MINERAL PROPERTY ACQUISITION AGREEMENT

__________

 

 

 

 

 

MINERAL PROPERTY ACQUISITION AGREEMENT

 

 

 

 

 

Among each of :

 

EDUARDO M. ESTEFFAN, FRESIA H. SEPULVEDA, EDUARDO S. ESTEFFAN, GRETCHEN S. ESTEFFAN, CLAUDIO S. ESTEFFAN and
INTEGRITY CAPITAL GROUP, LLC

 

 

And :

 

ZORO MINING CORP.

 

 

 

 

 

Zoro Mining Corp.
Suite 1000, 789 West Pender Street, Vancouver, British Columbia, Canada, V6C 1H2

__________

MINERAL PROPERTY ACQUISITION AGREEMENT

 

 

                       THIS MINERAL PROPERTY ACQUISITION AGREEMENT is made and dated for reference effective as of the 12 ^th day of April, 2007 (the " Effective Date ").

 

AMONG EACH OF :

EDUARDO M. ESTEFFAN , having an address for delivery and notice located at Van Buren 208, Copiapo, Chile

(" Eduardo M. Esteffan ");

OF THE FIRST PART

AND :

FRESIA H. SEPULVEDA , having an address for delivery and notice located at Van Buren 208, Copiapo, Chile

(" Fresia Sepulveda ");

OF THE SECOND PART

AND :

EDUARDO S. ESTEFFAN , having an address for delivery and notice located at Van Buren 208, Copiapo, Chile

(" Eduardo S. Esteffan ");

OF THE THIRD PART

AND :

GRETCHEN S. ESTEFFAN , having an address for delivery and notice located at Van Buren 208, Copiapo, Chile

(" Gretchen Esteffan ");

OF THE FOURTH PART

AND :

CLAUDIO S. ESTEFFAN , having an address for delivery and notice located at Van Buren 208, Copiapo, Chile

(" Claudio Esteffan ");

OF THE FIFTH PART

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AND :

INTEGRITY CAPITAL GROUP, LLC , having an address for delivery and notice located at 7272 Wurzbach Road, Suite 901, San Antonio, Texas, U.S.A., 78240

(" Integrity ");

OF THE SIXTH PART

(Eduardo M. Esteffan, Fresia Sepulveda, Eduardo S. Esteffan, Gretchen Esteffan, Claudio Esteffan and Integrity being hereinafter singularly also referred to as a " Vendor " and collectively referred to as the " Vendors " as the context so requires);

AND :

ZORO MINING CORP. , a company incorporated under the laws of the State of Nevada, U.S.A., and having an address for notice and delivery located at Suite 1000, 789 West Pender Street, Vancouver, British Columbia, Canada, V6C 1H2

(the " Purchaser ");

OF THE SEVENTH PART

(the Vendors and the Purchaser being hereinafter singularly also referred to as a " Party " and collectively referred to as the " Parties " as the context so requires).

 

                       WHEREAS :

 

A.                    The Vendors, either directly or indirectly and through either of their wholly-owned and controlled holding companies, affiliates, associates or nominees, as the case may be, are the legal, beneficial and registered owners of certain mineral property interests which are located in each of the following jurisdictions (collectively, the " Property "):

(a)       the Las Animas Project located in Mexico and comprising approximately 2,700 hectares;

(b)       the Costa Rica Project located in Chile and comprising approximately 2,100 hectares, the Escondida Project also located in Chile and comprising approximately 2,000 hectares; the Rio Sur Project also located in Chile and comprising approximately 1,300 hectares and the Don Beno Project located in Chile and comprising approximately 6,000 hectares; and

(c)      the Yura Project located in Peru and comprising approximately 2,000 hectares;

and which mineral property interests comprising the Property are more particularly described in Schedule "A" which is attached hereto and which forms a material part hereof;

B.                    The Purchaser is a reporting company incorporated under the laws of the State of Nevada, U.S.A., is in the business of seeking, acquiring and developing mineral resource property interests of merit and has its common shares listed for trading on the NASD over-the-counter Bulletin Board;

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C.                    As a consequence of various recent discussions and negotiations as between the Parties hereto the Vendors have agreed to grant an exclusive option to the Purchaser (the " Option ") to acquire an undivided 100% legal, beneficial and registerable interest in and to each of the mineral property interests comprising the Property; and

D.                    The Parties hereto have agreed to enter into this agreement (the " Agreement ") which formalizes and replaces, in its entirety, such recent discussions and negotiations, and which clarifies their respective duties and obligations in connection with the within granting by the Vendors to the Purchaser of the Option to acquire an undivided 100% legal, beneficial and registerable interest in and to the mineral property interests comprising the Property as a consequence thereof;

 

                       NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of the mutual covenants and provisos herein contained, THE PARTIES HERETO AGREE AS FOLLOWS :

 

Article 1
DEFINITIONS, SCHEDULES AND INTERPRETATION

1.1                  Definitions . For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following words and phrases shall have the following meanings:

(a)       " Affiliate " has the meaning ascribed to it in section "2.2" hereinbelow;

(b)       " Affiliate Share " has the meaning ascribed to it in section "2.2" hereinbelow;

(c)       " Affiliate Share Transfer " has the meaning ascribed to it in section "2.2" hereinbelow;

(d)       " Agreement " means this Mineral Property Acquisition Agreement as entered into between the Parties hereto, together with any amendments thereto and any Schedules as attached thereto;

(e)       " Arbitration Act " means the British Columbia Commercial Arbitration Act , R.S.B.C. 1996, as amended, as set forth in Article "14" hereinbelow;

(f)       " Closing " has the meaning ascribed to it in section "6.1" hereinbelow and includes, without limitation, the closing of each of the transactions contemplated hereby which shall occur after the conditions precedent set out in Article "5" hereinbelow have been satisfied in their entirety;

(g)       " Closing Date " has the meaning ascribed to it in section "6.1" hereinbelow;

(h)       " Confidential Information " has the meaning ascribed to it in section "12.1" hereinbelow;

(i)       " Consultants " has the meaning ascribed to it in section "2.2" hereinbelow;

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(j)       " Consulting Arrangements " has the meaning ascribed to it in section "2.2" hereinbelow;

(k)       " Defaulting Party " and " Non-Defaulting Party " have the meanings ascribed to them in section "15.1" hereinbelow;

(l)       " Disposing Party " has the meaning ascribed to it in section "8.3" hereinbelow;

(m)       " Effective Date " has the meaning ascribed to in on the front page of this Agreement;

(n)       " Escrow Agent " means Lang Michener LLP, Lawyers - Patent & Trade Mark Agents, or such other mutually agreeable escrow agent as may be selected by the Parties hereto either prior to or after the Effective Date and who agrees to be bound by the terms and conditions of this Agreement;

(o)       " Holding " has the meaning ascribed to it in section "8.3" hereinbelow;

(p)       " Indemnified Parties " and " Indemnified Party " have the meanings ascribed to them in section "16.1" hereinbelow;

(q)       " mortgage " has the meaning ascribed to it in section "8.1" hereinbelow;

(r)       " Option " has the meaning ascribed to it in section "2.1" hereinbelow as effected in the manner as set forth in Article "2" hereinbelow;

(s)       " Option Period " has the meaning ascribed to it in section "2.1" hereinbelow;

(t)       " Party " or " Parties " means the Vendors and/or the Purchaser hereto, together with their respective successors and permitted assigns as the context so requires;

(u)       " person " or " persons " means an individual, corporation, partnership, party, trust, fund, association and any other organized group of persons and the personal or other legal representative of a person to whom the context can apply according to law;

(v)       " Property " has the meaning ascribed to it in recital "A . " hereinabove; and which mineral property interests comprising the Property are particularly described in Schedule "A" which is attached hereto together with any other claim or interests of the Parties hereto which are incorporated into the Property by the terms of this Agreement;

(w)      " Property Documentation " means any and all technical records and other factual engineering data and information relating to the mineral property interests comprising the Property and including, without limitation, all plans, maps, agreements and records which are in the possession or control of any Party hereto;

(x)       " Property Rights " means all mineral licenses and all prioritized and protocoled applications for exploration licenses, permits, easements, rights-of-way, certificates, exclusive prospecting orders and other approvals obtained by either of the Parties either before or after the Effective Date of this Agreement and necessary for the exploration and development of any of the mineral property interests comprising the Property;

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(y)       " Purchaser " means Zoro Mining Corp., a company incorporated pursuant to the laws of the State of Nevada, U.S.A., or any successor company, however formed, whether as a result of merger, amalgamation or other action;

(z)       " Regulatory Approval " means the acceptance for filing of the transactions contemplated by this Agreement by the Regulatory Authorities;

(aa)     " Regulatory Authorities " means such regulatory bodies and agencies who have jurisdiction over the affairs of any of the Parties hereto and including, without limitation, all Regulatory Authorities from whom any such authorization, approval or other action is required to be obtained or to be made in connection with the transactions contemplated by this Agreement;

(ab)     " Securities Act " means the United States Securities Act of 1933 , as amended, together with any Rules and Regulations promulgated thereunder;

(ac)     " Subject Removal Date " has the meaning ascribed to it in section "5.1" hereinbelow;

(ad)     " subsidiary " means any company or companies of which more than 50% of the outstanding shares carrying votes at all times (provided that the ownership of such shares confers the right at all times to elect at least a majority of the board of directors of such company or companies) are for the time being owned by or held for a company and/or any other company in like relation to the company, and includes any company in like relation to the subsidiary;

(ae)     " Transfer Documents " has the meaning ascribed to it in section "7.2" hereinbelow; and

(af)     " Vendor " and " Vendors " means, individually and/or collectively, as the case may be, each of Eduardo M. Esteffan, Fresia Sepulveda, Eduardo S. Esteffan, Gretchen Esteffan, Claudio Esteffan and Integrity.

1.2                  Schedule . For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following shall represent the Schedule which is attached to this Agreement and which forms a material part hereof:

	Schedule	Description
	Schedule "A":	Property.

1.3                  Interpretation . For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)       the words " herein ", " hereof " and " hereunder " and other words of similar import refer to this Agreement as a whole and not to any particular Article, section or other subdivision of this Agreement;

(b)       the headings are for convenience only and do not form a part of this Agreement nor are they intended to interpret, define or limit the scope or extent of this or any provision of this Agreement;

(c)       any reference to an entity shall include and shall be deemed to be a reference to any entity that is a permitted successor to such entity; and

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(d)         words in the singular include the plural and words in the masculine gender include the feminine and neuter genders, and vice versa .

 

Article 2
GRANT, MAINTENANCE, EXERCISE AND TERMINATION OF THE OPTION

2.1                  Grant of the Option . Subject to the terms and conditions hereof and based upon the representations, warranties and covenants contained in Articles "3" and "4" hereinbelow and the prior satisfaction of the conditions precedent which are set forth in Article " 5 " hereinbelow, the Vendors hereby agrees to give and grant to the Purchaser the sole and exclusive right and option to acquire an undivided 100% legal, beneficial and registerable interest in and to the mineral property interests comprising the Property (again, the " Option ") and, in order to maintain the Option in good standing and in full force and effect, the Purchaser hereby agrees to exercise the Option on or before the Closing Date (and which period in time from the Effective Date herein to the Closing Date is referred to as the " Option Period ") for each of the considerations provided for in accordance with section "2.2" hereinbelow.

2.2                  Consideration for and maintenance of the Option . In order to keep the right and Option granted to the Purchaser in respect of the Property in good standing and in force and effect during the Option Period the Purchaser shall be obligated to provide the following consideration to the Vendors in the following manner:

(a)        Affiliate Share Transfer : in contemplation of each of the Vendor's various and potential continuing roles within the Company upon the exercise of the within Option and the proposed Closing of this Agreement, the Purchaser will be required to cause a certain existing founding shareholder of the Company (that being Paul D. Brock; a current director of the Purchaser and herein the " Affiliate ") to sell an aggregate of 35,500,000 restricted and control and issued and outstanding common shares from the holdings of such Affiliate in and to the Purchaser (each an " Affiliate Share ") to the order and direction of the Vendors at a purchase price of U.S. $0.0001 per Affiliate Share :

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(b)        Consulting Arrangements : in contemplation of certain agents to the Vendors having and continuing to have certain roles within the Company upon the exercise of the within Option and the proposed Closing of this Agreement; and to take effective only upon the Closing herein; the Purchaser will use its reasonably commercial efforts to enter into industry standard forms of proposed consulting arrangements (collectively, the " Consulting Arrangements ") with certain of the finally determined agents to the Vendors (collectively, the " Consultants " herein) therein providing for, without limitation, the provision of certain consulting services to be provided by the Consultants to the Purchaser in connection with the exploration, development and expansion of the Property in consideration of, among other matters, the provision of the monthly payments by the Purchaser to each of the Consultants together with entitlement for the Consultants to participate in the Purchaser's then incentive stock option plan subject, at all times, to the final determination of the Board of Directors of the Purchaser in each such instance; and

(c)        Maintenance payments : pay, or cause to be paid, to or on the Vendors' behalf as the Purchaser may determine, in the Purchaser's sole and absolute discretion, all underlying option, regulatory and governmental payments and assessment work required to keep the mineral property interests comprising the Property and any underlying option agreements respecting any of the mineral property interests comprising the Property in goodstanding during the Option Period of this Agreement.

2.3                  Resale restrictions and legending of Affiliate Share certificates . The Vendors hereby acknowledge and agree that neither the Purchaser nor the Affiliate makes any representations as to any resale or other restriction affecting the Affiliate Shares and that it is presently contemplated that the Affiliate Shares will be transferred by the Affiliate to the Vendors in reliance upon the registration and prospectus exemptions contained in certain sections of the United States Securities Act of 1933 (the " Securities Act ") which will impose a trading restriction in the United States on the Shares for a period of at least 12 months from the Closing Date. In addition, the Vendors hereby also acknowledges and agrees that the within obligation of the Affiliate to transfer the Affiliate Shares pursuant to section "2.2" hereinabove will be subject to each of the Purchaser and the Affiliate being satisfied that an exemption from applicable registration and prospectus requirements is available under the Securities Act and all applicable securities laws in respect of each of the Vendors and the Affiliate Shares.

                       The Vendors hereby also acknowledge and understand that neither the sale of the Affiliate Shares which the Vendors are acquiring nor any of the Affiliate Shares themselves have been registered under the Securities Act or any state securities laws, and, furthermore, that the Affiliate Shares must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. The Vendors also acknowledge and understand that the certificates representing the Affiliate Shares will be stamped with the following legend (or substantially equivalent language) restricting transfer in the following manner if such restriction is required by the Regulatory Authorities:

"The transfer of the securities represented by this certificate is prohibited except in accordance with the provisions of Regulation S promulgated under the United States Securities Act of 1933, as amended (the "Act"), pursuant to registration under the Act or pursuant to an available exemption from registration. In addition, hedging transactions involving such securities may not be conducted unless in compliance with the Act.".

or

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"The securities represented by this certificate have not been registered under the United States Securities Act of 1933, as amended, or the laws of any state, and have been issued pursuant to an exemption from registration pertaining to such securities and pursuant to a representation by the security holder named hereon that said securities have been acquired for purposes of investment and not for purposes of distribution. These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration, or the availability of an exemption from such registration. The stock transfer agent has been ordered to effectuate transfers only in accordance with the above instructions.";

and the Vendors hereby consent to the Purchaser making a notation on its records or giving instructions to any transfer agent of the Purchaser in order to implement the restrictions on transfer set forth and described hereinabove.

                       The Vendors also acknowledge and understand that:

(a)       the Affiliate Shares are restricted securities within the meaning of " Rule 144 " promulgated under the Securities Act;

(b)       the exemption from registration under Rule 144 will not be available in any event for at least one year from the date of transfer of the Affiliate Shares to the Vendors, and even then will not be available unless (i) a public trading market then exists for the common stock of the Purchaser, (ii) adequate information concerning the Purchaser is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and

(c)       any sale of the Affiliate Shares may be made by the Vendors only in limited amounts in accordance with such terms and conditions.

2.4                  Standstill provisions . In consideration of the Purchaser's within agreement to purchase the Property and to enter into the terms and conditions of this Agreement, the Vendors hereby undertakes for themselves, and for each of the Vendors' respective agents and advisors, that they will not until the earlier of the Closing Date or the termination of this Agreement approach or consider any other potential purchasers, or make, invite, entertain or accept any offer or proposal for the proposed sale of any mineral property interests comprising the Property or, for that matter, disclose any of the terms of this Agreement, without the Purchaser's prior written consent. In this regard the Vendors hereby acknowledge that the foregoing restrictions are important to the business of the Purchaser and that a breach by the Vendors of any of the covenants herein contained would result in irreparable harm and significant damage to the Purchaser that would not be adequately compensated for by monetary award. Accordingly, the Vendors hereby agree that, in the event of any such breach, in addition to being entitled as a matter of right to apply to a Court of competent equitable jurisdiction for relief by way of restraining order, injunction, decree or otherwise as may be appropriate to ensure compliance with the provisions hereof, the Vendors will also be liable to the Purchaser, as liquidated damages, for an amount equal to the amount received and earned by any such Party as a result of and with respect to any such breach. The Vendors also acknowledge and agree that if any of the aforesaid restrictions, activities, obligations or periods are considered by a Court of competent jurisdiction as being unreasonable, they agree that said Court shall have authority to limit such restrictions, activities or periods as the Court deems proper in the circumstances.

2.5                  Termination of the Option . The Option shall terminate upon 90-calendar days' prior written notice being first being provided by the Vendors to the Purchaser:

(a)       if the Purchaser fails to arrange for the completion of the Affiliate Share Transfer by the Affiliate to the order and direction of the Vendors in accordance with paragraph "2.2(a)" hereinabove during the Option Period and prior to the time period and the Closing Date as specified in paragraph "2.2(a)" hereinabove; or

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(b)       if the Purchaser fails to pay, or cause to be paid, to or on the Vendors' behalf as the Purchaser may determine, in the Purchaser's sole and absolute discretion, all underlying option, regulatory and governmental payments and assessment work required to keep the mineral property interests comprising the Property and any underlying option agreements respecting any of the mineral property interests comprising the Property in goodstanding in accordance with paragraph "2.2(c)" hereinabove.

2.6                    Termination by the Purchaser of the Option . Prior to the exercise of the Option the Purchaser may terminate the Option by providing a notice of termination to the Vendors in writing of its desire to do so at least 30 calendar days prior to its decision to do so. After such 30-calendar days' period the Purchaser shall have no further obligations, financial or otherwise, under this Agreement, except that the provisions of section "2.8" hereinbelow shall become immediately applicable to the Purchaser upon providing the said notice of termination to the Vendors.

2.7                  No interest in the Property upon termination of the Option . If the Option is so terminated in accordance with either of sections "2.5" or "2.6" hereinabove the Purchaser shall have no interest in and to any of the mineral property interests comprising the Property, and any and all prior Affiliate Share Transfer transfers, Consulting Arrangements and maintenance payments made, or caused to be made, or incurred by the Purchaser to or on behalf of the Vendors or any of the mineral property interests comprising the Property under this Agreement, shall then be non-refundable by the Vendors to the Purchaser for which the Purchaser shall have no recourse, and the provisions of section "2.8" hereinbelow shall become immediately applicable to the Purchaser.

2.8                  Obligations on termination of the Option . If the Option is terminated otherwise than upon the exercise thereof pursuant to this Article, then the Purchaser shall:

(a)       leave in good standing for a period of at least 60 calendar days from the termination of the Option those mineral property interests comprising the Property that are in good standing on the date thereof;

(b)       cause to be delivered to the Vendors the Transfer Documents and bills of sale in recordable form whereby the Purchaser's entire right, title and interest in and to the mineral property interests comprising the Property has been transferred to the Vendors free and clear of all liens or charges arising from the Purchaser's activities on the mineral property interests comprising the Property to the date thereof; and

(c)       deliver at no cost to the Vendors within 30 calendar days of such termination copies of all reports, maps, assay results and other relevant technical data compiled by or in the possession of the Purchaser with respect to the mineral property interests comprising the Property and not theretofore already furnished to the Vendors.

2.9                  Deemed exercise of the Option . At such time as the Purchaser has caused the completion of the Affiliate Share Transfer, entered into each of the Consulting Arrangements and made each of the required maintenance payments in accordance with section "2.2" hereinabove, within the Option Period and the time periods as specified in section "2.2", then the Option shall be deemed to have been exercised by the Purchaser, and the Purchaser shall have thereby, in accordance with the terms and conditions of this Agreement and without any further act required on its behalf, acquired an undivided 100% legal, beneficial and registerable interest in and to the mineral property interests comprising the Property.

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Article 3
REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE VENDORS

3.1                  General representations, warranties and covenants by the Vendors . In order to induce the Purchaser to enter into and consummate this Agreement, the Vendors hereby, jointly and severally, represent to, warrant to and covenant with the Purchaser, with the intent that the Purchaser will rely thereon in entering into this Agreement and in concluding the transactions contemplated herein, that, to the best of the knowledge, information and belief of each of the Vendors, after having made due inquiry:

(a)       each of the Vendors and/or agents to the Vendors is and will be qualified to do business in those jurisdictions where it is necessary to fulfill each of the Vendor's obligations under this Agreement, and each of the Vendors has the full power and authority to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement;

(b)       each of the Vendors has the requisite power, authority and capacity to fulfill the Vendor's obligations under this Agreement;

(c)       the execution and delivery of this Agreement and the agreements contemplated hereby have been duly authorized by all necessary action on each of the Vendor's part;

(d)       this Agreement constitutes a legal, valid and binding obligation of each of the Vendors enforceable against the Vendors in accordance with its terms, except as enforcement may be limited by laws of general application affecting the rights of creditors;

(e)       prior to the Subject Removal Date each of the Vendors will have obtained all authorizations, approvals, including Regulatory Approval, or waivers that may be necessary or desirable in connection with the transactions contemplated in this Agreement, and other actions by, and have made all filings with, any and all Regulatory Authorities from whom any such authorization, approval or other action is required to be obtained or to be made in connection with the transactions contemplated herein, and all such authorizations, approvals and other actions will be in full force and effect, and all such filings will have been accepted by each of the Vendors who will be in compliance with, and have not committed any breach of, any securities laws, regulations or policies of any Regulatory Authority to which either the Vendors or any of the mineral property interests comprising the Property may be subject;

(f)       except for Regulatory Approval of this Agreement by the appropriate Regulatory Authorities, there are no other consents, approvals or conditions precedent to the performance of this Agreement which have not been obtained;

(g)       the Vendors are not in breach of any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which the Vendors are subject or which apply to the Vendors;

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(h)       no proceedings are pending for, and the Vendors are unaware of, any basis for the institution of any proceedings leading to the placing of any of the Vendors in bankruptcy or subject to any other laws governing the affairs of insolvent persons;

(i)       the Vendors have not received, nor have the Vendors requested or do the Vendors require to receive, any offering memorandum or similar document describing the business and affairs of the Purchaser in order to assist the Vendors in entering into this Agreement and in consummating the transactions contemplated herein;

(j)       except as otherwise provided for herein, the Vendors have not retained, employed or introduced any broker, finder or other person who would be entitled to a brokerage commission or finder's fee arising out of the transactions contemplated hereby;

(k)       the Vendors are not, nor until or at the Closing Date will the Vendors be, in breach of any provision or condition of, nor have the Vendors done or omitted to do anything that, with or without the giving of notice or lapse or both, would constitute a breach of any provision or condition of, or give rise to any right to terminate or cancel or accelerate the maturity of any payment under, any deed of trust, contract, certificate, consent, permit, license or other instrument to which either of the Vendors is a party, by which either of the Vendors is bound or from which any of the Vendors derives benefit, any judgment, decree, order, rule or regulation of any court or governmental authority to which any of the Vendors is subject, or any statute or regulation applicable to any of the Vendors, to an extent that, in the aggregate, has a material adverse affect on either of the Vendors or on any of the mineral property interests comprising the Property;

(l)       each Vendor will give to the Purchaser, within at least five calendar days prior to the Closing Date, by written notice, particulars of:

(i)       each occurrence within the Vendor' knowledge after the Effective Date of this Agreement that, if it had occurred before the Effective Date, would have been contrary to any of the Vendor's representations or warranties contained herein; and

(ii)      each occurrence or omission within the Vendor's knowledge after the Effective Date that constitutes a breach of any of the Vendor's covenants contained in this Agreement;

(m)      the making of this Agreement and the completion of the transactions contemplated hereby and the performance of and compliance with the terms hereof does not and will not:

(i)       conflict with or result in a breach of or violate any of the terms, conditions or provisions of any law, judgment, order, injunction, decree, regulation or ruling of any court or governmental authority, domestic or foreign, to which any of the Vendors is subject, or constitute or result in a default under any agreement, contract or commitment to which any of the Vendors is a party;

(ii)      give to any party the right of termination, cancellation or acceleration in or with respect to any agreement, contract or commitment to which any of the Vendors is a party;

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(iii)     give to any government or governmental authority, or any municipality or any subdivision thereof, including any governmental department, commission, bureau, board or administration agency, any right of termination, cancellation or suspension of, or constitute a breach of or result in a default under, any permit, license, control or authority issued to any of the Vendors which is necessary or desirable in connection with the conduct and operations of each Vendor's business and the ownership or leasing of each Vendor's business assets; or

(iv)      constitute a default by any of the Vendors, or any event which, with the giving of notice or lapse of time or both, might constitute an event of default, under any agreement, contract, indenture or other instrument relating to any indebtedness of any of the Vendors which would give any party to that agreement, contract, indenture or other instrument the right to accelerate the maturity for the payment of any amount payable under that agreement, contract, indenture or other instrument;

(n)       neither this Agreement nor any other document, certificate or statement furnished to the Purchaser by or on behalf of the Vendors in connection with the transactions contemplated hereby knowingly or negligently contains any untrue or incomplete statement of material fact or omits to state a material fact necessary in order to make the statements therein not misleading which would likely affect the decision of the Purchaser to enter into this Agreement; and

(o)       the Vendors are not aware of any fact or circumstance which has not been disclosed to the Purchaser which should be disclosed in order to prevent the representations, warranties and covenants contained in this section from being misleading or which would likely affect the decision of the Purchaser to enter into this Agreement.

3.2                  Representations, warranties and covenants by the Vendors respecting the Property . In order to induce the Purchaser to enter into and consummate this Agreement, the Vendors hereby, jointly and severally, also represent to, warrant to and covenants with the Purchaser, with the intent that the Purchaser will also rely thereon in entering into this Agreement and in concluding the transactions contemplated herein, that, to the best of the knowledge, information and belief of each of the Vendors, after having made due inquiry:

(a)       the Vendors are the legal and beneficial owner of all of the mineral property interests comprising the Property; the particulars of which mineral property interests comprising the Property being more particularly described in Schedule "A" which is attached hereto;

(b)       the Vendors are authorized to hold the right to explore and develop each of the mineral property interests comprising the Property and all Property Rights held by the Vendors in and to the mineral property interests comprising the Property;

(c)       the Vendors hold all of the mineral property interests comprising the Property free and clear of all liens, charges and claims of others;

(d)       no other person, firm or corporation has any written or oral agreement, option, understanding or commitment, or any right or privilege capable of becoming an agreement, for the purchase from the Vendors of any interest in and to any of the mineral property interests comprising the Property;

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(e)       the mineral property interests comprising the Property have been duly and validly located and recorded in a good and minerlike manner pursuant to applicable mining laws;

(f)       all permits and licenses covering the mineral property interests comprising the Property have been duly and validly issued pursuant to applicable mining laws and are in good standing by the proper doing and filing of assessment work and the payment of all fees, taxes and rentals in accordance with the requirements of applicable mining laws and the performance of all other actions necessary in that regard;

(g)       where appropriate, the Vendors have insured the mineral property interests comprising the Property against loss or damage on a replacement cost basis;

(h)       all conditions on and relating to the mineral property interests comprising the Property and the operations conducted thereon by or on behalf of the Vendors are in compliance with all applicable laws, regulations or orders and including, without limitation, all laws relating to environmental matters, waste disposal and storage and reclamation;

(i)       there are no outstanding orders or directions relating to environmental matters requiring any work, repairs, construction or capital expenditures with respect to any of the mineral property interests comprising the Property and the conduct of the operations related thereto, nor have the Vendors received any notice of same;

(j)       there is no adverse claim or challenge against or to the ownership of or title to any of the mineral property interests comprising the Property or which may impede the development of any of the mineral interests comprising the Property, nor, to the best of the knowledge, information and belief of each of the Vendors, after having made due inquiry, is there any basis for any potential claim or challenge, and, to the best of the knowledge, information and belief of each of the Vendors, after having made due inquiry, no person has any royalty, net profits or other interests whatsoever in any production from any of the mineral property interests comprising the Property;

(k)       there are no actions, suits, proceedings or investigations (whether or not purportedly against or on behalf of the Vendors), pending or threatened, which may affect, without limitation, the rights of any of the Vendors to transfer any interest in and to the mineral property interests comprising the Property to the Purchaser at law or in equity, or before or by any federal, state, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, and, without limitation, there are no claims or potential claims under any relevant family relations legislation or other equivalent legislation affecting any of the mineral property interests comprising the Property. In addition, the Vendors are not now aware of any existing ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success;

(l)       the Vendors have delivered to the Purchaser all Property Documentation in the Vendors' possession or control relating to the mineral property interests comprising the Property together with copies of all permits, permit applications and applications for exploration and exploitation rights respecting any of the mineral property interests comprising the Property;

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(m)       the Vendors will also deliver, or caused to be delivered, to the Purchaser as soon as conveniently possible after the Effective Date, however, prior to the Subject Removal Date, an independent geological report or reports respecting the mineral property interests comprising the Property, together with, if required, a title opinion or opinions respecting the mineral property interests comprising the Property, all as addressed to the Purchaser and prepared in accordance with applicable rules and policies, together with such other documentation as the Purchaser may require in order to seek and obtain Regulatory Approval for each of the transactions contemplated by this Agreement; and

(n)       the Vendors are not aware of any fact or circumstance which has not been disclosed to the Purchaser which should be disclosed in order to prevent the representations and warranties contained in this section from being misleading or which would likely affect the decision of the Purchaser to enter into this Agreement.

3.3                  Continuity of the representations, warranties and covenants by the Vendors . The representations, warranties and covenants by the Vendors contained in this Article "3", or in any certificates or documents delivered pursuant to the provisions of this Agreement or in connection with the transactions contemplated hereby, will be true at and as of the Closing Date as though such representations, warranties and covenants were made at and as of such time. Notwithstanding any investigations or inquiries made by the Purchaser or by the Purchaser's professional advisors prior to the Closing Date, or the waiver of any condition by the Purchaser, the representations, warranties and covenants of the Vendors contained in this Article "3" shall survive the Closing Date and shall continue in full force and effect for a period of one year from the Closing Date; provided, however, that the Vendors shall not be responsible for the breach of any representation, warranty or covenant of the Vendors contained herein caused by any act or omission of the Purchaser prior to the Effective Date hereof of which the Vendors were unaware or as a result of any action taken by the Purchaser after the Effective Date. In the event that any of the said representations, warranties or covenants are found by a court of competent jurisdiction to be incorrect and such incorrectness results in any loss or damage sustained directly or indirectly by the Purchaser, then the Vendors will pay the amount of such loss or damage to the Purchaser within 30 calendar days of receiving notice of judgment therefor; provided, however, that the Purchaser will not be entitled to make any claim unless the loss or damage suffered may exceed the amount of U.S. $1,000.

 

Article 4
WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE PURCHASER

4.1                  Warranties, representations and covenants by the Purchaser . In order to induce the Vendors to enter into and consummate this Agreement, the Purchaser hereby warrants to, represents to and covenants with each of the Vendors, with the intent that the Vendors will rely thereon in entering into this Agreement and in concluding the transactions contemplated herein, that, to the best of the knowledge, information and belief of the Purchaser, after having made due inquiry:

(a)       the Purchaser is a corporation duly incorporated under the laws of the State of Nevada, U.S.A., is validly existing and is in good standing with respect to all statutory filings required by the Nevada Revised Statutes ;

(b)       the Purchaser is qualified to do business in those jurisdictions where it is necessary to fulfill the Purchaser's obligations under this Agreement, and the Purchaser has the full power and authority to enter into this Agreement and any agreement or instrument referred to or contemplated by this Agreement;

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(c)       the execution and delivery of this Agreement and the agreements contemplated hereby has been duly authorized by all necessary corporate action on the Purchaser's part;

(d)       prior to the Subject Removal Date the Purchaser will have obtained all authorizations, approvals, including Regulatory Approval, or waivers that may be necessary or desirable in connection with the transactions contemplated in this Agreement, and other actions by, and have made all filings with, any and all Regulatory Authorities from whom any such authorization, approval or other action is required to be obtained or to be made in connection with the transactions contemplated herein, and all such authorizations, approvals and other actions will be in full force and effect, and all such filings will have been accepted by the Purchaser who will be in compliance with, and have not committed any breach of, any securities laws, regulations or policies of any Regulatory Authority to which the Purchaser may be subject;

(e)       except for Regulatory Approval of this Agreement by the appropriate Regulatory Authorities, there are no other consents, approvals or conditions precedent to the performance of this Agreement which have not been obtained;

(f)       this Agreement constitutes a legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms, except as enforcement may be limited by laws of general application affecting the rights of creditors;

(g)       no proceedings are pending for, and the Purchaser is unaware of, any basis for the institution of any proceedings leading to the dissolution or winding up of the Purchaser or the placing of the Purchaser in bankruptcy or subject to any other laws governing the affairs of insolvent companies;

(h)       there is no basis for and there are no actions, suits, judgments, investigations or proceedings outstanding or pending or, to the best of the knowledge, information and belief of the Purchaser, after making due inquiry, threatened against or affecting the Purchaser at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau or agency;

(i)       the Purchaser is not in breach of any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which the Purchaser is subject or which apply to the Purchaser;

(j)       the Purchaser will save the Vendors harmless in respect of all claims, liabilities and expenses arising out of the Purchaser's activities on any of the mineral property interests comprising the Property;

(k)       the Purchaser will do all work on the Property in a good and minerlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any governmental authority;

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(l)       the Purchaser is not in breach of any provision or condition of, nor has the Purchaser done or omitted anything that, with or without the giving of notice or lapse or both, would constitute a breach of any provision or condition of, or give rise to any right to terminate or cancel or accelerate the maturity of any payment under, any deed of trust, contract, certificate, consent, permit, license or other instrument to which the Purchaser is a party, by which the Purchaser is bound or from which the Purchaser derives benefit, any judgment, decree, order, rule or regulation of any court or governmental authority to which the Purchaser is subject, or any statute or regulation applicable to the Purchaser, to an extent that, in the aggregate, has a material adverse affect on the Purchaser;

(m)       the Purchaser will give to the Vendors, within at least five calendar days prior to the Closing Date (as hereinafter defined), by written notice, particulars of:

(i)       each occurrence within the Purchaser's knowledge after the Effective Date of this Agreement that, if it had occurred before the Effective Date, would have been contrary to any of the Purchaser's representations or warranties contained herein; and

(ii)      each occurrence or omission within the Purchaser's knowledge after the Effective Date that constitutes a breach of any of the Purchaser's covenants contained in this Agreement;

(n)       the making of this Agreement and the completion of the transactions contemplated hereby and the performance of and compliance with the terms hereof does not and will not:

(i)       conflict with or result in a breach of or violate any of the terms, conditions or provisions of the incorporation documents of the Purchaser;

(ii)      conflict with or result in a breach of or violate any of the terms, conditions or provisions of any law, judgment, order, injunction, decree, regulation or ruling of any court or governmental authority, domestic or foreign, to which the Purchaser is subject, or constitute or result in a default under any agreement, contract or commitment to which the Purchaser is a party;

(iii)     give to any party the right of termination, cancellation or acceleration in or with respect to any agreement, contract or commitment to which the Purchaser is a party;

(iv)      give to any government or governmental authority, or any municipality or any subdivision thereof, including any governmental department, commission, bureau, board or administration agency, any right of termination, cancellation or suspension of, or constitute a breach of or result in a default under, any permit, license, control or authority issued to the Purchaser which is necessary or desirable in connection with the conduct and operations of the Purchaser's business and the ownership or leasing of the Purchaser's business assets; or

(v)       constitute a default by the Purchaser or any event which, with the giving of notice or lapse of time or both, might constitute an event of default, under any agreement, contract, indenture or other instrument relating to any indebtedness of the Purchaser which would give any party to that agreement, contract, indenture or other instrument the right to accelerate the maturity for the payment of any amount payable under that agreement, contract, indenture or other instrument;

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(o)       neither this Agreement nor any other document, certificate or statement furnished to the Vendors by or on behalf of the Purchaser in connection with the transactions contemplated hereby knowingly or negligently contains any untrue or incomplete statement of material fact or omits to state a material fact necessary in order to make the statements therein not misleading; and

(p)       the Purchaser is not aware of any fact or circumstance which has not bee