**Exhibit 10.1**

 

 

**RIGHT OF FIRST REFUSALAGREEMENT**

 

**Between**

 

**SILVERWHEATON CORP.**

 

**-and -**

 

**MINES MANAGEMENT, INC.**

 

**November 2, 2007**

 

 

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**THIS RIGHT OFFIRST REFUSAL AGREEMENT****is dated as of**the 2nd day ofNovember,**2007.**

** **

**BETWEEN:**

 

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

 

(“**Silver Wheaton**”)

 

- and -

 

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

 

(“**MMI**”)

 

**RECITALS:**

** **

**WHEREAS****,********Silver Wheaton and MMI have entered into**anagreement (the “**Subscription Agreement**”) dated asof November 2, 2007 pursuant to which, on the terms and conditions set outtherein, Silver Wheaton has agreed to purchase from MMI, by way of privateplacement, 2,500,000 common shares of MMI;

 

**AND WHEREAS**, theparties have agreed to enter into this Agreement with effect as of the datefirst noted above to grant Silver Wheaton a right of first refusal over certainsilver purchase agreements contemplated by MMI on the terms and conditions setforth herein;

 

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

 

# **1.**             Definitions

#  

In thisAgreement, unless there is something in the subject matter or contextinconsistent therewith:

 

“**Affiliate**” of any Person means any otherPerson, directly or indirectly, controlling or controlled by or under direct orindirect 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 managementand policies of such Person, directly or indirectly, whether through the ownershipof 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;

 

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# **“**ElectionPeriod” shall havethe meaning ascribed thereto in subsection 3(a);

#  

“**MMI**” meansMines Management, Inc., a corporation incorporated under the laws of the Stateof Idaho;

 

# **“**MMIOffer” shall havethe meaning ascribed thereto in subsection 3(a);

#  

# **“**MMISilver” shall meansilver mined, produced or otherwise recovered by MMI in the State of Montana,United States;

#  

“**Person**”means a natural person, partnership, limited partnership, limited liabilitypartnership, company, corporation, limited liability company, unlimitedcorporation, joint stock company, trust, unincorporated association, jointventure or other entity or governmental authority, and pronouns have asimilarly extended meaning;

 

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

 

# **“**ThirdParty Offer” shall havethe meaning ascribed thereto in subsection 3(a).

#  

# **2.**             MMICovenants

#  

## (a)           MMIhereby covenants and agrees that it shall not, and shall not permit anyAffiliate of MMI to, at any time and from time to time, directly or indirectly,without the prior written authorization of Silver Wheaton: (i) incorporate orestablish a corporation, partnership, trust or any other legal or other entityor Person for the purpose of purchasing (A) MMI Silver, (B) a quantity ofsilver based upon production of MMI Silver, or (C) a royalty based onproduction of MMI Silver, other than an Affiliate of MMI thatis 100% owned or controlled by MMI and/or another Affiliate of MMI that doesnot offer its securities for sale to the public or whose securities do nottrade in any manner on a stock exchange; (ii) invest in, acquire or agree toacquire or make any proposal to acquire, in any manner, any securities, anyoption to acquire any securities, any security convertible into or exchangeablefor any securities or any other right to acquire any securities in any Personthat issues its securities to the public or whose securities trade on a stockexchange and that has agreed to purchase MMI Silver,which in the aggregate would give MMI or any of its Affiliates more than 20% ofthe voting securities of such Person, or (iii) except as permitted undersection 3, enter into any arrangement to sell any of the MMI Silver, other thantrade sales in the ordinary course of business. For the avoidance of doubt, thissection 2 shall preclude MMI or any of its Affiliates from creating acompetitor to Silver Wheaton for the purpose of purchasing MMI Silver.

##  

## (b)           MMIhereby agrees that Silver Wheaton shall have the right to make a proposal toMMI’s board with respect to the purchase of MMI Silver or the purchase of aroyalty relating to MMI Silver and MMI covenants and agrees to consider anysuch proposal in good faith.

 

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# **3.**             Rightof First Refusal

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## (a)           If MMI or any of itsAffiliates receives a bona fide offer from a third party (a “**Third Party Offer**”) to enter into anarrangement to purchase MMI Silver, other than trade sales in theordinary course of business, and MMI or any of its Affiliates is willing toaccept that Third Party Offer, then:

##  

### (i)            MMI shall givewritten notice to Silver Wheaton of the Third Party Offer together with MMI’sown offer to Silver Wheaton to sell MMI Silver on the same terms and conditionsas the Third Party Offer (the “**MMI Offer**”);and

###  

### (ii)           Silver Wheaton shallhave the right for a period of 15 days from the date of receipt of the MMIOffer (the “**Election Period**”) toelect to accept the MMI Offer.

###  

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

##  

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

##  

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

 

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### **4.****            ****Term**

###  

### ThisAgreement shall have a term of 20 years and shall remain in effect from thedate hereof to the date that is the 20th anniversary of thisAgreement.

###  

# **5.**             Notices andCommunications

#  

## Allnotices, demands and communications required or permitted hereunder will be inwriting and will be delivered personally, by facsimile, by courier or byregistered mail, postage prepaid, return receipt requested to the respectiverepresentatives at Silver Wheaton and MMI set forth below. Notices, demands andcommunications hereunder will be effective: (i) if delivered personally, on delivery; (ii) if delivered by facsimileor by courier, upon receipt; or (iii) if delivered by registered mail,forty-eight (48) hours after deposit thereof in the mail addressed to the partyto whom such notice, demand or communication is given. Until changed by writtennotice, all such notices, demands and communications will be addressed asfollows:

 
|   | If to Silver  Wheaton: | Suite 3150, 666 Burrard StreetVancouver, British Columbia  V6C 2X8 Attention:  Chief Financial  Officer   Fax:           (604)  684-3123 |
|--------|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | If to MMI:             | 905 West Riverside Avenue, Suite 311Spokane, Washington 99201 Attention:  Chief Financial Officer Fax:           (509)  838-0486         |

 

# **6.**             EntireAgreement

#  

## ThisAgreement and the Subscription Agreement constitute the entire understandingand agreement between the parties hereto and will supersede any and all otherinstruments, whether written or oral, pertaining to the subject matter of thisAgreement.

##  

# **7.**             Assignment

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## Neitherparty may assign or transfer this Agreement in whole or in part without theprior written consent of the other party, provided that Silver Wheaton mayassign this Agreement or the rights granted hereunder to any of its Affiliatesupon 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 andwill be binding upon the parties hereto and their respective successors andassigns.

##  

# **8.**             ApplicableLaw and Severability

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## ThisAgreement will in all respects be governed by the laws of the State of Idaho. Theinvalidity or 

 

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

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# **9.**             Headings

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## Theheadings appearing at the commencement of the sections hereof are descriptiveonly and for convenience and reference. Should there be any conflicts betweenany such heading and the section at the head of which it appears, the sectionand not such heading will control and govern in the construction of thisAgreement.

##  

# **10.**          Modificationsor Amendments

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## Noamendment, change, modification or waiver of this Agreement will be validunless it is in writing and signed by both of the parties hereto and expresslystates that such amendment, change, modification or waiver is intended.

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# **11.**          Counterparts

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## Thisdocument may be executed and delivered by facsimile, email or other electronictransmission in one or more separate counterparts, each of which, when soexecuted, 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 authorizedofficers 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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