(ENGLISH VERSION)
CONTRACTS OF MINING EXPLORATION AND OF PROMISE OF ASSIGNMENT OF RIGHTS ENTERED
INTO BY AND BETWEEN, AS A FIRST PARTY, MR. XXXXX XXXXX XXXXXX, ACTING ON HIS OWN
BEHALF, (IN THIS DOCUMENT THE "TITLEHOLDER") AND ON BEHALF OF MRS. ALBERTA
XXXXXXX XXXXX XXXXX, THE LATTER IN NAME AND ON BEHALF OF XXX. XXXXXXXX XXXXX
XXXXX XX XXXXX, IN ORDER TO GRANT THE SPOUSE CONSENT REQUIRED; AND, AS A SECOND
PARTY, POLO Y XXX MINERALES, S.A. DE C.V., (IN THIS CONTRACT THE "BENEFICIARY"),
REPRESENTED IN THIS ACT BY XX. XXXXX X. XXXXXXXXX, IN ACCORDANCE WITH THE
FOLLOWING DECLARATIONS AND CLAUSES:
D E C L A R A T I O N S
I. The TITLEHOLDER declares:
1. That he is Mexican by birth, of legal age, married under community property,
as it is evidenced with copy of the corresponding marriage certificate, recorded
in the Federal Taxpayers' Registry under code GEGF-270729-AT3, with legal
capacity to enter into contracts and to hold mining concessions, in accordance
with that established in the Mining Law and its Regulations;
2. That he is the only holder of the rights deriving from the mining
exploitation concessions covering the mining lots named "EL QUINTO II", title
175486 and "EL COMETA NAVIDENO", title 171847 (in this contract jointly
identified as the LOTS), which identification data are the following:
a) "EL QUINTO II", mining exploitation concession, title 175486, issued
on July 31, 1985, located in the Municipality of Zacualpan, State of
Mexico, with a surface of 9.0957 hectares, recorded under number 166,
page 42, volume 238 of the General Book of Mining Concessions of the
Public Registry of Mining; and,
b) "EL COMETA NAVIDENO", mining exploitation concession, title 171847,
issued on June 15, 1983, located in the Municipality of Tetipac, State
of Xxxxxxxx, with a surface of 23.0584 hectares, recorded under number
627, page 158, volume 228 of the General Book of Mining Concessions of
the Public Registry of Mining.
Attached as Exhibit I, are copies of the mining concession titles covering the
LOTS described in the above subparagraphs.
3. That he is considered as current in the fulfillment of the obligation related
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to the proof of mining works carried out in the LOTS; the foregoing taking into
consideration that he is titleholder of mining concessions which surface,
jointly, do not exceed 100 (one hundred) hectares and, according to the
applicable legal provisions of the Mining Law and its Regulations, he has no
obligation to file proof of assessment works with the General Direction of
Mines.
As concerns the payment of duties over mining concessions established in the
Federal Duties Law (surface taxes) the TITLEHOLDER states that a debt by the
TITLEHOLDER with respect to the same LOTS exists.
In line with that mentioned in the preceding paragraph, the TITLEHOLDER also
states that he has received an official communication from the mining
authorities, requesting him to prove the payment of such surface taxes by means
of the filing of the corresponding receipts, including the up-dating of such
debt and surcharges deriving from such incompliance; reason why the TITLEHOLDER
obligates himself to pay the totality of such outstanding surface taxes, upon
the receiving by him of the first payment referred to in subparagraph a) of
section 4.2 of Clause Second of these Contracts, or if such would not be
possible, then the TITLEHOLDER shall enter into an agreement with the competent
tax authorities, with the purpose of paying such total amount due in
installments, but not later than November 30, 1998.
For said purposes, attached hereto as Exhibit II are added copies of the
receipts of payment for the surface duties (surface taxes) corresponding to the
LOTS, for the semesters that have been paid by the TITLEHOLDER.
As Exhibit III are added copies of the certifications referred to by the second
paragraph of article 23 of the Mining Law, whereby it is evidenced that the
concessions covering the LOTS are in effect, also showing the status of
compliance with the obligations that the Mining Law and its Regulations impose
to the TITLEHOLDER as concessionaire of the LOTS.
4. That the monuments indicating the location of the starting point of each one
of the LOTS, are well preserved, built in the terms of law and maintained in the
same place previously approved by the mining authorities.
5. That the rights derived from the mining concessions that cover the LOTS are
free of any liens, encumbrances, burdens or limitations of domain of any nature,
and that to the date of execution of this document, the TITLEHOLDER has not
entered nor will enter into any Contract, nor he has performed nor will perform
any act with respect to the LOTS, which could encumber, burden or limit, in any
manner whatsoever, the rights that he has over the abovementioned mining
concessions; therefore, the TITLEHOLDER guaranties the existence, validity and
availability of the rights referred to herein.
6. That with respect to the activities performed in the LOTS, as of this date,
no legal provisions in the environmental area nor of any other nature have been
breached, also stating the TITLEHOLDER that -when so required- all of the
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authorizations required to perform works in the LOTS were obtained, reason why
as of the date of execution of this document, no environmental contingency nor
of any other nature that may affect the validity of the mining concessions
covering the LOTS exists.
7. That the TITLEHOLDER hereby wishes to grant to the BENEFICIARY the exclusive
right to evaluate and explore the LOTS, for a term of 12 (twelve) months counted
from the date of execution and ratification before Notary Public of these
Contracts by both parties; which exploration shall be carried out under the
terms and conditions established in this document, considering that the
BENEFICIARY is capable to be the holder of mining concessions in accordance with
the Mining Law and its Regulations and that this Contract of Exploration is
authorized in terms of the applicable legal provisions.
8. That, furthermore, the TITLEHOLDER hereby wishes to enter with BENEFICIARY,
for the same term, into a Contract of Promise of Assignment of all of the Rights
derived from the mining concessions covering the LOTS, as well as in connection
with all the rights that the TITLEHOLDER has to access the surface covered by
the LOTS, such as rights for the expropriation of land, temporary occupations,
licenses, permits, authorizations, easements or any other equivalent permits
that, in general, allow the performance of the mining works; the foregoing, in
the terms and conditions set forth in this document.
II. Mr. Xxxxx Xxxxx Xxxxxx declares that his principal, Mrs. Alberta Xxxxxxx
Xxxxx granted him enough authority to act on behalf of Xxx. Xxxxxxxx Xxxxx
Xxxxx xx Xxxxx.
1. That Mrs. Alberta Xxxxxxx Xxxxx Xxxxx has the authority to act in the name
and on behalf of Xxx. Xxxxxxxx Xxxxx Xxxxx xx Xxxxx, obligating the latter in
the terms of these Contracts, as evidenced in public instrument number 27,877,
of July 23, 1988, granted before Mr. M.A. Xxxxxxx Xxxxxxxxx Ysita, Notary Public
number 1 for the District of Tenancingo, State of Mexico; authority that, as of
the date of execution of this document, has not been revoked nor modified in any
manner, and that she appears to this act, in order to grant the spouse consent
of her principal to Mr. Xxxxx Xxxxx Xxxxxx, in order for the latter to enter
into these Contracts with the BENEFICIARY, as well as to enter into the
contracts that may derive from these Contracts.
III. The BENEFICIARY declares through its representative:
1. That his principal is a Mexican mining company, incorporated in accordance
with the Laws of the Mexican United States, as evidenced in public instrument
8,299 of March 10, 1988, granted before Xx. Xxxx Xxxxxxx Xxxxxxxxx y Xxxx, at
that moment Notary Public 21 for the District of Morelos; and that, in
accordance with its corporate purpose, it is capable to be holder of mining
concessions, as well as to enter into contracts whose subject matter are rights
derived from such concessions.
2. That as representative of the BENEFICIARY, he has the authority to act in the
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name and on behalf of the latter, obligating itself under the terms of these
Contracts, as evidenced in public instrument number 3,889, of February 6, 1998,
granted before Ms. Xxxxx del Xxxxxx Breach xx Xxxxxxxxx, Notary Public 26 for
the District of Morelos; authority that as of the date of execution of this
document, has not been revoked nor modified in any manner.
3. That given the declarations of the TITLEHOLDER, the BENEFICIARY wishes: (i)
to enter into a Mining Exploration Contract with the TITLEHOLDER, with respect
to each and all of the LOTS; and, (ii) that in case that the BENEFICIARY
exercises the right to acquire granted herein, the TITLEHOLDER enters into a
definitive Contract or Contracts of Assignment of all the rights deriving from
both or one of the LOTS, as determined by the BENEFICIARY; the above in the
terms and conditions mentioned below.
Given the foregoing declarations, the parties agree on the following:
C L A U S E S
CONTRACT OF EXPLORATION
FIRST. The TITLEHOLDER hereby transfers to the BENEFICIARY, the exclusive right
to evaluate and explore the LOTS, which identification data are specified in
declaration I.2. of this document, in accordance with the following provisions:
1. Term. The life of this Contract of Exploration is of 12 (twelve) months,
counted from the date of execution and ratification of this document before
Notary Public.
1.1 The aforesaid term shall be compulsory for the TITLEHOLDER, and voluntary
for the BENEFICIARY; therefore, the latter may terminate this Contract of
Exploration, at any time, at its sole discretion and without any responsibility
for itself, by means of a written notice addressed to the TITLEHOLDER, with 15
(fifteen) days anticipation to the date on which the BENEFICIARY wishes such
termination to be effective; the BENEFICIARY obligating itself to pay any
outstanding debt which same had committed to pay according to this document and
is considered due to the BENEFICIARY, prior to the date on which the termination
be effective.
That indicated in the last part of the preceding paragraph means that, in order
to determine if, upon the termination of these Contracts, any outstanding debt
to be paid by the BENEFICIARY exists or not, the parties agree on the following:
(i) As concerns the payment of duties over mining concessions (surface taxes)
to be generated for the first and second semesters of 1999: if on January
1, 1999 these Contracts remain in effect -because the BENEFICIARY had not
delivered the respective termination notice or because such termination has
not became effective- then the BENEFICIARY shall reimburse to the
TITLEHOLDER the corresponding amount paid as surface taxes for the first
semester of 1999; otherwise, it is expressly agreed that such surface taxes
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shall be of the exclusive responsibility of the TITLEHOLDER. The foregoing
shall be also applicable on July 1, 1999, with respect to the surface taxes
corresponding to the second semester of 1999.
(ii) As concerns the payments established in sections 4. and 4.2 of Clause
Second of these Contracts: it is expressly agreed that, should any of the
dates -individually considered- referred to in each subparagraph of section
4.2 of Clause Second arrives and these Contracts are still in effect
-because the BENEFICIARY had not delivered the respective termination
notice or because such termination has not became effective- then the
BENEFICIARY shall pay the corresponding amount according to the respective
subparagraph; otherwise, the provision referring to "release of the
obligation of making payments" contained in Section 5. of Clause Second of
these Contracts shall be applicable.
That indicated in this section 1.1 means that the TITLEHOLDER, as of now, grants
his broadest consent, should that be the case, for the BENEFICIARY to terminate
in advance this Contract, in the manner agreed in this section, without it is
being necessary to enter into an express termination agreement or for the
BENEFICIARY to comply with any other formality; the foregoing is stated for all
legal purposes and particularly for the purpose of that mentioned in the last
paragraph of article 76 of the Regulations to the Mining Law, taking into
consideration that this document is ratified by the parties before a Notary
Public.
1.2 Given the duration of this Contract of Exploration, it is expressly agreed
that any titles of mining concessions that replace or derive from the titles
currently covering the LOTS, shall be incorporated to the subject matter of this
Contract under the concept LOTS, and therefore shall be subject to that set
forth in this document.
2. Access. Given the exclusive right to explore herein granted to the
BENEFICIARY, the TITLEHOLDER obligates himself to cooperate with the BENEFICIARY
in order for the latter to obtain free and full access to the surface covered by
the LOTS, stating the TITLEHOLDER that all the authorizations required from the
owners or possessors of the surface where the LOTS are located have been
obtained, in order to allow the BENEFICIARY the free access to same for the
execution of the exploration works referred to in this document. The expenses to
obtain future authorizations to have access to the LOTS shall be borne by the
BENEFICIARY, prior authorization by the latter for such purposes.
2.1 Likewise, the TITLEHOLDER obligates himself that, if during the term of this
Contract of Exploration the owners or possessors of the surface where the LOTS
are located change, or the circumstances under which the corresponding
authorizations were granted to have free access to the LOTS and to carry out the
exploration works change, he shall cooperate with the BENEFICIARY to obtain new
authorizations, to the extent required, in order for the BENEFICIARY to be able
to carry out the exploration works indicated in this Contract, according to its
work program.
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3. Works. The exploration to be carried out by the BENEFICIARY, be it directly
or through contractors who render their services to the BENEFICIARY, comprise,
among others, the works that allow the location, identification and
determination of mineral substances existing in the LOTS, consisting of site
preparation, geological investigations and examinations, including geological
explorations, topographical works, drilling of any kind and mining works such as
drifts, trenches, fronts, crosscuts, shafts and the like considered convenient,
additionally to one or more feasibility studies for the evaluation of this
project aimed at establishing a new mining unit.
Likewise the exploration to be carried out by the BENEFICIARY includes all such
activities related thereto and permitted by the applicable legal provisions in
the area of mining, particularly those indicated in articles 28 and 29 of the
Mining Law, and which may be used to prove the assessment works to which the
TITLEHOLDER is obligated as concessionaire of the LOTS.
4. Buildings and Constructions. From this date, the BENEFICIARY is authorized to
perform, at its own cost and risk, by itself or by means of third parties, all
of the works and build the structures, buildings, improvements, means of access
and others, as well as to install and use all the machinery and equipment
required for the exploration, which may be removed at any time, during the life
of this Contract of Exploration and during an additional term of 90 (ninety)
days after the termination of this Contract, whether the property of the
BENEFICIARY or of its contractors or third parties, if and when the removal of
same does not jeopardize the safety of the works carried out, in which case they
may not be removed.
4.1 It is understood that the permanent support works, struts and in general the
works necessary for the safety and stability of the mines may not be removed, in
accordance with that provided by the Mining Law.
4.2 The BENEFICIARY may request the support and assistance of the TITLEHOLDER,
should that be necessary, to negotiate with the owners or possessors of the
surface comprising the LOTS, for the performance of the works and constructions
referred to in this section 4, whether temporary or permanent. The expenses to
obtain such authorizations shall be borne by the BENEFICIARY.
5. Consideration for the Right to Explore and Investment Commitments. As
consideration for the right to explore granted by the TITLEHOLDER to the
BENEFICIARY in accordance with this Contract, the latter obligates itself,
during the life thereof, to carry out investments in exploration, development of
mining works, and any other activities which purpose is to evaluate the
potential mineral existing in the LOTS, for which purposes, the BENEFICIARY
shall invest the amounts that it considers convenient, taking into consideration
the minimum investments set forth in the Mining Law and in its Regulations.
5.1 It is expressly agreed that the BENEFICIARY shall have the right to explore
the LOTS with no restriction whatsoever during all the time in which this
Contract of Exploration is in effect.
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5.2 Acts of God or Force Majeure. It is expressly understood that the
BENEFICIARY shall not be liable for the delay or total or partial
non-fulfillment of its obligations, consisting in the performance of the
exploration works in terms of this document, as well as of making the payments
referred to in section 4 of Clause Second of these Contracts, when such delay or
non-fulfillment results from an Act of God or force majeure, this is, from facts
or events of nature or man that are unforeseeable or that even in the case they
might be foreseen, they cannot be avoided by the BENEFICIARY.
In accordance with that indicated in the above paragraph, the parties agree that
the events mentioned below, as examples but not in a limitative manner, shall be
considered as acts of God or force majeure: accidents such as fire, explosions,
flooding, tempests, tremors, epidemics, civil disturbances, labor disturbances,
strikes, wars, invasions, oppositions or disturbances caused by rural
communities, ejido's communities or any other kind of association legally
created or not, as well as oppositions or disturbances caused by any other
person impeding the free access of the BENEFICIARY to the LOTS or obstructing
the performance of the mining works set forth in this Contract, as well as
actions or omissions of any governmental authority, whether Federal, State or
Municipal, which include the delay or impossibility to timely obtain such
permits required from any governmental authority, individual or corporation,
group or entity to carry out the mining works provided for in this document.
The aforecited events shall be considered as acts of God or force majeure, as
the case may be, if in the event of occurrence they obstruct or delay, whether
totally or partially, the fulfillment of the obligations of the BENEFICIARY, if
and when such event is not provoked by an action or omission imputable to the
BENEFICIARY itself.
In the event that an occurrence take place causing an act of God or force
majeure, the BENEFICIARY shall notify it to the TITLEHOLDER within a term of 30
(thirty) calendar days, counted from the date on which the BENEFICIARY becomes
aware of such event.
If the act of God or force majeure continues, the term to carry out the works of
exploration shall be extended for a term equal to the duration of the act of God
or force majeure, in order for the term of the exploration to be of one
effective year.
5.3 Proof of Works It shall be the responsibility of the TITLEHOLDER that
indicated in section 8 of this Clause First and section 3 of Clause Second of
these Contracts, with respect to the proof of the mining works carried out in
the LOTS; the foregoing, under the terms of that provided by the Mining Law and
its Regulations.
For the purposes of that indicated above, the BENEFICIARY obligates itself to
inform in writing to the TITLEHOLDER not later than April 30, 1999, with respect
to the exploration works performed under the terms of this Contract, furnishing
to the TITLEHOLDER copies of the documents evidencing the investments made.
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5.4 Definitive Suspension of the Investment Commitments. If at any time the
BENEFICIARY would decide not to proceed, and therefore, to terminate this
Contract of Exploration in advance, it shall not be obligated to make any
further investments other than those carried out as of the date of the
termination notice.
In this latter case, the BENEFICIARY shall inform the TITLEHOLDER of the works
carried out as of the date of the termination notice, and shall deliver to the
TITLEHOLDER a copy of the documents evidencing the investments carried out, and
which documents had not been previously delivered to the TITLEHOLDER, and shall
withdraw without keeping any interest whatsoever in the LOTS.
6. Use of Mineral. So long as the BENEFICIARY does not exercise its right to
acquire mentioned below, if by virtue of the performance of the mining
exploration works mineral would be extracted, it may -during the life of this
Contract of Exploration- take gratuitously up to 500 (five hundred) tons of
mineral from each one of the LOTS to carry out all kind of samples and
metallurgic tests, in the understanding that the rest of the mineral obtained
will remain in benefit of the TITLEHOLDER.
On the other hand, so long as the BENEFICIARY does not exercise the right to
acquire the LOTS, it is expressly agreed that the TITLEHOLDER may continue
extracting mineral from the LOTS, up to an amount of 50 (fifty) tons per month
from each one of the LOTS; the foregoing, if and when such works do not
interfere with the exploration works being carried out by the BENEFICIARY and
such works are completely stopped at the moment the BENEFICIARY, in its case,
acquires the LOTS.
7. Obligations of the Beneficiary. In the performance of the exploration, the
BENEFICIARY obligates itself to the following:
a) To carry out the exploration works pursuant to custom and usage of the
good miner and in accordance with the Mining Law, its Regulations and
other legal provisions related to the mining activities, allowing the
TITLEHOLDER to inspect the works carried out by the BENEFICIARY, if
and when the former do not interfere or interrupt the activities which
are being carried out by the BENEFICIARY in the LOTS.
b) To preserve the LOTS in good maintenance conditions, when carrying out
the exploration of same.
c) To take care of the maintenance of the monuments of the starting point
and of location of each one of the LOTS, for which purposes the
TITLEHOLDER shall deliver to the BENEFICIARY the corresponding
documents, such as expert reports and others.
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d) To deliver to the TITLEHOLDER, within a term of 60 (sixty) calendar
days following the termination of this Contract of Exploration, if the
definitive Contract of Assignment of Rights mentioned below is not
executed, a non-interpretative report on the exploration operations,
which shall include a report with respect to the mineral deposits
located in the LOTS, as well as in connection with the geological,
mining and sampling works performed, with copies of the geological and
topographical maps and of the drilling made; such information and
documents shall not be interpretative and may be delivered in English
version, should the originals have been drafted in such language.
e) To comply with the labor, social security, tax and other obligations
with respect to the personnel of the BENEFICIARY working on the LOTS,
as a consequence of the exploration carried out by the BENEFICIARY in
accordance with this Contract.
f) To hold the TITLEHOLDER free and harmless of any claim tried against
him by employees or workers of the BENEFICIARY or by third parties
contracted by the latter to whom the BENEFICIARY may have entrusted
the rendering of a service on the LOTS.
g) To comply with the obligations in the environmental area, with respect
to the activities carried out in the LOTS directly by the BENEFICIARY
or through its contractors.
h) To reimburse the TITLEHOLDER, as from the date of execution of this
Contract of Exploration and during the life of same, the surface taxes
deriving from the LOTS that in the future become due and be
effectively paid by the TITLEHOLDER; such reimbursement shall be made
by the BENEFICIARY within the 30 (thirty) calendar days following the
date on which the TITLEHOLDER delivers to the BENEFICIARY the
corresponding payment receipts; the foregoing taking into
consideration that provided in subparagraph (ii) of section 1.1 of
this Clause First.
8. Obligations of the TITLEHOLDER. Given the right to explore granted to the
BENEFICIARY by the TITLEHOLDER, the latter obligates himself during the life of
these Contracts to the following:
a) To maintain in force and in his favor the rights derived from the
mining concessions that cover the LOTS.
b) Not to transfer the rights derived from the mining concessions
covering or that in the future may cover the LOTS to third parties
different to the BENEFICIARY, or its designee, in case the right to
acquire is exercised in the terms and conditions of the Contract of
Promise of Assignment of Rights contained herein.
c) To maintain the rights derived from the mining concessions that cover
each one of the LOTS, free from all encumbrances, liens, burdens or
ownership limitation of any nature, except for that indicated in this
document.
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d) Not to interfere, impede nor to obstruct the exclusive right to
evaluate and to explore the LOTS granted to the BENEFICIARY in
accordance with this Contract; to the contrary, the TITLEHOLDER
obligates himself to make his best efforts to facilitate and support
the activities performed by the BENEFICIARY and shall cooperate with
same to the extent required by it, in order for the BENEFICIARY to
conclude such evaluation and exploration at its entire satisfaction.
e) To cooperate with the BENEFICIARY in order to obtain free access to
the LOTS, in terms of that mentioned in section 2 of this Clause
First.
f) To comply with the labor, social security, tax and other obligations
with respect to the personnel of the TITLEHOLDER working on the LOTS,
as a consequence of any activity that the TITLEHOLDER carries out.
g) To hold the BENEFICIARY, its representatives, officers and outside
advisors free and harmless of any claim and/or responsibility that may
be tried against them, as a consequence of acts directly imputable or
of the exclusive responsibility of the TITLEHOLDER, his workers, or
derived from any act deriving from the exclusive responsibility of the
TITLEHOLDER.
h) To maintain in secrecy during the duration of this Contract and for an
additional period of 1 (one) year, counted from the date of
acquisition of the LOTS -if the right to acquire is exercised by the
BENEFICIARY- any and all information that the TITLEHOLDER receives
from the BENEFICIARY and that has not been of the public knowledge
before and in any manner whatsoever, which information shall be of an
industrial nature and shall be considered and treated as privileged
information and industrial secret.
i) To prove the works and mining works performed in the LOTS during the
life of this Contract, under the terms of the applicable legal
provisions, as well as to continue complying with other obligations
assessed upon mining concessionaires by the Mining Law, its
Regulations and other legal provisions.
j) To pay during the life of this contract and with respect to the LOTS,
the totality of the duties on mining concessions referred to by the
Federal Duties Law (surface taxes); same taxes that will be reimbursed
by the BENEFICIARY to the TITLEHOLDER as from the date of execution of
this Contract of Exploration; taking always into consideration that
provided in subparagraph (i) of section 1.1 of this Clause First.
k) To pay -within 5 (five) calendar days counted from the date of
execution and ratification before Notary Public of this document or,
in its case, not later than November 30, 1998- with the amount
received by him as the first payment established in subparagraph a) of
section 4.2 of Clause Second of these Contracts, the totality of the
outstanding surface taxes deriving from the LOTS, owed by the
TITLEHOLDER, as well as to file with the mining authorities copies
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of the corresponding receipts, in order for him to be considered as current in
the compliance of said obligation.
In order to carry out the foregoing, the parties agree that, with respect to the
payment to be made in favor of the TITLEHOLDER referred to in the preceding
paragraph, the amount required to pay the outstanding surface taxes deriving
from the LOTS shall be separated; the foregoing, in order for the TITLEHOLDER
and the representative of the BENEFICIARY -jointly- make the corresponding
payments and file with the mining authorities, the respective receipts.
CONTRACT OF PROMISE OF ASSIGNMENT OF RIGHTS
SECOND. The TITLEHOLDER hereby promises and obligates himself to assign in
property to the BENEFICIARY or to its designee, without any reserve or
limitation, free of any encumbrances, liens, burdens or ownership limitations of
any nature, the totality of the rights derived from any or both of the titles of
mining concessions which cover or in the future may cover the LOTS, upon request
to the TITLEHOLDER by means of a written notice addressed to the TITLEHOLDER,
with 15 (fifteen) calendar days anticipation to the date on which the right
herein referred to is desired to be exercised, if and when that mentioned below
is complied with.
If the right to acquire the LOTS is exercised, the TITLEHOLDER obligates himself
to simultaneously assign to the BENEFICIARY or its designee for such purposes,
without any reserve or limitation, all the rights that the TITLEHOLDER may have
to access the surface comprising the LOTS, such as rights for the land
expropriation, temporary occupations, licenses, permits, authorizations,
easements or any equivalent permits that, in general, allows the carrying out of
the mining works.
This Promise of Assignment of Rights shall be additionally governed by the
following:
1. Term. The term during which the BENEFICIARY may exercise, at any time, the
right to assign to the BENEFICIARY itself or to its designee, the rights derived
from any or both of the titles of mining concession which cover the LOTS, as
well as the above referred rights that the TITLEHOLDER may have to access the
LOTS, shall be of a period of 12 (twelve) months counted from the date of
execution and ratification before a Notary Public of these Contracts.
1.1 The aforesaid term shall be compulsory for the TITLEHOLDER, and voluntary
for the BENEFICIARY; therefore, the latter may terminate this Contract of
Promise, at any time, at its sole discretion and without any responsibility for
itself, by means of a written notice addressed to the TITLEHOLDER, with 15
(fifteen) days anticipation to the date on which the BENEFICIARY desires the
termination to be effective; obligating the BENEFICIARY itself to pay any
outstanding debt that the latter had committed to pay in terms of these
Contracts and that is considered due to the BENEFICIARY prior to the date on
which the termination becomes effective. In relation to that stated in this
section, the provisions referred to in subparagraphs (i) and (ii) of section 1.1
of Clause First of these Contracts shall be also applicable.
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That indicated in the preceding paragraph, means that the TITLEHOLDER, as of
now, grants his broadest consent, should that be the case, for the BENEFICIARY
to terminate in advance these Contracts, in the manner agreed in this section,
without being necessary to enter into an express termination agreement or for
the BENEFICIARY to comply with any other formality; the foregoing is stated for
all legal purposes and particularly for the purpose of that mentioned in the
last paragraph of article 76 of the Regulations of the Mining Law, taking into
consideration that this document is ratified by the parties before a Notary
Public.
1.2 Given the duration of this Contract of Promise, it is expressly agreed that
any titles of mining concession that replace or derive from the titles currently
covering the LOTS, shall be incorporated to the subject matter of this Contract
under the concept LOTS, and therefore shall be subject to that set forth in this
document.
2. Obligations of the Titleholder. The TITLEHOLDER obligates himself that,
during the term indicated, he shall not encumber, burden nor limit in any manner
whatsoever, the rights derived from each and all the mining concessions that
cover and will cover in the future the LOTS, nor to enter into any contract with
respect to the LOTS, except with the BENEFICIARY or its designee for such
purposes, and therefore the TITLEHOLDER guarantees the existence, validity and
availability of the aforecited rights.
2.1 Likewise, the TITLEHOLDER obligates himself not to request reduction,
subdivision nor unification of the surface which cover the LOTS; likewise, the
TITLEHOLDER obligates himself not to waive from the rights derived from the same
LOTS; the foregoing without prior written authorization of the BENEFICIARY
through a legal representative with authority therefor.
3. Other Obligations The TITLEHOLDER obligates himself to comply with the
execution and to file the proof of assessment works carried out in the LOTS, in
terms of that provided in the applicable legal provisions of the Mining Law and
its Regulation, according to the investments made by the BENEFICIARY, in
accordance with the Contract of Exploration contained in this document, as well
as in accordance with any other investments made, in its case, by the
TITLEHOLDER.
4. Consideration for the Promise and for the Assignment of Rights. The
consideration that shall be paid to the TITLEHOLDER for the onerous promise and
for the assignment of all the rights derived from the mining concessions which
cover or which in the future may cover the LOTS, shall be in the amounts
mentioned in subparagraphs a) through l) of section 4.2 below, which amounts
will be paid on the dates indicated.
4.1 Currency and VAT. The payments to be made to the TITLEHOLDER as
consideration for the promise and for the assignment of the rights referred to
12
in this Contract, shall be made in dollars, currency of the United States of
America or its equivalent in Mexican currency on the date of payment, plus the
corresponding Value Added tax (V.A.T.) to each payment.
4.2 Schedule of Payments. The amounts referred to in section 4 above shall be as
follow:
a) The date on which this Contract of Promise of Assignment of Rights be
executed and ratified before a Notary Public, the total amount of
$20,000.00 (twenty thousand dollars).
It is expressly agreed that, with respect to the amount referred to in
this subparagraph a), the amount required to pay the outstanding
surface taxes deriving from the LOTS shall be separated; the foregoing
in order for -within the 5 (five) calendar days counted from the date
of execution and ratification before Notary of this document- the
TITLEHOLDER and the representative of the BENEFICIARY to make the
corresponding payments as well as to file the respective receipts with
the mining authorities.
In the event that the TITLEHOLDER would not be able to pay the total
amount due as surface taxes within the aforesaid term of 5 (five)
calendar days, then the latter is hereby authorized -and at the same
time obligated- to agree with the competent tax authorities on a first
payment to be made within the 5 (five) calendar days following the
date of execution and ratification of this document before a Notary
Public, if and when he commits himself to pay the respective
outstanding balance not later than November 30, 1998. Once the
TITLEHOLDER has made such payment(s) shall furnish to the BENEFICIARY
the corresponding receipt(s).
b) On November 30, 1998, provided that the Contracts contained in this
document are still in effect, the total amount of $1,000.00 (one
thousand dollars 000/100).
c) On December 31, 1998, provided that the Contracts contained in this
document are still in effect, the total amount of $2,000.00 (two
thousand dollars 000/100).
d) On February 1, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $4,000.00 (four
thousand dollars 000/100).
e) On March 1, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $7,500.00 (seven
thousand five hundred dollars 000/100).
f) On March 31, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $7,500.00 (seven
thousand five hundred dollars 000/100).
g) On April 30, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $7,500.00 (seven
thousand five hundred dollars 000/100).
h) On May 31, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $7,500.00 (seven
thousand five hundred dollars 000/100).
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i) On June 30, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $7,500.00 (seven
thousand five hundred dollars 000/100).
j) On July 30, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $7,500.00 (seven
thousand five hundred dollars 000/100).
k) On August 31, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $7,500.00 (seven
thousand five hundred dollars 000/100).
l) On September 30, 1999, provided that the Contracts contained in this
document are still in effect, the total amount of $5,500.00 (five
thousand five hundred dollars 000/100). At the moment this last
payment is made, it will be understood that the right to acquire the
LOTS has been fully exercised.
m) Should the option to acquire the LOTS be exercised prior to September
30, 1999, the BENEFICIARY shall pay to the TITLEHOLDER, such amounts
referred to in subparagraphs b) to l) above which had not been paid
with respect to the dates which have not been met, in order for the
total consideration for the promise and for the assignment of all the
rights deriving from the mining concessions which at that moment cover
the LOTS be, in any case, the total amount of $85,000.00 (eighty five
thousand dollars 00/100), plus the corresponding V.A.T.
5. Release of the Obligation of Making Payments. It is expressly agreed, as
indicated above, that the BENEFICIARY shall have the right to terminate this
Contract of Promise of Assignment of Rights at any time, at its own discretion
and without any obligation by means of a written notice addressed to the
TITLEHOLDER and, in such event, the BENEFICIARY shall have no obligation to make
any payment of those amounts referred in all subparagraphs of section 4.2 above,
with respect to the dates that have not elapsed.
5.1 Xxxxxxx money. It is expressly understood that, in the event the BENEFICIARY
terminates this Contract in advance, the amounts that the TITLEHOLDER would have
received as of the date on which the BENEFICIARY delivers to him the notice of
termination, shall inure to his benefit as xxxxxxx money.
COMMON TO BOTH CONTRACTS
THIRD. Other Obligations of Both Parties. The TITLEHOLDER and the BENEFICIARY
expressly obligate themselves that, during the life of these Contracts in the
performance of their respective activities they will faithfully comply with all
obligations imposed upon them by the Mining Law, its Regulations, the
14
environmental, water, security and hygiene in the mines, labor, tax and other
applicable legal provisions; likewise, they obligate themselves not to incur in
any of the causes for nullity, cancellation, suspension or expiration of rights
referred to by the Mining Law, with respect to the mining concessions which
cover and will cover in the future the LOTS.
Given that no labor relationship whatsoever will exist between the workers or
contractors of each one of the parties, with respect to the other, the
TITLEHOLDER and the BENEFICIARY agree that each party shall assume its entire
responsibility whether of a labor, social security, or tax nature, and others,
with respect to their own workers and contractors; therefore, each party agrees
to hold the other free and harmless of any claim, lawsuit or accusation or
complain that could be filed against the other party, by the workers or
employees of said party, by its contractors or by the authorities in the labor
or administrative area.
FOURTH. Incompliance. Notwithstanding any stipulation on the contrary agreed in
this document, should any party be or incur on incompliance (the "Non-complying
Party"), with respect to any obligation stated in these Contracts, the affected
party of such incompliance (the "Affected Party"), may give written notice
specifying in which the incompliance consists ("Notice of Incompliance") to the
Non-complying Party, in order to:
(a) within the five working days following to the reception of the Notice
of Incompliance -referring to the lack of payment of any amounts that
must be paid in terms of these Contracts- the Non-complying Party: (i)
pays to the Affected Party the totality of such amounts due; (ii)
proves that such amounts have been paid; or, (iii) justifies the valid
reasons -not imputable to itself- why the corresponding payments have
not been made.
(b) within the 30 (thirty) calendar days following to the reception of the
Notice of Incompliance -which refers to an incompliance different that
the lack of payment- the Non-complying Party cures such incompliance
or fault, if and when same may be easily corrected within such period;
or
(c) in case that the incompliance be different to lack of payment, and
that, deriving from its nature it may not be easily corrected during
the 30 (thirty) days period referred to in subparagraph (b) above, the
Non-complying Party shall initiate -within such 30 (thirty) days term
following the reception of the Notice of Incompliance- the necessary
and prudent actions in order to correct the incompliance and,
therefore, follow such actions in a proper manner until the
incompliance be completely cured within a term not exceeding 90
(ninety) calendar days counted from the date on which the
Non-complying Party received the Notice of Incompliance.
Notwithstanding the foregoing, the affected party shall be authorized to seek
for in good faith for any remedy applicable to such incompliance; with no
prohibition that, in case that the Non-complying Party does not carry out that
mentioned in subparagraphs (a), (b) or (c) above, within the maximum terms
therein contemplated for each case, the Affected Party may exercise its right to
15
judicially terminate these Contracts and to demand the payment of damages and
detriment; or, in its case, the right to request the compulsory compliance of
the obligations of the Non-complying Party and the payment of damages and
detriment.
FIFTH. Registration. The BENEFICIARY expressly obligates itself to register in
the Public Registry of Mining these Contracts of Mining Exploration and of
Promise of Assignment of Rights, as well as the definitive Contract or Contracts
of Assignment of Rights that be executed, should that be the case.
SIXTH. Expenses, Fees and Taxes. All the expenses, fees and taxes caused as a
consequence of the execution of these Contracts of Mining Exploration and of
Promise of Assignment of Rights, shall be for the account of the BENEFICIARY.
The foregoing, except for the Income Tax applicable to the TITLEHOLDER, who
obligates himself to issue the corresponding receipts (invoices) for the amounts
that he receives; the foregoing in accordance to the Income Tax Law.
Likewise, the TITLEHOLDER obligates himself to comply with all the obligations
imposed upon him by the applicable tax provisions in force, given that he has
stated to the BENEFICIARY that he is recorded in the Federal Taxpayers'
Registry, under code PRM-880310-9V2.
Given that mentioned in the preceding paragraphs, it is understood that, so long
the applicable tax provisions do not provide otherwise, for each payment to be
made to the TITLEHOLDER, the corresponding withholding of the Income Tax will be
made, delivering to the TITLEHOLDER the withholding certificate and, once such
tax be paid, shall deliver to the TITLEHOLDER copy of the corresponding income
tax return.
In accordance with that provided by the Value Added Tax Law, for each payment
that the TITLEHOLDER receives, he shall separate in an express manner the amount
corresponding to the Value Added Tax, as set forth in the applicable articles of
the abovementioned Law, as well as on those applicable of the Fiscal Code of the
Federation.
SEVENTH. Guaranty of Compliance. The TITLEHOLDER Mr. Xxxxx Xxxxx Xxxxxx,
obligates himself in accordance with articles 2554, fourth paragraph, 2587 and
2596, first paragraph, of the Civil Code for the Federal District on Common
Matters and for all of the Republic on Federal Matters, to grant before a Notary
Public, a special and irrevocable power of attorney, in order to guarantee the
compliance with the obligations undertaken by the TITLEHOLDER in accordance with
this document, in the following terms:
"Mr. Xxxxx Xxxxx Xxxxxx, on his own behalf, grants to Messrs. Xxxxxxxx
Xxxxx Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxx Xxxxxx Xxxxxxx Xxxx, Xxxxxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx Xxxxx, Xxxxx Xxxxx Xxxxxxxx and
Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxxx, a special and irrevocable power of
attorney to be exercised jointly or individually, in order that in the
name and on behalf of the grantor:
16
They comply, if so required by Polo y Xxx Minerales, S.A. de C.V. -or
by its designee- expressly and in writing, with the obligations
undertaken by Mr. Xxxxx Xxxxx Xxxxxx in favor of Polo y Xxx Minerales,
S.A. de C.V., in the Contracts of Mining Exploration and of Promise of
Assignment of Rights entered into between the grantor as promisor (in
said Contracts named as the "TITLEHOLDER") and Polo y Xxx Minerales,
S.A. de C.V. as promisee (in said Contract the "BENEFICIARY"),
consisting on executing with the latter or with its designee,
Definitive Assignment Contract(s) of the Rights derived from the
titles of mining concession covering the LOTS:
a) "EL QUINTO II", mining exploitation concession, title 175486, issued
on July 31, 1985; located in the Municipality of Zacualpan, State of
Mexico, with a surface of 9.0957 hectares, recorded under number 166,
page 42, volume 238 of the General Book of Mining Concessions of the
Public Registry of Mining; and
b) "EL COMETA NAVIDENO", mining exploitation concession, title 171847,
issued on June 15, 1983; located in the Municipality of Tetipac, State
of Xxxxxxxx, with a surface of 23.0584 hectares, recorded under number
627, page 158, volume 228 of the General Book of Mining Concessions of
the Public Registry of Mining;
This power of attorney is granted with the limitation that in order to exercise
the authority to assign the rights therein referred, the attorney(s)-in-fact
exercising this mandate must evidence to the Notary Public before whom the
signatures of the Contract or Contracts of Assignment of Rights derived from the
LOTS are ratified, that it has been delivered to the TITLEHOLDER the total
amount of the price agreed for the promise and for the assignment of rights of
the LOTS, or that such consideration has been deposited in favor of the
TITLEHOLDER.
This power of attorney is granted, in addition, in order that if so required
expressly and in writing by the BENEFICIARY or its designee, the
attorneys-in-fact exercise all of the rights that the Mining Law, its
Regulations and other applicable dispositions, in the area of mining grant to
the concessionaires with respect to their concessions, as well as to comply with
the obligations upon of Mr. Xxxxx Xxxxx Xxxxxx, among which are included, in an
exemplarily manner though not limited to, file the reports and proofs of the
execution of the mining works to which the Mining Law and its Regulations refer;
initiate mining opposition procedures; exercise administrative remedies in terms
of the Mining Law, its Regulations and other applicable provisions; initiate
constitutional protection proceedings; and, other acts which are applicable in
accordance with said provisions, except to relinquish, subdivide, reduce or
unify surface of the LOTS, which shall only operate by means of a written
authorization jointly signed by the TITLEHOLDER and the representative of the
BENEFICIARY.
17
Within the specialty of the power of attorney, the attorneys in fact shall have
all of the authority corresponding to a general power of attorney for lawsuits
and collections, to administer property, and for acts of ownership, with the
broadest authority, as provided for in article 2554 (two thousand five hundred
and fifty four) of the Civil Code for the Federal District on Common Matters and
for all of the Republic on Federal Matters and the corresponding article of the
Civil Code of each State of the Mexican United States; with the limitation that
the attorneys in fact may only exercise this power of attorney in matters
related to rights deriving from the mining concessions that cover or will cover
in the future the LOTS subject matter of the Contracts referred to herein.
Given that the power of attorney contained in this public instrument is granted
for the compliance of obligations acquired by the grantors in a bilateral
contract, it is expressly stated that the power of attorney is granted with an
irrevocable nature, under the terms of article 2596 (two thousand five hundred
and ninety six) of the Civil Code for the Federal District on Common Matters and
for all the Republic on Federal Matters and the corresponding article of the
Civil Code of each State of the Mexican United States.
This power of attorney will be in effect during the time in which the
obligations of the grantor in the Contracts of Mining Exploration and of Promise
of Assignment of Rights referred to subsist, of which copy is attached hereto in
order to form an integral part of this instrument."
EIGHTH. BENEFICIARY's guaranty. The BENEFICIARY shall become liable before the
TITLEHOLDER, of each and all the obligations convened by the attorneys-in-fact
in the mandate referred to in the above Clause, should either it or the
attorneys-in-fact illegally exercise the authority conferred upon them by such
mandate.
NINTH. The TITLEHOLDER obligates himself to furnish to the BENEFICIARY all the
information that it requests, as well as to sign, evidence and comply with any
other necessary requirement and to exercise the legal actions that may be
required, in order to: (i) obtain, whenever needed, any authorizations for the
BENEFICIARY to exercise the rights herein granted; (ii) maintain the LOTS
subject matter of these Contracts, free of all charge, lien, burden, or
limitation of domain of any nature, according to that agreed in this document;
and, (iii) in general, to solve any contingency that may affect the legal status
of the LOTS and that may prevent, limit or hinder the exercise of the rights
granted by virtue of this document to the BENEFICIARY.
TENTH. Communications. All communications to be made among the parties pursuant
to these Contracts, shall be in writing, delivered at their domiciles in an
authentic manner; and, for such purpose, the parties designate the following
domiciles:
THE TITLEHOLDER:
MR. XXXXX XXXXX XXXXXX
Domicilio Conocido
Rancheria el Moral
Zacualpan, Estado de Mexico
18
THE BENEFICIARY:
POLO Y XXX MINERALES, S.A. DE C.V.
Xxxxxxx Xxxxx Xxxxxxx Xx. 000
Xxxxxxxxx, Xxxxxxxxx
Att'n: Xx. Xxxxx X. Xxxxxxxxx
Any change of domicile or of representative shall be notified in writing,
delivered in an authentic manner.
ELEVENTH. Alternative Formalities. The TITLEHOLDER authorizes the BENEFICIARY,
as of now, to formalize this document in public instrument before a Notary
Public of its choice, at the expense of the latter and without requiring the
appearance of the TITLEHOLDER.
TWELFTH. Assignment. The TITLEHOLDER, expressly authorize the BENEFICIARY, as of
now, to assign totally or partially without the need to obtain the consent of
the TITLEHOLDER the rights and obligations deriving from this document in favor
and in charge of the BENEFICIARY; the foregoing if and when in the document
containing such assignment of rights and obligations, the express acceptance of
the assignee in order to subrogate in all of the obligations that by virtue of
this document the BENEFICIARY acquires is contained; likewise, the third party
acquiring such rights and obligations, must commit itself that, in case that in
the future executes another contract whereby transfers or sells such rights and
obligations, shall contain the same clause.
The parties agree that so long as these Contracts are in effect, they shall be
valid and binding for the contracting parties, as well as for the designee of
the BENEFICIARY and the respective successors or assignees of the parties, and
for the heirs or legatees of the TITLEHOLDER.
THIRTEENTH. Absence of Injury. The parties, notwithstanding the nature of this
document, expressly declare that in the covenants subject matter of same there
is that no injury and, even in case it exists, they expressly waive the right to
request the relative nullity referred to in articles 2228 and 2239 of the Civil
Code for the Federal District on Common Matters and for all the Republic on
Federal Matters and the corresponding article of the Civil Code of each State of
the Mexican United States.
FOURTEENTH. Applicable Laws and Jurisdiction. This Contract which is entered
into under the terms of article 78 of the Commerce Code, is of a mercantile
nature; therefore, for all that not expressly agreed upon herein and for the
interpretation of and compliance with same, there shall be applied the Mining
Law, its Regulations and the Commerce Code, as well as suppletory law the Civil
Code for the Federal District on Common Matters and for all of the Republic on
Federal Matters, for that not provided for in the first two.
19
For the resolution of any controversy which might arise from this document, the
parties expressly agree to submit themselves to the jurisdiction of the
competent courts in Mexico City, Federal District.
FIFTEENTH. Headings. The parties acknowledge that the headings in the Clauses,
sections, subparagraphs in which these Contracts are divided, have been stated
only with the purpose of easy reading of this document, therefore, such headings
have no interpretative or linking value.
Once this document, was read by the parties, they ratify same in its entirety
and sign it as evidence thereof, the TITLEHOLDER and the BENEFICIARY on November
19, 1998, in the City of Chihuahia, State of Chihuahua.
THE TITLEHOLDER
/s/ Xxxxx Xxxxx Xxxxxx
----------------------
Xxxxx Xxxxx Xxxxxx,
on his own behalf and in name and on behalf of Xxx.
XXXXXXXX XXXXX XXXXX XX XXXXX.
THE BENEFICIARY
POLO Y XXX MINERALES, S.A.DEC.V.
/s/ Xxxxx X. Xxxxxxxxx
----------------------
XXXXX X. XXXXXXXXX
20
