Exhibit 10.6
MINING LEASE
AND
OPTION TO PURCHASE AGREEMENT
THIS MINING LEASE AND OPTION TO PURCHASE AGREEMENT
("Agreement") effective as of January 15, 1998 ("Effective Date"), is by and
between Mark Milner, Daniel Milner, and Stephen R. Crossland ("Owners"), as
lessors and optionors, and GOLDEN PHOENIX MINERALS, INC.. ("GPM"). a Minnesota
corporation authorized to transact business in the State of California, as
lessee and optionee, with an office at 3595 Airway Drive Suite 405, Reno, Nevada
89511.
RECITALS:
WHEREAS, Owners represent that they own certain real property interests
situated in Modoc County, State of California, which real property interests
are more particularly described in Exhibit "A" attached hereto and made a part
hereof ("Property"); and,
WHEREAS, the Owners and GPM desire to enter into a Mining Lease And
Option To Purchase Agreement whereby the Owners grant to GPM the exclusive right
to explore, and develop and mine, if warranted, the Property, and further
granting GPM an exclusive and irrevocable option to purchase all of the Owners'
right, title and interest in and to the Property, upon the terms and conditions
and for the consideration set forth herein.
NOW THEREFORE, in consideration of the various payments, covenants and
agreements contained herein, the sufficiency of which the Owners acknowledge,
the Owners and GPM agree as follows:
AGREEMENT:
1. Grant of Lease
Owners lease, let and demise to GPM the Property and all fixtures and
improvements thereon.
2. Grant of Rights.
The Owners grant to GPM the following exclusive rights on and with
respect to the Property:
(a) To enter the Property to survey, explore, prospect, drill,
develop, mine and cross-mine (in any manner whether by
surface, open-pit, underground, solution or other mining
methods), stockpile, remove, leach, concentrate,
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mill, smelt, beneficiate, process, ship, and market, without
limitation, all ores, metals, tailings and concentrates, and
mineral products ("Minerals") in, on and under the Property,
employing currently recognized or subsequently developed
technology and any exploration methods that GPM may deem
necessary, convenient or desirable to conduct its operations
on the Property;
(b) To construct, use. maintain, repair, replace, and relocate
buildings, ore bins, shafts, declines, inclines, tunnels,
drifts, open pits, reservoirs, tailing ponds, waste dumps, or
stock piles, roads, pipelines, power and communication lines,
and any other structures and facilities;
(c) To use the Property for the storage or permanent disposal of
Minerals, water. waste, tailings, or other materials produced
from the Property or other real property owned or controlled
by GPM ("Other Properties");
(d) To use all easements, means of access, and rights-of-way for
ingress and egress to and from the Property;
(e) To drill for, appropriate, develop, use, consume, drain, and
dispose of all water on or appurtenant to the Property;
(f) To commingle Minerals from the Property with Minerals from
Other Properties in accordance with the procedures set forth
in Section 3 of Exhibit "B."
(g) To use the Property for all of the purposes stated in this
Section 2 in conjunction with GPM's activities on Other
Properties; and
(h) To exercise all other Agreement and Property rights and
privileges which are necessary, convenient or incidental, for
GPM. to effectuate the purposes of this Agreement.
3. Term; No Implied Covenants; Operations Generally.
3.1 Unless sooner terminated as herein provided, this Agreement shall commence
on the Effective Date and continue for six (6) years therefrom ("Primary Term"),
and so long thereafter as any development, mining or processing operations or
any right set forth in Section 2 is being conducted or exercised on the Property
or in conjunction with Other Properties on a continuous basis ("Extended Term").
Development, mining and processing operations shall be deemed continuous so long
as such operations do not cease for a period of more than one hundred eighty
(180) consecutive days, excluding, however, periods of force majeure and
unsatisfactory markets as provided herein. In the event GPM is unable to obtain
a satisfactory market for any Minerals discovered or produced on the Property,
and as a result. GPM delays commencement of development, mining or processing
operations on the Property beyond the end of the Primary Term, this lease
Agreement shall not expire
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or terminate as a result of such period of lack of satisfactory markets but may
be extended by GPM's continuing payment of minimum advance royalty payments
pursuant to Section 4.1. GPM shall use diligence in searching for a satisfactory
market for the Minerals during such lack of satisfactory market periods, and
when a satisfactory market becomes available, GPM shall have a reasonable time
thereafter within which to begin or resume development, mining or processing
operations. During the term, GPM's right to cease production shall be governed
by Section 4.2.
3.2 In lieu of any obligation on the part of GPM, express or implied, to explore
the Property or to perform any other work or activities thereon, GPM agrees to
make the minimum advance royalty payments set forth in Section 4.1.
3.3 All decisions pertaining to operations on the Property and the diligence
with which such operations shall be conducted shall be made in the sole
discretion of GPM. GPM's operations on the Property and its operations on Other
Properties may be conducted on the Property as a single operation, as if all
such properties constituted a single tract.
4. Minimum Advance Royalty Payments
4.1 GPM shall pay Owners the minimum advance royalty payments ("Minimum Advance
Royalty Payments") as follows:
Due Date(s) Payable Amounts
----------- ---------------
Upon execution of Agreement $5,000.00
January 15, 1998 $10,000.00
January 15, 1999 $15,000.00
January 15, 2000 $20,000.00
January 15, 2001 $25,000.00
January 15, 2002 $25,000.00
All Minimum Advance Royalty Payments paid to Owners shall be credited against
any net returns royalty that accrue pursuant to Section 5. In the event no
Minerals are produced from the Property, owners shall have no obligation to
refund the Minimum Advance Royalty Payments. GPM shall have the right to prepay
any Minimum Advance Royalty Payments. GPM shall pay the Minimum Advance Royalty
Payments directly to Owners.
4.2 If at any time during the Extended Term, GPM desires to shut down or cease
production for any reason, it shall have the right to do so without terminating
this Agreement by continuing to make the Minimum Advance Royalty Payments in
accordance with Section 4.1 as long as the suspension continues. The Extended
Term of this Agreement shall remain in effect provided Minimum Advance Royalty
Payments are made.
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5. Net Returns Production Royalty
GPM shall pay Owners a net returns production royalty of two and a half percent
(2 1/2%) of the net returns for Minerals mined from the Property ("Net Returns
Royalty"). The Net Returns Royalty is defined in Exhibit "B" attached hereto and
made a part hereof. No production royalty shall be paid on any minerals removed
for the purposes of determining the amenability to beneficiation or mining,
including bulk sampling, unless such sampling involves removal of one thousand
(1,000) or more tons of material.
6. Grant of Option to Purchase; Exercise; Purchase Price; Obligations
Terminated; Property Removal
6.1 In consideration of the payment of the initial Five Thousand Dollars
(S5.000.00). the receipt and sufficiency of which the Owners hereby acknowledge,
the Owners hereby grant to GPM the exclusive and irrevocable right and option to
purchase ("Option to Purchase") all their right, title and interest in and to
the Property, all minerals and mineral deposits, ores, concentrates, metals,
materials, tailings, dumps and mine wastes, in. on and under the Property, and
mining rights appertaining thereto, all surface and water rights, and all
compensable improvements thereon. "Compensable Improvements" means all
buildings, structures, fences, fixtures and other improvements affixed to the
Property by the Owners or any predecessor owner(s).
6.2 GPM may exercise its Option to Purchase at anytime during the Primary Term
or Extended Term by giving at least thirty (30) days' advance written notice to
the Owners of its intent to exercise at a specific date, time and place
("Closing"), and by delivering to the escrow agent, defined in Section 7. the
purchase price set forth in section 6.3.
6.3 The total purchase price ("Purchase Price") for the Property, Minerals and
all Compensable Improvements thereon shall be Five Hundred Thousand Dollars
($500,000.00). The Minimum Advance Royalty Payments and any Net Returns Royalty
Payments made to the owners shall be credited against Purchase Price.
6.4 Except for the reservation by the Owners of the Net Returns Royalty and the
obligation of GPM to pay the same, if GPM purchases the Property, all rights,
duties, obligations and reservations set forth in this Agreement, including the
payment of Minimum Advance Royalty Payments, shall terminate as of the date
Owners' warranty deed, as defined in section 7.3, is delivered to GPM.
6.5 All of the Owner's personal property must be removed from the Property prior
to the expiration of ninety (90) days after closing. Any personal property not
timely removed shall be deemed to have been conveyed and transferred to GPM and
shall become the property of GPM without additional compensation due the Owners.
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7. Escrow Agent; Method of Payment; Warranty Deed; Quitclaim Deed and
Release
7.1 Pursuant to the terms of the escrow instructions ("Escrow Instructions") set
forth in Exhibit "C," attached hereto and made a part hereof, (Name of
firm/company) shall serve as escrow agent ("Escrow Agent") for purposes of the
Option to Purchase granted pursuant to Section 6.1.
7.2 Escrow Agent shall receive and distribute Purchase Price payments or tenders
to be made to the Owners. The Minimum Advance Royalty Payments and Net Returns
Royalty payments shall be paid directly to the Owners by GPM. All payments or
tenders made to the Owners may be made by cash, check or draft, mailed or
delivered to the address specified in Exhibit "C," on or before the appropriate
due date.
7.3 Concurrently, with the execution of this Agreement, the Owners (i) shall
execute, acknowledge and deposit with the Escrow Agent a warranty deed
("Warranty Deed"), in the form set forth in Exhibit "D," attached hereto and
made a part hereof, conveying to GPM all of the Owners' right, title and
interest in and to the Property, the Minerals and Compensable Improvements
except for the two percent (2%) Net Returns Production Royalty reserved to
Owners; (ii) if necessary to complete GPM's purchase of the Property, or if
requested by GPM, Owners shall execute, acknowledge and deliver to the Escrow
Agent a bill of sale in proper form for any personal property on the Property
which shall be conveyed and transferred to GPM; and (iii) GPM shall execute,
acknowledge and deposit with the Escrow Agent a quitclaim deed and release
("Quitclaim Deed and Release") in the form set forth in Exhibit "E," attached
hereto and made a part hereof, quit claiming and releasing to the Owners all of
GPM's interest in the Property and the Agreement. The aforementioned documents
will be held and delivered by the Escrow Agent pursuant to the terms of the
Escrow Instructions.
8. Representations, Warranties and Covenants; Title
8.1 The Owners represent, warrant and covenant to GPM. and its successors and
assigns, that:
(a) The Owners are the sole legal and equitable owners of the
Property (subject to paramount title in the United States for
am unpatented "Mining Claims" compromising the Property).
(b) Any Mining Claims comprising part or all of the Property were
properly located in accordance with Federal and State law on
land which was then available for mineral location and all
such Mining Claims have been properly maintained in accordance
with the Federal Land Policy and Management Act of 1976 and
all other applicable federal, state, regional and county laws
and regulations.
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(c) The Property is free and clear of all leases, liens,
encumbrances and outstanding adverse claims and interests,
except taxes not yet payable.
(d) The execution and delivery of this Agreement and the
performance of this Agreement by the Owners will not result in
any breach or constitute a default (or an event which, with
notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment,
acceleration, cancellation, or consent, or result in the
creation of a lien or encumbrance on the Property, pursuant to
any instrument or obligation to which the Owners are a party
or by which they are bound.
(e) The Owners shall not create, permit or suffer any lien or
encumbrance, reservation, restriction or easement on the
Property, which is not subordinated to GPM's rights hereunder,
and GPM may, in its sole discretion, discharge any claims or
demand and thereby be subrogated to all rights of the holder
thereof, and may recover any amounts so paid from any amount
otherwise due to the Owners under Agreement.
(f) There is no environmental or other condition on the Property
which is. or may become, a violation of any applicable
federal, state, county or municipal law, regulation or
ordinance relating to zoning, land use, environmental
protection, or otherwise with respect to the Property or any
activities relating thereto, and the Owners have not received
any notice of any investigation of any such condition or
violation.
(g) GPM shall have the quiet and peaceful possession and enjoyment
of the Property and the Owners will do everything lawfully
within their power to defend title to the Property and GPM's
quiet and peaceful possession thereof against all persons or
entities who may claim any interest in the Property or
Minerals, or proceeds therefrom.
(h) Promptly following execution of this Agreement, and at any
time during the Term hereof, the Owners shall make available
to GPM copies of all technical, title, and recording
information and data relating to the Property in the
possession of the Owners.
GPM may investigate and in the Owners' name take any action GPM deems necessary
to remedy any defects in the title to the Property including but not limited to,
the right, at GPM's sole discretion, to relocate, amend, or abandon the location
of any one or more of the Mining Claims whenever GPM deems such relocation,
amendment, or abandonment desirable to perfect any of the Mining Claims, to
avoid or create overlaps, or to include ground within the boundaries of any
individual mining claim found not to be included because of improper location
procedures, or to obtain mill sites. Any such relocations, amendments, or
abandonments made by GPM shall be done as agent for Owners.
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Owners shall deliver to GPM a full and irrevocable power of attorney authorizing
GPM to apply for a United States mineral patent for any or all of the Mining
claims and agree not to object to or adverse such application. If GPM takes any
such action or applies for a patent to any or all of the Mining Claims,
application may be made in Owners' names and Owners shall, at the request of
GPM, execute any and all documents in connection with the patent application.
GPM shall pay all costs of such application.
If any of the above action is unsuccessfully taken by GPM or any patent
application is rejected in whole or in part, GPM shall not be liable to Owners
for any loss whatsoever provided GPM has proceeded in good faith. If patent to
the Property or any of the Mining Claims is issued in Owners' names and if GPM
has acquired the Property or Mining Claims, Owners shall promptly transfer the
patented Property or Mining Claims to GPM.
The Owners agree to cooperate with GPM in investigating and remedying any title
defects. GPM shall have the right to offset and credit against any amounts due.
or which become payable to the Owners hereunder, all costs incurred by and
payments made by GPM to remedy such defects.
Neither GPM's approval of title nor its omission to examine title shall
constitute a release or waiver of Owners' warranties, representations or
covenants and all the terms, conditions and covenants, expressed or implied
herein, shall continue in full force and effect.
9. Conduct of Operations; Indemnification; Insurance; Data
9.1 GPM shall conduct its operations on the Property according to the following
standards, methods and requirements and shall pay damages as follows:
(a) All work performed by GPM on the Property pursuant to this
Agreement shall be done in a good and miner-like manner and in
compliance with all federal, state, county and municipal laws,
regulations and ordinances governing such operations. GPM
shall reclaim the Property in accordance with and to the
extent required by relevant applicable law, regulation or
ordinance when any condition requiring reclamation is a direct
result of GPM's operations on the Property.
(b) GPM shall avoid conducting drilling and trenching activities
within one hundred fifty (150) feet of a dwelling house or
outbuildings, if any. now located on the Property. Completed
drill holes shall be plugged pursuant to federal, state,
county and municipal laws and regulations unless transferred
to the Owners pursuant to Paragraph 9.1 (j).
(c) Ingress and egress routes, drill pads, and trench sites
constructed by GPM shall be reclaimed to approximate the
conditions and contours existing prior to the commencement of
GPM's operations on the Property. All areas of
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surface disturbance shall be reseeded, if necessary, after the
completion of activities.
(d) GPM may use existing roads on the Property and may construct
additional roads on the Property. GPM shall maintain and shall
repair all damage caused by GPM's activities to existing and
new roads.
(e) GPM shall avoid undue degradation of trees and vegetation when
conducting its exploration activities on the Property. Where
practicable, trees that impede passage over the Property shall
be pruned rather than cut and removed.
(f) GPM, its employees, agents, or contractors shall not hunt or
fish on the Property, nor shall they carry onto the Property
any firearms.
(g) GPM shall not use water from the Owners' well, tanks or
surface reservoirs without first obtaining the consent of the
Owners; however, GPM may drill its own water wells.
(h) GPM may. in its sole discretion, and to the extent that it may
legally do so, offer to transfer to the Owners any drill hole
on the Property, in which water is discovered, on an "as is"
basis for the purpose of converting the drill hole to a water
well. Prior to abandoning or plugging a drill hole, GPM shall
give the Owners written notice, delivered at least ten (10)
days prior to its intended action. Within seventy-two (72)
hours of the receipt of GPM's notice, the Owners shall give
written notice to GPM accepting the transfer of such drill
hole, and all responsibility therefore, including, but not
limited to, any and all reclamation and environmental
responsibilities. GPM shall then transfer the drill hole to
the Owners. The Owners shall be responsible for all permits,
materials and costs required to convert such drill hole to a
water well. The Owners shall indemnify, defend and hold GPM
harmless from any and all claims, liability, loss and
expenses, including attorneys' fees, demands or causes of
action made against GPM and relating to such drill hole after
its transfer to the Owners.
(i) GPM shall remove all garbage, litter and other waste produced
by its operations from the Property on a regular basis.
(j) GPM shall not create or suffer any liens or encumbrances on
the Property that may arise out of work conducted by or on its
behalf pursuant to this Agreement, except for those it
contests in good faith or for which it posts a statutory bond.
However, nothing herein shall prevent GPM from mortgaging or
granting a security interest in or otherwise encumbering its
leasehold rights to or its Option to Purchase the Property for
any purpose whatsoever, including the obtaining of financing
for exploration,
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development, construction or mining operations on the
Property. The Owners hereby consent to any such encumbrance.
(k) GPM shall indemnify and hold the Owners harmless from and
against any liability arising from personal injury, death or
property damage caused solely by GPM's activities on the
Property during the Term of this Agreement. Nothing herein
shall relieve the Owners from and against any liability for
their own negligence or for the negligence of persons or
entities acting as agents or as guests of the Owners. This
indemnification shall survive the termination of this
Agreement for as long as GPM is performing reclamation work
upon the Property or is in possession of its personal property
and improvements remaining on the Property.
(1) During the Term, GPM agrees to comply with all applicable
federal and state laws and regulations regarding insurance for
persons working in or on the Property and under the direct
supervision of GPM. GPM will carry liability insurance with
respect to its operations in reasonable amounts with reputable
insurance companies licensed to do business in the state.
(m) GPM shall be responsible for the payment of federal
maintenance rental payments, performance and filing of
assessment work (if such should ever be reinstated), and
payment of the necessary fees and recordation of the required
documents (such as, the annual notice of intention to hold)
with the appropriate federal or county offices for all
unpatented Mining Claims in Exhibit "A" or located under
Section 8 of this Agreement for each year that this Agreement
is in effect. If GPM shall keep this Agreement in effect
beyond June 1 of any year, it shall immediately pay and
perform all BLM rental payments, work obligations and
recordation requirements with the federal government.
(n) GPM shall provide to the Owners annually, within thirty (30)
days after each anniversary of the Effective Date, a brief
summary report, including copies of all relevant
non-interpretative data of work performed on the Property
during the preceding year. GPM does and shall not make any
representations or warranties as to the accuracy, reliability
or completeness of such data or information so provided.
10. Lesser Interest; After Acquired Rights; Third-Party Claims
10.1 Without impairment of the representations, warranties and covenants
contained in this Agreement, if the Owners own less than the entire and
undivided interest in the Property, then the Minimum Advance Royalty Payments,
Net Returns Royalty payments. Purchase Price and the reserved Net Returns
Royalty provided herein shall be paid to and reserved by the Owners only in the
proportion that the Owners' actual interest bears to the entire ownership
interest of the Property. GPM shall be entitled to recover excess monies
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previously paid to the Owners or to offset, such excess monies paid, against any
future monies due or which become payable thereafter to the Owners.
10.2 The Owners agree that any additional interest in the Property acquired by
GPM during the Term of this Agreement shall be owned solely by GPM and the
Owners shall have no right or interest in such acquired interest.
10.3 If during the Term of this Agreement, the Owners acquire any additional
right or interest in the Property, then (i) the Owners shall promptly notify GPM
of such acquisition; (ii) such right or interest shall automatically become part
of the Property for all purposes of this Agreement; and (iii) the Owners shall
sign, acknowledge and deliver to GPM an amendment to the Agreement and the
Warranty Deed so as to include such right or interest.
10.4 If GPM is advised by an attorney that a third party may have a claim of
ownership in the Property, any of the Mining Claims, or Minerals or the proceeds
therefrom, GPM may deposit in a special escrow account any payments otherwise
due and give written notice of such a deposit to Owners. The sums deposited
shall remain in the special escrow account until the claim, or controversy is
resolved or until there has been a final determination of the claim or
controversy by a court or administrative body of competent jurisdiction and any
appeal therefrom, or the period in which to appeal has expired.
11. Assignment
The rights of the Owners and GPM hereunder may not be assigned in whole or in
part without the prior written consent of the other party, which consent shall
not be unreasonably withheld. However, GPM may freely assign its right hereunder
to an affiliate, subsidiary or partner. An assignment of this Agreement by GPM.
in whole or in part, shall relieve and discharge GPM from any obligations
hereunder as to the interest assigned. No change in or division of ownership or
of any interest under this Agreement shall bind GPM for any purpose until
forty-five (45) days after such person or entity acquiring such rights has
furnished GPM with written notice and a copy of the instrument (or a certified
copy thereof if requested by GPM) evidencing the change in or division of
ownership. The assignee shall enter into a written assumption, satisfactory to
GPM. of all the assignor's obligations hereunder. No assignment by the Owners or
GPM shall have the effect of increasing the duties of the non-assigning party or
enlarging the rights of the assignee.
12. Default
Failure by GPM to perform or comply with any terms, provisions or conditions,
express or implied, hereunder shall not cause a forfeiture or termination of
this Agreement, including the Option to Purchase, nor be grounds for a reversion
of the estate or rights granted hereunder nor for cancellation of this
Agreement. If GPM defaults in the performance of its duties hereunder, the
Owners shall give GPM written notice specifying the default. GPM shall commence
curing the default within forty-five (45) days after receiving such notice and
thereafter diligently prosecute such action to completion. Any default by GPM
consisting
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of only the failure to make payments required hereunder may be cured within ten
(10) business days after GPM receives notice of such default from the Owners. In
the event GPM fails to timely cure a default, this Agreement shall remain in
force and the Owners' sole remedy shall be compensatory damages.
If the Owners and GPM agree in writing or a court of competent jurisdiction
determines there has been a default under this agreement, and within (10) days
from the date of the agreement or determination, GPM pays the Owners the monies
due them. GPM shall be excused from any obligation to pay damages and this
Agreement shall remain in full force and effect.
13. Termination
13.1 GPM may terminate its rights under this Agreement, as to all or any part of
the Property, at any time by delivering to the Owners, ten (10) days prior to
the termination, written notice of GPM's intent to terminate as of a specified
date. As of the specified date, all rights of GPM as to all or any part of the
Property, subject to the termination, shall terminate.
13.2 Upon termination of this Agreement, GPM shall not be required to make any
further payments or perform any further obligations hereunder except as follows:
(i) to perform reclamation work required as a direct result of GPM's operations
on the Property, as required by applicable law and this Agreement; (ii) to
deliver to the Owners, within forty-five (45) days after termination, one set of
copies of all available non-interpretative data, which GPM has developed during
its operations on the Property and which data has not been previously furnished
to the Owners, provided that GPM shall not be responsible for the accuracy,
reliability or completeness of such data: and (iii) to permit the Owners, at
their expense, to take possession of any available core, cutting, and other
samples derived from the Property, provided that GPM shall in no event be liable
to the Owners for any prior loss or damage to such core, cuttings and other
samples.
13.3 If GPM's notice of termination provides that the Agreement is being
terminated as to only part of the Property, the Agreement shall remain in force
as to the remaining lands comprising the Property and all other obligations of
GPM, including the Purchase Price to be paid pursuant to the Option to Purchase
in Section 6. shall be proportionately reduced.
14. Removal of Property
For six (6) months after the termination of this Agreement, GPM shall have the
right to remove from the Property all improvements and personal property placed
on the Property by GPM. All such improvements or personal property not removed
from the Property within the six (6) month time period shall become the personal
property of the Owners. GPM shall have the right, at its expense, to keep one or
more watchmen on the Property during the six-month period.
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15. Taxes
15.1 The Owners and GPM shall pay their proportionate share of all taxes or
assessments (whether based on ownership, mining, production, processing,
severance of minerals or net proceeds from the extraction of minerals) on their
respective interests in the Property or assessed against their respective
personal property on or about the Property. The Owners shall be responsible for
all federal and state income taxes resulting from any payments made by GPM to
them. Prior to any purchase of the Property by GPM pursuant to Section 6, the
Owners shall pay, when due, their proportionate share of all taxes and
assessments against the Property and all taxes resulting from the Owners' use
thereof. GPM may, in its sole discretion, pay and discharge any taxes levied or
assessed upon the Property which are past due and owed by the Owners; GPM shall
be subrogated to the holder of the rights thereof. GPM may reimburse itself for
such expenditures from any monies thereafter payable to the Owners.
15.2 GPM shall pay when due, or reimburse the Owners for all taxes or
assessments that are levied upon the Property as a result of GPM's operations or
improvements upon the Property while this Agreement is in effect and for so long
thereafter as GPM's operations continue on or its improvements or personal
property remain upon the Property.
16. Force Majeure
GPM shall not be deemed in default of this Agreement during any period when it
is hindered, prevented or delayed from complying therewith in whole or in part
by, including but not limited to: acts of God; acts of the public enemy; labor
disturbances; civil disorders; war; unavoidable accidents; unusually severe
weather; unforeseen geological conditions; inability to obtain any necessary
permits, bonds or operating approvals whether by action or inaction of
governmental authorities; inability to obtain competent workmen, fuel, water,
equipment or transportation; litigation; rules or regulations imposed by any
federal, state, or other governmental agency under asserted authority;
environmental restrictions or conditions; or any other cause reasonably beyond
the control of GPM, other than financial or economic delays, each of which is
called a "Force Majeure." The term of this Agreement shall be extended by the
period of any Force Majeure. GPM shall not be required to compensate the Owners
for any loss occasioned by a Force Majeure. GPM shall promptly notify the Owners
of any suspension caused by a Force Majeure and it shall use reasonable
diligence to remedy or eliminate the cause of such suspension. However, GPM
shall not be required to remedy the effects of any Force Majeure by settlement
of any labor difficulty contrary to its wishes or contest the validity of any
law, regulation or any action or inaction by a civil or military authority. The
handling of those controversies shall be entirely within GPM's discretion.
17. Rights Not To Be Suspended
Disputes or differences between GPM and the Owners shall not interrupt
performance of this Agreement. In the event of any dispute or difference, GPM
may continue operations in the
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same manner as prior to the dispute until the matters have finally been
determined between GPM and the Owners by judicial determination, if necessary.
18. Confidentiality
18.1 During the Term of this Agreement, the Owners shall not disclose to any
third party any information furnished to them by GPM, or obtained through any
other source whatever, concerning GPM's operations on the Property without the
prior written consent of GPM.
18.2 Owners shall not use GPM's name, or its subsidiaries', affiliates' or
partners' names in any public statement or press release and shall not make any
press release, public statements or public announcements of any sort concerning
this Agreement or the operations and activities of GPM with respect thereto,
except with the prior consent of GPM or as required by law or by a stock
exchange.
19. Notice
Any notice or other communication ("Notice") required or desired to be given
under this Agreement shall be in writing and shall become effective when
personally served upon the party to be given such Notice: when posted by
certified or registered mail, return receipt requested; or when delivered by
telex, telegraph, telecopier or other wire service.
The addresses for such Notices shall be:
The Owners: Mark Milner. Daniel Milner & Stephen Crossland
in care of Stephen Crossland
Johnson. Gaukroger & Crossland. P.S.
104 Cottage Avenue P.O. Box 566
Cashmere, WA 98815-0566
Telephone: (509) 782-4418
Telecopier (509) 782-4298
Golden Phoenix: Golden Phoenix Minerals, Inc.
3595 Airway Drive Suite 405
Reno, Nevada 89511
Attention: Michael R. Fitzsimonds, President
Telephone: (702) 853-4919
Telecopier: (702) 853-5010
13
Escrow Agent: Flowers Escrow
100 S Terminal Way #104
P.O. Box 12520
Reno, NV 89510-2520
Attention:
Telephone: (702) 786-3090
Telecopier (702) 786-0562
20. Binding Effect
All covenants, conditions and terms of this Agreement shall be of benefit to and
run with the Property and shall bind and inure to the benefit of the parties
hereto, their respective heirs, representatives, assigns and successors in
interest.
21. Memorandum
GPM and the Owners shall sign and acknowledge a memorandum of this Agreement
suitable for recording to give notice hereof to third parties. GPM shall record
the memorandum at its expense. This Agreement shall not be recorded.
22. Headings
The section headings herein have been inserted for convenience of reference only
and shall not modify or restrict any of the terms or provisions hereof. Unless
otherwise expressly provided, or unless the context shall otherwise require,
words importing the singular shall include the plural and words importing the
masculine gender shall include the feminine gender, and vice versa.
23. Entire Agreement; Waiver and Modification; Counterparts
23.1 This Agreement and the exhibits attached hereto set forth the entire
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement supersedes all prior written and oral negotiations, discussions,
agreements and understandings related to such subject matter.
23.2 Any waiver or modification of the covenants, conditions, warranties,
representations or obligations contained herein or amendment of this Agreement
must be in writing, dated subsequent to the Effective Date, and signed by each
of the parties hereto.
23.3 This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which shall constitute the same
Agreement.
14
24. Governing Law; Severability; Perpetuities; Attorneys' Fees; Currency
24.1 This Agreement is to be governed by and construed under the laws of the
State of California, without reference to its conflicts of laws, and each of the
parties hereto irrevocably attorns to the jurisdiction of the courts of
California for adjudication of rights, obligations and interests arising
pursuant to this Agreement.
24.2 Any provision of this Agreement prohibited by the laws of the United States
or the States of California or Nevada shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions of this Agreement.
24.3 Any right or option to acquire any interest in real property (and any other
right held subject to the Rule Against Perpetuities) under the Agreement must be
exercised, if at all, so as to vest such interest within twenty-one (21) years
after the Effective Date.
24.4 In the event of any suit between the parties hereto, the prevailing party
shall be entitled to recover reasonable attorneys' fees incurred in connection
with that suit.
24.5 All references to monetary amounts contained in this Agreement are
references to the currency of the United States of America
25. Further Assurances
The Owners and GPM hereby covenant to do and perform all acts and provide all
documents which are necessary to give full effect to the provisions of this
Agreement.
THE OWNERS AND GPM, INTENDING TO BE LEGALLY BOUND, have executed this Agreement
effective the date and year first above written.
The Owners:
/s/ Stephen R. Crossland
- -----------------------------
Stephen R. Crossland
###-##-####
- ------------------------
Tax ID Number
/s/ Mark Milner /s/ Daniel Milner
- ----------------------------- -----------------------------
Mark Milner Daniel Milner
###-##-#### ###-##-####
- ----------------------------- -----------------------------
Tax ID Number Tax ID Number
15
GOLDEN PHOENIX MINERALS, INC.
By: /s/ Michael Fitsimonds
Name: Michael Fitsimonds
Title: President
STATE OF WASHINGTON )
)SS.
COUNTY OF_______________________________ )
On this day personally appeared before me Mark Milner to me known to be
the individual described in and who executed the within and foregoing
instrument, and acknowledges that he signed the same as his free and voluntary
act and deed, for the uses and purposes therein mentioned. Given under my hand
and official seal this ____ day of _____________________, 1998.
________________________________
Notary Public
My commission expires:
____________________________
STATE OF WASHINGTON )
)SS.
COUNTY OF_______________________________ )
On this day personally appeared before me Daniel Milner to me known to
be the individual described in and who executed the within and foregoing
instrument, and acknowledges that he signed the same as his free and voluntary
act and deed, for the uses and purposes therein mentioned. Given under my hand
and official seal this ___ day of _________________, 1998.
________________________________
Notary Public
My commission expires:
____________________________
16
STATE OF WASHINGTON )
)SS.
COUNTY OF_______________________________ )
On this day personally appeared before me Stephen R. Crossland to me
known to be the individual described in and who executed the within and
foregoing instrument, and acknowledges that he signed the same as his free and
voluntary act and deed, for the uses and purposes therein mentioned. Given under
my hand and official seal this ___ day of _________________, 1998.
________________________________
Notary Public
My commission expires:
____________________________
STATE OF NEVADA )
)SS.
COUNTY OF WASHOE )
On this 15th day of January, 1998. before me, personally appeared
Michael R. Fitzsimonds, to me known to be the President of Golden Phoenix
Minerals, Inc., a Minnesota corporation, that executed the within and foregoing
instrument, and acknowledged said instrument to be the free and voluntary act
and deed of said corporation, for the uses and purposes therein mentioned, and
upon oath stated that he was authorized to execute said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ DARCI DAWN BERTRAM
__________________________
Notary Public
My commission expires:
7/29/00
DARCI DAWN BERTRAM
Notary Public - State of Nevada
Appointment Recorded in Washoe County
No. 96-3591 -2-EXPIRES JULY 29, 20OO
17
EXHIBIT "A"
TO
MINING LEASE AND OPTION TO PURCHASE AGREEMENT DATED JANUARY 15,
1998
BETWEEN
MARK MILNER, DANIEL MILNER and STEPHEN R. CROSSLAND
("OWNERS")
AND GOLDEN PHOENIX MINERALS, INC ("GPM")
Property
Under the terms of the above-referenced Agreement, Owners have leased
to GPM and have granted GPM the exclusive option to purchase certain unpatented
mining claims referred to as the Property and situated in the County of Modoc,
State of California, and more particularly described as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
CLAIM SEC/TWP/RGE LOCATION MODOC COUNTY RECORDING CAMC NO.
NAME BOOK/PAGE
- ------------------------------------------------------------------------------------------------------------------------------------
CIRRUS #1 12/47N/15E 11/28/1982 295/777 120351
- ------------------------------------------------------------------------------------------------------------------------------------
CIRRUS #2 12/47N/15E 11/28/1982 295/776 120352
- ------------------------------------------------------------------------------------------------------------------------------------
CIRRUS #3 12/47N/15E 11/28/1982 295/775 120353
- ------------------------------------------------------------------------------------------------------------------------------------
CIRRUS #4 12/47N/15E 11/28/1982 295/774 120354
- ------------------------------------------------------------------------------------------------------------------------------------
CIRRUS #5 12/47N/15E 11/28/1982 295/773 120355
- ------------------------------------------------------------------------------------------------------------------------------------
CIRRUS #6 12/47N/15E 11/28/1982 295/772 120356
- ------------------------------------------------------------------------------------------------------------------------------------
STONE 7,12/47N/15E 11/28/1982 295/778 120357
- ------------------------------------------------------------------------------------------------------------------------------------
KLONDIKE FRACTION 12/47N/15E 11/28/1982 295/779 120358
- ------------------------------------------------------------------------------------------------------------------------------------
RUBY TOO FRACTION 12/47N/15E 11/28/1982 295/780 120359
- ------------------------------------------------------------------------------------------------------------------------------------
RUBY FRACTION 12/47N/15E 11/28/1982 295/781 120360
- ------------------------------------------------------------------------------------------------------------------------------------
Initialed for Identification: /s/ MRF
"A-1"
EXHIBIT "B"
TO
MINING LEASE AND OPTION TO PURCHASE AGREEMENT DATED JANUARY 15,1998
BETWEEN
MARK MILNER, DANIEL MILNER and STEPHEN R. CROSSLAND
("OWNERS")
AND GOLDEN PHOENIX MINERALS, INC ("GPM")
NET RETURNS PRODUCTION ROYALTY
1. Reserved Net Returns Production Royalty
Owners have reserved, and GPM and the Owners agree that, a net returns
production royalty (hereinafter called "Net Returns Royalty") shall be
calculated and payable on a calendar quarter basis by GPM to the Owners at a
rate equal to two percent (2%) of the "Net Returns" (defined herein) of all
minerals, ores, concentrates, metals, and other materials produced from the
Property ("Minerals") during "Commercial Production" (defined herein) from the
Property.
(A) Commercial Production. The term "Commercial Production" shall be
defined as the mining, extraction, processing, and recovery for sale of Minerals
from the Property. Commercial Production shall not include the taking of
Minerals from the Property for the purpose of determining the amenability to
benefaction processes or mining thereof, including bulk sampling. Only the sale
proceeds, if any, of such sampling in excess of one thousand (1,000) tons shall
become subject to the Net Returns Royalty.
(B) Net Returns. The term "Net Returns" shall mean the total "Gross
Sale Proceeds" or "Deemed Gross Sale Proceeds" (both defined herein) less
deductions for the following total actual costs paid by, charged to or otherwise
incurred by GPM within that calendar quarter which are attributable to the
handling, treatment and sale of individual Minerals within that calendar
quarter:
(1) All smelting, refining, treatment, assaying, sampling,
umpiring, selling and other costs, charges and penalties
charged by any refinery, smelter or other purchaser of
Minerals;
(2) All taxes paid on production of Minerals, except income taxes,
including but not limited to production, severance, sales and
privilege taxes, and all local, state and federal royalties
that are based upon the production of Minerals;
"B-1"
(3) All costs of loading, securing, transporting and insuring
Minerals from the Property to the refinery, smelter or
purchaser;
(4) All costs or charges of any nature for or in connection with
insurance, storage, or representation' at a smelter or
refinery for ores and Minerals; and,
(5) All actual sales and brokerage costs on ores and minerals.
(C) Gross Sale Proceeds or Deemed Gross Sale Proceeds. "Gross Sale
Proceeds" or "Deemed Gross Sale Proceeds" from sales or deemed sales of Minerals
shall mean and be determined as follows:
Gold. Silver, Platinum and Palladium.
The Gross Sale Proceeds for gold, silver, platinum and palladium shall
be deemed gross proceeds from deemed sales of such Minerals, and sales of such
Minerals shall be deemed to have occurred, without regard to when or to whom
they actually are made, upon the earliest of the following:
(1) When such Minerals (other than refined bullion, dore, or
concentrates) are shipped by GPM from the Property to an
independent refinery, smelter or other unaffiliated
third-party purchaser; or,
(2) With respect to refined bullion produced by GPM, the day the
final, refined bullion was produced; or,
(3) With respect to dore produced by GPM, three (3) business days
after the dore was produced; or,
(4) With respect to other concentrates produced by GPM, thirty
(30) days after those concentrates have been produced.
The total Deemed Gross Proceeds of all such sales occurring within a
single calendar quarter shall be determined by multiplying the total number of
troy ounces of the particular Minerals deemed sold within that calendar quarter
by the following:
(1) For gold, platinum or palladium, the arithmetic mean of the
daily London Bullion Market afternoon fixing for the calendar
quarter per ounce of the respective Minerals; and
(2) For silver, the arithmetic mean of the weekly Handy & Harman
base price per troy ounce as quoted in Metals Week for the two
weeks which conclude within that calendar quarter, but in the
event Metals
"B-2"
Week is not published or if for any other reason such
quotation is not available, the arithmetic mean of the daily
handy & Harman base price quote as published in the Wall
Street Journal for the calendar quarter will be utilized.
Other Products
The Gross Sale Proceeds for all Minerals other than gold, silver,
platinum or palladium shall be the actual proceeds of sale to an independent
refinery, smelter or other unaffiliated third-party purchaser of such minerals
during a calendar quarter.
In the event such Minerals other than gold, silver, platinum or
palladium are actually and finally disposed of by GPM by means other than sale,
Net Returns shall be determined as follows: using assays or other accurate
analyses regularly taken for ores and concentrates, the recoverable marketable
content of the ores and concentrates produced from the Property shall be
determined in accordance with commonly accepted industry standards; the mineral
content then shall be multiplied by the closing price for each respective
marketable mineral on the day of disposition of the subject ores and
concentrates quoted on the New York Commodity Exchange ("COMEX"); the product
thereof shall be the value of the subject Minerals disposed of other than by
sale; and Net Returns shall be determined upon the value of the Minerals less
applicable charges, royalties, taxes, costs, and penalties which GPM actually
incurs with respect to the disposition of the subject ores and minerals.
2. Grantor Owned Facilities
In the event smelting or refining are carried out in facilities owned
or controlled, in whole or in part, by GPM, then charges, costs and penalties
for such operations shall mean the amount GPM would have incurred if such
operations were carried out at facilities not owned or controlled by GPM then
offering comparable services for comparable product on prevailing terms, but in
no event greater than actual costs incurred.
3. Stockpiling and Commingling
GPM may stockpile and commingle Minerals with ores, concentrates or
other products not mined from the Property. GPM shall, prior to such stockpiling
or commingling, measure, weigh and analyze samples of such commingled materials
in accordance with sound mining and metallurgical practices, and GPM shall keep
accurate records as a basis for computing any Net Returns Royalty payments. In
determining which commingled materials are sold from a commingled stockpile, a
first-in, first-out system shall be used.
4. Tailings and Waste
All tailings or waste material shall be the property of GPM and GPM
shall have no obligation to process or extract substances therefrom. If GPM
elects to extract Minerals of value therefrom and utilizes or sells the same,
the Owners shall be paid a Net Returns
"B-3"
Royalty thereon in the amount and manner provided herein. If GPM commingles the
tailings or waste material produced from the Property with tailings and waste
material not produced from the Property, GPM shall record the tonnage amount and
source of such tailings and waste material prior to commingling and a Net
Returns Royalty, if any, shall be paid based upon a pro rata portion of the
average production as determined as a percentage of the volume of the tailings
or waste material stored. The records of GPM shall be deemed conclusive as to
the tailings or waste material attributable to each source.
5. Trading Activities
GPM shall have the right to sell or refrain from selling Minerals
produced from the Property in any manner it may elect. GPM shall have the right
to engage in forward sales, future trading or commodity options trading, and
other price hedging, price protection, gold and silver loans, financing and
speculative arrangements which may involve the possible delivery of Minerals
produced from the Property but do not result in the actual sale and delivery of
Minerals produced from the Property ("Trading Activities"). The Owners
acknowledge that the proceeds of Trading Activities shall not be considered part
of or included in the amounts paid to GPM for Minerals sold for purposes of
determining Net Returns. The Owners shall not be entitled to participate in the
proceeds or be obligated to share in any losses generated by any Trading
Activities.
6. Bulk Sampling
GPM shall have the right to take samples of minerals and material from
any portion of the surface and subsurface of the Property for the purpose of
determining the amenability to beneficiation processes and mining thereof,
including bulk sampling. Only the sale proceeds, if any, of such sampling in
excess of one thousand (1,000) tons shall become subject to the Net Returns
Royalty.
7. Payments and Records Inspection
All Net Returns Royalty payments due the Owners shall be made by cash,
check, or draft, mailed or delivered on or before the twenty-fifth (25th) day of
the month following the calendar quarter in which payment or the equivalent
accounting amount is received by GPM from the sale or deemed sale of Minerals.
All Net Returns Royalty payments shall be accompanied by a statement showing the
basis upon which the payment was computed. For six (6) months subsequent to any
such payments, the Owners, or their representatives appointed in writing, upon
reasonable notice to GPM and during normal business hours, shall have the right
to inspect GPM's record regarding the computation of the Net Returns Royalty.
"B-4"
8. Termination of Net Returns Royalty
In the event GPM purchases the Property, the Net Returns Royalty, and
all right of Owners, and duties and obligations of GPM to Owners pertaining to
thereto, shall terminate upon the date of delivery of the Warranty Deed set
forth in Exhibit "D" by Owners to GPM.
Initialed for Identification: /s/ MNF
"B-5"
EXHIBIT "C"
TO
MINING LEASE AND OPTION TO PURCHASE AGREEMENT
DATED JANUARY 15,1998
BETWEEN
MARK MILNER, DANIEL MILNER and STEPHEN R. CROSSLAND
AND
GOLDEN PHOENIX MINERALS, INC
ESCROW INSTRUCTIONS
To: Flowers Escrow
1005 Terminal Way, #104
Post Office Box 12520
Reno, NV 89510-2520
The Undersigned, being Golden Phoenix Minerals, Inc. ("GPM"), and Mark Milner,
Daniel Milner and Stephen R. Crossland ("Owners"), hereby deliver to you (also
called "Escrow Agent") the instruments described below, to be held and disposed
of by Escrow Agent in accordance with the following instructions and upon the
following terms and conditions to which the undersigned agree.
1. Instruments Deposited or Required
1.1 The following instruments ("Instruments") are herewith delivered to the
Escrow Agent by GPM and the Owners:
(a) A copy of the fully executed Mining Lease and Option to
Purchase Agreement ("Agreement"), dated effective January 15,
1998, between Mark Milner, Daniel Milner and Stephen R.
Crossland, as lessors and optionors, and Golden Phoenix
Minerals, Inc., as lessee and optionee. The subject of the
Agreement is certain real property, comprised of unpatented
mining claims, situated in Modoc County, CA ("Property") and
more fully described in Exhibit "A" to the Agreement. Pursuant
to the terms of the Agreement, the Owners granted GPM an
option to purchase ("Option to Purchase") the Property.
(b) The original of the fully executed and acknowledged Warranty
Deed, dated effective January _________, 1998, by which the
Owners, as grantors, have conveyed the Property to GPM, as
grantee.
(c) The original of the fully executed and acknowledged Quitclaim
Deed and Release, dated effective January_________, 1998,
whereby GPM, as grantor, quit
"C-1"
claims all its interest in the Property to the Owners, as
grantees, and releases its interest in the Agreement.
1.2 If needed, or if requested by GPM, to complete the purchase of the Property
or to satisfy Section 7.3 of the Agreement pertaining to personal property to be
transferred by Owners to GPM, Owners shall execute, acknowledge and deliver to
Escrow Agent a bill of sale ("Bill of Sale") in which they sell, convey and
transfer to GPM any personal property which becomes part of the Option to
Purchase transaction or is required to be transferred to GPM.
1.3 Ten (10) days prior to closing, Owners, at their expense, shall furnish to
GPM a current commitment for an owner's title insurance policy in an amount
equal to the Purchase Price (unless the Property is unpatented mining claims).
2. Instructions
2.1 You are authorized by the Owners to receive and give receipts for all
purchase price payments made by GPM pursuant to the Option to Purchase and to
distribute such payments to the Owners.
2.2 GPM shall pay your escrow fees. GPM shall pay the fee for recording the
Warranty Deed. The Owners shall pay the fee for recording the Quitclaim Deed and
Release.
2.3 You are instructed to hold the aforementioned documents in escrow and
deliver them in accordance with the following instructions:
(a) If GPM exercises the Option to Purchase the Property and pays
the purchase price required by the Agreement, you shall have
the Warranty Deed recorded and shall deliver the recorded
Warranty Deed and all remaining documents (i.e., the Quitclaim
Deed and Release and the Bill of Sale, if any) to GPM, or its
order; or,
(b) If the Agreement is terminated without the exercise of the
Option to Purchase by GPM, you shall record the Quitclaim Deed
and Release and shall deliver the recorded document and all
remaining documents (i.e., Warranty Deed and the Bill of Sale,
if any) to the Owners, or their order.
2.4 You are not a party to, nor are you bound by any agreement other than these
Escrow Instructions.
2.5 You are to act herewith as a depositor only and are not responsible or
liable, in any manner whatsoever, for the sufficiency, correctness, genuineness,
or validity of any instrument, or with respect to the form or execution of the
same, or for the identity or authority or rights of any person executing or
depositing it.
"C-2"
Golden Phoenix Minerals, Inc.:
Golden Phoenix Minerals, Inc.:
___________________________________
Michael R. Fitzsimonds
President
Date: _______________, 1998
Escrow Agent hereby acknowledges receipt of these Escrow Instructions
and of the Instruments deposited herewith and agrees to hold and dispose of the
same in accordance with the Instructions herein:
Flowers Escrow:
/s/
Its: President
Dated: Jan 1, 1998
Initialed for Identification:/s/ MNF
"C-5"
EXHIBIT "D"
TO
MINING LEASE AND OPTION TO PURCHASE AGREEMENT
DATED JANUARY, 1998
BETWEEN
MARK MILNER, DANIEL MILNER and STEPHEN R. CROSSLAND
AND
GOLDEN PHOENIX MINERALS, INC
WARRANTY DEED
THIS WARRANTY DEED ("Deed") is made effective as of January 15, 1998 by
and between Mark Milner, Daniel Milner and Stephen R. Crossland ("Grantors"),
whose address is Johnson, Gaukroger & Crossland, P.S., 104 Cottage Avenue, Post
Office Box 566, Cashmere, WA 98815-0566, and GOLDEN PHOENIX MINERALS, INC., a
Minnesota corporation, duly authorized to transact business in the State of
California, with offices at 3595 Airway Drive Suite, 405 Reno, NV 89511
("Grantee"). Grantors or Grantees may individually or collectively be referred
to herein as a "Party" or the "Parties."
WITNESSETH:
Grantors, for and in consideration of the sum of Ten Dollars ($10.00),
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by Grantors, have granted, bargained, sold and conveyed,
and by these presents do grant, bargain, sell, convey, confirm and warrant
against the lawful claims of all persons whomsoever to Grantee, its successors
and assigns, that certain real property consisting of unpatented mining claims
situated in Modoc County, California ("Property"), which Property (includes, but
is not limited to, any water and extra lateral mining rights thereto) is more
particularly described in Exhibit "A" attached hereto and made a part hereof,
and all of Grantor's right, title and interest in and to that reserved net
returns production royalty for all minerals produced from the Property ("Net
Returns Royalty"), which Net Returns Royalty is more particularly described in
Section 2 below.
TOGETHER with all and singular the hereditaments and appurtenances
thereto belonging, or in anywise appertaining, and the reversion and reversion,
remainder and remainders, rents, issues and profits thereof, and all the estate,
right, title, interest, claim and demand whatsoever of the Grantors, either in
law or in equity, of, in and to the bargained Property, with hereditaments and
appurtenances.
TO HAVE AND TO HOLD the Property and title hereby conveyed to Grantee,
its successors and assigns, forever.
"D-1"
1. Representations and Warranties
The Grantors represent, warrant and covenant to Grantee, and its
successors and assigns, that:
The Grantors are the sole legal and equitable owners of the Property.
(a) The Property is free and clear of all leases, liens,
encumbrances and outstanding adverse claims, demands and
interests.
(b) The execution and delivery of this Deed and the performance of
this Deed by the Grantors will not result in any breach or
constitute a default (or an event which, with notice or lapse
of time, or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration,
cancellation, or consent, or result in the creation of a lien
or encumbrance on the Property, pursuant to any instrument or
obligation to which the Grantors are a party or by which they
are bound.
(c) There is no environmental or other condition on the Property
which is, or may become, a violation of any applicable
federal, state, county or municipal law, regulation or
ordinance relating to zoning, land use, environmental
protection, or otherwise with respect to the Property or any
activities of the Grantors or their predecessors in interest
relating thereto, and the Grantors have not received any
notice of any investigation of any such condition or
violation.
(d) The Grantors are lawfully seized of the Property and have good
right and lawful authority to convey the Property.
(e) Grantee shall have the quiet and peaceful possession and
enjoyment of the Property and the Grantors will do everything
lawfully within their power to defend title to the Property
and Grantee's quiet and peaceful possession thereof against
all persons or entities who may claim any interest in the
Property or the minerals therein, or proceeds therefrom.
2. Net Returns Royalty; Termination of Mining Lease
Pursuant to a certain Mining Lease and Purchase Option Agreement, dated
effective January 15, 1998, between Mark Milner, Daniel Milner and Stephen R.
Crossland and Golden Phoenix Minerals, Inc. ("Agreement"), which Agreement
pertained to the Property, the Grantors reserved a two percent (2%) Net Returns
Royalty for all minerals produced from the Property. Grantors hereby convey,
assign and transfer to Grantee all of their right title and interest in and to
the Net Returns Royalty and to the Agreement and acknowledge that the Agreement
is hereby terminated and of no further force or effect.
"D-2"
3. After Acquired Title
This Deed, without payment of any additional consideration, shall
operate to convey and transfer automatically to Grantee, its successors and
assigns, any and all right, title and interest in the Property acquired by
Grantors after the effective date of this Deed.
4. Binding Effect
All covenants, conditions and terms of this Deed shall bind and inure
to the benefit of the parties hereto, their respective heirs, representatives,
assigns and successors.
5. Further Assurances
Grantors and Grantee agree to execute or furnish the other with such
additional formal assurances or other documents, in proper and recordable form,
as may be reasonably necessary to carry out the intent, purpose and terms of
this Deed.
6. Governing Law; Severability; Perpetuities; Attorneys' Fees
6.1 This Deed is to be governed by and construed under the laws of the State of
California, without reference to its conflicts of laws, and each of the parties
hereto irrevocably attorns to the jurisdiction of the courts of California for
adjudication of rights, obligations and interests arising pursuant to this
Agreement.
6.2 Any provision of this Agreement prohibited by the laws of the United States
or the State of California shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions of this Agreement.
6.3. Any right or option to acquire any interest in real property (and any other
right held subject to the Rule Against Perpetuities) under the Agreement must be
exercised, if at all, so as to vest such interest within twenty-one (21) years
after the Effective Date.
6.4 In the event of any suit between the parties hereto, the prevailing party
shall be entitled to recover reasonable attorneys' fees incurred in connection
with that suit.
7. Sole Agreement Modification
This Deed and the attached Exhibit set forth the entire agreement
between the Grantors and Grantee with respect to the subject matter hereof. No
modification or alteration of this Deed and the Exhibit hereto shall be
effective unless reduced to writing and signed by both Grantors and Grantee.
IN WITNESS WHEREOF, Grantors have executed this Deed effective the day
and year first above written.
"D-3"
Grantors:
/s/ Mark Milner
- ----------------------------------
MARK MILNER
STATE OF Washington )
)ss.
COUNTY OF Okanogan )
This Warranty Deed was acknowledged before me on this 24 day of
December, 1998, by Mark Milner.
/s/
- -----------------------------
NOTARY PUBLIC
/s/ Daniel Milner
- ----------------------------
DANIEL MILNER
STATE OF Washington )
)ss,
COUNTY OF Snohomish )
This Warranty Deed was acknowledged before me on this 19th day of
December, 1998, by Daniel Milner.
/s/ Cynthia L. Brown
- --------------------------------
NOTARY PUBLIC
/s/ Stephen R. Crossland
- ------------------------------
STEPHEN R. CROSSLAND
STATE OF WASHINGTON )
)ss.
COUNTY OF Chelan )
This Warranty Deed was acknowledged before me on this 29 day of
December, 1998, by Stephen R. Crossland.
Pamela J. Wolford
- --------------------------------
NOTARY PUBLIC
"D-4"
EXHIBIT "A"
TO
WARRANTY DEED
("DEED") DATED
JANUARY 15,1998
BETWEEN
MARK MILNER, DANIEL MILNER and STEPHEN R. CROSSLAND
("GRANTORS")
AND GOLDEN PHOENIX MINERALS, INC ("GRANTEE")
Property
Under the terms of the above-referenced Agreement, Owners have leased
to GPM and have granted GPM the exclusive option to purchase certain unpatented
mining claims referred to as the Property and situated in the County of Modoc,
State of California, and more particularly described as follows:
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CLAIM SEC/TWP/RGE LOCATION MODOC COUNTY RECORDING CAMC NO.
NAME BOOK/PAGE
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CIRRUS #1 12/47N/15E 11/28/1982 295/777 120351
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CIRRUS #2 12/47N/15E 11/28/1982 295/776 120352
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CIRRUS #3 12/47N/15E 11/28/1982 295/775 120353
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CIRRUS #4 12/47N/15E 11/28/1982 295/774 120354
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CIRRUS #5 12/47N/15E 11/28/1982 295/773 120355
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CIRRUS #6 12/47N/15E 11/28/1982 295/772 120356
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STONE 7,12/47N/15E 11/28/1982 295/778 120357
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KLONDIKE FRACTION 12/47N/15E 11/28/1982 295/779 120358
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RUBY TOO FRACTION 12/47N/15E 11/28/1982 295/780 120359
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RUBY FRACTION 12/47N/15E 11/28/1982 295/781 120360
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Initialed for Identification: /s/ MRF
"D-5"
EXHIBIT "E"
TO
MINING LEASE AND OPTION TO PURCHASE AGREEMENT
DATED JANUARY 15,1998
BETWEEN
MARK MILNER, DANIEL MILNER and STEPHEN R. CROSSLAND
AND
GOLDEN PHOENIX MINERALS, INC
QUITCLAIM DEED AND RELEASE
For valuable consideration received, GOLDEN PHOENIX MINERALS, INC.. a
Minnesota corporation authorized to transact business in the State of
California, whose address is 3595 Airway Drive, Suite 405, Reno, Nevada 89511
("Grantor") hereby conveys and quit claims to Mark Milner, Daniel Milner and
Stephen R. Crossland, whose address is Johnson, Gaukroger & Crossland, P.S., 104
Cottage Avenue, Post Office Box 566, Cashmere, WA 98815-0566("Grantee"), all of
Grantor's interest, now held or hereafter acquired, in and to that certain real
property situated in Modoc County, California, which real property is more
particularly described in Exhibit "A" attached hereto and made a part hereof
(hereinafter called the "Property").
Grantor shall no longer be obligated or liable for any payments or
other obligations resulting from or arising out of that certain Mining Lease and
Option to Purchase Agreement ("Agreement"), dated effective January 15, 1998,
between Grantee, as lessor and optionor, and Grantor, as lessee and optionee,
which Agreement has heretofore been terminated, and Grantor does hereby release,
relinquish and surrender all of its right, title and interest in and to the
Agreement and the Property which is subject thereto.
Date effective January 15, 1998.
Grantor:
Golden Phoenix Minerals, Inc
By:______________________________
Name: ___________________________
Title:___________________________
"E-1"
STATE OF NEVADA )
)SS.
COUNTY OF WASHOE )
On this_____________day of_______________, 1998, before me, personally
appeared Michael R. Fitzsimonds, to me known to be the President of Golden
Phoenix Minerals, Inc., a Minnesota corporation, that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and upon oath stated that he was authorized to execute said
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
_______________________________
Notary Public
My commission expires:
_________________________________
"E-2"
After Recording Return To:
Golden Phoenix Minerals, Inc.
3595 Airway Drive, #405
Reno, NV 89511
- --------------------------------------------------------------------------------
WARRANTY DEED
THIS WARRANTY DEED ("Deed") is made effective as of January 15, 1998 by
and between Mark Milner, Daniel Milner and Stephen R. Crossland ("Grantors"),
whose address is Johnson, Gaukroger & Crossland, P.S., 104 Cottage Avenue, Post
Office Box 566, Cashmere, WA 98815-0566, and GOLDEN PHOENIX MINERALS, INC., a
Minnesota corporation, duly authorized to transact business in the State of
California, with offices at 3595 Airway Drive Suite, 405 Reno, NV 89511
("Grantee"). Grantors or Grantees may individually or collectively be referred
to herein as a "Party" or the "Parties."
WITNESSETH:
Grantors, for and in consideration of the sum of Ten Dollars ($10.00),
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by Grantors, have granted, bargained, sold and conveyed,
and by these presents do grant, bargain, sell, convey, confirm and warrant
against the lawful claims of all persons whomsoever to Grantee, its successors
and assigns, that certain real property consisting of unpatented mining claims
situated in Modoc County, California ("Property"), which Property (includes, but
is not limited to, any water and extra lateral mining rights thereto) is more
particularly described in Exhibit "A" attached hereto and made a part hereof,
and all of Grantor's right, title and interest in and to that reserved net
returns production royalty for all minerals produced from the Property ("Net
Returns Royalty"), which Net Returns Royalty is more particularly described in
Section 2 below.
TOGETHER with all and singular the hereditaments and appurtenances
thereto belonging, or in anywise appertaining, and the reversion and reversion,
remainder and remainders, rents, issues and profits thereof, and all the estate,
right, title, interest, claim and demand whatsoever of the Grantors, either in
law or in equity, of, in and to the bargained Property, with hereditaments and
appurtenances.
TO HAVE AND TO HOLD the Property and title hereby conveyed to Grantee,
its successors and assigns, forever.
1. Representations and Warranties
The Grantors represent, warrant and covenant to Grantee, and its
successors and assigns, that:
The Grantors are the sole legal and equitable owners of the Property.
(a) The Property is free and clear of all leases, liens,
encumbrances and outstanding adverse claims, demands and
interests.
(b) The execution and delivery of this Deed and the performance of
this Deed by the Grantors will not result in any breach or
constitute a default (or an event which, with notice or lapse
of time, or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration,
cancellation, or consent, or result in the creation of a lien
or encumbrance on the Property, pursuant to any instrument or
obligation to which the Grantors are a party or by which they
are bound.
(c) There is no environmental or other condition on the Property
which is, or may become, a violation of any applicable
federal, state, county or municipal law, regulation or
ordinance relating to zoning, land use, environmental
protection, or otherwise with respect to the Property or any
activities of the Grantors or their predecessors in interest
relating thereto, and the Grantors have not received any
notice of any investigation of any such condition or
violation.
(d) The Grantors are lawfully seized of the Property and have good
right and lawful authority to convey the Property.
(e) Grantee shall have the quiet and peaceful possession and
enjoyment of the Property and the Grantors will do everything
lawfully within their power to defend title to the Property
and Grantee's quiet and peaceful possession thereof against
all persons or entities who may claim any interest in the
Property or the minerals therein, or proceeds therefrom.
2. Net Returns Royalty; Termination of Mining Lease
Pursuant to a certain Mining Lease and Purchase Option Agreement, dated
effective January 15, 1998, between Mark Milner, Daniel Milner and Stephen R.
Crossland and Golden Phoenix Minerals, Inc. ("Agreement"), which Agreement
pertained to the Property, the Grantors reserved a two percent (2%) Net Returns
Royalty for all minerals produced from the Property. Grantors hereby convey,
assign and transfer to Grantee all of their right title and interest in and to
the Net Returns Royalty and to the Agreement and acknowledge that the Agreement
is hereby terminated and of no further force or effect.
3. After Acquired Title
This Deed, without payment of any additional consideration, shall
operate to convey and transfer automatically to Grantee, its successors and
assigns, any and all right, title and interest in the Property acquired by
Grantors after the effective date of this Deed.
4. Binding Effect
All covenants, conditions and terms of this Deed shall bind and inure
to the benefit of the parties hereto, their respective heirs, representatives,
assigns and successors.
5. Further Assurances
Grantors and Grantee agree to execute or furnish the other with such
additional formal assurances or other documents, in proper and recordable form,
as may be reasonably necessary to carry out the intent, purpose and terms of
this Deed.
6. Governing Law; Severability; Perpetuities; Attorneys' Fees
6.1 This Deed is to be governed by and construed under the laws of the State of
California, without reference to its conflicts of laws, and each of the parties
hereto irrevocably attorns to the jurisdiction of the courts of California for
adjudication of rights, obligations and interests arising pursuant to this
Agreement.
6.2 Any provision of this Agreement prohibited by the laws of the United States
or the State of California shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions of this Agreement.
6.3. Any right or option to acquire any interest in real property (and any other
right held subject to the Rule Against Perpetuities) under the Agreement must be
exercised, if at all, so as to vest such interest within twenty-one (21) years
after the Effective Date.
6.4 In the event of any suit between the parties hereto, the prevailing party
shall be entitled to recover reasonable attorneys' fees incurred in connection
with that suit.
7. Sole Agreement Modification
This Deed and the attached Exhibit set forth the entire agreement
between the Grantors and Grantee with respect to the subject matter hereof. No
modification or alteration of this Deed and the Exhibit hereto shall be
effective unless reduced to writing and signed by both Grantors and Grantee.
IN WITNESS WHEREOF, Grantors have executed this Deed effective the day
and year first above written.
Grantors:
- ----------------------------------
MARK MILNER
STATE OF ______________ )
)ss.
COUNTY OF _____________ )
This Warranty Deed was acknowledged before me on this __ day of
________, 1998, by Mark Milner.
- -----------------------------
NOTARY PUBLIC
- ----------------------------
DANIEL MILNER
STATE OF ____________ )
)ss,
COUNTY OF ___________ )
This Warranty Deed was acknowledged before me on this __ day of
________, 1998, by Daniel Milner.
- --------------------------------
NOTARY PUBLIC
- ------------------------------
STEPHEN R. CROSSLAND
STATE OF _____________ )
)ss.
COUNTY OF ____________ )
This Warranty Deed was acknowledged before me on this __ day of
________, 1998, by Stephen R. Crossland.
- --------------------------------
NOTARY PUBLIC
Recording requested by and return to:
Donald James McDowell
9051 South, 1075 West, Suite B-301
West Jordan, Utah 84088
ASSIGNMENT
Newmont North America Exploration Limited, a Delaware corporation,
("Assignor"), for consideration paid, assigns to Donald James McDowell, a single
man, whose address is 9051 South 1075 West, Suite B-301, West Jordan, Utah 84088
("Assignee"), all right, title and interest of Assignor in and to that certain
Mining Lease and Option to Purchase Agreement with an effective date of January
15, 1998 wherein Mark Milner, Daniel Milner and Steven R. Crossland are "Owners"
and Golden Phoenix Minerals, Inc., is Lessee / Optionee, the subject of which is
certain unpatented mining claims located in Modoc County, California, more
particularly described in Schedule 1 attached hereto (the "Property").
Assignor, for itself and its successors, represents and covenants to
Assignee, his heirs, successors and assigns, that the Property and the leasehold
interest herein assigned are free from all encumbrances made by or through
Assignor, and that Assignor will, and its successors shall, warrant and defend
the same as to Assignee, his heirs, successor and assigns, forever against the
lawful claims and demands of all persons claiming by, through, or under
Assignor, but against none other.
Other than the foregoing representations and covenants, Assignor has no
further obligation to Assignee, his heirs, successors and assigns, arising from
the said Lease Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment effective as
of July 13, 2001.
ASSIGNOR:
Newmont North America Exploration Limited
By: /s/ Britt D. Banks
Name: Britt D. Banks
Title: Vice President & Secretary
1
STATE OF COLORADO )
) SS.
CITY & COUNTY OF DENVER )
On this 21st day of August 2001, personally appeared before me, a
Notary Public, Britt Banks, a duly qualified and acting officer of NEWMONT NORTH
AMERICA EXPLORATION LIMITED, personally known or proved to me to be the person
whose name is subscribed to the above instrument who acknowledged to me that he
executed the above instrument.
/s/ Vicki Engeman Kelley
-------------------------------------
Notary Public
My Commission expires:
July 16, 2005
2
SCHEDULE 1
to Assignment - Newmont to McDowell
The "Property"
Those certain unpatented mining claims in Township 47 North, Range 15 East, MDM,
Modoc County, California, more particularly described as:
Modoc Co.
Claim Name Book/Page BLM Serial Number
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Klondike Fraction 445/168 CAMC - 274724
Stone 445/170 CAMC - 274725
Ruby Fraction 445/172 CAMC - 274726
Ruby Too Fraction 445/174 CAMC - 274727
Cirrus #1 445/176 CAMC - 274728
Cirrus #2 445/178 CAMC - 274729
Cirrus #3 445/180 CAMC - 274730
Cirrus #4 445/182 CAMC - 274731
Cirrus #5 445/184 CAMC - 274732
Cirrus #6 445/186 CAMC - 274733
3
Recording requested by and return to:
Donald James McDowell
Great American Minerals. Inc
9051 South 1075 West, Suite B-301
West Jordan, Utah 84088
Assignment
Donald James McDowell, a single man ("Assignor"), for consideration
paid, assigns to Great American Minerals, Inc., a Nevada Corporation
("Assignee"), all right, title and interest of Assignor in and to that certain
Mining Lease and Option to Purchase Agreement with an effective date of January
15, 1998 wherein Mark Milner, Daniel Milner and Stephen R Crossland are "Owners"
and Golden Phoenix Minerals, Inc is the original Lessee / Optionee, the subject
of which is certain unpatented mining claims located in Modoc County,
California, more particularly described in Schedule 1 attached hereto (The
"Property")
Assignor, for itself and its successors, represents and covenants to
Assignee, its heirs, successors and assigns, that the property and leasehold
interest herein assigned and free from all encumbrances made by or through
Assignor, and that Assignor will, and its successors shall, warrant and defend
the same as to the Assignee, his heirs, successor and assigns, forever against
the lawful claims and demands of all persons claiming by, through, or under
Assignor, but against non other
Other than the foregoing representations and covenants, Assignor has no
further obligation to Assignee, his heirs, successors and assigns, arising from
the said lease
IN WITNESS THEREOF, Assignor has executed this assignment effective as
of May 15, 2003
ASSIGNOR
/s/ Donald James McDowell
-------------------------------
Donald James McDowell
STATE OF UTAH )
) ss
COUNTY OF Salt Lake )
On this 16 day of May 2003, personally appeared before me, a Notary
Public Donald James McDowell personally known or proved to me to be the person
whose name is subscribed to the above instrument who acknowledged to me that he
executed the above instrument
/s/ Tammy L. Fontana
---------------------------
Notary Public
My Commission expires: 7-21-04
SCHEDULE 1
To Assignment - McDowell to Great American Minerals, Inc.
The "Property"
Those certain unpatented mining claims in Township 47 North, Range 15 East,
MDB&M, Modoc County, California, more particularly described as:
Modoc County
Claim Name Book/Page BLM Serial Number
---------- --------- -----------------
Klondike Fraction 445/168 CAMC - 274724
Stone 445/170 CAMC - 274725
Ruby Fraction 445/172 CAMC - 274726
Ruby Too Fraction 445/174 CAMC - 274727
Cirrus #1 445/376 CAMC - 274728
Cirrus #2 445/178 CAMC - 274729
Cirrus #3 445/180 CAMC - 274730
Cirrus #4 445/182 CAMC - 274731
Cirrus #5 445/184 CAMC - 274732
Cirrus #6 445/186 CAMC - 274733