|GOLD FORWARD SALES CONTRACT|
|BY AND BETWEEN|
|GOLDRICH MINING COMPANY|
|This GOLD FORWARD SALES CONTRACT
(Agreement) is entered into as of the|
date set forth on the Confirmation Letter (as defined herein), to be delivered in the form attached
hereto as Exhibit A and incorporated herein by reference, by and between Goldrich Mining
Company, an Alaska corporation, having its principal place of business at 3412 South Lincoln
Drive, Spokane, WA 99203-1650 (the Seller), and the entity described in the Confirmation
Letter (the Purchaser).
WHEREAS, Seller desires to sell and Purchaser desires to purchase certain quantities of
Gold (as defined herein) on the terms and conditions set forth herein;
WHEREAS, Seller desires to sell and Purchaser desires to purchase Class E common
stock purchase warrants of the Seller (Class E Warrants) on the terms and conditions set forth
herein and in the Subscription Agreement attached hereto as Appendix A.
NOW THEREFORE, in consideration of the respective covenants and agreements
hereinafter set forth and for good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged), the parties hereby agree as follows:
|ARTICLE I -
|For purposes of this Agreement,
the following terms shall have the meanings indicated:
Affiliate shall mean any person, partnership, joint venture, corporation or other form of
enterprise that directly or indirectly controls, or is controlled by, or is under common control
with, a party to this Agreement. For the purposes of this paragraph, control shall mean
possession, directly or indirectly, of the power to direct or cause direction of management and
policies through ownership of voting securities, contract, voting trust or otherwise.
Agreement shall mean this Gold Forward Sales Contract, as it may be amended, restated,
extended or otherwise modified from time-to-time.
Business Day shall mean a day, other than a Saturday or a Sunday, on which commercial banks
are not required to be closed in Fairbanks, Alaska. Whenever any action to be taken hereunder
shall be stated to be required to be taken shall be due on a day other than a Business Day, unless
otherwise specifically provided for herein, such action shall be taken on the next succeeding
Common Shares shall mean shares of common stock of the Seller.
Confirmation Letter shall mean a letter to be executed by Purchaser and Seller pursuant to
Section 2.01 which contains terms and conditions pertaining to this sales transaction.
Current Market Price of the Common Shares at any date shall mean the price per share equal
to the weighted average price at which the Common Shares have traded for the 20 consecutive
Trading Days before the relevant date on any United States or Canadian stock exchange on which
the Common Shares are then listed or quoted as may be selected by the directors of the Seller or,
if the Common Shares are not then listed or quoted on any United States or Canadian stock
exchange then on such other stock exchange on which the Common Shares are then listed as may
be selected by the directors of the Seller or, if the Common Shares are not then listed on a stock
exchange, on the over-the-counter market (provided that, in each case, if such average price is not
in United States dollars, such price will be translated into United States dollars using the then
applicable Exchange Rate); provided that, if there is no market for the Common Shares during all
|Page 2 of
|or part of such period during
which the Current Market Price per Common Share would|
otherwise be determined, the Current Market Price per Common Share shall in respect of all or
such part of the period be determined by a nationally recognized firm of certified public
accountants or chartered accountants appointed by the Seller (who may be the Sellers auditors).
Deficiency Quantity shall mean with respect to a particular Delivery Date the amount by
which the Required Quantity of Gold for such Delivery Date exceeds the quantity of Gold
actually delivered hereunder with respect to such Delivery Date.
Delivery Date shall mean the date or dates specified as such in a Confirmation Letter.
Delivery Point shall mean the location specified as such in a Confirmation Letter to which a
Required Quantity of Gold shall be delivered on a Delivery Date. Purchaser is responsible for all
delivery costs from Fairbanks, Alaska to Delivery Point, including, but not limited to, shipping,
certification, and insurance costs.
Designated Properties shall mean the properties owned or controlled by Seller specified in
Exhibit B, attached hereto and incorporated herein by reference, from which the Gold shall be
Effective Date shall be the date so specified in a Confirmation Letter and shall be the effective
date of this Agreement.
Exchange Rate means, on any date for determination, the rate at which United States dollars
may be exchanged into other currency calculated by reference to such publicly available service
for displaying exchange rates of a major bank in the City of New York as may be determined by
Force Majeure shall mean a failure by Seller to perform one or more obligations hereunder to
the extent that such failure is caused by war; riot; insurrection; fire; explosion; sabotage; strikes
or other labor or industrial disturbances; acts of God or the elements, including, but not limited to
extraordinarily inclement weather for the Chandalar Lake area and earthquakes; Governmental
Requirements; disruption or breakdown of production or transportation facilities, failures of
contract transporters to deliver a Required Quantity of Gold; or by any other cause, similar or
dissimilar, reasonably beyond the control of Seller.
Gold shall mean pure gold and the trading unit is one fine troy ounce. The agreed fine gold
content in troy ounces of bar weights shall be the same as established by the London Bullion
Governmental Requirement shall mean all judgments, orders, writs, injunctions, decrees,
awards, laws, ordinances, statutes, regulations, rules, permits, certificates, licenses, authorizations
and the like of any government or any commission, board, court, agency, instrumentality or
political subdivision thereof.
Delivery Date Index Price shall mean the immediate next London PM Fix price for fine gold
after a Delivery Date or termination date; provided if such price cannot be determined, the
Delivery Date Index Price shall be any alternative agreed to in writing by Seller and Purchaser.
Initial Index Price shall mean the immediate next London PM Fix price for fine gold on the
date and time the Confirmation Letter is signed by the Purchaser or such other date as specified in
|Page 3 of
|Person shall mean any
individual, corporation, company, partnership, joint venture,
unincorporated association, government or any commission, board, court, agency, instrumentality
or political subdivision thereof, any other entity or any trustee, receiver, custodian or similar
Prepaid Price shall be the dollar amount to be paid to Seller on the Effective Date as set forth
in the Confirmation Letter
Purchasers Gold shall have the meaning specified in Section 2.06.
Required Quantity shall mean the number of Troy ounces of Gold to be delivered and
received on a given Delivery Date pursuant to this Agreement as specified in the Confirmation
Letter, based on the Prepaid Price and the lesser of either (i) $850 per ounce of fine gold or (ii) a
25% discount to the Initial Index Price, and subject to adjustment as set forth herein.
Trading Day means any day on which trading occurs on the Over the Counter Bulletin Board
(or such other exchange or market provided for in the definition of Current Market Price).
|ARTICLE II - SALE
AND PURCHASE OF GOLD|
|2.01 - SALE AND PURCHASE OF
GOLD. On or before the Effective
Date of this|
Agreement, Purchaser and Seller shall execute a Confirmation Letter which shall specify a
mutually ac/[ceptable Prepaid Price, payable on the Effective Date and, for each Delivery Date,
the Delivery Point and the Required Quantity of Gold. On the Effective Date, Purchaser shall pay
to Seller the Prepaid Price by wire transfer of immediately available funds to the account
designated by Seller, set forth in Appendix B hereto. Seller shall deliver, or cause to be
delivered, to the Purchaser or to the account of Purchaser, on each Delivery Date, at each
Delivery Point, the Required Quantity of Gold all as set forth in the Confirmation Letter subject
to the terms and conditions set forth in this Agreement. Purchaser hereby agrees to accept
delivery of such Gold. The Prepaid Price shall constitute payment in full of the purchase price of
the Gold to be delivered hereunder.
2.02 MEASUREMENT AND QUALITY. All Gold delivered pursuant to this Agreement to a
specific Delivery Point shall be measured by the operator of such Delivery Point in accordance
with its standard practices.
2.03 DELIVERY AND RECEIPT OF GOLD. Seller shall take such action as shall be
necessary to schedule the delivery and receipt of such Gold at the Delivery Point on each
Delivery Date in compliance with all rules, regulations and procedures, if any, applicable at such
Delivery Point. Except as otherwise provided in Article III hereof, Purchaser shall arrange for
receipt of Gold at the Delivery Point.
2.04 PAYMENT OF COSTS AND FEES. Seller shall pay all costs in connection with
transportation of the Gold to Fairbanks, Alaska and shall be responsible for the payment of all
closing fees (whether charged to Seller or Purchaser) payable in connection with delivery of Gold
hereunder to Fairbanks, Alaska. Purchaser is responsible for all delivery costs from Fairbanks,
Alaska to Delivery Point, including, but not limited to, shipping, certification, and insurance
|Page 4 of
Seller shall be responsible hereunder for all insurance, storage, processing, separation, handling, |
treating, gathering, transportation, security or other costs, fees, taxes or expenses with respect to
the Gold delivered hereunder until delivery in Fairbanks, Alaska. Purchaser is responsible for all
such costs from Fairbanks, Alaska to the Delivery Point.
2.05 FAILURE TO DELIVER.
(a) If, for reasons other than the occurrence of a Force Majeure, Seller is unable to
deliver the Required Quantity of Gold to the Purchaser at the Delivery Point in the amounts
agreed upon in the Confirmation Letter, Seller shall pay, as liquidated damages, any additional
insurance, storage, handling, transportation, security or other costs, fees or expenses with respect
to the Gold to be delivered hereunder until such delivery occurs. If Purchaser is unable to receive
the Required Quantity of Gold from Seller at the Delivery Point in the amounts agreed upon in
the Confirmation Letter, Seller shall be obligated to deliver and Purchaser shall be obligated to
receive, the Required Quantity of Gold at a comparable Delivery Point reasonably acceptable to
Seller and Purchaser at a mutually agreeable time, in which case Purchaser shall pay, as
liquidated damages, any additional insurance, storage, handling, transportation, security or other
costs, fees or expenses incurred by Seller with respect to the Gold to be delivered hereunder until
such delivery occurs.
(b) If as a result of a Force Majeure, Seller is unable to meet its delivery obligation
with respect to a Delivery Date at a Delivery Point, Seller shall pay and hereby agrees to pay to
Purchaser, as liquidated damages, the Delivery Date Index Price times the Deficiency Quantity of
Gold with respect to that Delivery Date. Seller shall pay any and all amounts due under this
Section 2.05 by wire transfer of immediately available funds to such account as Purchaser may
designate not later than 5:00 p.m. Fairbanks, Alaska within 3 Business Days following the
applicable Delivery Date.
(c) If Seller is unable to perform its obligations to deliver the Required Quantity of
Gold hereunder for any reason, Seller shall give notice and full particulars of such event to
Purchaser as soon as reasonably possible and, if such failure is a result of Force Majeure, shall
take all reasonable actions necessary to remedy the event of Force Majeure before the Delivery
2.06 POSSESSION, TITLE AND RISK. Possession of and title to Gold delivered shall pass
from Seller to Purchaser at the Delivery Point when the Gold is accepted by Purchaser or for
Purchasers account and is weighed and recorded (upon acceptance, such Gold shall be referred
to as Purchasers Gold). Until such acceptance, Seller shall be deemed to be in control and
possession of, have title to, and be responsible for all such Gold and, after such time, Purchaser
shall be deemed to have title to all such Gold until such time as it is sold to any Third Party
Purchaser in accordance with the provisions of Article III of this Agreement. The Gold to be
delivered by Seller to Purchaser shall be free and clear of all liens including taxes and royalties
for which Seller is responsible, except for those in favor of Purchaser.
2.07 RE-CALCULATION OF REQUIRED QUANTITY OF GOLD. In the event that the
Prepaid Price is not paid in full to Seller within 5 business days of the Effective Date, the Seller,
at its sole discretion, has the option to adjust the Required Quantity of Gold to that quantity of
Gold that can be purchased with the Prepaid Price based on the lesser of either (i) $850 per ounce
of fine gold or (ii) a 25% discount to the Initial Index Price on the date such Prepaid Price is
actually received in full by the Seller.
Page 5 of 10
In the event that the Prepaid Price is not paid in full to Seller within 5 business days of the |
Effective Date and the Purchaser elects to accelerate the Delivery Date of the Required Quantity
of Gold according to section 2.08, the Seller, at its sole discretion, has the option to adjust the
Required Quantity of Gold to that quantity of Gold that can be purchased with the Prepaid Price
based on the lesser of either (i) $960 per ounce of fine gold or (ii) a 15% discount to the Initial
Index Price on the date such Prepaid Price is actually received in full by the Seller.
2.08 PURCHASER OPTION TO ACCELERATE DELIVERY DATE Purchaser has the
option to elect to accelerate the Delivery Date and receive the Required Quantity of Gold on
October 31, 2010. Such election must be made by October 20, 2010, and if made, the Required
Quantity of Gold to be delivered will be adjusted to equal that quantity of Gold that can be
purchased with the Prepaid Price based on the lesser of either (i) $960 per ounce of fine gold or
(ii) a 15% discount to the Initial Index Price.
2.09 PURCHASER OPTION TO RECEIVE COMMON SHARES At the option of the
Purchaser, the amount equal to the Prepaid Price is payable in an amount of Common Shares
equal to the Prepaid Price converted into Common Shares at $0.45 per Common Share. Such
election must be made by October 20, 2010, and if made, the Required Quantity of Gold to be
delivered shall be reduced to zero.
ARTICLE III - MARKETING
3.01 DESIGNATION OF AGENT, THIRD PARTY CONTRACTS. If Seller consents to so
act, Purchaser hereby designates Seller to be the agent for Purchaser and in such instance, Seller
shall be and hereby is authorized to so act. Upon Purchasers written direction Seller acting as
Purchasers agent, will effect on behalf of Purchaser the sale of Purchasers Gold, pursuant to a
firm contract satisfying the following requirements: (a) the third party purchaser
(Counterparty) will be approved by Purchaser in writing; unless Seller delivers Purchasers
Gold for cash or cash equivalent; (b) the Counterparty shall be responsible for all transportation,
storage, handling and other costs, fees or expenses, and all taxes applicable to Purchasers Gold
at and after the time title passes to the Counterparty; (c) all third party contracts shall be with a
bona fide third party on an arms-length basis. Seller will pay to Purchaser the Delivery Date
Index Price per Troy ounce for all of Purchasers Gold sold pursuant to a Third Party Contract by
wire transfer not later than 5:00 p.m. Fairbanks, Alaska time on the Business Day next following
such third party sale. Seller will be entitled to retain as a marketing fee all amounts received in
excess of the Delivery Date Index Price of such Purchasers Gold and Seller shall be solely liable
for any shortfall. Seller shall promptly provide Purchaser an accounting of the payment made on
such Delivery Date, including the volume of Purchasers Gold sold (b) the Deficiency Quantity, if
any, and (c) the Delivery Date Index Price for such Delivery Date.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
4.01 REPRESENTATIONS AND WARRANTIES OF THE SELLER. Seller represents and
warrants to Purchaser that:
(a) Seller is a corporation, duly formed, validly existing and in good standing under
the laws of the State of Alaska and has all requisite power and authority to own
its properties, to conduct its business as conducted at present and to execute,
deliver and perform under this Agreement.
Page 6 of 10
|(b)||The execution, delivery and performance by Seller of this Agreement have been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered to Purchaser by Seller and is the legal, valid and binding obligation of Seller.|
|(c)||Neither the execution, delivery and performance by Seller of this Agreement nor the consummation of the transactions contemplated by this Agreement will result in or require the creation or imposition of any lien on any properties, assets or revenues of Seller.|
|(d)||Seller is in compliance in all material respects with all applicable Governmental Requirements. Seller has good and indefeasible title to the Designated Properties, free and clear of all liens except as set forth in Exhibit A.|
|(e)||The Designated Properties contain drill-defined quantities of readily recoverable Gold in excess of those required to meet all of Sellers obligation hereunder in the Required Quantities at the designated Delivery Points on each Delivery Date.|
|Except as disclosed in the Sellers reports filed with the United States Securities and Exchange Commission, there are no suits, investigations or proceedings pending or threatened against Seller or the Designated Properties except those disclosed in the Exhibit B. The Designated Properties are unencumbered by obligations except as disclosed in the Exhibit B.|
|4.02 REPRESENTATIONS AND
WARRANTIES OF PURCHASER.
and warrants to the Seller that Purchaser has full power and authority to enter into this Agreement
and has taken all necessary action to authorize its performance under this Agreement in
accordance with its terms.
4.03 MUTUAL REPRESENTATIONS AND WARRANTIES. Seller and Purchaser
acknowledge that this Agreement constitutes a forward contract within the meaning of the United
States Bankruptcy Code and the Internal Revenue Code.
4.04 COVENANTS OF THE SELLER.
(a) Seller shall deliver to Purchaser a
current report covering the Designated
Page 7 of 10
Seller will not assign or otherwise
transfer any interest in any of the Designated
ARTICLE V - DEFAULT, SECURED
|5.01 EVENTS OF
DEFAULT. Each of the following
events shall constitute an Event
Default by the Seller under this Agreement:
(a) Seller shall fail to perform or observe any term, covenant or agreement contained in this
Agreement; (b) a warranty made by the Seller in this Agreement shall prove to have been
incorrect in a material respect when made; or (c) Seller shall generally not pay its debts as such
debts become due.
5.02 REMEDIES BY THE PURCHASER. If an Event of Default has occurred, Purchaser may
designate a termination date for this Agreement. Upon the designation of a termination date, the
obligation of Seller to make any further deliveries of Gold under this Agreement will terminate,
and Sellers appointment as Purchasers agent under Article III of this Agreement will likewise
terminate. If notice of the termination date is given, Seller shall pay to the Purchaser an amount
equal to the Delivery Date Index Price of any Deficiency Quantity within 3 Business Days after
the termination date.
At the option of Purchaser, the amount equal to the Delivery Date Index Price of any Deficient
Quantity is payable in either (i) cash or (ii) an amount of Common Shares equal to the Delivery
Date Index Price of any Deficiency Quantity converted into Common Shares at the greater of
$0.15 per Common Share or 75% of the Current Market Price per Common Share on the Delivery
5.03 SECURITY INTEREST IN SEVERED GOLD. Seller hereby grants Purchaser a
priority security interest in all Gold recovered from the Designated Properties which security
interest shall remain in effect until the Required Quantities of Gold are delivered to Purchaser or
Purchasers agent at the Delivery Points on the Delivery Dates.
5.04 OTHER REMEDIES. If all amounts payable when due under Section 5.02 shall not have
been received by Purchaser on such date, Purchaser may immediately enforce its rights, at law or
PURCHASE OF CLASS E WARRANTS|
|6.01 PURCHASE OF CLASS E
WARRANTS. The Purchaser hereby
irrevocably agrees to|
purchase Class E Warrants from Seller on the following terms. For each dollar of gold purchased,
the Purchaser will receive one-half of a Class E Warrant. Each whole Class E Warrant is
exercisable to purchase one Common Share at an exercise price of $0.65 for a period of two years
following the Effective Date. The Purchaser will deliver a fully completed subscription
agreement as attached hereto as Appendix A and agrees to be bound by the representations,
warranties and covenants in such subscription agreement as if set forth herein in full in relation to
this Agreement to the extent that this Agreement is considered a security of the Seller. The
Purchaser further agrees, without limitation, that the Seller may rely upon the Purchasers
representations, warranties and covenants contained in such subscription agreement and the
|Page 8 of
|attachments thereto. The Class E
Warrants will have the terms set forth in the subscription|
ARTICLE VII - NOTICES, MISCELLANEOUS
7.01 NOTICES. All notices and other communications provided for hereunder shall be in
writing and mailed, delivered or telecopied:
|Goldrich Mining Company
3412 South Lincoln Drive
Spokane, WA 99203-1650
Attention: William Schara, Chief Executive Officer
Telephone No.: (509) 728-4468
Telecopier No.: (509) 695-3289
Email: [email protected]
Purchaser: In accordance with the information set forth in the
All notices and communications shall be effective upon receipt.
Page 9 of 10
|(e)||This Agreement may not be modified or amended except by an instrument in writing signed by the Purchaser and the Seller or by their respective successors or permitted assigns.|
|(f)||No failure to exercise and no delay in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.|
|(g)||The remedies herein provided are cumulative and not exclusive of any remedies provided by law except as otherwise expressly provided herein. Time is of the essence of this Agreement.|
|(h)||This Agreement may be executed in counterparts, each of which may be delivered in original, by email or facsimile form but each of which so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.|
|(i)||Each party hereto agrees that it will not disclose, without the prior consent of the other (other than to its employees, auditors or counsel), any information with respect to this Agreement; provided that nothing contained herein shall prevent disclosure of any such information (a) as has become generally available to the public, (b) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, or (c) in order to comply with any law, order, regulation or ruling applicable to such party.|
All disputes between the parties
to this Agreement shall be resolved by|
binding arbitration conducted by a single arbitrator in Fairbanks, Alaska or such other location
mutually agreed upon by the parties. The arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The arbitrator shall
minimize the time and cost of the proceedings. Each party hereby waives its right to recover
exemplary or punitive damages in connection with any dispute. The arbitrator shall render his
final decision within twenty (20) days of the completion of the final hearing. The arbitrators
decision shall be final and non-appealable. Judgment upon any award rendered in the arbitration
proceeding may be entered by, any federal or state court having jurisdiction. All costs of
arbitration shall be borne equally by the parties.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the Effective
|William Schara, Chief Executive
|Page 10 of