Exhibit 10.8
FINAL
April 1, 1995
STOCK OPTION PURCHASE AGREEMENT
This Stock Option Purchase Agreement ("Agreement") is made effective
this 1st day of April, 1995, ("the effective date") by and between Xxxxx X.
Xxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx X.
Xxxxxxx, Xxxxxxxx X. Xxxx, Xxxxxxx X. Xxxxx, and Xxxxxx X. Xxxxx (hereinafter
collectively referred to as "Optionor") and Golden Queen Mining Company,
Inc., a California corporation whose address X.X. Xxx 000, Xxxxxxxx,
Xxxxxxxxxx 00000-0000 (hereinafter referred to as "Golden Queen").
WITNESSETH:
WHEREAS, Optionor are owners and holders of all of the issued and
outstanding Stock of the KARMA XXXXXXX CORPORATION, hereinafter referred to
as "Company", whose address is 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
and whereas, Company owns real property described in Exhibit A attached
hereto and by this reference made a part hereof (hereinafter referred to as
"Area of Interest"); and such property is encumbered by the lease described
in Exhibit B, attached hereto and incorporated by reference; and
WHEREAS, Optionor and Golden Queen desire to enter into an agreement
pursuant to which Optionor will grant to Golden Queen an exclusive option to
purchase all of the issued and outstanding Stock of the Company, all on the
terms and conditions as hereinafter set forth;
NOW, THEREFORE, for and in consideration of the covenants and agreements
herein contained and the payments hereinafter provided, the parties agree as
follows:
ARTICLE I
RIGHTS GRANTED
A. CONSIDERATION FOR OPTION PAYMENT
For a period of nine (9) months commencing on the Effective Date of this
Agreement and terminating on January 1, 1996, (hereinafter referred to as
"Exploration Term"), Optionor will cause Company to grant to Golden Queen the
rights of ingress and egress to and from the Area of Interest to use all
easements and rights of way for ingress and egress to and from the Area of
Interest to which the Company is entitled, along with the right at any time
and form time to time to enter upon said properties in order to inspect, to
survey, to map, to chart, to collect hand samples, to prospect, to drill, to
trench and to do or make such other geological, geophysical, geochemical or
other investigatory use thereof as Golden Queen deems necessary in its
opinion to obtain accurate, dependable samples for assay, or to adequately
analyze, determine and otherwise search for deposits of minerals in an effort
to evaluate the presence of mineral reserves in and under the Area of
Interest and to obtain other information necessary for ore reserve
calculations, for mine planning and design work, for engineering studies, for
cost estimates, for permit evaluations and for other investigatory purposes
as Golden Queen deems necessary to define the mineral potential or the Area
of Interest. All of the foregoing shall be done by Golden Queen in a manner
consistent with and subject to those activities allowed under the underlying
lease during the term thereof.
For purposes hereof, "minerals" shall mean all metallic or non-metallic
minerals and ores which contain mineral matter or substances, including
without limitation silica, now held or subsequently acquired by one or more
of the parties, in, on, and under the Area of Interest, excluding only coal,
oil, gas and associated hydrocarbon substances.
In the conduct of all the activities described above, Golden Queen shall
use due care and do no more damage to the Area of Interest than is reasonably
incident to the exercise of the rights herein granted. Golden Queen further
agrees to indemnify and hold harmless Optionor and Company from any and all
claims, actions or causes of action which may be asserted against Optionor or
Company for personal injury and/or property damage claimed or sustained by
any person, firm or corporation whomsoever, and directly resulting from the
activities performed by or on behalf of Golden Queen during the course of its
operations during the Exploration Term.
X. XXXXX OF OPTION TO PURCHASE
Optionor does hereby grant to Golden Queen, its successors and assigns,
the exclusive right and option to purchase, in the manner as described in
Article II below and in accordance with all other terms and conditions as
hereinafter set forth, all of the issued and outstanding Stock of the
Company. Optionor and Golden Queen agree that, excluding the $100,000.00 set
forth in Article III (A) of this Agreement, all payments made pursuant to
Article III (B), (C) and (D), are part of an installment sale of stock by
optionor, and include simple interest at 9% per annum.
Golden Queen shall have the right and option to purchase the Stock of
the Company placed in escrow on full payment to Optionor or Optionor's
assigns according to the payment schedule in Article III provided that Golden
Queen has performed and fulfilled all conditions of this Agreement. Golden
Queen shall not receive or have any right to purchase any or all of the
issued and outstanding Stock of the Company, and shall not be a shareholder
of the Company, or have the right to exercise any of the rights of a
shareholder of the Company, unless it has made full payment to Optionor of
$1,600,000.00, according to the schedule set forth in Article III. Any
payments made to the Optionor by Golden Queen shall be non-refundable.
If full payment to Optionor of S1,600,000.00 shall not be made on or
before July 1, 1999, all right of Golden Queen to purchase the Stock of the
Company shall terminate without further action on the part of Optionor.
Optionor is basing the sale price of the stock at $1,184,000 plus simple
interest at 9% per annum. No prepayment of any sums by Golden Queen will
affect the obligation of Golden Queen to pay to Optionor the full and total
amount of S1,600,000.00, nor shall Golden Queen be entitled to receive any of
the shares of the Optionor placed in escrow, or to exercise any rights as a
shareholder of the Company until the full amount of $1,600,000.00 has been
paid to Optionor according to Article III (A), (B), (C) and (D).
C. OWNERSHIP OF STOCK
Each Optionor owns, beneficially and of record, free and clear of all
liens, charges, claims, equities, restrictions, or encumbrances, the shares
of capital Stock of the Company set forth opposite his name in Exhibit C,
which is attached hereto and incorporated herein, and has the full right,
power, and authority to sell, transfer, and deliver to Golden Queen, in
accordance with this Agreement, the number of shares of common Stock of the
Company so set forth, free and clear of all liens, charges, claims equities,
restrictions, and encumbrances.
D. PURCHASE ENTIRELY FOR OWN ACCOUNT
This Agreement is made with Golden Queen in reliance upon its
representation to Optionor and Company, which by Golden Queen's execution of
the Agreement it hereby confirms, that the Stock to be purchased by it will
be acquired for investment for its own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and
that it has no present intention of selling, granting any participation in,
or otherwise distributing the same. By executing this Agreement, Golden Queen
further represents that it does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to
such person or to any third person, with respect to any of the Stock.
E. RELIANCE UPON REPRESENTATIONS
Golden Queen understands that the Stock is not registered under the
Securities Act or qualified with the California Commissioner of Corporations
on the ground that the sale provided for in this Agreement and the issuance
of securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and exempt from qualification with the
California Commissioner of Corporations, and that Optionor's reliance on such
exemption is predicated on Golden Queen's representations set forth herein.
Golden Queen realizes that the basis for the exemption may not be present if,
notwithstanding such representations, Golden Queen has in mind merely
acquiring Stock of the Company for a fixed or determinable period in the
future, or for a market rise, or for sale if the market does not rise. Golden
Queen has no such intention.
F. RESTRICTED SECURITIES
Golden Queen understands that the Stock may not be sold, transferred, or
otherwise disposed of without registration under the 1933 Act or an exemption
therefrom, or qualification with the California Commissioner of Corporations,
or an exemption therefrom, and that in the absence of an effective
registration statement covering the Stock or qualification, or an available
exemption from registration under the 1933 Act, exemption from or
qualification, the Stock must be held indefinitely. In particular, Golden
Queen is aware that the Stock may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of that
Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about the Company. Such
information is not now available and the Company has no present plans to make
such information available.
G. LEGENDS
To the extent applicable, each certificate or other document evidencing
any of the Stock shall be endorsed with the legend set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED WITH THE CALIFORNIA COMMISSIONER OF
CORPORATIONS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR QUALIFIED WITH
THE CALIFORNIA COMMISSIONER OF CORPORATIONS, UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED."
H. INDEPENDENT CONTRACTOR STATUS
Golden Queen is an independent contractor. Subject only to the specific
limitations set forth in this Agreement, Golden Queen shall have such
dominion and control over the Area of Interest, and all operations during the
term of this Agreement, as agreed to by the parties hereto during the term of
this Agreement. All the employees and agents employed or contracted for by
Golden Queen, whether on a wage or profit-sharing basis, shall be selected,
hired, directed, paid, and discharged only by Golden Queen.
I. COMPLIANCE WITH LEGAL REQUIREMENTS
Golden Queen shall comply with the existing or future laws of the State
of California with respect to worker's compensation and occupational disease,
and all federal and state laws and regulations and all other legislation or
regulations now or subsequently applicable to the working and operation of
the Area of Interest.
Golden Queen will, at its expense, carry worker's compensation
insurance, employees liability insurance, and occupational disease
compensation insurance covering all Golden Queen's employees in, about, or on
the Area of Interest.
Golden Queen will pay any taxes and make any deductions under the
Federal Social Security Act and any state Employment Security Act, that
Golden Queen may be obligated to pay or to deduct.
Golden Queen shall make all payments, returns, and reports required by
these laws.
In addition, Golden Queen will comply with all present and future
environmental laws and regulations as promulgated by the Environment
Protection Agency and all other State, County and Federal agencies.
Golden Queen will comply with all State and Federal laws, rules and
regulations relating to the sale of the Stock of the Company by Optionor to
Golden Queen.
J. MAINTENANCE OF AREA OF INTEREST
During the Exploration Term, Golden Queen shall keep at all times any
shafts, drifts, tunnels, and other passages and workings on the Area of
Interest in as good condition as when first received. Golden Queen shall take
such reasonable steps necessary to secure the Area of Interest so as to
prevent strangers and uninvited persons from entering the Area of Interest,
but nothing herein shall require Golden Queen to post guards.
Golden Queen acknowledges that it has been informed that the area of the
property is an active Seismic Zone and the potential earthquake problem must
be taken into consideration in providing proper foundations and bracing for
equipment and buildings. Employees should be notified of said problem and
signs posted to this effect.
Golden Queen agrees to provide adequate fencing and security in areas
being mined or being used for stockpiling or processing materials to prevent
unlawful entry and protect the public. This area shall be posted with, "No
Trespass-Private Property", signs.
Golden Queen shall maintain and keep the Area of Interest in a clean and
orderly condition. All waste, trash, garbage and debris shall be disposed of
in a timely, proper and legal manner. All supplies and equipment shall be
stored in an area designated for such purposes. Proper toilet and sanitary
facilities shall be provided for invitees and employees.
ARTICLE II
EXERCISE OF PURCHASE OPTION
A. PURCHASE OF ALL STOCK
At any time during the Exploration Term of this agreement, Golden Queen
may exercise its option to purchase in its entirety only all of the issued
and outstanding Stock or the Company placed in escrow by depositing written
notice in the United States mail, return receipt requested, or by Federal
Express, or other overnight carrier, addressed to Optionor at the address
indicated in Article XXX below. The failure of Golden Queen to give written
notice of its election not to proceed under its option, shall not be
considered as an election to proceed under its option. Upon exercise of said
option, and payment to Optionor of the total sum of $1,600,000.00 in
accordance with the payment schedule set forth in Article III, by cashiers
check, or wire transfer as directed by Optionor, and completion of the terms
of this Agreement, Optionor shall promptly (i.e., within Ten (10) days from
receipt of the final payment that will total $1,600,000.00) deliver to Golden
Queen all issued and outstanding stock of the Company. Ad valorem, property
and other taxes and assessments imposed on the properties comprising the Area
of Interest shall be pro rated at closing and such additional sum shall be
paid to Optionor. The parties shall execute and deliver such other documents
as may be necessary and shall take other action as may be necessary to carry
out their obligations hereunder.
ARTICLE III
PAYMENT SCHEDULE
A. OPTION PAYMENT
Upon execution of this Agreement, Golden Queen shall pay to Optionor the
sum of One Hundred Thousand Dollars ($100,000.00), such payment is to be
non-refundable. Optionor authorizes the aforesaid check or wire transfer as
directed by Optionor for $100,000.00 to be made payable to Karma Xxxxxxx
Corporation. Upon the payment of the $100,000.00, Optionor shall deposit
their respective shares of stock of the Company in escrow with Mission Valley
Escrow, 0000 Xxxxxx Xxx Xxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, with mutually
agreed upon instructions to deliver all of the shares of stock to Golden
Queen, only if Golden Queen pays to Optionor the full and total sum of
$1,600,000.00 pursuant to the schedule described in this Article III, and to
return such stock to Optionor if such sum is not paid, or this Agreement is
violated, terminated, or otherwise not complied with. Delivery of such
shares of stock into escrow shall in no way affect Optionor rights,
privileges, or status as shareholders of the Company, and Golden Queen shall
not have any rights, privileges, or status as a shareholder of the Company
until such stock is delivered to Golden Queen after full payment of
$1,600,000 to Optionor.
B. INITIAL PURCHASE PAYMENT
Upon the earlier of January 1, 1996 or the date Golden Queen exercises
its purchase option in accordance with Article II above, Golden Queen shall
pay to Optionor the sum of Two Hundred Fifty Thousand Dollars ($250,000.00),
which payment shall be non-refundable. Optionor will allocate said
$250,000.00 to include simple interest at 9% per annum of $79,920.00.
C. START-UP CONSTRUCTION PAYMENT
Upon the earlier of commencement of construction or July 1, 1997, Golden
Queen shall pay to Optionor the sum of Five Hundred Thousand Dollars
($500,000.00) which payment shall be non-refundable. Said $500,000.00
includes simple interest at 9% per annum $121,670.00 For purposes hereof,
commencement of construction shall be defined as the date on which
groundbreaking occurs on the construction of production facilities capable of
producing gold in commercial quantities.
D. SUSTAINED PRODUCTION PAYMENT
Upon the earlier of a determination of sustained production or July 1,
1999, Golden Queen shall pay to Optionor the sum of Seven Hundred Fifty
Thousand Dollars ($750,000.00), which shall be non-refundable. Optionor will
allocate said $750,000.00 to include simple interest at 9% per annum of
$114,410.00. For purposes hereof, sustained production shall be defined as a
period of sixty (60) days during which the Xxxxxxx-Xxxxx plant has operated
at or near design capacity.
E. PRODUCTION ROYALTIES
In addition to the above, upon commencement of commercial production
from the Area of Interest, and any production from the lease set forth in
Exhibit B, Golden Queen shall pay for a period up to, but not to exceed sixty
(60) years from the initial date this Agreement, to Optionor, their heirs,
successors and assigns a royalty in an amount equal to one percent (1%) of
the gross smelter returns received, if any, without credit or deduction, from
ores mined, saved, and marketed from the Area of Interest. In no case shall
the total royalty payments to Optionor exceed sixty million ($60,000,000)
dollars This shall be binding upon any successor, assignee, or transferee of
Golden Queen, whether by operation of law or otherwise. For purposes hereof,
the term gross smelter returns shall be defined as the gross amount received
from the sale of heretofore mentioned valuable minerals and ores including
without limitation silica. Royalties shall accrue on a calendar quarterly
basis, and shall be payable within thirty (30) days of the end of the
previous quarter. Golden Queen shall not compute the royalty due to Lessor on
the basis of sales to any individual, partnership, corporation, subsidiary,
or any other business entity of any kind whatsoever which is owned,
controlled or affiliated with Golden Queen. Said royalty is to be computed on
the basis of comparable sales to parties not connected with (at-arms-length
from) Golden Queen.
F. FORM OF PAYMENTS: NON REFUNDABLE
All payments made pursuant to this Agreement, are to be made in readily
available federal funds by cashiers check or wire transfer as directed by
Optionor drawn on a United States bank acceptable to Optionor. It is agreed
that all payments made are in consideration of this Agreement and are
non-refundable. In the event of a late payment, interest at ten percent (10%)
per annum or the highest legal rate, shall accrue from the time such payment
was due.
ARTICLE IV
PAYMENT OF TAXES AND LIABILITIES
A. TAXES-GENERAL
Golden Queen shall pay, before delinquency, all taxes levied on personal
property, improvements, and structures now or subsequently placed or
installed on the Area of Interest.
Golden Queen shall pay to Optionor before delinquency an amount equal to
the license fees, net proceeds taxes, occupation taxes, and other taxes
exacted from, levied upon, or assessed against Optionor and/or Company
because of, or based on, severance or production by Golden Queen of
materials, ores, and products taken from the Area of Interest. Golden Queen
shall furnish such information and data concerning operations in the Area of
Interest as shall be required to enable Optionor and Company to make proper
returns for tax purposes or pay any license fees.
B. EMPLOYER TAXES AND OTHER LIABILITIES
Golden Queen shall protect and indemnify Optionor and Company against
any payroll taxes or contributions imposed with respect to any employees of
Golden Queen by any applicable law dealing with old age pensions,
unemployment compensation, accident compensation, health insurance, and
related subjects.
Golden Queen shall properly safeguard Optionor and Company against
liability for injuries to persons, including injuries resulting in death and
loss of and damage to property, by obtaining and maintaining in force
insurance with responsible insurers in amounts acceptable to Optionor and
Company, and furnishing Optionor and Company with written evidence of the
insurance. Optionor and Company shall be named as additional insureds.
Golden Queen shall maintain minimum liability insurance of $1,000,00.00
per occurrence and property damage insurance in the amount S1,000,000.00 in
full effect before any work commences and during the term of this Agreement.
Optionor and Company shall be named as Additional Insureds in said policies.
Copies of said policies shall be furnished to Optionor.
C. ADDITIONAL FEES & FILINGS
Golden Queen shall pay all fees, impositions, and assessments in a
timely manner so as not to forfeit any rights, claims, and privileges of
Optionor or the Company, including without limitation all fees, impositions,
and assessments imposed by the Bureau of Land Management, the Federal, State,
County, and local governments. Golden Queen shad timely file all necessary
and appropriate documentation with the proper governmental authority, body or
agency, with copies to Optionor, so as not to forfeit any rights, claims or
privileges of Optionor or the Company.
Without in any way limiting the foregoing Golden Queen shall cause to be
performed upon each and every claim of the Area of Interest, a sufficient
amount of labor in exploration and development thereof so that the end
purpose of Federal and State regulations regarding Annual Assessment Work
shall be met. This work shall be scheduled and witnessed by Optionor or his
agent, and shall be completed no later that June 30th of the calendar year. A
statement showing dollar valuation for completed work shall be signed by
Golden Queen furnished to Optionor.
ARTICLE V
TITLE
A. AREA OF INTEREST
To the best of Optionor's knowledge, Company is the sole owner of the
Area of Interest, and other than the lease set forth in Exhibit B. no other
person or persons are known to Optionor to be claiming any right, title, or
interest to the Area of Interest.
B. MARKETABILITY
To the best of Optionor's knowledge, Company's title to the Area of
Interest is marketable, free and clear from any reservation of any mineral,
oil or gas rights or interests of any person or governmental entity. Optionor
have the full right, power and capacity to enter into this Agreement upon the
terms and conditions herein contained.
C. COVENANTS
Optionor covenant that its full power, right and capacity to enter into
this Agreement will not be affected adversely because of any act or omission
on the part of Optionor during the continuance thereof. The foregoing
representations are made effective on the date of this Agreement and upon the
conveyance of the Stock of the Company pursuant to the option described
herein.
D. INSPECTION BY GOLDEN QUEEN
Golden Queen has had the opportunity to inspect the Area of Interest and
to search title thereto. Golden Queen will defend all right title and
interest to the Area of Interest at its sole expense, except that Optionor
will cause the Company to make available to Golden Queen all documents in its
possession in order to enable Golden Queen to defend all right, title and
interest to the Area of Interest. Optionor and Company make no warranties of
title of any nature whatsoever.
E. AS IS, WHERE IS
Golden Queen agrees that it is familiar with the Area of Interest and
the mining claims described in this Agreement, and is familiar with the
condition of the title the Company has. Golden Queen shall accept the title
of the Company in its present condition and the present condition of the Area
of Interest, including without limitation, the shafts, tunnels, cyanide
tailings, and shall never assert any claim against Optionor or Company for or
on account of any defects, objections or other claims to the title or
condition of the Area of Interest.
ARTICLE VI
EFFECT OF FAILURE TO EXERCISE OPTION
A. NO RIGHT TO ACQUIRE STOCK OR AREA OF INTEREST
If Golden Queen fails to exercise its option to acquire all the issued
and outstanding Stock of the Company on or before the period stated
heretofore in this Agreement, Golden Queen shall have no right, title,
interest or claim to the Area of Interest or any of the Stock of the Company.
However, the failure of Golden Queen to exercise its option shall in no way
affect the payments agreed to be paid by Golden Queen to Optionor in Article
III, of this Agreement.
B. SURRENDER OF AREA OF INTEREST
If Golden Queen elects not to exercise its option, it shall peaceably
surrender the Area of Interest to Company in as good condition as it now is,
subject to uses and operations permitted pursuant to this Agreement, and free
and clear of any and all liens and encumbrances incurred by Golden Queen in
its operations on and about the Area of Interest.
ARTICLE VII
DEFAULT IN PAYMENTS
A. TERMINATION OF AGREEMENT
If Golden Queen exercises the option to purchase and subsequently fails
to make any subsequent payment within ten (10) days after it has become due,
this Agreement may be terminated by Optionor in its sole and absolute
discretion, and all sums paid by Golden Queen shall be non-refundable.
ARTICLE VIII
COMMINGLING
Any minerals produced from the Area of Interest may be mixed or
commingled with any other minerals or materials from other properties if they
have first been weighed and assayed or if other procedures consistent with
good mining industry practices are used by Golden Queen to determine the
quantity and grade of minerals, valuable ores and substances produced from
the Area of Interest.
ARTICLE IX
NO EXPRESS OR IMPLIED COVENANTS
Nothing in this Agreement shall impose any obligations or covenants upon
Golden Queen, express or implied, to conduct any exploration, development or
mining operations upon the Area of Interest, it being the intent of the
parties that Golden Queen shall have the sole discretion to determine the
time, method, manner and rate of conducting any operations thereon.
ARTICLE X
INSPECTION
The Optionor, or their duly authorized agent or representative, shall be
permitted to enter into or upon the Area of Interest and the workings of
Golden Queen at all reasonable times for the purposes of inspection, but
shall make entry at Optionor own risk and so as not to hinder unreasonably
the operations of Golden Queen; and the Optionor shall indemnify and hold
harmless Golden Queen from any damage, claim or demand by reason of injury to
or the presence of Optionor or its agents or representatives or any of them
on the Area of Interest or the approaches thereto.
ARTICLE XI
PROTECTION FROM LIENS
A. KEEP FREE FROM LIENS
Golden Queen shall, at its expense, keep the Area of Interest free from
all liens, claims, and encumbrances resulting from its operations thereon. In
the event the Area of Interest shall be returned to the Company, pursuant to
the terms of this Agreement, such transfer shall be free of any and all
liens, claims, and encumbrances.
B. MECHANICS' AND OTHER LIENS
Optionor and Company shall not be responsible for any mechanics' or
miner's liens or other liens, claims, encumbrances, or liabilities incurred
by Golden Queen in connection with operations on the Area of Interest.
ARTICLE XII
INDEMNIFICATION AND INSURANCE
Golden Queen assumes all responsibility for and will fully indemnify
Optionor and Company against all claims and demands of every kind and nature
that may be made against Optionor, Company, or against the Area of Interest
for or on account of, or arising from any operations on or occupancy of the
Area of Interest by Golden Queen, its agents, servants, or employees, and any
debts or expenses contracted or incurred by Golden Queen, as well as from and
against all acts, transactions, or omissions by Golden Queen, its agents,
employees and servants, including claims and demands arising during the
existence of this Agreement from or on account of injury to any person,
whether occasioned by any unsafe or dangerous condition of any part of the
Area of Interest or any workings on or in the Area of Interest used by Golden
Queen or otherwise. Golden Queen will defend Optionor and Company at Golden
Queen's own cost and expense from any such liability or asserted liability,
including any State or Federal worker's compensation claims.
Golden Queen will post and keep posted in conspicuous places on the Area
of Interest as many written notices as may be necessary to adequately notify
all persons who may come within or on the Area of Interest, that Golden Queen
is liable for all labor performed and supplies and materials used by Golden
Queen in and on the Area of Interest, and that Golden Queen shall be
responsible for all debts and expenses incurred in mining operations in or on
the Area of Interest, and that the interest of the Company shall not be
subject to any liens, claims, or encumbrances arising in connection with
occupancy or any operations on the Area of Interest.
In case of loss, the money realized from any insurance shall be applied
toward the reconstruction of the Area of Interest, and if insufficient, any
additional sum required to repair or replace the Area of Interest shall be
paid by Golden Queen.
Should any legal proceedings that would interfere with the possession
and enjoyment of the Area of Interest be instituted, Golden Queen shall not
attempt to hold Optionor or Company liable in damages or otherwise on account
of any such disturbance or interruption in Golden Queen's possession and
enjoyment of the premises.
ARTICLE XIII
LIABILITY FOR DAMAGE TO LAND
Golden Queen shall be responsible for any fire or damage that may occur
to the Area of Interest, except such as may clearly occur by conditions of
Force Majeure.
During the term of this Agreement, Golden Queen agrees to keep the Area
of Interest free from contamination by properly and legally disposing of all
used greases, solvents, paints, fuels, chemicals and other liquid and solid
wastes in accordance with government regulations. Golden Queen shall xxxx no
responsibility for contamination of said premises which occurred before
Agreement takes affect or after it is terminated.
Golden Queen agrees to comply fully with all Air, Noise and Water
pollution Regulations. Processing equipment shall have appropriate pollution
control equipment for dusts and particulate matter. Engines shall be muffled
and no liquid or solid waste shall be disposed of which will pollute waters.
ARTICLE XIV
LIABILITY FOR LABOR AND MATERIALS
Golden Queen shall furnish and pay for labor, power, tools, equipment,
powder, timber and other materials, services and supplies that may be used by
it in the prosecution of any work under this Agreement.
ARTICLE XV
TERMINATION BY GOLDEN QUEEN
A. NOTICE OF CANCELLATION
Golden Queen expressly reserves the right, notwithstanding any previous
royalty payment or payments, to cancel and terminate this Agreement at any
time with respect to the Area of Interest by giving or mailing, return
receipt requested, to the Optionor written notice at least fifteen (15) days
prior to the termination date specified in said notice. Upon such
cancellation, all obligations of Golden Queen to purchase the Stock shall
forthwith cease except as to any obligations accruing but unsatisfied prior
to the termination date. Optionor shall be entitled to retain all monies
theretofore paid by Golden Queen. However, Golden Queen shall not have any
right to cancel and terminate this Agreement after it has received all of the
issued and outstanding Stock of the company or made full payment of
$1,600,000.00 to Optionor.
B. WRITTEN RELINQUISHMENT
In the event of any such cancellation or termination, and upon the
request of Optionor, or Company, Golden Queen shall make, execute,
acknowledge and deliver to Optionor or Company an appropriate written
relinquishment of any and all Golden Queen's right, title, and interest in
the Area of Interest.
ARTICLE XVI
TERMINATION BY OPTIONOR
If any payment, or any portion of a payment, or any tax, or portion of a
tax, remains unpaid after the expiration of five (5) days from the time when
written noted of default is given by Optionor, or if Golden Queen fails to
perform any of the non monetary terms, covenants or conditions required to be
performed, pursuant to this Agreement, after the expiration of ten (10) days
from the time when written notice of default is given by Optionor, Optionor
in its sole and absolute discretion may terminate this Agreement.
Notwithstanding the foregoing paragraph, except for default in the
payment or monies, provided that Golden Queen shall commence substantial
efforts to cure such default or thereafter within a reasonable time prosecute
to completion with diligence and continuity the curing of such default, or
shall have contested and challenged the alleged non-monetary default within
ten (10) days from its receipt of written notice of default, and further
providing that no such non-monetary default, contest or challenge lasts
longer than eight (8) months, then Optionor shall not terminate this
Agreement. Thereafter Optionor may in their sole and absolute discretion
terminate this Agreement and, all Golden Queen's rights and privileges
arising under this Agreement shall terminate, and the option to purchase the
Stock shall expire and be of no effect.
Notwithstanding the foregoing, either (a) the appointment of a receiver
to take possession of all or substantially all of the assets of Golden Queen,
or (b) a general assignment by golden Queen for the benefit of creditors, or
(c) any action taken or suffered by Golden Queen under any insolvency or
bankruptcy act shall constitute a breach of this Agreement by Golden Queen,
and shall, at the option of Optionor, terminate this Agreement.
In any such event, Optionor or the Company may subsequently, without
further demand or notice, enter on and into possession of the Area of
Interest, and Golden Queen shall deliver peaceable possession to Optionor or
Company.
On Optionor re-entry on the Area of Interest, Golden Queen and all
persons claiming under Golden Queen shall be completely excluded from the
Area of Interest and Golden Queen shall deliver peaceable possession to
Optionor or Company.
The re-entry shall not work a forfeiture of the rents, royalties or
taxes or any other sums to be paid at the time of the re-entry or thereafter
by Golden Queen.
ARTICLE XVII
RE-DELIVERY OF AREA OF INTEREST
Upon termination of this Agreement, Golden Queen shall deliver to
Optionor the Area of Interest with all its appurtenances and improvements
whether made or erected by Golden Queen or by some other person, including
all sluice-boxes, with all sluice-ways, shafts, tunnels, and other passages,
thoroughly clear of rubbish and drained, and the mine in all respects ready
for continued immediate working, without demand or further notice or demand.
Such re-delivery of the Area of Interest shall be made free and clear of any
and all liens, claims, and encumbrances. The Area of Interest shall be
redelivered free and clear of all cyanide pads and other chemicals. The Area
of Interest shall be redelivered in full compliance with all federal, state,
and local laws and ordinances, including without limitation all Environmental
Protection Agency standards and regulations.
ARTICLE XVIII
REMOVAL OF EQUIPMENT
Upon any termination or expiration of this Agreement, Golden Queen shall
have a period of three (3) months from and after the effective date of such
termination or expiration in which to remove from the Area of Interest all of
its, and only its, machinery, buildings, structures, facilities, equipment
and other property of every nature and description erected, placed or
situated thereon, except supports, track and pipe placed in shafts, drifts or
openings in the Area of Interest. Any property of Golden Queen not so removed
at the end of said three (3) month period shall upon the election of Optionor
or Company, become the property of Company; provided, however, that Golden
Queen does not warrant, either expressly or impliedly, any such property as
to its useability. Any property Company does not elect to become its property
may be removed by Optionor or Company, and the cost or removal charged to
Golden Queen. Golden Queen shall have the right to keep a watchman on the
Area of Interest during said three (3) month period.
ARTICLE XIX
FORCE MAJEURE
Golden Queen shall not be deemed in default or to have ceased
performance or operations hereunder during any period in which performance or
operations are prevented by any cause reasonably beyond Golden Queen's
control, each of which cause is called "force majeure". Force majeure shall
include, without limitation, the following: fire, flood, windstorms and other
damage from the elements; acts, laws, regulations or orders of any
governments or agencies acting under semblance of authority. All periods of
force majeure shall be deemed to begin at the time Golden Queen stops
performance or operations hereunder by reasons of force majeure, and Golden
Queen shall notify Optionor in writing of the beginning and ending date of
each such period. The period for discharging Golden Queen's obligations with
respect to any prevented performance shall be extended for the period of
force majeure. However, any act of force majeure which lasts longer than
eight (8) months shall give to Optionor in its sole and absolute discretion
the right to terminate this Agreement.
ARTICLE XX
INUREMENT
The terms, provisions, covenants and agreements herein contained snail
extend to and be binding upon and inure to the benefit or the successors and
assigns of the parties hereto.
ARTICLE XXI
AGREEMENT NOT ASSIGNABLE
Golden Queen shall not have the right to transfer or assign, by
operation of law or otherwise, including without limitation the Bankruptcy
laws, all or any part of this Agreement, or the benefits or burdens under
this Agreement, without the prior written consent of Optionor, which consent
will not be unreasonably withheld. Any violation of this covenant shall
authorize an immediate termination, forfeiture and/or cancellation of this
Agreement by Optionor in its sole and absolute discretion.
ARTICLE XXII
MEMORANDUM OF EXPLORATION AGREEMENT WITH
OPTION TO PURCHASE
Whenever requested so to do by Golden Queen, a memorandum of this
Agreement, with the written consent of Optionor, which consent shall not be
unreasonably withheld by Optionor, may he recorded by Golden Queen.
ARTICLE XXIII
CONFIDENTIALITY
Except as required by law or governmental authority, Golden Queen and
Optionor shall not, without mutually agreed written consent of the other
disclose any information, including the terms of this Agreement, it may
obtain with respect to the results of the operations hereunder, nor issue any
press release concerning the operations; provided, however, that if Optionor
contemplates selling or assigning its interest, it shall have the right to
disclose such information to a potential purchaser if it first obtains an
agreement in writing, reasonably satisfactory to Golden Queen, from such
third partly and burnishes a copy of such agreement to Golden Queen that the
third party shall hold confidential the information furnished to it.
ARTICLE XXIV
CONSTRUCTION OF AGREEMENT
This Agreement shall constitute the sole understanding of the parties
with respect to the subject matter hereof, and no modification or alteration
of any terms shall be binding unless such modifications or alteration shall
be in writing and properly executed. This Agreement shall be governed and
construed in accordance with the laws or the State of California.
ARTICLE XV
BOORS AND RECORDS
Golden Queen shall furnish Optionor all necessary information that
Optionor may require to assure it that it is receiving the payments to which
it is entitled under this agreement.
Optionor shall have the right to inspect, examine, and make copies of
the books and records of Golden Queen at least every month, so as to enable
Optionor to satisfy themselves that they are receiving their proper payments,
including without limitation payments for their one percent (1%) production
royalty. Golden Queen shall provide upon request all documentation, including
without limitation financial documentation, regarding production, production
locations, values, assay reports and all other documentation, relating to the
payments set forth in Article III, including without limitation, documents
and reports relating to the aforesaid royalty.
ARTICLE XXVI
INVESTIGATION OF PREMISES
Golden Queen accents the Area of Interest in its existing condition.
Golden Queen acknowledges that Golden Queen has made an investigation to
determine existing conditions, limitation of the areas involved, equipment
necessary to conduct complete operations, laws affecting performance under
this Agreement, Optionor and Company knowledge of prior mining, location of
old works and latent dangers and dangerous conditions.
OPTIONOR AND COMPANY MAKES NO IMPLIED OR EXPRESS WARRANTY OR
REPRESENTATION CONCERNING THE EXISTENCE, QUANTITY, QUALITY, MINEABILITY OR
MERCHANTABILITY OF THE AREA OF INTEREST, TITLE THERETO OR OTHERWISE.
GOLDEN QUEEN COVENANTS AND AGREES THAT NO REPRESENTATIONS, STATEMENTS OR
WARRANTIES, EXPRESS OR IMPLIED, HAVE BEEN MADE BY OR ON BEHALF OF OPTIONOR OR
COMPANY REGARDING THE AREA OF INTEREST, THEIR CONDITION, THE USE OR
OCCUPATION THAT MAY BE MADE THEREOF OR THE INCOME THEREFROM.
Optionor and Company shall not assume or be liable for any loss incurred
by Golden Queen under this Agreement.
Optionor and Company do not assume any responsibility or liability for
the present or future condition of the Area of Interest.
Optionor and Company shall not be liable to Golden Queen for any damage
to or destruction of the Area of Interest or Golden Queen's property or the
property of any other person due to fires, floods or any other accident or
natural catastrophe that occurs on or within the Area of Interest.
ARTICLE XXVII
DISPUTE AS TO OWNERSHIP OF SURFACE LANDS
If Company is the owner of the minerals and mining rights only on the
Area of Interest, the rights granted shall be limited to such as Company has
in connection with the mining of minerals, and this Agreement shall not be
effective unless and until an appropriate release acceptable to Optionor,
Company, and Golden Queen has been obtained from the surface owner by Golden
Queen and furnished to Optionor and Company.
If there is any dispute as to the ownership of or rights in any surface
lands under this Agreement, or as to the ownership of or extent of the
mineral and mining rights in any lands under this Agreement, Golden Queen
shall discontinue the use of the surface or of the mineral, either or both,
as the case may be, until the dispute shall have been settled.
ARTICLE XXVIII
MODIFICATION AND EFFECT OF AGREEMENT
This Agreement may not be changed orally, but only by agreement in
writing signed by the parties.
This Agreement shall extend to and bind the heirs, assigns, successors,
parents, and personal representatives of the parties.
ARTICLE XXIX
WAIVER OF BREACH; REMEDIES
No waiver of any breach of any term or covenant in this Agreement shall
be construed to be a waiver of the term or covenant itself, or of any
subsequent breach of this Agreement. The rights, power, privileges and
remedies of the Optionor provided in this Agreement are cumulative and not
exclusive of any right, power, privilege or remedy provided at law or in
equity.
ARTICLE XXX
ATTORNEYS' FEES
If either Golden Queen, Optionor, or Company shall bring an action
against the other by reason of the breach of any covenant, provision of
condition hereof, or otherwise arising out of this Agreement the unsuccessful
party shall pay to the prevailing party all attorneys' fees and costs
actually incurred by the prevailing party, in addition to any other relief to
which it may be entitled.
ARTICLE XXXI
GOVERNING LAW AND VENUE
This Agreement is to be governed by and construed in accordance with the
laws of the State of California. Any suit brought hereon shall be brought in
the state or federal courts sitting in Los Angeles, California, the parties
hereto hereby waiving any claim or defense that such forum is not convenient
or proper. Each party hereby agrees that any such court shall have in
personam jurisdiction over it and consents to service or process in any
manner authorized by California law.
ARTICLE XXXII
NOTICES
Notwithstanding anything herein contained to the contrary, any other
notice or communication required or permitted hereunder shall be in writing
and shall be effective when personally delivered or when addressed:
If to Optionor: Xxx. Xxxxxxxx Xxxx
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
If to Golden Queen: Golden Queen Mining Company Inc.
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
and deposited, postage prepaid, and registered or certified with return
receipt requested, in the United States mail. Either Optionor or Golden Queen
may, by notice given to the other as aforesaid, change its mailing address
for future notices hereunder.
ARTICLE XXXIII
CAPTIONS
The captions, titles and subtitles, of the various Articles of this
Agreement are listed for convenience only and shall not be deemed to be a
part of this Agreement.
ARTICLE XXXIV
SEVERABILITY
In the event that any term, provision, or covenant of this Agreement, or
the application of any such term, provision, or covenant to any person or
circumstances, shall be determined to be invalid, unlawful or unenforceable
to any extent, the remainder of the Agreement, and the application of such
term, provision, or covenant to persons or circumstances other than those as
to which it is determined to be invalid, unlawful or unenforceable, shall not
be affected and shall continue to be enforceable to the fullest extent
permitted by law.
ARTICLE XXXV
INTEGRATION
This Agreement, including the Exhibits hereto, sets forth the entire
understanding of the parties hereto and supersedes all other agreements and
understandings between the parties relating to the subject matter hereof.
ARTICLE XXXVI
TIME
Time is of the essence of this Agreement.
ARTICLE XXXVII
THIRD PARTY BENEFICIARIES
Other than the Company, there are no third party beneficiaries to their
Agreement. Nothing in this Agreement, express, or implied, is intended to
confer upon any party other then the parties hereto and the Company, or their
respective assigns any rights, remedies, obligations, or liabilities under or
by reason of their Agreement, except as expressly provided in this Agreement.
ARTICLE XXXVIII
COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this instrument, in
person or by duly authorized officer, as of the day and year first above
written.
Optionor
Date: Effective as of April 1, 1995
By: s/ Xxxxx X. Xxxxx
--------------------------------
By: s/ Xxxxxxxx X. Xxxxx, by Xxxxxxx X. Xxxxx,
--------------------------------
Attorney-In-Fact
By: s/ Xxxxxxx X. Xxxxxxx
--------------------------------
By: s/ Xxxxxxx X. Xxxxxxx
--------------------------------
By: s/ Xxxx X. Xxxxxxx
--------------------------------
By: s/ Xxxxxxxx X. Xxxx
--------------------------------
By: s/ Xxxxxxx X. Xxxxx
--------------------------------
By: s/ Xxxxxx X. Xxxxx
--------------------------------
GOLDEN QUEEN MINING COMPANY, INC.
Date: April 1, 1995 By: s/ Xxxx X. Xxxxx
------------------------------
Its: PRESIDENT
