Exhibit 10.1




 





 


RIGHT OF FIRST REFUSAL
AGREEMENT


 


Between


 


SILVER
WHEATON CORP.


 


-
and -


 


MINES MANAGEMENT, INC.


 


November 2, 2007




 





 

















 


THIS RIGHT OF
FIRST REFUSAL AGREEMENT is dated as of the 2nd day of
November, 2007.


 


BETWEEN:


 


SILVER WHEATON CORP., a corporation continued under
the laws of the Province of Ontario


 


(“Silver Wheaton”)


 


- and -


 


MINES MANAGEMENT, INC., a corporation incorporated under
the laws of the State of Idaho


 


(“MMI”)


 


RECITALS:


 


WHEREAS,
Silver Wheaton and MMI have entered into an
agreement (the “Subscription Agreement”) dated as
of November 2, 2007 pursuant to which, on the terms and conditions set out
therein, Silver Wheaton has agreed to purchase from MMI, by way of private
placement, 2,500,000 common shares of MMI;


 


AND WHEREAS, the
parties have agreed to enter into this Agreement with effect as of the date
first noted above to grant Silver Wheaton a right of first refusal over certain
silver purchase agreements contemplated by MMI on the terms and conditions set
forth herein;


 


NOW, THEREFORE,
in consideration of the foregoing recitals and the mutual covenants of the
parties set forth herein, and other good and valuable consideration (the
sufficiency and receipt of which is hereby acknowledged by each of the parties
hereto) the parties hereto agree as follows:


 


1.             Definitions


 


In this
Agreement, unless there is something in the subject matter or context
inconsistent therewith:


 


“Affiliate” of any Person means any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such Person. For the purposes of this Agreement, “control”
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms “controlling” and
“controlled” have the meanings correlative to the foregoing;


 


“Agreement” means this right of first refusal agreement;


 

















 


“Election
Period” shall have
the meaning ascribed thereto in subsection 3(a);


 


“MMI” means
Mines Management, Inc., a corporation incorporated under the laws of the State
of Idaho;


 


“MMI
Offer” shall have
the meaning ascribed thereto in subsection 3(a);


 


“MMI
Silver” shall mean
silver mined, produced or otherwise recovered by MMI in the State of Montana,
United States;


 


“Person”
means a natural person, partnership, limited partnership, limited liability
partnership, company, corporation, limited liability company, unlimited
corporation, joint stock company, trust, unincorporated association, joint
venture or other entity or governmental authority, and pronouns have a
similarly extended meaning;


 


“Silver Wheaton”
means Silver Wheaton Corp., a corporation continued under the laws of the
Province of Ontario; and


 


“Third
Party Offer” shall have
the meaning ascribed thereto in subsection 3(a).


 


2.             MMI
Covenants


 


(a)           MMI
hereby covenants and agrees that it shall not, and shall not permit any
Affiliate of MMI to, at any time and from time to time, directly or indirectly,
without the prior written authorization of Silver Wheaton: (i) incorporate or
establish a corporation, partnership, trust or any other legal or other entity
or Person for the purpose of purchasing (A) MMI Silver, (B) a quantity of
silver based upon production of MMI Silver, or (C) a royalty based on
production of MMI Silver, other than an Affiliate of MMI that
is 100% owned or controlled by MMI and/or another Affiliate of MMI that does
not offer its securities for sale to the public or whose securities do not
trade in any manner on a stock exchange; (ii) invest in, acquire or agree to
acquire or make any proposal to acquire, in any manner, any securities, any
option to acquire any securities, any security convertible into or exchangeable
for any securities or any other right to acquire any securities in any Person
that issues its securities to the public or whose securities trade on a stock
exchange and that has agreed to purchase MMI Silver,
which in the aggregate would give MMI or any of its Affiliates more than 20% of
the voting securities of such Person, or (iii) except as permitted under
section 3, enter into any arrangement to sell any of the MMI Silver, other than
trade sales in the ordinary course of business. For the avoidance of doubt, this
section 2 shall preclude MMI or any of its Affiliates from creating a
competitor to Silver Wheaton for the purpose of purchasing MMI Silver.


 


(b)           MMI
hereby agrees that Silver Wheaton shall have the right to make a proposal to
MMI’s board with respect to the purchase of MMI Silver or the purchase of a
royalty relating to MMI Silver and MMI covenants and agrees to consider any
such proposal in good faith.


 


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3.             Right
of First Refusal


 


(a)           If MMI or any of its
Affiliates receives a bona fide offer from a third party (a “Third Party Offer”) to enter into an
arrangement to purchase MMI Silver, other than trade sales in the
ordinary course of business, and MMI or any of its Affiliates is willing to
accept that Third Party Offer, then:


 


(i)            MMI shall give
written notice to Silver Wheaton of the Third Party Offer together with MMI’s
own offer to Silver Wheaton to sell MMI Silver on the same terms and conditions
as the Third Party Offer (the “MMI Offer”);
and


 


(ii)           Silver Wheaton shall
have the right for a period of 15 days from the date of receipt of the MMI
Offer (the “Election Period”) to
elect to accept the MMI Offer.


 


(b)           Without prejudice to
the binding nature of the agreement between MMI and Silver Wheaton that shall
come into existence on the date on which Silver Wheaton elects to accept the
MMI Offer, MMI or an Affiliate of MMI and Silver Wheaton or an Affiliate of
Silver Wheaton shall enter into a written agreement, in form and content
reasonably acceptable to MMI and Silver Wheaton, that incorporates the terms of
the MMI Offer and other commercially reasonable terms and conditions, within 15
days following the date on which Silver Wheaton elects to accept the MMI Offer.


 


(c)           If Silver Wheaton
rejects the MMI Offer or fails to provide written notice of acceptance to MMI
within the Election Period, then the rights of Silver Wheaton with respect to
this specific MMI Offer shall automatically terminate and MMI or its Affiliate
shall be free to sell such MMI Silver to the applicable third party
pursuant to the Third Party Offer. In the event that MMI or its Affiliate and
the third party have not entered into a written agreement pertaining to such
Third Party Offer within 30 days of the expiry of the Election Period, the
right of first refusal herein contained shall be deemed to be revived and MMI
shall be required to comply with the terms of this Section 3 with respect to
any Third Party Offer.


 


(d)           For the avoidance of doubt, this
Agreement and the right of first refusal granted hereby do not apply to, and
such right of first refusal shall not be triggered by:  (i) trade sales and spot sales of MMI Silver
in the ordinary course of business; (ii) sales or transfers of concentrates
containing or including MMI Silver to smelters and refiners in the ordinary
course of business; (iii) forward sales, other hedging arrangements or
derivatives based on or related to MMI Silver or the delivery thereof; or (iv)
security interests, assignments of production or other liens or encumbrances on
or related to MMI Silver for the purpose of obtaining debt financing or other
financing or the construction or operation of a mine that is expected to
produce MMI Silver. For greater certainty, clauses (i), (ii) and (iii) above
are limited to transaction in which no upfront payment is to be received by MMI
or one of its Affiliates.


 


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4.             Term


 


This
Agreement shall have a term of 20 years and shall remain in effect from the
date hereof to the date that is the 20th anniversary of this
Agreement.


 


5.             Notices and
Communications


 


All
notices, demands and communications required or permitted hereunder will be in
writing and will be delivered personally, by facsimile, by courier or by
registered mail, postage prepaid, return receipt requested to the respective
representatives at Silver Wheaton and MMI set forth below. Notices, demands and
communications hereunder will be effective: 
(i) if delivered personally, on delivery; (ii) if delivered by facsimile
or by courier, upon receipt; or (iii) if delivered by registered mail,
forty-eight (48) hours after deposit thereof in the mail addressed to the party
to whom such notice, demand or communication is given. Until changed by written
notice, all such notices, demands and communications will be addressed as
follows:


 


	
   

  	
  If to Silver
  Wheaton:

  	
  Suite 3150, 666 Burrard Street

  Vancouver, British Columbia
  V6C 2X8

  
 Attention:  Chief Financial
  Officer  
 Fax:           (604)
  684-3123



  
	
   

  	
  If to MMI:

  	
  905 West Riverside Avenue, Suite 311

  Spokane, Washington 99201
 
 Attention:  Chief Financial Officer
 Fax:           (509)
  838-0486

  



 


6.             Entire
Agreement


 


This
Agreement and the Subscription Agreement constitute the entire understanding
and agreement between the parties hereto and will supersede any and all other
instruments, whether written or oral, pertaining to the subject matter of this
Agreement.


 


7.             Assignment


 


Neither
party may assign or transfer this Agreement in whole or in part without the
prior written consent of the other party, provided that Silver Wheaton may
assign this Agreement or the rights granted hereunder to any of its Affiliates
upon the provision of written notice thereof to MMI. Subject to the foregoing,
all the terms and conditions contained herein will inure to the benefit of and
will be binding upon the parties hereto and their respective successors and
assigns.


 


8.             Applicable
Law and Severability


 


This
Agreement will in all respects be governed by the laws of the State of Idaho. The
invalidity or 


 


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enforceability of
any provision of this Agreement shall not effect the validity or enforceability
of any other provision hereof and any such invalid or unenforceable provision
shall be deemed to be severable.


 


9.             Headings


 


The
headings appearing at the commencement of the sections hereof are descriptive
only and for convenience and reference. Should there be any conflicts between
any such heading and the section at the head of which it appears, the section
and not such heading will control and govern in the construction of this
Agreement.


 


10.          Modifications
or Amendments


 


No
amendment, change, modification or waiver of this Agreement will be valid
unless it is in writing and signed by both of the parties hereto and expressly
states that such amendment, change, modification or waiver is intended.


 


11.          Counterparts


 


This
document may be executed and delivered by facsimile, email or other electronic
transmission in one or more separate counterparts, each of which, when so
executed, will be deemed to be an original. Such counterparts will, together,
constitute and be one and the same instrument.


 


IN WITNESS WHEREOF,
the parties have caused this Agreement to be executed by their duly authorized
officers on the date first appearing above.


 


 


	
   

  	
  SILVER
  WHEATON CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nolan Watson

  	
   

  
	
   

  	
  Name:

  	
  Nolan Watson

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MINES
  MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Moore

  	
   

  
	
   

  	
  Name:

  	
  James Moore

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  



 


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