SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-SB
Under the Securities Exchange Act of 1934
GOLDEN QUEEN MINING CO. LTD.
(Exact name of registrant as specified in its charter)
Province of British Columbia Not Applicable
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
Green Flag Building, Suite 211-A
104 South Freya
Spokane, Washington 99202
(Address of principal executive offices)
Registrant's telephone number, including area code: (509) 535-4022
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
without par value
<PAGE>
PART III
Items 1 and 2. Exhibits.
The following exhibits are filed as part of this registration statement.
Exhibit No.
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3.1 Certificates and Articles of Incorporation of the
Registrant under the Company Act of British Columbia,
as amended. Filed herewith.
10.1 Warrant Indenture dated May 23, 1996 between the
Registrant and Montreal Trust Company of Canada,
as trustee. Filed herewith.
10.2 Employment agreement dated April 2, 1996 among
the Company, Castle Group, Inc. and Steven W.
Banning. Filed herewith.
10.3 Employment agreement dated May 8, 1996 between
the Company and Richard W. Graeme. Filed herewith.
10.4 Employment agreement dated May 24, 1996 between
the Company and Bernard F. Goodson. Filed herewith.
10.5 Lease dated October 20, 1994 between the Subsidiary
and William J. Warner with respect to certain property
within the project area. Filed herewith.
10.6 Lease dated September 19, 1994 between the Subsidiary
and Western Centennials, Inc. with respect to certain
property within the project area. Filed herewith.
10.7 Purchase agreement dated March 8, 1995 between the
Subsidiary and William and Dorothy Meier with respect
to the acquisition by the Subsidiary of certain property
within the project area. Filed herewith.
10.8 Stock option purchase agreement dated April 1, 1995
between the Subsidiary and Grace W. Meehl, Madge W.
Wolff, Stephen G. Wegmann, Michael L. Wegmann, John G.
Hodgson, Virginia L. Sigl, Patrick L. Wolff and George P.
Wolff with respect to the acquisition by the Subsidiary
of an option to purchase all of the outstanding shares
of KWC. Filed herewith.
10.9 Purchase agreement dated September 22, 1995 between
the Subsidiary and the Paveen Gupta Medical Corporate
Defined Benefit Pension Plan with respect to the
acquisition by the Subsidiary of certain property within
the project area. Filed herewith.
10.10 Purchase agreement dated March 29, 1996 between the
Subsidiary and the Meehl Family Trust and others with
respect to the acquisition by the Subsidiary of certain
property within the project area. Filed herewith.
10.11 Mineral exploration agreement and option to lease or
purchase dated January 25, 1996 between the
Soledad-Mojave Mining Syndicate and the Subsidiary with
respect to the potential acquisition by the Subsidiary
of 129.5 hectares of fee land within the project area.
Filed herewith.
10.12 Purchase agreement dated August 1, 1996 between the
Subsidiary and Southwestern Refining Corporation with
respect to the acquisition by the Subsidiary of certain
property and mill tailings within the project area.
Filed herewith.
21.0 Subsidiaries of the Registration. Previously filed as
Exhibit 21.0 to Registrant's registration statement
on Form 10-SB.
24.0 Power of attorney and consent on Form F-X. Previously
filed as Exhibit 24.0 to Registrant's registration
statement on Form 10-SB.
27.0 Financial Data Schedule. Previously filed as
Exhibit 27.0 to Registrant's registration statement
on Form 10-SB.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on this behalf
by the undersigned, thereunto duly authorized.
GOLDEN QUEEN MINING CO. LTD.
By: /s/ Bernard F. Goodson
-----------------------------------------
its Vice President of
Administration and Controller
Dated: December 31, 1996
Exhibit 3.1
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 300709
Province of British Columbia
Ministry of Consumer and Corporate Affairs
REGISTRAR OF COMPANIES
COMPANY ACT
Certificate of Incorporation
I HEREBY CERTIFY THAT
GOLDEN QUEEN MINING CO. LTD.
HAS THIS DAY BEEN INCORPORATED UNDER THE COMPANY ACT
GIVEN UNDER MY HAND AND SEAL OF OFFICE
AT VICTORIA, BRITISH COLUMBIA,
THIS 21ST DAY OF NOVEMBER, 1985
M. A. JORRE DE ST. JORRE
REGISTRAR OF COMPANIES
<PAGE>
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
Certificate of
Incorporation No. 300709
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned
Company on the date stated:
NAME OF COMPANY: GOLDEN QUEEN MINING CO. LTD.
DATE RESOLUTION PASSED: May 30, 1986
Resolution:
"RESOLVED, as a Special Resolution, that the existing Articles of
the Company, as filed with the Registrar of Companies, be altered
by deleting all the provisions thereof and that all the provisions
in the set of Articles attached hereto and marked Schedule A be
adopted as the Articles of the Company."
CERTIFIED A TRUE COPY THE 9th DAY OF JULY, 1986.
Davis & Company (Signature) s/
2800 Park Place ----------------------------
666 Burrard Street
Vancouver, B.C. Solicitor
V6C 2Z7 ----------------------------
(Relationship to Company)
FILED and REGISTERED
JUL 22 1986
M.A. Jorre De St. Jorre
Registrar of Companies
<PAGE>
SCHEDULE A
ARTICLES
of
GOLDEN QUEEN MINING CO. LTD.
PART 1 TABLE OF CONTENTS
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1.1
PART ARTICLE PAGE
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1 TABLE OF CONTENTS 1
2 INTERPRETATION 1
3 SHARES 2
4 BRANCH REGISTERS 3
5 TRANSFER AND TRANSMISSION OF SHARES 3
6 PURCHASE AND REDEMPTION OF SHARES 4
7 GENERAL MEETINGS 4
8 VOTING OF MEMBERS 6
9 DIRECTORS 8
10 POWERS AND DUTIES OF DIRECTORS 9
11 DISCLOSURE OF INTEREST OF DIRECTORS 10
12 PROCEEDINGS OF DIRECTORS 13
13 EXECUTIVE AND OTHER COMMITTEES 11
14 OFFICERS 12
15 INDEMNITY AND PROTECTION OF DIRECTORS,
OFFICERS AND EMPLOYEES 12
16 DIVIDENDS AND RESERVE 13
17 DOCUMENTS, RECORDS AND REPORTS 14
18 NOTICES 14
19 SEAL 15
PART 2 INTERPRETATION
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2.1. These Articles are subject to the provisions of the "Company Act"
and any reference herein to the "Companies Act" shall be a reference to the
"Company Act".
2.2. In these Articles, unless there is something in the
subject or context inconsistent herewith:
"Board" and "Directors" or "directors" mean the Directors or sole
Director of the Company for the time being.
"Companies Act" means the Companies Act of the Province of British
Columbia from time to time in force and includes the regulations made
pursuant thereto.
"registered owner", "registered holder", "owner" or "holder" when used
with respect to a share in the authorized capital of the Company means
the person registered in the register of members in respect of such
share.
2.3. A reference to writing includes any visible form of representing or
reproducing words.
2.4. Words importing the singular or plural, a person or corporation, or
the masculine, feminine or neuter gender shall include the other or others of
them respectively as the context requires.
2.5. The meaning of any words or phrases defined in the Companies Act
shall, if not inconsistent with the subject or context bear the same meaning
in these Articles.
PART 3 SHARES
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3.1. The shares in the Company shall be under the control of the
Directors who may, subject to the rights of the holders of any shares, allot,
issue, or otherwise deal with them, at such times to such persons (including
Directors) in such manner, at such price or consideration, upon such terms
and conditions, as they, in their discretion, may determine.
3.2. The Directors on behalf of the Company may pay a commission or
allow a discount to any person in consideration of his subscribing or
agreeing to subscribe, whether absolutely or conditionally, for any shares in
the Company or procuring or agreeing to procure subscriptions, whether
absolutely or conditionally, for any such shares.
3.3. Except as required by law or these Articles, no person shall be
recognized by the Company as having any interest whatsoever in any share
except the registered holder thereof.
3.4. If a share is registered in the names of two or more persons they
shall be joint holders.
3.5. Neither the Company nor any transfer agent shall be liable for any
loss occasioned to the member owing to any share certificate being lost in
the mail or stolen.
3.6. A share certificate or debt obligation bearing the printed or
mechanically reproduced signature of a person shall not be invalid at its
date of issue by reason of the fact that such person shall have ceased to
hold the office he is stated to hold on such certificate or debt obligation.
PART 4 BRANCH REGISTERS
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4.1. Unless prohibited by the Companies Act, the Company may keep or
cause to be kept one or more branch registers of members or debenture holders
at such place or places as the Directors may from time to time determine.
PART 5 TRANSFER AND TRANSMISSION OF SHARES
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5.1. Subject to the provisions of the Memorandum and of these Articles,
a member may transfer any of his shares by instrument in writing executed by
or on behalf of such member and delivered to the Company or its transfer
agent. The instrument of transfer may be in the form, if any, on the back of
the share certificate representing the shares, or in such other form as the
Directors may from time to time approve. Except to the extent that the
Companies Act may otherwise provide, the transferor shall be deemed to remain
the holder of the shares until the name of the transferee is entered in the
register of members or a branch register of members in respect thereof.
5.2. The signature of the registered owner of any shares, or of his duly
authorized attorney, upon the instrument of transfer shall constitute a
complete and sufficient authority to the Company, its directors, officers and
agents to register in the name of the transferee as named in the instrument
of transfer or, if no transferee is named in the instrument of transfer, in
the name of the person on whose behalf any certificate for the shares to be
transferred is deposited with the Company for the purpose of having the
transfer registered, the number of shares specified in the instrument of
transfer or, if no number is specified, all the shares represented by all
share certificates deposited with the instrument of transfer.
5.3. Neither the Company nor any Director, officer or agent thereof
shall be bound to inquire into the title of the person named in the
instrument of transfer as transferee, or, if no person is so named, of the
person on whose behalf the certificate is deposited for the purpose of having
the transfer registered, or be liable to any person for registering or not
registering the transfer, and the transfer when registered shall confer upon
the person in whose name the shares have been registered a valid title to the
shares.
5.4. Every instrument of transfer shall be executed by the transferor
and left for registration at the registered office of the Company or at the
office of its transfer agent or registrar together with the share certificate
for the shares to be transferred and such other evidence, if any, as the
Directors or the transfer agent or registrar may require to prove the title
of the transferor to, or his right to transfer, the shares and the right of
the transferee to have the transfer registered. If the transfer is registered
all instruments of transfer and evidence shall be retained by the Company or
its transfer agent or registrar and, if the transfer is not registered, they
together with the share certificate shall be returned to the person
depositing them.
5.5. There shall be paid to the Company in respect of the registration
of any transfer such sum, if any, as the Directors may from time to time
determine.
5.6. In the case of the death of a member, his legal personal
representative, or if he was a joint holder the surviving joint holder, shall
be the only person recognized by the Company as having any title to his
interest in the shares. Before recognizing a person as a legal personal
representative the Directors may require him to obtain from a court of
competent jurisdiction a grant of letters probate or letters of
administration.
PART 6 PURCHASE AND REDEMPTION OF SHARES
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6.1. The Company may purchase any of its shares unless the special
rights and restrictions attached thereto otherwise provide.
6.2. If the Company proposes to redeem some but not all of the shares of
any class, the Directors may, subject to the special rights and restrictions
attached to such class of shares, decide the manner in which the shares to be
redeemed are to be selected.
PART 7 GENERAL MEETINGS
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7.1. The date, time and place of all general meetings of the Company
within the Province of British Columbia shall be fixed by the Directors.
7.2. All business that is transacted at a general meeting shall be
special except in the case of an annual general meeting the conduct of and
voting at such meeting, the consideration of the financial statements and the
reports of the Directors and the Auditor, a resolution to elect two or more
directors by a single resolution, the election of Directors, the appointment
of the Auditor, the fixing of the remuneration of the Auditor, such other
business as by these Articles or the Companies Act may be transacted at a
general meeting without prior notice thereof being given to the members, and
any business which is brought under consideration by the report of the
Directors; and in the case of any other general meeting, such business as
relates to the conduct of or voting at that meeting.
7.3. Except as otherwise provided by the Companies Act, where any
special business to be considered at a general meeting includes considering,
approving, ratifying, adopting or authorizing any document or the execution
thereof or the giving of effect thereto, the notice convening the meeting
shall be sufficient if, with respect to such document, it states that a copy
of the document is or will be available for inspection by members at the
registered office or records office of the Company or at such other place in
British Columbia designated in the notice during usual business hours up to
the date of such general meeting.
7.4. No business, other than the election of the chairman or the
adjournment of the meeting, shall be transacted at any general meeting unless
there is a quorum at the commencement of the meeting, but the quorum need not
continue throughout the meeting.
7.5. A quorum for a general meeting is two persons entitled to vote.
7.6. If within half an hour from the time appointed for a general
meeting there is no quorum, the meeting, if convened upon the requisition of
members, shall terminate. In any other case it shall be adjourned to the same
day in the next week, at the same time and place, and, if at the adjourned
meeting there is no-quorum within half an hour from the time appointed for
the meeting, the member or members entitled to attend and vote at the meeting
who are present or represented by proxy or other proper authority shall be
the quorum.
7.7. The Chairman of the Board, if any, or in his absence the President
of the Company or in his absence a Vice-President of the Company, if any,
shall be entitled to preside as chairman at every general meeting of the
Company.
7.8. If at any general meeting neither the Chairman of the Board nor the
President nor a Vice-President is present within fifteen minutes after the
time appointed for holding the meeting or if present is not willing to act as
chairman, the Directors present shall choose a chairman; but if all the
Directors present decline to take the chair or fail so to choose or if no
Director is present, the members present shall choose a chairman.
7.9. The chairman may, and shall if so directed by the meeting, adjourn
the meeting from time to time and from place to place, but no business shall
be transacted at any adjourned meeting other than the business left
unfinished at the meeting from which the adjournment took place. It shall not
be necessary to give any notice of an adjourned meeting or of the business to
be transacted at an adjourned meeting.
7.10. The Directors and any other person permitted by the chairman of
the meeting shall be entitled to attend any general meeting.
7.11. No motion proposed at a general meeting need be seconded and the
chairman may propose a motion.
7.12. Unless the Companies Act otherwise provides, any action to be
taken by a resolution of the members may be taken by an ordinary resolution.
PART 8 VOTING OF MEMBERS
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8.1. Subject to any special voting rights or restrictions attached to
any class of shares and the restrictions on joint holders of shares, on a
show of hands every member who is present in person and entitled to vote
thereat shall have one vote and on a poll every member present in person or
represented by proxy or other proper authority shall have one vote for each
share of which he is the registered holder.
8.2. A member, being a corporation, may appoint a proxyholder and may
also appoint a representative to act for it by delivering to the Company a
copy of a resolution of its directors or other governing body naming a person
as its representative. Such representative, subject to any restrictions
contained in the resolution, shall be entitled to exercise the same powers on
behalf of the corporation as the corporation could exercise if it were an
individual member. If the corporation is a subsidiary of the Company its
shares may not be voted and its proxyholder or representative or the
proxyholder of the representative may not be counted to make a quorum.
8.3. In the case of joint registered holders of a share the vote of the
senior who exercises a vote, whether in person or by proxyholder, shall be
accepted to the exclusion of the votes of the other joint registered holders;
and for this purpose seniority shall be determined by the order in which the
names stand in the register of members. Two or more legal personal
representatives of a deceased member whose shares are registered in his sole
name shall for the purpose of this Article be deemed joint registered
holders.
8.4. A member of unsound mind entitled to attend and vote in respect of
whom an order has been made by any court having jurisdiction may vote,
whether on a show of hands or on a poll, by his committee, curator bonis, or
other person in the nature of a committee or curator bonis appointed by that
court, and any such committee, curator bonis, or other person may appoint a
proxyholder.
8.5. A member may by proxy appoint a proxyholder to vote for him on a
poll.
8.6. In the case of an equality of votes, whether on a show of hands or
on a poll, the chairman of the meeting at which the show of hands takes place
or at which the poll is demanded shall not be entitled to a second or casting
vote.
8.7. If a poll is demanded it shall be taken either at the meeting and
of the members present in person or represented by proxy or other proper
authority at the time the poll is taken, or at such other time and in such
manner as the chairman may direct. Any business other than that upon which
the poll has been demanded may be proceeded with pending the taking of the
poll. A demand for a poll may be withdrawn.
8.8. In any dispute as to the admission or rejection of a vote the
decision of the chairman made in good faith shall be final and conclusive.
8.9. On a poll a person entitled to cast more than one vote need not, if
he votes, use all his votes or cast all the votes he uses in the same way.
8.10. A member holding more than one share in respect of which he is
entitled to vote shall be entitled to appoint one or more (but not more than
two) proxyholders to attend, act and vote for him on the same occasion. If
such a member should appoint more than one proxyholder for the same occasion
he shall specify the number of shares each proxyholder shall be entitled to
vote. A member may also appoint one or more alternate proxyholders to act in
the place and stead of an absent proxyholder.
8.11. A form of proxy shall be in writing under the hand of the
appointor or his attorney duly authorized in writing, or, if the appointor is
a corporation, either under the seal of the corporation or under the hand of
a duly authorized officer or representative of or attorney for the
corporation. A proxyholder shall be a member of the Company unless (i) the
Company is at the time a reporting company, (ii) the member appointing the
proxyholder is a corporation, (iii) the Company shall have at the time only
one member, or (iv) all the members present otherwise agree.
8.12. Unless otherwise provided by the Directors, a form of proxy and
the power of attorney or other authority, if any, under which it is signed or
a notarially certified copy thereof shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose
in the notice convening the meeting, or in the information circular relating
thereto not less than 48 hours, excluding Saturdays and holidays, before the
time of the meeting.
8.13. Except as otherwise provided by law or these Articles, a proxy
may be in any form the Directors or the chairman of the meeting approve.
8.14. A vote given in accordance with the terms of a proxy shall be
valid notwithstanding the previous death or incapacity of the member giving
the proxy or the revocation of the proxy or of the authority under which the
form of proxy was executed or the transfer of the share in respect of which
the proxy is given, provided that no notification in writing of such death,
incapacity, revocation or transfer shall have been received at the registered
office of the Company or by the chairman of the meeting or adjourned meeting
for which the proxy was given before the vote is taken.
PART 9 DIRECTORS
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9.1. The members, except as otherwise restricted by the Memorandum or
Articles, shall be entitled to elect Directors at the annual general
meetings,but the number to be elected shall be determined by the Directors.
Failing such determination the number to be elected shall be the same as the
number of Directors whose terms expire at the meeting.
9.2. The Directors may, from time to time, appoint additional directors.
9.3. A casual vacancy occurring in the Board of Directors may be filled
by the remaining Directors or Director.
9.4. A Director's term of office shall expire on the date fixed at the
time of his appointment or election and in the absence thereof on the
election of Directors either at the annual general meeting next following his
appointment or election or by the consent in writing in lieu of such meeting,
as the case may be.
9.5. A retiring Director shall be eligible for re-election.
9.6. Any Director may by written notice to the Company appoint any
person to be his alternate to act in his place at meetings of the Directors
at which he is not present or by these Articles deemed to be present unless
the Directors shall have reasonably disapproved the appointment of
such-person and given notice to that effect to the Director within a
reasonable time. Every alternate shall be entitled to attend and vote at
meetings at which the person who appointed him is not present or deemed to be
present, and, if he is a Director, to have a separate vote on behalf of the
Director he is representing in addition to his own vote. A Director may at
any time by written notice to the Company revoke the appointment of an
alternate appointed by him. The remuneration payable to such an alternate
shall be payable out of the remuneration of the Director appointing him.
9.7. The Directors may remove from office a Director who is convicted of
an indictable offense.
9.8 The remuneration of the Directors as such may from time to time be
determined by the Directors. Such remuneration may be in addition to any
salary or other remuneration paid to any officer or employee of the Company
who is a Director. The Directors shall be repaid such reasonable travelling,
hotel and other expenses as they incur in and about the business of the
Company and if any Director shall perform any professional or other services
for the Company that in the opinion of the Directors are outside the ordinary
duties of a Director or shall otherwise be specially occupied in or about the
Company's business, he may be paid a remuneration to be fixed by the Board,
or, at the option of such Director, by resolution of the members and such
remuneration may be either in addition to, or in substitution for, any other
remuneration that he may be entitled to receive. The Directors may pay a
gratuity or pension or allowance on retirement to any Director who has held
any salaried office or place of profit with the Company or to his spouse or
dependents and may make contributions to any fund and pay premiums for the
purchase or provision of any such gratuity, pension or allowance.
PART 10 POWERS AND DUTIES OF DIRECTORS
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10.1. The powers of the Company shall be exercised only by the
Directors, except those which by the Companies Act or these Articles are
required to be exercised by a resolution of the members and those referred to
the members by the Directors.
10.2. The Directors may from time to time (i) borrow money in such
manner and amount, on such security, from such sources and upon such terms
and conditions as they think fit, (ii) issue bonds, debentures and other debt
obligations either outright or as security for any liability or obligation of
the Company by any other person, and (iii) mortgage or charge, whether by way
of specific or floating charge, or give other security on the undertaking and
the whole or any part of the property and assets (both present and future) of
the Company.
10.3. The Directors may from time to time by power of attorney or other
instrument appoint any person to be the attorney of the Company for such
purposes, and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Directors under these Articles and
excepting the powers of the Directors relating to the constitution of the
Board and of any of its committees and the appointment or removal of officers
and the power to declare dividends), 'or such period, with such remuneration
and subject to such conditions as the Directors may think fit, and any such
power of attorney may contain such provisions for the protection or
convenience of persons dealing with such attorney as the Directors think fit.
Any such attorney may be authorized by the Directors to sub-delegate all or
any of the powers, authorities and discretions for the time being vested in
him.
PART 11 DISCLOSURE OF INTEREST OF DIRECTORS
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11.1. A Director shall disclose his interest in and not vote in respect
of any proposed contract or transaction with the Company in which he is in
any way directly or indirectly interested, but such Director shall be counted
in the quorum at the meeting of the Directors at which the proposed contract
or transaction is approved.
11.2. A Director may hold any office or place of profit with the
Company in addition to his office of Director for such period and on such
terms (as to remuneration or otherwise) as the Directors may determine and no
Director or intended Director shall be disqualified by his office from
contracting with the Company either with regard to his tenure of any such
other office or place of profit or as vendor, purchaser or otherwise, and no
contract or transaction entered into by or on behalf of the Company in which
a Director is in any way interested shall be voided by reason thereof.
11.3. A Director or his firm may act in a professional capacity for the
Company and he or his firm shall be entitled to remuneration for professional
services as if he were not a Director.
11.4. A Director.may be or become a director, officer or employee of,
or otherwise interested in, any corporation or firm in which the Company may
be interested as a shareholder or otherwise, and such Director shall not,
except as provided by the Companies Act or these Articles, be accountable to
the Company for any remuneration or other benefit received by him as
director, officer or employee of, or from his interest in, such other
corporation or firm, unless the Directors otherwise direct.
PART 12 PROCEEDINGS OF DIRECTORS
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12.1. Unless otherwise determined by the Directors the President shall
be the Chairman of the Board.
12.2. A Director may, and the Secretary shall on the request of a
Director, call a meeting of the Directors.
12.3 The Chairman of the Board, or in his absence the President, shall
preside as chairman at every meeting of the Directors, or if there is no
Chairman of the Board or neither the Chairman of the Board nor the President
is present within fifteen minutes of the time appointed for holding the
meeting or is willing to act as chairman, if the Chairman of the Board and
the President have advised the Secretary that they will not be present at the
meeting, the Directors present shall choose one of their number to be
chairman of the meeting.
12.4. The Directors may meet together for the dispatch or business,
adjourn and otherwise regulate their meetings as they think fit. Questions
arising at any meeting shall be decided by a majority of votes and in case of
an equality of votes the chairman shall not have a second or casting vote.
12.5. A Director may participate in a meeting of the Board or of any
committee of the Directors by means of conference telephones or other
communication facilities by means of which all Directors participating in the
meeting can hear each other and provided that all such Directors agree to
such participation. A Director participating in a meeting in accordance with
this Article shall be deemed to be present at the meeting and to have so
agreed and shall be counted in the quorum therefor and be entitled to speak
and vote thereat.
12.6. The quorum necessary for the transaction of business by the
Directors may be fixed by the Directors and if not so fixed shall be a
majority of the Board.
12.7. The Directors may if there is a quorum act notwithstanding any
vacancy.
12.8. Every act of a Director is valid notwithstanding any defect that
may afterwards be discovered in his election or appointment.
12.9. Any resolution of the Directors or of a committee thereof may be
passed with the consent in writing to the resolution of all the Directors or
the members of that committee. The consent may be in counterparts.
PART 13 EXECUTIVE AND OTHER COMMITTEES
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13.1. The Directors may appoint an Executive Committee to consist of
such member or members of the Board as they think fit. The Executive
Committee shall have all the powers vested in the Board except the power to
fill vacancies in the Board, the power to change the membership of, or fill
vacancies in the Executive Committee or any other committee of the Board and
such other powers, if any, as are specified.
13.2. The Directors may appoint one or more committees consisting of
such member or members of the Board as they think fit and may delegate to any
such committee any powers of the Board; except, the power to fill vacancies
in the Board, the power to change the membership of or fill vacancies in any
committee of the Board, and the power to appoint or remove officers appointed
by the Board.
13.3. All committees may meet and adjourn as they think fit. Questions
arising at any meeting shall be determined by a majority of votes of the
members of the committee, and in case of an equality of votes the chairman
shall have a second or casting vote.
13.4. All committees shall keep minutes of their actions and shall
cause them to be recorded in books kept for that purpose and shall report the
same to the Board at such times as the Board requires. The Directors shall
also have power at any time to revoke or override any authority given to or
acts to be done by any such committees except as to acts done before such
revocation or over-riding and to terminate the appointment or change the
membership of a committee and to fill vacancies in it. Committees may make
rules for the conduct of their business and may appoint such assistants as
they may deem necessary.
PART 14 OFFICERS
- ------- --------
14.1. The Directors may decide what functions and duties each officer
shall perform and may entrust to and confer upon him any of the powers
exercisable by them upon such terms and conditions as they think fit and may
from time to time revoke, withdraw, alter or vary any of such functions,
duties and powers.
PART 15 INDEMNITY AND PROTECTION OF DIRECTORS,
- ------- OFFICERS AND EMPLOYEES
--------------------------------------
15.1. Subject to the provisions of the Companies Act, the Company shall
indemnify a Director or former Director of the Company and the Company may
indemnify a director or former director of a corporation of which the Company
is or was a shareholder and the heir and personal representatives of any such
person against all costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, actually and reasonably incurred by
him or them in a civil, criminal or administrative action or proceeding to
which he is or they are made a party by reason of his being or having been a
Director of the Company or a director of such corporation, including any
action brought by the Company or any such corporation. Each Director on being
elected or appointed shall be deemed to have contracted with the Company on
the terms of the foregoing indemnity.
15.2. Subject to the provisions of the Companies Act, the Directors may
cause the Company to indemnify any officer, employee or agent of the Company
or of a corporation of which the Company is or was a shareholder
(notwithstanding that he may also be a Director) and his heirs and personal
representatives against all costs, charges and expenses whatsoever incurred
by him or them and resulting from his acting as an officer, employee or agent
of the Company or such corporation. In addition the Company shall indemnify
the Secretary and any Assistant Secretary of the Company if he is not a full
time employee of the Company and notwithstanding that he may also be a
Director and his respective heirs and legal representatives against all
costs, charges and expenses whatsoever incurred by him or them and arising
out of the functions assigned to the Secretary by the Companies Act or these
Articles and the Secretary and Assistant Secretary shall on being appointed
be deemed to have contracted with the Company on the terms of the foregoing
indemnity.
15.3. The failure of a Director or officer of the Company to comply
with the provisions of the Companies Act, the Memorandum or these Articles
shall not invalidate any indemnity to which he is entitled under this Part.
15.4. The Directors may cause the Company to purchase and maintain
insurance for the benefit of any person who is or was serving as a Director,
officer, employee or agent of the Company or as a director, officer, employee
or agent of any corporation of which the Company is or was a shareholder and
his heirs or personal representatives against any liability incurred by him
as such Director, officer, employee or agent.
PART 16 DIVIDENDS AND RESERVE
- ------- ---------------------
16.1. The Directors may from time to time declare and authorize payment
of such dividends, if any, as they. deem advisable and need not give notice
of such declaration to any member. No dividend shall be paid otherwise than
out of funds or assets properly available for the payment of dividends and a
declaration by the Directors as to the amount of such funds or assets
available for dividends shall be conclusive. Any dividend may be paid wholly
or in part by the distribution of specific assets and in particular by
shares, bonds, debentures or other securities of the Company or any other
corporation or in any one or more such ways as Way be authorized by the
Directors. Where any difficulty arises with regard to such a distribution the
Directors may settle the same as they see fit, and in particular may fix the
value for distribution of such specific assets or any part thereof, and may
determine that cash payment in substitution for all or any part of the
specific assets to which any member is entitled shall be made to the member
on the basis of the value so fixed in order to adjust the rights of all
parties and may vest any specific assets in trustees for the persons entitled
to the dividend.
16.2. Any dividend declared on shares of any class may be made payable
on such date as is fixed by the Directors.
16.3. If persons are registered as joint holders of any share, any one
of them may give an effective receipt for any dividend, bonus or other monies
payable in respect of the share.
16.4. Unless otherwise determined by the Directors, no dividend shall
be paid on any share which has been purchased or redeemed by the Company
while the share is held by the Company.
16.5. Any dividend, bonus or other monies payable in cash in respect of
shares may be paid by cheque. The mailing of such cheque shall, to the extent
of the sum represented thereby (plus the amount of any tax required by law to
be deducted), discharge all liability for the dividend unless the cheque is
not paid on presentation or the amount of tax so deducted is not paid to the
appropriate taxing authority.
16.6. Notwithstanding anything contained in these Articles the
Directors may from time to time capitalize any undistributed surplus on hand
of the Company and may from time to time issue shares, bonds, debentures or
debt obligations of the Company as a dividend representing such undistributed
surplus on hand or any part thereof.
PART 17 DOCUMENTS, RECORDS AND REPORTS
- ------- ------------------------------
17.1. No member of the Company shall be entitled to inspect the
accounting records of the Company unless the Directors determine otherwise.
PART 18 NOTICES
- ------- -------
18.1. Any notice required to be given by these Articles or the
Companies Act unless the form is otherwise specified may be given orally or
in writing.
18.2. A notice in writing, statement, report or other document shall
have been effectively sent or given if posted prepaid delivered, telegraphed
or cabled to the person entitled thereto at his address recorded on a
register maintained by the Company; and a certificate signed by the Secretary
or other officer of the Company or of any other corporation acting on behalf
of the Company that the notice, statement, report or other document was so
sent or given shall be conclusive evidence thereof.
18.3. A notice, statement, report or other document may be given by the
Company to the joint holders of a share by giving it to any of them.
18.4. A notice, statement, report or other document may be given by the
Company to the persons entitled to a share in consequence of the death,
bankruptcy or incapacity of a member in the same manner as the same might
have been given if the death, bankruptcy or incapacity had not occurred.
18.5. Notice of each Directors' meeting, except a Directors meeting
held immediately following an annual general meeting of which no notice shall
be required, shall be given to every Director and alternate Director except a
Director or alternate Director who has waived notice or is absent from the
Province of British Columbia.
18.6. The accidental omission to give notice of a meeting to, or the
non-receipt thereof by, any person entitled to receive notice shall not
invalidate the proceedings at that meeting.
18.7. Every notice of a meeting shall specify the place, day and time
of the meeting and if for a general meeting the general nature of all special
business intended to be conducted thereat, unless specified in an information
circular relating thereto.
18.8. A Director may waive his entitlement to receive a notice of any
past, present or future meeting or meetings of Directors and may at any time
withdraw such waiver. After the waiver is received by the Company and until
it is withdrawn no notice need be given to such Director or, unless the
Director otherwise requires in writing to the Company, to his alternate.
Meetings held without such notice being given shall not have been improperly
called by reason thereof.
18.9. Not less than two hours' notice of a Directors' meeting requiring
notice shall be given.
18.10. Where in these Articles any period of time dating from a given
day, act or event is prescribed the time shall be reckoned exclusive of such
day, act or event.
PART 19 SEAL
- ------- ----
19.1. Notwithstanding any resolution of the Directors, if the seal of
the Company is affixed and accompanied by the signature of at least one of
the Chairman of the Board, the President, a Vice-President, the Secretary, or
the Treasurer, or a Director, that shall constitute effective execution.
19.2. The Company may have an official seal for use in any other
province, state, territory or country.
19.3. The seal of the Company may, if directed by the Board, be
reproduced on any document by any means and in any form other than an
impression thereof.
<PAGE>
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
Certificate of
Incorporation No. 300709
COMPANY ACT
SPECIAL RESOLUTIONS
The following special resolutions were passed by the undermentioned
Company on the date stated:
NAME OF COMPANY: GOLDEN QUEEN MINING CO. LTD.
DATE RESOLUTIONS PASSED: October 13, 1987
Resolutions:
"RESOLVED, as a Special Resolution, that the authorized
capital of the Company be increased by the creation of
3,000,000 shares designated as Preferred shares without
par value so that the authorized capital of the Company
consists of 23,000,000 shares divided into 20,000,000
Common shares without par value, and 3,000,000 unissued
Preferred shares without par value.
RESOLVED, as a Special Resolution, that the Preferred
shares shall have attached thereto the special rights and
restrictions set forth in Appendix I attached hereto,
which shall be set forth in the Articles of the Company.
RESOLVED, as a Special Resolution, that the Memorandum of the
Company be altered by deleting paragraph 2 in its entirety and
substituting the following therefor:
'2. The authorized capital of the Company
consists of 23,000,000 shares divided into
20,000,000 Common shares without par value and
3,000,000 Preferred shares without par value.'
RESOLVED, as a Special Resolution, that the Memorandum of
the Company be altered by renumbering paragraph 3 as a
paragraph 4.
RESOLVED, as a Special Resolution, that the Memorandum of
the Company be altered by adding thereto as paragraph 3
the following:
'3. Special rights and restrictions attached to
the Preferred shares are set out in the
Articles.'"
THE MEMORANDUM AS ALTERED IS ATTACHED AS SCHEDULE A.
CERTIFIED A TRUE COPY THE 4TH DAY OF NOVEMBER, 1987.
Davis & Company (Signature) s/
2800 Park Place ----------------------------
666 Burrard Street
Vancouver, B.C. Solicitor
V6C 2Z7 ----------------------------
(Relationship to Company)
FILED and REGISTERED
NOV 09 1987
M.A. Jorre De St. Jorre
Registrar of Companies
<PAGE>
APPENDIX I
PART 20
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO
PREFERRED SHARES
-------------------------------------------
20.1 The holders of the Preferred shares shall not as such have any voting
rights for the election of Directors or for any other purpose, nor shall they
be entitled to attend shareholders' meetings or to receive notice of
shareholders' meetings.
20.2 No dividends shall be declared or paid at any time on the Preferred
shares and the holders of such shares shall not have any claim against the
Company for dividends of any kind.
20.3 The holders of the Preferred shares shall have an option exercisable in
writing by notice to the Company at any time up to March 10, 1988, to convert
all or a portion of such Preferred shares into fully paid Common shares of
the Company upon the following basis, namely, that the holder or holders of
the Preferred shares shall receive and the Company shall issue to such holder
or holders units comprised of fully paid and non-assessable Common shares of
the Company at the rate of one (1) Common share for each Preferred share so
converted together with non-transferable share purchase warrants entitling
the holder to purchase up to the same number of additional Common shares of
the Company at any time up to August 10, 1988 at the price of $1.70 per
share. The holders of the Preferred shares exercising such option shall
tender the said notice and the certificates representing the Preferred shares
to be converted and within ten (10) days of the receipt of such notice and
certificates representing the shares to be converted, the Company shall issue
and deliver the certificates for the Common shares resulting from the
conversion together with the appropriate share purchase warrants. After the
date so fixed for conversion, the said Preferred shares shall be deemed to be
converted for Common shares and the holders thereof shall cease to have any
rights in respect thereof.
20.4 Any holder of Preferred shares may, at any time up to March 10, 1988,
upon giving notice to the Company as hereinafter provided, require the
Company to redeem all or the balance of the Preferred shares held by such
holder not converted as aforesaid, on payment for each such share to be
redeemed of the issue price thereof (hereinafter called "the redemption
price"). The Directors of the Company shall upon receipt of such notice and
provided the redemption will not be in breach of any of the provisions of the
Company Act, redeem such shares at the redemption price aforesaid. In the
event all or a portion of the Preferred shares are redeemed the Company shall
be entitled to retain all accrued interest on the subscription funds for such
Preferred shares. In exercising the powers conferred by this clause, notice
shall be given as hereinafter provided and upon a redemption pursuant to such
notice, the Company shall not be required to redeem the Preferred shares of
any other holder or holders of Preferred shares. Not less than thirty (30)
days notice in writing of such redemption shall be given by mailing to the
Registered Office of the Company a notice specifying the date on which
redemption is to take place and, if part only of the Preferred shares held by
such holder is to be redeemed, the number thereof so to be redeemed. On or
after the date specified for redemption, the Company shall pay or cause to be
paid, to or for the order of such holder requiring such Preferred shares to
be redeemed, the redemption price aforesaid on presentation and surrender of
the certificate for the Preferred shares called for redemption. Such
Preferred shares shall thereupon be and be deemed to be redeemed and shall be
cancelled.
20.5 In the event of the liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, the holders of the Preferred
shares shall be entitled to receive the amount paid up thereon, before any
amount shall be paid or any property or assets of the Company distributed to
the holders of the Common shares, but shall not have any further right to
participate in the distribution of the property and assets of the Company.
<PAGE>
SCHEDULE A
Attached to the Resolutions of GOLDEN QUEEN MINING CO. LTD. passed by the
Members on the 13th day of October, 1987.
MEMORANDUM
(ALTERED)
of
GOLDEN QUEEN MINING CO. LTD.
I wish to be formed into a company with limited liability under the COMPANY
ACT in pursuance of this memorandum.
1. The name of the Company is GOLDEN QUEEN MINING CO. LTD.
2. The authorized capital of the Company consists of 23,000,000 shares
divided into 20,000,000 Common shares without par value and 3,000,000
Preferred shares without par value.
3. Special rights and restrictions attached to the Preferred shares are set
out in the Articles.
4. I agree to take the number and kind and class of shares in the Company
set opposite my name.
- ---------------------------------------------------------------------------
FULL NAME, RESIDENT ADDRESS NUMBER AND KIND AND CLASS OF
AND OCCUPATION OF SUBSCRIBER SHARES TAKEN BY SUBSCRIBER
- ---------------------------------------------------------------------------
______________________________
TOTAL SHARES TAKEN . . . . . . .
- ---------------------------------------------------------------------------
DATED the day of , 19 .
<PAGE>
GOLDEN QUEEN MINING CO. LTD.
Certificate Pursuant to Section 251(5)
of the Company Act
I, Chester Shynkaryk, President and a Director of the above Company, DO
HEREBY CERTIFY that the provisions of the COMPANY ACT have been complied with
in relation to the special resolutions of the Company dated the 13th day of
October, 1987, whereby the Company increased its authorized capital by
creating 3,000,000 Preferred shares with Special Rights and Restrictions
attached thereto.
CERTIFIED this 27th day of October, 1987.
s/ Chester Shynkaryk
------------------------------
President
214,467
<PAGE>
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
Certificate of
Incorporation No. 300709
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned
Company on the date stated:
NAME OF COMPANY: GOLDEN QUEEN MINING CO. LTD.
DATE RESOLUTION PASSED: October 13, 1987
Resolution:
"RESOLVED, as a Special Resolution, that the Articles as filed with
the Registrar of Companies be altered by adding thereto as Part 20,
the special rights and restrictions set forth in Appendix I
attached hereto, and that the Articles are altered accordingly."
THE SPECIAL RIGHTS AND RESTRICTIONS ARE ATTACHED HERETO AS APPENDIX I.
CERTIFIED A TRUE COPY THE 4TH DAY OF NOVEMBER, 1987.
Davis & Company (Signature) s/
2800 Park Place ----------------------------
666 Burrard Street
Vancouver, B.C. Solicitor
V6C 2Z7 ----------------------------
(Relationship to Company)
FILED and REGISTERED
NOV 09 1987
M.A. Jorre De St. Jorre
Registrar of Companies
<PAGE>
APPENDIX I
PART 20
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO
PREFERRED SHARES
-------------------------------------------
20.1 The holders of the Preferred shares shall not as such have any voting
rights for the election of Directors or for any other purpose, nor shall they
be entitled to attend shareholders' meetings or to receive notice of
shareholders' meetings.
20.2 No dividends shall be declared or paid at any time on the Preferred
shares and the holders of such shares shall not have any claim against the
Company for dividends of any kind.
20.3 The holders of the Preferred shares shall have an option exercisable in
writing by notice to the Company at any time up to March 10, 1988, to convert
all or a portion of such Preferred shares into fully paid Common shares of
the Company upon the following basis, namely, that the holder or holders of
the Preferred shares shall receive and the Company shall issue to such holder
or holders units comprised of fully paid and non-assessable Common shares of
the Company at the rate of one (1) Common share for each Preferred share so
converted together with non-transferable share purchase warrants entitling
the holder to purchase up to the same number of additional Common shares of
the Company at any time up to August 10, 1988 at the price of $1.70 per
share. The holders of the Preferred shares exercising such option shall
tender the said notice and the certificates representing the Preferred shares
to be converted and within ten (10) days of the receipt of such notice and
certificates representing the shares to be converted, the Company shall issue
and deliver the certificates for the Common shares resulting from the
conversion together with the appropriate share purchase warrants. After the
date so fixed for conversion, the said Preferred shares shall be deemed to be
converted for Common shares and the holders thereof shall cease to have any
rights in respect thereof.
20.4 Any holder of Preferred shares may, at any time up to March 10, 1988,
upon giving notice to the Company as hereinafter provided, require the
Company to redeem all or the balance of the Preferred shares held by such
holder not converted as aforesaid, on payment for each such share to be
redeemed of the issue price thereof (hereinafter called "the redemption
price"). The Directors of the Company shall upon receipt of such notice and
provided the redemption will not be in breach of any of the provisions of the
Company Act, redeem such shares at the redemption price aforesaid. In the
event all or a portion of the Preferred shares are redeemed the Company shall
be entitled to retain all accrued interest on the subscription funds for such
Preferred shares. In exercising the powers conferred by this clause, notice
shall be given as hereinafter provided and upon a redemption pursuant to such
notice, the Company shall not be required to redeem the Preferred shares of
any other holder or holders of Preferred shares. Not less than thirty (30)
days notice in writing of such redemption shall be given by mailing to the
Registered Office of the Company a notice specifying the date on which
redemption is to take place and, if part only of the Preferred shares held by
such holder is to be redeemed, the number thereof so to be redeemed. On or
after the date specified for redemption, the Company shall pay or cause to be
paid, to or for the order of such holder requiring such Preferred shares to
be redeemed, the redemption price aforesaid on presentation and surrender of
the certificate for the Preferred shares called for redemption. Such
Preferred shares shall thereupon be and be deemed to be redeemed and shall be
cancelled.
20.5 In the event of the liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, the holders of the Preferred
shares shall be entitled to receive the amount paid up thereon, before any
amount shall be paid or any property or assets of the Company distributed to
the holders of the Common shares, but shall not have any further right to
participate in the distribution of the property and assets of the Company.
<PAGE>
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBUS
Certificate of Incorporation No. 300709
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned
company on the date stated:
NAME OF COMPANY: Golden Queen Mining Co. Ltd.
DATE RESOLUTION PASSED: November 26, 1993
Resolution:
"BE IT RESOLVED as a Special Resolution that:
1. the authorized capital of the Company be increased by creating
80,000,000 additional common shares without par value and that the
Company's Memorandum be altered accordingly; and
2. the Memorandum be in the form attached hereto and marked Schedule "A",
so that the Memorandum, as altered, shall at the time of filing comply
with the Company Act."
THE MEMORANDUM AS ALTERED IS ATTACHED AS SCHEDULE "A".
CERTIFIED A TRUE COPY THE 30TH DAY OF NOVEMBER, 1993.
DuMoulin Black (Signature) s/
10th Floor - 595 Howe Street ----------------------------
Vancouver, B.C., V6C 2T5 Solicitor
FILED and REGISTERED
DEC 8 1993
Registrar of Companies
<PAGE>
SCHEDULE A
Attached to the Resolutions of Golden Queen Mining Co. Ltd. passed by the
Members on the 26th day of November, 1993.
MEMORANDUM
(ALTERED)
of
GOLDEN QUEEN MINING CO. LTD.
1. The name of the Company is "Golden Queen Mining Co. Ltd.
2. The authorized capital of the Company consists of 103,000,000 shares
divided into 3,000,000 preferred shares without par value and
100,000,000 common shares without par value.
Exhibit 10.1
DATED AS OF May 23, 1996
GOLDEN QUEEN MINING CO. LTD.
- and -
MONTREAL TRUST COMPANY OF CANADA
______________________________
WARRANT INDENTURE
Providing for the Issue of up to
[2,750,000] Warrants
______________________________
LAWSON LUNDELL LAWSON & MCINTOSH
Vancouver, B.C.
STIKEMAN, ELLIOTT
Vancouver, B.C.
<PAGE>
TABLE OF CONTENTS
1. INTERPRETATION 1
1.1 Definitions 1
1.2 Words Importing Gender and Number 5
1.3 Interpretation Not Affected by Headings 5
1.4 Day Not a Business Day 5
1.5 Time of the Essence 5
1.6 Applicable Law 5
1.7 Meaning of "outstanding" for Certain Purposes 5
2. ISSUE OF WARRANTS 6
2.1 Issue of Warrants 6
2.2 Terms of Warrants 6
2.3 Warrant Certificates 6
2.4 Issue in Substitution for Lost Warrants 7
2.5 Warrantholder not a Shareholder 8
2.6 Warrants to Rank Pari Passu 8
2.7 Signing of Warrants 8
2.8 Certification by the Trustee 8
3. EXCHANGE AND OWNERSHIP OF WARRANTS 9
3.1 Exchange of Warrants 9
3.2 Charges for Exchange 9
3.3 Ownership of Warrants 9
3.4 Registration and Transfer of Warrants 9
4. EXERCISE OF WARRANTS 11
4.1 Method of Exercise of Warrants 11
4.2 Effect of Exercise of Warrants 12
4.3 No Fractional Common Shares 12
4.4 Expiration of Warrants 12
4.5 Accounting and Recording 13
5. ADJUSTMENT OF EXCHANGE NUMBER 13
5.1 Definitions 13
5.2 Adjustment of Exchange Number 13
5.3 Subscription Rights Adjustment Rules 17
5.4 Postponement of Subscription 18
5.5 Notice of Certain Events 18
6. RIGHTS AND COVENANTS 18
6.1 Company May Purchase 18
6.2 General Covenants of the Company 18
6.3 Trustee's Remuneration and Expenses 19
6.4 Performance of Covenants by Trustee 20
7. ENFORCEMENT 20
7.1 Suits by Warrantholders 20
7.2 Immunity of Shareholders 20
7.3 Limitation of Liability 20
8. MEETINGS OF WARRANTHOLDERS 20
8.1 Right to Convene Meetings 20
8.2 Notice 21
8.3 Chairman 21
8.4 Quorum 21
8.5 Power to Adjourn 21
8.6 Show of Hands 21
8.7 Poll 22
8.8 Voting 22
8.9 Regulations 22
8.10 Company and Trustee may be Represented 22
8.11 Powers Exercisable by Extraordinary Resolution 23
8.12 Meaning of "Extraordinary Resolution" 23
8.13 Powers Cumulative 24
8.14 Minutes 24
8.15 Instruments in Writing 25
8.16 Binding Effect of Resolutions 25
8.17 Holdings by Company Disregarded 25
9. SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES 25
9.1 Provision for Supplemental Indentures
for Certain Purposes 25
9.2 Successor Companies 26
10. CONCERNING THE TRUSTEE 26
10.1 Trust Indenture Legislation 26
10.2 Rights and Duties of Trustee 27
10.3 Evidence, Experts and Advisers 27
10.4 Securities, Documents and Monies Held by Trustee 28
10.5 Action by Trustee to Protect Interests 28
10.6 Trustee Not Required to Give Security 28
10.7 Protection of Trustee 29
10.8 Replacement of Trustee 30
10.9 Conflict of Interest 30
10.10 Acceptance of Trust 31
11. GENERAL 31
11.1 Notice to Company, Trustee and Underwriters 31
11.2 Notice to Warrantholders 33
11.3 Satisfaction and Discharge of Indenture 33
11.4 Sole Benefit of Parties and Warrantholders 33
11.5 Counterparts and Formal Date 34
<PAGE>
THIS WARRANT INDENTURE is dated as of May 23, 1995 and made
BETWEEN
GOLDEN QUEEN MINING CO. LTD., a British Columbia company having its
registered and records office at 1600 - 925 West Georgia Street,
Vancouver, British Columbia, V6C 3L2
(the "Company")
AND
MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated under the
laws of Canada and having an office at 510 Burrard Street, Vancouver,
British Columbia, V6C 3B9
(the "Trustee")
WHEREAS:
A. The Company proposes to issue warrants exercisable by the holder on the
terms hereinafter set out for the acquisition of common shares in the capital
of the Company;
B. The Company is duly authorized to create and issue the Warrants to be
issued as herein provided;
C. All things necessary have been done and performed to make the Warrants,
when certified by the Trustee and issued as in this Indenture provided,
legal, valid and binding upon the Company with the benefits of and subject to
the terms of this Indenture; and
D. The Trustee has agreed to enter into this Indenture and to hold all
rights, interests and benefits contained herein for and on behalf of those
persons who become holders of Warrants from time to time issued pursuant to
this Indenture;
NOW THEREFORE THIS INDENTURE WITNESSES that in consideration of the premises
and the covenants of the parties, the Company hereby appoints the Trustee as
trustee for the Warrantholders (as hereinafter defined) to hold all rights,
interests and benefits contained herein for and on behalf of those persons
who are holders of Warrants from time to time issued pursuant to this
Indenture and it is hereby agreed and declared as follows:
1. INTERPRETATION
1.1 Definitions
In this Indenture, unless there is something in the subject matter or context
inconsistent therewith:
(a) "Accredited Investor" has the meaning given to that term in Regulation
D;
(b) "Applicable Legislation" means the provisions of the statutes of Canada
and its provinces and territories and the regulations under those
statutes relating to trust indentures or the rights, duties or
obligations of corporations and trustees under trust indentures as are
from time to time in force and applicable to this Indenture;
(c) "business day" means a day that is not a Saturday, Sunday, or civic or
statutory holiday in Vancouver, British Columbia;
(d) "Common Shares" means the fully paid and non-assessable common shares
without par value in the capital of the Company, as constituted as at
the date hereof, provided that if the exchange rights are subsequently
adjusted or altered pursuant to subsections 5.2.4 or 5.2.5, "Common
Shares" shall thereafter mean the shares or other securities or property
to which a Warrantholder is entitled on an exchange after such
adjustment or alteration;
(e) "Company" means Golden Queen Mining Co. Ltd. and its lawful successors
from time to time;
(f) "Company's auditors" means the firm of chartered accountants duly
appointed as auditors of the Company from time to time;
(g) "Convertible Security" means a security of the Company (other than the
Warrants or the Special Warrants) convertible into or exchangeable for
or otherwise carrying the right to acquire Common Shares;
(h) "counsel" means a barrister or solicitor (who may be an employee of the
Company) or a firm of barristers and solicitors (who may be counsel for
the Company) in any case acceptable to the Trustees, acting reasonably;
(i) "Current Market Price" of the Common Shares at any date means the price
per Common Share equal to the weighted average price at which the Common
Shares have traded on such stock exchange upon which such shares are
listed (or if listed on more than one stock exchange, on the stock
exchange on which the greatest volume of Common Shares is traded) during
any 30 consecutive trading days, selected by the Company with the
approval of the Trustee, within the 45 trading day period before that
date;
(j) "directors" means the directors of the Company for the time being, and
reference without more to "action by the directors" means action by the
directors of the Company as a board or by a duly empowered executive
committee of the board;
(k) "dividends paid in the ordinary course" means dividends (payable in cash
or in securities, property or assets) declared payable on the Common
Shares in any.fiscal year of the Company to the extent that those
dividends, in the aggregate, do not exceed in amount or value the
greatest of:
(i) 150% of the aggregate amount of dividends paid on the Common Shares
in the 12 months immediately preceding that fiscal year;
(ii) 50% of the consolidated net earnings of the Company, before
extraordinary items, for the 12 months immediately preceding that
fiscal year shown in the consolidated financial statements of the
Company; and
(iii) 5% of the average amount at which the Common Shares are carried on
the books of the Company during that fiscal year;
and for such purpose the amount of any dividends paid other than in cash
shall be the fair market value of the dividends as determined by the
directors;
(l) "Exchange Number" means, at any time, that number of Common Shares that
Warrantholders are entitled to receive for each Warrant held upon
exercise of the rights attached to the Warrant as the number may be
adjusted by Article 5 (such number being equal to one Common Share for
each Warrant at the date hereof);
(m) "Exercise Date" with respect to any Warrant means the date on which
Common Shares are issued pursuant to section 4.2;
(n) "extraordinary resolution" has the meaning given in sections 8.12 and
8.15;
(o) "Original U.S. Purchaser" means a Qualified Institutional Buyer ^ that
purchased Special Warrants from ^ Goepel Shields & Partners (USA), Inc.
^ pursuant to Rule 144A under the U.S. Securities Act or an Accredited
Investor that purchased Special Warrants from the Company under Section
4(2) in either case on the date of this Indenture;
(p) "person" means an individual, a corporation, a partnership, a trustee or
any unincorporated organization, and words importing persons have a
similar meaning;
(q) "Qualified Institutional Buyer" has the meaning given in Rule 144A under
the U.S. Securities Act;
(r) "Regulation D" means Regulation D promulgated under the U.S. Securities
Act;
(s) "Regulation S" means Regulation S promulgated under the U.S. Securities
Act;
(t) "shareholder" means an owner of record of one or more Common Shares or
shares of any other class or series of the Company;
(u) "Special Warrant Indenture" means the indenture between the Company and
the Trustee of even date herewith providing for the creation and
issuance of an aggregate of [5,500,000] special warrants;
(v) "Special Warrants" means the special warrants created by the Company and
issued pursuant to the Special Warrant Indenture;
(w) "Subscription Price" means $2.90;
(x) "subsidiary of the Company" means a corporation, a majority of the
outstanding voting shares of which is owned, directly or indirectly, by
the Company or by one or more subsidiaries of the Company; and, as used
in this definition, "voting shares" means shares of a class or classes
ordinarily entitled to vote for the election of a majority of the
directors of a corporation irrespective of whether or not shares of any
other class or classes shall have or might have the right to vote for
directors by reason of the happening of any contingency;
(y) "this Warrant Indenture", "this Indenture", "herein", "hereby" and
similar expressions mean or refer to this Warrant Indenture and any
indenture, deed or instrument supplemental or ancillary hereto; and the
expressions "Article", "section" or "subsection" followed by a number or
letter mean and refer to the specified Article, section or subsection of
this Indenture;
(z) "Time of Expiry" means 4:00 p.m. ^(Vancouver time) on November 28, 1997;
(aa) "trading day" with respect to a stock exchange means a day on which the
stock exchange is open for business;
(bb) "Transfer Agent" means the transfer agent ^ of the Common Shares;
(cc) "Trustee" means Montreal Trust Company of Canada, or any lawful
successor thereto including through the operation of section 10.8;
(dd) "United States" means the United States of America, its territories and
possessions, any state of the United States and the District of
Columbia;
(ee) "U.S. Person" has the meaning given to that term in Regulation S under
the U.S. Securities Act;
(ff) "U.S. Securities Act" means the United States Securities Act of 1933, as
amended;
(gg) "Warrant Certificates" means the certificates substantially in the form
attached as Schedule A hereto, or such other form as may be approved
under subsection 2.3.1, evidencing Warrants;
(hh) "Warrantholders" or "holders" means the registered holders of Warrants
for the time being;
(ii) "Warrantholders' Request" means an instrument signed in one or more
counterparts by Warrantholders entitled to purchase in the aggregate not
less than 10% of the aggregate number of Common Shares that could be
acquired pursuant to the exercise of all the Warrants then outstanding
requesting the Trustee to take some action or proceeding specified
therein; and
(jj) "Warrants" means the warrants authorized to be created by the Company
under subsection 2.1.1 and issued and certified under this Indenture
entitling the holders to acquire Common Shares and for the time being
outstanding and includes warrants evidenced by Warrant Certificates;
(kk) "written order of the Company", "written request of the Company",
"written consent of the Company" and "certificate of the Company" mean
respectively a written order, request, consent and certificate signed in
the name of the Company by any one or more of the President and Chief
Executive Officer and the ^ Vice-President - Administration of the
Company and may consist of one or more instruments so executed and any
other documents referred to herein which is required or contemplated to
be provided or given by the Company is a document signed on behalf of
the Company by any one or more of such officers.
1.2 Words Importing Gender and Number
Words importing gender and number shall be read with such changes as the
context may require.
1.3 Interpretation Not Affected by Headings
The division of this Indenture into Articles, sections, subsections and
paragraphs, the provision of a table of contents and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Indenture.
1.4 Day Not a Business Day
In the event that any day on which the Exercise Period expires or on or
before which any action is required to be taken hereunder is not a business
day, then the Exercise Period shall expire on or the action shall be required
to be taken on or before the next succeeding day that is a business day.
1.5 Time of the Essence
Time shall be of the essence in all respects in this Indenture, the Warrants
and the Warrant Certificates.
1.6 Applicable Law
This Indenture, the Warrants and the Warrant Certificates shall be construed
and enforced in accordance with the laws of the Province of British Columbia
and shall be treated in all respects as British Columbia contracts.
1.7 Meaning of "outstanding" for Certain Purposes
Every Warrant Certificate countersigned and delivered by the Trustee
hereunder shall be deemed to be outstanding until it has been surrendered to
the Trustee pursuant to this Indenture, provided however that:
(a) a Warrant Certificate that has been partially exchanged shall be deemed
to be outstanding only to the extent of the unexchanged part of the
Warrants;
(b) where a Warrant Certificate has been issued in substitution for a
Warrant Certificate that has been lost, stolen or destroyed, only one of
them shall be counted for the purpose of determining the Warrants
outstanding; and
(c) for the purpose of any provision of this Indenture entitling holders of
outstanding Warrants to vote, sign consents, requests or other
instruments or take any other action under this Indenture, Warrants
owned legally or equitably by the Company or any subsidiary of the
Company shall be disregarded, except that:
(i) for the purpose of determining whether the Trustee shall be
protected in relying on any vote, consent, request or other
instrument or other action, only the Warrants of which the Trustee
has notice that they are so owned shall be so disregarded; and
(ii) Warrants so owned that have been pledged in good faith other than
to the Company or any subsidiary of the Company shall not be so
disregarded if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right to vote the Warrants in its discretion
free from the control of the Company or any subsidiary of the
Company pursuant to the terms of the pledge.
2. ISSUE OF WARRANTS
2.1 Issue of Warrants
2.1.1 A total of [2,750,000] Warrants entitling the holders thereof to
acquire from the Company on exercise thereof, subject to the
conditions in Article 4 and adjustment to the Common Shares as
provided for in Article 5, up to an aggregate of [2,750,000] Common
Shares are hereby authorized to be issued by the Trustee on behalf
of the Company. Such Warrants shall be issued pursuant to and in
accordance with the terms of the Special Warrant Indenture.
2.1.2 Certificates for Warrants issued pursuant to subsection 2.1.1 shall
be executed by the Company and certified by or on behalf of the
Trustee and delivered by the Company in accordance with section
2.3.
2.2 Terms of Warrants
2.2.1 Subject to the provisions of Articles 4 and 5, each of the Warrants
issued hereunder shall entitle the holder thereof to acquire from
the Company upon payment of the Subscription Price, at any time
prior to the Time of Expiry, the number of Common Shares equal to
the Exchange Number in effect at the Exercise Date.
2.2.2 Fractional Warrants shall not be issued or otherwise provided for.
2.3 Warrant Certificates
2.3.1 Warrants shall be issued in registered form only and shall be
evidenced only by Warrant Certificates, which shall be
substantially in the form attached as Schedule A hereto or in such
other form not inconsistent with this Indenture as may be approved
by the Company and the Trustee, shall be dated as of the date
hereof (regardless of their actual dates of issue), shall bear such
distinguishing letters and numbers as the Company shall with the
approval of the Trustee prescribe and may, if required, be prepared
in both the English and French languages.
2.3.2 The Trustee shall maintain and make available to the Company lists
of all persons who are entitled to Warrant Certificates, and the
Trustee shall mail or deliver Warrant Certificates evidencing whole
Warrants to the Underwriters or those persons.
2.3.3 Unless the Warrants have been registered under the U.S. Securities
Act, Warrants issued to an Original U.S. Purchaser and any
transferee of such Warrants who is a U.S. Person or a person in the
United States in accordance with subsection 3.4.2 of the Special
Warrant Indenture, shall bear the following ^ legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "U.S. SECURITIES ACT"), AND MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH ANY
APPLICABLE SECURITIES LAWS, (C) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE
144A OR BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D)
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, PURSUANT TO
ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS."
2.3.4 ^ If, at the time of issue of any of the Warrants, there are
restrictions on resale under applicable securities legislation on
such Warrants, the Company may, on the advice of counsel, endorse
the Warrant Certificates with respect to those restrictions.
2.4 Issue in Substitution for Lost Warrants
2.4.1 In case any of the Warrant Certificates shall become mutilated or
be lost, destroyed or stolen, the Company, subject to applicable
law and to subsection 2.4.2, shall issue and thereupon the Trustee
shall certify and deliver a new Warrant Certificate of like date
and tenor as the one mutilated, lost, destroyed or stolen upon
surrender of and in place of and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and in substitution for the
lost, destroyed or stolen Warrant Certificate, and the substituted
Warrant Certificate shall be in a form approved by the Trustee and
shall be entitled to the benefit hereof and rank equally in
accordance with its terms with all other Warrant Certificates
issued or to be issued hereunder.
2.4.2 The applicant for the issue of a new Warrant Certificate pursuant
to this section shall bear the cost of the issue thereof and in
case of loss, destruction or theft shall, as a condition precedent
to the issue thereof, furnish to the Company and to the Trustee
such evidence of ownership and of the loss, destruction or theft of
the Warrant Certificate so lost, destroyed or stolen as shall be
satisfactory to the Company and to the Trustee in their discretion
and the applicant may also be required to furnish an indemnity in
amount and form satisfactory to the Company and the Trustee in
their discretion, and shall pay the reasonable charges of the
Company and the Trustee in connection therewith.
2.5 Warrantholder not a Shareholder
Nothing in this Indenture or in the holding of a Warrant evidenced by a
Warrant Certificate, or otherwise, shall be construed as conferring upon a
Warrantholder any right or interest whatsoever as a shareholder, including,
but not limited to, the right to vote at, to receive notice of, or to attend
meetings of shareholders or any other proceedings of the Company or the right
to receive any dividend and other distribution.
2.6 Warrants to Rank Pari Passu
A Warrant shall rank pari passu with all other Warrants, whatever may be the
actual date of issue of the Warrant Certificates that evidence them.
2.7 Signing of Warrants
The Warrant Certificates shall be signed by any one of the President and
Chief Executive Officer and the ^ Vice-President - Administration of the
Company. The signatures of either of these officers may be mechanically
reproduced in facsimile and Warrant Certificates bearing those facsimile
signatures shall be binding upon the Company, as if they had been manually
signed by the officers. Notwithstanding that any of the persons whose manual
or facsimile signature appears on any Warrant Certificate as an officer may
no longer hold office at the date of the Warrant Certificate or at the date
of certification or delivery thereof, any Warrant Certificate signed as
aforesaid shall, subject to section 2.8, be valid and binding upon the
Company, as herein provided.
2.8 Certification by the Trustee
2.8.1 No Warrant Certificate shall be issued or, if issued, shall be
valid or entitle the holder to the benefit hereof until it has been
certified by manual signature by or on behalf of the Trustee
substantially in the form approved by the Company and the Trustee
and the certification by the Trustee upon any Warrant Certificate
shall be conclusive evidence as against the Company that the
Warrant Certificate so certified has been duly issued hereunder and
that the holder is entitled to the benefit hereof.
2.8.2 The certification of the Trustee on Warrant Certificates issued
hereunder shall not be construed as a representation or warranty by
the Trustee as to the validity of this Indenture or of the Warrant
Certificates (except the due certification thereof) and the Trustee
shall in no respect be liable or answerable for the use made of the
Warrants or any of them or of the consideration thereof, except as
otherwise specified herein.
3. EXCHANGE AND OWNERSHIP OF WARRANTS
3.1 Exchange of Warrants
3.1.1 One or more Warrant Certificates representing Warrants to acquire a
certain number of Common Shares as determined in accordance with
the provisions of this Indenture may, upon compliance with the
reasonable requirements of the Trustee, be exchanged for one or
more Warrant Certificates representing Warrants issued by the
Company, entitling the holder thereof to acquire an equal aggregate
number of Common Shares.
3.1.2 Warrants may be exchanged only at the principal transfer offices of
the Trustee in the cities of Vancouver, British Columbia [and
Toronto, Ontario] or at any other place that is designated by the
Company. Any Warrants tendered for exchange shall be surrendered to
the Trustee or to its agent and canceled. The Company shall sign
all Warrant Certificates necessary to carry out exchanges as
hereinbefore provided and those Warrant Certificates shall be
certified by or on behalf of the Trustee.
3.2 Charges for Exchange
For each Warrant exchanged, the Trustee shall, except as otherwise herein
provided, if required by the Company, charge a reasonable sum for each new
Warrant Certificate issued. The party requesting the exchange, as a condition
precedent thereto, shall pay such charges and shall pay or reimburse the
Trustee or the Company for all exigible transfer taxes or governmental or
other similar transfer charges required to be paid in connection therewith.
3.3 Ownership of Warrants
The Company and the Trustee and their respective agents may deem and treat
the holder of any Warrant as the absolute owner of that Warrant for all
purposes, and the Company and the Trustee and their respective agents shall
not be affected by any notice or knowledge to the contrary except in respect
of equities of which the Company is required to take notice by statute or by
order of a court of competent jurisdiction. The holder of any Warrant shall
be entitled to the rights evidenced by that Warrant free from all equities or
rights of set-off or counterclaim between the Company, and the original or
any intermediate holder thereof and all persons may act accordingly and the
receipt by any holder of the Common Shares or monies obtainable pursuant
thereto shall be a good discharge to the Company and the Trustee for the same
and neither the Company nor the Trustee shall be bound to inquire into the
title of any holder.
3.4 Registration and Transfer of Warrants
3.4.1 The Company hereby appoints the Trustee as registrar of the
Warrants. The Company may hereafter, with the consent of the
Trustee, appoint one or more other additional registrars of the
Warrants.
3.4.2 The Company shall cause a register and branch registers to be kept
by the Trustee at its principal transfer offices in each of the
cities of Vancouver, British Columbia [and Toronto, Ontario] and in
such other place or places and by such other agent as the Company
with the approval of the Trustee may designate, in which shall be
entered the names and addresses of the holders of Warrants and
other particulars of the Warrants held by them respectively and of
all transfers of Warrants. Warrants bearing the legend set out in
subsection 2.3.3 may not be transferred in the United States or to
or for the account or benefit of a person in the United States
unless the conditions set out in such legends are met to the
satisfaction of the Company. No transfer of Warrants shall be valid
unless:
(a) it is made by the holder or his executors or administrators or
other legal representatives or his or their attorney duly appointed
by an instrument in writing in form and executed in a manner
satisfactory to the registrar, upon compliance with such
requirements as the registrar may prescribe; and
(b) the Company and the Trustee shall have received satisfactory
written representations of the transferor and transferee together
with such other evidence (if any) as the Company shall reasonably
require to assure that the transfer complies with applicable
securities laws and the restrictions or transfer set out herein;
and
(c) the transfer shall have been duly entered on one of the appropriate
registers by a registrar.
3.4.3 The registers referred to in this section shall at all reasonable
times be open for inspection by the Company, by the Trustee and by
any Warrantholder.
3.4.4 The holder of a Warrant may at any time and from time to time have
the Warrant transferred at any of the places at which a register of
transfers is kept pursuant to the provisions of this section 3.4 in
accordance with such reasonable regulations as the registrar may
prescribe.
3.4.5 Except as required by law, neither the Trustee nor any other
registrar nor the Company shall be charged with notice of or be
bound to see to the execution of any trust, whether express,
implied or constructive, in respect of any Warrant and may transfer
any Warrant on the written direction of the holder thereof, whether
named as trustee or otherwise, as though that person were the
beneficial owner thereof.
3.4.6 Except in the case of the registers required to be kept at the
cities of Vancouver, British Columbia [and Toronto, Ontario], the
Company by agreement shall have the power to close any branch
register at any time. In the event that the register in any place
is closed, notice of the closing shall be given, in the manner
provided in section 11.2, to the Warrantholders.
3.4.7 The registrar shall, when requested so to do by the Company,
furnish the Company with a list of names and addresses of the
Warrantholders showing the number of Warrants held by each
Warrantholder.
4. EXERCISE OF WARRANTS
4.1 Method of Exercise of Warrants
4.1.1 Subject to subsection 4.1.2 the holder of any Warrant may, at any
time prior to the Time of Expiry, exercise the right thereby
conferred on him to acquire Common Shares by:
(a) surrendering to the Trustee at its principal transfer office in
either of the cities of Vancouver, British Columbia [or Toronto,
Ontario] or at any other place or places that may be designated by
the Company with the approval of the Trustee, a certificate or
certificates representing one Warrant for each Common Share to be
acquired, or, if the Exchange Number has been adjusted as provided
for in Article 5, that number of Warrants, which, when multiplied
by the Exchange Number, equals the number of Common Shares to be
acquired;
(b) delivering to the Trustee a certified cheque or recognized bank
draft payable to or to the order of the Company for the
Subscription Price for the number of Common Shares to be acquired;
and
(c) delivering to the Trustee a duly completed and executed exercise
form as attached to the Warrant Certificates, together with, if
required by subsection 4.1.2 the opinion of counsel described
therein, and the Warrants shall only be deemed to have been
surrendered upon personal delivery thereof to, or if sent by mail
or other means of transmission upon actual receipt thereof by, the
Trustee at one of the offices specified in this subsection.
4.1.2 The Common Shares issuable upon exercise of the Warrants have not
been registered under the U.S. Securities Act or the securities
laws of any state. The Warrants may not be exercised in the United
States or by or for the account or benefit of, or for resale to, a
U.S. person or a person in the United States, nor shall
certificates for Common Shares be registered at or delivered to an
address in the United States unless the Common Shares are
registered under the U.S. Securities Act and all applicable state
securities laws or exemptions from registration are available, and
an opinion of counsel to such effect, addressed to the Company and
the Trustee and satisfactory to the Company, is delivered in
connection with the exercise, provided that a person who was an
Original U.S. Purchaser of Special Warrants may exercise Warrants
issued upon exercise of those Special Warrants without providing an
opinion of counsel.
4.1.3 Any exercise form referred to in subsection 4.1.1 shall be signed
by the Warrantholder or his executors or administrators or other
legal representatives or an attorney of the Warrantholder duly
appointed by an instrument in writing satisfactory to the Trustee.
The exercise form included in the Warrant Certificate shall be
completed to specify the number of Common Shares to be acquired,
the person or persons in whose name or names the Common Shares are
to be issued, his or their address or addresses and the number of
Common Shares to be issued to each person if more than one is so
specified. If any of the Common Shares to be acquired are to be
issued to a person or persons other than the Warrantholder, the
Warrantholder shall pay to the Trustee or to its agent all exigible
transfer taxes or governmental or other charges required to be paid
in respect of the transfer of the Warrants or Common Shares.
4.1.4 Certificates representing Common Shares issuable upon exercise of
Warrants bearing the legend set out in subsection 2.3.3 shall also
bear the legend set out in subsection 2.3.3.
4.1.5 If, at the time of exercise of the Warrants, there remain
additional restrictions on resale under applicable securities
legislation on the Common Shares acquired, the Company, may, on the
advice of counsel, endorse the certificates representing the Common
Shares with respect to those restrictions.
4.2 Effect of Exercise of Warrants
4.2.1 Upon exercise of the Warrants and compliance by the holder with
section 4.1 and subject to sections 4.3 and 5.4, the holder of the
Warrants shall be entitled to receive from the Company the number
of Common Shares that is equal to the number of Warrants
surrendered multiplied by the Exchange Number in effect at the date
of the surrender and the Company shall cause the holder thereof to
be entered forthwith on its register of shareholders as the holder
of the Common Shares.
4.2.2 Upon the due exercise of the Warrants as hereinbefore provided, the
Company shall, without charge therefor except as provided in
subsection 4.1.3, forthwith cause to be mailed to the person or
persons in whose name or names the Common Shares so acquired are to
be issued as specified by the holder of Warrants in the exercise
form on the Warrant Certificate at his or their respective address
or addresses specified in the exercise form or, if specified in the
exercise form, cause to be delivered to the person or persons at
the office where the Warrants were surrendered, a certificate or
certificates for the appropriate number of Common Shares that the
Warrantholder is entitled to and has elected to acquire pursuant to
the Warrants surrendered.
4.3 No Fractional Common Shares
Under no circumstances shall the Company be obliged to issue any fractional
Common Shares upon the exercise of one or more Warrants. To the extent that
the holder of one or more Warrants would otherwise have been entitled to
receive on the exercise or partial exercise thereof a fraction of a Common
Share, then such holder may exercise that right in respect of the fraction
only in combination with another Warrant or Warrants that in the aggregate
entitle the holder to purchase a whole number of Common Share. If such right
if not so exercised, the Company shall pay to the holder by cheque, in
satisfaction of the right to otherwise have received a fraction of a Common
Share, the amount obtained when the fraction of a Common Share to which the
holder would be entitled is multiplied by the Current Market Price.
4.4 Expiration of Warrants
After the Time of Expiry, all rights under any Warrant in respect of which
the right of subscription herein and therein provided for shall not
theretofore have been exercised shall wholly cease and terminate and the
Warrant shall be void and of no effect.
4.5 Accounting and Recording
The Trustee shall promptly notify the Company with respect to Warrants
exercised. The Trustee shall record the particulars of the Warrants
exercised which shall include the name or names and addresses of the persons
who become holders of Common Shares on exercise and the Exercise Date. Within
three business days of each Exercise Date, the Trustee shall provide those
particulars in writing to the Company.
5. ADJUSTMENT OF EXCHANGE NUMBER
5.1 Definitions
In this Article, the term "Adjustment Period" means the period from and
including the date hereof to and including the expiry of the Exercise Period
and the terms "record date" and "effective date" where used herein shall mean
the close of business on the relevant date.
5.2 Adjustment of Exchange Number
The Exchange Number (or the number and kind of shares or securities to be
received upon exercise in the case of subsections 5.2.4 and 5.2.5 below)
shall be subject to adjustment from time to time in the events and in the
manner provided in section 5.3 and in the manner provided in this Article 5.
5.2.1 If during the Adjustment Period the Company shall:
(a) issue to all or substantially all the holders of the Common
Shares in Canada by way of a stock dividend or otherwise
Common Shares or Convertible Securities (save and except for
any issue of Common Shares in lieu of cash dividends paid in
the ordinary course upon exercise by shareholders of a right
to receive or reinvest cash dividends in Common Shares and
save and except for dividends paid in the ordinary course); or
(b) subdivide or split its then outstanding Common Shares into a
greater number of shares; or
(c) combine or consolidate its then outstanding Common Shares into
a smaller number of shares
(any of those events being herein called a "Common Share
Reorganization");
then the Exchange Number shall be adjusted effective immediately
after the record date at which the holders of Common Shares are
determined for the purposes of the Common Share Reorganization to a
number that is the product of (1) the Exchange Number in effect on
the record date and (2) a fraction:
(d) the numerator of which shall be the number of Common Shares
outstanding after giving effect to the Common Share
Reorganization; and
(e) the denominator of which shall be the number of Common Shares
outstanding on the record date before giving effect to the
Common Share Reorganization.
For the purposes of determining the number of Common Shares
outstanding at any particular time for the purpose of this
subsection 5.2.1 there shall be included that number of Common
Shares which would have resulted from the conversion at that time
of all outstanding Convertible Securities.
5.2.2 If during the Adjustment Period the Company shall issue rights,
options or warrants to all or substantially all the holders of the
Common Shares pursuant to which those holders are entitled to
subscribe for, purchase or otherwise acquire Common Shares or
Convertible Securities, save and except rights, options or warrants
to acquire within a period of 45 days from the date of issue
thereof Common Shares at a price, or Convertible Securities at a
conversion price, of not less than 95% of the Current Market Price
at such date of issue aforesaid (any issuance not hereinbefore
excepted being herein called a "Rights Offering" and Common Shares
that may be acquired in exercise of the Rights Offering, or upon
conversion of the Convertible Securities offered by the Rights
Offering, being herein called the "Offered Common Shares"), the
Exchange Number shall be adjusted effective immediately after the
record date at which holders of Common Shares are determined for
the purposes of the Rights Offering to an Exchange Number that is
the product of (1) the Exchange Number in effect on the record date
and (2) a fraction:
(a) the numerator of which shall be the sum of:
(i) the number of Common Shares outstanding on the record date;
plus:
(ii) the number of Offered Common Shares offered pursuant to the
Rights Offering or the maximum number of Offered Common Shares
into which the Convertible Securities so offered pursuant to
the Rights Offering may be converted, as the case may be; and
(b) the denominator of which shall be the sum of:
(i) the number of Common Shares outstanding on the record date;
plus:
(ii) the number arrived at when (A) either the product of (1) the
number of Offered Common Shares so offered and (2) the price
at which those shares are offered, or the product of (3) the
conversion price thereof and (4) the maximum number of Offered
Common Shares for or into which the Convertible Securities so
offered pursuant to the Rights Offering may be converted, as
the case may be, is divided by (B) the Current Market Price of
the Common Shares on the record date.
Any Offered Common Shares owned by or held for the account of the
Company shall be deemed not to be outstanding for the purpose of
any computation. If all the rights, options or warrants are not so
issued or if all rights, options or warrants are not exercised
prior to the expiration thereof, the Exchange Number shall be
readjusted to the Exchange Number in effect immediately prior to
the record date, and the Exchange Number shall be further adjusted
based upon the number of Offered Common Shares (or Convertible
Securities into Offered Common Shares) actually delivered upon the
exercise of the rights, options or warrants, as the case may be,
but subject to any other adjustment required hereunder by reason of
any event arising after that record date.
5.2.3 If during the Adjustment Period the Company shall issue or
distribute to all or substantially all the holders of Common
Shares, (i) shares of any class other than Common Shares, (ii)
rights, options or warrants, (iii) evidences of indebtedness or
(iv) any other assets (excluding cash dividends paid in the
ordinary course) and that issuance or distribution does not
constitute a Common Share Reorganization or a Rights Offering or an
issuance excepted from the definition of Rights Offering in
subsection 5.2.2 (any of those events being herein called a
"Special Distribution"), the Exchange Number shall be adjusted
effective immediately after the record date at which the holders of
Common Shares are determined for purposes of the Special
Distribution to an Exchange Number that is the product of (1) the
Exchange Number in effect on the record date and (2) a fraction:
(a) the numerator of which shall be the product of:
(i) the sum of the number of Common Shares outstanding on the
record date plus the number of Common Shares which the
Warrantholders would be entitled to receive upon exercise of
all their outstanding Warrants if they were exercised on the
record date;
multiplied by:
(ii) the Current Market Price thereof on that date; and
(b) the denominator of which shall be:
(i) the product of:
(A) the sum of the number of Common Shares outstanding on
the record date plus the number of Common Shares which
the Warrantholders would be entitled to receive upon
exercise of all their outstanding Warrants if they were
exercised on the record date;
multiplied by:
(B) the Current Market Price thereof on that date;
less:
(ii) the aggregate fair market value, as determined by the board,
whose determination shall be conclusive, of the shares,
rights, options, warrants, evidences of indebtedness or other
assets issued or distributed in the Special Distribution.
Any Common Shares owned by or held for the account of the Company
shall be deemed not to be outstanding for the purpose of any such
computation; to the extent that the distribution of shares, rights,
options, warrants, evidences of indebtedness or assets is not so
made or to the extent that any rights, options or warrants so
distributed are not exercised, the Exchange Number shall be
readjusted to the Exchange Number that would then be in effect
based upon shares, rights, options, warrants, evidences of
indebtedness or assets actually distributed or based upon the
number of Common Shares or Convertible Securities actually
delivered upon the exercise of the rights, options or warrants, as
the case may be, but subject to any other adjustment required
hereunder by reason of any event arising after the record date.
5.2.4 If during the Adjustment Period there is a reorganization of the
Company not otherwise provided for in subsection 5.2.1 or a
consolidation, merger or amalgamation of the Company with or into
another body corporate or other entity including a transaction
whereby all or substantially all of the Company's undertaking and
assets become the property of any other corporation or other entity
(any such event being herein called a "Capital Reorganization"),
any holder of a Warrant who has not exercised his Warrant for
Common Shares prior to the effective date of the Capital
Reorganization shall be entitled to receive and shall accept, upon
the exercise of his Warrants at any time after the effective date
of the Capital Reorganization, in lieu of the number of Common
Shares (and any other securities or properties to which holders are
entitled upon exercise of the Warrants) to which he was theretofore
entitled upon exercise of the Warrants, the aggregate number of
shares or other securities or property of the Company, or the
continuing, successor or purchasing corporation, as the case may
be, under the Capital Reorganization that the holder would have
been entitled to receive as a result of the Capital Reorganization
if, on the effective date thereof, he had been the holder of the
number of Common Shares (and any other securities to which holders
are entitled upon exercise of the Warrants) to which immediately
before the transaction he was entitled upon exercise of the
Warrants. No Capital Reorganization shall be carried into effect
unless all necessary steps shall have been taken so that the
holders of Warrants shall thereafter be entitled to receive the
number of shares or other securities or property of the Company, or
of the continuing, successor or purchasing corporation or other
entity, as the case may be, under the Capital Reorganization,
subject to adjustment thereafter in accordance with provisions the
same, as nearly as may be possible, as those contained in this
section 5.2 and in section 5.3.
5.2.5 If the Company shall reclassify or otherwise change the outstanding
Common Shares, the exercise right shall be adjusted effective
immediately upon the reclassification becoming effective so that
holders of Warrants who exercise their rights thereafter shall be
entitled to receive such shares as they would have received had the
Warrants been exercised immediately prior to the effective date,
subject to adjustment thereafter in accordance with provisions the
same, as nearly as may be possible, as those contained in this
section 5.2 and in section 5.3.
5.3 Subscription Rights Adjustment Rules
5.3.1 The adjustments and readjustments provided for in this Article 5
are cumulative and, subject to subsection 5.3.2, shall apply
(without duplication) to successive issues, subdivisions,
combinations, consolidations, distributions and any other events
that require adjustment of the Exchange Number or the number or
kind of shares or securities purchasable hereunder.
5.3.2 No adjustment in the Exchange Number shall be required unless the
adjustment would result in a change of at least 1% in the Exchange
Number then in effect; provided, however, that any adjustments
that, except for the provisions of this subsection 5.3.2 would
otherwise have been required to be made, shall be carried forward
and taken into account in any subsequent adjustment.
5.3.3 No adjustment in the Exchange Number shall be made in respect of
any event described in subsection 5.2.1(a) or subsections 5.2.2 or
5.2.3 if the holders of the Warrants are entitled to participate in
the event on the same terms, mutatis mutandis, as if they had
exercised their Warrants immediately prior to the effective date or
record date of the event. Any participation in such event by
Warrantholders is subject to the prior written consent of The
Toronto Stock Exchange and the Vancouver Stock Exchange, to the
extent required by such exchanges, if the Common Shares are then
listed on such exchanges.
5.3.4 No adjustment in the Exchange Number shall be made pursuant to
section 5.2 in respect of the issue of Common Shares pursuant to:
(a) this Indenture and the Warrants or the Warrants; or
(b) any stock option or purchase plan for officers or employees of
the Company or a subsidiary of the Company;
and any such issue shall be deemed not to be a Common Share
Reorganization, a Rights Offering or a Special Distribution.
5.3.5 If a dispute shall at any time arise with respect to adjustments of
the Exchange Number, the dispute shall be conclusively determined
by the auditors of the Company or if they are unable or unwilling
to act, by such firm of independent chartered accountants as may be
selected by the directors and any such determination shall be
binding upon the Company, the Trustee, all transfer agents and all
Warrantholders.
5.3.6 If the Company shall set a record date to determine the holders of
Common Shares for the purpose of entitling them to receive any
dividend or distribution or any subscription or purchase rights and
shall, thereafter, legally abandon its plans to pay or deliver the
dividend, distribution or subscription or purchase rights, then no
adjustment in the Exchange Number shall be required by reason of
the setting of the record date.
5.4 Postponement of Subscription
In any case where the application of section 5.2 results in an increase of
the Exchange Number taking effect immediately after the record date for or
occurrence of a specific event, if any Warrants are exercised after that
record date or occurrence and prior to completion of the event or of the
period for which a calculation is required to be made, the Company may
postpone the issuance to the holder of the Warrants of the Common Shares to
which he is entitled by reason of the increase of the Exchange Number but the
Common Shares shall be so issued and delivered to that holder upon completion
of that event or period, with the number of those Common Shares calculated on
the basis of the Exchange Number on the Exercise Date adjusted for completion
of that event or period, and the Company shall forthwith after the Exercise
Date deliver to the person or persons in whose name or names the Common
Shares are to be issued an appropriate instrument evidencing his or their
right to receive the Common Shares.
5.5 Notice of Certain Events
5.5.1 At least 14 days prior to the effective date or record date, as the
case may be, of any event referred to in sections 5.2 or 5.3
whether or not the event requires or might require an adjustment in
the subscription rights pursuant hereto the Company shall:
(a) file with the Trustee a certificate of the Company specifying
the particulars of the event and, if determinable, any
adjustment and the computation of the adjustment; and
(b) give notice to the Warrantholders of the particulars of the
event and, if determinable, any adjustment.
Such notice need only set out such particulars as shall have been
determined at the date that notice is given.
5.5.2 In case any adjustment for which a notice in subsection 5.5.1 has
been given is not then determinable, the Company shall promptly
after the adjustment is determinable:
(a) file with the Trustee a computation of the adjustment; and
(b) give notice to the Warrantholders of the adjustment.
6. RIGHTS AND COVENANTS
6.1 Company May Purchase
The Company may from time to time purchase, in the open market or by private
contract, any of the Warrants from such persons and on such terms as it may
determine.
6.2 General Covenants of the Company
The Company covenants with the Trustee that so long as any Warrants remain
outstanding:
(a) the Company will at all times maintain its existence, carry on and
conduct its business in a proper, efficient and business-like
manner and in accordance with good business practice, keep or cause
to be kept proper books of account in accordance with applicable
law, and, if and whenever required in writing by the Trustee, file
with the Trustee copies of all annual statements of the Company
sent by it to its shareholders during the term of this Indenture.
(b) the Company will reserve and keep available a sufficient number of
Common Shares for issuance upon the exercise of Warrants.
(c) the Company will cause the Common Shares from time to time
subscribed for pursuant to the Warrants, in the manner herein
provided, to be duly issued and delivered in accordance with the
Warrants and the terms hereof.
(d) the Company will cause the certificates representing the Common
Shares from time to time to be acquired pursuant to the Warrants in
the manner herein provided, to be duly issued and delivered in
accordance with the Warrants and the terms hereof.
(e) all Common Shares that shall be issued by the Company upon exercise
of the Warrants shall be issued as fully paid and non-assessable
shares.
(f) the Company will use its reasonable best efforts to maintain its
status as a "reporting issuer" (or the equivalent thereof) not in
default of the requirements of the applicable securities acts and
regulations in each of the provinces of British Columbia and
Ontario, and in each other province in which it attains that status
prior to the Time of Expiry, until the date which is six months
following the Time of Expiry.
(g) the Company will use its reasonable best efforts to ensure that the
Common Shares issuable upon exercise of the Warrants will be listed
and posted for trading on The Toronto Stock Exchange upon their
issue;
(h) the Company will not engage in "directed selling efforts" as
defined in Regulation S with respect to its Common Shares or engage
in general solicitation within the meaning of Regulation D; and
(i) generally, the Company will well and truly perform and carry out
all the acts or things to be done by it as provided in this
Indenture.
6.3 Trustee's Remuneration and Expenses
The Company covenants that it will pay to the Trustee from time to time
reasonable remuneration for its services hereunder and will pay or reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in the administration or execution
hereof (including the reasonable compensation and the disbursements of
counsel and all other advisers and assistants not regularly in its employ),
both before any default hereunder and thereafter until all duties of the
Trustee hereunder shall be finally and fully performed, except any expense,
disbursement or advance as may arise from the negligence or bad faith of the
Trustee or of persons for whom the Trustee is responsible.
6.4 Performance of Covenants by Trustee
If the Company shall fail to perform any of its covenants contained in this
Indenture, the Trustee may notify the Warrantholders of the failure on the
part of the Company or may itself perform any of the said covenants capable
of being performed by it, but shall be under no obligation to do so or to
notify the Warrantholders. All sums expended or advanced by the Trustee in so
doing shall be repayable as provided in section i. No performance,
expenditure or advance by the Trustee shall be deemed to relieve the Company
of any default hereunder.
7. ENFORCEMENT
7.1 Suits by Warrantholders
All or any of the rights conferred upon a Warrantholder by the terms of a
Warrant or of this Indenture may be enforced by the holder by appropriate
legal proceedings but without prejudice to the right that is hereby conferred
upon the Trustee to proceed in its own name to enforce each and all the
provisions herein contained for the benefit of the holders of the Warrants
from time to time outstanding.
7.2 Immunity of Shareholders
The Trustee, and by their acceptance of the Warrant Certificates and as part
of the consideration for the issue of the Warrants, the Warrantholders,
hereby waive and release any right, cause of action or remedy now or
hereafter existing in any jurisdiction against any past, present or future
shareholder, director or officer of the Company, in their capacity as such,
for the issue of Common Shares pursuant to any Warrants or on any covenant,
agreement, representation or warranty by the Company herein or in the Warrant
Certificates.
7.3 Limitation of Liability
The obligations hereunder are not personally binding upon, nor shall resort
hereunder be had to, the private property of any of the past, present or
future directors or shareholders of the Company or any of the past, present
or future officers, employees or agents of the Company, but only the property
of the Company (or any successor corporation) shall be bound in respect
hereof.
8. MEETINGS OF WARRANTHOLDERS
8.1 Right to Convene Meetings
The Trustee may at any time and from time to time and shall on receipt of a
written request of the Company or of a Warrantholders' Request and upon being
indemnified to its reasonable satisfaction by the Company or by the
Warrantholders signing the Warrantholders' Request against the cost that may
be incurred in connection with the calling and holding of the meeting,
convene a meeting of the Warrantholders. In the event of the Trustee failing,
within 15 days after receipt of the written request of the Company or
Warrantholders' Request and indemnity given as hereinbefore provided, to give
notice convening a meeting, the Company or the Warrantholders, as the case
may be, may convene the meeting. Every meeting shall be held in the City of
Vancouver, the City of Toronto or at such other place as may be approved or
determined by the Trustee.
8.2 Notice
At least 14 days' notice of any meeting shall be given to the Warrantholders
in the manner provided in section 11.2 and a copy of the notice shall be sent
by mail to the Trustee unless the meeting has been called by it and to the
Company unless the meeting has been called by it. Each notice shall state the
time when and the place where the meeting is to be held and shall state
briefly the general nature of the business to be transacted thereat and it
shall not be necessary for the notice to set out the terms of any resolution
to be proposed or any of the provisions of this Article 8.
8.3 Chairman
A person nominated in writing by the Trustee shall be chairman of the meeting
and if no person is so nominated, or if the person so nominated is not
present within 15 minutes from the time fixed for the holding of the meeting,
the Warrantholders present in person or by proxy shall choose a person
present to be chairman.
8.4 Quorum
Subject to the provisions of section 8.12, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person or
by proxy and entitled to acquire at least 20% of the aggregate number of
Common Shares that could be acquired pursuant to all the then outstanding
Warrants. If a quorum of the Warrantholders shall not be present within half
an hour from the time fixed for holding any meeting, the meeting, if summoned
by the Warrantholders or on a Warrantholders' Request, shall be dissolved,
but (subject to section 8.12), in any other case the meeting shall be
adjourned to the same day in the next week (unless that day is a non-business
day, in which event the meeting shall be reconvened on the next day that is a
business day) at the same time and place and no notice need be given. At the
adjourned meeting the Warrantholders present in person or by proxy shall form
a quorum and may transact the business for which the meeting was originally
convened, notwithstanding that they may not be entitled to acquire at least
20% of the aggregate number of Common Shares that can be acquired pursuant to
all the then outstanding Warrants.
8.5 Power to Adjourn
The chairman of any meeting at which a quorum of the Warrantholders is
present may, with the consent of the meeting, adjourn the meeting and no
notice of the adjournment need be given except such notice, if any, as the
meeting may prescribe.
8.6 Show of Hands
Every question submitted to a meeting shall be decided in the first place by
a majority of the votes given on a show of hands except that votes on an
extraordinary resolution shall be given in the manner hereinafter provided.
At any meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a
particular majority shall be conclusive evidence of the fact.
8.7 Poll
On every extraordinary resolution, and on any other question submitted to a
meeting upon which a poll is directed by the chairman or requested by one or
more of the Warrantholders acting in person or by proxy, a poll shall be
taken in such manner as the chairman shall direct. Questions other than an
extraordinary resolution shall be decided by a majority of the votes cast on
a poll.
8.8 Voting
On a show of hands every person who is present and entitled to vote, whether
as a Warrantholder or as proxy for one or more absent Warrantholders or both,
shall have one vote. On a poll each Warrantholder present in person or
represented by a proxy duly appointed by instrument in writing shall be
entitled to one vote in respect of each Warrant then held by him. A proxy
need not be a Warrantholder.
8.9 Regulations
8.9.1 The Trustee, or the Company with the approval of the Trustee, may
from time to time make or vary such regulations as they shall think
fit:
(a) for the issue of voting certificates by any bank, trust
company or other depository satisfactory to the Trustee
stating that the Warrants specified therein have been
deposited with the depository by a named person and will
remain on deposit until after the meeting, which voting
certificates shall entitle the persons named therein to be
present and vote at the meeting and at any adjournment thereof
or to appoint a proxy or proxies to represent them and vote
for them at that meeting and at any adjournment thereof in the
same manner and with the same effect as though the persons so
named in the voting certificates were the actual holders of
the Warrants specified therein;
(b) for the deposit of voting certificates and/or instruments
appointing proxies at such place and time as the Trustee, the
Company or the Warrantholders convening the meeting, as the
case may be, may in the notice convening the meeting direct;
(c) for the deposit of voting certificates and/or instruments
appointing proxies at some approved place or places other than
the place at which the meeting is to be held and enabling
particulars of the voting certificates and/or instruments
appointing proxies to be sent by mail, cable, telex or other
means of prepaid, transmitted, recorded communication before
the meeting to the Company or to the Trustee at the place
where the same is to be held and for the voting of proxies so
deposited as though the instruments themselves were produced
at the meeting; and
(d) for the form of instrument appointing a proxy.
8.9.2 Any regulations so made shall be binding and effective and the
votes given in accordance therewith shall be valid and shall be
counted. Except as such regulations may provide, the only persons
who shall be recognized at any meeting as the holders of any
Warrants, or as entitled to vote or, subject to section 8.10, be
present at the meeting in respect thereof, shall be persons who are
the registered holders of Warrants.
8.10 Company and Trustee may be Represented
The Company and the Trustee by their respective officers or directors, and
the counsel to the Company and the Trustee, may attend any meeting of the
Warrantholders, but shall have no vote as such.
8.11 Powers Exercisable by Extraordinary Resolution
In addition to all other powers conferred upon them by any other provisions
of this Indenture or by law, the Warrantholders at a meeting shall have the
following powers exercisable from time to time by extraordinary resolution:
(a) power to agree to any modification, abrogation, alteration,
compromise or arrangement of the rights of Warrantholders and/or
the Trustee in its capacity as trustee hereunder or on behalf of
the Warrantholders against the Company whether those rights arise
under this Indenture or the Warrants or otherwise, except that, in
respect of a change in the Time of Expiry or the Subscription
Price, the amendment shall not be binding upon a Warrantholder who
does not consent thereto;
(b) power to direct or authorize the Trustee to enforce any of the
covenants on the part of the Company contained in this Indenture or
the Warrants or to enforce any of the rights of the Warrantholders
in any manner specified in the extraordinary resolution or to
refrain from enforcing any such covenant or right;
(c) power to waive and direct the Trustee to waive any default on the
part of the Company in complying with any provisions of this
Indenture or the Warrants either unconditionally or upon any
conditions specified in the extraordinary resolution;
(d) power to restrain any Warrantholder from taking or instituting any
suit, action or proceeding against the Company for the enforcement
of any of the covenants on the part of the Company contained in
this Indenture or the Warrants or to enforce any of the rights of
the Warrantholders;
(e) power to direct any Warrantholder who, as such, has brought any
suit, action or proceeding to stay or discontinue or otherwise deal
with the same upon payment of the costs, charges and expenses
reasonably and properly incurred by the Warrantholder in connection
therewith; and
(f) power from time to time and at any time to remove the Trustee and
appoint a successor trustee.
8.12 Meaning of "Extraordinary Resolution"
8.12.1 The expression "extraordinary resolution" when used in this
Indenture means, subject as hereinafter provided in this section
8.12 and in sections 8.15 and 8.16, a resolution proposed at a
meeting of the Warrantholders duly convened for that purpose and
held in accordance with the provisions of this Article 8 at which
there are present in person or by proxy Warrantholders entitled to
acquire at least 51% of the aggregate number of Common Shares that
can be acquired pursuant to all the then outstanding Warrants and
passed by the affirmative votes of Warrantholders entitled to
acquire not less than two thirds of the aggregate number of Common
Shares that can be acquired pursuant to all the Warrants
represented at the meeting and voted on the poll upon the
resolution.
8.12.2 If, at any meeting called for the purpose of passing an
extraordinary resolution, Warrantholders entitled to acquire 51% of
the aggregate number of Common Shares that can be acquired pursuant
to all the then outstanding Warrants are not present in person or
by proxy within half an hour after the time appointed for the
meeting, then the meeting, if convened by Warrantholders or on a
Warrantholders' Request, shall be dissolved, but, in any other
case, it shall stand adjourned to such day, being not less than 15
or more than 60 days later, and to such place and time as may be
appointed by the chairman. Not less than 10 days' notice shall be
given of the time and place of the adjourned meeting in the manner
provided in section 11.2. The notice shall state that at the
adjourned meeting the Warrantholders present in person or by proxy
shall form a quorum but it shall not be necessary to set out the
purposes for which the meeting was originally called or any other
particulars. At the adjourned meeting the Warrantholders present in
person or by proxy shall form a quorum and may transact the
business for which the meeting was originally convened and a
resolution proposed at the adjourned meeting and passed by the
requisite vote as provided in subsection 8.12.1 shall be an
extraordinary resolution within the meaning of this Indenture,
notwithstanding that Warrantholders entitled to acquire 51% of the
aggregate number of Common Shares that can be acquired pursuant to
all the then outstanding Warrants are not present in person or by
proxy at the adjourned meeting.
8.12.3 Votes on an extraordinary resolution shall always be given on a
poll and no demand for a poll on an extraordinary resolution shall
be necessary.
8.13 Powers Cumulative
It is hereby declared and agreed that any one or more of the powers or any
combination of the powers in this Indenture stated to be exercisable by the
Warrantholders by extraordinary resolution or otherwise may be exercised from
time to time and the exercise of any one or more of the powers or any
combination of the powers from time to time shall not be deemed to exhaust
the right of the Warrantholders to exercise that power or those powers or
combination of powers then or any other power or powers or combination of
powers thereafter from time to time.
8.14 Minutes
Minutes of all resolutions and proceedings at every meeting of Warrantholders
as aforesaid shall be made and duly entered in books to be provided for that
purpose by the Trustee at the expense of the Company and any such minutes, if
signed by the chairman of the meeting at which resolutions were passed or
proceedings had, or by the chairman of the next succeeding meeting of the
Warrantholders, shall be prima facie evidence of the matters therein stated
and, until the contrary is proved, every meeting, in respect of the
proceedings of which minutes shall have been made, shall be deemed to have
been duly convened and held, and all resolutions passed thereat or
proceedings taken, to have been duly passed and taken.
8.15 Instruments in Writing
All actions that may be taken and all powers that may be exercised by the
Warrantholders at a meeting held as hereinbefore in this Article 8 provided
may also be taken and exercised by Warrantholders entitled to acquire
two-thirds of the aggregate number of Common Shares that can be acquired
pursuant to all the then outstanding Warrants by an instrument in writing
signed in one or more counterparts by Warrantholders in person or by attorney
duly appointed in writing and the expression "extraordinary resolution" when
used in this Indenture shall include an instrument so signed.
8.16 Binding Effect of Resolutions
Every resolution and every extraordinary resolution passed in accordance with
the provisions of this Article 8 at a meeting of Warrantholders shall be
binding upon all the Warrantholders, whether present at or absent from the
meeting, and every instrument in writing signed by Warrantholders in
accordance with section 8.15 shall be binding upon all the Warrantholders,
whether signatories thereto or not, and each and every Warrantholder and the
Trustee (subject to the provisions for its indemnity herein contained) shall
be bound to give effect accordingly to every resolution and instrument in
writing passed or executed in accordance with these provisions.
8.17 Holdings by Company Disregarded
In determining whether the requisite number of Warrantholders are present for
the purpose of obtaining a quorum or have voted or consented to any
resolution, extraordinary resolution, consent, waiver, Warrantholders'
Request or other action under this Indenture, Warrants owned by the Company
or any subsidiary of the Company shall be deemed to be not outstanding.
9. SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES
9.1 Provision for Supplemental Indentures for Certain Purposes
9.1.1 From time to time the Company and the Trustee may, subject to the
provisions hereof, and they shall, when so directed hereby, execute
and deliver by their proper officers indentures or instruments
supplemental hereto, which thereafter shall form part hereof, for
any one or more or all of the following purposes:
(a) adding to the provisions hereof such additional covenants and
enforcement provisions as, in the opinion of counsel, are
necessary or advisable, provided that the same are not in the
opinion of the Trustee prejudicial to the interest of the
Warrantholders as a group;
(b) giving effect to any extraordinary resolution passed as
provided in Article 8;
(c) making provisions not inconsistent with this Indenture as may
be necessary or desirable with respect to matters or questions
arising hereunder provided that the provisions are not, in the
opinion of the Trustee, prejudicial to the interests of the
Warrantholders as a group;
(d) adding to or altering the provisions hereof in respect of the
transfer of Warrants, making provision for the exchange of
Warrants and making any modification in the form of the
Warrants that does not affect the substance thereof;
(e) modifying any of the provisions of this Indenture or relieving
the Company from any of the obligations, conditions or
restrictions herein contained, provided that no such
modification or relief shall be or become operative or
effective if in the opinion of the Trustee the modification or
relief impairs any of the rights of the Warrantholders as a
group, or of the Trustee, and provided that the Trustee may in
its uncontrolled discretion decline to enter into any
supplemental indenture which in its opinion may not afford
adequate protection to the Trustee when the same shall become
operative;
(f) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification or any
ambiguities, defective provisions, errors or omissions herein,
provided that in the opinion of the Trustee the rights of the
Trustee and the Warrantholders as a group, are in no way
prejudiced thereby; and
(g) evidencing any succession or successions of other bodies
corporate to the Company and the assumption by any successor
of the covenants of the Company contained herein, as provided
in section 9.2.
9.1.2 For the purposes of this section 9.1, the phrase "the
Warrantholders as a group" does not include the Company or any of
its subsidiaries to the extent that they hold any Warrants.
9.2 Successor Companies
In the case of the consolidation, amalgamation, merger or transfer of the
undertaking or assets of the Company as an entirety or substantially as an
entirety to another corporation (a "successor corporation"), the successor
corporation resulting from the consolidation, amalgamation, merger or
transfer (if not the Company) shall be bound by the provisions hereof and all
obligations for the due and punctual performance and observance of each and
every covenant and obligation contained in this Indenture to be performed by
the Company, and, if requested by the Trustee, the successor corporation
shall, by supplemental indenture satisfactory in form to the Trustee and
executed and delivered to the Trustee, expressly assume those obligations.
10. CONCERNING THE TRUSTEE
10.1 Trust Indenture Legislation
10.1.1 If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, such mandatory requirement shall prevail.
10.1.2 The Company and the Trustee agree that each will at all times in
relation to this Indenture and any action to be taken hereunder
observe and comply with and be entitled to the benefits of
Applicable Legislation.
10.2 Rights and Duties of Trustee
10.2.1 In the exercise of the rights and duties prescribed or conferred by
the terms of this Indenture, the Trustee shall act honestly and in
good faith with a view to the best interests of the Warrantholders
and shall exercise that degree of care, diligence and skill that a
reasonably prudent trustee would exercise in comparable
circumstances.
10.2.2 The obligation of the Trustee to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of the
Trustee or the Warrantholders hereunder shall be conditional on the
Warrantholders furnishing, when required by notice in writing by
the Trustee, sufficient funds to commence or continue the act,
action or proceeding and indemnity reasonably satisfactory to the
Trustee to protect and hold harmless the Trustee against the costs,
charges and expenses and liabilities to be incurred thereby and any
loss and damage it may suffer by reason thereof. None of the
provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties or in the exercise of any
of its rights or powers unless indemnified as hereinbefore
provided.
10.2.3 The Trustee may before commencing action or proceeding, or at any
time during the continuance thereof require the Warrantholders at
whose instance it is acting to deposit with the Trustee the Warrant
Certificates held by them, for which Warrant Certificates the
Trustee shall issue receipts.
10.2.4 Every provision of this Indenture that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable
Legislation, and of this section 10.2 and section 10.3.
10.3 Evidence. Experts and Advisers
10.3.1 In addition to the reports, certificates, opinions and other
evidence required by this Indenture, the Company shall furnish to
the Trustee such additional evidence of compliance with any
provision hereof, and in such form, as may be prescribed by
Applicable Legislation or as the Trustee may reasonably require by
written notice to the Company.
10.3.2 In the exercise of its rights- and duties, the Trustee may, if it
is acting in good faith, rely as to the truth of the statements and
the accuracy of the opinions expressed therein, upon statutory
declarations, opinions, reports, certificates or other evidence
furnished to the Trustee pursuant to any provision hereof or of
Applicable Legislation or pursuant to a request of the Trustee,
provided that the evidence complies with Applicable Legislation and
that the Trustee examines the same and determines that the evidence
complies with the applicable requirements of this Indenture.
10.3.3 Whenever Applicable Legislation requires that evidence referred to
in subsection 10.3.1 be in the form of a statutory declaration, the
Trustee may accept the statutory declaration in lieu of a
certificate of the Company required by any provision hereof Any
such statutory declaration may be made by one or more of the
officers of the Company.
10.3.4 Proof of the execution of an instrument in writing, including a
Warrantholders' Request, by any Warrantholder may be made by the
certificate of a notary public, or other person with similar powers
that the person signing the instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to the execution
or in any other manner that the Trustee may consider adequate.
10.3.5 The Trustee may, at the expense of the Company, employ or retain
such counsel, accountants, engineers, appraisers, or other experts
or advisers as it may reasonably require for the purpose of
discharging its duties hereunder and may pay reasonable
remuneration for all services so performed by any of them, without
taxation of costs of any counsel, and shall not be responsible for
any misconduct on the part of any of them.
10.3.6 The Trustee may, at the expense of the Company, as a condition
precedent to any action to be taken by it under this Indenture
require such opinions, statutory declarations, reports,
certificates or other evidence as it, acting reasonably, considers
necessary or advisable in the circumstances.
10.4 Securities, Documents and Monies Held by Trustee
Any securities, documents of title or other instruments that may at any time
be held by the Trustee subject to the trusts hereof may be placed in the
deposit vaults of the Trustee or of any of the Canadian Imperial Bank of
Commerce, Bank of Montreal, Bank of Nova Scotia, The Toronto-Dominion Bank
Royal Bank of Canada, National Bank of Canada and the Hong Kong Bank of
Canada or deposited for safekeeping with any of those Canadian chartered
banks. Unless herein otherwise expressly provided, any monies held pending
the application or withdrawal thereof under any provisions of this Indenture
shall be invested in short-term obligations issued or guaranteed by the
Government of Canada or any province of Canada and specified by the Company,
provided that such monies may be held on deposit as hereinbefore contemplated
for any period of no more than 24 hours pending such investment. Subject to
the provisions of this Indenture and unless the Company shall be in default
hereunder, all interest or other income received by the Trustee in respect of
such deposits and investments shall belong to the Company.
10.5 Action by Trustee to Protect Interests
The Trustee shall have power to institute and to maintain such actions and
proceedings as it may consider necessary or expedient to preserve, protect or
enforce its interests and the interests of the holders of Warrants.
10.6 Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or security in respect of
the execution of the trusts and powers of this Indenture or otherwise in
respect of the premises.
10.7 Protection of Trustee
By way of supplement to the provisions of any law for the time being relating
to trustees, it is expressly declared and agreed as follows:
(a) the Trustee shall not be liable for or by reason of any
representations, statements of fact or recitals in this Indenture
or in the Warrants (except the representation contained in section
10.9 or in the certificate of the Trustee on the Warrants) or
required to verify the same, but all those statements or recitals
are and shall be deemed to be made by the Company;
(b) nothing herein contained shall impose any obligation on the Trustee
to see to or to require evidence of the registration (or filing or
renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto;
(c) the Trustee shall not be bound to give notice to any person or
persons of the execution hereof;
(d) the Trustee shall not incur any liability or responsibility
whatever or be in any way responsible for the consequence of any
breach on the part of the Company of any of the covenants or
warranties herein contained or of any acts of any director,
officer, employee or agent of the Company; ^
(e) the Trustee shall not be bound to give any notice or to do or take
any act, action or proceeding by virtue of the powers conferred on
it hereby unless and until it shall have been required so to do
under the terms hereof and the Trustee shall not be required to
take notice of any default of the Company hereunder unless and
until notified in writing of the default (which notice must specify
the nature of the default) and, in the absence of such notice, the
Trustee may for all purposes hereunder conclusively assume that no
default by the Company hereunder has occurred. The giving of any
notice shall in no way limit the discretion of the Trustee
hereunder as to whether any action is required to be taken in
respect of any default hereunder^;
(f) the Trustee shall not at any time be under any duty or
responsibility to any Warrantholder to determine whether any facts
exist which may require any adjustment contemplated by Article 5,
with respect to the nature or extent of any such adjustment when
made or with respect to the method used in making such adjustment;
(g) the Trustee shall not be accountable with respect to the validity
or value (or the kind or amount) of any shares or other securities
or property which may at any time be issued or delivered upon the
exercise of the rights attached to any Warrant; and
(h) the Trustee shall not be responsible for any failure of the Company
to make any cash payment or to issue, transfer or deliver Common
Shares or certificates therefor upon the surrender of any Warrants
for the purpose of the exercise of the rights attached to such
Warrants or to comply with any of the covenants contained in
Article 5.
10.8 Replacement of Trustee
10.8.1 The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder by giving to the Company not less
than 90 days' notice in writing or such shorter notice as the
Company may accept as sufficient The Warrantholders by
extraordinary resolution shall have power at any time to remove the
Trustee and to appoint a new Trustee. In the event of the Trustee
resigning or being removed as aforesaid or being dissolved,
becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting hereunder, the Company shall forthwith appoint
a new Trustee unless a new Trustee has already been appointed by
the Warrantholders. Failing such appointment by the Company, the
retiring Trustee or any Warrantholder may apply to a Justice of the
Supreme Court of British Columbia, at the Company's expense, on
such notice as the Justice may direct, for the appointment of a new
Trustee. Any new Trustee so appointed by the Company or by the
Court shall be subject to removal by the Warrantholders as
hereinbefore provided. Any new Trustee appointed under any
provision of this section 10.8 shall be a corporation authorized to
carry on the business of a trust company in the Province of British
Columbia and, if required by the Applicable Legislation of any
other Province, in that other Province. On any appointment, the new
Trustee shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as
Trustee without any further assurance, conveyance, act or deed
(provided, however, there shall be immediately executed, at the
expense of the Company, all such conveyances or other instruments
as may, in the opinion of counsel, be necessary or advisable for
the purpose of assuring the same of the new Trustee).
10.8.2 Upon the appointment of a new Trustee, the Company shall promptly
give notice to the Warrantholders thereof.
10.8.3 Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation succeeding to the
trust business of the Trustee, shall be the successor to the
Trustee hereunder without any further act on its part or any of the
parties hereto provided that the corporation would be eligible for
appointment as a new Trustee under subsection 10.8.1.
10.8.4 Any Warrants certified but not delivered by a predecessor Trustee
may be certified by the new or successor Trustee in the name of the
predecessor or new or successor Trustee.
10.9 Conflict of Interest
10.9.1 The Trustee represents to the Company that at the time of the
execution and delivery hereof no material conflict of interest
exists in the Trustee's role as a fiduciary hereunder and agrees
that in the event of a material conflict of interest arising
hereafter it will, within 90 days after ascertaining that it has a
material conflict of interest, either eliminate the same or resign
its trust hereunder.
10.9.2 Subject to subsection 10.9.1, the Trustee, in its personal or any
other capacity, may buy, lend upon and deal in securities of the
Company, may act as registrar and transfer agent for the Common
Shares and generally may contract and enter into financial
transactions with the Company or any subsidiary of the Company, all
without being liable to account for any profit made thereby.
10.10 Acceptance of Trust
The Trustee hereby accepts the trusts in this Indenture declared and provided
for, agrees to perform the same upon the terms and conditions herein set out
and agrees to hold all rights, interests and benefits contained herein for
and on behalf of those persons who become holders of Warrants from time to
time issued pursuant to this Indenture and for the Company, all as set out
herein.
10.11 Indemnification
Without limiting any protection or indemnity of the Trustee under any other
provision hereof or otherwise at law, the Company hereby agrees to indemnify
and hold harmless the Trustee from and against any and all liabilities,
losses, damages, penalties, claims, actions, suits, costs. expenses and
disbursements, including reasonable legal or adviser fees and disbursements,
of whatever kind and nature which may at any time be imposed on. incurred by
or asserted against the Trustee in connection with the performance of its
duties and obligations hereunder, other than such liabilities, losses damages
penalties claims actions suits, costs. expenses and disbursements arising by
reason of the negligence or fraud of the Trustee. This indemnity shall
survive the resignation or removal of the Trustee or the termination of this
Indenture. The Trustee shall not be under any obligation to prosecute or to
defend any action or suit at the instance of the Company which, in the
opinion of its counsel. May subject the Trustee to expense or liability
unless the Company shall, so often as required, furnish the Trustee with
satisfactory indemnity against or funding in respect of such expense or
liability.
11. GENERAL
11.1 Notice to Company and Trustee
11.1.1 Unless herein otherwise expressly provided, any notice to be given
hereunder to the Company or the Trustee shall be deemed to be
validly given if delivered or if sent by registered letter, postage
prepaid:
If to the Company:
Golden Queen Mining Co. Ltd.
Greenflag Building
Suite 211A, South 104 Freya Street
Spokane, Washington
99202
Attention: President
with a copy to:
Lawson Lundell Lawson & McIntosh
1600 - 925 West Georgia Street
Vancouver, B.C.
V6C 3L2
Attention: Jerrold W. Schramm
If to the Trustee:
Montreal Trust Company of Canada
510 Burrard Street
Vancouver, B.C.
V6C 3B9
Attention: Manager, Corporate Trust
and any notice delivered in accordance with the foregoing shall be
deemed to have been received on the date of delivery or, if mailed,
on the third business day following the day of the mailing of the
notice.
11.1.2 The Company or the Trustee, as the case may be, may from time to
time notify the other in the manner provided in subsection 11.1.1
of a change of address which, from the effective date of the notice
and until changed by like notice, shall be the address of the
Company or the Trustee, as the case may be, for all purposes of
this Indenture.
11.1.3 If, by reason of a strike, lockout or other work stoppage, actual
or threatened, involving postal employees, any notice to be given
to the Trustee or to the Company hereunder could reasonably be
considered unlikely to reach its destination, the notice shall be
valid and effective only if it is delivered to an officer of the
party to which it is addressed or if it is delivered to that party
at the appropriate address provided in subsection 11.1.1 by
telecopy or other means of prepaid, transmitted, or recorded
communication and any notice delivered in accordance with the
foregoing shall be deemed to have been received on the date of
delivery to the officer or if delivered by, telecopy or other means
of prepaid, transmitted, recorded communication, on the first
business day following the date of the sending of the notice by the
person giving the notice.
11.2 Notice to Warrantholders
11.2.1 Unless herein otherwise expressly provided, any notice to be given
hereunder to Warrantholders shall be deemed to be validly given if
the notice is sent by mail, prepaid, addressed to the holder or
delivered by hand (or so mailed to certain holders and so delivered
to other holders) at their respective addresses appearing on the
register maintained by the Trustee and if, in the case of joint
holders of any Warrants, more than one address appears on the
register in respect of that joint holding, the notice shall be
addressed or delivered, as the case may be, only to the first
address so appearing. No accidental error or omission in giving
notice or accidental failure to give notice to any Warrantholder
shall invalidate any action or proceeding founded thereon.
11.2.2 If, by reason of strike, lock-out or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to
the Warrantholders could reasonably be considered unlikely to reach
its destination, the notice may be published or distributed once in
the Report on Business section of the National edition of The Globe
and Mail newspaper, or, in the event of a disruption in the
circulation of that newspaper, once in a daily newspaper in the
English language approved by the Trustee of general circulation in
each of the cities of Vancouver and Toronto; provided, however,
that in the case of a notice convening a meeting of the holders of
Warrants, the Trustee may require such additional publications of
that notice, in the same or in other cities or both, as it may deem
necessary for the reasonable protection of the holders of Warrants
or to comply with any applicable requirement of law or any stock
exchange. Any notice so given shall be deemed to have been given on
the day on which it has been published in all of the cities in
which publication was required (or first published in a city if
more than one publication in that city is required). In
determining, under any provision hereof, the date when notice of
any meeting or other event must be given, the date of giving notice
shall be included and the date of the meeting or other event shall
be excluded.
11.3 Satisfaction and Discharge of Indenture
Upon the date by which Common Shares shall have been delivered to
Warrantholders to the full extent of the rights attached to all Warrants
theretofore certified hereunder and the monies to be paid hereunder have been
paid, this Indenture shall cease to be of further effect, and on demand of
and at the cost and expense of the Company and upon delivery to the Trustee
of a certificate of the Company stating that all conditions precedent to the
satisfaction and discharge of this Indenture have been complied with and upon
payment to the Trustee of the fees and other remuneration payable to the
Trustee, the parties hereto shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture.
11.4 Sole Benefit of Parties and Warrantholders
Nothing in this Indenture or in the Warrants, expressed or implied, shall
give or be construed to give to any person other than the parties hereto and
the Warrantholders any legal or equitable right, remedy or claim under this
Indenture, or under any covenant or provision therein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
the Warrantholders.
11.5 Counterparts and Formal Date
This Indenture may be simultaneously executed in several counterparts, each
of which when so executed shall be deemed to be an original and the
counterparts together shall constitute one and the same instrument and
notwithstanding their date of execution shall be deemed to bear date as of
May 23, 1996.
IN WITNESS WHEREOF the parties hereto have executed these presents under
the hands of their proper officers in that behalf.
GOLDEN QUEEN MINING CO. LTD.
By: ______________________________
______________________________
MONTREAL TRUST COMPANY OF CANADA
By: ______________________________
______________________________
<PAGE>
SCHEDULE A
WARRANTS
TO ACQUIRE COMMON SHARES OF
GOLDEN QUEEN MINING CO. LTD.
(Incorporated under the laws of British Columbia)
WARRANT CERTIFICATE Certificate for warrants,
each entitling the holder to acquire
NO. one common share in the capital of
Golden Queen Mining Co. Ltd.
THIS IS TO CERTIFY THAT, for value received,
(herein called the "holder") is entitled to receive in the manner herein
provided and without further payment therefor, subject as hereinafter
provided, one fully paid and non-assessable common share in the capital of
Golden Queen Mining Co. Ltd. (the "Company") for each of the warrants (the
"Warrants") evidenced by this certificate.
The Warrants represented by this Warrant Certificate are issued under and
pursuant to a Warrant indenture (herein called the "Indenture") made as of
May 23, 1996 between the Company and Montreal Trust Company of Canada (the
"Trustee"), to which Indenture and any instruments supplemental thereto
reference is hereby made for a full description of the rights of the holders
of the Warrants and the terms and conditions upon which Warrants are, or are
to be, issued, held, exchanged and surrendered, all to the same effect as
if.the provisions of the Indenture and all instruments supplemental thereto
were herein set out, and to all of which provisions the holder of these
Warrants evidenced hereby by acceptance hereof assents. In the event of any
conflict between the provisions of this Warrant Certificate and the
provisions of the Indenture, the provisions of the Indenture shall prevail
and govern. Capitalized terms used in this Warrant Certificate and not
otherwise defined shall have the meanings ascribed to them in the Indenture.
The Warrants are exercisable at any time prior to 4:00 p.m. ^(Vancouver time)
on November 28, 1997 (the "Time of Expiry").
The Warrants represented by this Warrant Certificate may be exercised by the
holder at any time prior to the Time of Expiry by:
a) duly completing and executing the exercise form attached to this
Warrant Certificate;
b) delivering to the Trustee a certified cheque or recognized bank
draft payable to or to the order of the Company for the
subscription price of $2.9(: for each Common Share to be acquired;
and
c) surrendering this Warrant Certificate to the Trustee at the
principal transfer office of the Trustee in either of the cities of
Vancouver, British Columbia [or Toronto, Ontario].
If the Warrants represented by this Warrant Certificate have not been
exercised prior to the Time of Expiry, all rights under the Warrants
represented hereby shall wholly cease and terminate and the Warrants shall be
void and of no effect.
The Indenture provides for adjustments to the right of subscription,
including the amount of and class and kind of securities or other property
issuable upon exercise, upon the happening of certain stated events,
including the subdivision or consolidation of the Common Shares, certain
distributions of Common Shares or securities convertible into Common Shares
or of other securities or assets of the Company, certain offerings of rights,
warrants or options and certain capital reorganizations.
The holder of this Warrant Certificate may upon surrender hereof to the
Trustee at its principal transfer office in either of the cities of
Vancouver, British Columbia [or Toronto, Ontario] exchange this Warrant
Certificate for other Warrant Certificates evidencing Warrants entitling the
holder to receive in the aggregate the same number of Common Shares as may be
acquired pursuant to the Warrants evidenced by this Warrant Certificate.
The holding of the Warrants evidenced by this Warrant Certificate shall not
constitute the holder hereof a shareholder of the Company or entitle the
holder to any right or interest in respect thereof except as herein and in
the Indenture expressly provided.
The Indenture contains provisions making binding upon all holders of Warrant
Certificates resolutions passed at meetings of such holders held in
accordance with such provisions and instruments in writing signed by the
holders of Warrants entitled to acquire a specified percentage of the Common
Shares which may be acquired pursuant to all of the then outstanding Warrant
Certificates.
The Warrants evidenced by this Warrant Certificate may only be transferred in
accordance with applicable securities laws, the rules of the stock exchanges
upon which the Common Shares are listed and upon executing the transfer form
attached to this certificate and, subject thereto, may be transferred on the
register kept at the offices of the Trustee by the holder hereof or his legal
representatives or his or their attorney duly appointed by an instrument in
writing in form and execution satisfactory to the Trustee only upon
compliance with the conditions prescribed in the Indenture and upon
compliance with such reasonable requirements as the Trustee may prescribe.
This Warrant Certificate shall not be valid for any purpose whatever unless
and until it has been countersigned by or on behalf of the Trustee.
The registered holder of this Warrant Certificate expressly acknowledges
having requested, and consents to, the drawing in the English language only
of this Warrant Certificate evidencing the Warrants registered in its name
and all documents relating to such Warrants. Le detenteur inscrit du present
certificat de bons de souscription reconnait expressement avoir demande et
consenti que le present certificat attestant qu'il est le detenteur inscrit
de bons de souscription, ainsi que tous les documents s'y rapportant, soient
rediges en anglais seulement.
Time shall be of the essence hereof.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the province of British Columbia.
IN WITNESS WHEREOF the undersigned has caused this Warrant Certificate to be
duly executed as of the 23rd day of May, 1996.
GOLDEN QUEEN MINING CO. LTD.
By: ______________________________
Authorized Officer
Countersigned by:
MONTREAL TRUST COMPANY OF CANADA
By: ______________________________
Authorized Officer
<PAGE>
LEGEND
^ THE WARRANTS REPRESENTED HEREBY AND THE COMMON SHARES ISSUABLE UPON
EXERCISE ^ THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF
ANY STATE. ^ SUCH WARRANTS MAY BE EXERCISED ONLY BY A PERSON WHO (I) IS NOT
IN THE UNITED STATES OR A U.S. PERSON AND IS NOT EXERCISING THIS WARRANT FOR
THE ACCOUNT OR BENEFIT OF OR FOR RESALE TO A U.S. PERSON OR A PERSON IN THE
UNITED STATES AND WHO PROVIDES A WRITTEN REPRESENTATION TO SUCH EFFECT, OR
(II) PROVIDES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT SUCH COMMON SHARES ARE REGISTERED UNDER THE U.S. SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR EXEMPTIONS FROM REGISTRATION ARE
AVAILABLE. A QUALIFIED INSTITUTIONAL BUYER ^(AS DEFINED IN RULE 144A ^ UNDER
THE U.S. SECURITIES ACT) ^ THAT WAS ISSUED ^ THE WARRANTS REPRESENTED HEREBY
UPON EXERCISE OF SPECIAL WARRANTS OF THE COMPANY PURCHASED BY SUCH HOLDER
FROM ^ GOEPEL SHIELDS & PARTNERS (USA), INC. ^ ON OR ABOUT MAY 23, 1996^ IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT
TO RULE 144A THEREUNDER OR AN ACCREDITED INVESTOR (AS DEFINED IN REGULATION D
UNDER THE U.S. SECURITIES ACT) THAT WAS ISSUED THE WARRANTS REPRESENTED
HEREBY UPON EXERCISE OF SPECIAL WARRANTS OF THE COMPANY PURCHASED BY SUCH
HOLDER FROM THE COMPANY ON OR ABOUT MAY 23, 1996 IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PURSUANT TO SECTION 4(2)
THEREUNDER SHALL NOT BE REQUIRED TO DELIVER AN OPINION OF COUNSEL IN
CONNECTION WITH THE EXERCISE OF ^ THE WARRANTS REPRESENTED HEREBY.^
[Insert any additional legends ^ required under the Warrant Indenture]
<PAGE>
TRANSFER OF WARRANTS
FOR VALUE RECEIVED, the undersigned transferor (the "Transferor") hereby
sells, assigns and transfers unto
__________________________________________________________ (the "Transferor")
(Name)
_____________________________________________________________________________
(Address)
the Warrants registered in the name of the undersigned represented by this
Warrant Certificate. ^
The Transferee, by executing this instrument, agrees to be bound by the
terms of the Indenture, and
Check One
[ ] represents and warrants to and for the benefit of Golden Queen Mining
Co. Ltd. (the "Company"), the Trustee and the Transferor that the
Transferee (i) is not a U.S. Person or a person in the United States, or
acquiring the Warrants for the account or benefit of, or for resale to,
a U.S. Person or a person in the United States; (ii) was not offered the
Warrants in the United States, and (iii) did not exercise or deliver
this transfer form or other order to purchase the Warrants in the United
States. "United States" and "U.S. Person" are used herein as defined in
Regulation S under the United States Securities Act of 1933, as amended.
[ ] has included herewith evidence of compliance with the restrictions on
transfer set out in ^the Indenture, it being understood that no transfer
shall be effective unless and until such evidence is found to be
satisfactory to the Company^.
DATED the _____ day of _____________, 199_.
______________________________ ______________________________
Signature Guaranteed (Signature of Transferor)
______________________________ ______________________________
Witness (Signature of Transferee)
<PAGE>
EXERCISE FORM
TO: GOLDEN QUEEN MINING CO. LTD.
AND TO: MONTREAL TRUST COMPANY OF CANADA
The undersigned holder of the ^ Warrants represented by this Warrant
Certificate hereby exercises the right provided for in the Warrants to
receive _______________ Common Shares in the capital of Golden Queen Mining
Co. Ltd. issuable pursuant to the Warrants and encloses the amount of $2.90
per Common Share (or the adjusted dollar amount per share at which the
undersigned is entitled to purchase such shares under the Indenture) by way
of certified cheque or recognized bank draft made payable to or to the order
of the Company.
The undersigned hereby irrevocably directs that such Common Shares be
issued and delivered as follows:
Number(s) of
Name(s) in Full Address(es)* Common Shares
_______________ _______________ _______________
_______________ _______________ _______________
_______________ _______________ _______________
(Please print in full the name in which certificates are to be issued. If any
of the securities are to be issued to a person or persons other than the
Warrantholder, the Transfer of Warrants should be endorsed and the
Warrantholder must pay to the Trustee all exigible transfer taxes or other
government charges.)
Check One:
[ ] The Undersigned represents and warrants to the Company and the Trustee
that the Undersigned is not in the United States or a U.S. Person or
exercising the Warrants represented by this Certificate for the account
or benefit of or for resale to, a U.S. person or person in the United
States. "United States" and "U.S. Person" are used herein as defined in
Regulation S under the United States Securities Act of 1933.
[ ] The Undersigned is ^ an Accredited Investor (as defined in ^ Regulation
D^ under the United States Securities Act of 1933) ^ that was issued the
Warrants represented by this Warrant Certificate pursuant to the
exercise of Special Warrants which the undersigned purchased from ^ the
Company or is a Qualified Institutional Buyer (as defined in Rule 144A
under the United States Securities Act of 1933) that was issued the
Warrants represented by this Warrant Certificate pursuant to the
exercise of Special Warrants which the undersigned purchased from Goepel
Shields & Partners (USA), Inc.^, in either case on or about May 23, 1996
in a transaction exempt from registration under the United States
Securities Act of 1933.
[ ] The Undersigned is delivering herewith an opinion of counsel to the
effect that the Common Shares issuable upon exercise hereof are
registered under the United States Securities Act of 1933 and applicable
state securities laws or exemptions from such registration are
available, it being understood that securities issuable upon exercise
hereof will not be delivered unless and until such opinion is found to
be satisfactory to the Company.
DATED this ______ day of _____________, 199_.
______________________________ ______________________________
Witness Signature of Holder
______________________________
Name of Holder
______________________________
______________________________
Address of Holder
* Certificates will not be registered at or delivered to an address in the
United States without an opinion of counsel that the Common Shares are
registered under the U.S. Securities Act and applicable state securities laws
or exemptions from such registration are available, except in connection with
an exercise by a person who checks the second box above on this Exercise
Form.
[ ] Please check box if these certificates are to be delivered to the office
where this Warrant Certificate is surrendered, failing which the
certificates will be mailed to the address shown on the register.
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 2nd day of April, 1996, effective the first
day of the term hereof, between Golden Queen Mining Company Inc., herein
referred to as the "Corporation", Castle Group Inc., herein referred to as
"CGI," and Steven W. Banning, herein referred to as the "Employee."
In consideration of the mutual covenants and benefits as herein set forth,
the parties hereto agree as follows:
SECTION ONE
EMPLOYMENT
The Corporation hereby employs the Employee as its President and Chief
Executive Officer and CGI hereby employs the Employee and the Employee hereby
accepts such employment and agrees to devote all of his efforts for the
benefit of the Corporation and CGI and to faithfully, industriously and, to
the best of his ability, experience and talents, perform all of his required
and assigned duties. Employee shall perform his duties subject to the general
supervision of and pursuant to the orders, advice and direction of the
President of the CGI and the Board of Directors of the Corporation.
SECTION TWO
TERM OF EMPLOYMENT
The term of employment by the Corporation under this Agreement shall commence
on December 1, 1995 and shall continue thereafter for a period of three years
until terminated as hereinafter provided. The term of employment by CGI under
this Agreement shall commence on December 1, 1995 and shall continue
thereafter until May 31, 1996 or until earlier terminated as hereinafter
provided.
SECTION THREE
COMPENSATION
CGI shall pay Employee, and the Employee shall accept from CGI, compensation
at the minimum annual rate of U.S.$200,000 during his employment with CGI,
prorated and payable semi-monthly or on such other basis as the parties may
hereafter agree Corporation shall reimburse CGI for all such payments to
Employee. If CGI fails to make the salary payments described above,
Corporation shall be obligated to make the payments to Employee directly.
When Employee's employment with CGI is terminated, Corporation shall pay
Employee, and Employee shall accept from Corporation, compensation at the
minimum annual rate of U.S. $200,000 until November 30, 1996 and U.S.$
220,000 for the second year of his employment, prorated and payable semi-
monthly or on such other basis as the parties may hereafter agree. Such
minimum compensation may be adjusted for merit or other raises as from time
to time determined by the Board of Directors of Corporation or any Committee
thereof having such authority. Employee shall be entitled to a minimum paid
vacation of four (4) weeks in any calendar year. Employee shall also be
entitled to an annual cash bonus which will be set by the Board of Directors
of the Corporation and based upon the Employee's performance and the
financial condition of the Corporation.
SECTION FOUR
OTHER BENEFITS
In addition to the compensation as provided in the previous Section Three
hereof, CGI shall at its expense provide for Employee the following
additional benefits:
1. An allowance of not to exceed Three Hundred Dollars ($300.00) per month
to acquire and operate a current model automobile for business and
personal use.
2. Participation in all of CGI's benefit plans, including life insurance,
medical, dental, vision, 401(k), pension, disability, and any and all
other plans that may be made available to employees; medical, dental and
vision insurance shall be effective on the first day of the term hereof.
3. Such directors and officers liability insurance as is available to the
other officers and directors of CGI.
CGI shall provide the benefits described in 1, 2 and 3 above only until the
Corporation establishes similar benefit plans to those described above and
Employee has been enrolled in those plans or May 31, 1996, whichever is
earlier, at which time CGI's obligation to provide such benefits to Employee
shall cease.
In addition to the compensation as provided above, Corporation shall at its
expense provide for Employee the following additional benefits:
1. Assistance in annual tax preparation and estate planning.
2. Payment of dues in professional associations as may be required to
maintain Employee's membership in those associations and the privilege
of attending appropriate seminars, conferences and educational programs
as may be necessary.
3. Reimbursement for all expenses incurred in connection with the
performance of services to the Corporation, including entertainment and
travel and other expenses incidental to the duties undertaken hereunder;
provided, however, that such expenses shall be reasonable and necessary
and that Employee shall submit bills and vouchers supporting requests
for reimbursements in accord with Corporation's policies.
4. Corporation hereby grants. to Employee, effective December 1, 1995 an
option ("First Option") to acquire 680,000 shares of Corporation's
common stock, at a strike price equal to C$1.35 per share which was the
closing price of the Corporation's shares on the Toronto Stock Exchange
on December 1, 1995. The First Option may be exercised as to these
680,000 shares (herein referred to as the "First Shares") as follows:
i. Beginning on the date of grant of the First Option, the First
Option may be exercised to the extent of one-third (1/3) of the
First Shares covered hereby;
ii. Beginning on the date one year from the date of grant of the First
Option, the Option may be exercised as to two-thirds (2/3) of the
First Shares covered hereby;
iii. Beginning on the date two years from the date of grant of the First
Option, the First Option may be exercised as to all of the First
Shares covered hereby.
Corporation hereby grants to Employee, effective February 21, 1996 an option
("Second Option") to acquire 130,000 shares ("Second Shares") of
Corporation's common stock at a strike price equal to C$1.51 per share which
was the closing price of the Corporation's shares on the Toronto Stock
Exchange on February 21, 1996. The Second Option may be exercised as to the
Second Shares as follows:
i. Beginning on the date of the grant of the Second Option, the Second
Option may be exercised to the extent of one-third (1/3) of the
Second Shares covered hereby;
ii. Beginning on the date one year from the date of grant of the Second
Option, the Second Option may be exercised as to two-thirds of the
Second Shares covered hereby:
iii. Beginning on the date two years from the date of grant of the
Second Option, the Second Option may be exercised as to all of the
Second Shares covered hereby.
The Corporation agrees to grant to Employee an option ("Third Option") to
acquire an additional 190,000 shares ("Third Shares") of Corporation's common
stock at a strike price equal to the closing price of the Corporation's
shares on the Toronto Stock Exchange on the date the Third Option is granted.
Corporation agrees to issue to Employee the Third Option on the date that all
of the following events have occurred.
A. The Corporation's Stock Option Plan (Plan) has been amended to increase
the number of shares available for issuance under the Plan so that the
Third Shares are available for issuance.
B. The amended Plan has been approved by the shareholders of the
Corporation.
C. The amended Plan has been approved by the relevant Stock Exchanges.
The Third Option may be exercised as to the Third Shares as follows:
i. Beginning on the date of grant of the Third Option, the Third
Option may be exercised to the extent of one-third (1/3) of the
Third Shares covered hereby;
ii. Beginning on the date one year from the date of grant of the Third
Option, the Third Option may be exercised as to one-third (1/3) of
the Third Shares covered hereby;
iii. Beginning on the date two years from the date of grant of the Third
Option, the Third Option may be exercised as to all of the Third
Shares covered hereby.
The First Option, Second Option and Third Option shall be referred to as the
Options.
If Employee elects to exercise his Options, he must exercise all of the First
Option which has vested at the time of exercise before he may exercise his
Second Option. Likewise, he shall exercise all of the Second Option which has
vested at the time of exercise before he may exercise his Third Option.
Corporation agreed to grant Employee 1,000,000 Options at a strike price
equal to the closing price of the Corporation's shares on the Toronto Stock
Exchange on December 1, 1995. On December 1, 1995, Corporation had only
680,000 shares available for grant under its Plan. To compensate employee for
the increase in the price of the Corporation's shares since December 1, 1995,
Corporation agrees that, after Employee exercises his Second or Third Options
and pays the Corporation the funds for the Second or Third Shares,
Corporation will pay Employee for each share purchased the difference between
the strike price of C$1.51 for the Second Shares or the applicable strike
price for the Third Shares, as the case may be, and C$1.35.
Subject to the terms of this Agreement, the Options are granted to Employee
pursuant to the terms of the Plan. The above will constitute a valid and
binding stock option agreement between the Corporation and Employee.
SECTION FIVE
TERMINATION
After Corporation has established the benefit programs described in Section
Four above and Employee has been enrolled in those plans but not later than
May 31, 1996, CGI may terminate Employee. Thereafter, CGI shall have no
obligation to make the salary payments under Section Three or provide
benefits under Section Four, such payments and benefits then being provided
by Corporation. Under these circumstances CGI shall not owe Employee any
severance compensation.
This Agreement will terminate or may be terminated by Employee or Corporation
for any one of the following reasons:
1. Voluntarily and without cause, subject to Sections Two and Six, upon at
least six (6) months prior written notice of termination by Corporation
to the Employee or by the Employee to the Corporation; or
2. By the Corporation for cause as hereinafter defined in Section Ten; or
3. Upon a Change of Control; or
4. Upon retirement.
SECTION SIX
SEVERANCE COMPENSATION
1. Termination by Employee or by Corporation With Cause. If Employee shall
voluntarily terminate his employment under this Agreement or if the
employment of the Employee is terminated by the Corporation for cause,
then all compensation and benefits as heretofore provided in Sections 3
and 4 shall terminate immediately upon the effective date of termination
and no special severance compensation will be paid.
2. Termination by Corporation Without Cause. If Corporation shall terminate
this Agreement for any reason except cause as defined in Section Ten,
then, upon the effective date of termination, the Corporation shall pay
Employee an amount equal to twenty-four (24) months' salary. The amount
shall be paid in one lump sum on the date the Employee's services
terminate. All employee benefits provided to the Employee shall be
continued as if the Employee was still an employee of the Corporation
for a period of one (1) year from the date of termination or equal or
better benefits are provided by a new employer, whichever shall first
occur. In the event Employee has existing stock options, they will be
honored and all such options will vest immediately and may be exercised
by Employee at any time within three months following the date of his
termination. Corporation shall also provide to Employee employment
search assistance by a firm mutually acceptable to Corporation and
Employee, Employee's choice to secure comparable employment, the cost of
which shall not exceed $25,000.00.
3. Termination Following Change of Control
(a) For purposes of this Agreement, a Change in Control shall be deemed
to have occurred if any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, or
any syndicate or group deemed to be a person under Section 14(d)(2)
of the Exchange Act, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power
of the Corporation's then outstanding securities entitled to vote
in the election of directors of the Corporation The foregoing shall
not apply to any beneficial ownership exceeding 25% held by
Ventures Trident L.P., Ventures Trident 11 L.P., or any general
partner or affiliated parties thereof;
(b) Irrespective of any other provisions in this Agreement regarding
termination, if the event described above constituting a Change in
Control shall have occurred, upon the subsequent termination of
Employee's employment (unless such termination is by the
Corporation for cause or by Employee other than for "Good Reason")
Employee shall be entitled to and will receive no later than the
thirtieth (30th) day following the date of termination a lump sum
severance payment equal to two (2) times Employee's then current
annual base salary. In addition, all benefits then applicable to
Employee shall be continued for a period of twenty-four (24)
months. In the event Employee has existing stock options, they will
be honored and all such options will vest immediately and may be
exercised by Employee at any time within three months following the
date of his termination.
(c) After a Change in Control, Employee shall be entitled to terminate
his employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without Employee's express written
consent, any of the following:
(i) the assignment to Employee of any duties inconsistent with
Employee's status as President and Chief Executive Officer of
the Corporation, or Employee's removal from such position, or
a substantial alteration in the nature or status of Employee's
responsibilities from those in effect immediately prior to the
Change in Control;
(ii) a reduction by the Corporation in Employee's annual base
salary as in effect on the date hereof or as the same may have
been increased from time to time or a failure by the
Corporation to increase Employee's salary at a rate
commensurate with that of other key executives of the
Corporation;
(iii) the relocation of the office of the Corporation where Employee
is employed at the time of the Change in Control (the "CIC
Location") to a location more than fifty (50) miles away from
the CIC Location or the Corporation's requiring Employee to be
based more than fifty (50) miles away from the CIC Location
(except for required travel on the Corporation's business to
an extent substantially consistent with Employee's business
travel obligations just prior to the Change in Control);
(iv) after establishment of Corporations benefit plans under
Section Four, the failure by the Corporation to continue to
provide Employee with benefits at least as favorable as those
enjoyed by Employee under any of the Corporation's life
insurance, medical, health and accident, disability, deferred
compensation, pension, or savings plans in which Employee was
participating at the time of the Change in Control, the taking
of any action by the Corporation which would directly or
indirectly materially reduce any of such benefits or deprive
Employee of any material fringe benefit enjoyed by Employee at
the time of the Change in Control, or the failure by the
Corporation to provide Employee with the number of paid
vacation days to which Employee is entitled on the basis of
years of service with the Corporation in accordance with the
Corporation's normal vacation policy in effect at the time of
the Change in Control; or
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement or, if the business of the Corporation for
which Employee's services are principally performed is sold at
any time after a Change in Control, the purchaser of such
business shall fail to agree to provide Employee with the same
or a comparable position, duties, salary and benefits as
provided to Employee by the Corporation immediately prior to
the Change in Control.
(d) In the event of termination of Employee by reason of either a
Change in Control or, after a Change in Control, for"Good Reason"
as herein defined then, in addition to the severance payment as
provided in paragraph 4(b) hereof, Employee shall be entitled to
the following:
(i) Employment search assistance to secure other comparable
employment for a period not to exceed one (1) year or until
such comparable employment is found, whichever is the sooner,
with the fees for such assistance paid by the Corporation;
(ii) Protection for the sale of Employee's residence in the amount
of the original purchase price, plus major improvements, or
the net realized therefrom; and
(iii) Payment of the cost of a one time move to a new location in
the event such a move becomes necessary in order for Employee
to accept new employment
SECTION SEVEN
NON-TRANSFERABILITY
This is a personal agreement. None of Employee's rights, benefits or
interests hereunder may be subject to sale, anticipation, alienation,
assignment, encumbrance, charge, pledge, hypothecation, transfer, or set-off
in respect of any claim, debt or obligation or to execution, attachment, levy
or similar process, or to assignment by operation of law. Any attempt,
voluntary or involuntary, to effect any such action shall be null, void and
of no effect.
SECTION EIGHT
CHOICE OF LAW
It is the intention of the parties hereto that this Agreement and the
performance hereunder and all suits and special proceedings hereunder be
construed in accordance with and under and pursuant to the laws of the State
of Washington and that in any action, special proceeding or other proceeding
that may be brought arising out of, in connection with, or by reason of this
Agreement, the laws of the State of Washington shall be applicable and shall
govern, to the exclusion of the law of any other forum, without regard to the
jurisdiction in which any action or special proceeding may be instituted.
SECTION NINE
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
Corporation, its successors or assigns, and to Employee, and his personal
representatives, heirs, executors and administrators.
SECTION TEN
DEFINITION OF CAUSE
Cause to terminate the Employee's employment shall mean (a) the willful and
continued failure by the Employee to substantially perform his duties, after
demand for substantial performance is delivered by the Corporation that
specifically identifies the manner in which the Corporation believes the
Employee has not substantially performed his duties, or (b) the willful
engagement by the Employee in misconduct which is materially injurious to the
Corporation, monetarily or otherwise, or (c) the willful violation by the
Employee of the provisions of this Employment Agreement.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for cause unless there shall have been delivered to the Employee a
copy of a notice of termination from the Corporation and, after reasonable
written notice, Employee and his counsel have been given an opportunity to be
heard by the Board of Directors of the Corporation and thereafter a
resolution has been duly adopted by the Directors of the Corporation then in
office to the effect that, in the good faith opinion of such Directors, the
Employee was guilty of conduct set forth above, which resolution shall set
forth in particular detail the facts and circumstances claimed to provide a
basis for termination of employment under the provisions so indicated.
SECTION ELEVEN
DIRECTORSHIPS
The Employee shall be entitled to accept positions as director of other
corporations, whether such corporations are engaged in the mining industry or
not, provided any such directorship is first approved by the Corporation,
which approval shall not be unreasonably withheld.
SECTION TWELVE
REPRESENTATIONS
The Corporation represents and warrants to the Employee, with the intent that
Employee shall rely on such representations and warranties in entering into
this Agreement, as follows:
1. The common shares of Corporation are listed for trading on the Vancouver
Stock Exchange and the Toronto Stock Exchange.
2. The financial statements, reports, and other information provided by the
Corporation and its respective officers and employees, both orally and
in writing, constitute complete and accurate disclosures of the status
of the affairs of the Corporation and the Corporation does not know of
any other information which, if disclosed to the Employee, might
reasonably be expected to cause the Employee to refrain from accepting
employment with the Corporation or affect the value of the Corporation's
shares
SECTION THIRTEEN
CONFIDENTIALITY
Employee agrees that, except as required for the performance of his duties,
obligations and responsibilities hereunder, he will not at any time during
the term of this Agreement or thereafter divulge to any person, firm or
corporation any Confidential Information received by him during the course of
his employment and all such Confidential Information shall be kept
confidential and deemed to be the property of Corporation. For the purpose of
this provision, "Confidential Information" means information known to the
Employee as a consequence of his employment by Corporation and not generally
known in the industry in which the Corporation is engaged or not otherwise
available to third parties from sources unrelated to or controlled by
Corporation.
IN WITNESS WHEREOF, the parties have executed this Agreement at Spokane,
Washington as of the day and year first above written.
Golden Queen Mining Company Inc.
By s/ Paul A. Bailly
----------------------------------
Its Chairman of the Board
----------------------------------
Castle Group Inc.
By s/ Christopher M.T. Thompson
----------------------------------
It President and Chief Executive Officer
EMPLOYEE
By s/ Steven W. Banning
----------------------------------
Name: Steven W. Banning
Address: South 4809 Bella Vista Drive
City, State: Veradale, WA
Zip Code: 99037
Telephone Number: 509-891-1581
SS#: ###-##-####
DESIGNATION OF BENEFICIARY
On this 2nd day of April, 1996, Employee hereby designates Sarah Banning, his
Spouse, as his beneficiary for purposes of receiving, upon his death,
compensation and benefits under Section Six, Paragraph 3, hereof.
By s/ Steven W. Banning
----------------------------------
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 8th day of May, 1996, effective the first
day of the term hereof, between Golden Mining Company Inc., herein referred
to as the "Corporation" and Richard W. Graeme, herein referred to as the
"Employee."
In consideration of the mutual covenants and benefits as herein set forth,
the parties hereto agree as follows:
SECTION ONE
EMPLOYMENT
The Corporation hereby employs the Employee as its Vice President Operations
and the Employee hereby accepts such employment and agrees to devote all of
his efforts for the benefit of the Corporation and to faithfully,
industriously and, to the best of his ability, experience and talents,
perform all of his required and assigned duties. Employee's duties shall
include, but not be limited to, assembling a project team, completing a
project feasibility study, and permitting, constructing and bringing the
Soledad Mountain Property into production. Employee shall perform his duties
subject to the general supervision of and pursuant to the orders, advice and
direction of the President and Chief Executive Officer of the Corporation.
SECTION TWO
TERM OF EMPLOYMENT
The term of employment by the Corporation under this Agreement shall commence
on February 1, 1996 and shall continue thereafter for a period of two years
until terminated as hereinafter provided.
SECTION THREE
COMPENSATION
Corporation shall pay Employee, and the Employee shall accept from
Corporation, compensation at the minimum annual rate of U.S.$110,000 during
his employment with Corporation, prorated and payable semi-monthly or on such
other basis as the parties may hereafter agree. Such minimum compensation may
be adjusted for merit or other raises as from time to time determined by the
President and Chief Executive Officer and/or the Board of Directors of
Corporation or any Committee thereof having such authority. Employee shall be
entitled to a minimum paid vacation of three (3) weeks in any calendar year.
Employee shall also be entitled to an annual cash bonus which will be set by
the Board of Directors of the Corporation and based upon the Employee's
performance and the financial condition of the Corporation.
SECTION FOUR
OTHER BENEFITS
In addition to the compensation as provided in the previous Section Three
hereof, Corporation shall at its expense provide for Employee the following
additional benefits as soon as the plans covering these benefits are adopted
by the Corporation:
1. Participation in all of Corporation's benefit plans, including life
insurance, medical, dental, vision, 401 (k), pension, disability, and
any and all other plans that may be made available to employees;
2. Such directors and officers liability insurance as is available to the
other officers and directors of Corporation.
Until such time as the Corporation adopts these benefit plans, Corporation
shall reimburse Employee for the reasonable costs of obtaining such insurance
coverages on his own.
In addition to the compensation as provided above, Corporation shall at its
expense provide for Employee the following additional benefits:
1. Assistance in annual tax preparation and estate planning.
2. Payment of dues in professional associations as may be required to
maintain Employee's membership in those associations and the privilege
of attending appropriate seminars, conferences and educational programs
as may be necessary.
3. Reimbursement for all expenses incurred in connection with the
performance of services to the Corporation, including entertainment and
travel and other expenses incidental to the duties undertaken hereunder;
provided, however, that such expenses shall be reasonable and necessary
and that Employee shall submit bills and vouchers supporting requests
for reimbursements in accord with Corporation's policies.
4. Corporation hereby grants to Employee, effective February 21, 1996 an
option ("Option") to acquire 200,000 shares of Corporation's common
stock, at a strike price equal to C$1.51 per share which was the closing
price of the Corporation's shares on the Toronto Stock Exchange on
February 21, 1996. The Option may be exercised as to these 200,000
shares (herein referred to as the "Shares") as follows:
i. Beginning on the date of grant of the Option, the Option may be
exercised to the extent of one-third (1/3) of the Shares covered
hereby;
ii. Beginning on the date one year from the date of grant of the
Option, the Option may be exercised as to two-thirds (2/3) of the
Shares covered hereby;
iii. Beginning on the date two years from the date of grant of the
Option, the Option may be exercised as to all of the Shares covered
hereby.
Subject to the terms of this Agreement, the Options are granted to Employee
pursuant to the terms of the Corporation's Stock Option Plan. The above will
constitute a valid and binding stock option agreement between the Corporation
and Employee.
SECTION FIVE
TERMINATION
This Agreement will terminate or may be terminated by Employee or Corporation
for any one of the following reasons:
1. Voluntarily and without cause, subject to Sections Two and Six, upon at
least six (6) months prior written notice of termination by Corporation
to the Employee or by the Employee to the Corporation; or
2. By the Corporation for cause as hereinafter defined in Section Ten; or
3. Upon a Change of Control; or
4. Upon retirement.
SECTION SIX
SEVERANCE COMPENSATION
1. Termination by Employee or by Corporation With Cause. If Employee shall
voluntarily terminate his employment under this Agreement or if the
employment of the Employee is terminated by the Corporation for cause,
then all compensation and benefits as heretofore provided in Sections 3
and 4 shall terminate immediately upon the effective date of termination
and no special severance compensation will be paid.
2. Termination by Corporation Without Cause. If Corporation shall terminate
this Agreement for any reason except cause as defined in Section Ten,
then, upon the effective date of termination, the Corporation shall pay
Employee an amount equal to twenty-four (24) months' salary. The amount
shall be paid in one lump sum on the date the Employee's services
terminate. All employee benefits provided to the Employee shall be
continued as if the Employee was still an employee of the Corporation
for a period of one (1) year from the date of termination or equal or
better benefits are provided by a new employer, whichever shall first
occur. In the event Employee has existing stock options, they will be
honored and all such options will vest immediately and may be exercised
by Employee at any time within three months following the date of his
termination. Corporation shall also provide to Employee employment
search assistance by a firm mutually acceptable to Corporation and
Employee, Employee's choice to secure comparable employment, the cost of
which shall not exceed $25,000.00.
3. Termination Following Change of Control
(a) For purposes of this Agreement, a Change in Control shall be deemed
to have occurred if any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, or
any syndicate or group deemed to be a person under Section 14(d)(2)
of the Exchange Act, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power
of the Corporation's then outstanding securities entitled to vote
in the election of directors of the Corporation. The foregoing
shall not apply to any beneficial ownership exceeding 25% held by
Ventures Trident L.P., Ventures Trident 11 L.P., or any general
partner or affiliated parties thereof;
(b) Irrespective of any other provisions in this Agreement regarding
termination, if the event described above constituting a Change in
Control shall have occurred, upon the subsequent termination of
Employee's employment (unless such termination is by the
Corporation for cause or by Employee other than for "Good Reason")
Employee shall be entitled to and will receive no later than the
thirtieth (30th) day following the date of termination a lump sum
severance payment equal to two (2) times Employee's then current
annual base salary. In addition, all benefits then applicable to
Employee shall be continued for a period of twenty-four (24)
months. In the event Employee has existing stock options, they will
be honored and all such options will vest immediately and may be
exercised by Employee at any time within three months following the
date of his termination.
(c) After a Change in Control, Employee shall be entitled to terminate
his employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without Employee's express written
consent, any of the following:
(i) the assignment to Employee of any duties inconsistent with
Employee's status as Vice President Operations of the
Corporation, or Employee's removal from such position, or a
substantial alteration in the nature or status of Employee's
responsibilities from those in effect immediately prior to the
Change in Control;
(ii) a reduction by the Corporation in Employee's annual base
salary as in effect on the date hereof or as the same may have
been increased from time to time or a failure by the
Corporation to increase Employee's salary at a rate
commensurate with that of other key executives of the
Corporation;
(iii) the relocation of the office of the Corporation where Employee
is employed at the time of the Change in Control (the "CIC
Location") to a location more than fifty (50) miles away from
the CIC Location or the Corporation's requiring Employee to be
based more than fifty (50) miles away from the CIC Location
(except for required travel on the Corporation's business to
an extent substantially consistent with Employee's business
travel obligations just prior to the Change in Control);
(iv) after establishment of Corporations benefit plans under
Section Four, the failure by the Corporation to continue to
provide Employee with benefits at least as favorable as those
enjoyed by Employee under any of the Corporation's life
insurance, medical, health and accident, disability, deferred
compensation, pension, or savings plans in which Employee was
participating at the time of the Change in Control, the taking
of any action by the Corporation which would directly or
indirectly materially reduce any of such benefits or deprive
Employee of any material fringe benefit enjoyed by Employee at
the time of the Change in Control, or the failure by the
Corporation to provide Employee with the number of paid
vacation days to which Employee is entitled on the basis of
years of service with the Corporation in accordance with the
Corporation's normal vacation policy in effect at the time of
the Change in Control; or
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement or, if the business of the Corporation for
which Employee's services are principally performed is sold at
any time after a Change in Control, the purchaser of such
business shall fail to agree to provide Employee with the same
or a comparable position, duties, salary and benefits as
provided to Employee by the Corporation immediately prior to
the Change in Control.
(d) In the event of termination of Employee by reason of either a
Change in Control or, after a Change in Control, for "Good Reason"
as herein defined then, in addition to the severance payment as
provided in paragraph 4(b) hereof, Employee shall be entitled to
the following:
(i) Employment search assistance to secure other comparable
employment for a period not to exceed one (1) year or until
such comparable employment is found, whichever is the sooner,
with the fees for such assistance paid by the Corporation;
(ii) Protection for the sale of Employee's residence located within
fifty miles of the office of employment in the amount of the
original purchase price, plus major improvements, or the net
realized therefrom; and
(iii) Payment of the cost of a one time move to a new location in
the event such a move becomes necessary in order for Employee
to accept new employment.
SECTION SEVEN
NON-TRANSFERABILITY
This is a personal agreement. None of Employee's rights, benefits or
interests hereunder may be subject to sale, anticipation, alienation,
assignment, encumbrance, charge, pledge, hypothecation, transfer, or set-off
in respect of any claim, debt or obligation or to execution, attachment, levy
or similar process, or to assignment by operation of law. Any attempt,
voluntary or involuntary, to effect any such action shall be null, void and
of no effect.
SECTION EIGHT
CHOICE OF LAW
It is the intention of the parties hereto that this Agreement and the
performance hereunder and all suits and special proceedings hereunder be
construed in accordance with and under and pursuant to the laws of the State
of Washington and that in any action, special proceeding or other proceeding
that may be brought arising out of, in connection with, or by reason of this
Agreement, the laws of the State of Washington shall be applicable and shall
govern, to the exclusion of the law of any other forum, without regard to the
jurisdiction in which any action or special proceeding may be instituted.
SECTION NINE
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
Corporation, its successors or assigns, and to Employee, and his personal
representatives, heirs, executors and administrators.
SECTION TEN
DEFINITION OF CAUSE
Cause to terminate the Employee's employment shall mean (a) the willful and
continued failure by the Employee to substantially perform his duties, after
demand for substantial performance is delivered by the Corporation that
specifically identifies the manner in which the Corporation believes the
Employee has not substantially performed his duties, or (b) the willful
engagement by the Employee in misconduct which is materially injurious to the
Corporation, monetarily or otherwise, or tc) the willful violation by the
Employee of the provisions of this Employment Agreement.
SECTION ELEVEN
DIRECTORSHIPS
The Employee shall be entitled to accept positions as director of other
corporations, whether such corporations are engaged in the mining industry or
not, provided any such directorship is first approved by the Corporation,
which approval shall not be unreasonably withheld.
SECTION TWELVE
REPRESENTATIONS
The Corporation represents and warrants to the Employee, with the intent that
Employee shall rely on such representations and warranties in entering into
this Agreement, as follows:
1. The common shares of Corporation are listed for trading on the Vancouver
Stock Exchange and the Toronto Stock Exchange.
2. The financial statements, reports, and other information provided by the
Corporation and its respective officers and employees, both orally and
in writing, constitute complete and accurate disclosures of the status
of the affairs of the Corporation and the Corporation does not know of
any other information which, if disclosed to the Employee, might
reasonably be expected to cause the Employee to refrain from accepting
employment with the Corporation or affect the value of the Corporation's
shares.
SECTION THIRTEEN
CONFIDENTIALITY
Employee agrees that, except as required for the performance of his duties,
obligations and responsibilities hereunder, he will not at any time during
the term of this Agreement or thereafter divulge to any person, firm or
corporation any Confidential Information received by him during the course of
his employment and all such Confidential Information shall be kept
confidential and deemed to be the property of Corporation. For the purpose of
this provision, "Confidential Information" means information known to the
Employee as a consequence of his employment by Corporation and not generally
known in the industry in which the Corporation is engaged or not otherwise
available to third parties from sources unrelated to or controlled by
Corporation.
IN WITNESS WHEREOF, the parties have executed this Agreement at Spokane,
Washington as of the day and year first above written.
Golden Queen Mining Company Inc.
By s/ Steven W. Banning
----------------------------------
Its President and Chief Executive Officer
----------------------------------
EMPLOYEE
By s/ R.W. Graeme
----------------------------------
Name: Richard W. Graeme
Address: 4619 E. Coronado Dr.
City, State: Tucson, Arizona
Zip Code: 85718
Telephone Number: (502) 577-3447
SS#: ###-##-####
DESIGNATION OF BENEFICIARY
On this 8th day of May, 1996, Employee hereby designates Monica Graeme, his
wife, as his beneficiary for purposes of receiving, upon his death,
compensation and benefits under Section Six, Paragraph 3, hereof.
By s/ R.W. Graeme
----------------------------------
Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 24 day of May, 1996, effective the
first day of the term hereof, between Golden Queen Mining Company Inc.,
herein referred to as the "Corporation" and Bernard Goodson, herein referred
to as the "Employee."
In consideration of the mutual covenants and benefits as herein set forth,
the parties hereto agree as follows:
SECTION ONE
EMPLOYMENT
The Corporation hereby employs the Employee as its Vice President
Administration and Controller and the Employee hereby accepts such employment
and agrees to devote all of his efforts for the benefit of the Corporation
and to faithfully, industriously and, to the best of his ability, experience
and talents, perform all of his required and assigned duties. Employee's
duties shall include, but not be limited to, performing the accounting,
financial, treasury and payroll functions of the Corporation. Employee shall
perform his duties subject to the general supervision of and pursuant to the
orders, advice and direction of the President and Chief Executive Officer of
the Corporation.
SECTION TWO
TERM OF EMPLOYMENT
The term of employment by the Corporation under this Agreement shall commence
on April 1, 1996 and shall continue thereafter for a period of one year until
terminated as hereinafter provided.
SECTION THREE
COMPENSATION
Corporation shall pay Employee, and the Employee shall accept from
Corporation, compensation at the minimum annual rate of U.S.$80,000 during
his employment with Corporation, prorated and payable semi-monthly or on such
other basis as the parties may hereafter agree. Such minimum compensation may
be adjusted for merit or other raises as from time to time determined by the
President and Chief Executive Officer and/or the Board of Directors of
Corporation or any Committee thereof having such authority. Employee shall be
entitled to a minimum paid vacation of three (3) weeks in any calendar year.
Employee shall also be entitled to an annual cash bonus which will be set by
the Board of Directors of the Corporation and based upon the Employee's
performance and the financial condition of the Corporation.
SECTION FOUR
OTHER BENEFITS
In addition to the compensation as provided in the previous Section Three
hereof, Corporation shall at its expense provide for Employee the following
additional benefits as soon as the plans covering these benefits are adopted
by the Corporation:
1. Participation in all of Corporation's benefit plans, including life
insurance, medical, dental, vision, 401 (k), pension, disability, and
any and all other plans that may be made available to employees;
2. Such directors and officers liability insurance as is available to the
other officers and directors of Corporation.
Until such time as the Corporation adopts these benefit plans, Corporation
shall reimburse Employee for the reasonable costs of obtaining such insurance
coverages on his own.
In addition to the compensation as provided above, Corporation shall at its
expense provide for Employee the following additional benefits:
1. Assistance in annual tax preparation and estate planning.
2. Payment of dues in professional associations as may be required to
maintain Employee's membership in those associations and the privilege
of attending appropriate seminars, conferences and educational programs
as may be necessary.
3. Reimbursement for all expenses incurred in connection with the
performance of services to the Corporation, including entertainment and
travel and other expenses incidental to the duties undertaken hereunder;
provided, however, that such expenses shall be reasonable and necessary
and that Employee shall submit bills and vouchers supporting requests
for reimbursements in accord with Corporation's policies.
4. An allowance of not to exceed Three Hundred Dollars ($300.00) per month
to acquire and operate a current model automobile for business and
personal use.
SECTION FIVE
TERMINATION
This Agreement will terminate or may be terminated by Employee or Corporation
for any one of the following reasons:
1. Voluntarily and without cause, subject to Sections Two and Six, upon at
least Two (2) months prior written notice of termination by Corporation
to the Employee or by the Employee to the Corporation; or
2. By the Corporation for cause as hereinafter defined in Section Ten; or
3. Upon a Change of Control; or
4. Upon retirement.
SECTION SIX
SEVERANCE COMPENSATION
1. Termination by Employee or by Corporation With Cause. If Employee shall
voluntarily terminate his employment under this Agreement or if the
employment of the Employee is terminated by the Corporation for cause,
then all compensation and benefits as heretofore provided in Sections 3
and 4 shall terminate immediately upon the effective date of termination
and no special severance compensation will be paid.
2. Termination by Corporation Without Cause. If Corporation shall terminate
this Agreement for any reason except cause as defined in Section Ten,
then, upon the effective date of termination, the Corporation shall pay
Employee an amount equal to twelve (12) months' salary. The amount shall
be paid in one lump sum on the date the Employee's services terminate.
All employee benefits provided to the Employee shall be continued as if
the Employee was still an employee of the Corporation for a period of
one (1) year from the date of termination or equal or better benefits
are provided by a new employer, whichever shall first occur. In the
event Employee has existing stock options, they will be honored and all
such options will vest immediately and may be exercised by Employee at
any time within three months following the date of his termination.
Corporation shall also provide to Employee employment search assistance
by a firm mutually acceptable to Corporation and Employee, Employee's
choice to secure comparable employment, the cost of which shall not
exceed $25,000.00.
3. Termination Following Change of Control
(a) For purposes of this Agreement, a Change in Control shall be deemed
to have occurred if any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, or
any syndicate or group deemed to be a person under Section 14(d)(2)
of the Exchange Act, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power
of the Corporation's then outstanding securities entitled to vote
in the election of directors of the Corporation. The foregoing
shall not apply to any beneficial ownership exceeding 25% held by
Ventures Trident L.P., Ventures Trident II L.P., or any general
partner or affiliated parties thereof;
(b) Irrespective of any other provisions in this Agreement regarding
termination, if the event described above constituting a Change in
Control shall have occurred, upon the subsequent termination of
Employee's employment (unless such termination is by the
Corporation for cause or by Employee other than for "Good Reason")
Employee shall be entitled to and will receive no later than the
thirtieth (30th) day following the date of termination a lump sum
severance payment equal to one (I) times Employee's then current
annual base salary In addition, all benefits then applicable to
Employee shall be continued for a period of twelve (12) months. In
the event Employee has existing stock options, they will be honored
and all such options will vest immediately and may be exercised by
Employee at any time within three months following the date of his
termination.
(c) After a Change in Control, Employee shall be entitled to terminate
his employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without Employee's express written
consent, any of the following:
(i) the assignment to Employee of any duties inconsistent with
Employee's status as Vice President Administration and
Controller of the Corporation, or Employee's removal from such
position, or a substantial alteration in the nature or status
of Employee's responsibilities from those in effect
immediately prior to the Change in Control;
(ii) a reduction by the Corporation in Employee's annual base
salary as in effect on the date hereof or as the same may have
been increased from time to time or a failure by the
Corporation to increase Employee's salary at a rate
commensurate with that of other key executives of the
Corporation;
(iii) the relocation of the office of the Corporation where Employee
is employed at the time of the Change in Control (the "CIC
Location") to a location more than fifty (50) miles away from
the CIC Location or the Corporation's requiring Employee to be
based more than fifty (50) miles away from the CIC Location
(except for required travel on the Corporation's business to
an extent substantially consistent with Employee's business
travel obligations just prior to the Change in Control);
(iv) after establishment of Corporations benefit plans under
Section Four, the failure by the Corporation to continue to
provide Employee with benefits at least as favorable as those
enjoyed by Employee under any of the Corporation's life
insurance, medical, health and accident, disability, deferred
compensation, pension, or savings plans in which Employee was
participating at the time of the Change in Control, the taking
of any action by the Corporation which would directly or
indirectly materially reduce any of such benefits or deprive
Employee of any material fringe benefit enjoyed by Employee at
the time of the Change in Control, or the failure by the
Corporation to provide Employee with the number of paid
vacation days to which Employee is entitled on the basis of
years of service with the Corporation in accordance with the
Corporation's normal vacation policy in effect at the time of
the Change in Control; or
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement or, if the business of the Corporation for
which Employee's services are principally performed is sold at
any time after a Change in Control, the purchaser of such
business shall fail to agree to provide Employee with the same
or a comparable position, duties, salary and benefits as
provided to Employee by the Corporation immediately prior to
the Change in Control.
(d) In the event of termination of Employee by reason of either a
Change in Control or, after a Change in Control, for "Good Reason"
as herein defined then, in addition to the severance payment as
provided in paragraph 4(b) hereof, Employee shall be entitled to
the following:
(i) Employment search assistance to secure other comparable
employment for a period not to exceed one (1) year or until
such comparable employment is found, whichever is the sooner,
with the fees for such assistance paid by the Corporation;
(ii) Protection for the sale of Employee's residence located within
fifty miles of the office of employment in the amount of the
original purchase price, plus major improvements, or the net
realized therefrom; and
(iii) Payment of the cost of a one time move to a new location in
the event such a move becomes necessary in order for Employee
to accept new employment.
SECTION SEVEN
NON-TRANSFERABILITY
This is a personal agreement. None of Employee's rights, benefits or
interests hereunder may be subject to sale, anticipation, alienation,
assignment, encumbrance, charge, pledge, hypothecation, transfer, or set-off
in respect of any claim, debt or obligation or to execution, attachment, levy
or similar process, or to assignment by operation of law. Any attempt,
voluntary or involuntary, to effect any such action shall be null, void and
of no effect.
SECTION EIGHT
CHOICE OF LAW
It is the intention of the parties hereto that this Agreement and the
performance hereunder and all suits and special proceedings hereunder be
construed in accordance with and under and pursuant to the laws of the State
of Washington and that in any action, special proceeding or other proceeding
that may be brought arising out of, in connection with, or by reason of this
Agreement, the laws of the State of Washington shall be applicable and shall
govern, to the exclusion of the law of any other forum, without regard to the
jurisdiction in which any action or special proceeding may be instituted.
SECTION NINE
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
Corporation, its successors or assigns, and to Employee, and his personal
representatives, heirs, executors and administrators.
SECTION TEN
DEFINITION OF CAUSE
Cause to terminate the Employee's employment shall mean (a) the willful and
continued failure by the Employee to substantially perform his duties, after
demand for substantial performance is delivered by the Corporation that
specifically identifies the manner in which the Corporation believes the
Employee has not substantially performed his duties, or (b) the willful
engagement by the Employee in misconduct which is materially injurious to the
Corporation, monetarily or otherwise, or (c) the willful violation by the
Employee of the provisions of this Employment Agreement.
SECTION ELEVEN
DIRECTORSHIPS
The Employee shall be entitled to accept positions as director of other
corporations, whether such corporations are engaged in the mining industry or
not, provided any such directorship is first approved by the Corporation,
which approval shall not be unreasonably withheld.
SECTION TWELVE
REPRESENTATIONS
The Corporation represents and warrants to the Employee, with the intent that
Employee shall rely on such representations and warranties in entering into
this Agreement, as follows:
1. The common shares of Corporation are listed for trading on the Vancouver
Stock Exchange and the Toronto Stock Exchange.
2. The financial statements, reports, and other information provided by the
Corporation and its respective officers and employees, both orally and
in writing, constitute complete and accurate disclosures of the status
of the affairs of the Corporation and the Corporation does not know of
any other information which, if disclosed to the Employee, might
reasonably be expected to cause the Employee to refrain from accepting
employment with the Corporation or affect the value of the Corporation's
shares.
SECTION THIRTEEN
CONFIDENTIALITY
Employee agrees that, except as required for the performance of his duties,
obligations and responsibilities hereunder, he will not at any time during
the term of this Agreement or thereafter divulge to any person, firm or
corporation any Confidential Information received by him during the course of
his employment and all such Confidential Information shall be kept
confidential and deemed to be the property of Corporation. For the purpose of
this provision, "Confidential Information" means information known to the
Employee as a consequence of his employment by Corporation and not generally
known in the industry in which the Corporation is engaged or not otherwise
available to third parties from sources unrelated to or controlled by
Corporation.
IN WITNESS WHEREOF, the parties have executed this Agreement at Spokane,
Washington as of the day and year first above written.
Golden Queen Mining Company Inc.
By s/ Steven W. Banning
----------------------------------
Its President and Chief Executive Officer
----------------------------------
EMPLOYEE:
By s/ Bernard Goodson
-----------------------------------
Name: Bernard Goodson
Address: 318 Maple St.
City, State: Kellogg, Idaho
Zip Code: 83837
Telephone Number: 208-783-6681
SS#: ###-##-####
DESIGNATION OF BENEFICIARY
On this ___ day of __________, 19__, Employee hereby designates Diane R.
Goodson, his wife, as his beneficiary for purposes of receiving, upon his
death, compensation and benefits under Section Six, Paragraph 3, hereof.
By s/ Bernard Goodson
-----------------------------------
Exhibit 10.5
Recording Requested By:
LYNNE D. ROSINSKI
After Recording Return To:
Golden Queen Mining Company, Inc.
P.O. Box 878
Rosamond, CA 93560-0878
MEMORANDUM OF MINING LEASE
NOTICE IS HEREBY GIVEN that WILLIAM J. WARNER (hereafter referred to as
"LESSOR"), and GOLDEN QUEEN MINING COMPANY, INC., (hereafter referred to as
"LESSEE"), have entered into a Mining Lease dated October 20, 1994, for a
period of twenty (20) years, unless terminated earlier or extended pursuant
to the terms and provisions set forth in said Mining Lease granting LESSEE
the exclusive right to conduct mining activities within and upon the
following premises: The Ben Hur Patented Lode Claim Mineral Survey Number
5932 and Patent Number 1052037 situate within Section 6, Township 10 North,
Range 12 West, San Bernardino Base Meridian, Kern County, California, and
begin all that same property described in the certain Deed to Mining Claim
dated August 16, 1988, and which has been recorded in the records of Kern
County, California, in Book 144, at Page 364.
The terms and provisions of said Mining Lease are hereby incorporated by
reference in the Memorandum of Mining Lease.
IN WITNESS WHEREOF, the party has executed this Memorandum of Mining Lease as
of this 21 day of December, 1994.
LESSOR: LESSEE:
GOLDEN QUEEN MINING COMPANY, INC.
By: s/ William J. Warner By: s/ Paul L. Blair
_________________________ _________________________
President
Tax I.D. # ###-##-####
<PAGE>
STATE OF CALIFORNIA
County of Riverside
On 21, December, 1994 before me, Ellie C. Medel "Notary Public",
personally appeared William J. Warner,
proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
s/ Ellie C. Medel
--------------------------------
SIGNATURE OF NOTARY
STATE OF CALIFORNIA
SS.
COUNTY OF _________
On ____________________________, before me, the undersigned, a Notary Public
in and for said State, personally appeared William J. Warner, personally
known to me or proved to me on the basis of satisfactory evidence to be the
person who executed the within instrument and acknowledge to me that (s)he
executed the same.
WITNESS my hand and official seal.
________________________________
Notary Public for said State
STATE OF CALIFORNIA
SS.
COUNTY OF KERN
On December 14, 94, before me, the undersigned, a Notary Public in and for
said State, personally appeared Paul L. Blair proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged that he executed the same.
WITNESS my hand and official seal.
s/ Terry Virgil Landsiedel
- --------------------------------
Notary Public for said State
<PAGE>
Golden Queen Mining Company, Inc./
William J. Warner & Jackie J. Warner, Husband and Wife
MINING LEASE
Table of Contents
1. DESCRIPTION OF PROPERTY 1
2. GRANT OF LEASE 1
3. TERM OF LEASE 1
4. ROYALTIES AND CONSIDERATION 2
4.1 Advance Minimum Royalty 2
4.2 Production Regulations 2
4.3 Manner of Payment 2
5. CONDUCT OF MINING OPERATIONS 3
5.1 General 3
5.2 Commingling of Ore 3
5.3 Cross-Mining Rights 3
6. RECORDS AND BOOKS OF ACCOUNTS 4
6.1 Books of Account 4
6.2 Inspection 4
7. PROTECTING FROM LIENS AND TAXES 4
8. NOTICE 5
9. WASTE AND REFUSE 5
10. INSURANCE 5
10.1 Workers' Compensation Insurance 5
10.2 Automobile and Comprehensive General Liability 5
10.3 Certificates of Insurance 6
10.4 Indemnity 6
11. COMPLIANCE WITH LAWS 6
12. TITLE 6
13. DEFAULT AND TERMINATION 7
13.1 Default 7
13.1.1 Breach of Covenants 7
13.1.2 Assignments 7
13.1.3 Bankruptcy 7
13.1.4 Receivership 7
13.1.5 Attachment 7
13.2 Remedies 7
13.2.1 Termination 7
13.2.2 Eviction 9
13.2.3 Damages 9
13.2.4 Remedies Under CC 1951.4 9
13.2.5 Default by Landlord 9
13.3 Termination by LESSEE 9
13.4 Information 9
14. INUREMENT 10
15. RECORDATION 10
16. ASSIGNMENT 10
16.1 Assignment by LESSOR 10
16.2 Assignment by LESSEE 11
17. REMOVAL OF EQUIPMENT 11
18. ARBITRATION 11
19. COUNTERPARTS 11
20. COMPLETE AGREEMENT 11
21. CALIFORNIA LAW 11
22. SEVERABILITY 11
<PAGE>
MINING LEASE
This agreement is made and entered into this 20 day of Oct. 1994, by and
between William J. Warner and Jackie J. (DECEASED) Warner, (hereafter
referred to as "LESSOR"), and Golden Queen Mining Company, Inc., a California
corporation, (hereafter "LESSEE").
1. DESCRIPTION OF PROPERTY
LESSOR is partial owner of the Ben Hur Patented Lode Claim Mineral
Survey Number 5932 and Patent Number 1052037 situate within Section 6,
Township 10 North, Range 12 West, San Bernardino Base Meridian, Kern County,
California, and being all that same property described in the certain Deed to
Mining Claim dated August 16, 1988, and which has been recorded in the
records of Kern County, California, in Book 144, at Page 364.
2. GRANT OF LEASE.
2.1 LESSOR hereby leases exclusively to LESSEE, subject to the terms
and condition hereinafter expressed, the property set forth in Paragraph 1
(hereafter referred to as "LEASED PROPERTY).
2.2 This lease is granted for the purpose of the exploration,
development, and mining of the LEASED PROPERTY for minerals as may be found
therein (hereinafter referred to as the "Leased Minerals") LESSEE is hereby
granted the exclusive right to enter into possession of the LEASED PROPERTY,
and during the terms of this lease, to remain in possession thereof, and to
explore, develop, mine, operate and use the property and any surface or
underground rights, including but not limited to access, and water or water
rights, and to mine, extract and remove from the LEASED PROPERTY the Leased
Minerals and to treat, mill, ship, sell or otherwise dispose of the same and
receive the full proceeds thereof (subject to the obligation of royalty
payment as specified below); and to construct, use and operate thereon and
therein structures, excavations, roads, equipment and other improvements or
facilities which LESSEE shall deem reasonably required for, or in connection
with, the full enjoyment of the rights and interests granted to LESSEE by
this lease.
3. TERM OF LEASE.
The term of this Mining Lease shall be for twenty (20) years from and
after the date of this lease and for so long thereafter as LESSEE is in
production on properties located within one (1) mile radius of the LEASED
PROPERTY. For purposes of this paragraph, production shall be defined as the
processing of in excess of l0,000 tons of ore per year. LESSEE may terminate
this lease at any time by delivery to LESSOR of a quitclaim deed to the
LEASED PROPERTY, provided that LESSEE is not then in default under the terms
of this lease.
4. ROYALTIES AND CONSIDERATION.
4.1 Advance Minimum Royalty.
LESSEE shall pay to LESSOR as an advance minimum royalty the sum of
ONE THOUSAND DOLLARS ($1000.00) upon execution of this agreement and on each
anniversary date of the execution of this agreement during its term.
4.2 Production Royalties.
4.2.1 A production royalty for all minerals mined, removed, and
sold from the property set forth in Paragraph 1 equal to five percent (5%) of
the Smelter Returns shall be calculated. LESSOR, as defined in this
Agreement, shall receive a percentage of the production royalty calculated
equal to LESSOR'S actual ownership interest of the property described in
Paragraph 1.
4.2.2 The term "Smelter Returns" shall be defined to be the
gross amount received from the sale of valuable minerals less all taxes
levied, incurred or imposed on the sale, severance or production of such
minerals and less costs of transportation (to the smelter and/or refinery or
point of sale), smelting and refining charges and costs of sale.
4.3 Manner of Payment
4.3.1 All minerals mined, removed and extracted from the LEASED
PROPERTY shall be sold under the name of LESSEE and a royalty settlement
sheet accounting for such transactions shall be furnished to LESSOR on or
before the twenty-fifth (25th) day of the next succeeding calendar month for
all sales made and received during the preceding calendar quarter. All
production royalty payments, accompanied by a settlement sheet required by
this lease shall be made to LESSOR in the percentages and at the address set
forth in Paragraph 12.1 below, or such other person or address as said listed
party shall designate by written notice pursuant to the provisions of
Paragraph 8 by mail or personal delivery. LESSEE shall receive a cumulative
credit against production royalties paid pursuant to this lease agreement
regardless of the year in which said minimum royalties are paid and
production royalties shall not be payable until the production royalty set
forth in Paragraph 4.2 exceeds the cumulative sums paid by LESSEE pursuant to
paragraph 4.1. If the Leased Minerals are sold to or processed by, a smelter
or refinery owned, operated, affiliated with or controlled by LESSEE, in no
event shall the royalties computed herein be less than would have been paid
had the ore been sold to or processed by a major smelter or refinery not
owned, operated, affiliated with, or controlled by LESSEE.
5. CONDUCT OF MINING OPERATIONS.
5.1 General.
LESSEE shall conduct, and cause all mining activities to be
conducted in a prudent, workmanlike, miner-like manner in accordance with
established mining practices, state and federal regulations and laws.
5.2 Commingling of Ore
LESSEE may commingle ore from the LEASED PROPERTY with ore from
other properties, either before or after concentration or beneficiation,
provided that the method and procedures LESSEE uses to commingle the ore and
to determine the weight and grade of the ore removed from the LEASED PROPERTY
and of the ore with which it is commingled shall be a method recognized by
the mining industry and conducted in accordance with generally accepted
accounting principles. LESSEE shall use that method to determine weight and
grade and to allocate net returns from the commingled ore between the LEASED
PROPERTY and the other properties from which the other commingled ore was
removed and to assure that the share of production received by LESSOR is
representative of the ore that was produced from the LEASED PROPERTY. All
such weight, grade and allocation calculations by LESSEE shall be done in
accordance with generally accepted accounting principles and in a manner
recognized by the mining industry as practical and sufficient at that time.
If it is impractical to determine which portion of any of the costs and
expenses described in Paragraph 4.2.2 above are directly attributable to ore
removed from the LEASED PROPERTY, such costs and expenses shall be allocated
on a straight-line, per-ton basis among all ores that give rise to those
expenses, in accordance with acceptable accounting standards.
5.3 Cross-Mining Rights.
LESSEE is hereby granted the right, if it so desires, to mine or
remove from the LEASED PROPERTY any ores, waste, water and other materials
existing therein or thereon or in any part thereof, through or by means of
shafts, openings or pits which may be sunk or made upon other property owned,
controlled, or operated by or for LESSEE (hereinafter "Other Property").
LESSEE also may stockpile any ores, waste, or other materials and/or
concentrated products of ores or materials (collectively "Products") from the
LEASED PROPERTY, or any part thereof upon stockpile grounds situated upon
such Other Property. In the event LESSEE stockpiles Products from the LEASED
PROPERTY or Other Properties, LESSEE shall execute or cause to be executed
such instruments as LESSOR may reasonably request in writing to evidence
LESSOR'S royalty interest in the Products so stockpiled. Any such instrument
executed by LESSEE, however, expressly shall acknowledge LESSEE'S right to
sell the stockpiled Products. LESSEE also, if it so desires, may use the
LEASED PROPERTY and any part thereof and any shafts, openings, pits and
stockpile grounds sunk or made for the mining, removal and or stockpiling of
any Products from the LEASED PROPERTY and/or from the Other Property, of for
any purpose or purposes connected therewith, provided, however, that such use
of the LEASED PROPERTY does not prevent or interfere with the mining or
removal of ore from the LEASED PROPERTY.
6. RECORDS AND BOORS OF ACCOUNTS.
6.1 Books of Account.
LESSEE shall keep complete, true and proper books and records of
account showing all minerals mined and removed from the LEASED PROPERTY and
recording all sales, transfers, conveyances or other dispositions of ores,
minerals or other materials taken from the LEASED PROPERTY in accordance with
generally accepted accounting principles. Said books and records shall be
open to examination by LESSOR or its duly authorized representative during
regular business hours and shall include any and all documents necessary to
establish a gross selling price of the ores, minerals or the materials taken
from the Leased Premises. LESSOR is hereby granted the right at LESSOR'S
expense to examine and make a copy or copies of said books or records or any
portion thereof.
6.2 Inspection.
LESSOR or its duly authorized agents shall have following advanced
notice the right at reasonable times under reasonable circumstances to enter
upon the LEASED PROPERTY for the purpose of inspecting operations and work
being performed by LESSEE pursuant to this lease. Such entry shall be at
LESSOR'S risk and LESSEE shall not be liable for injury to LESSOR unless such
injury is caused by the willful or grossly negligent conduct of LESSEE.
7. PROTECTING FROM LIENS AND TAXES.
7.1 LESSEE shall keep the subject premises and every part thereof free
and clear of any and all liens and encumbrances for work performed upon the
subject premises, or for materials furnished to it while this agreement
remains in force and effect.
7.2 LESSEE shall pay not later than ten (10) days before due, one
hundred percent (100%) of all taxes and assessments that may be levied or
assessed against the premises, including all taxes that may be levied or
assessed as a direct or indirect result of LESSEE'S mining activities, and
including, but not limited to, taxes on the mineral estate, real property
improvements and personal property and possessory interest taxes. LESSOR
shall forward to LESSEE, upon receipt all notices of taxes and assessments
due. LESSOR shall be responsible for payment of all taxes or assessments due
as a result of LESSOR'S activities.
8. NOTICE.
Any notices required or permitted to be given to LESSOR or LESSEE
hereunder shall be considered as delivered when received by the parties to
whom they shall be directed. Notice shall be given by personal delivery or by
registered mail, postage prepaid and return receipt requested, addressed to
the persons and addresses given below or to such other person or address as
the parties may designate by written notice from time to time.
LESSOR: William J. Warner
Post Office Box 1363
Sugar Loaf, CA 92386
LESSEE: Golden Queen Mining Company, Inc.
7596 W. Jewell Avenue, Suite 203
Lakewood, Colorado 80226
Changes in the above names and addressed shall be effected by sending notice
as set forth herein and said change shall be effective fifteen (15) days from
receipt thereof.
9. WASTE AND REFUSE.
LESSEE agrees to dispose of waste and refuse from all mining activities
conducted pursuant to this lease in accordance with good mining practice and
in accordance with the provisions of applicable ordinances, laws and
regulations.
10. INSURANCE.
LESSEE shall at its sole cost and expense cause to be issued and
maintained during the term of this lease or any extension thereof the
following insurance coverages:
10.1 Workers' Compensation Insurance.
LESSEE shall maintain workers' compensation insurance coverage in
accordance with the provision of California law.
10.2 Automobile and Comprehensive General Liability Insurance.
LESSEE shall cause to be maintained during the term of this
agreement automobile liability and comprehensive general liability coverage
with broad form endorsements, with a minimum limit of liability of not less
than ONE MILLION DOLLARS ($1,000,000.00) with such minimum to be raised to
FIVE MILLION DOLLARS ($5,000,000.00) upon commencement of production. LESSOR
shall be named as an additional named insured on all insurance policies
provided for by this lease.
10.3 Certificates of Insurance.
LESSEE shall promptly furnish to LESSOR certificates of insurance
for all types of insurance applicable under this lease, which certificates
shall provide that the insurance described therein may not be cancelled,
restrictively modified or terminated excerpt upon not less than thirty (30)
days written notice delivered to LESSOR
10.4 Indemnity
LESSEE shall protect and indemnify and hold LESSOR harmless from
and against any and all claims, demands, suits, charges or allegations of
responsibility by any and all third parties, including but not limited to
subcontractors, agents, employees, assignee, transferee, successors,
invitees, neighbors, and the public relating to conditions on or about the
project.
11. COMPLIANCE WITH LAWS.
LESSEE shall conduct and cause to be conducted all mining activities in
full compliance with the applicable laws of the State of California and the
United States of America. The LESSEE will comply with all environmental
regulations and accepts full responsibility for conditions on and after the
date hereof.
12. TITLE.
12.1 LESSOR warrants that LESSOR is the owner of the LEASED PROPERTY and
that there are no defects in its title which would affect LESSOR'S right to
possession and use pursuant to the terms of this lease.
12.2 In the event that any defect in LESSOR'S title is determined to
exist, LESSOR shall, at its sole cost and expense, take such steps as may be
required, including, but not limited to, the commencement of litigation, to
correct such defect. Expenditures to correct any defect shall be reasonable
and not exceed value of LESSOR'S title. In the event LESSOR fails or refuses
to take or complete appropriate steps to correct any defect in LESSOR'S
title, LESSEE may elect to correct such defect and deduct the cost of such
correction, including attorney fees, from the payment obligations contained
in this lease. LESSEE also may make such deductions for costs or corrections
to title to the LEASED PROPERTY incurred by LESSEE prior to the date of this
lease.
12.3 In the event it is determined that LESSOR owns a different
percentage of the LEASED PROPERTY than an undivided (eight and one quarter
percent) (8.75%) interest in the Ben Hur patented Lode Claim, then LESSOR'S
rights under this Agreement and the percentage indicated shall be adjusted so
and to reflect the actual the actual interest owned.
13. DEFAULT AND TERMINATION.
13.1 Default.
The occurrence of any of the following events shall constitute any
event of default on the part of LESSEE:
13.1.1 Breach of Covenants.
Failure (i) to perform any of LESSEE'S covenants hereunder,
and (ii) to remedy such failure within thirty (30) days after written demand
is made therefore.
13.1.2 Assignments.
The making of a general assignment by LESSEE for the benefit
of creditors.
13.1.3 Bankruptcy.
The filing of any form of voluntary petition in bankruptcy by
LESSEE, or the filing of an involuntary petition by LESSEE'S creditors, if
such petition remains undischarged for a period of thirty (30) days.
13.1.4 Receivership.
The appointment of a receiver to take possession of
substantially all of LESSEE'S assets or of the interest held by LESSEE under
this lease, if such receivership remains undissolved for a period of thirty
(30) days.
13.1.5 Attachment.
The attachment of other judicial seizure of substantially all
of LESSEE'S assets or of the interest held under this lease, if such
attachment or other seizure remains undismissed or undischarged for a period
of thirty (30) days after the levy thereof.
13.2 Remedies.
13.2.1 Termination.
In the event of the occurrence of any event of default
mentioned in Paragraph 15.1 hereof, LESSOR, shall have the right, so long as
default continues, to immediately terminate this lease by giving LESSEE
written notice of such termination.
13.2.2 Eviction.
In the event of any such termination of this lease,
LESSOR may then or at any time thereafter, re-enter the LEASED PROPERTY, or
any part thereof, and expel or remove therefrom LESSEE and any other person
occupying the same, using such force as may be necessary so to do, and again
repossess and enjoy the LEASED PROPERTY, without prejudice to any other
remedies that LESSOR may have under this lease, or at law or equity, by
reason of LESSEE'S default or of such termination.
13.2.3 Damages.
In the event of any such termination of this lease,
LESSOR shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil code of the State of California.
13.2.4 Remedies Under CC 1951.4.
In the event LESSEE breaches this lease and abandons the
LEASED PROPERTY, LESSOR shall have all of the remedies of a landlord provided
by Section 1951.4 of the Civil Code of the State of California.
13.2.5 Default by Landlord.
In the event of default by LESSOR, LESSEE shall have all
of the remedies of a tenant provided by the laws of the State of California.
13.3 Termination by LESSEE.
This agreement may be terminated by LESSEE at any time by giving of
three (3) months written notice and provide written proof said properties
will be in full environmental compliance with federal, state, county, and
local regulations and laws at the termination date.
13.4 Information.
Upon termination of this Agreement, LESSEE shall provide LESSOR
with copies of all Information as defined below. As used in this Agreement,
"information" shall mean at no cost to LESSOR all geological, geophysical and
geochemical data, all laboratory testing results, maps and reports, whether
acquired, generated or compiled by or for LESSEE. LESSEE warrants that all
Information supplied to LESSOR pursuant to the terms of this provision shall
be true and accurate copies of the Information acquired, generated or
compiled by or for LESSEE; provided, however, that LESSEE does not warrant
that the data contained therein is an accurate interpretation of the geology
described therein.
13.4.1 Upon execution of this Agreement, LESSOR shall provide
LESSEE access to all geologic, geophysical and geochemical data concerning
the LEASED PROPERTY which has been acquired, generated, or compiled by LESSOR
as agreed to in Section 12.2 of the Exploration Agreement and Option to
Lease.
13.4.2 Any and all data, information reports and samples
provided LESSEE to LESSOR under the terms of this Agreement shall be treated
and held confidential for the term of this Agreement.
14. INUREMENT.
This lease shall inure to the benefit of and be binding upon their
respective heirs, trustees, conservators, successors and assigns of the
parties.
15. RECORDATION.
This agreement is not to be recorded. LESSEE may, however, prepare and
submit to LESSOR for signature, a memorandum of this agreement for
recordation.
16. ASSIGNMENT.
16.1 Assignment by LESSOR.
LESSOR agrees that it shall give notice to LESSEE of its intention
to sell or otherwise assign the Lease or LEASED PROPERTY. Upon receipt of a
bona fide offer to purchase the Lease or LEASED PROPERTY, the LESSOR shall
forthwith give notice, to be accompanied by a true copy of such offer to
purchase attached thereto, to LESSEE and LESSEE shall have ten (10) calendar
days in which to present to LESSOR a written counteroffer, such counteroffer
to be for greater consideration than the offer, expressed in cash or
marketable securities. Upon receipt of such counteroffer, LESSOR will have
twenty (20) calendar days to sell to LESSEE or to give notice to LESSEE of
receipt of a further counteroffer for greater consideration than LESSEE'S
counteroffer. In the event of a further counteroffer being presented, LESSEE
will have seven (7) calendar days from receipt of notice to raise its offer
and the offers and counter offers shall thereafter be limited to a response
time of seven (7) calendar days from receipt of notice.
16.2 Assignment by LESSEE.
LESSEE may assign this Lease without the prior written consent of
LESSOR provided LESSEE guarantees the obligations of the assignee; otherwise,
this Lease shall not be assigned by LESSEE without the prior written consent
of LESSOR which consent shall not be unreasonably withheld.
17. REMOVAL OF EQUIPMENT.
At the termination of this lease, LESSEE may remove any and all
equipment it placed on the property during the term of this lease, or any
extension thereof, provided, said removal is completed within one hundred and
twenty (120) days of the termination date.
18. ARBITRATION.
Any dispute arising out of this lease herein must be raised and settled
in binding arbitration proceeding held in accordance with the rules of the
American Arbitration Association. The process for selecting arbitrators shall
be as follows: Each party shall select an arbitrator and the two (2) selected
arbitrators shall select the third arbitrator. Such selections must be made
within fifteen (15) days after the party commencing the arbitration process
gives notice to the other party of its intention to arbitrate a dispute or
difference. Any arbitration award may include the reasonable attorney fees
and costs of the prevailing party.
19. COUNTERPARTS.
This agreement may be signed in counterparts and shall be deemed
effective when both parties have executed this agreement or any counterpart
thereof.
20. COMPLETE AGREEMENT.
This writing and all terms and covenants contained herein are deemed to
be the complete and unequivocal written agreement of the parties and no other
agreements, either written or oral, are contemplated with respect to said
property.
21. CALIFORNIA LAW.
This lease shall be governed by and construed and interpreted under the
internal laws of the State of California.
22. SEVERABILITY.
If any term, covenant, condition or provision of this agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable,
the remainder of the provision hereof shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
EXECUTED this 20 day of Oct., 1994 at Rosamond CA
LESSOR LESSEE:
GOLDEN QUEEN MINING CO., INC.
s/ William J. Warner By s/ Paul L. Blair
- ------------------------------ ------------------------------
Its President
s/ William J. Warner
- ------------------------------
Jackie J. Warner DECEASED 10-5-92
STATE OF CALIFORNIA
SS.
COUNTY OF SAN BERNARDINO
On 10-25-94, before me, the undersigned, a Notary Public in and for said
State, personally appeared William J. Warner proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged that he executed the same.
WITNESS my hand and official seal.
s/ DeWayne L. Ellis
- --------------------------------
Notary Public for said State
STATE OF CALIFORNIA
SS.
COUNTY OF _________
On ______________, before me, the undersigned, a Notary Public in and for
said State, personally appeared Jackie J. Warner proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged that he executed the same.
WITNESS my hand and official seal.
_____________________________
Notary Public for said State
STATE OF CALIFORNIA
SS.
COUNTY OF KERN
On Oct 20, 1994, before me, the undersigned, a Notary Public in and for said
State, personally appeared Paul L. Blair personally known to me to be the
person whose name is subscribed to the within instrument and acknowledged
that he executed the same
WITNESS my hand and official seal.
s/ Myrna L. Mendenhall
- ------------------------------
Notary public for said State
Exhibit 10.6
MINING LEASE
This mining lease (this "Lease") is made and entered into this 19th day
of September, 1994, by and between Western Centennials, Inc. a Nevada
Corporation (hereafter referred to as "LESSOR"), and GOLDEN QUEEN MINING
COMPANY, INC., a California corporation, (hereafter referred to as "LESSEE").
1. DESCRIPTION OF PROPERTY.
The property subject to this Lease is the Golden Queen patented mining
claim more particularly described in Mineral Survey No. 6185 and Patent No.
1100921 containing 7.423 acres more or less; which Golden Queen claim lies
within Section 6, Township 10 North, Range 12 West, San Bernardino Base
Meridian and is referred to by the Kern County Tax Assessor as Parcel No.
243-110-10-00-2C.
2. GRANT OF LEASE.
2.1 LESSOR hereby leases exclusively to LESSEE, subject to the terms
and conditions hereinafter expressed, the property set forth in Paragraph 1
(hereafter referred to as the "LEASED PROPERTY").
2.2 This Lease is granted for the purpose of exploration, development,
and mining of the LEASED PROPERTY for any minerals as may be found therein
(hereinafter referred to as the "Leased Minerals") and LESSEE is hereby
granted the exclusive right to enter into possession of the LEASED PROPERTY,
and during the term of this Lease, to remain in possession thereof, and to
explore, develop, mine, operate and use the property and any surface or
underground rights, including but not limited to access, water or water
rights, if any, and to mine, extract and remove from the LEASED PROPERTY the
Leased Minerals and to treat, mill, ship, sell or otherwise dispose of the
same and receive the full proceeds thereof (subject to the obligation of
royalty payment as specified below); and to construct, use and operate
thereon and therein structures, excavations, roads, equipment and other
improvements or facilities which LESSEE shall deem reasonably required for,
or in connection with, the full enjoyment of the rights and interests granted
to LESSEE by this Lease.
3. TERM OF LEASE.
The term of this Lease shall be for twenty (20) years from and after the
date of this Lease and for so long thereafter as LESSEE shall continue to
make the Advance Minimum Royalty payments as each accrues pursuant to Section
4.2 of this Lease. LESSEE may terminate this Lease at any time by delivery to
LESSOR of a quitclaim deed to the LEASED PROPERTY, provided that LESSEE is
not then in default under the terms of this Lease.
4. ROYALTIES AND CONSIDERATION.
4.1 Consideration.
A consideration of $30,000 has been paid to LESSOR upon
execution of this Lease.
4.2 Advance Minimum Royalty.
LESSEE shall pay to LESSOR as "Advance Minimum Royalty" the
sum of Ten Thousand Dollars ($10,000.00) on each anniversary date of the
execution of this Lease during its term.
4.3 Production Royalties.
4.3.1. For all minerals mined, removed and sold from the
LEASED PROPERTY (except materials sold as rock products or aggregate, as
provided in Paragraph 4.3.3 below), a production royalty equal to five
percent (5%) of the "Net Returns" (as defined below) shall be calculated and
paid to LESSOR.
4.3.2 The term "Net Returns" shall be defined to be the
gross amount received from the sale of all minerals (other than the minerals
specified in 4.3.3 below) less all taxes levied, incurred or imposed on the
sale, severance or production of such minerals, and which taxes are paid by
LESSEE, and less costs of transportation to the smelter and/or refinery or
point of sale.
4.3.3 For all sand, gravel, natural rock, crushed rock
or other non metallic substances produced and sold from the LEASED PROPERTY, a
royalty of 15 cents per ton shall be paid to LESSOR.
4.4 Manner of Payment.
4.4.1 All minerals mined, removed and extracted from the
LEASED PROPERTY shall be sold under the name of LESSEE and a royalty
settlement sheet accounting for such transactions shall be furnished to
LESSOR on or before the twenty-fifth (25th) day of the next succeeding
calendar month for all sales made and for which payment was received during
the preceding calendar quarter. All production royalty payments required by
this Lease, accompanied by a settlement sheet, shall be made to LESSOR at the
address set forth in Paragraph 12.1 below, or such other address as LESSOR
may designate by written notice pursuant to the provisions of Paragraph 8, by
mail or personal delivery. All payments of Advance Minimum Royalty made
hereunder pursuant to Section 4.2 herein shall constitute a cumulative credit
against production royalties which become payable pursuant to Section 4.3 of
this Lease, regardless of the year in which said Advance Minimum Royalties
are paid, and production royalties shall not be payable until the production
royalty set forth in Paragraph 4.3 exceeds the cumulative sums paid by LESSEE
pursuant to paragraph 4.2. If the Leased Minerals are sold to or processed by
a smelter or refinery owned, operated, affiliated with or controlled by
LESSEE, in no event shall the royalties computed thereon be less than would
have been paid had the ore been sold to or processed by a major smelter or
refinery not owned, operated, affiliated with, or controlled by LESSEE.
5. CONDUCT OF MINING OPERATIONS.
5.1 General.
LESSEE shall conduct, and cause all mining activities to be conducted in
a prudent, workmanlike, miner-like manner in accordance with established
mining practices.
5.2 Commingling of Ore.
LESSEE may commingle ore from the LEASED PROPERTY with ore from other
properties, either before or after concentration or beneficiation, provided
that the method and procedures LESSEE uses to commingle the ore and to
determine the weight and grade of the ore removed from the LEASED PROPERTY
and of the ore with which it is commingled shall be a method recognized by
the mining industry and conducted in accordance with generally accepted
accounting principles. LESSEE shall use that method to determine weight and
grade and to allocate the minerals produced from the commingled ore between
the LEASED PROPERTY and the other properties from which the other commingled
ore was removed, to assure that the share of production royalty to be
received by LESSOR is representative of the ore that was produced from the
LEASED PROPERTY. All such weight, grade and allocation calculations by LESSEE
shall be done in accordance with generally accepted accounting principles and
in a manner recognized by the mining industry as practical and sufficient at
that time. If it is impractical to determine which portion of any of the
costs and expenses described in Paragraph 4.3.2 above are directly
attributable to ore removed from the LEASED PROPERTY, such costs and expenses
shall be allocated on a straight-line, per-ton basis among all ores that give
rise to those expenses, in accordance with acceptable accounting standards.
5.3 Cross-Mining Rights.
LESSEE is hereby granted the right, if it so desires, to mine or remove
from the LEASED PROPERTY any ores, waste, water and other materials existing
therein or thereon or in any part thereof, through or by means of shafts,
openings, pits which may be sunk or made upon other property owned,
controlled, or operated by or for LESSEE (hereinafter "Other Property").
LESSEE also may stockpile any ores, waste, or other materials and/or
concentrated products of ores or materials (collectively "Products") from the
LEASED PROPERTY, or any part thereof, upon stockpile grounds situated upon
such Other Property. In the event LESSEE stockpiles Products from the LEASED
PROPERTY on Other Properties, LESSEE shall promptly inform LESSOR of such
fact and LESSEE shall execute or cause to be executed such instruments as
LESSOR may reasonably request in writing to evidence LESSOR'S royalty
interest in the Products so stockpiled. Any such instrument executed by
LESSEE, however, expressly shall acknowledge LESSEE'S right to sell the
stockpiled Products. LESSEE also, if it so desires, may use the LEASED
PROPERTY and any part thereof and any shafts, openings, pits and stockpile
grounds made for the mining, removal and/or stockpiling of any Products from
the LEASED PROPERTY and/or from the Other Property, for any purpose or
purposes connected therewith, provided, however, that such use of the LEASED
PROPERTY does not prevent or interfere with the mining or removal of ore from
the LEASED PROPERTY.
6. RECORDS AND BOOKS OF ACCOUNTS.
6.1 Books of Account.
LESSEE shall keep complete, true and proper books and records of account
showing the grade, tonnage and all other pertinent facts concerning all
minerals mined and removed from the LEASED PROPERTY and recording all sales,
transfers, conveyances or other dispositions of ores, minerals or other
materials taken from the LEASED PROPERTY in accordance with generally
accepted accounting principles. Said books and records shall be open to
examination by LESSEE or its duly authorized representative during regular
business hours and shall include any and all documents necessary to allow
LESSOR to ascertain that its production royalty is being calculated properly.
LESSOR is hereby granted the right at LESSOR'S expense to examine and make a
copy or copies of said books or records or any portion thereof.
6.2 Inspection.
LESSOR or its duly authorized agents shall have, following advance
notice, the right at reasonable times under reasonable circumstances to enter
upon the LEASED PROPERTY for the purpose of inspecting operations and work
being performed by LESSEE pursuant to this Lease. Such entry shall be at
LESSOR'S risk and LESSEE shall not be liable for injury to LESSOR unless such
injury is caused by the willful or grossly negligent conduct of LESSEE.
7. PROTECTION FROM LIENS AND TAXES.
7.1 LESSEE shall keep the Leased Property and every part thereof free
and clear of any and all liens and encumbrances for work performed upon the
Leased Property, or for materials furnished to it while this Lease remains in
force and effect.
7.2 LESSEE shall pay not later than ten (10) days before due, one
hundred percent (100%) of all taxes and assessments that may be levied or
assessed against the premises, including all taxes that may be levied or
assessed as a direct or indirect result of LESSEE'S mining activities, and
including, but not limited to, taxes on the mineral estate, real property,
improvements, personal property and possessory interest taxes. LESSOR shall
forward to LESSEE, upon receipt all notices of taxes and assessments due.
8. NOTICES.
Any notices required or permitted to be given to LESSOR or LESSEE
hereunder shall be considered as delivered when received by the parties to
whom they shall be directed. Notice shall be given by personal delivery or by
registered or certified mail, postage prepaid and return receipt requested,
addressed to the persons and addresses given below or to such other person or
address as the parties may designate by written notice from time to time.
LESSEE GOLDEN QUEEN MINING CO., INC.
7596 West Jewell Avenue, Suite 203
Lakewood, CO 80226
Copy to:
GOLDEN QUEEN MINING CO., LTD.
321 Water Street, suite 407
Vancouver, B.C. Canada V6B 1B8
LESSOR Western Centennials, Inc.
P. O. Box 2183
Grand Junction, CO 81502
Changes in the above addresses shall be effected by sending notice as set
forth herein and said change shall be effective fifteen (15) days from
receipt thereof.
9. WASTE AND REFUSE.
LESSEE agrees to dispose of waste and refuse from all mining activities
conducted pursuant to this Lease in accordance with good mining practice and
in accordance with the provisions of all applicable ordinances, laws and
regulations.
10. INSURANCE.
LESSEE shall at its sole cost and expense cause to be issued and
maintained during the term of this Lease or any extension thereof the
following insurance coverages:
10.1 Workers' Compensation Insurance.
LESSEE shall maintain workers' compensation insurance coverage in
accordance with the provisions of California law.
10.2 Automobile and Comprehensive General Liability Insurance.
LESSEE shall cause to be maintained during the term of this Lease
automobile liability and comprehensive general liability coverage with broad
form endorsements.
10.3 Certificates of Insurance.
LESSEE shall promptly furnish to LESSOR certificates of insurance for
all types of insurance applicable under this Lease, which certificates shall
provide that the insurance described therein may not be cancelled,
restrictively modified or terminated except upon not less than thirty (30)
days written notice delivered to LESSOR.
11. COMPLIANCE WITH LAWS.
LESSEE shall conduct and cause to be conducted all of its activities on
the LEASED PROPERTY in full compliance with the applicable laws of the State
of California and the United States of America, including compliance with
those relating to environmental protection, reclamation and remediation which
are required by the activities or operations of LESSEE on the LEASED
PROPERTY.
12. TITLE.
12.1. LESSOR has prevailed in a Quiet Title Action which it
conducted with respect to the LEASED PROPERTY, being Case No. 209028 in the
Superior Court of the State of California in and for the County of Kern,
styled "Western Centennials, Inc. vs. Mary Ann Scott, et al". A Judgement
resulting from said action was entered on February 20, 1992, and is recorded
in Book 6731 at Pages 660 through 665 of the Official Records in the office
of the Recorder of Kern County, California. LESSOR knows of no defects in its
title which would affect LESSEE'S right to possession and use pursuant to the
terms of this Lease, and LESSEE has made its independent evaluation of the
effects of said Judgement and of LESSOR'S title to the LEASED PROPERTY.
12.2 LESSOR warrants its title to the LEASED PROPERTY against, but
only against, any parties claiming by, through or under LESSOR.
12.3 In the event it is determined that LESSOR owns a different
percentage of the LEASED PROPERTY than an undivided One Hundred percent
(100%) interest then LESSOR'S rights under this Lease shall be adjusted so as
to reflect the actual interest owned.
13. DEFAULT AND TERMINATION.
13.1 Default.
The occurrence of any of the following events shall constitute an event
of default on the part of LESSEE:
13.1.1 Breach of Covenants.
Failure (i) to perform any of LESSEE'S covenants
hereunder, and (ii) to remedy such failure within sixty (60) days after
written demand is made therefor.
13.1.2 Assignments.
The making of a general assignment by LESSEE for the benefit
of creditors.
13.1.3 Bankruptcy.
The filing of any form of voluntary petition in bankruptcy by
LESSEE, or the filing of an involuntary petition by LESSEE'S creditors, if
such petition remains undischarged for a period of thirty (30) days.
13.1.4 Receivership.
The appointment of a receiver to take possession of
substantially all of LESSEE'S assets or of the interest held by LESSEE under
this Lease, if such receivership remains undissolved for a period of thirty
(30) days.
13.1.5 Attachment.
The attachment or other judicial seizure of substantially all of
LESSEE'S assets or of the interest held under this Lease, if such attachment
or other seizure remains undismissed or undischarged for a period of thirty
(30) days after the levy thereof.
13.2 Remedies.
13.2.1 Termination.
In the event of the occurrence of any event of default mentioned in
Paragraph 13 hereof, LESSOR, shall have the right, so long as default
continues, to immediately terminate this Lease by giving LESSEE written
notice of such termination.
13.2.2 Eviction.
In the event of any such termination of this Lease, LESSOR may
then or at any time thereafter, re-enter the LEASED PROPERTY, or any part
thereof, and expel or remove therefrom LESSEE and any other person occupying
the same, using such force as may be necessary so to do, and again repossess
and enjoy the LEASED PROPERTY, without prejudice to any other remedies that
LESSOR may have under this Lease, or at law or equity, by reason of LESSEE'S
default or of such termination.
13.2.3 Damages.
In the event of any such termination of this Lease, LESSOR
shall have all of the rights and remedies of a landlord provided by Section
1951.2 of the Civil code of the State of California.
13.2.4 Remedies Under CC 1951.4.
In the event LESSEE breaches this Lease and abandons the
LEASED PROPERTY, LESSOR shall have all of the remedies of a landlord provided
by Section 1951.4 of the civil Code of the State of California.
13.2.5 Default by Landlord.
In the event of default by LESSOR, LESSEE shall have all of
the remedies of a tenant provided by the laws of the State of California.
13.3 Termination by LESSEE.
This Lease may be terminated by LESSEE at any time by giving of three
(3) months written notice.
13.4 Information.
13.4.1 From time to time, upon request of LESSOR, and upon
termination of this Lease, LESSEE shall, to the extent not previously
furnished, provide LESSOR with copies of all Information as defined below. As
used in this Lease, "Information" shall mean all geological, geophysical and
geochemical data, drilling data, all laboratory testing, and assay results,
maps and reports, whether acquired, generated or compiled by or for LESSEE.
LESSEE warrants that all Information supplied to LESSOR pursuant to the terms
of this provision shall be true and accurate copies of the Information
acquired, generated or compiled by or for LESSEE; provided, however, that
LESSEE does not warrant that the data contained therein is an accurate
interpretation of the geology described therein.
13.4.2 Any and all data, information reports and samples
provided by LESSEE to LESSOR under the terms of this Lease shall be treated
and held confidential for the term of this Lease.
13.5 CONTINUING OBLIGATION OF LESSEE:
No termination of this Lease shall relieve LESSEE from the continuing
obligations for performance of any reclamation, remediation or other
obligations under Section 11, above, arising from any activities conducted by
LESSEE on the LEASED PROPERTY.
14. FORCE MAJEURE.
The failure to perform or comply with any of the covenants or conditions
hereof on the part of LESSEE will not be grounds for cancellation, penalty,
termination or forfeiture hereof, during such time as failure to perform is
caused or compliance is prevented by severe weather, explosion, unusual
mining casualty, mill shutdowns, damage to or destruction of mill or mill
plant facility, fire, flood, civil or military authority, insurrection,
strikes, riots, inability after diligent effort to obtain competent workmen
or material or necessary permits, fuel shortages, inadequate or shortages of
transportation facilities not due to the negligence or lack of diligence by
LESSEE, governmental actions or policies which substantially restrict the
legality or profitability of extracting and selling any of the valuable
minerals produced under the Mining Lease, acts of God, or any circumstances
or conditions beyond the control of LESSEE, and in such an event, LESSEE
shall be excused from, and not held liable for, such failure to perform or
comply. No event of force majeure shall affect LESSEE'S obligation to make
the Advance Royalty Payments or production royalty payments required under
Section 4 above.
15. INUREMENT.
This Lease shall inure to the benefit of and be binding upon their
respective heirs, trustees, conservators, successors and assigns of the
parties.
16. RECORDATION.
This Lease is not to be recorded. LESSEE may, however, prepare and
submit to LESSOR for signature, a memorandum of this Lease for recordation.
17. ASSIGNMENT.
LESSEE may assign this Lease without the prior written consent of LESSOR
provided LESSEE guarantees the obligations of the assignee; otherwise, this
Lease shall not be assigned by LESSEE without the prior written consent of
LESSOR, which consent shall not be unreasonably withheld.
18. REMOVAL OF EQUIPMENT.
At the termination of this Lease, and provided that it is not in default
hereunder, LESSEE may remove any and all equipment it placed on the property
during the term of this Lease, or any extension thereof, provided, said
removal is completed within one (1) year of the termination date.
19. ARBITRATION.
Any dispute arising out of this Lease herein must be raised and settled
in binding arbitration proceeding held in accordance with the rules of the
American Arbitration Association. The process for selecting arbitrators shall
be as follows: Each party shall select an arbitrator and the two (2) selected
arbitrators shall select the third arbitrator. Such selections must be made
within fifteen (15) days after the party commencing the arbitration process
gives notice to the other party of its intention to arbitrate a dispute or
difference. Any arbitration award may include the reasonable attorney fees
and costs of the prevailing party.
20. COUNTERPARTS.
This Lease may be signed in counterparts and shall be deemed effective
when both parties have executed this Lease or any counterpart thereof.
21. COMPLETE AGREEMENT.
This writing and all terms and convents contained herein are deemed to
be the complete and unequivocal written agreement of the parties and no other
agreements, either written or oral, are contemplated with respect to said
property. Any subsequent modifications of this Lease agreed to by the parties
shall be in writing and duly executed by LESSEE and LESSOR.
22. CALIFORNIA LAW.
This Lease shall be governed by and construed and interpreted under the
internal laws of the State of California.
23. SEVERABILITY.
If any term, covenant, condition or provision of this Lease is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions hereof shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
24. TITLE HEADING.
The headings of the respective paragraphs of this Lease are inserted for
convenience only and shall not be deemed to be a part of this Lease, nor
considered in construing this Lease.
EXECUTED as of the day and year first above written.
LESSOR: LESSEE:
WESTERN CENTENNIALS, INC. GOLDEN QUEEN MINING COMPANY, INC.
By: s/ W.L. Wilson By: s/ Edward G. Thompson
------------------------- -------------------------
Its: Director Its: Director
<PAGE>
Recording Requested By:
LYNNE D. ROSINSKI
After Recording Return To:
Golden Queen Mining Company, Inc.
P.O. Box 878
Rosamond, CA 93560-0878
MEMORANDUM OF MINING LEASE
NOTICE IS HEREBY GIVEN that Western Centennials, Inc. a Nevada Corporation
(hereafter referred to as "LESSOR"), and Golden Queen Mining Company, Inc.,
(hereafter referred to as "LESSEE"), have entered into a Mining Lease dated
September 19, 1994, for a period of twenty (20) years, unless terminated
earlier or extended pursuant to the terms and provisions set forth in said
Mining Lease granting LESSEE the exclusive right to conduct mining activities
within and upon the following premises: The Golden Queen patented mining
claim more particularly described in Mineral Survey No. 6185 and Patent No.
1100921 containing 7.423 acres more or less; which Golden Queen claim lies
within Section 6, Township 10 North, Range 12 West, San Bernardino Base
Meridian and is referred to by the Kern County Tax Assessor as Parcel No.
243-110-10-00-2C. The terms and provisions of said Mining Lease are hereby
incorporated by reference in the Memorandum of Mining Lease.
IN WITNESS WHEREOF, the party has executed this Memorandum of Mining Lease as
of this 29 day of November, 1994.
LESSOR: LESSEE:
WESTERN CENTENNIALS, INC. GOLDEN QUEEN MINING COMPANY, INC.
By: s/ W.L. Wilson By: s/ Paul L. Blair
------------------------- -------------------------
Its: Vice President Its: President
Tax I.D # 93-6050911
<PAGE>
STATE OF COLORADO
SS.
COUNTY OF MESA
On Nov. 29, 1994, before me, the undersigned, a Notary Public in and for said
State, personally appeared W.L. Wilson proved to me on the basis of
satisfactory evidence to be the Vice President of Western Centennials, Inc.,
the corporation that executed the within instrument and known to me to be the
person who executed the within instrument on behalf of said corporation and
acknowledged to me that such corporation executed the within instrument
pursuant to its By-Laws or a resolution of its Board of Directors.
WITNESS my hand and official seal.
s/ Stacy Antonucci
- ------------------------------
Notary Public for said State
STATE OF CALIFORNIA
SS.
COUNTY OF KERN
On Nov 17, 1994, before me, the undersigned, a Notary Public in and for said
State, personally appeared Paul L. Blair proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged that he executed the same.
WITNESS my hand and official seal.
s/ Myrna L. Mendenhall
- ------------------------------
Notary Public for said State
Exhibit 10.7
AGREEMENT OF SALE AND PURCHASE
This Agreement of Sale and Purchase ("Agreement") is entered into on
March 8, 1995, between William and Dorothy Meier (hereinafter referred to as
"Seller") and Golden Queen Mining Co., Inc., a California Corporation,
("Buyer").
Recitals
A. Seller is the owner of certain real property consisting of approximately
2.9 acres situated in Kern County, California ("Property") more
particularly described on the document attached hereto as Exhibit "A"
and incorporated by reference.
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the Property on the terms and conditions provided in this
Agreement.
In consideration of the mutual covenants and conditions contained
herein, Seller and Buyer agree as follows:
1. Sale and Purchase. Seller shall sell to Buyer and Buyer shall purchase
from Seller the Property, on the terms and conditions set forth herein.
2. Purchase Price. The purchase price ("Purchase Price") for the Property
shall be $13,000.00.
3. Payment of Purchase Price. The purchase price shall be payable by Buyer
to Seller in the sum of Thirteen thousand dollars ($13,000.00) on close
of escrow.
4. Representations of Seller. In addition to all other representations and
warranties under the Agreement, Seller represents that it is lawfully
seized of the indefeasible estate on the property and that is free and
clear of any liens of any nature; that, to the best of its knowledge, no
suit, action or other proceeding is pending or threatened before any
court or governmental entity and no cause of action exists that relates
to the property; that it has received no notice of violation of any
local, state or federal law, regulation, rule, ordinance or order or of
any permit, license, consent or authorization; and that, to the best of
its knowledge, no condition exists on the Property which would result in
any action under the Comprehensive Environmental Response, Compensation
and Liability Act (Superfund) 42 U.S.C. 9601-9657, as amended, nor any
other federal, state or local environmental or other law, regulation,
rule, ordinance or order.
5. Escrow. An escrow shall be opened to consummate the sale and purchase
of the Property pursuant to this Agreement at the office of Chicago
Title Company of Bakersfield, California within five (5) days from the
date hereof. Such escrow shall close within ninety (90) days of the
opening thereof unless the ninetieth (90th) day falls on a Sunday or a
national holiday, in which event the Escrow shall close on the next
business day thereafter.
6. Conditions of Escrow. The close of such escrow and Buyer's obligation
to purchase the Property are conditioned on:
a) The conveyance to Buyer of good and marketable title to the
Property, as evidenced by a standard form title insurance policy,
in the full amount of the purchase price, issued by World Title
Company subject only to such liens, encumbrances, clouds or
conditions as may be approved in writing by Buyer.
b) Delivery of possession of the Property to Buyer immediately on
close of escrow, free and clear of all uses and occupancies.
7. Failure of Conditions. Should any of the conditions specified on
paragraph 5. of this Agreement fail to occur by close of escrow as
herein provided, Buyer shall have the power, exercisable by the giving
of written notice by Buyer to the escrow holder and to Seller, to cancel
such escrow, terminate this Agreement, and recover any amounts paid by
Buyer to Seller or to the escrow holder on amount of the purchase price
of the Property. The exercise of such power by Buyer shall not,
however, constitute a waiver by Buyer of any other rights which Buyer
may have against Seller for breech of this Agreement.
a) Prorations. There shall be prorated between Seller and Buyer on
the basis of thirty (30) day months as of 12:00 midnight Pacific
Standard Time on the date of close of escrow as herein provided:
b) Real property taxes levied or assessed against the Property as
shown on the latest available tax bills.
c) Premiums on insurance policies, if any, acceptable to Buyer
insuring the improvements and buildings on the Property against
damage or destruction by fire, theft or the elements.
8. Bonds and Assessments. Any bonds or improvement assessments which are a
lien on the Property shall, on the close of escrow, be paid by Seller.
9. Expenses of Escrow. The expenses of the escrow herein provided shall be
paid in the following manner:
a) The full cost of securing the title insurance policy referred to in
subparagraph 6.(a) hereof shall be paid by Seller.
b) The cost of preparing, executing and acknowledging any deed or
other instruments required to convey title to Buyer in the Manner
referred to in subparagraph 6.(a) hereof shall be paid by Seller.
c) The cost of recording a grant deed required to convey title to the
Property to Buyer as described in subparagraph 6.(a) hereof shall
be paid by Buyer.
d) Any tax imposed on the conveyance of title to the Property to Buyer
under the Documentary Transfer Tax Act shall be paid by Seller.
e) Any escrow fee charged by the escrow holder, in addition to the
cost of the title insurance policy required by this Agreement,
shall be paid the Seller and buyer in equal proportions.
10. Destruction of Improvements. If any of the improvements on the Property
are destroyed or damaged prior to the close of escrow as herein
provided, Buyer shall have the power, exercisable by giving of written
notice by Buyer to the escrow holder and to Seller, to cancel such
escrow, terminate this Agreement and recover any all amounts paid to
Seller or the escrow holder on account of the Purchase Price of the
Property.
11. Notices. Any and all notices or other communications required or
permitted by this Agreement or by law to be served on or given to Seller
or Buyer by the other party hereto, shall be in writing and shall be
deemed duly served and given when personally delivered to Seller or in
lieu of such personal service, forty-eight (48) hours from the time that
it is deposited in the United States mail, first-class postage prepaid,
addressed to Seller or Buyer at the addresses shown below. Either this
paragraph by giving written notice of such change to the other party in
the manner provided herein.
Seller: William and Dorothy Meier
P.O. Box 475
Cascade, ID 83611
Buyer: Golden Queen Mining Co., Inc.
P.O. Box 878
Rosamond, CA 93560-0878
12. Attorneys' Fees. In the event of any controversy, claim, or dispute
between Seller or Buyer, arising out of or relating to this Agreement or
the breach thereof, the prevailing party shall be entitled to recover
from the losing party reasonable expenses, attorneys' fees and costs.
13. Severability. In the event that any provision contained with this
Agreement is rendered by a court of competent jurisdiction to be void,
invalid or unenforceable, Seller and Buyer agree that such invalidity or
unenforceability shall have no effect whatsoever on the balance of the
Agreement.
14. Heirs, Successors and Assigns. All terms of this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
respective heirs, successors and assigns of Seller and Buyer.
15. Counterparts. This Agreement may be executed and delivered in any
number of counterparts, each of which, when executed and delivered, will
be an original, but all of which together constitute on and the same
agreement.
16. Entire Agreement. This Agreement contains the entire agreement between
Seller and Buyer respecting the Property, and any agreement of
representation respecting the Property or the duties of either Seller or
Buyer in relation thereto not expressly set forth in the Agreement is
null and void.
SELLER BUYER
s/ William H. Meier 3-15-95 GOLDEN QUEEN MINING CO., INC.
- ------------------------------
Date
s/ Dorothy Meier 3-15-95 By: s/ Paul L. Blair 3/8/95
- ------------------------------ ------------------------------
Dorothy Meier Date President Date
Tax Payer I.D.# 345-051-26-00-2
<PAGE>
EXHIBIT "A"
Escrow No. 645129-MM
THAT PORTION OF THE SOUTH HALF OF THE SOUTH HALF OF THE NORTH HALF OF THE
SOUTH HALF OF THE NORTHEAST QUARTER OF SECTION 1, TOWNSHIP 10 NORTH, RANGE 13
WEST, SAN BERNARDINO MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF
KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT OF SAID LAND
APPROVED BY THE SURVEYOR GENERAL ON FEBRUARY 19, 1856, LYING EASTERLY OF THE
CENTER LINE OF THE MOJAVE-TROPICO ROAD AS SAID ROAD EXISTED ON OCTOBER 12,
1965.
THE PLAT OF A DEFENDANT RESURVEY OF SAID TOWNSHIP WAS FILED IN THE DISTRICT
LAND OFFICE OCTOBER 7, 1936.
<PAGE>
STATE OF IDAHO
SS.
COUNTY OF VALLEY
On March 15-95, before me, the undersigned, a Notary Public in and for said
State, personally appeared William and Dorothy Meier, personally known to me
or (proved to me or proved to me on the basis of satisfactory evidence) to be
the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged that they executed the same.
WITNESS my hand and official seal.
s/ Glenna K. Young
- ------------------------------
Notary Public for said State
=================================================================
STATE OF CALIFORNIA
SS.
COUNTY OF KERN
On Mar 8, 1995, before me, the undersigned, a Notary Public in and for said
State, personally appeared Paul L. Blair, personally known to me or (proved
to me or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged that they executed the same.
WITNESS my hand and official seal.
s/ Myrna L. Mendenhall
- ------------------------------
Notary Public for said State
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 Grace W.
Meehl, Madge W. Wolff, Stephen G. Wegmann, Michael L. Wegmann, John G.
Hodgson, Virginia L. Sigl, Patrick L. Wolff, and George P. Wolff (hereinafter
collectively referred to as "Optionor") and Golden Queen Mining Company,
Inc., a California corporation whose address P.O. Box 878, Rosamond,
California 93560-0878 (hereinafter referred to as "Golden Queen").
WITNESSETH:
WHEREAS, Optionor are owners and holders of all of the issued and
outstanding Stock of the KARMA WEGMANN CORPORATION, hereinafter referred to
as "Company", whose address is 714 Valita Street, Venice, California 90291
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.
B. GRANT 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 Wegmann
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, 2565 Camino Del Rio South, San Diego, California 92108, 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 Merrill-Crowe 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 nave 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: Mrs. Virginia Sigl
714 Valita Street
Venice, California 90291
If to Golden Queen: Golden Queen Mining Company Inc.
475 17th Street, Suite 750
Denver, Colorado 80202-4017
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/ Grace W. Meehl
--------------------------------
By: s/ Margaret W. Wolff, by Patrick L. Wolff,
--------------------------------
Attorney-In-Fact
By: s/ Stephen G. Wegmann
--------------------------------
By: s/ Michael L. Wegmann
--------------------------------
By: s/ John G. Hodgson
--------------------------------
By: s/ Virginia L. Sigl
--------------------------------
By: s/ Patrick L. Wolff
--------------------------------
By: s/ George P. Wolff
--------------------------------
GOLDEN QUEEN MINING COMPANY, INC.
Date: April 1, 1995 By: s/ Paul L. Blair
------------------------------
Its: PRESIDENT
Exhibit 10.9
AGREEMENT OF SALE AND PURCHASE
This Agreement of Sale and Purchase ("Agreement") is entered into on
9/22/, 1995, between Praveen Gupta M.D., Trustee of the Praveen Gupta Medical
Corporate Defined Benefit Pension Plan (hereinafter referred to as "Seller")
and Golden Queen Mining Co., Inc., a California Corporation, (hereinafter
referred to as "Buyer").
Recitals
A. Seller is the owner of certain real property consisting of approximately
158 acres situated in Kern County, California ("Seller's Property").
The North Half of the South Half of Section 1, Township 10 North, Range
13 West, San Bernardino Meridian, in the Unincorporated area, County of
Kern, State of California, According to the official Plat thereof. APN
345 052 01-00. Subject to proper survey and subdivision description.
B. Seller and Buyer agree that Seller shall have Seller's Property surveyed
and subdivided both to be at Buyer's expense prior to the close of
escrow to comply with paragraph (c) below.
C. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller only the portion of the Seller's Property which lies easterly of
Mojave-Tropico Road, Mojave, CA approximately 40 acres ("Property") as
depicted on Exhibit A attached hereto and incorporated herein by
reference, and on the terms and conditions provided in this Agreement.
Operative Provisions
In consideration of the mutual covenants and conditions contained
herein, Seller and Buyer agree as follows:
1. SALE AND PURCHASE. Seller shall sell to Buyer and Buyer shall purchase
from Seller the Property, on the terms and conditions set forth herein.
2. PURCHASE PRICE. The purchase price ("Purchase Price") for the Property
shall be $375,000.00.
3. PAYMENT OF PURCHASE PRICE. A deposit of $37,500.00 will be made by
Buyer to Seller outside of Escrow by certified funds, and shall be
returned to Buyer only as set forth in Section 7 below. Prior to the
close of escrow an additional cash payment of $150,000.00 shall be
deposited into escrow. Balance of $187,500.00 to be carried by "Seller"
for a period of one (1) year from the close of escrow or until the start
of mining production whichever comes first at an interest rate of 12%
per annum evidenced by a Note with 6% late charge in the event payment
is not received within 5 days of due date and attorneys' fees provision
secured by a Deed of Trust on the subject Property with due on sale
clause in the event of transfer bother to be prepared by escrow holder
as per Schedule of Payments in Exhibit B.
4. REPRESENTATIONS OF SELLER. In addition to all other representations and
warranties under the Agreement, Seller represents and warrants that it
is the owner of the Property and that is free and clear of any liens of
any nature; the Property is not subject to any lease or contracts which
will be in effect after the close of escrow; that, to the best of its
knowledge, no suit, action or other proceeding is pending or threatened
before any court or governmental entity and no cause of action exists
that relates to the Property; that it has received no notice of
violation of any local, state or federal law, regulation, rule,
ordinance or order or of any permit, license, consent or authorization;
and that, to the best of its knowledge, no condition exists on the
Property which would result in any action under the Comprehensive
Environmental Response, Compensation and Liability Act (Superfund) 42
U.S.C. 9601-9657, as amended, nor any other federal, state or local
environmental or other law, regulation, rule, ordinance or order, and
the Property is not contaminated with any hazardous materials. All
representations and warranties of Seller contained herein shall survive
the close of escrow.
5. ESCROW. An escrow shall be opened to consummate the sale and purchase
of the Property pursuant to this Agreement at the office of Chicago
Title Company of Bakersfield, California within twenty (20) days from
the date hereof. Such escrow shall close on or before August 30, 1996.
6. CONDITIONS OF ESCROW. The close of such escrow and Buyer's obligation
to purchase the Property are conditioned on:
a) The conveyance to Buyer of good and marketable title to the
Property, as evidenced by a standard form title insurance policy,
in the full amount of the purchase price, issued by Chicago Title
Company subject only to such liens, encumbrances, clouds or
conditions as may be approved by Buyer and with such endorsements
as may be requested by Buyer. Failure to disapprove in writing
within 10 days the Preliminary Title Report shall be deemed Buyer's
approval.
b) Delivery of possession of the Property to Buyer immediately on
close of escrow, free and clear of all uses and occupancies except
those known by Buyer or created after the opining of escrow.
Seller does not warrant or represent to Buyer any fitness for
purpose or use of the Property and Buyer is advised to investigate
any and all future use that Buyer intends.
7. FAILURE OF CONDITIONS. Should any of the conditions specified in
paragraph 6 of this Agreement fail to occur by close of escrow as herein
provided, Buyer shall have the power, exercisable by the giving of
written notice by Buyer to the escrow holder and to Seller, to cancel
such escrow, terminate this Agreement, and obtain a refund of the
deposit less fees and costs and damage to Property incurred during
escrow. Seller shall also receive monetary compensation for any damage
caused by Buyer to the Property or by its failure to remove stored
minerals, etc. from the Property. The exercise of such power by Buyer
shall not constitute a waiver by either party of any other rights which
either party may have against the other due to the breach of the
Agreement.
8. LIQUIDATED DAMAGES. In the event that Buyer deems the property to be
not suitable for any reason, or fails to close escrow timely (except for
the conditions set forth in paragraph 6), or Buyer is unable to change
the zoning of the subdivided property, Seller shall keep the $37,500.00
deposit without recourse by Buyer.
9. PRORATIONS. There shall be prorated between Seller and Buyer on the
basis of thirty (30) day months as of 12:00 midnight Pacific Standard
Time on the date of close of escrow as herein provided:
a) Real property taxes levied or assessed against the Property as
shown on the latest available tax bills.
BONDS AND ASSESSMENTS. Seller is not aware of any bonds or improvement
assessments at this time other than the normal property taxes (currently
not exceeding $2,000.00 per year). Buyer should verify before signing
the agreement. Buyer shall be responsible for all bonds and or
improvement assessments at the time of close of the escrow.
10. EXPENSES OF ESCROW. The expenses of the escrow herein provided shall be
paid in the following manner:
a) The full cost of securing the title insurance policy referred to in
subparagraph 6.(a) hereof shall be paid by Buyer.
b) The cost of preparing, executing and acknowledging any deed or
other instruments required to convey title to Buyer in the manner
referred to in subparagraph 6.(a) hereof shall be paid by Buyer.
c) The cost of recording a grant deed required to convey title to the
Property to Buyer as described in subparagraph 6.(a) hereof shall
be paid by Buyer.
d) Any tax imposed on the conveyance of title to the Property to Buyer
under the Documentary Transfer Tax Act shall be paid by Buyer.
e) Any escrow fee charged by the escrow holder shall be paid 50% by
the Buyer and 50% by the Seller.
11. PRODUCTION ROYALTIES. A production royalty for all minerals mined,
removed, and sold from the Property equal to five percent (5%) of the
Net Smelter Returns shall be calculated up to, but not to exceed twenty
(20) years. In no case shall the total royalty payments to Seller exceed
One Million Dollars ($1,000,000.00). The term "Net Smelter Returns"
shall be defined to be the gross amount received from the sale of
valuable minerals less all taxes levied, incurred or imposed on the
sale, severance or production of such minerals and less costs of
transportation (to the smelter and/or refinery or point of sale),
smelting and refining charges and costs of sale. Production royalty only
applies to minerals mined and removed from the Property and not from
minerals mined and removed from nearby or adjacent properties stored
upon Property.
12. COMMINGLING. Any minerals produced from the Property 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 for the Property with prior written disclosure to
Seller.
13. EXPLORATION. Sellers grant to Buyers the right to enter upon the
Property for the purpose to drill up to a maximum of six (6) exploratory
drill holes prior to the close of escrow. Buyer is to pay all costs and
to repair any and all damage caused thereby in the event Buyer does not
purchase the Property.
14. INSURANCE. Buyer shall at its sole cost and expense cause to be issued
and maintained during the escrow period the following insurance
coverage's:
a) Workers Compensation Insurance: Buyer shall maintain worker's
compensation insurance coverage in accordance with the provisions
of California Law.
b) Automobile and Comprehensive General Liability Insurance: Buyer
shall cause to be maintained during the escrow period, automobile
liability and comprehensive general liability coverage with broad
form endorsements with a minimum limit of liability of not less
that One Million Dollars ($1,000,000.00). Seller shall be named as
an additional insured on all insurance policies provided for by
this mining Lease in accordance with the provisions of California
Law.
c) Certificates of Insurance: Buyer shall promptly furnish to Seller
certificates of insurance for all types of insurance applicable
under this Agreement of Sale and Purchase, which certificates shall
provide that the insurance described therein may not be canceled
restrictively modified or terminated except upon not less that
thirty (30) days written notice delivered to Seller.
15. INDEMNITY. Buyer agrees to indemnify and hold harmless Seller, its
agents, employees, heirs and assigns from any and all claim, losses,
expenses, fees, attorneys' fees, costs and judgments that arises from
Buyers' activities impacting the Property during the escrow period.
16. NOTICES. Any and all notices or other communications required or
permitted by this Agreement or by law to be served on or given to Seller
or Buyer by the other party hereto, shall be in writing and shall be
deemed duly served and given when personally delivered (including
overnight professional delivery service such as Federal Express or UPS)
or in lieu of such personal service, after delivery upon being deposited
in the United States mail certified return receipt requested, postage
prepaid, addressed to Seller or Buyer at the addresses shown below.
Either party may change its address for notice set forth in this
paragraph by giving written notice of such change to the other party in
the manner provided herein.
Seller: Praveen Gupta, M.D.
Trustee of the Praveen Gupta Medical Corp.
Defined Benefit Pension Plan
9435 Venice Blvd.
Culver City, CA 90232
Buyer: Golden Queen Mining Co., Inc.
P.O. Box 878
Rosamond, CA 93560-0878
17. ATTORNEYS' FEES. In the event of any controversy, claim, or dispute
between Seller or Buyer, arising out of or relating to this Agreement or
the breach thereof, the prevailing party shall be entitled to recover
from the losing party reasonable expenses, attorneys' fees and costs.
18. SEVERABILITY. In the event that any provision contained with this
Agreement is rendered by a court of competent jurisdiction to be void,
invalid or unenforceable, Seller and Buyer agree that such invalidity or
unenforceability shall have no effect whatsoever on the balance of the
Agreement.
19. HEIRS, SUCCESSORS AND ASSIGNS. All terms of this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
respective heirs, successors and assigns of Seller and Buyer.
20. COUNTERPARTS. This Agreement may be executed and delivered in any
number of counterparts, each of which, when executed and delivered, will
be an original, but all of which together constitute on and the same
agreement.
21. SUBDIVISION. All surveying and subdivision cost shall be paid by Buyer.
22. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
Seller and Buyer respecting the Property, and any agreement of
representation respecting the Property or the duties of either Seller or
Buyer in relation thereto not expressly set forth in the Agreement is
null and void.
SELLER BUYER
GOLDEN QUEEN MINING CO., INC.
s/ Praveen Gupta M.D. 9/22/95 By: s/ John E. Dowis 9/22/95
- -------------------------------- --------------------------------
Trustee of the Date Project Manager Date
Praveen Gupta Medical Corporate
Defined Benefit Pension Plan
TaxPayer I.D.# 95-4473800
<PAGE>
EXHIBIT A
Assessor's Map No. 345-05 showing location of property.
<PAGE>
EXHIBIT B - GUPTA PROPERTY
Loan Amortized at 12%
Payment Payment Principal
Date Number Amount Principal Interest Balance
- -----------------------------------------------------------------------
Opening Balance 187,500.00
9/30/96 1 16,659.15 14,784.15 1,875.00 172,715.85
10/31/96 2 16,659.15 14,931.99 1,727.16 157,783.86
11/30/96 3 16,659.15 15,081.31 1,577.84 142,702.55
12/31/96 4 16,659.15 15,232.12 1,427.03 127,470.43
1/31/97 5 16,659.15 15,384.45 1,274.70 112,085.98
2/28/97 6 16,659.15 15,538.29 1,120.86 96,547.69
3/31/97 7 16,659.15 15,693.67 965.48 80,854.02
4/30/97 8 16,659.15 15,850.61 808.54 65,003.41
5/31/97 9 16,659.15 16,009.12 650.03 48,994.29
6/30/97 10 16,659.15 16,169.21 489.94 32,825.08
7/31/97 11 16,659.15 16,330.90 328.25 16,494.18
8/31/97 12 16,659.12 16,494.18 164.94 0.00
GRAND TOTAL 199,909.77 187,500.00 12,409.77 0.00
======================================================================
<PAGE>
State of CALIFORNIA
County of LOS ANGELES
On Sept. 22, 1995 before me, ESTHER MAY TARN, NOTARY PUBLIC personally
appeared PRAVEEN GUPTA, M.D. and JOHN E. DOWIS, proved to me on the basis of
satisfactory evidence to be the person(s) whose names(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
s/ Esther May Tarn
--------------------------------
SIGNATURE OF NOTARY
Exhibit 10.10
AGREEMENT OF SALE AND PURCHASE
This Agreement of Sale and Purchase ("Agreement") is entered into on
3/29/96, 1996, between Grace W. Meehl, (Meehl Family Trust), Mary/aka/May
Meehl (Joseph Meehl, Estate), Eric W. Godfrey, John G. Meehl, and James P.
Sigl, (hereinafter referred to as "Seller(s)") and Golden Queen Mining
Company, Inc., a California Corporation, ("Buyer").
RECITALS
A. Seller(s) is the owner of certain unpatented mining claims and millsite
known as Tepeyac Hill, CAMC # 34226, Homestake, CAMC # 36726 located in
Section 6, T10N,R12W SBM and Homestake Millsite CAMC #42415 located in
Section 32, T11N,R12W SBM, situated in the Mojave Mining District, Kern
County, State of California, ("Property") more particularly described on
the document attached hereto as Exhibit "A" and incorporated by
reference.
B. Seller(s) desires to sell and Buyer desires to purchase the Property on
the terms and conditions provided in this Agreement.
In consideration of the mutual covenants and conditions contained
herein, Seller(s) and Buyer agree as follows:
1. SALE AND PURCHASE. Seller(s) shall sell to Buyer and Buyer shall
purchase from Seller(s) the Property, on the terms and conditions set
forth herein.
2. PURCHASE PRICE. The purchase price ("Purchase Price") for the Property
shall be $65,000.00. Seller(s) hereby acknowledges receipt of a payment
made by Buyer to Seller(s) in the amount $2,000.00 in consideration for
a certain Letter of Intent dated October 27, 1995, described in "Exhibit
B" and attached and incorporated by reference herein.
3. PAYMENT OF PURCHASE PRICE. The purchase price shall be payable by Buyer
to Seller(s) as outlined below:
a) Upon the signing of this Agreement a down payment of Eleven
thousand dollars ($11,000.00) payable to each owner, according to
percentage of ownership (as set forth below). This payment is
non-refundable.
b) The principle balance of $52,000.00 is to be carried at an interest
rate of 10% per annum for a term of three (3) years, exclusive of
the retained royalty. See attached Payment Schedule, Exhibit C.
c) Monthly payments in the amount of One thousand five hundred dollars
($1,500.00) are to be made payable to each owner according to
percentage of ownership (as set forth below). Payments are due on
the first (1st) day of each month beginning on May 1, 1996. Any
payments made later than twenty (20) days will cause this Agreement
to be subject to forfeit. After thirty (30) days of non-payment a
written notice will be sent via Certified mail - return receipt
requested to notify the Golden Queen that this Sales Agreement is
terminated. All payments received are non-refundable.
d) A Quit Claim Deed shall be completed and executed by all Seller(s)s
to be held in escrow by Mission Valley Escrow. Upon payment of the
full Purchase Price, Mission Valley Escrow will record the Quit
Claim Deed and forward all necessary documents to Buyer. The Quit
Claim Deed shall be in the form attached as Exhibit D.
Owners Percentage of Ownership
------ -----------------------
Grace W. Meehl, Meehl Family Trust 44.5%
Mary (May) Meehl (Joseph Meehl, Estate) 33.3%
Eric W. Godfrey 7.4%
John G. Meehl 7.4%
James P. Sigl 7.4%
4. GRANT. Seller(s) hereby grants to Buyer during the term of this
Agreement free and unrestricted access to the Property, and the
exclusive right; (1) to explore, sample and test Property, (2) to
construct, use, and maintain on the Property such roads, buildings,
structures, machinery, equipment, personal property, fixtures, and
improvements as may be required for the conduct of its exploration and
related operations, and (3) to extract and remove from the Property such
materials as may be removed in the normal course of exploration or
mining operations on the Property.
5. PRODUCTION ROYALTY. A production royalty of 3% NSR (with expenses not to
exceed 5% of the gross smelter returns) for a term of 20 years from the
date of this agreement and not to exceed $500,000.00 will be paid to
Seller(s) on a quarterly basis. (Not to be included in payments outlined
in paragraph 3 above). Complete production and progress reports and
records are to be available to Seller(s) or Seller(s)s representative at
all reasonable times. Payments are to be made within thirty (30)
working days after the end of the production quarter. If payments are
not made within the required time, action may be taken by Seller(s) to
recover the funds due, and 10% interest will be assessed to Buyer, and
any legal costs will be paid by Buyer should Seller(s) prevail as
provided for in section 19 of this Agreement.
a) The NET SMELTER RETURN (NSR) is defined as the net dollar amount
received by Seller(s) from the sale of minerals produced from the
Ore mined from the Property in the corresponding calendar quarter,
after deducting: (1) all charges, penalties, umpire charges, and
deductions of any nature made by the smelter, refinery, or other
treatment plant or other purchaser arising out of the receipt,
processing or handling of production; and (ii) the following items
attributable to production paid by or for the account of Buyer; (a)
all brokers' or agents' commissions negotiated at arms length with
an independent party on the sale and all other costs of sale, (b)
all cost of transportation (including forwarding, port, demurrage,
delay, and other like charges and expenses) from mine, mill, or
refinery, as the case may be, to the delivery destination specified
in the purchase contract, and (c) any sales, severance, gross
production, privilege, or similar tax assessed on or in connection
with the minerals or measured by the value thereof. Mining and
milling costs shall not be deducted in calculating Net Smelter
Returns.
6. COMMINGLING. Any minerals produced from the Property 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
Mining Company, Inc. to determine the quantity and grade of minerals,
valuable ores and substances produced from the Property with prior
written disclosure to Seller(s).
7. REPRESENTATIONS OF SELLER(S). In addition to all other representations
and warranties under the Agreement, Seller(s) represents that it is the
owner of any and all rights, title and interest of the Property and that
to the best of their knowledge it is lawfully seized, and that to the
best of their knowledge is free and clear of any liens or encumbrances
of any nature; that, to the best of their knowledge, no suit, action or
other proceeding is pending or threatened before any court or
governmental entity and no cause of action exists that relates to the
Property; that to the best of their knowledge it has not received nor
has reason to receive notice of violation of any local, state or federal
law, regulation, rule, ordinance or order or of any permit, license,
consent or authorization; and that, to the best of their knowledge, no
condition exists on the Property which would result in any action under
the Comprehensive Environmental Response, Compensation and Liability Act
(Superfund) 42 U.S.C. 9601-9657, as amended, nor any other federal,
state or local environmental or other law, regulation, rule, ordinance
or order.
8. OPERATIONS. Buyer shall conduct all of its operations on the Property
in a good and workman like manner and in accordance with accepted mining
practice. All decisions with respect to exploration of the Property,
including all decisions regarding the commencement, suspension,
resumption, or termination of any operation, shall be made by Golden
Queen in its sole discretion. There are no covenants or agreements
regarding this matter other than those expressly set forth herein.
9. PROTECTION FROM LIENS AND DAMAGES. Buyer shall keep the Property free
of liens for labor performed or materials or merchandise furnished for
use on the Property pursuant to this Agreement, and shall hold Seller(s)
harmless from all costs, loss, or damage which may result from any work
or operations of Buyer or its possessions of the Property. Buyer shall
conduct business in such a manner that will to insure that Seller(s) are
free from Mechanics' Lien Law liability.
10. TAXES, BUREAU OF LAND MANAGEMENT FEES, ETC. Buyer shall pay prior to
being due all taxes, Bureau of Land Management fees, and file in a
timely manner all necessary documentation to all appropriate agencies to
insure the title to the Property during the term of this Agreement.
Buyer will furnish Seller(s) with proof that this work has been done
prior to the date due required by law. Buyer will pay any and all fees,
taxes or other levies for any buildings, structures, machinery,
equipment, personal property, fixtures, and or improvements placed upon
the Property by Buyer, as an employer of labor.
11. INSURANCE. Buyer shall carry insurance at all times during the terms of
this Agreement. Workman Compensation insurance, and other insurance
required by state laws and mining regulations, or Buyer may self insure
if it qualified as a self-insurer under the appropriate laws and
regulations. Proof of insurance is to be provided to Seller(s) upon
request.
12. INSPECTION. Seller(s) or its authorized representative may at
reasonable intervals enter on the Property at any reasonable time during
normal business hours for the purpose of inspection, but shall enter at
Seller(s)s sole cost, risk, and expense and so as not to hinder
unreasonably the operations of Buyer. Seller(s) shall indemnify and
hold Buyer harmless from any damage, claim, or demand by reason of
injury to, or the presence of Seller(s), its agents or representatives
on the Property unless caused by the gross negligence or willful
misconduct of Buyer.
13. DATA. Upon the surrender or termination of this Agreement, Buyer shall,
upon written request of Seller(s), within ninety (90) days after
termination, deliver to Seller(s) copies of all non interpretive factual
geological and geophysical data and maps, logs of drill holes, results
of assays and sampling and reports pertaining to the Property which
Buyer has obtained or prepared as a result of its exploration work under
this Agreement. Upon written request of Seller(s), Buyer shall also
make available for delivery to Seller(s) any available drill core
obtained from the Property. Buyer makes no representation or warranty
as to the accuracy of completeness of any such data or information.
14. TERMINATION AND SURRENDER. If Buyer fails to comply with any of the
provisions of this Agreement and if Buyer does not initiate and
diligently pursue steps to correct such default within thirty (30) days
after notice has been given to it by Seller(s) detailing the nature of
such default, then upon the expiration of the thirty day period all
rights of Buyer under this Agreement (except as provided in paragraph
16) shall terminate, and all liabilities and obligations of Buyer
(except liability existing on the date of termination and (except as
provided in paragraphs 13 and 17) shall terminate. Any default claimed
with respect to the payment of money may be cured by the deposit in
escrow of the amount in controversy (not including claimed consequences
special exemplary, or punitive damages) and the giving of notice of the
deposit to Owners the amount to remain in escrow until the controversy
is resolved by decision of a court or arbitration, or otherwise. If
Buyer by notice to Seller(s) disputes the existence of a default, then
this Agreement shall not terminate hereunder unless Buyer does not
initiate and diligently pursue steps to correct the default within
thirty (30) days after the existence of a default has been determined by
decision of a court or arbitration or otherwise;
Subject to the right of Seller(s) to terminate this Agreement as
provided in the foregoing subparagraph (a), controversy between the
parties hereto shall not interrupt performance of this Agreement or
continuation of operations hereunder. In the event of any controversy,
Buyer may continue operating hereunder and shall make the payments
provided for herein not withstanding the existence of such controversy.
Upon the resolution of the controversy, such payments or restitution
shall be made as required by the terms of the decision of a court or
arbitration or otherwise.
Buyer may at any time terminate this Agreement as to the Property by
delivering to Seller(s) or by filing for record in the appropriate
office, with a copy to Seller(s), a good and sufficient Surrender of
this Agreement. Upon mailing the Surrender to, or to the appropriate
office, all rights of Buyer under this Agreement (except as provided in
paragraph 16) shall terminate and all liabilities and obligation of
Buyer with respect to the Property (except liabilities existing the date
of termination and except as provided in the paragraphs 13 and 17) shall
terminate.
Notwithstanding the foregoing, either (a) the appointment of a receiver
to take possession of all or substantially all of the assets of Buyer,
or (b) a general assignment by Buyer for the benefit of creditors, or
(c) any action taken or suffered by Buyer under any insolvency or
bankruptcy act shall constitute a breach of this Agreement by Buyer, and
shall, at the option of Seller(s), terminate this Agreement.
15. CONFIDENTIALITY. Seller(s) and authorized representatives of Seller(s)
agree to treat all proprietary information received under this Agreement
as confidential and shall not disclose any information obtained here
under without prior written consent of Buyer.
16. REMOVAL OF PROPERTY. For a period of six (6) months after the
termination of this Agreement Buyer shall have the right, but not the
obligation, to remove from the Property all buildings, structures,
machinery, equipment, personal property, fixtures, and improvements
owned by Buyer or erected or placed on or placed in the Property by
Buyer except mine timber in place. Buyer may keep one (1) or more
watchman on the Property during the six (6) month period.
17. RECLAMATION. Buyer shall comply with all state and federal laws and
regulations, as well as all regulations from the Bureau of Land
Management, relating to mining land reclamation. Should Buyer terminate
this Agreement prior to final payment, Buyer agrees to reclaim surface
disturbances resulting from its exploration activities on the property
to conditions that conform to state and federal requirements are
reasonably comparable on the effective date of this Agreement.
18. NOTICES. Any and all notices or other communications required or
permitted by this Agreement or by law to be served on or given to
Seller(s) or Buyer by the other party hereto, shall be in writing and
shall be deemed duly served and given when personally delivered to
Seller(s) or in lieu of such personal service, forty-eight (48) hours
from the time that it is deposited in the United States mail, first-
class postage prepaid, addressed to Seller(s) or Buyer at the addresses
shown below. Either this paragraph by giving written notice of such
change to the other party in the manner provided herein.
Seller(s): Grace W. Meehl, Mary (May) Meehl
Meehl Family Trust (Joseph Meehl, Estate)
714 Valita Street 3730 Trieste Drive
Venice, CA 90291 Carlsbad, CA 92008
Eric W. Godfrey John G. Meehl
531 Stephens Street 239 Kittery Place
Fillmore, CA 93015 SanRamon, CA 94583
James P. Sigl
714 Valita Street
Venice,CA 90291
Buyer: Golden Queen Mining Company, Inc.
Box 878
Rosamond, CA 93560-0878
19. ATTORNEYS' FEES. If either Buyer or Seller(s) 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.
20. SEVERABILITY. In the event that any provision contained with this
Agreement is rendered by a court of competent jurisdiction to be void,
invalid or unenforceable, Seller(s) and Buyer agree that such invalidity
or unenforceability shall have no effect whatsoever on the balance of
the Agreement.
21. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successor, and all assignee.
22. COUNTERPARTS. This Agreement may be executed and delivered in any
number of counterparts, each of which, when executed and delivered, will
be an original, but all of which together constitute on and the same
agreement.
23. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
Seller(s) and Buyer respecting the Property, and any agreement of
representation respecting the Property or the duties of either Seller(s)
or Buyer in relation thereto not expressly set forth in the Agreement is
null and void.
24. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the State of California.
SELLER(S)
s/ Grace W. Meehl 3/27/96 s/ Mary (May) Meehl 3-30-96
- ------------------------------ ------------------------------
Meehl Family Trust Date (Joseph Meehl Estate) Date
SS# ###-##-#### SS# ###-##-####
s/ Eric W. Godfrey 4-5-96 s/ John G. Meehl 4-2-96
- ------------------------------ ------------------------------
SS# ###-##-#### Date SS# ###-##-#### Date
s/ James P. Sigl 3/27/96
- ------------------------------
SS# ###-##-#### Date
BUYER
GOLDEN QUEEN MINING COMPANY, INC.
s/ Richard W. Graeme March 26, 1996
- --------------------------------------------
Vice President, Operations Date
<PAGE>
EXHIBIT "A"
Property Description
"TEPEYAC HILL", "HOMESTAKE", AND "HOMESTAKE" - Millsite
Mining Claims:
"Tepeyac Hill" CAMC #34226 Section 6, T10N,R12W SBM
"Homestake" CAMC #36726 Section 6, T10N,R12W SBM
"Homestake" - Millsite CAMC # 42415 Section 32, T11N,R12W SBM
<PAGE>
GUARANTEE AGREEMENT
This Agreement, effective on this 31st day of March, 1996 is between
"Owners": Grace W. Meehl, (Meehl Family Trust), Mary/aka/May Meehl, (Joseph
Meehl, Estate), Eric W. Godfrey, John G. Meehl, James P. Sigl, and Golden
Queen Mining Company, Ltd., a Canadian Corporation (Golden Queen) agree to
the following facts.
A. Owners of unpatented mining claims: "Tepeyac Hill", "Homestake", and
"Homestake" - Millsite, located in Kern County, state of California are
entering in to a Option, Purchase, Agreement with Golden Queen Mining
Company, Ltd. a wholly-owned California subsidiary, Golden Queen Mining
Company, Inc.
B. Owners ask Golden Queen Mining Company, Ltd. to guarantee the
performance of the Agreement.
C. Golden Queen Mining Company, Ltd. is willing to make such guarantee,
as to the terms and subject to conditions hereinafter set forth.
Therefore, the parties agree to the following:
In consideration of Owners entering into this Agreement with Golden
Queen Mining Company, Inc., then Golden Queen Mining Company, Ltd. guarantees
all obligations which Golden Queen Mining Company, Inc. is obligated to
perform under terms of this Agreement. Golden Queen Mining Company, Ltd. is
liable for any default of Golden Queen Mining Company, Inc. to the same
extent as if it were a signatory to this Agreement.
It is acknowledged that Golden Queen Mining Company, Ltd. has the right
and the power to enter into this Guarantee Agreement and carry out this
transaction contemplated hereby.
This Guarantee Agreement has been signed this 26th day of March, 1996,
in Witness whereof:
GOLDEN QUEEN MINING COMPANY, LTD.
s/ R.W. Graeme
-----------------------------------
Vice-President Operations (Title)
Exhibit 10.11
MINERALS EXPLORATION AGREEMENT AND OPTION TO LEASE OR PURCHASE
SOLEDAD-MOJAVE MINING SYNDICATE, a Nevada corporation, (hereinafter referred
to as "LICENSOR") and GOLDEN QUEEN MINING CO., INC., a California
corporation, (hereinafter referred to as "LICENSEE"), agree effective as of
January 25, 1996 as follows:
1. GRANT. Pursuant to the terms of this Agreement, LICENSOR grants to
LICENSEE: the exclusive right to conduct mineral exploration activities
within and upon and the exclusive right to either purchase or lease with
option to purchase the following premises (hereinafter the "PREMISES"):
The West on-half(1/2) of Section 7, Township 10 North, Range 12 West,
SBBM and referred to by the Kern County Tax Assessor as parcel number
429-02001-00-4. LICENSOR reserves all oil and petroleum deposits in the
PREMISES without right to enter upon the surface.
2. TERM. The term of this Agreement shall be three (3) years, commencing
on the effective date of this agreement, unless LICENSOR exercises one
of its options or terminates.
3. CONSIDERATION.
3.1. In consideration for the granting of the rights set forth herein,
LICENSEE agrees to pay to LICENSOR the following sums:
Upon execution of this Agreement $ 50,000.00
Effective date anniversary, 1997 $ 50,000.00
Effective date anniversary, 1998 $ 50,000.00
Effective date anniversary, 1999 $100,000.00
A license year is defined to be the twelve (12) month period beginning
the effective date and the anniversary date of the effective date in
subsequent years.
4. CONDUCT OF OPERATIONS. During the term of this Agreement, LICENSEE
shall have possession of, and free and unrestricted access to, the
PREMISES and shall have the right to explore, investigate, measure,
sample (including bulk sample), examine, test, work, use manage, control
and develop the PREMISES. LICENSOR shall further receive in addition to
the consideration set forth in Paragraph 3, above, an accounting and
production royalty, pursuant to the terms of Lease/Option to Purchase
attached hereto as EXHIBIT "A", for all ores, minerals and concentrates
removed and sold from the PREMISES during the term hereof and prior to
exercise of the option to lease. LICENSEE may trench or drill any part
of the PREMISES, may rehabilitate existing mine workings, construct new
workings, and may erect, construct, use, and maintain on the PREMISES
such roads, building structures, equipment and machinery as in its
reasonable discretion it may deem necessary to its exploration
operations.
Royalty payments due for all ores, minerals, and concentrates removed
and sold from the PREMISES during the three (3) year term hereof and
prior to any exercise of the option to lease shall be paid quarterly at
the address set forth in Paragraph 5 by mail or personal delivery.
Should LICENSEE exercise its option to purchase said property all
pre-exercise royalty payments actually received by LICENSOR shall be
credited against the agreed purchase price set forth in Paragraph 10.5,
hereof.
5. NOTICE. Any notices required or permitted to be given to LICENSOR or
LICENSEE hereunder shall be given in the manner provided herein and be
considered as delivered and received when the same are delivered in
person or received by the addressee following deposit in the United
States mail, return receipt requested, with postage prepaid. All notices
given hereunder shall be addressed to the persons and addresses given
below or such other persons or addresses as the parties may designate
from time to time. Any change in the names and/or addresses of the
persons listed below shall be effective thirty (30) days from the giving
of the notice to the other party as provided herein.
LICENSEE: Golden Queen Mining Co., Inc.
Desert Street, Ste. 4
Box 878
Rosamond, CA 93560-0878
LICENSOR: Soledad-Mojave Mining Syndicate
c/o Charles Beck
932 Springwood Lane
Olivenhain, CA 92024
6. TERMINATION. Subject to the provisions of Paragraphs 8 and 16, LICENSEE
may terminate this agreement within thirty (30) days of the last day of
each license year; if, LICENSEE has not so terminated, then this License
shall continue in effect for the subsequent license year. Upon
termination or surrender under the terms of this License, all rights of
LICENSEE under this Agreement, except as provided in Paragraph 11, shall
terminate and all payments heretofore made under this agreement shall be
retained by LICENSOR as full compensation, as rental, for the use and
occupancy of said PREMISES and as consideration for which this Agreement
is given.
7. INSURANCE. LICENSEE shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by the laws
and mining regulations of the State of California.
7.1. WORKMEN'S COMPENSATION INSURANCE. LICENSEE at its sole expense
shall cause to be issued and maintained during the term of this
Agreement and at all times while conducting activity upon the
PREMISES workmen's compensation insurance in accordance with the
provisions of the applicable laws of the State of California.
7.2. PUBLIC LIABILITY INSURANCE. LICENSEE shall at its sole expense
cause to be issued and maintained during the term of this Agreement
comprehensive general public liability insurance coverage in
responsible insurance carriers qualified to conduct insurance
business in the State of California. Such policy or policies shall
name LICENSOR as an additional insured and shall be in the total
amount of not less the One Million Dollars ($1,000,000.00).
7.3. CERTIFICATE OF INSURANCE. LICENSEE shall within thirty (30) days
of execution of this Agreement by all parties furnish to LICENSOR
certificates of insurance for all insurance policies required
hereunder. LICENSEE shall cause LICENSOR to be notified not less
that thirty (30) days prior to any cancellation or restrictive
modification of the above enumerate policies.
8. INDEMNITY.
8.1. LICENSEE shall protect and indemnify and hold LICENSOR harmless
from and against any and all claims, actions or causes of action,
including, without limitation, employees of LICENSEE, contractors
and employees of contractors of LICENSEE, for injury to or death of
persons or damage to property arising out of or in connection with
LICENSEE'S exploration activities.
8.2. LICENSOR shall protect and indemnify and hold LICENSEE harmless
from and against any and all claims, actions or causes of action,
including without limitation, claims brought by employees of
LICENSOR, contractors and employees of contractors of LICENSOR, for
injury to or death of persons or damage to property arising out of
or in connection with LICENSOR'S rights to take samples and observe
facilities and operations as authorized in this Agreement.
9. COMPLIANCE WITH LAWS. LICENSEE shall conduct all exploration activities
in full compliance with the applicable laws and regulations of the State
of California and the United States of America including, but not
limited to, the provisions of the Federal Land Management and Policy Act
of 1976 and the regulations promulgated pursuant thereto, and the
provisions of Article 16 hereof.
10. OPTION TO LEASE OR PURCHASE.
10.1. During the term of this Agreement, or during the term of any
extension hereof, and provided that LICENSEE is not in
default, LICENSEE may exercise an option to lease the PREMISES
with an option to purchase pursuant to the terms and
conditions set forth in the formal Lease/Option to Purchase
attached hereto as EXHIBIT "A" and made a part hereof as
though set forth in its entirety.
10.2. Also during the term of this agreement, or during the term of
any extension hereof and provided Licensee is not in default,
Licensee may exercise an option to purchase the premises
pursuant to the terms set forth in paragraph 10.4 below.
10.3. The option to lease/option to purchase as described in
paragraph 10.1 above shall be deemed exercised when LICENSOR
has received two (2) copies of EXHIBIT "A" executed by
LICENSEE and LICENSEE has tendered the amount required as set
forth in EXHIBIT "A". LICENSOR shall sign one copy and return
it promptly to LICENSEE.
10.4. The Option to Purchase the premises pursuant to 10.2 above
shall be deemed exercised when LICENSEE has sent notice to
LICENSOR and requested in writing that Chicago Title of
Bakersfield act as escrow agent. The parties agree to execute
escrow instructions consistent with the terms of the Agreement
and as may be reasonably required by the escrow holder. Said
instructions shall provide for the proration of taxes, the
closing of escrow within sixty (60) days from the date of
exercise of the Option to Purchase, equal division of escrow
fees and costs, for LICENSOR/SELLER to supply and ALTA policy
of title insurance, and, LICENSOR/SELLER to convey by grant
deed in the form normally used by escrow holder but in
conformance with all terms of this agreement.
10.5. The purchase price of the PREMISES payable in full at close of
escrow shall be determined as follows:
PURCHASE PRICE
If option exercised prior to the
anniversary of the effective date
of this Agreement in 1997 $500,000.00
If option exercised prior to the
anniversary of the effective date
of this Agreement in 1998 $470,000.00
option exercised prior to the
anniversary of the effective date of
this Agreement in 1999 and before
termination of this Agreement $450,000.00
10.6. LICENSOR, in addition to receiving payment of the cash
purchase price as hereinafter provided, reserves to itself,
and LICENSEE hereby agrees to pay to the LICENSOR, for all
minerals mined or extracted from the PREMISES sold hereunder,
a production royalty interest equal to five percent (5%) of
the Net Smelter Return as hereinafter defined.
10.7. The term "Net Smelter Return" shall be defined to be the gross
amount received from the sale of all minerals mined and
extracted from the PREMISES, less all taxes levied, incurred
or imposed on the sale, severance or production of such
minerals and less reasonable costs of transportation to the
smelter and refinery, smelting and refining charges and costs
of sale, determined in accordance with generally accepted
accounting principles.
10.8. All minerals mined, removed and extracted from the PREMISES
shall be sold under the name of LICENSEE and a royalty
settlement sheet accounting for such transactions shall be
furnished to LICENSOR on or before the twenty-fifty (25th) day
of the next succeeding calendar month for all sales made and
received during the preceding calendar quarter. All production
royalty payments, accompany by a settlement sheet required by
this Agreement shall be made to the LICENSOR monthly at the
addresses set forth in Paragraph 5 by mail or personal
delivery. So long as it is not in default hereunder, LICENSEE
shall receive a cumulative credit against monthly production
royalties equal to the total of the cash purchase price paid
to LICENSOR under Paragraph 10.5. Production royalties shall
not become payable to LICENSOR until the amount of the
cumulative production royalty credit set forth in the
paragraph exceed the purchase price paid by LICENSEE pursuant
to Paragraph 10.5.
If all or any part of the minerals are sold to, or processed
by, a smelter or refinery owned, operated, affiliated with or
controlled by LICENSEE, in no event shall the royalties
computed herein be less that would have been paid had the ore
been sold to or processed by a major smelter or refinery not
owned, operated, affiliated with, or controlled by LICENSEE.
10.9. LICENSEE may commingle ore from the PREMISES with ore from
other properties, either before or after concentration or
beneficiation, provided that the method and procedures
LICENSEE uses to commingle the ore and to determine the weight
and grade of the ore removed from the PREMISES and of the ore
with which it is commingled shall be a method recognized by
the mining industry and conducted in accordance with generally
accepted accounting principles. LICENSEE shall use that method
to determine weight and grade and to allocate net returns from
the commingled ore between the PREMISES and the other
properties from which the other commingled ore was removed and
to assure that the share of production received by LICENSOR is
representative of the ore that was produced from the PREMISES.
All such weight, allocations, and calculations by LICENSEE
shall be done in accordance with generally accepted accounting
principles and in a manner recognized by the mining industry
as practical and sufficient at that time. If it is impractical
to determine which portions of any of the costs and expenses
described in Paragraph 10.7 above are directly attributable to
ore removed from the PREMISES, such costs and expenses shall
be allocated on a straight-line, per-ton basis among all ores
that give rise to those expenses, in accordance with generally
accepted accounting standards.
10.10. LICENSEE is hereby granted the right, if it so desires, to
mine or remove from the PREMISES any ores, waste, water and
other materials existing therein or thereon or in any part
thereof, through or by means of shafts, openings or pits which
may be sunk or made upon other property owned, controlled, or
operated by or for LICENSEE (hereinafter "Other Property").
LICENSEE also may stockpile any ores, waste or other materials
and/or concentrated products of ores, waste or other materials
and/or concentrated products of ores or materials
(collectively "Products") from the PREMISES, or any part
thereof, upon stockpile grounds situated upon such Other
Property. In the event LICENSEE stockpiles Products from the
PREMISES on Other Properties, LICENSEE shall execute or cause
to be executed such instruments as LICENSOR may reasonably
request in writing to evidence LICENSOR'S royalty interest in
the PRODUCTS so stockpiled. Any such instrument executed by
LICENSEE, however, expressly shall acknowledge LICENSEE'S
right to sell the stockpiled Products. LICENSEE also, if it so
desires, may use the PREMISES and any part thereof and any
shafts, openings, pits and stockpile grounds sunk or made for
the mining, removal and/or stockpiling of any Products from
the PREMISES and/or from Other Property, or for any purpose or
purposes connected therewith, provided, however, that such use
of the PREMISES does not prevent or interfere with the mining
or removal of ore from the PREMISES.
10.11. The term of the production royalty provided herein shall be
for twenty (20) years from and after the close of escrow and
for so long thereafter as LICENSEE is in production on
properties located with a one (1) mile radius of the PREMISES.
For purposes of this Paragraph 10, production shall be defined
as the processing of in excess of 10,000 tons of ore per year.
LICENSEE may terminate this production royalty agreement as
hereinafter provided, by delivery to LICENSOR of a quitclaim
deed to the PREMISES, provided that LICENSEE is not then in
default under the terms of this agreement and further provided
one of the following circumstances exists:
10.11.1. If LICENSEE is not in production on both the PREMISES and
any Other Property owned or controlled by LICENSEE within
a one (1) mile radius of the PREMISES, in which event
LICENSEE may terminate this production royalty agreement
upon one (1) year's notice.
10.11.2. If LICENSEE is not in production on the PREMISES and is
not utilizing the PREMISES for the operation of equipment
and facilities related to crushing, beneficiation,
milling, treatment, processing, leaching, refining and
concentrating minerals or materials, in which event
LICENSEE may terminate this royalty agreement upon three
(3) year's notice.
10.11.3. Upon such termination, LICENSEE shall be liable for all
obligations affecting the PREMISES and accrued as of the
date of termination, including all obligations for
indemnification of LICENSOR under Paragraph 16 hereof,
which obligations shall survive the termination
hereunder.
related to the PREMISES semi-annually during the term hereof,
which information shall be received and held by LICENSOR in
total confidence.
12.2. LICENSOR agrees to hold LICENSEE harmless from any and all
claims, actions, or causes of action, without limitation,
arising from LICENSOR'S reliance on information obtained from
LICENSEE.
12.3. Upon execution of the Agreement, LICENSOR shall provided
LICENSEE access to all geologic, geophysical and geochemical
data concerning the PREMISES which has been acquired,
generated, or compiled by LICENSOR.
12.4. Any and all data, information, reports and samples provided by
LICENSEE to LICENSOR under this terms of the Agreement shall
be treated and held confidential for the term of this
Agreement, and for the term of the Lease/Option to Purchase
attached as EXHIBIT "A", if LICENSEE should exercise its
Option to Lease.
12.5. LICENSEE agrees to permit LICENSOR, or its duly authorized
representative, at reasonable times, and not less frequently
than monthly, access to all exploration activities for the
purpose of taking samples and observing the activities and
operations of LICENSEE. LICENSEE shall facilitate in every
reasonable manner such inspection, sampling and acquisition of
the information concerning the exploration activities of
LICENSEE. Upon written request by LICENSOR, LICENSEE shall
further permit LICENSOR, or its authorized representative,
quarterly access to the books and records of LICENSEE covering
operations on the PREMISES.
13. DEFAULT AND TERMINATION.
13.1. DEFAULT. The occurrence of any of the following events shall
constitute an event of default on the part of LICENSEE:
13.1.1. BREACH OF COVENANTS. Failure (i) to perform any of
LICENSEE'S covenants hereunder, including, but not
limited to the failure to make a LICENSEE shall be
excused to the extent made necessary by such force
majeure and this Agreement shall be extended by a length
of time equal to its continuance not to exceed a maximum
term of extension for any one or more causes of force
majeure of three (3) years from the initial occurrence of
any of such cause or causes. The term "force majeure" as
used herein shall include, but not be limited to, acts of
God, acts of civil or military authority, acts of war or
the public enemy, legislation, acts or orders of any
court, acts or failure to act of regulatory agencies or
administrative bodies having jurisdiction with respect to
the performance of this Agreement, insurrections, riots,
strikes, boycotts or other labor disturbances, fire,
flood, windstorm, explosion and other causes not within
the reasonable control of the parties directly affected
and claiming suspension of its obligation whether or not
like or similar to the causes or occurrences specifically
enumerated above and which by exercise of due diligence
and foresight could not reasonably have been avoided.
16. HAZARDOUS MATERIAL. LICENSOR hereby expressly acknowledges that
LICENSEE intends to use the PREMISES for the purpose of conduction
mining and/or mineral concentrating and processing operations
(hereinafter collectively referred to as "Operations"). LICENSEE shall
obtain, prior to engaging in Operations, such governmental approvals
(including, but not limited to, a closure or reclamation plan) as may be
required under applicable laws. LICENSEE shall make available to
LICENSOR copies of all approvals. In the course of conducting Operations
it is expected that LICENSEE will us materials which may be considered
"Hazardous Materials" as defined below and which are authorized for use
by appropriate permit or authorization. LICENSOR hereby expressly grants
permission for LICENSEE to use such materials in the course of
conduction Operations. If LICENSEE breaches its obligation as imposed by
any permit or authorization, and the unauthorized presence of Hazardous
Material on the PREMISES results in contamination of the PREMISES, or,
if any other damage to the PREMISES by Hazardous Material occurs, then
LICENSEE shall indemnify, defend, save and hold LICENSOR harmless from
and against any and all claims, judgments, damages, penalties, fines,
costs, liabilities, or losses, and reasonable sums paid in settlement of
claims, attorneys' fees, consultants' fees and expert fees which arise
during or after the term hereof or any extension, as applicable, as a
result of such contamination or otherwise as a result of the presence,
use, generation, storage, release, threatened release, manufacture or
disposal of Hazardous Material on the PREMISES or the transportation to
or from the PREMISES of Hazardous Material. This indemnification of
LICENSOR by LICENSEE includes, without limitation, costs incurred in
connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or
local governmental agency or political subdivision because of Hazardous
Material present in the soil or groundwater on or under the PREMISES and
shall continue in full force and effect in the event LICENSEE acquires
the fee ownership of the PREMISES pursuant to Paragraph 10.4.
In the event that LICENSEE shall fail to comply with any laws regulating
Hazardous Material or otherwise applicable in connection with LICENSEE'S
use and operation of the PREMISES within ten (10) days after LICENSOR
shall give LICENSEE written notice of such non-compliance, or if such
compliance within such period is not possible, if LICENSEE shall not
commence curing and diligently proceed to completion (but in any event
LICENSEE shall complete such compliance when required by law), then
LICENSOR may comply with the same on behalf of LICENSEE and all costs
and expenses incurred by LICENSOR in complying with such laws shall be
deemed additional consideration under the Agreement and shall be payable
to LICENSEE to LICENSOR within ten (10) days after LICENSOR'S written
demand therefor.
As used herein, the term "Hazardous Material" means and hazardous or
toxic substance, material or waste which is or becomes regulated by any
local governmental authority, the State of California, or the United
States Government. The term "Hazardous Material" includes, without
limitation, any material or substance which in (i) defined as a
"hazardous waste", "extremely hazardous waste" or "restricted hazardous
waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140, of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code,
Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance
Account Act), (iii) defined as "hazardous waste" under Section 25501 of
the California Health and Safety Code, Division 20 Chapter 6.95
(Hazardous Materials Release Response Plans and Inventory), (iv) defined
as a "hazardous substance" under Section 25281 of the California Health
and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under
Article 9 or defined as hazardous or extremely hazardous pursuant to
Article 11 of title 22 of the California Administrative Code, Division
4, Chapter 20, (viii) designated as a "hazardous substance" pursuant to
Section 1004 of the Federal Resource Conservation and Recovery Act, 42
U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601)".
17. TITLE. LICENSOR covenants the LICENSOR now owns legal record title to,
and is in actual possession of the PREMISES free and clear from all
former grants, sales, liens, or encumbrances of any kind, and that there
are no delinquent taxes; all as more fully set forth in that certain
Policy of Title Insurance No. D602181, dated February 11, 1988, and
issued by Ticor Title Insurance Co., a copy of which is attached hereto
as EXHIBIT "B". LICENSEE may, with LICENSOR'S written consent, elect, at
its sole initial cost and expense to correct any defects it determines
exist in title to the PREMISES, within the period of this Agreement.
LICENSEE'S reasonable costs, including attorney's fees, shall be a
credit to production royalties payable pursuant to the Lease/Option to
Purchase Agreement if such Agreement is executed. LICENSOR further
covenants that it will not by action or inaction during the term of this
Agreement cause a material change to occur to its title as shown in
EXHIBIT "B".
18. COMPLETE AGREEMENT. This Agreement and all the terms and covenants
contained herein are deemed to be the complete and unequivocal written
Agreement of the parties and no other Agreements, either written or
oral, are contemplated with respect to said PREMISES.
19. RECORDATION. This Agreement shall not be recorded, however, the attached
Memorandum of Minerals Exploration Agreement with Option to Lease or
Purchase, attached hereto as EXHIBIT "C", shall be executed and recorded
promptly following the execution of this Agreement. In the event of
termination of this Agreement as herein provided, the quitclaim deed
attached as Exhibit "D', which has been duly executed by LICENSEE and is
to be held during the period of this Agreement by Mr. Charles Beck, may
be recorded. Said quitclaim deed may also be recorded upon termination
of this Agreement by LICENSOR if LICENSEE is in default of the terms of
this Agreement as defined in Paragraph 13 hereinabove. If either option
granted by LICENSEE is exercised, the quitclaim deed shall be given to
LICENSEE if the option to lease is exercised or placed in escrow if the
option to purchase is exercised.
20. ATTORNEY FEES. If either party to this Agreement brings an action to
enforce the terms hereof or declare rights HEREUNDER, the prevailing
party in any such action, on trial or appeal, shall be entitle to his
reasonable attorneys' fees to be paid by the losing party as fixed by
the court, together with all costs and expenses paid or incurred by the
prevailing party in such litigation.
EXECUTED this 25th day of January, 1996, at Los Angeles, California.
LICENSOR: LICENSEE:
SOLEDAD-MOJAVE MINING SYNDICATE GOLDEN QUEEN MINING CO., INC.
a Nevada corporation a California Corporation
By: s/ Charles E. Beck By: s/ Paul A. Bailly
---------------------------- ----------------------------
Its: President Its: Chairman
<PAGE>
State of CALIFORNIA
County of LOS ANGELES
On Jan. 25, 1996 before me, THOMAS J. KOERBER, Notary Public personally
appeared CHARLES E. BECK, personally known to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
s/ Thomas J. Koerber
------------------------------
SIGNATURE OF NOTARY
<PAGE>
NOTARY ATTESTATION
THE STATE OF COLORADO )
) SS.
CITY AND COUNTY OF DENVER )
BEFORE ME, the undersigned authority, on this day personally appeared
Paul A. Bailly, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same freely
and voluntarily and for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this 23rd day of January,
1996.
s/ Nona C. Hillsten
------------------------------
Notary Public for the
State of Colorado
My commission expires:
August 28, 1996.
Exhibit 10.12
AGREEMENT OF SALE AND PURCHASE
This Agreement of Sale and Purchase ("Agreement") is entered into on
August 1, 1996, between Southwestern Refining Corporation, a California
Corporation (hereinafter referred to as "Seller") and Golden Queen Mining
Co., Inc., a California Corporation, ("Buyer").
RECITALS
A. Seller is the owner of and desires to sell to Buyer certain real
property consisting of approximately 29.18 acres, including real
property consisting of accumulated mounds of tailings from prior mining
operations, together with all buildings, storage facilities, dwellings,
window coverings, carpet, and permanent fixtures (collectively referred
to as: "Property"), all situated in Kern County, California, and all as
more particularly described in the legal description attached to and
forming a part of the Deed of Trust attached hereto as Exhibit "A" and
incorporated by reference. All such Property is accepted by Buyer in
"as is" condition, subject to the representations contained in Paragraph
5 hereof.
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the "Property" on the terms and conditions provided in this
Agreement.
In consideration of the mutual covenants and conditions contained
herein, Seller and Buyer agree as follows:
1. SALE AND PURCHASE. Seller sells to Buyer and Buyer purchases from
Seller the Property, on the terms and conditions set forth herein.
2. PURCHASE PRICE. The principal purchase price, exclusive of interest, for
the Property shall be Nine Hundred Fifty Thousand ($950,000.00) Dollars.
3. PAYMENT OF TOTAL PURCHASE PRICE. The total Purchase Price shall be
payable by Buyer to Seller as follows:
(a) Upon the opening of Escrow, Buyer shall deposit with Escrow
Holder the sum of One Hundred Thousand Dollars ($100,000) (the
"Deposit"). The Deposit shall be deposited by Escrow Holder in an
insured interest-bearing account determined by Buyer. Interest
accruing on such amounts, if any, shall be held for the benefit of
Buyer and shall apply toward the payment of the Purchase Price.
The Deposit shall be disbursed by Escrow Holder to Seller at close
of Escrow and credited against the Purchase Price.
(b) On or prior to the Close of Escrow, Buyer shall deposit with
Escrow Holder a Secured Promissory Note, identical to Exhibit "B"
attached hereto and incorporated herein by reference (the "Note"),
in the original principal amount of Eight Hundred Fifty Thousand
Dollars ($850,000.00), which Note shall be secured by a Deed of
Trust and Assignment of Rents ("Deed of Trust") identical to
Exhibit "A," attached hereto and incorporated herein by reference.
The Deed of Trust shall be filed for record at Close of Escrow.
(c) Seller's Liquidated Damages. In the event Escrow fails to
close by reason of Buyer's default, Seller and Buyer agree that,
based on the circumstances now existing, known or unknown, it would
be excessively costly and impracticable to establish Seller's
damages by reason of such default by Buyer, and it would be
reasonable to award Seller liquidated damages in the amount of the
Deposit. By their respective initials set forth below, Seller and
Buyer acknowledge and agree such sum is reasonable as liquidated
damages and shall be in lieu of any other relief, right or remedy,
at law or in equity, to which Seller might otherwise be entitled by
reason of Buyer's default.
s/ R W G s/ M J B
---------- ----------
Buyer's Initials Seller's Initials
<PAGE>
(d) The remaining principal balance of Eight Hundred Fifty
Thousand ($850,000) shall be loaned by Seller to Buyer, for fifteen
(15) years, at an interest rate of two percent (2%) above the Prime
Rate, as determined by the base rate on corporate loans as
published in the Wall Street Journal on August 1, 1996 and
thenceforth on each anniversary date hereof [8-1-96, 8-1-97, 8-1-
98, etc.]. Whenever any August 1st pertinent to this agreement
falls on a day when the Wall Street Journal is not published, the
next published issue of the Wall Street Journal shall be used for
the purposes of this agreement. Said rate shall apply
prospectively throughout each year until the next anniversary date.
(e) Principal and interest shall be payable by Borrower to Lender
in monthly installments of Nine Thousand Two Hundred Seventy Five
Dollars ($9,275.00), commencing on the date which is the first day
of the first calendar month after the date of the Close of Escrow,
and for the calendar year thereafter. Each year thereafter, the
amount of the monthly payments shall be adjusted in accord with
Subparagraph 3(d) above and with sound accounting principles
designed to amortize the entire obligation of Buyer hereunder, both
principal and interest, over the One Hundred Eighty (180)
consecutive months commencing with the first calendar month after
Close of Escrow.
(f) A balloon payment of all remaining and unpaid principal, if
any, and accrued but unpaid interest, if any, shall be due on
September 1, 2011.
4. A Deed of Trust with Assignment of Rents and a Secured Promissory Note
identical to Exhibits "A" and "B", respectively, shall be executed by
the parties prior to the close of Escrow. Escrow holder shall cause
such documents to be recorded appropriately. Any discrepancy between
Exhibits "A" and "B", on the one hand, and this Agreement, on the other,
shall be reconciled by adherence to the terms of this Agreement; this
Agreement shall be the controlling document.
5. REPRESENTATIONS OF SELLER. In addition to all other representations and
warranties under this Agreement, Seller represents that it is lawfully
seized of the indefeasible estate of the Property and that the property
is presently free and clear of any liens of any nature; that, to the
best of Seller's knowledge, no suit, action or other proceeding is
pending or threatened before any court or governmental entity and no
cause of action exists that relates to the Property; that Seller has
received no notice of violation of any local, state or federal law,
regulation, rule, ordinance or order or of any permit, license, consent
or authorization; and that, to the best of Seller's knowledge, no
condition exists on the Property which would result in any action under
the Comprehensive Environmental Response, Compensation and Liability Act
(Superfund) 42 U.S.C. 9601-9657, as amended, nor any other federal,
state or local environmental or other law, regulation, rule, ordinance
or order.
6. ESCROW. An escrow shall be opened to consummate the sale and purchase
of the Property pursuant to this Agreement at the office of Chicago
Title (Escrow Holder) in Bakersfield, California within five (5) days
from the date of execution hereof. Such escrow shall close as soon
after August 1, 1996, as reasonably possible. This Agreement shall
serve as Escrow Instructions to such Escrow; to the extent that
supplemental instructions are deemed necessary by Escrow Holder, the
parties shall cooperate in executing such orders.
7. CONDITIONS OF ESCROW. The close of such escrow and Buyer's obligation to
purchase the Property are conditioned on:
(a) The conveyance to Buyer of good and marketable title to the
Property, as evidenced by a standard form title insurance policy, in the
full amount of the principal purchase price (excluding interest), issued
by Chicago Title Company, which policy shall be subject only to such
liens, encumbrances or clouds as may be approved in writing by Buyer.
(b) Seller shall deliver possession of the Property to Buyer immediately
on close of escrow, free and clear of all uses and occupancies. Buyer
shall have access to all portions of the Property (excepting the
interior of buildings) upon making the Deposit into Escrow. Seller
shall have reasonable access to the Property for a period of 30 days
after close of Escrow.
8. FAILURE OF CONDITIONS. Should any of the conditions specified in
paragraphs 5, 6 and 7 of this Agreement fail to occur by close of escrow
as herein provided, Buyer shall have the power, exercisable by the
giving of written notice by Buyer to the escrow holder and to Seller, to
cancel such escrow, terminate this Agreement and recover any amounts
paid by Buyer to Seller or to the escrow holder on account of the
purchase price of the Property. The exercise of such power by Buyer
shall not, however, constitute a waiver by Buyer of any other rights
which Buyer may have against Seller for breach of this Agreement.
9. PRORATIONS. The following item shall be prorated between Seller and
Buyer on the basis of thirty (30) day months as of 12:00 midnight
Pacific Standard Time on the date of close of escrow as herein provided:
(a) Real property taxes levied or assessed against the Property as
shown on the latest available tax bills.
10. INDEMNITY. Buyer agrees to hold harmless, indemnify and defend Seller
from any and all claims by any and all entities not party to this
agreement that may result from any actions, inaction, negligence or
other alleged wrongdoing of Buyer arising from or in connection with
Buyer's use of Property. Further, Buyer agrees to post and maintain any
necessary or required financial guarantee and/or bond(s) [hereinafter
"Bond(s)"] with the appropriate governmental agencies to provide for
environmental remediation in the event that Buyer is either unable or
unwilling to undertake and complete any required remedial action, should
such become necessary. Buyer shall provide to Seller documentary
evidence of such bonds simultaneously with the provision of such
evidence to the involved governmental agencies. Buyer will maintain
such Bond(s) in place until such time as the appropriate governmental
agencies have determined that all environmental requirements have been
met and that the bond(s) are no longer required. Buyer will cause the
referenced bond(s) to operate to protect Seller as nearly as possible
to the extent that the bond(s) protect Buyer.
Additionally, Buyer agrees to procure and maintain a comprehensive
general liability policy issued by an insurance carrier admitted in
California, protecting both Buyer and Seller (as an additional named
insured) against liability, with limits not less than $5,000,000. Buyer
will cause the insurer to issue an endorsement naming Seller as an
additional named insured and will provide Seller with documentation, at
intervals of no more than 6 months, showing the continuing existence of
such liability coverage. Buyer will maintain workers compensation
insurance and provide evidence thereof to Seller at intervals of no more
than six months. (In addition to Seller, Mary Josephine Birtle,
Elizabeth Ann Birtle [Sherman] and Andrew Lawrence Birtle shall each be
listed as additional individual named insureds in the above mentioned
liability policy(ies) of insurance.) Upon mutual agreement in writing,
the parties may reduce the liability policy limits.
11. BONDS AND ASSESSMENTS. Any bonds or improvement assessments which are a
lien on the Property shall have been paid by Seller as of close of
escrow.
12. EXPENSES OF ESCROW. The expenses of the escrow herein provided shall be
paid in the following manner:
(a) All costs of obtaining the title insurance policy referred to in
subparagraph 7(a) hereof shall be divided equally between the parties.
(b) The cost of preparing, executing and acknowledging any deed or other
instruments required to convey title to Buyer in the manner referred to
in subparagraph 7(a) hereof shall be divided equally between the
parties.
(c) The cost of recording a grant deed required to convey title to the
Property to Buyer as described in subparagraph 6.(a) hereof shall be
paid by Buyer.
(d) Any tax imposed on the conveyance of title to the Property to Buyer
under the Documentary Transfer Tax Act shall be paid by Buyer.
(e) Any escrow fee charged by the escrow holder, in addition to the cost
of the title insurance policy required by this Agreement, shall be paid
by the Buyer.
13. DESTRUCTION OF IMPROVEMENTS. If any improvements on the Property of a
value over $25,000 are destroyed or substantially damaged during the
Escrow as herein provided and such loss is uninsured, Buyer shall have
the power, exercisable by the giving of written notice by Buyer to the
Escrow Holder and to Seller, to cancel such Escrow, terminate this
Agreement and recover any and all amounts paid to Seller or the Escrow
Holder on account of the Purchase price of the Property.
Notwithstanding the foregoing, in the event Buyer does not terminate
this Agreement pursuant to this paragraph or any other paragraph of this
Agreement, and subject to the representations and warranties of Seller
contained in this Agreement, Buyer shall accept the Property in "As Is"
condition as to the physical condition of the improvements located on
the Property, it being acknowledged and agreed that Seller makes no
representation or warranty, except as expressly set forth herein, as to
the physical condition of the improvements located on the Property.
14. NOTICES. Any and all notices or other communications required or
permitted by this Agreement or by law to be served on or given to Seller
or Buyer by the other party hereto, shall be in writing and shall be
deemed duly served and given when personally delivered to Seller or
Buyer or, in lieu of such personal service, sent by United States mail,
postage prepaid, certified mail, return receipt requested, or by
professional overnight delivery service, such as, by way of example and
not as a limitation, Federal Express, and actually received by or
rejected by the party to whom it is addressed. All such notices shall
be addressed to Seller or Buyer at the addresses shown below.
Seller: Southwestern Refining Corporation
Mrs. Mary J. Birtle
5028 Ladera Vista Drive
Camarillo, CA 93012
AND
Southwestern Refining Corporation
Agency Office
700 Buenos Tiempos Drive
Camarillo, CA 93012
Buyer: Golden Queen Mining Co., Inc.
Desert Street, Ste. 4
Box 878
Rosamond, CA 93560-0878
Either party may change its address for notice by giving notice to the
other party in the manner set forth above.
15. DEFAULT ON PAYMENTS: Should Buyer fail to make any of the payments
required hereunder within 15 days of each respective due date, Seller
shall be entitled to a late payment charge of $500.00 as to each such
late payment. Should an amount equal to two monthly payments be due and
payable, Buyer shall be in breach hereof and Seller may institute any
remedies available, including foreclosure.
16. ATTORNEYS' FEES. In the event of any controversy, claim, or dispute
between Seller or Buyer, arising out of or relating to this Agreement or
any breach thereof, the prevailing party shall be entitled to recover
from the losing party reasonable expenses, attorneys' fees and costs.
17. SEVERABILITY. In the event that any provision contained with this
Agreement is found by a court of competent jurisdiction to be void,
invalid or unenforceable, Seller and Buyer agree that such invalidity or
unenforceability shall, to the extent feasible, have no effect on the
balance of the Agreement.
18. HEIRS, SUCCESSORS AND ASSIGNS. All terms of this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
respective heirs, successors and assigns of Seller and Buyer.
19. COUNTERPARTS. This Agreement may be executed and delivered in any number
of counterparts, each of which, when executed and delivered, will be an
original, but all of which together constitute one and the same
agreement.
20. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
Seller and Buyer respecting the Property, and any agreement or
representation respecting the Property or the duties or either Seller or
Buyer in relation thereto not expressly set forth in the Agreement is
null and void.
SELLER BUYER
SOUTHWESTERN REFINING GOLDEN QUEEN MINING CO., INC.
CORPORATION
By: s/ Mary J. Birtle By: R. W. Graeme
---------------------------- ----------------------------
Its: President Its: Vice-President
Taxpayer I.D. #95-3017362
