INVESTMENT AND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 19th day of February, 1996
AMONG:
PACIFIC CANADA RESOURCES INC., a body corporate
incorporated under the laws of Ontario, with an office at 000 Xxx
Xxxxxx, Xxxxxxx, Xxxxxxx, X0X 0X0
("PCR")
AND:
TECK CORPORATION, a body corporate incorporated under the laws of
Canada, with an office at 700 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
("Teck")
AND:
COMINCO LTD., a body corporate incorporated under the laws
of Canada, with an office at 000 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
("Cominco")
WHEREAS:
(A) Under Chinese law a foreigner may acquire an interest in a joint venture or
other recognized Chinese vehicle which in turn holds a mineral property in
China;
(B) PCR intends to acquire indirect interests in mineral properties in China
and the right to exploit mineral properties in China, and in appropriate
circumstances to transfer such rights and interests to Opco (as defined herein)
or a subsidiary of PCR (and any continuing reference to PCR shall mean Pacific
Canada Resources Inc. or any subsidiary used by it to acquire the indirect
interests aforesaid) and, in connection therewith it is intended that Opco and
the subsidiary will sign a separate investment and participation agreement,
substantially on the terms of this Agreement, with Teck and Cominco;
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(C) The parties have separately executed confidentiality agreements under which
Cominco and Teck may conduct site visits of mineral properties which PCR holds
or has identified for potential acquisition;
(D) This Agreement provides for the manner in which Cominco and Teck may
acquire part of PCR's or Opco's interest in any NCI or Property (both as defined
herein) or any mineral property that is acquired;
(E) At the same time PCR and Opco will require working capital, Teck and
Cominco wish to invest, and PCR has agreed to grant and to cause Opco to grant
certain rights in consideration of such investments;
(F) PCR also intends to raise capital by public financing to generate the funds
necessary to advance one or more Properties to the stage of a preliminary
feasibility report;
(G) The parties have agreed that the interest to be acquired by Teck and
Cominco in PCR's or Opco's interest in an NCI or a Property may be increased in
through a good faith negotiation outside the terms of this Agreement at some
future time; and
(H) The parties wish to record their respective rights and obligations.
THEREFORE the Parties agree as follows:
PART 1
CONSTRUCTION
Definitions
1.1 In this Agreement, except as otherwise expressly provided or as the context
otherwise requires:
Acquired Property means a Property in respect of which
(i) the Owner has entered into a formal joint venture agreement (as such
term is understood in China) with a Chinese entity pursuant to which
the Owner has the right to acquire an NCI, and
(ii) the Chinese entity has applied for approval of the appropriate Chinese
Governmental Authority pursuant to a request by the Owner to negotiate
a joint venture contract with the Owner;
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Affiliate of a Party has the meaning ascribed to it in the Securities Act
(British Columbia).
Business Day means a day that is not a Saturday, Sunday or a statutory
holiday in British Columbia.
Closing means the closing of the purchase and sale of the Purchased Shares.
Closing Date means March 1, 1996, or such other date as the Parties may
agree upon.
Commitment Notice means a notice delivered to the Owner by the Investors
pursuant to ss.6.13 or 6.17 that they intend to proceed with programs
contemplated in a Final Feasibility Report and they have commitments from
lenders for the debt portion of the project financing, as evidenced by
certified copies of the lenders' commitment letters to the Investors
delivered with the notice.
Common Share means a common share, as constituted as at the date of this
Agreement, in the capital of PCR.
Confidentiality Agreements mean the agreements between PCR and Teck dated
April 29, 1994, and between PCR and Cominco dated as of October 1, 1995.
Costs means cash outlays, expenses, obligations and liabilities of whatever
kind or nature, but without duplication.
Designated Investor means, in the case of a base metal Property, Cominco,
and in all other cases, Teck.
Development Property means an Acquired Property that the Investors
determine, pursuant to ss.6.1, should be governed by this Agreement and
categorize as a Development Property pursuant to ss.6.4.
Earn-in Period means the period of time beginning on the date hereof and
ending on the date the Earn-In Rights terminate in accordance with ss.6.6.
Earn-in Rights means those rights to earn an Interest in an NCI in respect
of an Acquired Property, more particularly set out in ss.6.8 and 6.14.
Encumbrance means a security interest, mortgage, pledge, hypothecation,
lien, easement, right-of-way, encroachment, covenant, condition, right of
re-entry, lease, licence, assignment, option, claim or other title defect,
encumbrance or charge whatsoever, whether or not registered or registrable.
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Exercise Notice means, with respect to an Acquired Property, a written
notice delivered by an Investor that it intends to proceed with the
preparation of a Final Feasibility Report under Part 6.
Expenditures means all Costs spent or incurred or deemed incurred hereunder
by a Party in connection with a Property including:
(i) monies expended in maintaining the Property in good standing,
including any monies expended in doing and filing assessment work and
any required vendor's or royalty payments;
(ii) monies expended in exploring the Property, including doing
geophysical, geochemical and geological surveys, drilling, assaying
and metallurgical testing;
(iii)monies expended in acquiring assets for use on or in connection with
the Property;
(iv) monies expended in paying the fees, wages, salaries and traveling
expenses of all employees of a Party or associated entities engaged in
work with respect to and for the benefit of the Property, together
with an amount for fringe benefits usually paid by such Party;
(v) monies expended in paying for the food, lodging and other reasonable
needs of the persons referred to in clause (iv) hereof;
(vi) a charge equal to
(A) 10% before the date of a Commitment Notice, and
(B) 3% thereafter,
for unallocable overhead and head office expenses and all other
expenses relating to supervision and management of all work done with
respect to and for the benefit of the Property of all Expenditures,
other than the charge referred to in this clause (vi);
(vii)monies expended or set aside for environmental remediation and
reclamation;
(viii) all Costs related to the preparation of programs and reporting as to
the results thereof;
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(ix) all Costs related to the preparation of a Final or Preliminary
Feasibility Report and a production program;
(x) all Costs related to construction and development programs up to
commercial production; and
(xi) all Costs related to operations after the date of commencement of
commercial production.
Exploration Property means an Acquired Property that the Investors
determine, pursuant to ss.6.1, should be governed by this Agreement and
which has been categorized as an Exploration Property pursuant to ss.6.4.
Final Feasibility Report means a detailed report showing the feasibility of
placing a Property or part thereof into commercial production and including
at least the following information:
(i) a description of that part of the Property to be covered by the
proposed mine;
(ii) the estimated recoverable reserves of minerals and the estimated
composition and content thereof;
(iii) the proposed procedure for development, mining and production;
(iv) results of ore amenability tests (if any);
(v) the nature and extent of the facilities proposed to be acquired or
constructed and, if the size, extent and location of the ore body
makes mill facilities feasible, a preliminary design for such mill
facilities;
(vi) the total costs, including capital budget, reasonably required to
purchase, construct and install all structures, machinery and
equipment required for the proposed mine, including a schedule of
timing of such cost requirements;
(vii) environmental impact studies and costs thereof;
(viii) the period in which it is proposed the Property shall be brought to
commercial production;
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(ix) such other data and information as are reasonably necessary to
substantiate the existence of a mineral deposit of sufficient size and
grade to justify development of a mine, taking into account all
relevant business, tax and other economic considerations; and
(x) working capital requirements for the initial four months of operation
of the Property as a mine or such longer period as may be reasonably
justified in the circumstances.
First Recovery Date means the date on which the first of either an Owner or
an Investor recovers its Prior Costs from Net Proceeds.
Governmental Authority means a federal, state, provincial, regional,
municipal or local government or subdivision thereof including an entity or
person exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government or
subdivision.
Interest means an undivided interest in and to an NCI in respect of an
Acquired Property held by an Owner or an Investor, as the case may be.
Investors means Teck and Cominco and Investor means any one of them.
Joint Venture Agreement means the agreement to be entered into among the
parties pursuant to ss.6.22 defining the respective rights and obligations
with respect to the joint ownership (directly or indirectly) of, and
operation of activities on, an Exploration Property or Development
Property, as the case may be, once an Investor has earned an Interest.
Minimum Percentage means with respect to the Investors, 50% of that
percentage of the issued common shares of PCR or Opco issued to both
Investors pursuant to ss.3.1 as compared to the total issued common shares
of PCR at the Closing Date or Opco on the closing date of the private
placement in Opco, as the case may be.
NCI, with respect to a Property, means a direct or indirect interest
therein that is available for a non-Chinese entity or foreigner to acquire
under Chinese law and is held by or available to the Owner, including
shares, or a contractual right to acquire shares, in a Chinese company that
owns or holds a direct or indirect interest in the Property.
Net Proceeds means that amount which remains after the initial cash flows
available or attributable to the Parties' Interest from sales of product
from the mine have been used to pay operating, marketing and distribution
costs; taxes (other than income taxes) and royalties; any advances which a
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Party has made to cover sustaining capital requirements or operating losses
during the "cost recovery" period contemplated in ss.6.23 or ss.6.24; and
the administrative charge contemplated in ss.(vi)(B) of the Expenditures
definition on costs incurred from the date of commencement of commercial
production.
Opco means a company that is a reporting issuer under the securities laws
of a province of Canada and whose common shares are either listed on a
Canadian stock exchange or are traded over-the-counter in Canada.
Opco Shares means voting shares in the capital of Opco.
Owner with respect to a Property means whichever of PCR or Opco owns or has
the right to acquire an NCI in respect thereof.
Owner's Offer with respect to a Property has the meaning set out in ss.7.2.
Parties means two or more of PCR, Teck and Cominco and Party means any one
of them.
Person means an individual, corporation, partnership, joint venture,
association, trust or unincorporated organization or any trustee, executor,
administrator or other legal representative, or government official or
ministry.
Preliminary Feasibility Report means an intermediate level report, prepared
in accordance with Canadian industry standards, having as its objective a
determination whether a project justifies a detailed analysis and cost of a
Final Feasibility Report, and identifying aspects of the project that are
critical to its viability and that necessitate in-depth investigations
through functional or support studies and will be expected to include
evaluation of estimated reserves, preliminary mining methods and equipment
selections, preliminary metallurgical analysis, workable flow sheet for a
process plant, support services and facilities, manpower sources and costs,
project implementation schemes, market evaluation, environmental and
cultural issues, and a preliminary financial analysis based on investment
costs, production costs, and market potential.
Prime Rate means, at any particular time, the annual rate of interest
announced from time to time by Bank of Montreal, main branch, Vancouver,
British Columbia as a reference rate then quoted as being in effect on
Canadian dollar loans made in Canada to its most creditworthy commercial
customers and as to which from time to time a certificate of an officer of
such Bank shall be conclusive.
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Prior Costs with respect to a Property means the Expenditures incurred by
the Owner or Investor at the time incurred but before the date of
commencement of commercial production, all stated in United States dollars.
Property means a mineral property in China by whatever instrument it may be
held and any interest, contractual right or other right to acquire an
interest therein and includes an Acquired Property, an Exploration Property
and a Development Property.
Purchased Shares means the common shares to be issued to the Investors
pursuant to ss.3.1 hereof.
Requisite Approvals means the approvals of stock exchanges and other
regulatory authorities having jurisdiction to review and grant approval of
the transactions contemplated by this Agreement.
Second Recovery Date means the date on which the last of the Owner and the
Investors recovers its Prior Costs from Net Proceeds.
Underlying Agreement means any agreement in existence at the date hereof,
or that comes into existence after the date hereof, entitling the Owner to
acquire an NCI in respect of an Acquired Property.
Interpretation
1.2 For all purposes of this Agreement, except as otherwise expressly provided
or as the context otherwise requires:
(a) "this Agreement" means this agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions of this Agreement together with
all schedules and other attachments to it;
(b) the headings are for convenience only and shall not be used to
interpret this Agreement;
(c) the word "including," when following any general term or statement, is
not to be construed as limiting the general term or statement to the
specific items or matters set forth or to similar items or matters,
but rather as permitting the general term or statement to refer to all
other items or matters that could reasonably fall within the broadest
possible scope of the general term or statement;
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(d) an accounting term not otherwise defined herein has the meaning
assigned to it, and every calculation to be made hereunder is to be
made, in accordance with generally accepted accounting principles in
Canada;
(e) except where otherwise stated, all references to currency mean United
States currency;
(f) a reference to a statute includes all regulations made thereunder, all
amendments to the statute or regulations in force from time to time
and any statute or regulation that supplements or supersedes such
statute or regulations;
(g) a reference to a Part means a Part of this Agreement and the symbol
"ss." followed by a number or some combination of numbers and letters
refers to the provision of this Agreement so designated and the symbol
"ss." followed by a letter within a provision refers to a clause
within such provision;
(h) a reference to a person includes a successor to that person;
(i) words importing the masculine gender include the feminine or neuter,
words in the singular include the plural, words importing a corporate
entity include individuals and vice versa;
(j) a reference to "approval," "authorization" or "consent" means written
approval, authorization or consent; and
(k) references to payments to be made by certified cheque will be deemed
to contemplate payment by certified cheque drawn on, or bank draft
issued by, a Canadian chartered bank, payable at par in Vancouver,
British Columbia and payable to the party entitled to receive payment
or its counsel, in trust.
Schedules
1.3 The following schedules are incorporated into this Agreement by reference:
Schedule Description Reference
-------- ----------- ---------
A Capital of PCR and Rights to Acquire Securities ss.2.3(f)
B Right to Acquire Interests in NCI's or Properties of PCR ss.2.3(f)
C List and Description of Underlying Agreements ss.2.3(n)
D Form of Consent and Waiver ss.2.4(e)(ii)
E Net Smelter Return Royalty ss.6.22
F Terms of Joint Venture ss.6.20
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Governing Law
1.4 This Agreement shall be construed and governed by the laws in force in the
Province of British Columbia and the courts of said Province shall have
exclusive jurisdiction to hear and determine all disputes arising hereunder.
Each Party irrevocably attorns to the jurisdiction of said courts and consents
to the commencement of proceedings in such courts. This paragraph shall not be
construed to affect the rights of a Party to enforce a judgment or award outside
the said Province, including the right to record or enforce a judgment or award
in any jurisdiction in which the Property is situated.
Severability
1.5 If any provision of this Agreement is or shall become illegal, invalid or
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be and remain valid and subsisting and the said remaining provisions shall be
construed as if this Agreement had been executed without the illegal, invalid or
unenforceable portion.
PART 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations and Warranties of Teck
2.1 Teck represents and warrants to PCR, as representations and warranties on
which PCR has relied in entering into this Agreement and which will survive the
execution hereof, that:
(a) Teck is a body corporate duly incorporated, organized and validly
subsisting under the laws of its incorporating jurisdiction and has
full power and authority to carry on its business and to enter into
this Agreement and any agreement or instrument referred to or
contemplated by this Agreement;
(b) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby or thereby contemplated,
violate or result in the breach of its constating documents;
(c) this Agreement has been duly executed and delivered by, and
constitutes a legal, valid and binding obligation of Teck enforceable
against it in accordance with its terms; and
(d) Teck is acquiring the Purchased Shares as principal.
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Representations and Warranties of Cominco
2.2 Cominco represents and warrants to PCR, as representations and warranties
on which PCR has relied in entering into this Agreement and which will survive
the execution hereof, that:
(a) Cominco is a body corporate duly incorporated, organized and validly
subsisting under the laws of its incorporating jurisdiction and has
full power and authority to carry on its business and to enter into
this Agreement and any agreement or instrument referred to or
contemplated by this Agreement;
(b) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby or thereby contemplated,
violate or result in the breach of its constating documents;
(c) this Agreement has been duly executed and delivered by, and
constitutes a legal, valid and binding obligation of Cominco
enforceable against it in accordance with its terms; and
(d) Cominco is acquiring the Purchased Shares as principal.
Representations and Warranties of PCR
2.3 PCR represents and warrants to each of Teck and Cominco, as representations
and warranties upon which Teck and Cominco have relied in entering into this
Agreement, which will be true at the Closing of the purchase of the Purchased
Shares and which will survive the execution hereof, that:
(a) it is a corporation duly organized and validly subsisting under the
laws of its incorporating jurisdiction and has full power and
authority to carry on its business and to enter into this Agreement
and any agreement or instrument referred to in or contemplated by,
this Agreement;
(b) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby or thereby contemplated, (i)
violate or result in the breach of its constating documents or (ii)
conflict with, result in the breach of or accelerate the performance
required by any agreement to which it is a party;
(c) no proceedings are pending for and PCR is unaware of any basis for the
institution of any proceedings leading to the dissolution or
winding-up of PCR or the placing of it into bankruptcy or subject to
any other laws governing the affairs of insolvent persons;
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(d) Schedule A accurately sets out the authorized and issued capital of
PCR;
(e) this Agreement has been duly executed and delivered by, and
constitutes a legal, valid and binding obligation of PCR enforceable
against it in accordance with its terms;
(f) no person, other than the Investors or as set out in Schedules A and
B, has any right, agreement or option, present or future, contingent
or absolute or any right capable of becoming a right, agreement or
option
(i) to require PCR to issue any further or other shares in its
capital or any security or other instrument convertible or
exchangeable into shares in its capital, or to convert or
exchange any security or other instrument into, with or for
shares in its capital,
(ii) for the issue or allotment of any of the authorized but unissued
shares in its capital,
(iii) to require PCR to create any additional shares in its capital,
(iv) to require PCR to purchase, redeem or otherwise acquire any of
the issued and outstanding shares in its capital,
(v) to require PCR to distribute any or all of its assets, or to
declare any dividends,
(vi) for the purchase of any assets or the acquisition of any interest
in a Property or an NCI, or
(vii) to purchase or otherwise acquire any securities of PCR;
(g) no finder's fees, commission or financial services fees of any type
whatsoever are payable by PCR in connection with the transactions
contemplated by this Agreement except as will be disclosed to and
agreed by the Investors, such agreement not to be unreasonably
withheld, and not to exceed the regulatory maximum permitted;
(h) since the end of its most recently completed fiscal year, PCR has
carried on its business in the ordinary and normal course of the
routine daily affairs of such business. Since such date, there has
been no material change in the business, operations, affairs or
conditions of PCR, financial or otherwise, including any change
arising as a result of any legislative or regulatory change,
modification, revocation or suspension of any material license or
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right to do business, fire, explosion, accident, casualty, labour
trouble, flood, drought, riot, storm, expropriation, condemnation, act
of God or otherwise, except changes occurring in the ordinary course
of the routine daily affairs of business, which changes have not
materially adversely affected the organization, business, properties,
prospects or financial condition of PCR;
(i) no order prohibiting the issue and sale or resale of securities by PCR
has been issued and no proceedings for this purpose have been
instituted, are pending, or, to the knowledge of PCR contemplated or
threatened;
(j) this Agreement and any statement furnished to Teck and Cominco by or
on behalf of PCR do not contain and will not contain any untrue
statement of material fact or omit or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading;
(k) all taxes, assessments, levies and other amounts, the non-payment of
which could affect PCR's ownership interest or title to an NCI or
Acquired Property, will have been duly paid, withheld or collected
before the Closing Date; provided, however, that none of the foregoing
need be paid while the same is being contested in good faith by
appropriate proceedings diligently conducted;
(1) Schedule C contains a complete list of all Underlying Agreements at
the date hereof; and
(m) PCR owns, at the date hereof, the NCI's or has rights to acquire an
NCI in Properties as set out in the Underlying Agreements on Schedule
C and has the right to acquire NCI's in China.
Covenants of PCR
2.4 PCR covenants with Teck and Cominco that:
(a) until the Closing, each Investor and its counsel and other advisors
and representatives will be entitled to have full access during normal
business hours to all records relating to PCR, all Affiliates of PCR
and their businesses and PCR will furnish or cause to be furnished to
each Investor and its representatives all data and information
concerning the business, finances, operations and properties of and
all Affiliates of PCR that may reasonably be requested and will
provide on a timely basis such written consents as may be requested by
Teck or Cominco for the purpose of due diligence searches;
(b) all representations, warranties, covenants and agreements of PCR set
forth in this Agreement and in any written statements delivered under
this Agreement will be true and correct as at the Closing Date as if
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made on that date and all representations and warranties will survive
the Closing and the transactions contemplated hereby and any
investigations made at any time with respect thereto without
limitation;
(c) PCR intends to acquire more than 50% of the issued and outstanding
Opco Shares and will use its best efforts to complete such acquisition
within three months after the Closing;
(d) subject to receipt of all Requisite Approvals and to applicable law,
unless otherwise mutually agreed between PCR on one hand and the
Investors (acting as one Party) on the other hand, if PCR transfers
and assigns NCI's in respect of Acquired Properties, and all its
rights to acquire interests (including pursuant to an Underlying
Agreement) in such NCI's to Opco, the consideration in the case of
Acquired Properties that are the subject of existing Underlying
Agreements at the time of the first transfer, shall be satisfied by
issuance of Opco Shares and in all other cases, for some combination
of cash or non-cash consideration the value of which shall be
negotiated between PCR and Opco for each of those Properties at the
time of the transfer;
(e) during the Earn-In Period
(i) PCR will, and will cause Opco to, promptly provide each Investor
with a copy of each Underlying Agreement negotiated or entered
into after the date hereof,
(ii) PCR will, and will cause Opco to, use its best efforts to cause
each optionor, joint venturer or co-owner under an Underlying
Agreement or co-ownership agreement to which PCR or Opco is or
may become party to execute the form of consent and waiver
attached hereto as Schedule D and will keep each Investor
informed of its progress in obtaining such consents and waivers,
(iii)PCR will not, and it will ensure Opco does not, without the
Designated Investor's prior written consent (such consent not to
be unreasonably withheld), agree to amend any Underlying
Agreement in a manner that may materially adversely affect the
Investors, and
(iv) PCR will use its best efforts to secure, as part of any
Underlying Agreement entered into, the right for the Owner to
provide management and direction of, and to operate, programs of
work on the subject Acquired Property, and
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(v) PCR will consult with the Investors with respect to work programs
for each Acquired Property and budgets for each Acquired Property
and will provide the Designated Investor with such information
concerning each Acquired Property and the activities on or in
respect thereof and the results of such activities as the
Investors may from time to time reasonably request; and
(f) following the Earn-in Period, PCR will not, and it will ensure Opco
does not, with respect to the Properties on which the Investors have
exercised their Earn-in Rights, without the Designated Investor's
prior written consent (such consent not to be unreasonably withheld),
agree to amend any Underlying Agreement in a manner that may
materially adversely affect the Investors.
Covenants of Teck
2.5 Teck covenants with PCR that:
(a) all representations, warranties, covenants and agreements of Teck set
forth in this Agreement and in any written statement delivered by Teck
under this Agreement will be true and correct as at the Closing Date
as if made on that date and all representations and warranties will
survive the Closing and the transactions contemplated hereby and any
investigations made at any time with respect thereto without
limitation;
(b) it will at all times and from time to time cooperate with each other
Party in order to give full effect to this Agreement and in order to
assist and expedite the performance by each Party of all or any of the
provisions herein contained and, in particular, execute under its
corporate seal or otherwise and deliver all such instruments, deeds,
mortgages, assignments and other documents and cause all such
corporate acts to be duly, expeditiously and validly done as the
Parties may reasonably require in accordance with the provisions
hereof;
(c) subject to ss.2.8, it will use all reasonable efforts to ensure that
the Investors do not collectively own more than 20% of the issued and
outstanding common shares of PCR or Opco, as the case may be; and
(d) Teck will give notice to the Owner immediately following each sale of
Purchased Shares and upon becoming aware that the Investors
shareholding has fallen below the Minimum Percentage.
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Covenants of Cominco
2.6 Cominco covenants with PCR that:
(a) all representations, warranties, covenants and agreements of Cominco
set forth in this Agreement and in any written statement delivered by
Cominco under this Agreement will be true and correct as at the
Closing Date as if made on that date and all representations and
warranties will survive the Closing and the transactions contemplated
hereby and any investigations made at any time with respect thereto
without limitation;
(b) it will at all times and from time to time cooperate with each other
Party in order to give full effect to this Agreement and in order to
assist and expedite the performance by each party of all or any of the
provisions herein contained and, in particular, execute under its
corporate seal or otherwise and deliver all such instruments, deeds,
mortgages, assignments and other documents and cause all such
corporate acts to be duly, expeditiously and validly done as the
Parties may reasonably require in accordance with the provisions
hereof;
(c) subject to ss.2.8, it will use all reasonable efforts to ensure that
the Investors do not collectively own more than 20% of the issued and
outstanding common shares of PCR or Opco, as the case may be; and
(d) Cominco will give notice to the Owner immediately following each sale
of Purchased Shares and upon becoming aware that the Investors
shareholding has fallen below the Minimum Percentage.
Survival
2.7 The representations, warranties, covenants, agreements and conditions
hereinbefore set out are conditions on which the Parties have relied in entering
into this Agreement, shall survive the acquisition by an Investor of any
interest in a Property and related assets hereunder and shall be unaffected by
any due diligence undertaken by and Investor in respect of this Agreement and
each Party will indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by them and
contained in this Agreement (including lawyer's fees and disbursements).
Limitation
2.8 The restriction as to investment level set out in ss.2.5(c) and 2.6(c)
ceases to apply on the earliest to occur of the following events:
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(a) a significant change of control of PCR, of which PCR hereby agrees to
give the Investors immediate notice upon becoming aware of the
occurrence of the change, or Opco, provided that PCR shall give the
Investors at least five clear trading days prior notice of its
intention to sell any Opco Shares which would or are likely to result
in a change of control of Opco, as the case may be;
(b) except where such reduction occurs as a result of dispositions by an
Investor, the combined interests of the Investors and Xxx Xxx (whether
directly or indirectly through PCR and whether by ownership, control
of or direction over) in Opco Shares falling below 25%;
(c) any reconstitution of management of PCR or Opco, as the case may be,
that results in Xxx Xxx not being part of management;
(d) a Person (by itself or together with its Affiliates) or two or more
Persons acting jointly and in concert with each other acquiring more
than 10% of the outstanding shares of PCR or Opco;
(e) a takeover bid of which either PCR or Opco is the offeree; provided
that if a takeover bid or any competing takeover bid is not successful
according to its terms, the restriction set out in ss.2.5(c) and
ss.2.6(c) shall continue to apply; and
(f) an Owner offering more than 5% of any particular share offering to a
Person who is engaged in the business of mineral exploration, mining,
smelting or refining.
PART 3
INVESTMENT IN PCR AND GRANT OF RIGHTS
Issue of Shares and Grant of Rights
3.1 Relying upon the representations contained herein, in consideration of the
investment by the Investors, and subject to the terms and conditions hereof, PCR
hereby:
(a) agrees to cause Opco to issue and deliver to each Investor, upon
receipt of $500,000 Canadian from such Investor, that number of common
shares of Opco as are equal to 6%, or such lesser percentage as each
Investor may agree, of its issued and outstanding common shares
calculated on a fully diluted basis after having given effect to the
investment by the Investors or to cause a subsidiary of PCR
(i) to issue and deliver to each Investor, upon receipt of $500,000
Canadian form such Investor, that number of common shares of such
subsidiary as are equal to 6% of its issued and outstanding
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common shares calculated on a fully diluted basis after having
given effect to the investment by the Investors,
(ii) to use its best efforts to cause such subsidiary to amalgamate
with Opco within the four months next following the Closing Date,
and
(iii)to structure such amalgamation so that it will result in each of
the Investors owning that number of common shares of such
amalgamated entity as are equal to 6%, or such higher percentage
as may arise as a result of the Investors owning shares in Opco
prior to the amalgamation, of its issued and outstanding common
shares calculated on a fully diluted basis as at the date of the
amalgamation;
(b) grants to each Investor the right, until the second anniversary of the
date on which PCR acquires common shares of Opco, to require PCR to
cause an amalgamation of Opco and the issuing entity in ss.3.1(a) as
will result in the Investors owning Opco Shares;
(c) grants and will cause Opco to grant, to each Investor, until such
time, if any, as the Investors first cease to collectively own the
Minimum Percentage:
(i) the joint right to nominate one individual for election as a
director of PCR or Opco provided that upon the Investors' nominee
being elected as a director of Opco, any director of PCR who is a
nominee of the Investors shall resign from his position as
director of PCR,
(ii) the Earn-in Rights and preferential purchase rights more
particularly described in Parts 6 and 7 and the rights
contemplated in ss.2.4(e), and
(iii)the right to participate in future Financings of PCR and Opco,
as set forth in Part 5,
provided that, if the grant to the Investors under this ss.3.1(c)
terminates, the Investors rights under Parts 6 and 7 shall not be
affected as they relate to Properties in respect of which the
Investors have exercised their Earn-In Rights; however, the Investors'
rights under Parts 6 and 7 shall continue as to any unexercised
Earn-In Rights until March 1, 2004, regardless of whether the Acquired
Properties are held by PCR or Opco. In determining whether the
Investors have ceased to hold the Minimum Percentage, there shall be
excluded from the determination any shares issued as consideration for
the acquisition of Properties after the date on which the Investors
first acquire Common Shares or Opco Shares and any shares issued as
performance shares, the result of the exercise of directors' stock or
other options or any other shares which are issued in a manner in
which the Investors are unable to exercise their rights under Part 5.
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(d) agrees to cause Opco to execute a counterpart of this Agreement
agreeing to be bound by, and to comply with, the provisions hereof.
PART 4
CLOSING
Time and Place of Closing
4.1 The Closing will take place at 2:00 p.m. (Toronto time) on the Closing Date
at Teck's offices in Toronto, Ontario or such other place and time as the
Parties may agree.
Deliveries by the Investors
4.2 At the Closing each Investor will, subject to Part 8, deliver to PCR:
(a) a cheque or bank draft for $500,000 Canadian (being the purchase price
for that Investor's Purchased Shares);
(b) an opinion of counsel, acceptable to PCR, as to the matters set out
in ss.4.5;
(c) a certificate of an officer as to the truth and accuracy of the
representations, warranties and covenants of the Investor as at the
Closing; and
(d) such other instruments and documents as are required to be delivered
at Closing by the Investor to PCR pursuant to the provisions of this
Agreement or as are reasonably required to evidence compliance with
the representations, warranties and covenants of the Investor
contained herein.
Deliveries by PCR at Closing
4.3 At the Closing PCR will, subject to Part 8, deliver to each Investor:
(a) a certificate representing the Purchased Shares registered in the name
of the Investor;
(b) an opinion of counsel acceptable to the Investors as to the matters
set out in ss. 4.4;
(c) a certificate of an officer as to the truth and accuracy of the
representations, warranties and covenants of PCR as at the Closing;
and
(d) such other instruments and documents as are required to be delivered
at Closing by PCR pursuant to the provisions of this Agreement or as
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are reasonably required to evidence compliance with the
representations, warranties and covenants of PCR contained herein.
Opinions
4.4 PCR shall deliver at the Closing an opinion of counsel, addressed to each
Investor and in a form reasonably satisfactory to the Investor, as to:
(a) the matters set out inss.2.3(a), (d), and (e) and, limited as set out
in ss.4.6, ss.2.3(b) and (f);
(b) the valid allotment and issuance of the Purchased Shares to the
Investor as fully paid and non-assessable; and
(c) such other matters as the Investor shall reasonably request.
4.5 Each Investor shall deliver at the Closing an opinion of counsel, addressed
to PCR and in a form reasonably satisfactory to PCR, as to:
(a) in the case of Teck, the matters set out inss.2.1(a) and (b);
(b) in the case of Cominco, the matters set out inss.2.2(a) and (b); and
(c) such other matters as PCR shall reasonably request.
4.6 In giving the opinion regarding matters set out in ss.2.3(b)(ii) and 2.3(f)
counsel may state that such counsel has no actual knowledge of any such
agreement or right.
PART 5
GRANT OF SUBSCRIPTION RIGHTS TO INVESTORS
Right to Subscribe
5.1 PCR hereby grants, and will cause Opco to grant, to each Investor the right
to purchase equity securities of PCR or Opco, as the case may be, or securities
convertible into equity securities of PCR or Opco, as the case may be, (such
equity securities and securities convertible into equity securities being
referred to as "Securities") from time to time, in the circumstances and manner
set out below.
5.2 If PCR or Opco intends to allot any Securities (for any purpose including
raising working capital generally or to cover its share of program costs in
respect of a Property), it shall first offer to sell, free of fees, brokerage or
commissions, such number of the Securities to the Investors to ensure that the
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Investors' aggregate percentage ownership of issued and outstanding Securities
of PCR or Opco, as the case may be, will remain unchanged after giving effect to
the allotment.
5.3 The offer shall be made in writing and shall specify any conditions to the
offer; the price per offered Security; and that if an Investor does not, within
the time stipulated (which shall not be less than 10 days nor more than 30
days), elect in writing to exercise the option hereunder with respect to the
offered Securities (in whole or in part), that Investor will be deemed to have
elected not to exercise the option as to the offered Securities.
5.4 The purchase of Securities hereunder by the Investors shall be completed
contemporaneously with the purchase of Securities by all other persons. The
Investors may determine, as between themselves, to acquire all or part of the
offered Securities. Unless otherwise indicated by the Investors, if both accept
the offer they shall be deemed to be purchasing the offered Securities in equal
proportions.
5.5 After the expiry of the time stipulated in the offer, or on receipt of
written confirmation from both Investors that they elect not to exercise the
option with respect thereto, PCR or Opco, as the case may be, may for 180 days
thereafter offer the remaining Securities to the persons and in the manner it
thinks most beneficial, but the offer to those persons shall not be at a price
less than, or on terms less favourable to PCR or Opco, as the case may be, than
the offer to the Investors.
5.6 At such time, if any, as the Investors' first cease to collectively own the
Minimum Percentage, the right to purchase securities as set out in this Part 5
will immediately terminate.
PART 6
MATTERS AFFECTING PROPERTIES
Properties to be Governed Hereby
6.1 If, prior to March 1, 2004, the Owner identifies an Acquired Property of
merit in respect of which the Owner has acquired or may acquire an NCI which it
believes may be of interest to the Investors, the Owner, and all persons acting
on its behalf, shall deliver a notice to the Investors, providing reasonable
details regarding the Property, the NCI and the Underlying Agreement and
requesting the Investors to determine whether such Acquired Property:
(a) is one that should be governed by this Agreement; and
(b) should be acquired by or transferred to Opco, or failing which under
the terms of the agreement between PCR and Opco will be held by PCR
subject to the terms of this Agreement.
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The Investors shall notify the Owner in writing within 15 days after receipt of
the Owner's notice of their determination. The Investors Earn-In Rights under
this Part 6 shall not be limited as to time but may only be exercised on those
Acquired Properties which are held subject to this Agreement on or prior to
March 1, 2004.
6.2 If the Investors determine that such Acquired Property is not one that
should be governed by this Agreement, the Owner will be free to deal with that
Acquired Property as it sees fit and that Acquired Property shall thereafter not
be subject to this Agreement. Failure by the Investors to notify the Owner of
their determination within the time limit in ss.6.1 will be deemed to be a
determination that the Acquired Property should not be governed by this
Agreement.
6.3 If the Investors determine that the Acquired Property is to be governed by
this Agreement, they shall either sign a separate confidentiality agreement
relating to the particular Property or shall add the Property to the schedule of
properties governed by the current Confidentiality Agreements. Thereafter the
Owner will make all data in its possession or control available to the Investors
and will, if requested to do so by the Investors and subject to limits imposed
by the relevant Governmental Authority, arrange for site visits at the earliest
reasonable time and within such time periods that will allow the Investors
adequate time for evaluating the Property. The Investors shall be responsible
for their own costs in connection with such site visits and such other costs as
may have been agreed by the Investors in advance of the site visit.
Categorization of Exploration or Development Property
6.4 On the earlier of 15 days after receipt of the Owner's notice under ss.6.1,
if the Investors have already completed a site visit, or within 30 days of
completion of a site visit as contemplated in ss.6.3, the Investors shall
deliver a notice to the Owner indicating whether the Acquired Property should be
categorized as:
(a) an Exploration Property, in which casess.6.5 toss.6.13 will govern; or
(b) a Development Property, in which casess.6.14 toss.6.21 will govern.
Failure by the Investors to notify the Owner of their election within the above
time limit will be deemed to be an election to categorize the Acquired Property
as an Exploration Property.
Third Party Dealings Prior to Earn-in
6.5 All dealings by the Owner with respect to an Acquired Property before the
Investors have exercised their Earn-In Rights on two Properties shall be subject
to the Investors' Earn-In Rights and any Person who acquires an Interest in an
Acquired Property prior thereto shall hold that Interest subject to the
Investors' Earn-In Rights and, following such acquisition, this Agreement shall
apply mutatis mutandis to that Person and the Interest which it has acquired so
that the Person and PCR shall enjoy the rights and benefits flowing from the
Investors and shall be subject to the same duties and obligations to the
Investors pro rata their respective Interests.
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Earn-in Rights Generally
6.6 The Investors will have the right to earn an Interest (the "Earn-In
Right") in an aggregate of two NCIs, exercisable in the manner set out either in
ss.6.8 or ss.6.14. After the Investors have exercised their Earn-in Rights as to
two Acquired Properties, the Earn-In Rights will terminate and the provisions of
ss.6.1 through ss.6.21 will cease to apply to the Parties.
Exploration Properties Generally
6.7 An Acquired Property that has been categorized by the Investors as an
Exploration Property will form part of the general assets of the Owner, but will
remain subject to the terms of this Agreement, and in particular:
(a) all dealings with such Property by the Owner before the production of
a Preliminary Feasibility Report relating thereto will be subject to
the Earn-in Rights of the Investors set out more particularly in
ss.6.8.
(b) the Owner may, but is not obligated to, perform additional work on the
Property;
(c) all Preliminary Feasibility Reports shall be presented and delivered
to the Investors, forthwith upon completion or receipt by the Owner,
at a meeting to be held at a mutually convenient time and place and
called by the Owner on at least 30 days notice to the Investors;
(d) if less than $1,000,000 in Expenditures have been incurred by the
Owner in connection with the Exploration Property, the Owner may elect
to abandon the Property or allow contractual rights to expire without
the consent of the Investors but will provide notice of such event to
the Investors; and
(e) if the Owner has incurred Expenditures of $1,000,000 or more and
wishes to abandon the Exploration Property or allow contractual rights
to expire, it shall first give 30 days notice to the Investors of such
intent and if the Investors request the Owner not to abandon the
Property or to allow the contractual rights to expire, the Investors
shall, subject to the applicable Underlying Agreement and approval of
the relevant Governmental Authority, assume the obligations of the
Owner with respect to such contractual rights.
Earn-in Right on Exploration Properties
6.8 Subject to existing requirements under any applicable Underlying Agreement,
the Investors will have a right to earn a 51% Interest in respect of an
Exploration Property and will have the further joint right to become the
operator of programs on such Exploration Property, by
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(a) completing, at their sole cost as between the Parties, a Final
Feasibility Report with respect to the Exploration Property, and
(b) arranging for, and giving notice as contemplated in ss.6.12 of,
funding (by equity, debt or a combination thereof) of all costs which
are required to be provided by the Parties in respect of the NCI to
bring the Property into commercial production as contemplated in a
Final Feasibility Report.
6.9 The Earn-in Rights are exercisable with respect to an Exploration Property
in respect of which the Investors give the Owner an Exercise Notice prior to the
30th day after the date of the meeting contemplated in ss.6.7(c). Failing
delivery of an Exercise Notice within the 30 days aforesaid, the Investors shall
be deemed to have elected that the Exploration Property be released from their
Earn-In Rights and that Property shall thereafter not be subject to this
Agreement.
Earning an Interest - Exploration Property
6.10 Where the Investors have delivered an Exercise Notice as contemplated in
ss.6.9, the Investors will thereafter have the right to design and implement
such programs of work to be conducted on the Exploration Property as, in their
sole discretion, they consider necessary to complete a Final Feasibility Report
with respect thereto and will earn the Interest in accordance with the following
provisions.
6.11 The Investors shall complete the Final Feasibility Report contemplated in
ss.6.10 without undue delay and within such time limits as are imposed by the
applicable Underlying Agreement. The Investors shall present and deliver to the
Owner a copy of the Final Feasibility Report, forthwith upon completion or
receipt by the Investors, at a meeting to be held at a mutually convenient time
and place and called by the Investors on at least 30 days notice to the Owner.
At the meeting or by separate notice the Investors will indicate by notice
whether:
(a) they consider the Final Feasibility Report to be positive and bankable
and they intend to seek funding necessary to bring the mine into
commercial production as contemplated in the Final Feasibility Report,
in which case ss.6.12 shall apply;
(b) they consider the Final Feasibility Report to be otherwise positive
and bankable, but that it is not prudent to proceed at that time for
reasons or as a result of conditions which they shall itemize at that
time; in which case ss.6.13 shall apply; or
(c) they no longer wish to retain their Earn-In Rights with respect to
that Exploration Property, in which case that Property shall cease to
be subject to this Agreement.
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Notwithstanding the foregoing, the Investors may, at any time prior to
completion of a Final Feasibility Report, give notice to the Owner that they are
abandoning the completion of the Final Feasibility Report and that they no
longer wish to retain their Earn-In Rights with respect to that Exploration
Property, in which case that Property shall cease to be subject to this
Agreement. The Investors will, promptly following the abandonment, provide the
Owner, on a without-warranty basis, with copies of all factual information and
data held or developed by the Investors as part of their Final Feasibility
Report work which the Investors are not precluded from providing as a result of
confidentiality obligations to third parties.
6.12 If the Investors give notice under ss.6.11(a), the Investors shall have 180
days from the date of delivery of the notice to the Owner under ss.6.11(a) to
obtain (by equity and commitments from a bank or other third party for
financing) 100% of the funds necessary for the program contemplated by the Final
Feasibility Report which are required to be provided by the Parties in respect
of the NCI. Upon the delivery of a Commitment Notice by the Investors to the
Owner that the required funds are available:
(a) the Investors shall have earned an undivided 51% Interest provided
always that if the applicable Underlying Agreement provides that the
Owner must complete the programs before an Interest is earned, the
Investors shall earn their Interest at the same time as the Owner; and
(b) upon the Interest having been earned, the Investors shall have
exercised an Earn-In Right.
6.13 If the Investors give notice of deferral under ss.6.11(b), the Investors
may, where possible in accordance with the Underlying Agreement, defer delivery
of a Commitment Notice from time to time until, in their view, the subject
Property could be placed into commercial production and such deferral shall not
prejudice the rights of the Investors hereunder. If the Investors elect to defer
commencement of programs contemplated in the Final Feasibility Report under such
circumstances, they shall update the Final Feasibility Report annually and
deliver the results of such update to the Owner together with an indication
whether they are continuing to defer a decision to commence with the programs.
Earn-in Right on Development Properties
6.14 Subject to existing requirements under any applicable Underlying Agreement,
the Investors will have a right to earn a 70% Interest in respect of a
Development Property and will have the further joint right to become the
operator of programs on such Development Property, by
(a) completing, at their sole cost as between the Parties, such
exploration work or other activities as may be necessary after its
categorization as a Development Property under ss.6.4 and a Final
Feasibility Report with respect to the Development Property, and
26
(b) arranging for, and giving notice as contemplated in ss.6.17 of,
funding (by equity, debt or a combination thereof) 70% of the costs
which are required to be provided by the Parties in respect of the NCI
to bring the mine into commercial production as contemplated in a
Final Feasibility Report (or 70% of such funds as are required for the
programs contemplated under the Final Feasibility Report where such
programs relate to the expansion of an existing or currently operating
mine).
Earning an Interest - Development Property
6.15 Where under ss.6.4(b) the Investors have categorized the Acquired Property
as a Development Property, the Investors will thereafter have the right to
design and implement such programs of work to be conducted on the Property as,
in their sole discretion, they consider necessary to complete a Final
Feasibility Report with respect thereto and will earn their Interest in
accordance with the following provisions.
6.16 The Investors shall complete the Final Feasibility Report contemplated in
ss.6.15 without undue delay and within such time limits as are imposed by the
applicable Underlying Agreement. The Investors shall present and deliver to the
Owner a copy of the Final Feasibility Report, forthwith upon completion or
receipt by the Investors, at a meeting to be held at a mutually convenient time
and place and called by the Investors on at least 30 days notice to the Owner.
At the meeting or by separate notice the Investors will indicate by notice
whether:
(a) they consider the Final Feasibility Report to be positive and bankable
and they intend to seek funding necessary to bring the mine into
commercial production as contemplated in the Final Feasibility Report,
in which case ss.6.17 shall apply;
(b) they consider the Final Feasibility Report to be otherwise positive
and bankable, but that it is not prudent to proceed at that time for
reasons or as a result of conditions which they shall itemize at that
time; in which case ss.6.18 shall apply; or
(c) they no longer wish to retain their Earn-In Rights with respect to
that Property, in which case that Property shall cease to be subject
to this Agreement.
Notwithstanding the foregoing, the Investors may, at any time prior to
completion of a Final Feasibility Report, give notice to the Owner that they are
abandoning the completion of the Final Feasibility Report and that they no
longer wish to retain their Earn-In Rights with respect to that Property, in
which case that Property shall cease to be subject to this Agreement. The
Investors will, promptly following the abandonment, provide the Owner, on a
without-warranty basis, with copies of all factual information and data held or
developed by the Investors as part of their Final Feasibility Report work which
the Investors are not precluded from providing as a result of confidentiality
obligations to third parties.
27
6.17 If the Investors give notice under ss.6.16(a) or ss.6.18, the Investors
shall have 180 days from the date of delivery of the notice to the Owner under
ss.6.16(a) or ss.6.18 to obtain (by equity and commitments from a bank or other
third party for financing) 70% of the funds necessary for the program
contemplated by the Final Feasibility Report which are required to be provided
by the Parties in respect of the NCI. Upon delivery of a Commitment Notice by
the Investors to the Owner that the required funds are available:
(a) the Investors shall have earned an undivided 70% Interest, provided
always that if the applicable Underlying Agreement provides that the
Owner must complete the programs before an Interest is earned, the
Investors shall earn their Interest at the same time as the Owner; and
(b) upon the Interest having been earned, the Investors will have
exercised an Earn-in Right.
6.18 If the Investors give notice of deferral under ss.6.16(b), the Investors
may, where possible in accordance with the Underlying Agreement, defer delivery
of a Commitment Notice from time to time until, in their view, the subject
Property could be placed into commercial production and such deferral shall not
prejudice the rights of the Investors hereunder. If the Investors elect to defer
commencement of programs contemplated in the Final Feasibility Report under such
circumstances, they shall update the Final Feasibility Report annually and
deliver the results of such update to the Owner together with an indication
whether they are continuing to defer a decision to commence with the programs.
The Investors may, at any time during the deferral, give notice to the Owner
that conditions upon which the deferral has been based have been overcome and
they consider the Final Feasibility Report to be positive and bankable and they
intend to seek funding necessary to bring the mine into commercial production as
contemplated in the Final Feasibility Report, in which case ss.6.17 shall apply
to the Investors and ss.6.19 to ss.6.21 will apply to the Owner.
6.19 The Investors will be entitled to include in the terms of any bank or third
party commitment for financing a condition precedent that the Owner will provide
the remaining 30% of the funds necessary for the programs of work which are
required to be provided by the Parties in respect of the NCI.
6.20 If the Owner is unable, during the ISO-day period referred to in ss.6.17,
to deliver a Commitment Notice for its 30% of the required funds the Investors
can either:
(a) notify the Owner that the production programs will be postponed; or
(b) elect to arrange for or provide such remaining funds as are necessary
for the programs contemplated by the Final Feasibility Report, in
which case the Owner's Interest will be diluted in accordance with the
dilution formula set out in the Terms of Joint Venture annexed as
Schedule F hereto.
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6.21 If the Investors elect under ss.6.20 to postpone the production programs,
the Owner and Investor shall maintain their respective interests in the
Property. The Investors shall update the Final Feasibility Report annually and
may, at any time, elect to proceed with the production program contained
therein. In such case, the Investors will give notice in writing to the Owner
and the Owner will thereafter have 180 days within which to arrange for
financing of its share of funds required for the production programs. If after
the expiry of such time the Owner cannot deliver a Financing Notice for its
share of funds, the Investors will be entitled to provide balance of such funds
for the production programs and the interest of the Owner will be diluted in
accordance with the dilution formula set out in the Terms of Joint Venture
annexed as Schedule F hereto.
Joint Venture
6.22 As promptly as practicable after the Closing Date, the Parties shall settle
the form of Joint Venture Agreement relating to Properties, which Joint Venture
Agreement shall include at least the terms set out on Schedule F, including a
provision that if the Owner's Interest is diluted to 10% its Interest will be
converted to a 1% Net Smelter Return Royalty, as defined in Schedule E, from
that share of production from a mine on the Property which is taken in kind or
attributable to the Interests held by the Parties. Notwithstanding actual
Expenditures of an Owner, the Owner's initial contribution for a Development
Property for the purposes of calculating dilution shall be deemed to be such
amount that is equal to 30% of total Expenditures at the time of Commitment
Notice. Each Property for which the Investors have exercised an Earn-In Right
will be governed by its own separate Joint Venture Agreement.
Cost Recovery - Development Property
6.23 With respect to a Development Property, Net Proceeds shall be distributed
as follows:
(a) firstly 100% to repay any third party project financing;
(b) secondly, 100% to repay any project financing contributed by the
Parties as between the Parties in proportion to their percentage
contribution level to the project financing;
(c) thirdly, to repay any Prior Costs, excluding deemed costs, prior to
the date of the Investors' Commitment Notice; and
(d) finally, to the Parties in proportion to their respective Interests.
Cost Recovery - Exploration Property
6.24 With respect to an Exploration Property, Net Proceeds shall be distributed
as follows:
(a) firstly 100% to repay any third party project financing;
29
(b) secondly, until the First Recovery Date, 75% to the Investors in
respect of their Prior Costs, excluding deemed costs (in proportion to
their respective Interests as between them) and 25% to the Owner in
respect of its Prior Costs, excluding deemed costs, plus interest at
Prime Rate plus 2%, calculated in each case from the date on which the
said Prior Costs were paid;
(c) thirdly, until the Second Recovery Date, 100% to the Party that has
not yet recovered its Prior Costs, excluding deemed costs, plus
interest at the Prime Rate plus 2%, calculated from the date on which
such said Prior Costs were paid; and
(d) finally, to the Parties in proportion to their respective Interests.
PCR Consulting Services
6.25 Where PCR or Opco can demonstrate that its current employees have the
required expertise and provided that the contract price is within the standard
range in the industry for arms length engagements, such Party shall be entitled
to offer its consulting services to any other Party hereto. The Investors may
require PCR and Opco to render consulting services, so long as the renumeration
for such services is within the standard range in the industry.
PART 7
ASSIGNMENTS AND PREFERENTIAL RIGHTS OF PURCHASE
Assignments
7.1 No Party may assign any right, benefit or interest in this Agreement or an
NCI in respect of which the Investors have exercised their rights under Part 6
without the prior written consent of the other Parties and any purported
assignment without such compliance will be void except:
(a) such assignment is permitted if it occurs in accordance with Part 6;
(b) an Investor may, at any time, assign all or any part of its interest
to an Affiliate so long as such Affiliate agrees to be bound by the
terms of this Agreement and to retransfer the interest prior to
ceasing to be an Affiliate of such Investor;
(c) Opco may assign all or any part of its interest to a wholly-owned
subsidiary of Opco so long as such entity agrees to be bound by the
terms of this Agreement and to retransfer the interest prior to
ceasing to be a wholly-owned subsidiary;
(d) PCR may assign all or any part of its Interest to the Investors or to
Opco;
30
(e) the Investors may freely assign Interests as between them; and
(f) such assignment is permitted if it occurs in accordance withss.7.2
through 7.6.
7.2 Subject to ss.7.7 and to existing requirements under any applicable
Underlying Agreement, after the Earn-In Rights contained in ss.6.6 and 6.7 have
been exercised (by either or both Investors) with respect to an aggregate of two
Properties, if:
(a) the Owner wishes to dispose of all or a portion of its Interest in a
Property; or
(b) the Owner wishes to accept a legally binding and enforceable offer
from a third party to purchase, earn or acquire an Interest; it shall
first offer to the Investors the same opportunity in the manner
hereinafter set out.
7.3 The Owner shall deliver an offer (the "Owner's Offer") to the Investors
which shall include at least the following information or documents:
(a) a written notice specifying in reasonable detail the Property which is
the subject of the Owner's Offer, and the NCI in relation thereto;
(b) all information in the Owner's possession or control relating to the
Acquired Property;
(c) such preliminary feasibility report (if any and without obligating the
Owner to produce one) relating to the Acquired Property in the
possession or control of the Owner;
(d) the terms and conditions of the Owner's offer, or a copy of any third
party offer contemplated in ss.7.2(b), including the time period for
acceptance; and
(e) all other information, analysis and data in the Owner's possession or
control that the Investors may reasonably request or which might
reasonably be expected to be useful to them in deciding whether to
accept the Owner's Offer;
and in all cases if the Investors have not previously executed a confidentiality
agreement governing the subject Property, upon request of the Owner before
delivery of the information, they shall do so.
7.4 The Investors shall have 30 days after receipt of the Owner's Offer to
accept the Owner's Offer. Either or both of the Investors may elect in writing
to accept such offer and where both Investors elect to accept, they shall
participate in purchasing, earning or acquiring the Interest in equal
proportions unless otherwise agreed between them. Completion of the transaction
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shall occur on a date agreed among the Parties but not earlier than 60 days
after delivery of the acceptance notice.
7.5 If neither Investor accepts the Owner's Offer within the time period
provided for acceptance, the Investors shall be deemed to have declined the
offer and the Owner may, for a period of 180 days thereafter, sell or dispose of
the Interest to a third party (and where the Owner's Offer relates to a specific
third party offer to that third party) on the same, or financially equivalent,
terms and conditions as set out in the Owner's Offer; provided that, with
respect to the Properties in which the Investors have exercised their Earn-in
Rights, the third party agrees to be bound by this Agreement. If the Owner does
not complete the acquisition or transaction within the said 180 days, the
preferential right of purchase enjoyed by the Investors shall again apply to any
proposed disposition.
7.6 If after making an election or earning an Interest under Part 6 an Investor
wishes to transfer all of the Interest to a third party other than an Affiliate,
it must first offer the Interest to Opco or PCR in accordance with the
provisions of ss.7.2 to ss.7.5 and for these purposes "Owner" shall be read to
mean the particular Investor and "Investors" shall be read to mean Opco or PCR,
as the case may be.
7.7 This Part 7 shall cease to apply to Properties, other than the two in
respect of which the Investors have exercised their Earn-In Rights, on the
earlier of March 1, 2004, and the third anniversary of the date the Investors
have exercised their Earn-In Rights on two Properties.
PART 8
CONDITIONS
Conditions to the Obligations of Teck and Cominco
8.1 Except as otherwise specifically set forth herein, all obligations of Teck
and Cominco under this Agreement are subject to the fulfilment, before or on the
Closing Date, of each of the following conditions for the exclusive joint
benefit of the Investors, each of which may be waived in whole or in part by the
Investors, on or before the Closing Date:
(a) all representations and warranties of PCR contained in this Agreement
or in any written statement delivered to Teck or Cominco under this
Agreement, are true and correct, when made and will be true and
correct at the Closing Date; and
(b) each of the covenants and agreements of, conditions imposed upon and
the deliveries set out herein to be made by PCR to be performed,
satisfied or complied with on or before the Closing Date has been duly
performed, satisfied and complied with in all respects on or before
the Closing Date.
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Conditions to the Obligations of PCR
8.2 Except as otherwise specifically set forth herein, all obligations of PCR
under this Agreement are subject to the fulfilment, before or on the Closing
Date, of each of the following conditions for the exclusive benefit of PCR and
each of which may be waived in whole or in part by PCR on or before the Closing
Date:
(a) receipt of any Requisite Approvals for the transactions contemplated
in this Agreement;
(b) all representations and warranties of Teck and Cominco contained in
this Agreement, or in any written statement delivered to PCR by Teck
or Cominco under this Agreement, are true and correct, when made and
will be true and correct on the Closing Date; and
(c) each of the covenants, agreements and conditions of Teck and Cominco
to be performed, satisfied or complied with on or before the Closing
Date pursuant to the terms hereof has been duly performed, satisfied
and complied with in all respects on or before the Closing Date.
PART 9
FORCE MAJEURE
Force Majeure
9.1 Notwithstanding any other provision of this Agreement, a Party's rights and
privileges shall not be affected and no liabilities hereunder shall result to
that Party, except for monies then due, for any delay in performance or
non-performance caused by circumstances beyond the control of the party
affected, including but not limited to acts of God, earthquake, fire, flood or
the elements, perils of the sea, including any action or threatened action of
any nation endangering transport, malicious mischief, riots, strikes, lockouts,
boycotts, picketing, labour disturbances, war, compliance with any directive,
order or regulation of any governmental authority or representatives thereof
acting under claim or colour of authority, accidents, equipment or operational
breakdown, shortage or inability to obtain fuel, electric power, raw materials
or manufactured products, equipment, containers or transportation, unfavourable
economic or political considerations beyond the control of that Party such as,
but not limited to foreign exchange controls restricting foreign investment or
the return of foreign investment, or the currency in which it is payable and
restrictions on the export of production or due to any cause beyond that Party's
reasonable control whether or not similar to the foregoing.
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Notice
9.2 Upon the occurrence of an event of force majeure, the affected Party shall
notify the other Parties immediately upon such occurrence and the Parties shall
exercise all reasonable efforts and due diligence to eliminate or remedy any
event of force majeure or interrupting proponents hereunder (provided that
nothing herein contained shall be construed as requiring any party to accede to
any demands of workers which it considers unreasonable or to test
constitutionality of any law).
Extension of Time
9.3 If an event of force majeure occurs, the time periods during which a Party
must satisfy its obligations hereunder will be extended for the same length of
time as the event of force majeure continues.
PART 10
GENERAL PROVISIONS
Entire Agreement
10.1 This Agreement and the Confidentiality Agreements constitute the entire
agreement among the Parties and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
Parties with respect to the subject matter of this Agreement other than
agreements executed by each of the Parties on or after the date of this
Agreement.
No Other Representations
10.2 No director, officer, employee or agent of any Party has any authority to
make any representation or warranty not contained in this Agreement, and each
Party agrees that it has executed this Agreement without reliance upon any such
representation or warranty.
Waiver and Consent
10.3 No consent or waiver, express or implied, by either Party to or of any
breach or default by the other of any or all of its obligations under this
Agreement will
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to thisss.10.3;
(b) be relied on as a consent to or waiver of any other breach or default
of the same or any other obligation;
34
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this ss.10.3 in any other or subsequent instance.
Amendments
10.4 This Agreement may not be amended except by written document signed by all
Parties to this Agreement.
Press Releases
10.5 Each Party shall consult with the others prior to issuing any press release
or other public statement regarding a Property or the activities of the Parties
with respect thereto:
(a) during the Earn-In Period in respect of all Acquired Properties; and
(b) thereafter in respect of Acquired Properties for which the Investors
have exercised the Earn-In Rights.
At all times each Party shall obtain prior approval from the other before
issuing any press release or public statement using the others' names or the
name of any of the others' associated companies or of any of the officers,
directors or employees of the others or their associated companies.
Binding Effect
10.6 This Agreement will enure to the benefit of and be binding upon the
respective legal representatives, successors and permitted assigns of the
Parties.
Time of Essence
10.7 Time is of the essence in the performance of each obligation under this
Agreement.
Further Assurances
10.8 Each Party will at all times and from time to time cooperate with each
other Party in order to give full effect to this Agreement and in order to
assist and expedite the performance by each Party of all or any of the
provisions herein contained and, in particular, do all acts and things and
execute under its corporate seal or otherwise and deliver all such instruments,
deeds, mortgages, assignments and other documents and cause all such corporate
acts to be duly, expeditiously and validly done as the Parties may reasonably
require in accordance with the provisions hereof.
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Notice
10.9 Every notice, request, demand or direction (each, for the purposes of this
ss.10.9, a "notice") to be given pursuant to this Agreement by any Party to
another will be in writing and will be delivered or sent by telecopier or other
similar form of instantaneous written communication on tangible medium, in each
case, addressed as applicable as follows:
If to PCR:
000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxx
If to Teck at:
000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Secretary
If to Cominco at:
000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: General Manager, Exploration, International
or to such other address as is specified by the particular Party by notice to
the other.
Deemed Receipt
10.10 Any notice delivered or sent in accordance with ss.10.9 will be deemed to
have been given and received:
(a) if delivered, on the first Business Day after the day of
delivery; and
36
(b) if sent by telecopier or other similar form of instantaneous
written communication, on the first Business Day after the day of
transmittal. Termination
10.11 This Agreement will terminate:
(a) upon mutual agreement of the Parties; and
(b) at the option of the Investors if any of the events set out in
2.8(b) occurs.
Counterparts
10.12 This Agreement may be signed by facsimile and in any number of
counterparts and all such counterparts will be taken to comprise a single
agreement.
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and
year first above written.
The Corporate Seal of )
PACIFIC CANADA RESOURCES INC. )
was affixed in the presence of: )
)
/s/ ) C/S
--------------------------------------------)
Authorized Signatory )
)
)
/s/ )
--------------------------------------------)
Authorized Signatory )
The Corporate Seal of )
TECK CORPORATION )
was affixed in the presence of: )
)
/s/ ) C/S
--------------------------------------------)
Authorized Signatory )
)
)
/s/ )
--------------------------------------------)
Authorized Signatory )
The Corporate Seal of )
COMINCO LTD. )
was affixed in the presence of: )
)
/s/ ) C/S
--------------------------------------------)
Authorized Signatory )
)
)
/s/ )
--------------------------------------------)
Authorized Signatory )
