interest on monies borrowed or advanced for costs and expenses,
at an annual rate equal to two (2) percentage points above the
Prime Rate, but in no event in excess of the maximum permitted
by law.
h) An allowance for reasonable working capital and inventory.
i) Reasonably anticipated reclamation costs.
It is intended that the Operator and the nonwithdrawing Participants shall
recoup from net cash flow all of their contributions for Exploration,
Development, Mining, and marketing Products before any Net Proceeds are
distributed to any person holding a Net Proceeds interest. No deduction shall
be
<PAGE>
made for income taxes, depreciation, amortization or depletion. If in any
year after the beginning of Mining of the Property an operating loss relative
thereto is incurred, the amount thereof shall be considered as and be
included with outstanding costs and expenses and carried forward in
determining Net Proceeds for subsequent periods. If products are processed
by the Operator or a Participant, or are sold to an Affiliate of the Operator
or a Participant, then, for purposes of calculating Net Proceeds, such
Products shall be deemed conclusively to have been sold at a price equal to
fair market value to arm's length purchasers FOB the concentrator for the
Property, and Net Proceeds relative thereto shall be calculated without
reference to any profits or losses attributable to smelting or refining.
2. PAYMENT OF NET PROCEEDS. Payment of Net Proceeds shall commence
in the calendar year next following the calendar year in which Net Proceeds are
first realized, and shall be made 45 days following the end of each calendar
quarter during which Net Proceeds are realized, and shall be subject to
adjustment, if required, at the end of each calendar year. The recipient of
such Net Proceeds payments shall have the right to audit such payments within
the time and in the manner provided in Section 10.4 of the Agreement.
3. DEFINITIONS. All capitalized words and terms used herein have
the same meaning as in the Agreement to which this Exhibit C is attached.
<PAGE>
EXHIBIT NO. 4.1
PURCHASE AGREEMENT
THIS AGREEMENT, made this 31ST day of JANUARY, 1997, by and between
Verdstone -Stirrup Creek Minerals Ltd. (SELLER), and New Concept Mining Inc.
(BUYER).
RECITALS
A. The SELLER(s) own and possess certain waste dumps situated on patented
property located in Kingston Canyon, Nevada and more particularly described
as follows:
Waste dumps in excess of 100,000 tons created from the mining of the
Victorine Mine. Said waste dumps are on patented mining property located in
Section 27, Township 16 North, Range 43 East, MDM, in the Kingston Mining
District, Lender County, Nevada. This Agreement is made exclusive of any
right or title to the premises on which the waste dumps are located.
B. The foregoing waste dumps, together with all areas and the right to
delineate, develop and move this same along with other interest, appurtenant
thereto, shall be referred to collectively as the "Property".
C. The parties now desire to enter into an Agreement giving Buyer the
exclusive right to delineate, develop and remove the Property and further
granting to Buyer the exclusive option to purchase the Property.
THEREFORE, in consideration of the mutual rights and obligations set
forth herein, the parties have agreed as follows.
SECTION ONE
PURCHASE AGREEMENT
1.1 PURCHASE OF WASTE DUMPS. Sellers hereby grant to Buyer the right to
purchase, remove, and mill the Property as set forth in this section.
1.2 PAYMENTS. In consideration of this Purchase Agreement, Buyer shall make
the following payments to Seller:
1.3 BINDING PAYMENT. Commencing January 31, 1997, the sum of One Thousand
Dollars ($1,000.00) shall be paid to Sellers in order to bind this
Agreement. All payments shall be applied to the purchase price as
described below.
1.4 PRODUCTION PAYMENTS. Buyer agrees to purchase from Verdstone - Stirrup
Creek Minerals Ltd. suitable waste dump material at the rate of Eight
($8.00) dollars per ton delivered at its sole expense to the Manhattan
Millsite located in Manhattan, Nevada. Representative trucks will
be weighed at a certified scale in order to obtain accurate tonnage
and volume estimates for the Property delivered to the mill. Mr. Alan R.
Berry, 6024 Telesco Way, Carmichael, California, 95608 USA will receive
10% of the proceeds ($.80 per ton) of this Agreement. Payment of this
supervisory fee will be made by Verdstone - Stirrup Creek Minerals Ltd.
<PAGE>
1.5 METHOD OF PAYMENT. Production payments shall be made not later than
Sixty (60) days after the Buyer removes the waste dump material from
the Victorine Mine Site. All payments shall be accompanied by a
statement explaining the manner in which the payment was calculated.
1.6 PHYSICAL WORK. Upon binding of this Agreement, Buyer shall be give
free access to the Property for any and all purposes associated with
breaking, removal, and mailing of the Property. Execution of this
Agreement also conveys to Buyer the right to immediately commence any
and all necessary operations incident to the breaking, removal, and
milling of the Property as set forth in this Agreement.
Applicable road use permits will be obtained from the United States Forest
Service along with placement of necessary reclamation bonding prior to
commencement of breaking removal, and milling of the Property.
1.7 DELIVERY OF DATA. Buyer will maintain accurate estimates of tonnage and
will also furnish Seller with copies of all such records.
1.8 DURATION OF AGREEMENT. This Agreement will remain in effect from the
date of the Agreement for a period of 190 days. This Agreement may
be renewed in increments to 190 days each at the manual consent of the
parties.
SECTION TWO
MINING OPERATIONS
2.1 RIGHT IS DELINEATE, DIVISION, AND REMOVE. Following execution of this
Agreement, Buyer shall have the right to make geological investigations and
surveys, to make ready for haulage of the Property by any means, and to
have all the rights and privileges incident to ownership of the Property
including without limitation the right to extract by any means, remove,
save, mill, concentrate, treat and sell or otherwise dispose of area,
concentrates, mineral-breaking earth and rock, and other products
therefrom.
2.2 CONDUCT OF WORK. Buyer shall perform its activities on the Property in
accordance with good mining practice, and shall comply with the applicable
worker's compensation laws of the State of Nevada.
2.3 INSTALLATION OF EQUIPMENT. Buyer may install, maintain, replace and remove
during the term of this Agreement any and all mining machinery, equipment,
tools and facilities which it may desire to use in connection with its
mining activities on the Property. Upon termination of this Agreement for
any reason, Buyer shall have a period of Thirty (30) days following such
termination during which they may remove all of the above items at its sole
cost and expense.
2.4 REPORTS. Buyer shall provide Sellers with all data generated from its
activities, including maps, essays, metallurgical tests and so forth, and
such data shall be furnished upon completion and termination of this
Agreement.
SECTION THREE
INSPECTION BY SELLER
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3.1 INSPECTION OF PROPERTY. Sellers, or their authorized agent or
representative, shall be permitted to enter upon the mining claims at all
reasonable times for the purpose of inspection, but shall enter so as not
to hinder reasonable operations of Buyer, Sellers shall indemnify and hold
harmless Buyer from any damage, claim or demand by reason of injury to
Sellers or their agents of representatives on said Property, except by
negligence of Buyer.
3.2 INSPECTION OF ACCOUNTS. Buyer agrees to keep accurate books of account
reflecting the mining operations, and Sellers shall have the right, either
personally or through a qualified accountant of their choice, to examine
and inspect the books and records of Buyer pertaining to the mining,
milling, shipping operations of Buyer in connection with the disposition
of the Property.
SECTION FOUR
NOTICES AND PAYMENTS
4.1 NOTICES. All notices to Buyer or Sellers shall be in writing or telegram
and may be sent by certified or registered mail, return receipt requested,
to the address below. Notice of any change in addresses shall be given in
the same manner.
TO SELLERS: Verdstone - Stirrup Creek Minerals Ltd.
Windsor Square, Suite 310 - 1959 152nd Street
Surrey, British Columbia, Canada V4A 9E3
TO BUYER: New Concept Mining Inc.
P.O. Box 55
Manhattan, Nevada 89022
4.2 PAYMENTS. All payments required shall be paid to: Sellers' addresses as
shown above or as otherwise directed by Sellers. All payments shall be in
lawful currency of the United States of America.
SECTION FIVE
WARRANTY OF TITLE
5.1 WARRANTY. Sellers expressly warrant that they are the Sellers of the
Property described in Recital A and that the Property is free from liens
and encumbrances; and that Sellers have and will continue to have the
right to commit said Property to this Agreement.
SECTION SIX
MISCELLANEOUS PROVISIONS
6.1 BINDING EFFECT. This Purchase Agreement shall insure to the benefit of
and be binding upon the parties herein, their respective heirs, executors,
administrators, successors and assigns.
6.2 LAW. The terms and provision of this Purchase Agreement shall be
interpreted in accordance with the laws of the State of Nevada.
6.3 RECORDING MEMORANDUM OF AGREEMENT. The parties hereto agree to execute a
Memorandum of this Agreement (short form) for the purpose of recording same
on the records of Nye County, Nevada,
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so as to give public notice, pursuant to the laws of the State of Nevada,
of the existence of this Agreement.
6.4 VOID OR INVALID PROVISION. If any term, provision, covenant or condition
of this Purchase Agreement or any application thereof, should be held by
a court of competent jurisdiction to be invalid, void or unenforceable,
all provisions, covenants and conditions of this Purchase Agreement and
all applications thereof not held invalid, void or unenforceable, shall
continue in full force and affect and shall in no way be affected,
impaired, or invalidated thereby.
6.5 TIME OF THE ESSENCE. Time is of the essence of this Purchase Agreement and
each and every part thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement on the day and year first above written, Execution may be in
counterparts.
SELLERS BUYER
Verdstone - Stirrup Creek Minerals Ltd. New Concept Mining Inc.
- - ------------------------------------------- -------------------------------
Windsor Square - Suite 310 - 1959 152nd St. P.O. Box 55
- - ------------------------------------------- -------------------------------
Surrey, British Columbia, Canada V4A 9E3 Manhattan, Nevada 89022
- - ------------------------------------------- -------------------------------
/s/ JOHN P. FISHER, P. ENG. By: /s/ BILL S. FOSTER
- - ------------------------------------------- -------------------------------
(Director - VGC & SCU) Bill S. Foster, President/
CEO New Concept Mining Inc.
STATE OF NEVADA )
) ss.
County of ____________________ )
On this _________________ day of ______________________, 19___ personally
appeared before me, a Notary Public ________________________________known to
me to be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that the executed the within instrument.
-----------------------------------------
Notary Public
STATE OF NEVADA )
) ss.
County of ____________________ )
On this _________________ day of ______________________, 19___ personally
appeared before me, a Notary Public ________________________________known to
me to be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that the executed the within instrument.
-----------------------------------------
Notary Public
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EXHIBIT NO. 99.1
MINOREX CONSULTING LTD.
Geological Consultants and Exploration Management
March 5, 1997
The Board of Directors
STIRRUP CREEK GOLD LTD.
Suite 310 - 1959 152nd Street
Surrey, B.C. V4A 9E3
Dear Sirs:
Re: Historical Reference to the "Exploration Report on the Victorine Property,
Kingston Mining District, Lander County, Nevada, U.S.A.," dated May 18,
1993 and amended May 14, 1995
The undersigned prepared the "Exploration Report on the Victorine Property,
Kingston Mining District, Lander County Nevada, U.S.A.," dated May 18, 1993 and
amended May 14, 1995, and consents to the use of this report only as a
historical reference.
The undersigned consents to historical references to the undersigned contained
in, or incorporated by historical reference in, the Form 20-F of Stirrup Creek
Gold Ltd.
Yours truly,
MINOREX CONSULTING LTD.
[SEAL PROFESSIONAL GEOSCIENTIST - PROVINCE OF BRITISH COLUMBIA]
/s/ J. DOUGLAS BLANCHFLOWER
- - ------------------------------------
J. Douglas Blanchflower, P. Geo.
Consulting Geologist
