NEVADA EAGLE RESOURCES, LLC a wholly owned subsidiary of Gryphon Gold Corporation, a Nevada limited liability company, 1130 West Pender, #810, Vancouver, BC, V6E 4A4 (hereinafter referred to as “NER” and “Optionee”) - and – STEVE SUTHERLAND (...
Exhibit
99.1
BETWEEN:
NEVADA
EAGLE RESOURCES, LLC
a
wholly owned subsidiary of Gryphon Gold Corporation,
a
Nevada
limited liability company, 0000 Xxxx Xxxxxx, #000,
Xxxxxxxxx,
XX, X0X 0X0
(hereinafter
referred to as “NER” and “Optionee”)
-
and
–
XXXXX
XXXXXXXXXX
X.X.
Xxx
0000, Xxxx, Xxxxxx 00000
(
hereinafter referred to as “Xxxxxxxxxx” and “Optionee”)
-
and
-
a
Delaware corporation with its administration offices at
0000
Xxxxxxxx Xxx, Xxxxx 000X,
Xxxx
Xxxxxx 00000
(hereinafter
referred to as “Silver Reserve”)
WITNESSETH
THAT:
WHEREAS,
NER and Xxxxxxxxxx are the registered holders of twenty five (25) mineral claims
located in the Elko County, Nevada and more particularly described in Schedule
A
attached hereto and forming part hereof (the “Claims”);
WHEREAS,
the Claims, together with such additional mineral claims as may be covered
by
this Agreement during the term of this Agreement as provided herein, are
collectively referred to herein as the “Property;”
and
WHEREAS
NER and Xxxxxxxxxx have agreed that Silver Reserve may acquire the Claims,
subject to the terms of this Agreement;
NOW
THEREFORE, the parties hereby do evidence their agreement with respect to the
Claims as follows, in consideration of the premises and the mutual covenants
hereinafter set out.
| 1) |
REPRESENTATIONS
AND WARRANTIES
|
| a) |
SILVER
RESERVE REPRESENTATIONS AND
WARRANTIES
|
Silver
Reserve hereby represents and warrants to NER and Xxxxxxxxxx that:
|
i)
|
it
is a company duly incorporated under the laws of the State of Delaware,
and it is duly organized and validly existing under such laws and
is
qualified to do business in those states in the United States of
America
where it is necessary to conduct its
business;
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ii)
|
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iii)
|
it
has duly obtained all necessary corporate authorizations for the
execution, delivery and performance of this Agreement and such execution,
delivery and performance and the consummation of the transactions
herein
contemplated will not contravene any applicable laws and will not
conflict
with or result in any breach of any covenants or agreements contained
in,
or constitute a default under, or result in the creation of any
encumbrance, lien or charge under the provisions of its constating
documents or any shareholders’ or directors’ resolution or any indenture,
agreement or other instrument whatsoever to which it is a party or
by
which it is bound or to which it may be subject;
and
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iv)
|
this
Agreement has been duly executed and delivered by it and is valid
and
binding upon it in accordance with its
terms.
|
| b) |
NER
REPRESENTATIONS AND
WARRANTIES
|
NER
hereby represents and warrants to Silver Reserve that:
|
i)
|
it
is a limited liability company duly organized under the laws of the
State
of Nevada, and it is duly organized and validly existing under such
laws
and is qualified to carry on business in the United States of
America;
|
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ii)
|
it
has the power and capacity to carry on its business and to enter
into this
Agreement and any agreement or instrument referred to or contemplated
by
this Agreement and to carry out and perform all of its obligations
and
duties hereunder and thereunder;
|
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iii)
|
it
has duly obtained all necessary corporate authorizations for the
execution, delivery and performance of this Agreement and such execution,
delivery and performance and the consummation of the transactions
herein
contemplated will not contravene any applicable laws and will not
conflict
with or result in any breach of any covenants or agreements contained
in,
or constitute a default under, or result in the creation of any
encumbrance, lien or charge under the provisions of its constating
documents or any Members’ or managers’ resolution or any indenture,
agreement or other instrument whatsoever to which it is a party or
by
which it is bound or to which it or the Claims may be
subject;
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iv)
|
this
Agreement has been duly executed and delivered by it and is valid
and
binding upon it in accordance with its
terms.
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v)
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(1)
|
it
is the exclusive beneficial and recorded or registered owner of a
100%
right, title and possessory interest in and to the mineral properties
described for it in Schedule A, subject to the paramount legal interest
of
the United States comprising the Claims and no other person has any
proprietary or possessory interest in the Claims,
and
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2
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(2)
|
no
person has any entitlement to any royalty or other payment in the
nature
of rent or royalty on any minerals, metals or concentrates or any
other
such products removed from the
Claims.
|
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(a)
|
the
Claims it controls are properly and accurately described in Schedule
A,
attached hereto, and, each of the unpatented Claims (A) has been
properly
located and recorded with the Bureau of Land Management (BLM) and
(B) are in good standing under all applicable laws and regulations
with respect to the incurrence of any expenditures and the payment
of any
monies or taxes and will remain so until at least August 31,
2008;
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vi)
|
the
Claims it controls are free and clear of all liens, charges and
encumbrances, recorded or, to the best of NER’s
information, knowledge and belief,
unrecorded;
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vii)
|
there
are no outstanding or, to the best of NER’s
information, knowledge and belief, proposed, threatened or alleged
actions
or suits which, if successful, would or could affect the market value
or
ownership of the Claims it controls or any portion
thereof;
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viii)
|
conditions
on and relating to the Claims it controls are in compliance with
all
applicable laws, regulations and orders relating to environmental
matters,
including, but not limited to, waste disposal and storage and
reclamation;
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ix)
|
there
are no outstanding work orders or actions required to be taken relating
to
the condition of the Claims it controls or any operations thereon,
as of
the date hereof; and
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x)
|
NER
has or will make available to Silver Reserve all information in its
possession or control relating to work done on or with respect to
the
Claims it controls.
|
| 1.3 |
XXXXXXXXXX
REPRESENTATIONS
AND WARRANTIES
|
|
(a)
|
he
has the power and capacity to carry on his business and to enter
into this
Agreement and any agreement or instrument referred to or contemplated
by
this Agreement and to carry out and perform all of its obligations
and
duties hereunder and thereunder;
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(b)
|
he
has the full authority for the execution, delivery and performance
of this
Agreement and such execution, delivery and performance and the
consummation of the transactions herein contemplated will not contravene
any applicable laws and will not conflict with or result in any breach
of
any covenants or agreements contained in, or constitute a default
under,
or result in the creation of any encumbrance, lien or charge under
the
provisions of any indenture, agreement or other instrument whatsoever
to
which he is a party or by which he is bound or to which he or the
Claims
he controls may be subject;
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3
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(c)
|
this
Agreement has been duly executed and delivered by it and is valid
and
binding upon him in accordance with its
terms.
|
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(d)
|
(1)
|
he
is the exclusive beneficial and recorded or registered owner of
a 100%
right, title and possessory interest in and to the mineral
properties subject to the paramount legal interest of the United
States comprising the Claims he controls and no other person has any
proprietary or possessory interest in the Claims he controls,
and
|
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(2)
|
no
person has any entitlement to any royalty or other payment in the
nature
of rent or royalty on any minerals, metals or concentrates or any
other
such products removed from the Claims he
controls.
|
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(e)
|
the
Claims he controls are properly and accurately described in Schedule
A,
attached hereto, and, each of the unpatented Claims he controls (A)
has
been properly located and recorded with the Bureau of Land Management
(BLM) and (B) is in good standing under all applicable laws and
regulations with respect to the incurrence of any expenditures and
the
payment of any monies or taxes and will remain so until at least
August
31, 2008;
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(f)
|
the
Claims he controls are free and clear of all liens, charges and
encumbrances, recorded or, to the best of Xxxxxxxxxx’x information,
knowledge and belief, unrecorded;
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(g)
|
there
are no outstanding or, to the best of Xxxxxxxxxx’x information, knowledge
and belief, proposed, threatened or alleged actions or suits which,
if
successful, would or could affect the market value or ownership of
the
Claims he controls or any portion
thereof;
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(h)
|
conditions
on and relating to the Claims he controls are in compliance with
all
applicable laws, regulations and orders relating to environmental
matters,
including, but not limited to, waste disposal and storage and
reclamation;
|
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(i)
|
there
are no outstanding work orders or actions required to be taken relating
to
the condition of the Claims he controls or any operations thereon,
as of
the date hereof; and
|
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(j)
|
Xxxxxxxxxx
has or will make available to Silver Reserve all information in its
possession or control relating to work done on or with respect to
the
Claims he controls.
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4
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1.4
|
DURATION
AND EFFECT OF REPRESENTATIONS AND
WARRANTIES
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(a)
|
NER
and Xxxxxxxxxx acknowledges and agrees that Silver Reserve is entering
into this Agreement relying upon the representations and warranties
made
to it herein and the correctness of each such representation and
warranty
is a condition upon which Silver Reserve is entering into this Agreement,
each of which conditions may be waived in whole or in part solely
by
Silver Reserve and all such representations and warranties shall
survive
the execution, delivery and termination of this Agreement, the acquisition
of any interest in the Claims by a party and the commencement and
completion of any of the transactions contemplated herein, for a
period of
4 years following the execution of this
Agreement.
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(b)
|
Silver
Reserve acknowledges and agrees that NER
and Xxxxxxxxxx are entering into this Agreement relying upon the
representations and warranties made to it herein and the correctness
of
each such representation and warranty is a condition upon which
NER
and Xxxxxxxxxx are entering into this Agreement, each of which conditions
may be waived in whole or in part solely by an instrument in writing
signed by NER
and Xxxxxxxxxx and all such representations and warranties shall
survive
the execution, delivery and termination of this Agreement, the acquisition
of any interest in the Claims by a party and the commencement and
completion of any of the transactions contemplated herein for a period
of
4 years following the execution of this
Agreement.
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(c)
|
NER
agrees to indemnify and hold harmless Silver Reserve from all claims,
actions, damages and losses arising out of or in connection with
a breach
of any representation or warranty made by NER
contained herein.
|
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(d)
|
Xxxxxxxxxx
agrees to indemnify and hold harmless Silver Reserve from all claims,
actions, damages and losses arising out of or in connection with
a breach
of any representation or warranty made by Xxxxxxxxxx contained
herein.
|
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(e)
|
Silver
Reserve agrees to indemnify and hold harmless NER
and Xxxxxxxxxx from all claims, actions, damages and losses arising
out of
or in connection with a breach of any representation or warranty
made by
Silver Reserve contained herein.
|
| 2) |
OPTION
|
| a) |
GRANT
OF OPTION
|
NER
and
Xxxxxxxxxx hereby grant to Silver Reserve the sole and exclusive right and
option to acquire up to an undivided 100% right, title and interest (the
“Earned
Interest”)
in and
to the Claims (the “Option”)
in
accordance with the terms of this Agreement.
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5
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| b) |
TERMS
OF OPTION
|
To
exercise the Option and thereby earn an undivided 100% right, title and interest
in and to the Claims, subject to the NSR royalty set out in paragraph 3 below,
Silver Reserve shall; make payment to NER and Xxxxxxxxxx of $10,000 upon closing
of this Agreement and after closing, on the
|
1st
anniversary of closing
|
$15,000
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2nd
anniversary of closing
|
$30,000
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$60,000
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4th
thru 10th anniversaries of closing
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$80,000
on each anniversary date.
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On
payment of all of the above payments the Option shall be fully exercised and
Silver Reserve shall own 100% of the Property.
NER
and
Xxxxxxxxxx shall provide written direction to Silver Reserve upon execution
of
this Agreement the proportion of each option payment and NSR payment described
in paragraph 3 to be made to NER and Xxxxxxxxxx. The Optionees at their option,
shall have the right to except part of all of the cash payments due under this
Agreement in common stock of Silver Reserve Corp., at a price of 10% below
the
10 day average closing price, which the shares trade prior to the payment date.
The Optionees shall give Silver Reserve 15 day written notice of intent to
accept part or all of the payment due in common stock.
| 3. |
ROYALTY
|
|
NER
and Xxxxxxxxxx shall be entitled to a 3% Net Smelter Return (“NSR”)
royalty on the Property payable in accordance with the terms as set
out in
Schedule B hereto and forming part
hereof.
|
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3.1
|
ADVANCED
ROYALTY PAYMENT
|
Each
of
the Option payments shall be applied as advance royalty payments. Beginning
on
the 11th
anniversary date of this agreement, an annual advance royalty of $80,000 is
due
and payable. All advance royalty payments shall be applied to the reduction
of
any future royalty payments due under the NSR royalty. While in production,
Silver Reserve Corp. must annually pay the greater of the NSR royalty or
$80,000.
| 4.0 |
SUSTAINING
FEES
|
Silver
Reserve shall be responsible for the payment of all sustaining fees on the
Property due to the BLM before September 1st
each
year during the term of this Agreement and continuing after it has earned a
100%
interest in the Claims. Failure to timely pay the sustaining fees will result
in
default under this agreement as described in paragraph 10.3.
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6
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| 5.0 |
CONDITIONS
OF CLOSING
|
Silver
Reserve shall not be required to close this Agreement until (a) Silver
Reserve
is able to access the property and stake additional claims it believes
cover the
extension of the mineralized zone and (b) until NER and Xxxxxxxxxx have
delivered to the satisfaction of Silver Reserve all of the historical reports
and records relating to previous drilling and other work on the
property.
| 5.1 |
CLOSING
|
Closing
shall take place within 10 business day of satisfaction of conditions (a) and
(b) above or such other date as the parties may agree.
| 6.0 |
TITLE
|
|
(i)
|
NER
and Xxxxxxxxxx shall transfer title to the Claims to Silver Reserve
and
execute and deliver such documents as may be required to convey such
title
subject to the NSR royalty in accordance to the provisions (i) above
on
the completion of all option payments described in paragraph
2.2.
|
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(ii)
|
If
this Agreement is terminated for any reason prior to Silver Reserve
earning 100% interest in the Claims, it will transfer title it holds
in
any portion of the Property including any claims acquired within
the Area
of Interest to NER and Xxxxxxxxxx in accordance with Schedule
A.
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| 7.0 |
TERMINATION
|
Silver
Reserve may terminate this Agreement at any time by giving 60 days notice in
writing to NER and Xxxxxxxxxx. In the event of such termination, Silver Reserve
shall have no further obligation to NER and Xxxxxxxxxx except as set out in
6
above.
| 8.0 |
OPTION
PERIOD RIGHTS AND
OBLIGATIONS
|
|
8.1
|
During
the term of this Agreement: Silver Reserve shall have the exclusive
right
to conduct exploration and development work on the Property with
the right
to remove mineral samples therefrom, including bulk mineral samples,
for
the purpose of assays and tests. Silver Reserve shall have the right
to
erect, bring and install all such buildings, machinery, equipment
and
supplies on the Property as it shall deem necessary and proper; and
all
work done by Silver Reserve on the Property shall be done in accordance
with good mining practice and in compliance with the applicable laws
and
regulations including environmental laws and regulations applicable
to the
Property.
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8.2
|
During
the term of this Agreement: NER
and Xxxxxxxxxx shall have access to the Property and to all the records
of
Silver Reserve relating to the Property, at its sole risk and expense,
to
review work being carried out on the Property or to review results
obtained from work carried out on the Property, as the case may be,
provided however, that reasonable notice is given and that such access
shall not unduly interfere with or disrupt the activities of Silver
Reserve; Silver Reserve shall upon request, provide NER and Xxxxxxxxxx
with copies of all reports produced from work conducted on the
Property.
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7
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8.3
|
Silver
Reserve shall indemnify and save harmless NER and Xxxxxxxxxx from and
against all suits, claims, demands, losses and expenses which they
may
each suffer by reason of any act or thing done or omitted to be done
during the term of this Agreement by or on behalf of Silver Reserve
in
relation to its exploration and development operations on the Property,
including any consequences arising from the non-payment of workmen
and
wage earners employed by it or its contractors on or in connection
with
the Property or suppliers of materials purchased in connection therewith.
During the term of this Agreement, so long as Silver Reserve’s Option is
in effect, Silver Reserve shall keep the Property free from claims
for
liens, charges and encumbrances and, in the event of a lien, charge
or
encumbrance being recorded, it will on this fact becoming known to
it
forthwith take proceedings to have such lien, charge or encumbrance
removed as soon as possible. Silver Reserve may, however, dispute
and
contest any suit, claim, demand, loss or expense which forms the
basis of
a recorded lien, charge or
encumbrance.
|
| 9. |
EXERCISE
OF OPTION
|
At
such
time as Silver Reserve has made the payments, as set out in 2.2 as set out
herein it shall have earned a 100% interest in the Claims and the property
subject only to the NSR royalty.
| 10. |
GENERAL
PROVISIONS
|
| 10.1 |
NATURE
OF RELATIONSHIP
|
Nothing
herein shall be construed as creating a partnership between the parties.
Nothing
contained in this Agreement shall be construed so as to constitute a party
an
agent or legal representative of another party. Except as otherwise specifically
provided in this Agreement, a party shall not have any authority to act for,
or
to assume any obligation or responsibility on behalf of, any other party. Except
as expressly provided in this Agreement, each party shall have the free and
unrestricted right to independently engage in and receive the full benefits
of
any and all business endeavours of any sort whatsoever not related to the
Property and the area of interest, whether or not competitive with the
endeavours contemplated herein, without consulting or inviting or allowing
the
other party any interest therein and the legal doctrines of “corporate
opportunity” or “business opportunity” sometimes applied to joint venturers
shall not apply in the
case of
such other endeavours.
| 10.2 |
AREA
OF INTEREST
|
The
area of
interest shall
be
deemed
to
comprise
that area which is included within two (2) miles of the outermost
boundary
of the
mineral
properties, which
constitute the Property. Any claims or mineral rights acquired in any manner
by
any party within the area of interest shall be added to and form part of the
Property subject to the consent of the non-acquiring parties. The acquirer
shall
hold title to such acquisition in trust for the benefit of the parties to this
Agreement and transfer it to the appropriate party in accordance with the terms
hereof.
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8
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| 10.3 |
DEFAULT
PROVISIONS
|
The
following shall be considered a default on the part of Silver
Reserve:
| (a) |
failure
to make payments referred as described in paragraph 4.0 of this
agreement,
|
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(b)
|
if
it fails to make the payments, referred to in paragraph 2.2 hereof,
when
due during the term of this
Agreement.
|
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(c)
|
If
it fails to make the NSR royalty payments when due in accordance
with
Schedule B hereto.
|
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(d)
|
In
the event of a default in any of the above items, NER and Xxxxxxxxxx
shall
give Silver Reserve written notice in accordance herewith, describing
the
default and allowing Silver Reserve 15 business days from the date
of the
notice to correct said default. Failure of Silver Reserve to correct
the
default within the allotted time shall result in Silver Reserve forfeiting
all interest in the Property and being required to transfer any property
interests to NER and Xxxxxxxxxx in accordance with Schedule A. Such
default shall not relieve Silver Resource of its obligations for
environmental liabilities described in paragraph 10.10(i).
|
| 10.4 |
CONFIDENTIAL
INFORMATION
|
All
data
and information provided to or received by the parties with respect to the
Property shall be treated as confidential. A party shall not disclose such
information to third parties whether by way of press release or otherwise,
unless the disclosure is required by law, stock exchange rules or a regulatory
authority having jurisdiction or the disclosure is consented to by the other
parties (the “Non-Disclosing
Parties”);
consent of such Non-Disclosing Parties shall not be unreasonably withheld or
delayed in view of the parties’ timely disclosure obligations. Without limiting
the foregoing, the Non-Disclosing Parties may reasonably withhold its consent
to
the issuance of a press release where it has not been provided with an advance
draft copy of such press release. Where disclosure is required by law, stock
exchange rules or a regulatory authority having jurisdiction, a party shall,
if
permitted by such law, stock exchange rule or regulatory authority, use its
reasonable best efforts to provide a copy of the information to be disclosed
(the “Disclosure
Statement”)
to the
Non-Disclosing Parties in advance of its disclosure and make reasonable changes
to such Disclosure Statement as may be requested by the Non-Disclosing
Parties.
| 10.5 |
GEOLOGICAL
INTERPRETATIONS
|
No
party
(the “Reporting
Party”)
shall
be liable to another party (the “Receiving
Parties”)
in
respect of any opinions, findings, conclusions or other interpretative or
non-factual information included by the Reporting Party in any report or other
document provided to the Receiving Party, whether included by negligence or
otherwise. The Non Reporting Parties shall not release any information regarding
the Property to any third party without the consent of the Reporting
Party.
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9
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| 10.6 |
FORCE
MAJEURE
|
|
i.
|
No
party hereto shall be liable under this Agreement to another party
for any
failure to perform any of its obligations caused by or arising out
of any
act not within the control of the party, excluding lack of funds,
but
including, without limitation, acts of God, strikes, acts or terrorism,
lockouts or other industrial disputes, acts of a public enemy, riots,
fire, storm, flood, explosion, government restriction, failure to
obtain
any approvals required from regulatory authorities, including
environmental protection agencies, unavailability of equipment,
interference of persons primarily concerned about environmental or
native
rights issues and any other cause, whether of the kind enumerated
above or
otherwise, which is not reasonably within the control of the party
(the
“Event
of Force Majeure”).
|
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ii.
|
No
right of a party shall be affected, and no party shall be found in
default, under this Agreement by the failure of such party to meet
any
term or condition of this Agreement, excluding lack of funds, where
such
failure is caused by an Event of Force Majeure and, in such event,
all
times specified or provided for in this Agreement shall be extended
by a
period commensurate with the period during which the Event of Force
Majeure causes such failure.
|
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iii.
|
A
party affected by an Event of Force Majeure shall take all reasonable
steps within its control to remedy the failure caused by such event,
provided, however, that nothing contained in this
section 10.6
shall require any party to settle any labour or industrial dispute
or to
test the constitutionality of any law enacted by any Legislature
of or
within the United States.
|
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iv.
|
Any
party relying on the provisions of this section 10.6
shall forthwith give notice to the other party of the commencement
of an
Event of Force Majeure and of its
end.
|
| 10.7 |
NOTICES
|
|
1.
|
Any
notice, direction or other communication (the “Notice”)
given hereunder, irrespective of whether such Notice was required,
permitted or otherwise provided pursuant to or in respect of this
Agreement, shall be in writing;
|
|
2.
|
if
delivered, shall be deemed to have been given and received on the
day it
was delivered;
|
|
3.
|
if
mailed, shall be deemed to have been given and received on the seventh
business day following the day of mailing, except in the event of
disruption of postal services in which event such Notice shall be
deemed
to have been given and received only when actually received;
|
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10
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|
4.
|
if
sent by facsimile shall be deemed to have been given and received
on the
day it was so sent, except where sent outside of normal business
hours
(9:00 a.m. to 5:00 p.m. local time at the place of receipt), in which
event such Notice shall be deemed to have been given and received
on the
next following business day; and
|
|
5.
|
Notices
in each case shall be addressed as
follows:
|
if
to Silver Reserve, at:
0000
Xxxxxxxx Xxx, Xxxxx 000X
Xxxx,
Xxxxxx 00000
Attention: Xxxx
Xxxxxxxxxx
Fax:
000-000-0000
if
to NER, at:
Nevada
Eagle Resources, c/o
Gryphon
Gold Corporation
0000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxx,
XX, Xxxxxx X0X 0X0
Attention:
Xxxxxxx
Xxx
Fax:
000-000-0000
if
to Xxxxxxxxxx:
X.X.
Xxx
0000
Xxxx,
Xxxxxx 00000
Fax:
000-000-0000
Any
party
may give, at any time, notice in writing to the other party of any change of
address of the party giving such Notice and, from and after the giving of such
Notice, the address or addresses therein specified shall be deemed to be the
address of such party for the purpose of giving Notice hereunder.
| 10.8 |
INTERPRETATION
|
|
(i)
|
|
(ii)
|
All
references in this Agreement to monetary amounts are expressed in
US
currency.
|
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11
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|
(iii)
|
In
this Agreement, headings have been inserted for ease of reference
and may
not accurately describe the provisions that follow them. Consequently,
headings shall not be used for purposes of interpreting this
Agreement.
|
|
(iv)
|
In
this Agreement, the singular encompasses the plural and vice
versa,
and the masculine encompasses the feminine and vice
versa.
|
| 10.9 |
WHOLE
AGREEMENT AND FURTHER
ASSURANCES
|
|
i.
|
This
Agreement, including Schedules A and B attached hereto, constitutes
the whole of this Agreement and encompasses the entire agreement
between
Silver Reserve and NER and Xxxxxxxxxx pertaining to the Property.
This
Agreement supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, between Silver Reserve
and NER
and Xxxxxxxxxx, and there are no warranties, representations or other
agreements between Silver Reserve and NER and Xxxxxxxxxx in connection
with the Property, except as specifically set forth
herein.
|
|
ii.
|
The
parties agree to execute and cause to be executed such other documents,
and take and cause to be taken such other actions, as are reasonably
necessary:
|
| (a) |
to
secure and give effect to the rights and obligations granted and
assumed
hereunder; and
|
| (b) |
to
maintain the Property in good
standing.
|
| 10.10 |
ENVIRONMENTAL
RECLAMATION
|
| i. |
Notwithstanding
any other provision in this Agreement, NER and Xxxxxxxxxx shall
remain
liable and Silver Reserve shall have no obligations in respect
of
environmental liabilities incurred or arising as a result of the
state or
condition of the Claims prior to closing of this Agreement. Silver
Reserve
shall be liable for all obligations in respect of environmental
liabilities incurred or arising on the Property after the closing
date of
this agreement and that are caused by Silver Reserve. NER and Xxxxxxxxxx
shall have no obligations in respect to environmental liabilities
arising
after the closing date caused by Silver
Reserve.
|
| ii. |
For
purposes of section 10.10 (i), environmental liabilities shall mean
any and all damages (including but not limited to exemplary and
punitive
damages), losses, costs, expenses, liabilities and obligations
of
whatsoever kind, direct or indirect (including but not limited
to fines,
penalties, interest, lawyers’ fees and expenses, damages for personal
injury, death, property damage and economic loss, including but
not
limited to reduction in the value of the Property (or any other
person’s
property) incurred or arising as a result of the state or condition
of the
Claims, including costs relating to the removal, treatment, storage
and
disposal of hazardous substances and the remediation, clean-up,
restoration, abatement, reclamation or other securing or remedial
action
in respect of the Claims (or any other person’s property) under or for
breach of or failure to comply with any and all environmental laws,
whether statutory, in contract or in tort, including negligence
and strict
liability, or howsoever otherwise
arising.
|
-
12
-
| iii. |
For
purposes of sections 1.2(i), 1.3(h)
and 10.10(i):
|
| (a) |
environmental
laws shall mean any and all federal, state and local laws, statutes,
rules, regulations, ordinances, bylaws, orders, permits, licences,
approvals, policies and consents and the common law to the extent
that any
of the foregoing regulate, ascribe, provide for or pertain to liabilities
or obligations in relation to the existence, use, production, manufacture,
processing, distribution, production, transport, handling, storage,
removal, treatment, disposal, emission, discharge, migration, seepage,
leakage, spillage or release of hazardous substances or the construction,
alteration, use or operation, demolition or decommissioning of
any
facilities or other real or personal property in relation to the
foregoing
or otherwise in relation to the protection of the life, health
or safety
of persons, or to the protection of property or the environment,
including
but not limited to air, soil, surface water, ground water, biota,
wildlife
and personal or real property; and
|
| (b) |
hazardous
substances shall mean any substance
that:
|
| (c) |
when
released to the natural environment is likely to cause or does
cause,
immediately or at some future time, material harm or degradation
to the
natural environment or any risk to human health and, without restricting
the generality of the foregoing, includes any pollutant, contaminant,
waste or hazardous waste, or any “dangerous goods”, “hazardous chemical”,
“hazardous substance” or “hazardous waste”, as may be defined by
environmental laws; or
|
| (d) |
exhibits
characteristics of flammability, corrosivity, reactivity or
toxicity.
|
| 10.11 |
COUNTERPARTS
|
This
Agreement may be executed in multiple counterparts, each of which shall
be deemed
an
original, and all of which together shall constitute one and the same
instrument. Execution and delivery of this Agreement by exchange of facsimile
copies bearing facsimile signature of a party shall constitute a valid and
binding execution and delivery of this Agreement by such party. Such facsimile
copies shall constitute enforceable original documents.
-
13
-
IN
WITNESS WHEREOF the parties have executed this Agreement effective as of the
date first written above.
|
NEVADA
EAGLE RESOURCES, LLC
|
||||
|
/s/
Xxxxxxx Xxx
|
by
|
s/
Xxxx Xxxxxxxxxx
|
||
|
Anthony
D. J. Ker
|
Xxxx
Xxxxxxxxxx
|
|||
|
Managing
Member
|
President
|
|||
|
XXXXX
XXXXXXXXXX
|
||||
-
14
-
SCHEDULE
A
Medicine
Claims
Elko
County, Nevada
held
by Xxxxx Xxxxxxxxxx
|
Claim
number
|
County
document #
|
NMC
Number
|
|
9
|
589680
|
979237
|
|
10
|
589681
|
979238
|
|
11
|
589682
|
979239
|
|
12
|
589683
|
979240
|
|
13
|
589684
|
979241
|
|
14
|
589685
|
979242
|
|
|
||
|
37
|
589686
|
979243
|
|
38
|
589687
|
979244
|
|
39
|
589688
|
979245
|
|
40
|
589689
|
979246
|
|
41
|
589690
|
979247
|
|
42
|
589691
|
979248
|
|
43
|
589692
|
979249
|
|
44
|
589693
|
979250
|
|
45
|
589694
|
979251
|
|
46
|
589695
|
979252
|
|
|
||
|
63
|
589696
|
979253
|
|
64
|
589697
|
979254
|
|
65
|
589698
|
979255
|
|
66
|
589699
|
979256
|
|
00
|
000000
|
000000
|
|
125
|
589701
|
979258
|
|
126
|
589702
|
979259
|
SCHEDULE A
Peru
Claims
Elko
County, Nevada
registered
in the name of Nevada Eagle Resources, LLC
SCHEDULE
B
TO
NER/XXXXXXXXXX/
SILVER RESERVE AGREEMENT
DATED
April
1,
2008
Net
Smelter Return Royalty
3)
The
NSR
which may be payable to a party (the “Payee”)
by a
party (the “Payor”)
shall
be calculated and paid to the Payee in accordance with the terms of this
Schedule.
4) The
NSR
shall be calculated on a calendar quarterly basis.
5)
The
following words shall have the following meanings:
|
a)
|
“Gross
Revenue”
shall mean the aggregate of the following amounts received in each
quarterly period:
|
|
i)
|
(1)
|
all
revenue received by the Payor in such quarter from arm’s length purchasers
of mineral products, or
|
|
(2)
|
the
fair market value of all mineral products sold by the Payor in such
quarter to persons not dealing at arm’s length with the Payor;
and
|
|
ii)
|
any
proceeds of insurance received in such quarter due to losses or damages
in
respect to mineral products.
|
|
b)
|
“Permissible
Deductions”
shall mean the aggregate of the following charges (to the extent
not
previously deducted or accrued in computing Gross Revenue) that are
paid
in each quarterly period:
|
|
i)
|
sales
charges levied by any sales agent in respect to the sale of mineral
products;
|
|
(a)
|
all
costs, expenses and charges of any nature whatsoever which are either
paid
or incurred by the Payor in connection with the refinement or
beneficiation (in the case of direct-shipping ore) of mineral products
after leaving the Property, including all weighing, sampling, assaying
and
representation costs, metal losses, any umpire charges and any penalties
charged by the processor, refinery or smelter;
and
|
|
(b)
|
all
other insurance costs in respect of mineral
products;
|
provided:
(i)
that
where a cost or expense otherwise constituting a Permissible Deduction is
incurred by the Payor in a transaction with a party with whom it is not dealing
at arm’s length (as that term is defined in the Income
Tax Act
(Canada)), such costs or expenses may be deducted, but only as to the lesser
of
the actual cost incurred by the Payor and the fair market value
thereof
considering the time of such transaction and under all the circumstances
thereof;
and
(ii) transportation costs and milling costs at another site, prior to the
smelting and refining shall not be included in the definition of Permissible
Deductions.
|
c)
|
“Net
Smelter Returns”
shall mean Gross Revenue less Permissible Deductions in respect to
such
quarter.
|
|
d)
|
“NSR”
shall mean Net Smelter Returns.
|
6)
The
NSR
shall be calculated and paid within 45 days after the end of each calendar
quarter ending March 31, June 30, September 30 and December 31 of each year.
Smelter settlement sheets, if any, and a statement setting forth calculations
in
sufficient detail to show how the payment was derived (the “Statement”)
shall
be submitted with the payment.
7)
In
the
event that final amounts required for the calculation of the NSR are not
available within the time period referred to in paragraph 4 of this
Schedule, then provisional amounts shall be established, the NSR shall be paid
on the basis of such provisional amounts and positive or negative adjustments
shall be made to the payment in the succeeding quarter, as
necessary.
8)
All
NSR
payments shall be considered final and in full satisfaction of all obligations
of the Payor with respect thereto, unless the Payee delivers to the Payor a
written notice (the “Objection
Notice”)
describing and setting forth a specific objection to the calculation thereof
within 60 days after receipt by the Payee of the Statement. If the Payee objects
to a particular Statement as herein provided, the Payee shall, for a period
of
60 days after the Payor’s receipt of such Objection Notice, have the right, upon
reasonable notice and at a reasonable time, to have the Payor’s accounts and
records relating to the calculation of the NSR in question audited by the
auditors of the Payor. If such audit determines that there has been a deficiency
or an excess in the payment made to the Payee, such deficiency or excess will
be
resolved by adjusting the next monthly NSR payment due hereunder. The Payee
shall pay all the costs and expenses of such audit unless a deficiency of 2
1/2%
or more of the amount due is determined to exist. The Payor shall pay the costs
and expenses of such audit if a deficiency of 2 1/2% or more of the amount
due
is determined to exist. All books and records used and kept by the Payor to
calculate the NSR due hereunder shall be kept in accordance with U.S. generally
accepted accounting principles. Failure on the part of the Payee to make claim
against the Payor for adjustment in such 60 day period by delivery of an
Objection Notice shall conclusively establish the correctness and sufficiency
of
the Statement and NSR payment in respect of the applicable quarter.
9)
All
profits and losses resulting from the Payor engaging in any commodity futures
trading, option trading, metals trading, gold loans or any combination thereof,
and any other hedging transactions with respect to mineral products
(collectively, “Hedging
Transactions”)
are
specifically excluded from calculations of the NSR pursuant to this Schedule,
it
being understood by the parties that both the Payor and Payee may engage in
speculative hedging trading activities for their own account. All Hedging
Transactions by the Payor and all profits or losses associated therewith, if
any, shall be solely for the Payor’s account, irrespective of whether or not
mineral products are delivered in fulfilment of such obligations. When necessary
to give effect to the provisions of this paragraph 7, Gross Revenue from
mineral products subject to Hedging Transactions by the Payor shall be
determined pursuant to sub clause 3.1(a)(ii), rather than 3.1(a)(i)
hereof.
10)
Fair
market value shall be determined by using, for gold, the quarterly average
price
of gold which shall be calculated by dividing the sum of all London Bullion
Market Association P.M. Gold Fix prices reported for the calendar quarter in
question by the number of days for which such prices were quoted and, for silver
and other metals, the quarterly average price which shall be calculated by
dividing the sum of all New York Commodity Exchange (“COMEX”)
prices
reported for silver and the other metal quoted by and at the closing of COMEX
for the calendar quarter in question by a number of days for which such prices
were quoted, less, in each case, an amount reasonably equivalent to the
deductions permitted by clause 3.2 hereof.
