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EXHIBIT 10.23
AGREEMENT OF OPTION AND RIGHT OF FIRST REFUSAL
THIS AGREEMENT OF OPTION AND RIGHT OF FIRST REFUSAL (the "Option
Agreement") is
dated effective as of the 14th day of October, 2004 ("Effective
Date"), by and
between Nord Resources Corporation, a Delaware corporation (the
"Optionee"), on
the one hand and Ronald A. Hirsch, an individual residing in the
county of
Orange, State of California ("Hirsch") and Stephen D. Seymour, an
individual
residing in the county of Baltimore, State of Maryland ("Seymour",
and
collectively with Hirsch, the "Optionors") on the other hand.
RECITALS
WHEREAS, since May 20, 2004, the Optionee has been pursuing an
opportunity
(the "Opportunity") to acquire certain assets from ASARCO
Incorporated, a New
Jersey corporation ("ASARCO"), which assets comprise the entire
Tennessee Mines
Division zinc business as conducted by ASARCO and consisting of the
Young, Immel
and Coy mines, the Young Concentrator and the Middle Tennessee
exploration
properties, including in all cases the operations, impoundments,
processing and
other facilities incidental and ancillary to each of the
foregoing
(collectively, the "TMD Assets");
WHEREAS, as a result of the development efforts of the Optionee,
the
Optionee has been selected by ASARCO as the primary candidate it
will negotiate
with for the acquisition of the TMD Assets, and as to which the
Optionee has
received versions of a draft Asset Purchase Agreement (the
"Purchase Agreement")
for negotiation and execution;
WHEREAS, the Optionee has entered into a bridge loan agreement
with
Regiment Capital III, L.P., a Delaware limited partnership (the
"Lender"),
pursuant to which the Optionee entered into, executed and delivered
to Lender a
Promissory Note, a Security Agreement, a Pledge and Security
Agreement, and
certain other documents (collectively, the "Loan Documents"), which
Loan
Documents contain certain affirmative and negative covenants which
with the
Optionee must abide during the pendency of the bridge loan, and
which, among
other things, will restrict the Optionee from using its capital
resources to
make an investment in, or conduct any business with respect to, the
TMD
Opportunity without its prior written consent (and, as to which,
the Lender has
advised this Board of Directors of the Optionee that it will not
consent to the
Optionee undertaking the TMD Opportunity at this time or within the
foreseeable
future);
WHEREAS, the Optionors have expressed their willingness to assume
from the
Optionee all of its rights and interests in the Opportunity,
including without
limitation under the Purchase Agreement (collectively, the "TMD
Rights"), to
fund such further development expenses as are necessary to complete
the
acquisition of and exploit commercially the TMD Opportunity
independent of the
Optionee (the "Post-Development Expenses"), and to "reserve" the
place of the
Optionee with respect to such
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TMD Opportunity until such time as the Lender may consent to its
re-acquisition
of the TMD Rights from, and as further developed by, the Optionors;
and
WHEREAS, the Optionee has assigned the TMD Rights to the Optionors
pursuant
to an Agreement of Assignment and Assumption of the TMD Rights,
dated of even
date herewith (the "Assignment Agreement") as consideration for
Optionors' grant
to Optionee of a right of first refusal and an option to purchase
the TMD Rights
from the Optionors upon the payment to the Optionors of the
Post-Development
Expenses plus such premium for taking the risks of development of
the TMD
Opportunity as the parties may mutually agree (and as established
as fair and
reasonable to the Optionee by an independent person with experience
in the
valuation of business opportunities in the mining industry
generally)
("Premium").
NOW,
THEREFORE, in consideration of the foregoing premises, and the
promises and covenants herein contained, and for the consideration
set forth
herein and other good and valuable consideration, the receipt and
sufficiency of
which are hereby acknowledged, the parties, intending to be legally
bound,
hereby agree as follows:
ARTICLE I.
GRANT OF OPTION
1.1 GRANT OF OPTION. Optionors hereby grant Optionee an option (the
"Option") to
acquire the TMD Rights, subject to and in accordance with the terms
of this
Option Agreement.
1.2 CONSIDERATION. As consideration for the Option (the "Option
Consideration"),
the Optionee agrees to assign all of the TMD Rights to the
Optionors, and the
Optionors hereby agree to assume all of the obligations associated
with the TMD
Rights pursuant to that certain Agreement of Assignment and
Assumption of even
date herewith.
1.3 TERM. The term of the Option (the "Option Period") shall
commence on the
date hereof and expire on the two (2) year anniversary of the
Effective Date
unless extended by mutual written agreement of the parties hereto
or in the
event of exercise of the Option by the Optionee.
1.4 EXERCISE OF TMD OPTION. The Option may be exercised at any time
during the
Option Period by written notice from the Optionee to the Optionors
specifying a
date for closing the transaction (the "Closing Date"), which shall
occur at
least ninety (90) days but no more than two hundred seventy (270)
days
subsequent to the date of notice. Within ten (10) business days
from the date of
receipt of the written notice from the Optionee, Optionors shall
engage a
valuation firm reasonably acceptable by Optionee ("Valuation Firm")
to determine
the Premium and must deliver to Optionee a request for exercise
price ("Request
for Exercise Price") within thirty (30) days from the date of
engagement of the
Valuation Firm. The Request for Exercise Price shall set forth the
amounts of
the Post-Development Expenses and the Premium and shall be
accompanied
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by a fairness opinion rendered by the Valuation Firm that the
amount of Premium
is fair from a financial point of view to the shareholders of
Optionee. Within
ten (10) days of Optionee's receipt of the Request for Exercise
Price and the
fairness opinion, Optionee shall notify Optionors in writing
whether Optionee
accepts the determination of the Premium and the Purchase Price (as
defined
below).
1.5 PURCHASE OF TMD RIGHTS. Upon the exercise of the Option, and
subject to all
the conditions herein and the performance by each of the parties
hereto of their
respective obligations hereunder, Optionee agrees to purchase from
Optionors,
and Optionors agree to sell and deliver to Optionee, on the Closing
Date, all of
the TMD Rights (the "Closing"). The purchase price (the "Purchase
Price") for
the TMD Rights to be acquired upon exercise of the TMD Option shall
be an amount
equal to the aggregate of the Post-Development Expenses and the
Premium.
1.6 ASSUMPTION OF LIABILITIES. Upon exercise of the Option,
Optionee shall
assume, discharge or be liable for any debts, liabilities or
obligations of the
Optionors incurred in connection with its assumption of the duties
and
obligations of the Optionee pursuant to the Assignment Agreement
and the
development and commercial exploitation of the TMD Rights
thereafter
(collectively, the "Obligations") including, without limitation,
any (a)
Obligations of the Optionors to their creditors or equity owners;
(b)
Obligations of the Optionors with respect to any transactions; or
(c) taxes or
other Obligations of the Optionors incurred in connection with the
grant of the
Option or sale of the TMD Rights pursuant to this Agreement.
ARTICLE 2
RIGHT OF FIRST REFUSAL
2.1 OPTIONEE'S RIGHT OF FIRST REFUSAL. Before any of the TMD Rights
held by
Optionors may be sold or otherwise transferred (including transfer
by gift or
operation of law), the Optionee or its assignee(s) shall have a
right of first
refusal to
