Document:

ex101.htm

 

PROPERTY OPTION AGREEMENT

 

THIS AGREEMENT made effective as of 15th day of November, 2011

 

BETWEEN:

A to be formed Quebec corporation that will be a wholly-owned subsidiary of Solo International, Inc., a Nevada corporation, with its executive offices at 1155 Boul Rene

Levesque West, Suite 2500, Montreal, Quebec H3B 2K4

 

(the "Optionee")

 

OF THE FIRST PART

 

AND:

 

9228-6202 Québec Inc., a Quebec corporation with its executive offices at 2100-500 Place d'Armes, Montreal, Quebec, H2Y 2W2

 

(the "Optionor")

 

OF THE SECOND PART

 

WHEREAS:

 

A. The Optionor and the Optionee agree that pursuant to the Option provided herein, Optionee has the exclusive option to acquire an undivided 100% right, title and interest in and to certain mineral claims, located in Portland Township, Outaouais, Quebec (the "Property") to consist of 2 mineral claims (CDC2261871(Philadelphia) and CDC2318741 (unnamed)) totalling approximately 120 hectares currently staked and recorded in the name of the Optionor, as more particularly set out in Schedule "A" hereto, subject only to the Royalty, on the terms and conditions hereinafter set forth;

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of $1.00 now paid by the Optionee to the Optionor (the receipt and sufficiency of which is hereby acknowledged), the parties agree as follows:

 

	
1.  

	
DEFINITIONS.  For the purposes of this Agreement the following words and phrases shall have the following meanings, namely:

 

	
(a)  

	
"Commencement of Commercial Production" means:

 

	
(i)  

	
if a mill is located on the Property, the last day of a period of 40 consecutive days in which, for not less than 30 days, the mill processed ore from the Property at 50% of its rated concentrating capacity; or

 

	
(ii)  

	
if a mill is not located on the Property, the last day of a period of 30 consecutive days during which ore has been shipped from the Property on a reasonably regular basis for the purpose of earning revenues,

 

but any period of time during which ore or concentrate is shipped from the Property for testing purposes, or during which milling operations are undertaken as initial tune-up, shall not be taken into account in determining the date of Commencement of Commercial Production;

 

	
(b)  

	
"Option" means the option to acquire an undivided 100% right, title and interest in and to the Property as provided in this Agreement;

 

  

1

  

 

	
(c)  

	
"Option Period" means the period from the date of this Agreement to and including the date of exercise or termination of the Option;

 

	
(d)  

	
"Property" means the mineral claims located in the Portland Township, Outaouais, Quebec,  as more particularly set out in Schedule "A" hereto, including any replacement or successor claims, and all mineral/mining leases and other mining interests derived from any such claims.  Any reference herein to any mineral claim comprising the Property includes any mineral/mining leases or other interests into which such mineral claim may have been replaced or converted;

 

	
(e)  

	
"Property Rights" means all licenses, permits, easements, rights-of-way, certificates and other approvals obtained by either of the parties either before or after the date of this Agreement and necessary for the exploration of the Property, or for the purpose of placing the Property into production or continuing production therefrom;

 

	
(f)  

	
"Royalty" means a royalty of 2% net smelter returns (the "NSR") payable to the Optionor, as more particularly set out in Schedule "B" hereto;

 

	
(g)  

	
For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

 

	
(i)  

	
"this Agreement" means this property option agreement and all Schedules attached hereto;

 

	
(ii)  

	
any reference in this Agreement to a designated "Section", "Schedule", "paragraph" or other subdivision refers to the designated section, schedule, paragraph or other subdivision of this Agreement;

 

	
(iii)  

	
the words "herein" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement;

 

	
(iv)  

	
any reference to a statute includes and, unless otherwise specified herein, is a reference to such statute and to the regulations made pursuant thereto, with all amendments made thereto and in force from time to time, and to any statute or regulations that may be passed which has the effect of supplementing or superseding such statute or such regulation;

 

	
(v)  

	
any reference to "party" or "parties" means the Optionor, the Optionee or both, as the context requires;

 

	
(vi)  

	
the headings in this Agreement are for convenience of reference only and do not affect the interpretation of this Agreement; and

 

	
(vii)  

	
all references to currency refer to United States dollars. 

 

	
(h)  

	
The following are the Schedules to this Agreement, and are incorporated into this Agreement by reference:

 

Schedule "A":                                Property-Legal Description and Location

 

Schedule "B":                                Definition of Net Smelter Returns

 

	
2.  

	
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONOR.

 

	
(a)  

	
The Optionor represents and warrants to and covenants with the Optionee, with the knowledge that the Optionee relies upon same in entering into this Agreement, that:

  

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(i)  

	
no proceedings are pending for, and it is unaware of any basis for the institution of any proceedings leading to, its dissolution or winding up or being placed into bankruptcy;

 

	
(ii)  

	
it has all requisite power and capacity, and has duly obtained all requisite authorizations and performed all requisite acts, to enter into and perform its obligations hereunder, it has duly executed and delivered this Agreement and such constitutes a legal, valid and binding obligation of it enforceable against it in accordance with the Agreement's terms, and the entering into of this Agreement and the performance of its obligations hereunder does not and will not result in a breach of, default under or conflict with any of the terms and provisions of any of its constituting documents, any resolutions of its partners, any indenture, agreement or other instrument to which it is a party or by which it is bound or the Property may be subject, or any statute, order, judgment or other law or ruling of any competent authority;

 

	
(iii)  

	
it is legally entitled to hold the Property and the Property Rights and will remain so entitled until and always to the extent such is required for the due transfer to the Optionee of its requisite interest in and to the Property pursuant to and upon the exercise of the Option;

 

	
(iv)  

	
it is, and at the time of each transfer to the Optionee of an interest in and to the Property pursuant to and upon the exercise of the Option it will be, the beneficial owner of all right, title and interest in and to such transferred interest, free and clear of all liens, charges, claims, liabilities and adverse interests of any nature or kind, and no taxes or rentals are or will be due in respect of the Property;

 

	
(v)  

	
the mineral claims comprising the Property and the mineral agreements in respect thereof have been, to the best of the Optionor's knowledge and belief after due inquiry, duly and validly located, granted, entered into and recorded, as the case may be, pursuant to the laws of the jurisdiction in which the Property is situate and are in each case in good standing with respect to all filings, fees, rentals, taxes, assessments, work commitments and other obligations and conditions on the date hereof and until the dates set opposite the respective names thereof in Schedule "A" hereto;

 

	
(vi)  

	
there are neither any adverse claims or challenges against, or to the ownership or title to, any of the mineral claims comprising the Property or to the validity or enforceability of any of the mineral agreements in respect thereof, nor to the knowledge of the Optionor after due inquiry is there any basis therefor, and there are no outstanding agreements, options or other rights and interests to acquire or purchase the Property or any portion thereof or any interest therein, and no person has any royalty or other interest whatsoever in the production from any of the mineral claims comprising the Property or otherwise; and

 

	
(vii)  

	
notwithstanding anything to the contrary herein, Optionor does not hold the surface rights to the Property;

 

	
(viii)  

	
during the Option Period, Optionor shall use its best efforts to negotiate on behalf of Optionee a lease of all surface rights in respect of claim no.CDC2261871 (Philadelphia) that are necessary or desireable to conduct the exploration and development thereof, including but not limited to the activities contemplated in Section 6 hereof, the whole subject to the prior approval of Optionee.

 

	
(b)  

	
The representations and warranties contained in this section are provided for the exclusive benefit of the Optionee, and a breach of any one or more thereof may be waived by the Optionee in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty, and the representations and warranties contained in this section shall survive the execution and performance of this Agreement and of any transfers, assignments, deeds or further documents or acts of the parties respecting the Property.

  

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3.  

	
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE.

 

	
(a)  

	
The Optionee represents and warrants to and covenants with the Optionor, with the knowledge that the Optionor relies upon same in entering into this Agreement, that:

 

	
(i)  

	
it has been duly incorporated, amalgamated or continued and validly exists as a corporation in good standing with respect to the filing of annual reports under the laws of its jurisdiction of incorporation, amalgamation or continuation;

 

	
(ii)  

	
no proceedings are pending for, and it is unaware of any basis for the institution of any proceedings leading to, its dissolution or winding up or being placed into bankruptcy or subject to any other laws governing the affairs of insolvent corporations;

 

	
(iii)  

	
it has all requisite corporate power and capacity, and has duly obtained all requisite corporate authorizations and performed all requisite corporate acts, to enter into and perform its obligations hereunder, it has duly executed and delivered this Agreement and such constitutes a legal, valid and binding obligation of it enforceable against it in accordance with the Agreement's terms, and the entering into of this Agreement and the the performance of its obligations hereunder does not and will not result in a breach of, default under or conflict with any of the terms and provisions of any of its constituting documents, any resolutions of its shareholders or directors, any indenture, agreement or other instrument to which it is a party or by which it is bound or the Property may be subject, or any statute, order, judgment or other law or ruling of any competent authority applicable to it; and

 

	
(iv)  

	
it is lawfully authorized to hold mineral claims and real property under the laws of the jurisdiction in which the Property is situate.

 

	
(b)  

	
The representations and warranties contained in this section are provided for the exclusive benefit of the Optionor, and a breach of any one or more thereof may be waived by the Optionor in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty, and the representations and warranties contained in this section shall survive the execution hereof.

 

	
4.  

	
GRANT AND EXERCISE OF OPTION.

 

	
(a)  

	
The Optionor hereby grants to the Optionee the sole and exclusive right and option to acquire up to an undivided 100% right, title and interest in and to the Property, free and clear of all charges, encumbrances, claims, liabilities and adverse interests of any nature or kind, except for the Royalty.

 

	
(b)  

	
The Option shall be in good standing and exercisable by the Optionee by paying the amounts, issuing the securities, and incurring the expenses described below on or before the dates specified in the following schedule:

 

	
(i)  

	
paying the Optionor $50,000 within two (2) business days of the execution of this Agreement (the “First Option Payment”)

 

	
(ii)  

	
paying to the Optionor $70,000 within 30 days following the First Option Payment (the “Second Option Payment”);

 

	
(iii)  

	
paying to the Optionor $70,000 within 30 days following the Second Option Payment (the “Third Option Payment”);

 

	
(iv)  

	
paying to the Optionor $15,000 within 30 days following the Third Option Payment (the “Fourth Option Payment”);

 

  

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(v)  

	
incurring exploration expenditures on the Property of not less than $65,000 prior to the first anniversary of the execution of this Agreement;

 

	
(vi)  

	
issuing to Optionor or to the Optionor’s designee a number of common shares (the “Option Shares”) in the capital stock of the Optionee equal to $20,000 to be issued within 10 business days following completion of a forward share split by Optionee which shall, in any event, occur no later than 90 days following the execution of this Agreement.  The price per share at which the number of Option Shares shall determined shall be the average of the closing price of the Optionee’s common stock (as quoted on the OTC Bulletin Board) on the five (5) trading days ending on the date of issuance.  In the absence of a market on the OTC Bulletin Board for the purposes of calculating the number of Option Shares to be issued, the price per share shall be $0.06 per share, as adjusted to reflect the aforementioned forward split.  The Option Shares shall be entitled to piggy back registration rights with respect to any registration statement filed by the Optionor with the Securities and Exchange Commission; and

 

	
(vii)  

	
paying all rentals, taxes, fees and expenses in respect of the Property as they become due.

 

	
(b)  

	
The Optionor acknowledges and agrees that the Optionor Shares will be issued in accordance with all applicable securities laws and will be subject to hold periods and restrictions on resale in accordance with applicable securities laws and it is the Optionor's responsibility to determine what those hold periods and restrictions are before selling or otherwise transferring any Shares.

 

	
(c)  

	
The Optionor shall meaningfully consult with the Optionee regarding the planning and execution of all exploration activities on the Property during the term of this Agreement.

 

	
5.  

	
TRANSFER OF PROPERTY AND DATA.

 

	
(a)  

	
Concurrently with the execution of this Agreement, the Optionor shall deliver to the Optionee duly executed transfers of the appropriate interest in the Property which shall be acquired by the Optionee upon exercise of the Option.

 

	
(b)  

	
Upon exercise of the Option, the Optionee shall be entitled to record such transfers at its own cost with the appropriate government office to effect legal transfer of such interest in the Property into the name of the Optionee.

 

	
(c)  

	
Concurrently with the execution of this Agreement, Optionor shall deliver to the Optionee a copy of all data concerning the Property, including but not limited to any and all factual and interpretative, written, hard copy and digital geological, geochemical and geophysical data, reports, documents, correspondences, maps, drill logs, drill chips trays, core, coarse rejects, pulps, core tests, hand samples, surveys, assays, analyses, production reports, operations, technical, and all other information present, acquired, generated, delivered to or in Optionor’s possession (collectively  the “Data”), if any, and without any warranty.  Notwithstanding the foregoing, Optionor shall not be required to disclose any Data not primarily related to the exploration of the Property, including without limitation, Optionor’s private accounting and financial documents, correspondence or other records.

 

	
(d)  

	
Within two (2) weeks of the execution of this Agreement and provided that Optionee pays the First Option Payment, Optionor shall obtain photos of the Property at Optionor’s sole cost and expense.

 

	
6.  

	
RIGHT OF ENTRY.  Throughout the Option Period, the Optionee and its directors, officers, employees, servants, agents and independent contractors, shall have the sole and exclusive right in respect of the Property to:

 

	
(a)  

	
enter thereon;

 

	
(b)  

	
have exclusive and quiet possession thereof;

 

  

5

  

 

	
(c)  

	
do such prospecting, exploration, development and other mining work thereon and thereunder as the Optionee in its sole discretion may determine advisable;

 

	
(d)  

	
bring upon and erect upon the Property such buildings, plant, machinery and equipment as the Optionee may deem advisable; and

 

	
(e)  

	
remove therefrom and dispose of reasonable quantities of ores, minerals and metals for the purposes of obtaining assays or making other tests.

 

	
7.  

	
OBLIGATIONS OF THE OPTIONEE DURING OPTION PERIOD.  During the Option Period, the Optionee shall:

 

	
(a)  

	
maintain in good standing those mineral claims comprising the Property by the doing and filing of assessment work or the making of payments in lieu thereof, by the payment of taxes and rentals, and the performance of all other actions which may be necessary in that regard and in order to keep such mineral claims free and clear of all liens and other charges arising from the Optionee's activities thereon except those at the time contested in good faith by the Optionee;

 

	
(b)  

	
duly record all exploration work carried out on the Property by the Optionee as assessment work;

 

	
(c)  

	
following commencement of exploration activities, provide the Optionor quarterly reports on all exploration and drilling work carried out on the Property and regularly transfer exploration data;

 

	
(d)  

	
permit the partners, employees and designated consultants of the Optionor, at their own risk and expense, access to the Property at all reasonable times, and the Optionor agrees to indemnify the Optionee against and to save it harmless from all costs, claims, liabilities and expenses that the Optionee may incur or suffer as a result of any injury (including injury causing death) to any partner, employee or designated consultant of the Optionor while on the Property;

 

	
(e)  

	
do all work on the Property in a good and workmanlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any governmental authority;

 

	
(f)  

	
indemnify and save the Optionor harmless in respect of any and all costs, claims, liabilities and expenses arising out of the Optionee's activities on the Property, but the Optionee shall incur no obligation hereunder in respect of any such costs, claims. liabilities and expenses arising or damages suffered after termination of the Option if upon termination of the Option any workings on or improvements to the Property made by the Optionee are left in a safe condition and in full compliance with requirements of all environmental laws and regulations;

 

	
(g)  

	
permit the Optionor, at its own expense, reasonable access to the results of the work done on the Property during the last completed calendar year;

 

	
(h)  

	
deliver to the Optionor, forthwith upon receipt thereof, copies of all reports, maps, assay results and other technical data compiled by or prepared at the direction of the Optionee with respect to the Property.

 

The Optionor acknowledges and agrees that all technical and other information concerning the Property provided by the Optionee to it, directly or indirectly, shall be treated as confidential information, and it shall not copy, transmit or otherwise disclose, disseminate or use such information, including but not limited to use in violation of insider trading and other provisions of applicable securities laws, without the express written consent of the Optionee.

  

6

  

 

	
8.  

	
TERMINATION OF OPTION.

 

	
(a)  

	
The Option shall terminate:

 

	
(i)  

	
subject to paragraph 16 hereof, upon the Optionee failing to make any payment or issuance of Shares or incurrence of expenses which must be made or issued or incurred in exercise of the Option;

 

	
(ii)  

	
subject to paragraph 16 hereof, upon the Optionee failing to remedy a default as provided therein; or

 

	
(iii)  

	
at any other time, by the Optionee giving a minimum of sixty (60) days notice of such termination to the Optionor.  In the event that the Optionee provides such notice less than sixty (60) days prior to September 1st of any year, the Optionee shall pay all claim maintenance fees and lease payments for such year.

 

	
(b)  

	
If the Option is terminated otherwise than upon the exercise thereof, the Optionee shall:

 

	
(i)  

	
leave in good standing, for a period of at least 12 months from the termination of the Option Period, those mineral claims comprising the Property, to the extent allowable by the laws of the jurisdiction in which the Property is situate;

 

	
(ii)  

	
deliver or make available at no cost to the Optionor, within 90 days of such termination, all drill core, copies of all reports, maps, assay results and other relevant technical data compiled by, prepared at the direction of, or in the possession of the Optionee with respect to the Property and not theretofore furnished or made available to the Optionor;

 

	
(iii)  

	
reclaim the Property in accordance with the requirements of all applicable environmental laws and regulations, but only to the extent that such requirements result from the Optionee's activities on the Property hereunder.

 

	
(c)  

	
If the Option is terminated otherwise than upon the exercise thereof, the Optionee shall have the right, within a period of 180 days following the end of the Option Period, to remove from the Property all buildings, plant, equipment, machinery, tools, appliances and supplies which have been brought upon the Property by or on behalf of the Optionee, and any such property not removed within such 180 day period shall thereafter become the property of the Optionor.

 

	
9.  

	
ROYALTY.

 

	
(a)  

	
Upon the Commencement of Commercial Production, the Optionee shall pay to the Optionor the NSR Royalty, being equal to 2% of Net Smelter Returns, on the terms and conditions as set out in this paragraph and in Schedule "B" hereto.

 

	
(b)  

	
Installments of the NSR Royalty payable shall be paid by the Optionee to the Optionor immediately upon the receipt by the Optionee of the payment from the smelter, refinery or other place of treatment of the proceeds of sale of the minerals, ore, concentrates or other product from the Property.

 

	
(c)  

	
Within 120 days after the end of each fiscal year, commencing with the year in which Commencement of Commercial Production occurs, the accounts of the Optionee relating to operations on the Property and the statement of operations, which shall include the statement of calculation of NSR Royalty for the year last completed, shall be audited by the auditors of the Optionee at its expense.  The Optionor shall have 45 days after receipt of such statements to question the accuracy thereof in writing and, failing such objection, the statements shall be deemed to be correct and unimpeachable thereafter.

 

  

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(d)  

	
If such audited financial statements disclose any overpayment of NSR Royalty by the Optionee during the fiscal year, the amount of the overpayment shall be deducted from future installments of NSR Royalty payable.

 

	
(e)  

	
If such audited financial statements disclose any underpayment of NSR Royalty by the Optionee during the year, the amount thereof shall be paid to the Optionor forthwith after determination thereof.

 

	
(f)  

	
The Optionee agrees to maintain for each mining operation on the Property, up-to-date and complete records relating to the production and sale of minerals, ore, bullion and other product from the Property, including accounts, records, statements and returns relating to treatment and smelting arrangements of such product, and the Optionor or its agents shall have the right at all reasonable times, including for a period of 12 months following the expiration or termination of this Agreement, to inspect such records, statements and returns and make copies thereof at its own expense for the purpose of verifying the amount of NSR Royalty payments to be made by the Optionee to the Optionor pursuant hereto.  The Optionor shall have the right to have such accounts audited by independent auditors at its own expense once each fiscal year.

 

	
10.  

	
POWER TO CHARGE PROPERTY.  The Optionor shall not grant or permit to exist any liens, charges or mortgages (collectively referred to as an "encumbrance") upon the property or any portion thereof.  At any time after the Optionee has exercised the Option, in whole or in part, the Optionee may grant encumbrances upon the Property or any portion thereof, upon any mill or other fixed assets located thereon, and upon any or all of the tangible personal property located on or used in connection with the Property, to secure financing for the development of the Property, always provided that, unless otherwise agreed to by the Optionor, it shall be a term of each encumbrance that the encumbrancee or other person acquiring title to the Property upon enforcement of the encumbrance shall hold the same subject to the Royalty as if the encumbrancee or such other person had executed this Agreement.

 

	
11.  

	
TRANSFERS.  The Optionee may at any time either during the Option Period or thereafter, sell, transfer or otherwise dispose of all or any portion of its interest in and to the Property and this Agreement provided that any purchaser, transferee or recipient of any such interest shall have first delivered to the Optionor a written agreement to be bound by the terms of this Agreement.

 

	
12.  

	
SURRENDER OF PROPERTY INTERESTS PRIOR TO TERMINATION OF AGREEMENT.  The Optionee may at any time during the Option Period elect to abandon any one or more of the mineral claims comprised in the Property by giving notice to the Optionor of such intention.  Any claims so abandoned shall be in good standing under the laws of the jurisdiction in which they are situate for at least 12 months from the date of abandonment.  Upon any such abandonment, the mineral claims so abandoned shall for all purposes of this Agreement cease to form part of the Property and, if title to such claims has been transferred to the Optionee, the Optionee shall retransfer such title to the Optionor at the Optionee's expense.

 

	
13.  

	
FORCE MAJEURE.

 

	
(a)  

	
If the Optionee is at any time either during the Option Period or thereafter prevented or delayed in complying with any provisions of this Agreement by reason of strikes, lock-outs, labour shortages, power shortages, fuel shortages, fires, wars, acts of God, governmental regulations restricting normal operations, shipping delays or any other reason or reasons, other than lack of funds, beyond the control of the Optionee, the time limited for the performance by the Optionee of its obligations hereunder shall be extended by a period of time equal in length to the period of each such prevention or delay, but nothing herein shall discharge the Optionee from its obligations hereunder to maintain the Property in good standing;

 

	
(b)  

	
The Optionee shall give prompt notice to the Optionor of each event of force majeure and upon cessation of such event shall furnish to the Optionor with notice to that effect together with particulars of the number of days by which the obligations of the Optionee hereunder have been extended by virtue of such event of force majeure and all preceding events of force majeure.

  

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(c)  

	
After the Commencement of Commercial Production, the Optionee shall work, mine and operate the Property during such time or times as the Optionee in its sole judgment considers such operations to be profitable. The Optionee may suspend or curtail operations, both before and after Commencement of Commercial Production, during periods when the products derived from the Property cannot be profitably sold at prevailing prices or if an unreasonable inventory thereof, in the Optionee's sole judgment, has accumulated or would otherwise accumulate.

 

	
14.  

	
CONFIDENTIAL INFORMATION.  No information furnished by the Optionee to the Optionor hereunder in respect of the activities carried out on the Property by the Optionee, or related to the sale of minerals, ore, bullion or other product derived from the Property, shall be published or disclosed by the Optionor without the prior written consent of the Optionee, but such consent in respect of the reporting of factual data shall not be unreasonably withheld, and shall not be withheld in respect of information required to be publicly disclosed pursuant to applicable securities or corporation laws, regulations or policies.

 

	
15.  

	
ARBITRATION.

 

	
(a)  

	
All questions or matters in dispute under this Agreement shall be submitted to arbitration pursuant to the terms hereof.

 

	
(b)  

	
It shall be a condition precedent to the right of any party to submit any matter to arbitration pursuant to the provisions hereof, that any party intending to refer any matter to arbitration shall have given not less than 10 days' prior notice of its intention to do so to the other party, together with particulars of the matter in dispute.  On the expiration of such 10 days, the party who gave such notice may proceed to refer the dispute to arbitration as provided in paragraph (c).

 

	
(c)  

	
The party desiring arbitration shall appoint one arbitrator, and shall notify the other party of such appointment, and the other party shall, within 15 days after receiving such notice, either consent to the appointment of such arbitrator which shall then carry out the arbitration or appoint an arbitrator, and the two arbitrators so named, before proceeding to act, shall, within 30 days of the appointment of the last appointed arbitrator, unanimously agree on the appointment of a third arbitrator to act with them and be chairman of the arbitration herein provided for. If the other party shall fail to appoint an arbitrator within 15 days after receiving notice of the appointment of the first arbitrator, the first arbitrator shall be the only arbitrator.  If the two arbitrators appointed by the parties shall be unable to agree on the appointment of the chairman, the chairman shall be appointed under the provisions of the Code of Civil Procedure of Quebec.  Except as specifically otherwise provided in this section, the arbitration herein provided for shall be conducted in accordance with such Act.  The chairman, or in the case where only one arbitrator is appointed, the single arbitrator, shall fix a time and place in Montreal, Quebec, for the purpose of hearing the evidence and representations of the parties, and he shall preside over the arbitration and determine all questions of procedure not provided for under such Act or this section.  After hearing any evidence and representations that the parties may submit, the single arbitrator, or the arbitrators, as the case may be, shall make an award and reduce the same to writing, and deliver one copy thereof to each of the parties.  The expense of the arbitration shall be paid as specified in the award.

 

	
(d)  

	
The parties agree that the award of a majority of the arbitrators, or in the case of a single arbitrator, of such arbitrator, shall be final and binding upon each of them.

 

	
16.  

	
DEFAULT.  If at any time during the Option Period, the Optionee is in default of any material provision in this Agreement, the Optionor may terminate this Agreement, but only if:

 

	
(a)  

	
it shall have first given to the Optionee a notice of default containing particulars of the obligation which the Optionee has not performed, or the warranty breached; and

 

	
(b)  

	
the Optionee has not, within 60 days following delivery of such notice of default, cured such default or commenced proceedings to cure such default by appropriate payment or performance, the Optionee hereby agreeing that should it so commence to cure any default it will prosecute the same to completion without undue delay.

 

  

9

  

 

Should the Optionee fail to comply with the provision of subparagraph (b), the Optionor may thereafter terminate this Agreement by giving notice thereof to the Optionee, always provided that the default in question has not been cured or substantially cured at the time of the Optionee giving such notice of termination.

 

	
17.  

	
NOTICES.  Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be delivered or telecopied to such party at the address for such party specified above.  The date of receipt of such notice, demand or other communication shall be the date of delivery thereof if delivered or, if given by telecopier (with electronic confirmed receipt), shall be deemed conclusively to be the next business day.  Either party may at any time and from time to time notify the other party in writing of a change of address and the new address to which notice shall be given to it thereafter until further change.

 

	
18.  

	
GENERAL.

 

	
(a)  

	
This Agreement shall supersede and replace any other agreement or arrangement, whether oral or written, heretofore existing between the parties in respect of the subject matter of this Agreement.

 

	
(b)  

	
No consent or waiver expressed or implied by either party in respect of any breach or default by the other in the performance by such other of its obligations hereunder shall be deemed or construed to be a consent to or a waiver of any other breach or default.

 

	
(c)  

	
The parties shall promptly execute or cause to be executed all documents, deeds, conveyances and other instruments of further assurance and do such further and other acts which may be reasonably necessary or advisable to carry out fully the intent of this Agreement or to record wherever appropriate the respective interest from time to time of the parties in the Property.

 

	
(d)  

	
This Agreement shall enure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.

 

	
(e)  

	
This Agreement shall be governed by and construed in accordance with the laws of the Province of Quebec.

 

	
(f)  

	
Time shall be of the essence in this Agreement.

 

	
(g)  

	
Wherever the neuter and singular is used in this Agreement it shall be deemed to include the plural, masculine and feminine, as the case may be.

 

	
19.  

	
AREA OF MUTUAL INTEREST.

 

	
(a)  

	
The parties hereby agree that each and every mineral claim (including internal fractions) or interest therein which they may stake or otherwise acquire during the currency of this Agreement and which lies in whole or in part within one mile from the outside perimeter of the Property, or which is contiguous to such claims which are otherwise within this area of mutual interest, shall at the option of the other party form a part of the Property.  Any party shall, upon acquisition of any such additional claims or interests, forthwith give notice to the other party of same and thereafter the other party shall have thirty days from the date on which the Option is fully exercised within which to give notice of its desire to have such additional claims or interests form part of the Property and to pay to the other party their proportionate share of acquisition costs.  The other party shall be responsible to pay its proportionate share of costs of acquiring the additional claims or interests in accordance with its interest in the Property.  All title to such additional claims or interests shall be held subject to the terms of this Agreement.  Optionee expressly acknowledges that the claims listed in Schedule C to this agreement shall not be subject to this section 19 (a) and shall remain the exclusive property of Optionor.

 

	
(b)  

	
Paragraph (a) shall cease to operate if and when the Optionee loses its right to exercise the Option in full.

 

  

10

  

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

OPTIONEE

Per:

/s/ Michel Plante

Michel Plante

Its:      President and Authorized Signatory

 

9228-6202 QUÉBEC INC.

Per:

/s/ Lam Chan Tho

Lam Chan Tho

Its:      President and Authorized Signatory

  

11

  

SCHEDULE "A"

Property-Legal Description and Location

 

Claim 1 (Philadelphia)

 

	
CDC

	  	
2261871

	
Numéro feuillet SNRC

	
 : 

	
31G13

	
Nom gisement non métallique

	
 : 

	
MINE PHILADELPHIA

	
Numéro cogîte

	
 : 

	
31G/13-0042

	
État gisement non métallique

	
 : 

	
Mine fermée

	
Code minéraux

	
 : 

	
Apatite, Mica

	
Canton/seigneurie

	
 : 

	
PORTLAND

	
Fuseau

	
 : 

	
18

	
Estant

	
 : 

	
455227

	
Nordant

	
 : 

	
5071923

	  	  	  

 

 

Claim 2 (unnamed)

 

	
CDC

	  	
2318741

	
Numéro feuillet SNRC

	
 : 

	
31G13

	
Numéro cogîte

	
 : 

	
31G13 -0005 0051

	
Canton/seigneurie

	
 : 

	
PORTLAND

	
Fuseau

	
 : 

	
18  (approximate)

	
Estant

	
 : 

	
455227 (approximate)

	
Nordant

	
 : 

	
5071923 (approximate)

	  	  	  

 

 

There are no liens, charges, claims or encumbrances, subject to third party surface rights

 

.

  

12

  

SCHEDULE "B"

 

Definition of Net Smelter Returns

 

1.           For the purposes of this Agreement, the term "Net Smelter Returns" shall mean the net proceeds actually paid to the Optionee from the sale by the Optionee of minerals mined and removed from the Property, after deduction of the following:

 

	
  

	
(a)

	
smelting costs, treatment charges and penalties including, but not being limited to, metal losses, penalties for impurities and charges for refining, selling and handling by the smelter, refinery or other purchaser; provided, however, in the case of leaching operations or other solution mining or beneficiation techniques, where the metal being treated is precipitated or otherwise directly derived from such leach solution, all processing and recovery costs incurred by the Optionee, beyond the point at which the metal being treated is in solution, shall be considered as treatment charges;

 

	
  

	
(b)

	
costs of handling, transporting and insuring ores, minerals and other materials or concentrates from the Property or from a concentrator, whether situated on or off the Property, to a smelter, refinery or other place of treatment; and

 

(c)           ad valorem taxes and taxes based upon production, but not income taxes.

 

2.           In the event the Optionee commingles minerals from the Property with minerals from other properties, the Optionee shall establish procedures, in accordance with sound mining and metallurgical techniques, for determining the proportional amount of the total recoverable metal content in the commingled minerals attributable to the input from each of the properties by calculating the same on a metallurgical basis, in accordance with sampling schedules and mining efficiency experience, so that production royalties applicable to minerals produced from the Property may reasonably be determined.

  

13

  

 

Schedule C

Claims Excluded from Area of Mutual Interest

CDDC2261873 (McLaren)

CDC 2261869 (Craft)

CDC 2261866 (Craft)

CDC 2318739

CDC 2318740

CDC 2318742

CDC 2318743

CDC 2318744

CDC 2318745

CDC 2318746

CDC 2318747

CDC 2320858

CDC 2320859

CDC 2380860

CDC 2261850 (North Star)

CDC 2261864 (Chapleau)

CDC 2261865 (Chapleau)

CDC 2261867 (Chapleau)

CDC 2261868 (Chapleau)

  

14Exhibit 4.1

 

Advanced Semiconductor Engineering, Inc.

Articles of Incorporation

(Translation)

Chapter One:   General Principles

Article 1.      This company is called日月光半導體製造股份有限公司, and is registered as a company limited by shares according to the Company Law.  The English name of this company is Advanced Semiconductor Engineering, Inc.

Article 2.      This company is engaged in the following businesses:

	
  

	
(1)

	
The manufacture, assembly, processing, test and export of various types of integrated circuitry;

	
  

	
(2)

	
The research, development, design and manufacture, assembly, processing, test and export of various computers, electronics, communications, information products and their peripheral products;

	
  

	
(3)

	
General import and export trading business (excluding the approved businesses requiring special permits);

	
  

	
(4)

	
CC01080 Electronic parts and components manufacture business;

	
  

	
(5)

	
CC01990 Other mechanical, electronic and mechanical devices manufacture businesses (integrated circuit lead frame, ball grid array substrate and flip chip substrate);

	
  

	
(6)

	
F119010 Electronic material wholesale business;

	
  

	
(7)

	
F219010 Electronic material retail business;

	
  

	
(8)

	
I199990 Other consulting service businesses (technical and counseling service for integrated circuit lead frame, ball grid array substrate and flip chip substrate);

	
  

	
(9)

	
JE01010 Leasing business; and

	
  

	
(10)

	
ZZ99999 All other businesses not prohibited or restricted by laws and regulations except businesses requiring special permits.

Article 3.      The investment made by this company in other companies as limited liability shareholder thereof is not subject to the limitation that such investment shall not exceed a certain percentage of the paid-in capital as set forth in the Company Law.

 

  

- 1 -

  

 

Article 4.      This company may provide guaranty.

Article 5.      This company's headquarters are located in the Nantze Export Processing Zone, Kaohsiung, Taiwan, R.O.C. and may set up domestic or foreign branch offices as resolved by the Board of Directors, if necessary.

Chapter Two: Shares

Article 6.      This company's total capital is NT$ 95 billion divided into 9.5 billion shares with a par value of NT$10 per share.  Stock options worth NT$8 billion are set aside for employee subscription.  The Board of Directors is authorized to issue the unissued shares in installments if deemed necessary for business purposes.

Article 7.      The share certificates shall be in registered form and have the signatures or seals of at least three directors of this company and shall be legally authenticated before issuance. In accordance with the provisions set forth in Article 162.2 of the Company Law, this company may choose to not provide share certificates in print form.

Article 8.      No registration of share transfer shall be made within sixty days before each regular shareholders meeting, or within thirty days before each extraordinary shareholders meeting or five days before the record date for dividends, bonuses or other distributions as determined by this company.

Article 9.      The rules governing stock affairs of this company shall be made pursuant to the laws and the regulations of the relevant authorities.

Chapter Three:   Shareholders Meeting

Article 10.    Shareholders meetings include regular meetings and extraordinary meetings.  Regular meetings shall be convened by the Board of Directors once annually within 6 months after the end of each fiscal year.  Extraordinary meetings will be held according to the law whenever necessary.

Article 11.    Shareholders meetings shall be convened by written notice stating the date, place and purpose dispatched to each shareholder at least 30 days, in the case of regular meetings, and 15 days, in the case of extraordinary meetings, prior to the date set for such meeting.

 

  

- 2 -

  

 

Article 12.    Unless otherwise required by the Company Law, shareholders resolutions shall be adopted by at least a majority of the votes of shareholders present at a shareholders meeting who hold a majority of all issued and outstanding shares of this company.

Article 13.    Each shareholder of this company shall have one vote per share, unless otherwise provided by Article 179 of the Company Law.

Article 14.    Any shareholder, who for any reason is unable to attend shareholders meetings, may execute a proxy printed by this company, in which the authorized matters shall be expressly stated, to authorize a proxy to attend the meeting for him.  Such proxy shall be submitted to this company at least 5 days prior to the shareholders meeting.

Article 15.    The shareholders meeting shall be convened by the Board of Directors unless otherwise stipulated in the Company Law, and the person presiding over the meeting will be the Chairman of the Board of Directors (the “Chairman”).  If the Chairman is on leave or for any reason can not discharge his duty, Paragraph 3 of Article 208 of the Company Law should apply.  If the shareholders meeting is called by a person entitled to do so other than the Chairman, that person shall act as the Chairman.  If two or more persons are entitled to call the shareholders meeting, those persons shall elect one to act as the Chairman.

Chapter Four:   Directors, supervisors and managers

Article 16.    This company shall have seven to nine directors, of which there shall be two independent directors and five to seven non-independent directors, and also five to seven supervisors to be elected by the shareholders’ meeting from candidates with legal capacity.  Each director and supervisor shall hold office for a term of three years, and may continue to serve in the office if re-elected.  The election of the directors and supervisors of this company shall be conducted pursuant to Article 198 and relevant regulations of the Company Law. When handling the aforementioned election of directors, the election of independent directors and non-independent directors should be held together, with the names of the elected separately calculated, and those that receive more ballots that represent voting rights will be elected as independent directors or non-independent directors.

 

  

- 3 -

  

 

Article 16 (1): The election of this company’s independent directors uses the candidate nomination system. Shareholders holding 1% or more of this company’s issued shares and the board of directors shall nominate a list of candidates for independent director. After the Board of Directors examines the qualifications of the candidate(s) for serving as an independent director, the names are sent to the shareholders meeting for election. If the shareholders meeting is convened by another person with the authority to convene the meeting, after such person examines the qualifications of the candidate(s) for serving as an independent director, the names are sent to the shareholders meeting for election. All matters regarding the acceptance method and announcement of the nomination of candidates for independent director will be handled according to the Company Law, the Securities Exchange Law, and other relevant laws and regulations.

Article 16 (2): The remuneration of this company’s independent directors is set at NT$2 million per person annually. For those that do not serve a full year, the remuneration will be calculated in proportion to the number of days of the term that were actually served.

Article 17.    The Board of Directors is constituted by directors.  Their powers and duties are as follows:

	
  

	
(1).

	
Preparing business plans;

	
  

	
(2).

	
Preparing surplus distribution or loss make-up proposals;

	
  

	
(3).

	
Preparing proposals to increase or decrease capital;

	
  

	
(4).

	
Reviewing material internal rules and contracts;

	
  

	
(5).

	
Hiring and discharging the general manager;

	
  

	
(6).

	
Establishing and dissolving branch offices;

	
  

	
(7).

	
Reviewing budgets and audited financial statements; and

	
  

	
(8).

	
Other duties and powers granted by or in accordance with the Company Law or shareholders resolutions.

Article 18.    The Board of Directors is constituted by directors, and the Chairman and Vice Chairman are elected by the majority of the directors at a board meeting at which over two-thirds of the directors are present.  If the Chairman is on leave or for any reason can not discharge his duties, his acting proxy shall be elected in accordance with Article 208 of the Company Law.

 

  

- 4 -

  

 

Article 19.    Board of Directors meetings shall be convened by the Chairman, unless otherwise stipulated by the Company Law.  Board of Directors meetings can be held at the place that this company is headquartered, or at any place that is convenient for the directors to attend and appropriate for the meeting to be convened, or via teleconference.

Article 19.1  Directors and supervisors shall be notified of board meetings in writing via email or facsimile seven days prior to the meeting. However, in case of any emergency, a board meeting may be convened at any time.

Article 20.    A director may execute a proxy to appoint another director to attend the Board of Directors meeting and to exercise the voting right, but a director can accept only one proxy.

Chapter Five:   Managers

Article 21.    This company has one general manager.  The appointment, discharge and salary of the general manager shall be managed in accordance with Article 29 of Company Law.

Chapter Six:   Accounting

Article 22.    The fiscal year of this company starts from January 1 and ends on December 31 every year.  At the end of each fiscal year, the Board of Directors shall prepare financial and accounting books in accordance with the Company Law and submit them to the regular shareholders meeting for recognition.

Article 23.    The annual net income ("Income") shall not be distributed before:

	
  

	
(1)

	
Making up losses, if any;

	
  

	
(2)

	
10% being set aside as legal reserve;

	
  

	
(3)

	
A special reserve being set aside pursuant to the laws or regulation of governmental authority;

	
  

	
(4)

	
Setting aside a special reserve equal to the (unrealized) investment income under equity method for long-term investment, excluding cash dividends (the realized income shall be classified as earnings for distribution); and

 

 

  

- 5 -

  

 

	
  

	
If any Income remains, it shall be distributed as follows:

	
  

	
(5)

	
Not more than 2% of the balance (i.e., the Income deducting (1) to (4) above) as compensation to directors and supervisors;

	
  

	
(6)

	
Not less than 7% and not more than 10% of the balance (i.e. the Income deducting (1) to (4) above) as bonus to employees (the 7% portion being distributed to all employees in the form of stock bonus in accordance with the employee bonus rules, while the portion exceeding 7% being distributed to individual employees (having special contributions) in accordance with the rules made by the board of directors with the authority granted hereby); and

	
  

	
(7)

	
The remainder is distributed in proportion to the aggregate amount of outstanding shares proposed by the board.

	
  

	
"Employees" referred to in subparagraph (6) above include employees of affiliated companies meeting certain qualifications.  Such qualifications are to be determined by the Board of Directors.

Article 24     This Company is at the stage of stable growth.  In order to accommodate the capital demand for the present and future business development and satisfy the shareholder's demand for the cash, the Residual Dividend Policy is adopted for the dividend distribution of this Company.  The ratio for cash dividends shall be no less than 30% of the total dividends; and the residual dividends shall be distributed in form of stocks in accordance with the distribution plan proposed by the board and resolved by the shareholders meeting.

  

- 6 -

  

Chapter Seven:   Appendix

Article 25.     The constitutive rules and the operation rules of this company shall be stipulated otherwise.

Article 26.     Any matter not covered by these Articles of Incorporation shall be subject to the Company Law.

Article 27.     These Articles of Incorporation were enacted on March 31, 1984 as approved by all the promoters.

The first amendment was made on May 3, 1984.

The second amendment was made on June 11, 1984.

The third amendment was made on June 25, 1984.

The fourth amendment was made on May 28, 1986.

The fifth amendment was made on July 10, 1986.

The sixth amendment was made on September 1, 1988.

The seventh amendment was made on May 28, 1988.

The eighth amendment was made on July 18, 1988.

The ninth amendment was made on September 1, 1988.

The tenth amendment was made on October 30, 1988.

The eleventh amendment was made on November 24, 1988.

The twelfth amendment was made on December 5, 1988.

The thirteenth amendment was made on February 21, 1989.

The fourteenth amendment was made on December 11, 1989.

The fifteenth amendment was made on March 31, 1990.

The sixteenth amendment was made on March 30, 1991.

The seventeenth amendment was made on April 11, 1992.

The eighteenth amendment was made on April 28, 1993.

The nineteenth amendment was made on March 21, 1994.

The twentieth amendment was made on March 21, 1995.

The twenty-first amendment was made on April 8, 1996.

The twenty-second amendment was made on April 12, 1997.

The twenty-third amendment was made on March 21, 1998.

The twenty-fourth amendment was made on June 9, 1999.

The twenty-fifth amendment was made on 11 July 2000.

The twenty-sixth amendment was made on June 1, 2001.

The twenty-seventh amendment was made on June 21, 2002.

 

  

- 7 -

  

 

The twenty-eighth amendment was made on June 21, 2002.

The twenty-ninth amendment was made on June 19, 2003.

The thirtieth amendment was made on June 19, 2003.

The thirty-first amendment was made on June 15, 2004.

The thirty-second amendment was made on June 30, 2005.

The thirty-third amendment was made on June 21, 2006.

The thirty-fourth amendment was made on June 28, 2007.

The thirty-fifth amendment was made on June 19, 2008.

The thirty-sixth amendment was made on June 25, 2009.

The thirty-seventh amendment was made on June 14, 2010.

The thirty- eighth amendment was made on June 28, 2011.

 

- 8 -

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