XXXXXX CORPORATION
Suite 000, 000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
March 7, 2002
PRIVATE & CONFIDENTIAL
BAY RESOURCES LTD.
Attention: Xxxxxx Xxxxxxx
Dear Sirs:
This is written to confirm the mutual agreement of Xxxxxx Corporation ("XXXXXX")
and Bay Resources Ltd. ("BAY") concerning the grant of access by Xxxxxx to Bay
of certain confidential and proprietary information owned by Xxxxxx, all on the
terms and conditions hereinafter provided.
Xxxxxx is in the business of the exploration, development and mining of diamonds
(the and has properties or interests in properties in Nunavut and the Northwest
Territories, Canada. By their execution and delivery of this agreement (the
"AGREEMENT") and for good and valuable consideration, Xxxxxx and Bay do hereby
covenant and agree as follows:
1. ACCESS TO INFORMATION. Xxxxxx shall make available to Bay and its
authorized representatives (the "REPRESENTATIVES") certain confidential and
proprietary information of Xxxxxx comprising exploration data in written,
printed, graphic, electronic or other tangible form and in oral form (the
"XXXXXX EXPLORATION INFORMATION"), for use solely by Bay and its Representatives
in connection with the assessment by Bay and its Representatives of the gold,
silver and base metal (collectively, the "METALS") potential of the properties
which are the subject matter of the Xxxxxx Exploration Information (the "XXXXXX
PROPERTIES") or which are adjacent to or are in the area of the properties which
are the subject matter of the Xxxxxx Exploration Information (the "ADJACENT
PROPERTIES"). In this Agreement, the Xxxxxx Properties and the Adjacent
Properties are sometimes collectively referred to as the "EXAMINED PROPERTIES".
2. ACKNOWLEDGEMENT AS TO XXXXXX EXPLORATION INFORMATION. Bay acknowledges
on its own behalf and on behalf of its Representatives that the Xxxxxx
Exploration Information is being given to Bay and/or its Representatives by
Xxxxxx without liability on the part of Xxxxxx or its directors or officers and
that no representation and warranty is made as to any of the Xxxxxx Exploration
Information by Xxxxxx or its directors or
officers. Neither Bay nor its Representatives shall assert or allege the
existence of any representation, warranty or agreement by Xxxxxx or its
directors or officers solely as a result of the receipt by Bay and/or its
Representatives of the Xxxxxx Exploration Information as contemplated by this
Agreement.
3. AGREEMENT AS TO DIAMOND DEPOSITS. Bay agrees on its own behalf and on
behalf of its Representatives that, notwithstanding the grant of access by
Xxxxxx to Bay and its Representatives to the Xxxxxx Exploration Information; (i)
the Xxxxxx Exploration Information is the confidential and proprietary
information of Xxxxxx; and (ii) Xxxxxx shall retain full right, title and
interest in and to the Xxxxxx Exploration Information and for greater certainty
and without limitation, in all diamond deposits that may be discovered by
Xxxxxx, Bay and/or its Representatives in the Examined Properties or by virtue
of the Xxxxxx Exploration Information.
4. RIGHT OF ACCESS TO XXXXXX PROPERTIES. Bay agrees on its own behalf and
on behalf of its Representatives that; (i) notwithstanding the execution and
delivery of this Agreement by Xxxxxx and Bay, nothing herein shall be deemed to
grant to Bay and/or its Representatives the right to access the Xxxxxx
Properties; and (ii) Bay and/or its Representatives shall advise Xxxxxx in
writing if they should seek access to any of the Xxxxxx Properties
(collectively, the "ACCESSED PROPERTIES" and individually, an "ACCESSED
PROPERTY"). Bay and/or its Representatives shall only be able to access the
applicable Accessed Property if Xxxxxx and Bay have executed and delivered a
separate right of access agreement with respect thereto, which contains terms
and conditions that are acceptable to Xxxxxx (the "RIGHT OF ACCESS AGREEMENT"),
not inconsistent with the terms of this Agreement; (iii) Xxxxxx shall only
execute and deliver a Right of Access Agreement with respect to any Accessed
Property if Xxxxxx is able to procure all requisite third party consents,
including without limitation, the consent of joint venture partners and property
owners, that are necessary to permit Bay and/or its Representatives to have
access to the applicable Accessed Property; (iv) the Right of Access Agreement,
among other things, shall provide that; 1. under no circumstances shall the
operations of Bay and/or the Representatives on the Accessed Properties (the
"BAY OPERATIONS") interfere with the operations of Xxxxxx (the "XXXXXX
OPERATIONS"), the Xxxxxx Operations thereon to be of paramount importance and to
take precedence over the Bay Operations. If Xxxxxx advises Bay in writing that
the Bay Operations interfere with the Xxxxxx Operations, Bay and/or its
Representatives shall immediately cease and desist the Bay Operations; 2.
notwithstanding the terms thereof, Xxxxxx, in its sole and unfettered
discretion, shall have the right at any time and from time to time, to sell,
transfer, assign, encumber, mortgage, pledge, hypothecate, allow to lapse,
forfeit, surrender or in any other manner dispose of, its interest in all or any
of the Accessed Properties; and 3. the Bay Operations shall be conducted at the
sole risk and expense of Bay and Bay shall indemnify, defend and hold harmless
Xxxxxx to the full extent of any actual or alleged costs, liabilities or
expenses (including reasonable solicitors' fees) that Xxxxxx may become subject
to as a result of the Bay Operations.
5. EXPLOITATION POTENTIAL. Pursuant to the terms and conditions hereof,
but subject to the provisions of section 4 hereof, Bay shall have the right to
exploit opportunities in all Metals in the Accessed Properties. Bay agrees on
its own behalf and on behalf of its Representatives to forthwith bring to the
attention of Xxxxxx and/or Tahera's Representatives, any and all information
pertaining to potential diamond deposits and/or opportunities in the Examined
Properties, failing which Bay and its Representatives shall have no further
rights to access the Xxxxxx Exploration Information and/or the Accessed
Properties for any reason whatsoever and without in any way derogating from the
provisions of section 10 hereof, this Agreement shall be at an end, as shall all
Right of Access Agreements provided that, for greater certainty and without
limitation, the provisions of sections 6, 9, 10, 11, 12, 13, 14, 15 and 16
hereof shall survive such termination.
6. GRANT OF NET SMELTER RETURN ROYALTY. Upon the acquisition by Bay and/or
its subsidiaries or affiliates, as such terms are defined in the Business
Corporations Act, Ontario (the "BAY COMPANIES") in any manner whatsoever,
directly or indirectly, of any interests, claims, assets, deposits and/or
properties (the "BAY ACQUIRED PROPERTIES") as a direct or indirect consequence
of the grant of access by Xxxxxx to Bay and its Representatives to the Xxxxxx
Exploration Information and/or the Xxxxxx Properties and/or the execution and
delivery of a Right of Access Agreement, the Bay Companies shall forthwith grant
to Xxxxxx a 2% net smelter return royalty (the "NSR ROYALTY"). The NSR Royalty
shall be paid by the Bay Companies on the amount actually received from the sale
of any ores and minerals mined and removed from the Bay Acquired Properties and
thereafter sold by or for the account of the Bay Companies before or after
processing, smelting or refining, less only the following; (i) sales, use, gross
receipts, severance, ad valorem and other taxes, if any, however denominated,
payable with respect to the existence, severance, production, removal, sale or
disposition of such ores and minerals, but excluding taxes on net income; (ii)
charges and costs, if any, for transportation (including direct insurance costs
while in transit) to places where such ores and minerals are smelted, refined
and sold; and (iii) charges, costs and penalties, if any, for smelting, refining
and marketing, including costs of assaying and sampling. The Bay Companies shall
pay the NSR Royalty quarterly (on or before the 45th day after the last day of
the fiscal quarter of the Bay Companies). Within 90 days after the end of each
fiscal year of the Bay Companies, the Bay Companies shall deliver to Xxxxxx an
audited statement of the production of gold or other base metals from the Bay
Acquired Properties together with the NSR Royalty paid to Xxxxxx during the year
and the calculation thereof. Xxxxxx shall have the right, at its own sole cost
and expense, to an annual independent audit of the statement by its own auditors
or by an external certified public accountant, provided that all year-end
statements shall be deemed true and correct one year after presentation to
Xxxxxx. The NSR Royalty shall also have attached thereto, reasonable and
customary, industry-standard terms and conditions. Xxxxxx, in its sole and
unfettered discretion, shall have the right to register a copy of this Agreement
against title to any of the Bay Acquired Properties.
7. XXXXXX'S AUTHORIZATION REPRESENTATIONS AND WARRANTIES. Xxxxxx
represents and warrants to Bay that; (i) Xxxxxx is duly authorized to enter into
and perform this Agreement; (ii) Xxxxxx has the right to disclose the Xxxxxx
Exploration Information to
Bay and its Representatives without violating the rights of others and without
the necessity of securing the consent or agreement of any other person and the
use by Bay of the Xxxxxx Exploration Information as contemplated herein shall
not result in the violation of any confidentiality covenant, consent or other
obligation arising out of any agreement to which Xxxxxx is a party; and (iii)
this Agreement is enforceable against Xxxxxx in accordance with its terms,
subject to the usual qualifications with respect to bankruptcy and insolvency
and equitable rights and remedies.
8. XXX'S AUTHORIZATION REPRESENTATIONS AND WARRANTIES. Bay represents and
warrants to Xxxxxx that: (i) Bay is duly authorized to enter into and perform
this Agreement; (ii) Bay has the right to access the Xxxxxx Exploration
Information without violating the rights of others and without the necessity of
securing the consent or agreement of any other person and the use by Bay of the
Xxxxxx Exploration Information as contemplated herein shall not result in the
violation of any confidentiality covenant, consent or other obligation arising
out of any agreement to which Bay is a party; and (iii) this Agreement is
enforceable against Bay in accordance with its terms, subject to the usual
qualifications with respect to bankruptcy and insolvency and equitable rights
and remedies.
9. BAY COVENANTS AS TO XXXXXX EXPLORATION INFORMATION. Bay covenants and
agrees on its own behalf and on behalf of its Representatives as follows: (i)
Bay and its Representatives shall receive, protect and maintain the Xxxxxx
Exploration Information in the strictest confidence; (ii) neither Bay nor any of
its Representatives shall disclose the Xxxxxx Exploration Information to any
person for any reason whatsoever, other than Representatives of Bay who actually
need to have knowledge of the Xxxxxx Exploration Information, provided that
prior to disclosure of the Xxxxxx Exploration Information to any such
Representative, Bay or its Representatives shall inform each Representative of
the confidential nature of the Xxxxxx Exploration Information and shall require
each Representative to treat the Xxxxxx Exploration Information as confidential;
(iii) Bay and its Representatives shall safeguard the Xxxxxx Exploration
Information to the same extent as if it was information of or pertaining to Bay
and/or its Representatives; (iv) upon the written request of Xxxxxx, Bay and/or
its Representatives shall promptly return all Xxxxxx Exploration Information.
The foregoing provisions do not apply to details of the Xxxxxx Exploration
Information which; (i) are part of the public domain at the time they are
acquired by Bay or its Representatives; (ii) are not acquired by Bay or its
Representatives, either directly or indirectly, from Xxxxxx or its
Representatives; (iii) are made known to Bay or its Representatives without an
obligation of confidentiality by a third person who did not acquire knowledge of
the details, either directly or indirectly, under an obligation of
confidentiality; (iv) after they are made known to Bay or its Representatives,
become part of the public domain through no fault of Bay or its Representatives;
and/or (v) Bay or its Representatives can establish were in their respective
possession prior to the date of disclosure of such details by Xxxxxx and/or its
Representatives.
10. XXXXXX REMEDIES FOR BREACH. Without limiting any remedies that Xxxxxx
may otherwise have with respect to a breach of this Agreement or the misuse of
the Xxxxxx Exploration Information disclosed hereunder, Xxx agrees to indemnify
and save Xxxxxx
harmless in respect of any and all breaches hereof. Bay acknowledges and agrees
that Xxxxxx would be irreparably harmed if any of the provisions hereof and in
particular, section 9 hereof, were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, Xxx agrees that Xxxxxx
shall be entitled to injunctive relief to prevent breaches of this Agreement and
to specifically enforce the terms and provisions hereof in addition to any other
remedy to which Xxxxxx may be entitled, at law or in equity. No failure or delay
by Xxxxxx in exercising any rights, powers or privileges under this Agreement
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or future exercise of any rights, powers or
privileges hereunder.
11. SURVIVAL OF CONFIDENTIALITY OBLIGATIONS AND DELIVERY OF INFORMATION.
Except with the prior written consent of Xxxxxx, the confidentiality obligations
of Bay and its Representatives under this Agreement shall subsist for a period
of two years after the expiration of this Agreement, provided that the
confidentiality obligations of Bay and its Representatives shall continue if the
Xxxxxx Exploration Information enters the public domain as a consequence of a
breach of this Agreement or any other wrongful or negligent act or omission of
Bay or its Representatives. Upon the expiration of this Agreement, Bay and its
Representatives shall deliver the Xxxxxx Exploration Information to Xxxxxx
together with any and all notes, summaries or memoranda relating thereto,
without retaining any copies or extracts therefrom.
12. NON-DISCLOSURE. Without the prior written consent of the other party
hereto (collectively, the "PARTIES" or individually a, "PARTY"), neither Xxxxxx
nor Bay shall make any public announcement or make any statement to the press or
issue any press release with respect to this Agreement, except as may be
necessary, in the opinion of counsel to the relevant Party, to comply with the
requirements of applicable stock exchange rules and securities legislation. If
either Party determines that, as a result of such requirements, disclosure is
required to be made by such Party, the Party making the disclosure shall use
commercially reasonable efforts to give prior oral or written notice to the
other Party and if such prior notice is not possible, to give such notice
immediately following the making of such disclosure.
13. ENUREMENT. This Agreement shall enure to the benefit of and be binding
upon the Parties and their respective successors and permitted assigns, it being
understood and agreed that except as specifically contemplated herein, no person
shall be a third party beneficiary of this Agreement.
14. FEES AND EXPENSES. Except as otherwise expressly provided in this
Agreement, each Party will bear all expenses incurred by it in connection with
the negotiation, preparation, execution and delivery of this Agreement,
including but not limited to legal fees.
15. NO JOINT VENTURE. Nothing in this Agreement shall be interpreted to
create between the Parties, expressly or by implication, any partnership, joint
venture, joint enterprise, relationship of trust and confidence or other special
relationship or any relationship of principal and agent.
16. ENTIRE AGREEMENT. This Agreement together with all Right of Access
Agreements contains the entire Agreement of the Parties related to the subject
matter hereof. No promise, inducement or agreement, express or implied, not
herein expressed has been made or given or relied upon by either Party as
consideration for the execution and delivery of this Agreement. There are no
conditions, agreements, representations, warranties or understandings, express
or implied between the Parties, except as set forth herein or in any Rights of
Access Agreement.
17. LAWS. This Agreement shall be governed and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein and shall be treated in all respects as an Ontario contract. The Parties
do hereby submit to the jurisdiction of the courts of the Province of Ontario
with respect to any dispute, claim or other matter arising hereunder.
18. ASSIGNMENT. This Agreement and the rights and obligations created
hereunder may not be assigned by either Party without the prior written consent
of the other Party and any assignment in violation of this Agreement is
absolutely void and not just voidable.
19. COUNTERPART. This Agreement may be executed in counterpart, by original
or telefacsimile signature and each such counterpart when taken together shall
constitute one and the same Agreement.
If you are in agreement with the foregoing, please so indicate by signing two
copies of this letter and returning one copy to Xxxxxx Corporation to the
attention of Xxxxx Xxxxx, whereupon this letter will be deemed to constitute our
agreement with respect to the subject matter hereof.
Yours very truly,
XXXXXX CORPORATION
Per: /s/
------------------------
Authorized Signing Officer
Acknowledged and accepted this
7 day of March, 2002
BAY RESOURCES LTD.
Per: /s/Xxxxxx X. Xxxxxxx
-------------------------
Authorized Signing Officer
[XXXXXX CORPORATION LOGO]
Suite 000, 000 Xxxxxxxx Xxxxxx Xxxx,Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0XX
TEL. (000) 000-0000 - TOLL FREE 0(000) 000-0000 - FAX (000) 000-0000
XXX.XXXXXX.XXX
March 7, 2002
Reference to the Agreement between Xxxxxx Corporation ("Xxxxxx") and Bay
Resources Ltd. ("Bay") dated March 7, 2002 regarding the grant of access by
Xxxxxx to Bay of certain exploration data. Bay and Xxxxxx agree to the
following:
l.) The area under which Xxxxxx is entitled to a 2% net smelter return
royalty from production of gold or base metal deposits discovered by
Bay includes the entire Slave Craton, in addition to the "Examined
Properties".
2.) Bay will not be entitled to any interest in diamond deposits discovered
in the entire Slave Craton.
This amendment to the Agreement is accepted and approved.
XXXXXX CORPORATION
Per: /s/
------------------------
Authorized Signing Officer
Acknowledged and accepted this
7 day of March, 2002
BAY RESOURCES LTD.
Per: /s/Xxxxxx X. Xxxxxxx
-------------------------
Authorized Signing Officer
