GEOLOGICAL, MANAGEMENT AND
THIS AGREEMENT dated for reference the 31st day ofDecember, 1996
HUNTER DICKINSON INC., a company incorporated under the federal laws of Canada having a registered office at Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7
OF THE FIRST PART
MISTY MOUNTAIN GOLD LIMITED, a British Columbia company having a business office at Suite 1020, 800 West Pender Street, Vancouver, British Columbia, V6C 2V6
(herein “Misty Mountain”)
OF THE SECOND PART
(A) HDI is a company established to provide geological, corporate development,administrative and management services for public companies involved in theacquisition and exploration of natural resource properties;
(B) Misty Mountain and HDI have agreed that HDI will provide the services moreparticularly described herein on the terms and conditions of this Agreement andthat Misty Mountain will assist HDI by requiring one of Misty Mountain’sdirectors to serve on the board of directors of HDI.
NOW THEREFORE in consideration of the premises andmutual covenants herein contained, the parties hereto agree as follows:
1.1 During the term of this Agreement HDI shall provide Misty Mountain and/or MistyMountain’s affiliates with the following administration services:
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(a) useof HDI’s business premises located at Suite 1020, 800 West Pender Street,Vancouver, British Columbia, on a non-exclusive basis with access to thereception area, the boardroom and other offices as available and agreed to fromtime to time;
(b) useof HDI’s reception and telephone answering personnel;
(c) reasonable use of office equipment including telephone systems,photocopying, telecopier and computers, and other equipment as required;
(d) administration service personnel including accounting, purchasing,secretarial and like support staff on an “as needed” and “as available”basis.
1.2 The administration fee payable by Misty Mountain to HDI for the administrationservices shall be invoiced by HDI on a monthly basis based on a fee whichrepresents a full cost recovery basis to HDI and which fee will be reasonablydescribed in the invoice. The fee shall represent a reasonable pro-rationing ofHDI’s costs amongst all its client companies with regard to the level of servicerequirements of each such company. The fee will be reviewed from time to timeand the basis may be changed on notice by HDI in the event Misty Mountain’s useof the administration services is in excess of historical experience or HDI’scosts change or in the event a greater or lesser number of other publiccompanies are using HDI’s services.
1.3 Misty Mountain acknowledges that HDI has or intends to enter into substantiallyidentical agreements with other public companies and HDI may add, delete or varysuch arrangements with such other companies in HDI’s sole discretion. As of thedate hereof such other companies are more particularly described on Schedule “A”hereto.
GEOLOGICAL AND MANAGEMENT SERVICES
2.1 In addition to the administration services, HDI shall supply technical,geological, management and corporate development services to Misty Mountain on anon exclusive and on an “as needed” and “as available” basis. HDI shall, atleast annually, review the resource property portfolio of Misty Mountaintogether with Misty Mountain’s board of directors and such other independentconsultants as Misty Mountain desires to involve with a view to recommending andimplementing programs of exploration.
2.2 Such recommendations shall be accompanied by reasonable details of programsincluding scheduling, description of activities and related budgets. Uponacceptance (with or without variations) of such recommendations by MistyMountain (which acceptance is in the sole discretion of Misty Mountain) HDIshall generally carry out the program as the agent of Misty Mountain andshall:
(a) retain and/or itself provide the necessary technical and supportstaff;
(b) negotiate third party service contracts and provide them to Misty Mountain forexecution or execute same as agent for Misty Mountain. Such third partycontracts shall
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generally include geophysical andgeochemical surveys, sampling, line cutting, diamond drilling, engineering,environmental, independent analyses and reporting and such other work as hasbeen recommended by HDI and approved by Misty Mountain;
(c) apply for necessary government exploration or work permits and licences;
(d) provide field staff to supervise and oversee the work of HDI staff and othercontractors and subcontractors;
(e) obtain insurance and assist in making application and relevant filingspertaining to the maintenance of titles to the property as well as filing ofassessment work respecting exploration work carried out and paid for by MistyMountain;
(f) general administration of the exploration program including accounting, paymentof third party invoices and reporting thereon; and
(g) provide assistance with corporate awareness programs regarding MistyMountain.
2.3 For purposes of administration of any exploration program Misty Mountain shallbe deemed to be the operator of all of Misty Mountain’s joint venture agreementsand HDI’s function shall be as general advisor and agent.
2.4 The fee to HDI for the above technical services shall be included with andagreed as part of budgets which are provided to and subject to the approval ofMisty Mountain. Except for overruns, significant variations (greater than 50%)in the planned programs shall require the prior approval of Misty Mountain butthe costs incurred with respect to such overruns and variations shallnotwithstanding, be for the account of Misty Mountain.
ADDITIONAL RIGHTS AND DUTIES OF HDI
3.1 Misty Mountain agrees to indemnify and hold harmless HDI (and any subsidiary),their officers, directors, employees and agents, from any and all claims, suitsor demands arising out of the performance of HDI hereunder. Without restrictingthe generality of the foregoing Misty Mountain agrees to promptly pay HDIinvoices and to advance funds against written cash calls wherever reasonablyrequired by HDI to pay for or secure services, to secure equipment, contractors,deposits and the like and to honour all agreements which HDI enters into in goodfaith as agent on behalf of Misty Mountain with third parties. The foregoingindemnity shall not apply to losses, claims or suits arising out of HDI’snegligence or wilful misconduct.
3.2 HDI agrees to carry out its advisory, administrative and operating activitieshereunder in a competent and workmanlike manner, in good faith with a view tothe best interests of Misty Mountain.
3.3 HDI shall take reasonable precautions to ensure that only authorized personnelof HDI and Misty Mountain are provided with information respecting the businessaffairs,
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exploration results and properties of Misty Mountain. HDI shalllimit access to information respecting exploration developments to its own staffon a need to know basis and shall ensure that its personnel acknowledge the needto protect confidentiality of information respecting Misty Mountain which isdeveloped by or comes into the possession of HDI and that they are in a “specialrelationship” with Misty Mountain as contemplated by securities legislation. HDIshall generally maintain confidentiality of Misty Mountain’s affairs and shalltake reasonable precautions to protect the integrity and security of informationdeveloped for Misty Mountain.
3.4 HDI shall not compete with Misty Mountain and will not endeavour to acquire anyinterest in any property of Misty Mountain or related to or which can reasonablybe said to be derived from any property of Misty Mountain, without the priorwritten consent of Misty Mountain which consent shall be in Misty Mountain’ssole discretion.
3.5 HDI shall not be obligated whatsoever to provide any information or advice toMisty Mountain respecting resource property prospects and opportunities whichcome to the attention of HDI personnel unless such prospects and opportunitiescan be clearly demonstrated to be presented primarily as a result of theprovision of services by HDI to Misty Mountain under the terms of thisAgreement. Misty Mountain acknowledges that HDI is entering into substantiallyidentical agreements with other resource companies and as a consequence HDI willbe exposed to resources property opportunities in the ordinary course and mayreceive resource property prospects and opportunities as a consequence ofservices to such other resource companies in the ordinary course. As well, MistyMountain acknowledges that HDI may receive unsolicited proposals andopportunities from sources wholly unrelated to Misty Mountain or any of theother client companies of HDI and those opportunities are acknowledged by MistyMountain to be the sole property of HDI.
3.6 HDI may be retained by other client companies or terminate its relationship withany client company in its sole discretion and without notice to any clientcompany.
OTHER RIGHTS AND DUTIES OF MISTY MOUNTAIN
4.1 So long as this Agreement is in effect Misty Mountain shall require one of MistyMountain’s directors to be a director of HDI who shall by virtue of suchappointment have the right to review all aspects of HDI’s operations. MistyMountain shall obtain an agreement from such nominee director that he shall notseek confidential information respecting any other client company of HDI (unlesssuch director is also a director of such other client company) and shall in anyevent maintain appropriate confidentiality with respect to any HDI informationprovided to or obtained by such director and particularly with respect to anyother client company or where such information about another client company orits exploration prospects is inadvertently acquired by the director. Suchnominee shall further agree to promptly resign from the board of HDI in theevent this Agreement is terminated for any reason. Such nominee shall not useany information acquired by virtue of his directorship in HDI for the purpose ofcompeting with HDI or competing with any other client company of HDI. Suchnominee shall
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be in a “special relationship” with any other client company ofwhich he is not already an “insider”.
4.2 Any authorized representative of Misty Mountain shall at all reasonable timeshave full access to all of the records or information of HDI pertaining to theaffairs of Misty Mountain. Such access shall be extended to the auditors andother professional advisors of Misty Mountain.
4.3 HDI shall indemnify and save harmless Misty Mountain from any claim, suit ordemand which may arise by virtue of any improper act or gross negligence of HDIoccurring as a result of the performance by HDI of this Agreement.
4.4 On execution hereof Misty Mountain shall subscribe for a single common share ofHDI for $1.00 and shall resell such share to HDI for $1.00 on termination ofthis Agreement. Misty Mountain shall in no event sell, transfer or otherwisedispose of or encumber such share during the currency of this Agreement. Theparties acknowledge that HDI shall be owned by its client companies and thateach client company shall own one common share of HDI and that HDI shall notallow any other person to subscribe or be issued shares in HDI nor will HDIotherwise authorize, create or issue any other shares or any other securities inits capital stock without the consent of all of its client companies.
5.1 This Agreement may be terminated by either party hereto on 30 days writtennotice to the other party. From the date of notice to the date of termination,HDI shall not enter into any new arrangements on behalf of Misty Mountain(unless already legally committed to do so) without Misty Mountain’s priorconsent.
5.2 In the event of termination during the course of implementation of anyexploration or other program the parties shall negotiate in good faith tominimize any interruption of such program and to ensure that the costs relatedthereto are properly accounted for and duly discharged by Misty Mountain.Notwithstanding any termination of this Agreement Misty Mountain shall continueto be bound by any agreements contracted for on its behalf by HDI prior totermination.
5.3 The confidentiality and non-competition provisions of this Agreement shallsurvive any termination of this Agreement and continue in full force and effectfor three years thereafter.
5.4 Upon termination hereof Misty Mountain shall cease to use the HDI premises,phone number, etc. and shall make arrangements for the orderly transition ofadministrative and accounting responsibilities by advice letter to HDI. HDIshall turn over all business, technical, and like records pertaining to theaffairs and properties of Misty Mountain as may be in the possession of HDIalthough HDI may retain copies for its own records where reasonablyrequired.
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6.1 This Agreement is not assignable by the parties and any purported assignmentthereof is void ab initio.
6.2 This Agreement shall be binding upon and enure to the benefit of the partieshereto and their respective successors.
6.3 This Agreement shall be construed in accordance with the laws of the province ofBritish Columbia and the parties agree to attorn to such jurisdiction in theevent of a dispute hereunder.
6.4 Notices shall be considered effectively given hereunder when personallydelivered to a party by personal service or by fax, in each case addressed tothe President.
IN WITNESS WHEREOF the parties have caused thisAgreement to be executed as of the date and year first above written.
HUNTER DICKINSON INC.
|Per:||/s/ Hunter Dickinson Inc.|
MISTY MOUNTAIN GOLD LIMITED
|/s/ Misty Mountain Gold Limited|
|Other Client Companies||Nominee HDI Director|
|Amarc Resources Ltd.||David Copeland|
|Anooraq Resources Corporation||Scott Cousens|
|Farallon Resources Ltd.||Jeffrey Mason|
|Pacific Sentinel Gold Corp.||Robert Dickinson|
|Taseko Mines Limited||Robert Hunter|
|Quartz Mountain Gold Corp.||David Jennings|
|Consolidated North Coast Industries Ltd.||Ron Thiessen|
|Casamiro Resource Corporation||Ron Thiessen|
|Northern Dynasty Minerals Limited||Bruce Youngman|
|Misty Mountain Gold Limited||Jeffrey Mason|
(The foregoing Schedule is subject to change from time totime.)