Exhibit 10.2
AGREEMENT
Agreement dated July 22, 1997, by and between X. X. XXXXX & ASSOCIATES,
INC., a Nevada corporation ("Welsh") and GOLDEN PHOENIX MINERALS, INC., a
corporation ("Golden Phoenix").
RECITALS
x. Xxxxx is a party to a joint venture with Cambior Exploration USA,
Inc. A copy of the joint venture letter of intent, which defines the parties'
respective interests in 222 unpatented mining claims located in Mineral County,
Nevada, is attached hereto as Exhibit "A." Welsh's interest in the joint venture
is hereinafter referred to as the "Interest."
x. Xxxxx and Golden Phoenix entered into a letter agreement, dated June
20, 1997, according to which Golden Phoenix agreed to purchase the Interest in a
series of transactions according to a stipulated schedule.
c. This Agreement defines the specific terms according to which Golden
Phoenix will purchase the Interest and the relationship of the parties pending
the purchase of the entire Interest.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale of Interest. Welsh agrees to sell the Interest to
Golden Phoenix for the aggregate price of $1,600,000 USD. The sale of the
Interest shall be in stages according to the following schedule, with Golden
Phoenix owning the percentage of the interest purchased upon payment of the
purchase price for the percentage of the Interest purchased. Subject to the
terms of Section 3 of this agreement, each payment shall be cash or other good
funds. The designated schedule is as follows:
Payment Date Payment Amount Cumulative Amount % Ownership
------------ -------------- ----------------- -----------
July 22, 1997 $250,000 to Welsh
$100,000 to Camboir(1) $350,000 25%
Jan. 1, 1998 $ 50,000 to Welsh
$100,000 to Cambior $500,000 30%
June 1, 1998 $100,000 to Welsh $600,000 35%
Jan. 1, 1999 $200,000 to Welsh $800,000 50%
June 1, 1999 $200,000 to Welsh $1,000,000 65%
Jan. 1, 2000 $300,000 to Welsh $1,300,000 80%
June 1, 2000 $300,000 to Welsh $1,600,000 100%
2. Payment of Purchase Price and Assignment. Upon each payment date,
Golden Phoenix shall deliver to Welsh cash or good funds in the payment amount
(or if Welsh agrees to accept shares of stock, certificates for such shares
issued in the name of Welsh). On any date when a payment to Cambior is due, a
cashier's or bank check payable to Cambior shall be delivered to Welsh, which
shall, in turn, deliver it to Cambior. Upon receipt of each payment, Welsh shall
execute and deliver to Golden Phoenix an assignment of the percentage of the
Interest purchased by Golden Phoenix.
3. Stock in Lieu of Cash. Welsh agrees to accept 50,000 shares of
unrestricted shares of common stock of Golden Phoenix at an agreed upon price of
$2.00 per share as a portion ($100,000.00 of the $250,000.00 payable to Welsh)
of the July 18, 1997, payment to Welsh.
At any time following the January, 1998, payment, Golden Phoenix may
propose that a portion of any of the foregoing payments be made in unrestricted
common stock of Golden Phoenix, at the market value of the common stock at close
of the market on the day preceding the payment due date. If there is a
difference between "bid" and "ask" prices of the common stock, the "bid" price
shall be the value of the stock. Welsh agrees to consider any such proposal, but
shall not be obligated to accept stock in lieu of cash.
4. Interest Subject to Joint Venture Agreement. Golden Phoenix
acknowledges that any percentage of the Interest purchased pursuant to this
agreement is subject to the terms and conditions of the joint venture letter of
intent between Welsh and Cambior, and agrees to be bound by the terms of said
joint venture letter of intent.
5. Default. In the event that Golden Phoenix shall fail to make any
payment on the date it is due, Welsh may terminate Golden Phoenix' right to
purchase any additional percentage(s) of the Interest by giving Golden Phoenix
written notice of default. Unless the default is cured within 10 days following
the date of service of the notice of default, any right to purchase an
additional percentage of the Interest shall terminate without further notice to
Golden Phoenix, and Welsh shall hold the remaining percentage of the Interest
free of any right of Golden Phoenix to acquire the remaining percentage of the
Interest.
6. Payment Extension. If the January 1, 1998, payment is made to Welsh
and Cambior as specified, Golden Phoenix will obtain the right to extend the
payment date of one future payment by 60 calendar days. In order to exercise
this one-time extension right, Golden Phoenix must provide written notice to
Welsh a minimum of 15 days prior to the payment due date that it wishes to
extend. If the payment, and a late payment fee of 1.5% per month on the total
amount of the extended payment, is not delivered to Welsh within the 60-day
extension period, it shall constitute a default under Section 5 of this
Agreement. If any payments are due to third parties or to maintain claims during
the 60-day extension period, Golden Phoenix will make its proportionate share of
any such payment when due.
7. Termination of Cambior Interest. The joint venture letter agreement,
at Paragraph 1(c), gives Cambior the option to terminate the joint venture
agreement on sixty (60) days written notice. If the joint venture agreement is
so terminated before completion of Cambior's initial payment (as defined in the
joint venture agreement), it is deemed a withdrawal by Cambior.
If Cambior gives notice of termination to Welsh, Welsh shall provide
written notice of the termination to Golden Phoenix. Golden Phoenix shall,
within 30 days of such notice, elect to continue to purchase the Interest and
agree to pay all underlying royalty and claim payments, or cease purchasing
additional percentages of the Interest and pay only its proportionate share of
royalty and claim payments. If Cambior terminates the joint venture and
withdraws, Welsh and Golden Phoenix agree to execute a written joint venture
agreement to define their respective rights and duties with respect to the joint
venture property.
8. Exercise of Option. The joint venture letter agreement provides that
upon completion of Cambior's initial contribution, including the production of a
bankable feasibility study, Welsh will have a one time option to elect to
participate with a thirty percent (30%) participating interest in the Joint
Venture and to contribute thirty percent (30%) of all future financing, or elect
one of two royalty interests in lieu of a continuing participating interest.
(See Section 2 of the joint venture letter agreement).
If given notice to make such election, Welsh and Golden Phoenix shall
use their best efforts to obtain Cambior's approval to have Welsh and Golden
make independent elections as to how their respective interests are treated. If
such approval is not obtained, the parties shall use their best efforts to agree
as to the option to be elected. If the parties are unable to agree, the party
with the highest percentage interest, at the time the election is made, shall be
entitled to designate the option to be elected. If the parties proceed with a
participating interest, the interest of each party shall be subject to standard
industry dilution for an election by a party not to contribute to an approved
program.
9. Right of First Refusal. Golden Phoenix hereby grants Welsh a right
of first refusal to purchase any Interest purchased pursuant to this agreement.
Golden Phoenix shall not transfer, or in any way dispose of the Interest, or any
part thereof, without first offering the Interest which Golden Phoenix proposes
to transfer to Welsh at a price and on terms identical to those of the proposed
transfer.
If Golden Phoenix proposes to transfer any part of the Interest
purchased pursuant to this agreement to any other person or entity, a notice of
intent to transfer shall be delivered to Welsh. The notice of intent to transfer
(which shall include any executed counterparts of transfer documents) must name
the proposed transferee and specify the Interest to be transferred, the price,
and the terms of payment. For a period beginning with the date on which the
notice of intent to transfer is delivered to Welsh, and ending 30 days
thereafter, Welsh shall have the option to purchase the Interest at the price
and on the terms stated in the notice.
If Welsh does not elect to purchase the full Interest described in the
notice of intent to transfer, Golden Phoenix shall not be required to sell the
specified Interest to Welsh, but may sell or transfer the specified Interest to
the proposed transferee under the terms and for the price stated in the notice
of intent to transfer. Provided, however, that nothing in this section shall
authorize any transfer prohibited by the terms of the Joint Venture Agreement.
10. Representations and Warranties.
(a) Capacities of Parties: Welsh and Golden Phoenix each represent and
warrant as follows:
(i) That it is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation, and that it is qualified to do business and is in good
standing in those jurisdictions where necessary in order to carry out
the purposes of this agreement;
(ii) That it has all requisite capacity to enter into and
perform this Agreement and all transactions contemplated herein, and
that all corporate actions required to authorize it to enter into and
perform this Agreement have been properly taken; and
(iii) That this Agreement has been duly executed and delivered
by it and is valid and binding upon it in accordance with its terms,
and that the person(s) executing this Agreement are duly authorized to
execute this agreement.
(b) Title to Assets: Welsh makes the following representations and
warranties to Golden Phoenix:
(i) Welsh has good and marketable title to the Interest, free
and clear of any and all liens, mortgages, pledges, and encumbrances or
rights of third parties;
(ii) Welsh has full authority to assign the Interest to Golden
Phoenix; and
(iii) There are no known pending or threatened actions, suits,
proceedings, or notices of default which apply to the Interest.
(c) Golden Phoenix Stock: Golden Phoenix makes the following
representations and warranties to Golden Phoenix:
(i) The 50,000 shares of common stock of Golden Phoenix to be
issued to Welsh as a portion of the July 18, 1997 purchase price will,
at time of delivery, be duly authorized and issued by Golden Phoenix;
and
(ii) Said shares will not be subject to any restrictions on
sale, are duly registered under the Securities Act of 1933, and can be
sold or transferred by Welsh without violating any state or federal
securities laws or regulations.
11. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, the breach hereof, or the rights or liabilities of any party
hereunder, shall, unless resolved by agreement of the parties, be referred to
and finally settled by arbitration. The arbitration shall be held at Reno,
Nevada, and shall be conducted in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered may be entered in any court having jurisdiction or application
may be made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
12. Attorney's Fees. Should any arbitration (or litigation) be
commenced between the parties hereto concerning the Interest, this Agreement, or
the rights and duties of either in relation thereto, the party, Welsh or Golden
Phoenix, prevailing in such litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum as and for its attorney's
fees which shall be determined by the trier of fact or in a separate proceeding
brought for that purpose.
13. Entire Agreement. This instrument contains the entire agreement
between Welsh and Golden Phoenix respecting the Interest, and any other
agreement or representation respecting the Interest or the duties of either
party in relation thereto not expressly set forth in this instrument is null and
void.
14. Notices. Unless otherwise provided herein, any notice, tender, or
delivery to be given hereunder by either party to the other may be effected by
personal delivery, U.S. mail, or facsimile transmission. Mailed notices shall be
addressed as set forth below and facsimile transmissions shall be direct to the
numbers set forth below, but each party may change its address or fax number by
written notice in accordance with this paragraph.
Notices shall be addressed or transmitted as follows:
If to Welsh:
Xx. Xxxx X. Xxxxx
X. X. Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxx.
Xxxxxx, XX 00000
Fax No. (000) 000-0000
If to Golden Phoenix:
Golden Phoenix Minerals, Inc.
0000 Xxxxxx Xx. Xxxxx 000
Xxxx, Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxxx
Fax No. (000) 000-0000
15. Binding Effect. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of the parties.
16. Choice of Law. This Contract of Sale shall be governed by the laws
of the State of Nevada.
17. Time of Essence. Time is of the Essence for purposes of this
Agreement.
18. Additional Documents. Welsh and Golden Phoenix agree to execute and
deliver such additional documents as may be reasonably required to carry out the
terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement the day and year first above written.
Golden Phoenix: Welsh:
GOLDEN PHOENIX MINERALS, INC. X. X. XXXXX & ASSOCIATES, INC.
By /s/ XXXXXXX XXXXXXXXXXX By /s/ XXXX X. XXXXX
-------------------------------- --------------------------------
XXXXXXX XXXXXXXXXXX, President XXXX X. XXXXX, President
