DUE DILIGENCE LICENSE AGREEMENT
This
Agreement is made effective as of December 31, 2003
BETWEEN:
ROMARCO MINERALS INC. , a corporation incorporated under the laws of
Ontario and having an address of Suite 1500, 885 West Georgia
Street, Vancouver, British Columbia V6C 3E8, facsimile no.: (604)
688-9274
(“ Romarco ”)
AND:
JOHN BELL, an individual resident in the State of
Nevada
(“ Bell ”)
WHEREAS:
Bell
has the right to conduct mining exploration and related operations
on the Property (as defined below) located in the National District
of Humboldt County, Nevada; and
Bell
has determined to grant Romarco an exclusive license to conduct due
diligence relating to existing environmental liabilities and
potential mineralization on the Property.
NOW THEREFORE
in consideration of the mutual
promises made to each other in this Agreement, Bell and Romarco
(each a “ Party ” and collectively the “
Parties ”) hereby agree as follows:
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1.
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Representations and Warranties
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1.1
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Bell represents
and warrants to Romarco that:
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(a)
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Bell has the
requisite power and authority:
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(i)
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to enter into
this Agreement and all other agreements contemplated hereby;
and
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(ii)
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to carry out
and perform his obligations under the terms and provisions of this
Agreement and all other agreements contemplated hereby.
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(b)
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All requisite
action on the part of Bell, necessary for the execution, delivery
and performance of this Agreement and all other agreements
contemplated hereby, has been taken. This Agreement and all other
agreements contemplated hereby, when executed and delivered by
Bell, will be legal, valid, and binding obligations of Bell
enforceable against Bell in accordance with their terms. The
execution, delivery and performance of this Agreement will not
violate any provision of law; any order of any court or other
agency of government; or any provision of any indenture, agreement
or other instrument to which Bell is a party or by which his
properties or assets are bound; or be in conflict with, result in a
breach of, or constitute (with due notice and lapse of time) a
default under any such indenture, agreement or other instrument.
There is no law, rule or regulation, or any judgment, decree or
order of any court or governmental authority binding on Bell which
would be contravened by the execution, delivery, performance
or
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enforcement of
this Agreement and all other agreements contemplated hereby.
However, no representation is made as to:
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(i)
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the remedy of
specific performance or other equitable remedies for the
enforcement of this Agreement and all other agreements contemplated
hereby; or
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(ii)
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rights to
indemnity under this Agreement for securities law
liability.
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Additionally,
this representation is limited by applicable bankruptcy,
insolvency, moratorium, and other similar laws affecting generally
the rights and remedies of creditors and secured
parties.
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(c)
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Bell has a 100%
interest in the three (3) unpatented mining claims (the “
Property ”) held by Bell located in the National
District of Humboldt County, Nevada, and which are listed on
Schedule “A” attached hereto.
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(d)
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Bell is,
subject to the paramount title of the United States, the sole and
only owner of the unpatented mining claims comprising the
Property.
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(e)
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Bell has the
right to grant the License (as defined in Section 2.1) and any
rights given to Romarco in this Agreement and all other agreements
contemplated hereby.
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(f)
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To the best of
his knowledge and belief each of the unpatented claims included in
the Property will have been validly located, filed and recorded in
compliance with the laws of the State of Nevada and of the United
States as they relate to location and recording of such claims;
that Bell will have timely complied with all of the filing
provisions of the Federal Land Policy and Management Act (43 U.S.C.
Section 1701, et seq.) and other applicable federal laws and
regulations as they pertain to the unpatented claims included
within the Property; and that said claims are valid and subsisting
mining claims.
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(g)
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Bell has fully
and timely paid the Land Holding Fees (as defined in Section 5.1)
required to maintain the unpatented mining claims to the date of
execution of this Agreement.
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(h)
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Bell’s
rights in the Property are not subject to any prior agreement,
encumbrance, burden or restriction, created by any act or
instrument of Bell; that to the best of Bell’s knowledge,
other than the Hatch Adit (as defined in Section 2.5) the Property
is free from liens and encumbrances and other adverse claims by
third parties; and that the Property is not burdened with any
royalties, overriding royalties, net profits interests or payments
on production.
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(i)
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Other than the
Hatch Adit, there are no outstanding pending actions, suits or
claims affecting all or any of the Property, nor, to the best of
Bell’s knowledge, has any such action, suit or claim been
threatened, either verbally or in writing, nor, to the best of
Bell’s knowledge, is there any basis for any action, suit or
claim.
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(j)
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The execution,
delivery and performance of this Agreement by Bell and the
consummation of the transactions contemplated herein, including the
lease of the Property to Romarco, does not and will not result in
or constitute any of the following: (i) a default, breach or
violation or an event that, with notice or lapse of time or both,
would be a default, breach or violation of the terms, conditions or
provisions of any lease, lien,
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permit,
promissory note, security agreement, commitment, indenture,
mortgage, hypothecation, deed of trust or other agreement,
instrument or arrangement to which Bell is a party or by which it
or the Property is bound; (ii) an event that would permit any party
to rescind any agreement or accelerate the maturity of any
obligation of Bell related to the Property; (iii) the creation or
imposition of any lien on the Property; or (iv) an event requiring
the consent of any other party, including, without limitation, the
shareholders of Bell.
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(k)
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To the best of
Bell’s knowledge, other than the Hatch Adit, there are no
outstanding work orders or actions required to be taken relating to
environmental regulatory or reclamation matters, or any existing
condition on the Property which could be the basis therefor, in
respect to the Property or any operations thereon and that it has
no knowledge of any other environmental issues affecting the
Property.
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1.2
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Romarco
represents and warrants to Bell that:
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(a)
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Romarco is a
corporation duly organized, validly existing, and in good standing
under the laws of the Province of Ontario, Canada.
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(b)
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Romarco is duly
registered to do business in the State of Nevada.
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(c)
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Romarco has the
requisite corporate power and authority:
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(i)
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to enter into
this Agreement and all other agreements contemplated hereby,
and
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(ii)
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to carry out
and perform its obligations under the terms and provisions of this
Agreement and all agreements contemplated hereby.
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(d)
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All requisite
corporate action on the part of Romarco, and its officers and
directors, necessary for the execution, delivery and performance of
this Agreement and all other agreements of Romarco contemplated
hereby, have been taken. This Agreement and all agreements and
instruments contemplated hereby, when executed and delivered by
Romarco, will be legal, valid, and binding obligations of Romarco
enforceable against Romarco in accordance with their terms. The
execution, delivery and performance of this Agreement will not
violate any provision of law; any order of any court or other
agency of government; or any provision of any indenture, agreement
or other instrument to which Romarco is a party or by which its
properties or assets are bound; or be in conflict with, result in a
breach of, or constitute (with due notice and lapse of time) a
default under any such indenture, agreement or other instrument.
There is no law, rule or regulation, or any judgment, decree or
order of any court or governmental authority binding on Romarco
which would be contravened by the execution, delivery, performance
or enforcement of this Agreement or any instrument or agreement
required hereunder. However, no representation is made as
to:
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(i)
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the remedy of
specific performance or other equitable remedies for the
enforcement of this Agreement or any other agreement contemplated
hereby; or
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(ii)
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rights to
indemnity under this Agreement for securities law
liability.
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Additionally,
this representation is limited by applicable bankruptcy,
insolvency, moratorium, and other similar laws affecting generally
the rights and remedies of creditors and secured
parties;
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(e)
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Romarco has
obtained all consents, approvals, authorizations, declarations, or
filings required by any federal, state, local, or other authority
(except the TSX Venture Exchange), or any lenders, creditors, and
other third parties in connection with the valid execution,
delivery, and performance of this Agreement and the consummation of
the transaction contemplated hereby.
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(f)
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All
negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Romarco in such manner
as not to give rise to any valid claim against Bell for a brokerage
commission, finder’s fee or other fee or commission arising
by reason of the transactions contemplated by this
Agreement.
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1.3
The
representations and warranties set out in Sections 1.1 and 1.2 are
conditions upon which each of Bell and Romarco has relied in
entering into this Agreement and will survive the termination of
the Agreement, and each of Bell and Romarco hereby forever
indemnifies and saves the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any
breach of any representation or warranty made by it and contained
in this Agreement.
2.
The
Due Diligence License
2.1
Grant of
Due Diligence License . Bell hereby irrevocably grants
to Romarco the sole and exclusive license to conduct Due Diligence
Activities on the Property, (the “ License ”),
on the terms set out herein. For the purposes of this Agreement,
“Due Diligence Activities” means geological,
geochemical, geophysical, hydrological and other examinations and
investigations intended to determine the existence on the Property
of any condition which is, or might be construed to be, a
discharge, release, source of contamination or other condition
which violates, or may be deemed to, violate any applicable
Federal, state or local laws, regulations and ordinances, and any
of such activities intended to determine the existence of minerals
on the Property.
2.2
Maintenance
of License . To maintain the License in good standing,
Romarco must:
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(a)
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incur
Expenditures (as defined in Section 2.3) on the Property or the
Nearby Property (as defined in Section 2.3) in the aggregate of two
hundred thousand dollars ($200,000) on or prior to December 31,
2005;
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(b)
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pay a license
fee to Bell of $5,980 on the date of execution of the Agreement and
on each anniversary date of the Agreement, according to the
following schedule:
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(i)
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$5,980 on or
before December 31, 2004.
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(ii)
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$5,980 on or
before December 31, 2005.
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(iii)
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$6,900 on or
before December 31, 2006.
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(iv)
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$7,820 on or
before December 31, 2007.
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(v)
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$8,740 on or
before December 31, 2008.
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(vi)
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$9,200 on or
before December 31, 2009; and on or before December 31,
each successive year thereafter.
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(each
a “ License Fee ” and collectively the
“ License Fees ”).
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2.3
Expenditures.
For the purposes of Section 2.2(a), the term
“Expenditures” means:
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(a)
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all Land
Holding Fees (as defined in Section 5.1) for the Property and the
Nearby Property;
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(b)
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those costs
incurred to perform work on the Property or the Nearby Property (as
defined below) including, without limitation:
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(i)
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payments and
benefits to personnel engaged in the work program on the Property
(including analysis and reports thereon) and such persons’
travelling expenses;
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(ii)
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costs of
rehabilitation, reclamation or remediation;
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(iii)
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disbursements
for such third party services as drilling, assaying, geophysics and
the like;
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(iv)
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staking
additional claims which become part of the Property as provided for
herein;
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(v)
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consulting fees
and labour costs;
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(vi)
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costs of
supplies and making equipment available, and the transportation
thereof;
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(vii)
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costs of
transporting personnel; and
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(viii)
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title work and
the costs of recording same.
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(c)
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an amount equal
to 10% of the amounts set out in Section 2.3(a) and (b), in lieu of
general and administrative expenses.
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For greater certainty, except as
set out in Section 2.3(c), Expenditures will not include Romarco
overheads such as executive or directors salaries, fees or
expenses.
For the purposes of this
Agreement, the “ Nearby Property ” means those
10 claims held by Buckskin National Mine Ltd., which are contiguous
with the Property, in respect of which Romarco is signing a similar
agreement on the date hereof.
2.4
Lease
Option . At any time, at its sole discretion, Romarco may, upon
giving Bell written notice, exercise an option to acquire a 100%
leasehold interest in the Property, according to the terms of the
Lease Agreement attached hereto as Schedule “B” (the
“ Lease Option Exercise ”).
2.5
Limitation
of License. During the term of this Agreement, Romarco will not
disturb that area on the Property which is the subject of an
investigation by the United States Department of Agriculture
– Forest Service, and which has been identified by Bell as
such (the “ Hatch Adit ”). Romarco
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indemnify and save harmless Bell
from and against all suits, claims, demands, losses and expenses
that directly arise as a result of Romarco’s activities on
the Property which may disturb the Hatch Adit.
3.
Term
and Termination of the Agreement
3.1
This Agreement will have a term of 10 years, commencing on the date
hereof (the “ Term ”), unless sooner terminated
pursuant to the terms of this Agreement. Romarco will have the
option, in its sole discretion, to renew this Agreement at the end
of the Term for one or more additional 10 year terms, but may not
renew this Agreement more than five successive times.
3.2
The
Expenditures and License Fees required to keep the License in good
standing as outlined in Section 2.2 are optional at the sole
discretion of Romarco and Romarco will not be required to make any
such License Fee or incur any such Expenditures unless it wishes to
keep the License in good standing. This agreement may be terminated
at any time by Romarco upon giving Bell 30 days written notice of
termination. If termination occurs between July 1 st and
September 1 st of any year, Romarco will pay the Land
Holding Fees for that year. Until the Lease Option Exercise has
occurred, this Agreement will automatically terminate if Romarco
fails to:
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(a)
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pay the Land
Holding Fees (as defined in Section 5.1);
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(b)
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incur the
Expenditures required by Section 2.2 (a), or
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(c)
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satisfy the
License Fees,
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when due and Romarco does not
cure such failure within 30 days after notice of such failure from
Bell.
4.
Information
Disclosure
Upon execution of this Agreement
and throughout its term, Bell will make available to Romarco all
information in his possession or control relating to work done on
or with respect to the Property.
5.
Rights
and Obligations Prior to Lease Option Exercise
5.1
Land Holding Fees. Until the Lease Option Exercise or this
Agreement is terminated, Romarco will be responsible for all
obligations associated with keeping the Property in good standing
including:
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(a)
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payment of all
mining claim maintenance fees to the U.S. Bureau of Land Management
in connection with the Property;
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(b)
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payment of
recording fees to Humboldt County, Nevada, for notices of
intent-to-hold;
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and otherwise maintaining the
Property in good standing (the “ Land Holding Fees
”), and any costs incurred in connection therewith will be
included as Expenditures pursuant to Section 2.3. Until the Lease
Option Exercise occurs, neither Party will be entitled to create
any liens or encumbrances against title to the Property or to alter
the terms of any agreements affecting title to the Property without
the prior written approval of the other Party.
5.2
Work
Standards. All work done by Romarco will be done in accordance
with good exploration practice and in compliance with all
applicable laws and regulations including all reclamation
obligations.
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5.3
Indemnity. Until the Lease Option Exercise occurs Romarco
will indemnify and save harmless Bell from and against all suits,
claims, demands, losses and expenses that directly arise as a
result of Romarco’s activities on the Property.
5.4
Annual
Reports. During the term of this Agreement, Romarco will
provide Bell with annual reports indicating any results and
interpretations obtained or received in connection with exploration
work on the Property and an accounting of expenditures which were
incurred. The annual report will be submitted to Bell on or before
90 days following the anniversary of the effective date of this
Agreement in each successive year. Notwithstanding such disclosure
by Romarco, it will not have any liability or responsibility to
Bell in connection with any reports or results that it provides to
Bell, or any information contained therein, and Bell agrees that he
will rely on his own appraisals and interpretations related
thereto.
5.5
Site
Visits. Until the Lease Option Exercise occurs, Bell may visit
the Property and have access to all exploration results from the
Property, provided reasonable notice is given to Romarco and the
costs of any such visits will be borne by Bell and Romarco will be
held blameless and will be indemnified by Bell for any claim or
liability arising out of any actions by or the presence of Bell or
his employees on the Property. Bell acknowledges and agrees that
Romarco will not bear any responsibility or liability for any use
of any information so obtained by Bell or as to the accuracy or
completeness of such information.
5.6
Exclusive
Possession. Romarco will have full rights of access to and
quiet and exclusive possession of the Property and have the
exclusive right to conduct exploration work on the Property, with
the full right to remove mineral samples and ores for the purpose
of assays and tests, and to have such buildings, machinery,
equipment and supplies on the Property as it deems necessary. Upon
execution of this Agreement, Bell shall execute and deliver to
Romarco a deed evidencing rights of Romarco under this Agreement in
the form attached hereto as Schedule “C” or in such
other form as is agreed to by Romarco and Bell.
6.
The
Lease Agreement
Upon the Lease Option Exercise
occurring, the Lease Agreement in the form attached hereto as
Schedule “B” will be deemed to have been entered into
between Bell and Romarco and all rights and obligations under this
Agreement will immediately terminate and be superseded by the
rights and obligations in the Lease Agreement except that any
rights or obligations arising under this Agreement prior to the
Lease Option Exercise occurring will survive this
Agreement.
GENERAL
7.
Notice
Any notice, direction or other
instrument required or permitted to be given under this Agreement
may be given in the manner prescribed in the Lease
Agreement.
8.
Confidentiality
and Press Releases
Bell agrees that the entering
into of this Agreement and all data and information provided to or
received by Bell from Romarco with respect to the Property will be
treated as confidential. Bell will not disclose such information to
third parties without obtaining the prior written consent of
Romarco, such consent not to be unreasonably withheld, unless law
or regulatory authority having jurisdiction requires the
disclosure.
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9.
Force
Majeure
Other than cash payments to be
made hereunder, no Party hereto will be liable to the others and no
Party hereto will be deemed in default under this Agreement for any
failure or delay to perform any of its obligations within the times
specified under this Agreement if such failure or delay is caused
by or arises out of any act not within the control of the Party,
excluding lack of funds but including, without limitation, acts of
God, strikes, lockouts, or other industrial disputes, acts of the
public enemy, riots, fire, storm, flood, explosion, government
restriction, aboriginal land claims, failure to obtain any
approvals required from regulatory authorities, including
environmental protection agencies, unavailability of equipment,
interference of third party specific interests groups or other
causes whether of the kind enumerated above or otherwise which is
not reasonably within the control of the Party. No right of a Party
will be affected for failure or delay of the Party to meet any
condition of this Agreement, which failure or delay is caused by
one of the events above referred to, and all times provided for in
this Agreement will be extended for a period commensurate with the
period of the delay, and so far as possible the Party affected will
take all reasonable steps to remedy the delay caused by the events
above referred to provided, however, that nothing contained in this
section will require any Party to settle any industrial dispute or
to test the constitutionality of any law enacted by any State or
the Federal Government. Any Party relying on the provisions of this
section will forthwith give notice to the other Party of the
commencement of such event and of its termination.
10.
Obligations
Several
The obligations of each party
under this Agreement shall be in every case several and shall not
be construed to be either joint or joint and several and nothing
herein shall be construed as creating a partnership between the
parties. Nothing contained in this Agreement shall be deemed to
constitute a party an agent or legal representative of the other
party or to create any fiduciary relationship for any purpose
whatsoever. Except as otherwise specifically provided in this
Agreement, a party shall not have any authority to act for, or to
assume any obligation or responsibility on behalf of, any other
party. Each party hereby waives its rights to partition of the
Property and, to that end, agrees that it will not seek or be
entitled to partition of the Property whether by way of physical
partition, judicial sale or otherwise.
11.
Entire
Agreement
This Agreement including
Schedules “A”, “B” and “C”
hereto, constitutes the entire Agreement between Bell and Romarco
pertaining to the Property and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or
written between Bell and Romarco, and there are no warranties,
representations or other agreements between Bell and Romarco in
connection with the Property except as set forth herein.
12.
Headings
Headings in this Agreement are
for reference and convenience only with no legal significance and
do not expand, amend, alter or influence in any way the substantive
provisions of the sections to which they refer.
13.
Currency
References in this Agreement to
monetary amounts are expressed in United States dollars.
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14.
Further
Assurances and Agreements
Each of the parties to this
Agreement will take all such further steps and execute all such
further and other documentation as may be necessary in order to
more fully give effect to the provisions of this
Agreement.
15.
Counterparts
This Agreement may be executed in
one or more counterparts, or by facsimile, each of which will be
deemed to be an original and all of which will constitute one and
the same document.
16.
Governing
Law
This Agreement will be governed
by and construed in accordance with the laws of the State of
Nevada.
IN WITNESS WHEREOF the parties
have executed this agreement as of the date first written
above.
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ROMARCO
MINERALS INC.
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JOHN
BELL
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By:
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Diane
Garrett
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John
Bell
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President and
CEO
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SCHEDULE A
THE PROPERTY
John Bell
Unpatented Lode Mining Claims
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Humboldt
County
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BLM
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Claim
Name
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Document
No.
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Serial
No.
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Rattler No.
2
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796416
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Finis
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796417
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Sylvanite
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796418
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SCHEDULE B
MINING LEASE AGREEMENT
MINING LEASE
AGREEMENT
This
Agreement is made effective as of [ • ]
BETWEEN:
ROMARCO MINERALS INC. , a corporation incorporated under the laws of
Ontario and having an address of Suite 1500, 885 West Georgia
Street, Vancouver, British Columbia V6C 3E8, facsimile no.: (604)
688-9274
(“ Romarco ”)
AND:
JOHN BELL, an individual resident in the State of
Nevada
(“ Bell ”)
WHEREAS:
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A.
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Bell has the
right to conduct mining exploration and related operations on the
Property (as defined below) located in the National District of
Humboldt County, Nevada; and
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B.
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Bell has
determined to grant Romarco an exclusive lease of the
Property.
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NOW THEREFORE
in consideration of the mutual
promises made to each other in this Agreement, Bell and Romarco
(each a “ Party ” and collectively the “
Parties ”) hereby agree as follows:
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1.
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Interpretation
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1.1
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Definitions. For the purposes of this Agreement the following
words and phrases will have the following meanings:
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(a)
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“Affiliate” means any person,
partnership, limited liability company, joint venture, corporation,
or other form of enterprise which Romarco Controls, is Controlled
by, or is under common Control with.
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(b)
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“Cabins” means the structures on the
surface of the Property as they existed on the date of execution of
the Exploration License Agreement.
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(c)
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“Control” used as a verb means, when
used with respect to an entity, the ability, directly or indirectly
through one or more intermediaries, to direct or cause the
direction of the management and policies of such entity through (i)
the legal or beneficial ownership of voting securities or
membership interests; (ii) the right to appoint managers, directors
or corporate management; (iii) contract; (iv) operating agreement;
(v) voting trust; or otherwise; and “Control” used as a
noun means an interest which gives the holder the ability to
exercise any of the foregoing powers.
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(d)
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“Due
Diligence License Agreement” means the agreement between
Romarco and Bell effective December 31, 2003, pursuant to which
this Agreement is being exec
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