Document:

exhibit_10-1.htm

Exhibit 10.1

Execution Copy

DENDREON CORPORATION

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

(WASHINGTON STATE)

 

This Executive Employment Agreement (this “Agreement”) is entered into as of the date of the last signature to this Agreement (“Effective Date”), by and between Dendreon Corporation, a Delaware corporation (the “Company”), and John E. Osborn (“Employee”).

 

The parties agree as follows:

 

1. Employment.  The Company hereby employs Employee as Executive Vice President, General Counsel and Secretary, and Employee hereby accepts such employment, upon the terms and conditions set forth in this Agreement.

 

2. Duties.

 

2.1 Position.  Employee shall perform such duties as are customary for the position of Executive Vice President, General Counsel and Secretary at companies of the Company’s size and nature in the United States and any additional duties that the Executive Vice President, General Counsel and Secretary’s immediate supervisor or the Board of Directors of the Company (the “Board”) may reasonably prescribe from time to time and which are consistent with Employee’s position.  Employee shall devote Employee’s full business time and efforts to the performance of Employee’s assigned duties for the Company, provided, however, that Employee may devote reasonable periods of time to (a) serving on the board of directors of other corporations subject to the prior approval of the CEO, and (b) engaging in charitable or community service activities, so long as none of the foregoing additional activities materially interfere with Employee’s duties under this Agreement.

 

2.2 Work Location.  Employee’s principal place of work shall be located in Seattle, Washington, or such other location as the parties may agree upon from time to time.

 

3. Term.  The employment relationship pursuant to this Agreement shall begin on the Effective Date, will be for no specified term, and may be terminated by Employee or the Company at any time, with or without Good Reason or Cause (as defined in Section 6), as applicable, subject to the provisions regarding termination set forth in Section 6.

 

4. Compensation.

 

4.1 Base Salary.  As compensation for Employee’s performance of his duties under this Agreement, the Company shall pay Employee a base salary (“Base Salary”), which shall initially equal four hundred fifty thousand dollars ($450,000) per calendar year, payable in accordance with the normal payroll practices of the Company, less required deductions for state and federal withholding tax, social security and all other required employment taxes and payroll deductions.  For purposes of Section 6 hereof, Employee’s Base Salary shall be the current Base Salary as of the date of his termination of employment (the “Termination Date”).  The Base 

 

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Salary may not be reduced unless the base salaries of all other employees of the Company at the Vice President level and above are proportionally reduced and in the case of such reduction, Base Salary shall not be reduced by more than 10%.

 

4.2 Incentive Compensation.  Within thirty (30) days after the end of each calendar year, if the Company and Employee meet specified targets agreed upon in advance by the Board, Employee shall be entitled to receive a target bonus of fifty percent (50%) of his Base Salary (the “Annual Bonus”) as determined by the Board, in its sole discretion.  Employee must be currently employed by the Company as of the date of payment of any Annual Bonus in order to be entitled to such payment.  If the Company and Employee do not fully meet such targets, the Company may pay Employee a bonus of such amount as the Board deems appropriate in its sole discretion.  Before the beginning of a new bonus year, the Board may, in its discretion, reduce the percentage of the Annual Bonus applicable to employees, provided that Employee’s Annual Bonus may be reduced only to the extent that the percentage annual bonuses of all other employees of the Company at the Vice President level and above are proportionally reduced.

 

4.3 Equity Grants.  Employee shall be entitled to annual grants of stock options, restricted stock and other equity based long term incentive compensation generally made available to comparable senior executives of the Company on substantially the same terms and conditions as generally applicable to such other executives.

 

4.4 Performance and Compensation Review.  Employee’s performance will be reviewed no less frequently than annually to determine whether Employee’s salary or other compensation should be modified.

 

4.5 Vacation.  Employee shall be eligible to earn four (4) calendar weeks of paid vacation in each year of this Agreement.  Vacation will accrue at the rate of six and two-thirds (6 2/3) hours per pay period, and may be carried over from year to year up to a maximum cap of 240 hours and in accordance with Company policy.  Additional paid vacation shall accrue in accordance with Company policy. Any accrued unused vacation will be cashed out upon termination of employment at Employee’s then current Base Salary rate in accordance with Company policy and applicable law.

 

4.6 Benefits and Insurance.  In addition to the vacation benefits in Section 4.5 above, Employee shall be entitled to all benefits that the Company may make generally available from time to time to its employees, subject to the terms and conditions of the applicable policy or plan, and provided that Employee understands that he/she will be designated as a key employee for purposes of any leave granted under the Family and Medical Leave Act.

 

5. Business Expenses.  The Company shall pay, or promptly reimburse, Employee for all reasonable, out-of-pocket travel and business expenses incurred in the performance of Employee’s duties on behalf of the Company for which Employee submits the required supporting documentation and otherwise fully complies with the Company’s travel and expense reimbursement policy as in effect from time to time.  Reimbursements under this Section 5 will be made in accordance with Section 9.12.

 

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6. Separation of Employee’s Employment.

 

6.1 Termination for Cause by the Company.  The Company may terminate Employee’s employment at any time for Cause.  For purposes of this Agreement, “Cause” is defined as: (i) Employee’s willful and continued failure to substantially perform his duties and responsibilities, after prior written notice thereof and an opportunity to cure; (ii) Employee’s willful engaging in conduct which is materially injurious (monetarily or otherwise) to the Company, including without limitation, misuse of Company funds or property; (iii) Employee’s conviction of a felony (other than a moving vehicle violation); or (iv) any other material breach by Employee of this Agreement or any confidentiality, noncompetition, nondisclosure and/or invention agreement with the Company which is materially injurious (monetarily or otherwise) to the Company.  Notwithstanding the foregoing, the Company must notify Employee of any event constituting Cause within 45 days following the Company’s knowledge of its existence or such event will not constitute Cause under this Agreement.   For purposes of this Agreement, no act or failure to act, on the part of Employee, will be considered “willful” unless it is done, or omitted to be done, by Employee in bad faith or without reasonable belief that Employee’s action or omission was in the best interests of the Company.  Employee’s employment will in no event be considered to have been terminated by the Company for Cause if the act or failure to act upon which such termination is based is an act or failure to act in respect of which Employee meets the applicable standard of conduct prescribed for indemnification or reimbursement or payment of expenses under the By-laws of the Company or the laws of the state of its incorporation or the directors’ and officers’ liability insurance of the Company, in each case as in effect at the time of such act or failure to act.

 

In the event that Employee’s employment is terminated in accordance with this Section ‎6.1, Employee shall be entitled to receive, on Employee’s first regular payday following the Termination Date, a lump sum payment equal to the following:  (i) any portion of Employee’s Base Salary that has been earned but not yet paid as of the Termination Date, and (ii) any accrued unused vacation as of the Termination Date, all of the foregoing to be less required withholding (clauses (i) and (ii) collectively, the “Accrued Benefits”).  All other Company obligations to Employee, including but not limited to any bonus as described in Section 4.2 and Severance (as defined in Section 6.2), will automatically terminate and be completely extinguished as of the Termination Date; provided, however, Employee shall continue to be entitled to any accrued benefits under the Company’s benefit and welfare plans and to indemnification and continued coverage under the Company’s director and officer insurance policies (“D&O Policies”).

 

6.2 Termination Without Cause; Change of Control.

 

(a) If the Company terminates Employee’s employment without Cause, or if Employee resigns for Good Reason in accordance with Section 6.3, then Employee will be entitled to receive the following:

 

(i) a lump sum severance payment in an amount equal to one hundred twenty five percent (1.25x) of the sum of Employee’s then current Base Salary and Employee’s target Annual Bonus in respect of the calendar year in which the termination of employment occurs, less required withholding, and

 

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(ii) the amounts set forth in paragraph (c) below.

 

(b) If the Company terminates Employee without Cause, or if Employee resigns for Good Reason in accordance with Section 6.3, in either case within three (3) months before or twelve (12) months following a Change of Control, then Employee will be entitled to receive in addition to those payments set forth in Section 6.2(a) above, the following:

 

(i) a lump sum severance payment in an amount equal to twenty five percent (0.25x) of the sum of the greater of (A) Employee’s then current Base Salary and Employee’s target Annual Bonus in respect of the calendar year in which the termination of employment occurs, or (B) Employee’s Base Salary as of the date immediately prior to the Change of Control and Employee’s target Annual Bonus in respect of the calendar year in which the termination of employment occurs, less required withholding, and

 

(ii) the amounts set forth in paragraph (c) below.

 

(c) In addition to those amounts set forth in paragraphs (a) or (b) above, as applicable, Employee shall be entitled to (i) on Employee’s first regular payday following the Termination Date, a lump sum payment equivalent to the Accrued Benefits; (ii) reasonable costs not to exceed $10,000 for outplacement services provided by a purveyor approved by the Company and moving expenses, upon delivery to the Company of an itemized invoice for such services provided that, in each case, such costs are incurred within six (6) months of the Termination Date; (iii) reimbursement by the Company for the cost (on an after-tax basis) of continuation of all medical and dental benefits in effect on the Termination Date, for a period of eighteen (18) months following the Termination Date, or until Employee is eligible to receive comparable medical and dental benefits from another employer; provided, however, (A) Employee timely elects the continuation of group health plan benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), (B) Employee makes a payment to the Company in an amount equal to the monthly premium payments (both the employee and employer portions) required to maintain such coverage, (C) such reimbursement shall comply with Section 9.12(c), (D) Employee and the Company acknowledge that this coverage will count towards the Company’s and the applicable group health plan’s obligation to provide Employee with the right to continuation coverage pursuant to COBRA and Employee will be able to continue such coverage at his own expense for the balance of the period provided under COBRA, and (E) notwithstanding anything contained in this Agreement, Employee will not have a duty to mitigate the payments to be made to Employee pursuant to this Section 6.2(c) by obtaining subsequent employment or otherwise; (iv) any unpaid Annual Bonus with respect to the calendar year ended prior to the termination of Employee’s employment; and (v) full accelerated vesting of any and all unvested stock options, restricted stock units and restricted stock grants held by Employee.

 

(d) “Change of Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of one or more of the following events:

 

(i) Any Person, as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (“Person”), becomes the owner of voting securities of the Company (“Voting Securities”) representing more than fifty percent (50%) of the 

 

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combined voting power of the Company’s then-outstanding securities, other than by virtue of a merger, consolidation or similar transaction; provided, however, that in determining whether a Change of Control has occurred, Voting Securities which are acquired by any Person in a Non-Control Acquisition (as hereinafter defined) shall not constitute an acquisition which would cause a Change of Control.  A “Non-Control Acquisition” shall mean an acquisition by (A) an employee benefit plan (or a trust forming a part thereof) maintained by (1) the Company or (2) any of the Company’s subsidiaries, (B) the Company or any of the Company’s subsidiaries, or (C) any Person of not more than 25% of the Voting Securities that is entitled to and does report such beneficial ownership on Schedule 13G under the Exchange Act (a “13G Filer”), provided, however, that this clause (C) shall cease to apply when a Person who is a 13G Filer becomes required to file a Schedule 13D under the Exchange Act with respect to such beneficial ownership of the Voting Securities;

 

(ii) The consummation of a merger, consolidation or similar transaction that directly or indirectly involves the Company (a “transaction”), other than a transaction which results in (A) the Incumbent Directors (as hereinafter defined) constituting immediately after such transaction at least a majority of the Board, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof, and (B) the voting securities of the Company outstanding immediately prior to such transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, more than fifty percent (50%) of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such transaction;

 

(iii) The stockholders of the Company approve, or the Board approves, a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company otherwise occurs;

 

(iv) The consummation of a sale, lease or other disposition of all or substantially all of the consolidated assets of the Company (a “disposition”) that requires approval of the Company’s stockholders under Delaware corporate law; provided that this paragraph (d)(iv) excludes a disposition to an entity with respect to which stockholders of the Company own immediately after the disposition more than fifty percent (50%) of the combined voting power of the entity’s outstanding voting securities; or

 

(v) The Board ceases to be composed of at least a majority of Incumbent Directors.  “Incumbent Directors” are the current members of the Board and any subsequent Board member who was nominated or elected by a majority vote of the Incumbent Directors then in office; provided, however, that no individual shall be considered an Incumbent Director if such individual initially assumed office as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any election contest or Proxy Contest.

 

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Notwithstanding the above clauses (i) through (v), a “Change of Control” shall not have occurred (unless the Board determines otherwise) by reason of either of the following:  (A) any corporate reorganization, merger, consolidation, transfer of assets, liquidating distribution or other transaction entered into solely by and between the Company and any subsidiary of the Company (a “reorganization”), provided the reorganization was approved by at least two-thirds (2/3) of the Incumbent Directors (as defined above) then in office and voting; or (B) any of the transactions described in clauses (i) through (v) above occurs pursuant to an Insolvency Proceeding.  An “Insolvency Proceeding” means (A) the Company institutes or consents to the institution of any proceeding under any debtor relief law, makes an assignment for the benefit of creditors, or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for the Company or for all or any material part of the Company’s property; or (B) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of the Company and the appointment continues undischarged or unstayed for 60 calendar days; or (C) any proceeding under any debtor relief law relating to the Company or to all or any material part of the Company’s property is instituted without the consent of the Company and continues undismissed or unstayed for 60 calendar days, or any order for relief is entered in any such proceeding.

 

(e) The payments and benefits to which Employee is entitled under Section ‎6.2‎(a), Section ‎6.2‎(b) and Section 6.2(c) are referred to as “Severance.”  All other Company obligations to Employee pursuant to this Agreement other than Employee’s accrued benefits under the Company’s benefit and welfare plans and his rights to indemnification and continued coverage under the Company’s D&O Policies will automatically terminate and be completely extinguished as of the Termination Date.

 

6.3 Resignation of Employee for Good Reason.

 

(a) Other than during the twelve (12) month period commencing on the date of a Change of Control (such twelve (12) month period, the “Change of Control Protection Period”), Employee may resign for “Good Reason” upon notice to the Company within thirty (30) days following the relevant event or condition if any of the following occurs without Employee’s express consent:

 

(i) The Board or Company (A) alters Employee’s duties, responsibilities or title resulting in a significant diminution of Employee’s position, duties, responsibilities or status with the Company or, (B) requires Employee to report to anyone other than the most senior executive of the Company if the Employee previously reported to the most senior executive of the Company or (C) reduces Employee’s Base Salary, unless the base salaries of all other employees of the Company at the Vice President level or above are proportionately reduced and such reduction does not exceed 10% of Employee’s Base Salary;

 

(ii) The Board or Company transfers or assigns Employee to any location that is more than fifty (50) miles from the location of Employee’s principal office.  Required travel on the Company’s business that is consistent with the business travel obligations of Employee’s position is excluded from this Section 6.3(a)(ii); or

 

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(iii) The Company materially breaches its obligations under this Agreement, but only after Employee has provided written notice to the Company specifying such material breach and the Company fails to cure such breach within 20 days after its receipt of such notice.

 

(b) During the Change of Control Protection Period, Employee may resign for “Good Reason” upon the occurrence of any of the following events or conditions without Employee’s express consent:

 

(i) A material adverse change in Employee’s duties, responsibilities or title as in effect at any time within one year preceding the date of a Change of Control or at any time thereafter; the assignment to Employee of any duties or responsibilities which are inconsistent with his duties, responsibilities or title as in effect at any time within one year preceding the date of a Change of Control or at any time thereafter; or any removal of Employee from or failure to reappoint or reelect him/her to any of such offices or positions, except in connection with the termination of his employment for Disability, Cause, as a result of his death or by Employee other than for Good Reason;

 

(ii) A material reduction in Employee’s annual salary or target annual bonus opportunity as in effect at any time within one year preceding the date of a Change of Control or at any time thereafter; provided, however, that a reduction by more than 10% in Employee’s annual salary or target annual bonus opportunity shall be considered a material reduction for purposes of this Section 6.3(b)(ii);

 

(iii) The Board or Company transfers or assigns Employee to any location that is more than fifty (50) miles from the location of Employee’s principal office prior to the Change of Control.  Required travel on the Company’s business that is consistent with the business travel obligations of Employee’s position is excluded from this Section 6.3(b)(ii);

 

(iv) The failure by the Company to (A) provide Employee with compensation and benefits, in the aggregate, at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under a material employee benefit plan, program and practice in which Employee was participating at any time within one year preceding the date of a Change of Control or at any time thereafter, or (B) permit Employee to participate in any or all incentive, savings, retirement plans and benefit plans, fringe benefits, practices, policies and programs applicable generally to other similarly situated employees of the Company and affiliated companies of the Company (including any successors to the Company and affiliated companies of the Company);

 

(v) The Company materially breaches its obligations under this Agreement;

 

(vi) Any purported termination of Employee’s employment for Cause by the Company which does not comply with the terms of Section ‎‎‎6.1; or

 

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(vii) The failure of the Company to obtain an agreement, satisfactory to Employee, from any successors and to assume and agree to perform this Agreement.

 

Notwithstanding anything to the contrary in Sections 6.3(b)(i) through (vii) above, Employee shall provide written notice to the Company of any actual or perceived occurrence of any of the foregoing events which could give rise to a “Good Reason” termination by Employee, and the Company shall have twenty (20) days from the date of such notice to cure any alleged deficiency to the extent curable.

 

6.4 Resignation by Employee Without Good Reason.  Employee may voluntarily resign position with the Company without Good Reason at any time on thirty (30) days’ advance written notice.  In the event Employee’s resignation is without Good Reason, Employee will be entitled to receive, on Employee’s first regular payday following the Termination Date, a lump sum payment equivalent to the Accrued Benefits.  All other Company obligations to Employee pursuant to this Agreement other than Employee’s accrued benefits under the Company’s benefit and welfare plans and his rights to indemnification and continued coverage under the Company’s D&O Policies will automatically terminate and be completely extinguished.

 

6.5 Employee’s Execution of Release and Timing of Payments.

 

(a) Release.  Notwithstanding the foregoing, as a condition to the payment of any severance pursuant to Sections 6.2(a) or 6.6(b)(i) and (iii), Employee will be required to execute, deliver and not revoke, within 60 days following the Termination Date, a release provided by the Company which contains a full and general release of claims in favor of the Company and its affiliates, which release shall not include a waiver of Employee’s Accrued Benefits under the Company’s benefit and welfare plans or his rights to indemnification and continued coverage under the D&O Policies (“Release”).  If the Release has not been executed, delivered and become irrevocable by Employee within the statutory revocation period, no payments under Sections 6.2(a) or 6.6(b)(i) and (iii), will be or become payable.  Notwithstanding the foregoing, if the Company does not deliver the Release to Employee within three (3) business days following the Termination Date, then any requirement for Employee to execute, deliver and not revoke the Release as a condition of receiving any payments under Sections 6.2(a) or 6.6(b)(i) and (iii) will have no effect, and Employee will be entitled to receive any payments to which Employee otherwise qualifies under Sections 6.2(a) or 6.6(b)(i) and (iii).

 

(b) Time of Payments. Unless otherwise stated and subject to Sections ‎6.5‎(a) and ‎‎9.12 hereof, all payments and reimbursements required to be made under this Section 6 to Employee (including any payments or reimbursements to which Employee is entitled in respect of the period commencing on the Termination Date and ending on the 60th day following the Termination Date) shall be made or shall commence on the 60th day following the Termination Date; provided, however, all payments required to be made under Section 6.2(b) to Employee shall be made or shall commence on the 60th day following the later of:  (i) the Termination Date and (ii) the date of the Change in Control.

 

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6.6 Termination Upon Death or Disability.

 

(a) Death.  Employee’s employment will terminate automatically upon death of Employee.  In the event of Employee’s death, the Accrued Benefits shall be paid, on Employee’s first regular payday following the Termination Date, to the beneficiary designated in writing by Employee (“Beneficiary”) or, if no such Beneficiary is designated, to Employee’s estate.  In addition, (i) commencing on the Termination Date, the Company will continue Employee’s Base Salary until the earlier of six months from the Termination Date or the commencement of death benefits under any existing Company Group Life Insurance Plan, (ii) within sixty (60) days following the Termination Date, the Company shall pay any unpaid Annual Bonus with respect to the calendar year ended prior to the termination of Employee’s employment and a pro rata Annual Bonus (based upon his target Annual Bonus) for the year in which the termination of employment occurs; (iii) the Company shall fully accelerate vesting of any and all unvested stock options, restricted stock units and restricted stock grants held by Employee; and (iv) the Company shall continue the Employee’s right to indemnification and coverage under the D&O Policies.

 

(b) Disability.  In the event that Employee becomes physically or mentally disabled such that he/she is unable to perform his duties for a period of three (3) consecutive months as determined by a medical professional (“Disability”), the Company may terminate Employee’s employment, unless otherwise prohibited by law.  In the event of termination due to Disability, Employee shall be paid, on Employee’s first regular payday following the Termination Date, a lump sum payment equivalent to the Accrued Benefits.  In addition, (i) the Company will pay Employee a cash lump sum in an amount equal to half of Employee’s Base Salary; (ii) the Company shall pay any unpaid Annual Bonus with respect to the calendar year ended prior to the termination of Employee’s employment and a pro rata Annual Bonus (based upon his target Annual Bonus) for the year in which the termination of employment occurs; (iii) the Company shall fully accelerate vesting of any and all unvested stock options, restricted stock units and restricted stock grants held by Employee; and (iv) the Company shall continue the Employee’s right to indemnification and coverage under the D&O Policies.

 

6.7 Board Action.  The Company agrees to take all actions required by the Board or otherwise to accelerate Employee’s unvested stock options, restricted stock units and restricted stock grants as required by Sections ‎6.2 or ‎6.6.

 

6.8 Adjustment of Payments and Benefits. Notwithstanding any provision of this Agreement to the contrary, if any payment or benefit to be paid or provided under this Agreement or otherwise would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments and benefits to be paid or provided hereunder shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate payments and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, 

 

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and any applicable federal, state and local income taxes).  The determination of whether any reduction in such payments or benefits to be provided hereunder is required pursuant to the preceding sentence shall be made at the expense of the Company, if requested by Employee or the Company, by the Company's independent accountants.  The fact that Employee's right to payments or benefits may be reduced by reason of the limitations contained in this Section ‎6.8 shall not of itself limit or otherwise affect any other rights of Employee under this Agreement.  In the event that any payment or benefit intended to be provided hereunder is required to be reduced pursuant to this Section ‎6.8, such payments or benefits will be reduced in the following order:  (a) the lump sum severance payment described in Section ‎6.2(a)(i) (multiple of Base Salary); (b) the lump sum severance payment described in Section ‎6.2(a)(ii) (multiple of target Annual Bonus); (c) the lump sum severance payment described in Section ‎6.2(b)(i) (multiple of Base Salary); (d) the lump sum severance payment described in Section ‎6.2(b)(ii) (multiple of target Annual Bonus); (e) the benefits described in Section ‎6.2(c)(ii) (reimbursement for certain outplacement services and moving expenses); (f) the benefits described in Section ‎6.2(c)(iii) (reimbursement for cost of continued medical and dental benefits); (g) the benefits described in Section ‎6.2(c)(iv) (unpaid Annual Bonus with respect to year prior to year of termination); and (h) the benefits described in Section ‎6.2(c)(v) (accelerated vesting of equity awards).  

 

7. Agreement Not to Compete.

 

7.1 No Employment with, or Connection to, Competitor.  Employee agrees that, during the term of employment with the Company and for a period of nine (9) months following the Termination Date, Employee will not, without securing the prior written permission of the Company:

 

(a) be employed by, act as an agent for, or consult with or otherwise perform services for, a Competitor (as defined below); or

 

(b) own any equity interest in, manage or participate in the management (as an officer, director, partner, member or otherwise) of, or be connected in any other manner with, a Competitor, except that this section shall not restrict Employee from owning less than one percent (1%) of the equity interests of any publicly held entity.

 

7.2 Nonsolicitation of Company Employees and Customers.  Employee agrees that for a period of one (1) year following the Termination Date, Employee will not, without securing the prior written permission of the Company, induce or attempt to induce any Employee, officer, director, agent, independent contractor, consultant, customer, strategic partner, licensor, licensee, supplier or other service provider of the Company to terminate a relationship with, cease providing services or products to, or purchasing products or services from, the Company.

 

7.3 Definition of Competitor.  The term “Competitor” as used in this Agreement means any individual or entity that is directly or indirectly engaged in the development and/or commercialization in the United States of one or more ex vivo cellular immunotherapies for the therapeutic treatment of cancer, which ex vivo cellular immunotherapies generate twenty percent (20%) or more of either the annual gross revenue or worldwide operating expense of such Competitor in the United States.  The term “Competitor” 

 

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also includes an individual or entity that is preparing to directly or indirectly engage in the development and/or commercialization in the United States of ex vivo cellular immunotherapies, if such ex vivo immunotherapies are anticipated to generate twenty (20%) or more of either the annual gross revenue or annual operating expense of such Competitor in the United States during the first calendar year of development and/or commercialization.

 

7.4 Reasonableness of Restrictions.  The Company and Employee agree that, in light of all of the facts and circumstances relating to the relationship that exists and is expected to exist between the Company and Employee, these restrictions (including, but not limited to, the scope of the restricted activities, the duration of the restrictions, and the geographic extent of the restrictions) are fair and reasonably necessary for the protection of the goodwill and other protectable interests of the Company.  If a court or arbitrator of competent jurisdiction declines to enforce any of these restrictions, the Company and Employee agree that the restrictions shall be enforceable to the maximum extent allowed by law.

 

8. Legal Fees and Expenses.  Unless prohibited by law, if Employee prevails on at least one substantive issue in seeking to enforce the Company’s obligations under this Agreement, the Company shall pay and be solely responsible for any and all costs and expenses (including attorneys’ fees) incurred by Employee in connection with Employee’s action to enforce the Company’s obligations under this Agreement.  The Company shall pay directly or reimburse Employee for any and all such costs and expenses within sixty (60) calendar days following the presentation by Employee or by counsel selected from time to time by Employee of a statement or statements prepared by Employee or by such counsel of the amount of such costs and expenses.  The Company shall also pay to Employee interest (calculated at the base rate from time to time in effect at Bank of America, compounded monthly) on any payments or benefits that are paid or provided to Employee later than the date on which due under the terms of this Agreement.

 

In order to comply with Section 409A of the Code, (a) in no event will the payments by the Company under Section 8 of this Agreement be made later than the end of the calendar year next following the calendar year in which such fees and expenses were incurred; Employee shall be required to submit an invoice for such fees and expenses at least 10 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; (b) the amount of such legal fees and expenses that the Company is obligated to pay in any given calendar year will not affect the legal fees and expenses that the Company is obligated to pay in any other calendar year; (c) the Company’s obligation to pay Employee’s legal fees will terminate on the fifth anniversary of the termination of this Agreement; and (d) Employee’s right to have the Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

 

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9. General Provisions.

 

9.1 Successors and Assigns.  The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company.  Employee shall not be entitled to assign any of Employee’s rights or obligations under this Agreement.

 

9.2 Waiver.  Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

 

9.3 Severability.  In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefits contemplated in this Agreement to the fullest extent permitted by law.  If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected.

 

9.4 Interpretation; Construction.  The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement.  Both parties have participated in the negotiation of this Agreement.  Therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

9.5 Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated:  (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt.  Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

 

9.6 Survival.  Section 6 (“Separation of Employee’s Employment”), Section 7 (“Confidentiality; Agreement Not to Compete”), Section 8 (“Legal Fees and Expenses”), and Section 9 (“General Provisions”) of this Agreement shall survive Employee’s employment by the Company.

 

9.7 Entire Agreement.  This Agreement, the Company’s stock option plan and documents reflecting options and restricted stock granted to Employee, the Proprietary Information and Inventions Agreement entered into by Employee at the commencement of  employment with the Company, and the Indemnity Agreement entered into by the Company and Employee, if any, constitute the entire agreement between the parties relating to this subject matter and supersede all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral.  This Agreement may be amended or modified only with the written consent of Employee and a duly authorized officer of the Company.  No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

 

J. Osborn - Executive Employment Agreement

 

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9.8 Injunctive Relief.  Notwithstanding the foregoing, any action brought by the Company under this Agreement seeking a temporary restraining order, temporary and/or permanent injunction and/or decree of specific performance of the terms of this Agreement may be brought in any court of competent jurisdiction.  The Company shall not be required to post a bond as a condition for the granting of such relief.

 

9.9 Governing Law and Venue.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Washington as though made and to be fully performed in that State.  Venue for any action arising from this Agreement shall be exclusively in King County, Washington.

 

9.10 Arbitration.

 

(a) Employee and the Company agree that if a dispute arises concerning or relating to Employee’s employment with the Company, or the termination of Employee’s employment, such dispute shall be submitted to binding arbitration under the rules of the American Arbitration Association regarding resolution of employment disputes in effect at the time such dispute arises.  The arbitration shall take place in King County, Washington, before a single experienced arbitrator licensed to practice law in Washington and selected in accordance with the American Arbitration Association rules and procedures.  Except as provided below, Employee and the Company agree that this arbitration procedure will be the exclusive means of redress for any disputes relating to or arising from Employee’s employment with the Company or his termination, including disputes over rights provided by federal, state, or local statutes, regulations, ordinances, and common law, including all laws that prohibit discrimination based on any protected classification.  The parties expressly waive the right to a jury trial, and agree that the arbitrator’s award shall be final and binding on both parties, and shall not be appealable.  The arbitrator shall have discretion to award monetary and other damages, and any other relief that the arbitrator deems appropriate and is allowed by law taking into consideration Section 8 of this Agreement.

 

(b) The Company and Employee agree that the sole dispute that is excepted from Section 9.10is an action seeking injunctive relief from a court of competent jurisdiction regarding enforcement and application of Section 7 of this Agreement, which action may be brought in addition to, or in place of, an arbitration proceeding in accordance with Section 9.10.

 

9.11 Withholding.  All payments and benefits made to Employee hereunder will be subject to any payroll and withholding deductions required by applicable law.

 

9.12 Compliance with Section 409A of the Code.

 

(a) To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with Section 409A of the Code (it being understood that certain compensation arrangements under this Agreement are intended not to be subject to Section 409A of the Code).  The Agreement shall be construed, to the maximum extent permitted, in a manner to give effect to such intention.  Notwithstanding anything in this Agreement to the contrary, distributions upon termination of Employee’s employment may only 

 

J. Osborn - Executive Employment Agreement

 

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be made upon Employee’s “separation from service” with the Company (as determined in accordance with Section 409A of the Code).  Employee acknowledges that Employee has been advised to obtain independent legal, tax or other counsel in connection with Section 409A of the Code.

 

(b) Compliance with Section 409A of the Code. Notwithstanding any provisions of this Agreement to the contrary, if Employee is a “specified employee” (within the meaning of Section 409A of the Code and determined pursuant to policies adopted by the Company) at the time of Employee’s separation from service and if any portion of the payments or benefits to be received by Employee upon separation from service would be considered deferred compensation under Section 409A of the Code (“Nonqualified Deferred Compensation”), amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following Employee’s separation from service that constitute Nonqualified Deferred Compensation and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Employee’s separation from service that constitute Nonqualified Deferred Compensation will instead be paid or made available on the earlier of (i) the first business day of the seventh month following the date of Employee’s separation from service and (ii) Employee’s death.

 

(c) With respect to any amount of expenses eligible for reimbursement under this Agreement, such expenses will be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from Employee in accordance with the Company’s expense reimbursement policies, but in no event later than the last day of Employee’s taxable year following the taxable year in which Employee incurs the related expenses.  In no event will the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor will Employee’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.

 

(d) Each payment under this Agreement shall be regarded as a “separate payment” and not of a series of payments for purposes of Section 409A of the Code.

 

J. Osborn - Executive Employment Agreement

 

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THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION.

 

John E. Osborn

 

Dated: August 30, 2011                                                               /s/ John E. Osborn

 

Address:

99 Union Street #1705

Seattle, WA 98101

 

DENDREON CORPORATION

 

Dated: August 30, 2011                                       By: /s/ Mitchell H. Gold, M.D.

 

Its: President & CEO

Address:

1301 2nd Ave., Suite 3200

Seattle, WA  98101

 

 

J. Osborn - Executive Employment Agreement

- 15 -Exhibit 10.12

QUOTA PURCHASE AGREEMENT AND OTHER COVENANTS

By this private instrument and on the best terms of the law, on the one part, hereinafter referred to as Sellers:

[I] ROGÉRIO ANTONIO, Brazilian, single, businessman, bearer of CNH – Driver’s License No. 03532354568 DETRAN/ES, duly enrolled with the CPF/MF – Individual Taxpayers’ Registry of the Ministry of Finance under No. 551.283.439-87, resident and domiciled in the City of Vitória, State of Espírito Santo, at Avenida Dante Micheline, n° 1.845, apto. 101, Bairro Mata da Praia, CEP 29066-430, hereinafter individually referred to as “Rogério”; and

[II] ISABELA CIANNI PORTUGAL, Brazilian, single, businesswoman, bearer of CNH – Driver’s License No. 04286279287 DETRAN/ES, duly enrolled with the CPF/MF – Individual Taxpayers’ Registry of the Ministry of Finance under No. 930.260.137-49, resident and domiciled in the City of Vitória, State of Espírito Santo, at Avenida Dante Micheline, n° 1.845, apto. 101, Bairro Mata da Praia, CEP 29066-430, hereinafter individually referred to as “Isabela”;

on the other part, hereinafter referred to as “Buyer”,

[III] ARDENT MINES LIMITED, a company organized and existing in accordance with the laws of Nevada, United States of America, with head office in the City of New York, United States of America, at 100 Wall Street, 21st, Floor, New York, NY 10005, duly registered in the State of Nevada, United States of America, under No. C20312-2000, and duly enrolled with the CNPJ/MF – Brazilian National Registry of Legal Entities of the Ministry of Finance under No. 13.561.494/0001-25, herein represented, in accordance with its Articles of Incorporation, by Mr. Leonardo Alberto Riera, United States citizen, married under the specific system established by the laws of Venezuela, economist, holder of American passport No. 467010355, with office in the City of New York, United States of America, at 100 Wall Street, 21st Floor, New York, NY 10005,

Sellers and Buyer hereinafter individually referred to as “Party” and collectively as “Parties”,

and, as Intervening Party,

[IV] GOLD HILLS MINING LTDA., a limited liability company with head office in the City of Itapetim, State of Pernambuco, at Fazenda Piedade, s/n, Zona Rural, CEP 56720-000, duly enrolled with the CNPJ/MF - Brazilian National Registry of Legal Entities of the Ministry of Finance under No. 10.731.789/0001-04, with its articles of organization duly filed with the JUCEPE - Commercial Registry of the State of Pernambuco under NIRE No. 26.2.0173862-9, on March 23, 2009, herein represented in accordance with its Articles of Association by its managers, Mr. Rogério Antonio and Ms. Isabela Cianni Portugal, identified above, hereinafter referred to as “Company”,

   

  

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and, as Assignee,

  

[V] CARLOS ALBERTO DE MELO LACERDA, Brazilian, married, lawyer, enrolled with the Brazilian Bar Association, Rio de Janeiro Chapter under OAB/RJ No. 28.226, enrolled with the CPF/MF – Individual Taxpayers’ Registry of the Ministry of Finance under No. 228.339.517-87, domiciled at Rua 7 de Setembro no 55 grupo 1902, in the City and State of Rio de Janeiro, CEP 20050-004,

WHEREAS:

(A)           Rogério is the owner and lawful holder of twenty one thousand and ninety-five (21,095) quotas of the capital stock of the Company, free and clear of any and all liens, charges, encumbrances, usufructs, debts, doubts, actions or contingencies of any kind, with a par value of one Brazilian Real (R$1.00) each, totaling twenty one thousand and ninety-five Brazilian Reais (R$21,095.00);

(B)           Isabela is the owner and lawful holder of twenty one thousand and ninety-five (21,095) quotas of the capital stock of the Company, free and clear of any and all liens, charges, encumbrances, usufructs, debts, doubts, actions or contingencies of any kind, with a par value of one Brazilian Real (R$1.00) each, totaling twenty one thousand and ninety-five Brazilian Reais (R$21,095.00);

(C)           Sellers are collectively the owners and lawful holders of forty-two thousand one hundred and ninety (42,190) quotas of the capital stock of the Company, free and clear of any and all liens, charges, encumbrances, usufructs, debts, doubts, actions or contingencies of any kind, with a par value of one Brazilian Real (R$1.00) each, totaling forty-two thousand one hundred and ninety Brazilian Reais (R$42,190.00), representing all of the capital stock of the Company (“Quotas”);

(D)           the Company purpose is the prospecting for gold, silver and their byproducts and the mining of gold, silver and their byproducts, as well as the retail of gold and silver mineral goods and their byproducts, and it is the holder of the extraction rights relating to conduction of these activities, which are part of its assets, as described in Whereas “E” of this Agreement;

(E)           The Company has title to processes No. 846.165-09, 846.166-09, 846.167-09 and 846.174-09 (“Mineral Rights”), currently in progress in the Brazilian Mineral Production Department (“DNPM”), a federal agency linked to the Ministry of Mining and Power (“MME”), a body of the Federal Government of the Federative Republic of Brazil, by means of which the Company is authorized to prospect for gold, silver and their byproducts in the Cities of Desterro and Teixeira, State of Paraíba, and Itapetim and Brejinho, State of Pernambuco, encompassing a total area of 3,499.60 Hectares, to be collectively referred to as “Serra do Ouro” project, in accordance with Executive Order No. 227, of 1967 (the “Mining Code”) and additional laws;

(F)           Sellers wish to sell to Buyer the Company’s Quotas respectively owned by them, as well as all their rights and obligations;

(G)           Buyer wishes to purchase from Sellers the Company’s Quotas, for which purpose it has obtained from Sellers all information, data, certificates, agreements and other data, especially about the Mineral Rights, and found them to be in compliance with the applicable Brazilian law,

 

  

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NOW, THEREFORE, the Parties mutually resolve to execute this Quota Purchase Agreement and other Covenants (“Agreement”), which shall be governed by the following clauses and conditions:

	
I.

	
PURCHASE AND SALE OF QUOTAS

1.1. Purchase and Sale of Quotas. Sellers hereby assign and transfer to Buyer, for consideration, all Quotas, representing the whole capital stock of the Company, free and clear of any and all liens, charges, encumbrances, usufructs, debts, doubts, actions or contingencies of any kind.

1.2. Assignment and Transfer of Quotas. The assignment and transfer of Quotas from Sellers to Buyer is hereby formalized by means of the execution, by the Parties, of the First Amendment to the Articles of Association of the Company (“Amendment”), which shall be an integral part hereof as Exhibit 1.2, and which shall be filed by Buyer with the JUCEPE - Commercial Registry of the State of Pernambuco within thirty (30) days after the date hereof, as well as with the DNPM/MME and all other bodies and authorities as required for it to produce all legal effects for implementation of the purchase and sale of Quotas contemplated in this Agreement.

1.2.1. Buyer shall send Seller, return receipt requested (AR – Return Receipt of the Mail Service), a certified copy of the Amendment duly filed with the JUCEPE - Commercial Registry of the State of Pernambuco within up to fifteen (15) days as from the date of filing thereof.

1.3. Clearance Certificates. In order to implement the purchase and sale of Quotas and to file the Amendment with the JUCEPE - Commercial Registry of the State of Pernambuco, as provided in Article 1.2 above, Sellers hereby deliver Buyer the original counterparts of all clearance certificates of the Company (“Clearance Certificates”) issued by the competent authorities, which had already been deemed valid by Buyer and which shall be an integral part hereof as Exhibit 1.3.

1.4. Other documents that may be required. Without prejudice to the provisions of Article 1.3 above, and at the request of public authorities, Sellers hereby agree to perform any and all other actions required to ratify the assignment and transfer of the Quotas as provided herein, actually cooperating for all documents required by the JUCEPE - Commercial Registry of the State of Pernambuco and other competent bodies and authorities, especially including the DNPM, to be provided and/or produced for implementation of the purchase and sale of the Company’s Quotas.

	
II.

	
PRICE AND PAYMENT CONDITIONS

2.1. Purchase Price. The certain and agreed price to be paid by Buyer to Sellers for purchase of the Quotas representing all of the capital stock of the Company shall be composed of a fixed portion (“Fixed Prices”), a bonus (“Additional Price”) and a variable income (“Royalty”).

 

  

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2.2. First Fixed Price and Payment Conditions. The First Fixed Price is established in an amount in Brazilian Reais equivalent to two hundred and fifty thousand United States Dollars (USD$250,000.00), paid by Buyer to Sellers proportionally to the equity interest held by each Seller, by means of an international transfer of funds to the account held by Sellers with Banco HSBC, Branch No. 0426, checking account No. 09407-82, SWIFT: BCBBBRPR. This amount shall be duly converted into Brazilian Reais after the required conversion procedures and due registrations and authorizations issued by the SISBACEN – Central Bank of Brazil System.

2.2.1. Release. Upon receipt of the First Fixed Price, Sellers shall grant Buyer, by means of a separate document, full, general, irrevocable and irreversible release, having nothing else to claim, on any account, with regard to payment of the First Fixed Price, which shall include a statement of Buyers for purposes of releasing the amount of one hundred thousand United States Dollars (USD$100,000.00) credited in behalf of Sellers, in accordance with the provisions of the Escrow Agreement, which shall be an integral part hereof as Exhibit 2.2.1.

2.3. Second Fixed Price and Payment Conditions. According to the Extraction results, as defined in Section 4.1. below, Buyer shall pay Sellers the following amounts, it being understood that:

(a) Should the Extraction confirm the existence of gold, silver and byproduct reserves between three hundred thousand (300,000) and four hundred and ninety-nine thousand nine hundred and ninety-nine (499,999) equivalent gold ounces, certified in accordance with the National Instrument 43101, enacted by the CSA – Canadian Securities Administration, as “proven reserves”, the additional payment to be made by Buyer to Sellers shall correspond to four hundred thousand United States dollars (USD$400,000.00), to be paid within up to thirty (30) days after completion of the Pre-Feasibility Study, which shall be prepared within up to one hundred and eighty (180) days after publication of approval of the Final Mineral Prospection Report by the DNPM;

(b) Should the Extraction confirm the existence of gold, silver and byproduct reserves in excess of four hundred and ninety-nine thousand nine hundred and ninety-nine (499,999) equivalent gold ounces, certified in accordance with the National Instrument 43101, enacted by the CSA – Canadian Securities Administration, as “proven reserves”, the additional payment to be made by Buyer to Sellers shall be as follows: (i) one million United States dollars (USD$1,000,000.00), to be paid within up to thirty (30) days after completion of the Pre-Feasibility Study, which shall be prepared within up to one hundred and eighty (180) days after publication of approval of the Final Mineral Prospection Report by the DNPM; and (ii) two United States Dollars (USD$2.00) per additional ounce in excess of the first five hundred thousand (500,000) equivalent gold ounces, to be paid in four (4) successive biannual installments in the same amount, it being understood that the first installment shall be due on the twelfth (12th) month after payment of the amount defined in item (i) above;

 

  

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2.3.1. For purposes of the provisions of letters (a) and (b) above, “mineral reserves” shall mean only the volume of gold, silver and their byproducts contained in the ore existing in the soil and subsoil of the areas covered by the extraction rights held by the Company, characterized as “measured and indicated gold reserves”, as informed in the final mineral prospection report to be presented to the DNPM – Brazilian National Mineral Production Department, prepared for purposes of obtaining the Mining Concession, as established by the Brazilian Law. Definition of these reserves shall also observe the equivalence between the concepts of measured and indicated reserves as established in the Brazilian Law and the concepts of “measured resources” and “indicated resources”, respectively, as defined in accordance with the National Instrument 43-101, issued by the CSA – Canadian Securities Administration, which is internationally acknowledged and broadly used for purposes of defining mineral resources and reserves, which concepts may not be mistaken for the concepts of “proven reserves” and "probable reserves” defined in the same rule, which do not apply to the scope of the investment program defined in Section V below.

2.4. The Parties hereby agree that if the Extraction confirms the existence of gold, silver and byproduct reserves of less than three hundred thousand (300,000) gold, silver and byproduct ounces, no additional payment shall be made by Buyer to Sellers.

2.4.1. In this case, Buyer shall grant Sellers the option to acquire Mineral Rights for the amount hereby agreed of one Brazilian Real (R$1.00) per gold ounce contained in the mineral reserves, as defined at the end of the Extraction, which option shall be informed by Sellers within up to sixty (60) days as from the date on which they receive a notice in this regard. The Parties shall execute a separate document for purposes of complying with the provisions of this Section 2.4.1.

2.5. Additional Price and Payment Conditions. Within up to thirty (30) days as from the date on which the Company obtains the Environmental Installation License, Buyer shall pay Sellers the equivalent in Brazilian Reais to seven hundred thousand United States dollars (USD$700,000.00).

2.6. Variable Income. After beginning of the gold, silver and byproduct extraction by the Company in the Mineral Rights area, either through experimental mining (Use Form granted by the DNPM) or final mining (through an Ordinance granted by the MME), and during the entire useful life of the deposits existing in the Mineral Rights areas, Sellers shall be entitled to receive from the Company a monthly income (“Royalty”) equivalent to two percent (2%) of the net income obtained from sale of the mineral product collected in the Mineral Rights areas as a result of extraction and processing, calculated in accordance with the internationally acknowledged concept of Net Smelting Return, which corresponds to the gross revenues from the sale of refined gold and byproducts, less costs and taxes related to the refining process.

2.6.1. The payment of Royalties shall relate to the actual value of production, melting, refining of the ore or metal or ore concentrates (“Product”) derived from the production and sold after deduction of the following expenses, by Buyer, for purposes of calculating payment: melting and refining expenses; transportation of ore, metal or concentrates from the mine to any refining or melting company or another buyer; sale costs; insurance on the product; fees for the import or export of metals or concentrates applicable in Brazil or in the country of destination of the product, if these charges or costs are not paid by the Product purchaser.

 

  

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2.6.1.1. In case the refining or melting processes occur outside the Mineral Rights areas, the costs and fees relating to these operations, except for the costs and fees relating to transportation, shall be reasonable and compatible with the parameters for equivalent operations.

2.6.2. The royalties shall be paid monthly by the Company by the fifteenth (15th) day of the month following the month of actual sale of the gold, silver and byproducts, based on the accounting records of the Company.

2.6.3. Each payment owed shall be made in Brazilian currency by means of credit to a bank account to be informed by Sellers.

2.6.4. Upon the monthly payment contemplated in Section 2.6.2, the Company shall send Sellers a written statement informing the basis for calculation of the Royalty owed in the reference month.

2.6.5. Within up to ninety (90) days after the end of each fiscal year of production and payment of Royalty, the payment records may be audited by Sellers and any required amendments shall be made a posteriori.

2.7. Existence of other Minerals. The Parties acknowledge that the additional payments and the payment of Royalties contemplated herein shall only be owed by Buyer to Sellers in the event of existence of gold, silver and byproduct reserves, calculated in gold equivalent, for which reason they are not applicable to verification of the existence of other minerals.

2.8. The Parties hereby agree that for purposes hereof the terms “ounce” or “ounces” shall mean Troy ounces, in accordance with the internationally accepted standards.

	
III.

	
DEFAULT ON PAYMENTS

3.1. Default. All amounts owed to Sellers and not paid on the maturity date contemplated in the Agreement shall be adjusted for inflation in accordance with the General Market Price Index (“IGP-M”) compiled and disclosed by the Getúlio Vargas Foundation, and added by interest of one percent (1%) per month and a default fine equivalent to ten percent (10%) of the adjusted amount of the debt, from the maturity date until actual payment thereof, which amounts may be collected by means of a process of execution.

	
IV.

	
MINERAL EXTRACTION

4.1. Extraction. For purposes hereof, mineral extraction (“Extraction”) means mineral prospection works, as defined in Executive Order No. 227/69 (“Mining Code”), for the purpose of defining the volume and quality of gold, silver and byproducts contained in the soil and subsoil of the areas covered by the Mineral Rights.

 

  

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4.2. Within ninety (90) days as from execution hereof, Buyer shall begin the Extraction, at its sole and own expenses and liens, by means of a mineral prospection program compatible with the best international practices, subject to the provisions of the Brazilian mining laws, for the purpose of determining the cubic footage (volume and quality) of the mineral reserves existing in the Mineral Rights area.

4.2.1. As from execution hereof, Buyer shall be solely and exclusively liable for the processing of Mineral Rights in the DNPM/MME, incurring and being liable for all rights and obligations under the Mining Code and applicable law, including with regard to the soil owners. For that purpose, the Company grants, on the date hereof and in a separate instrument, powers for representatives of Buyer to have access to the Mineral Rights, while the Amendment is filed with the JUCEPE - Commercial Registry of the State of Pernambuco.

4.2.2. Rogério hereby agrees to assist Buyer, using his best efforts for Buyer to obtain the authorization of any third party that owns and/or has possession of the soil encompassed by the Mineral Rights area, so that the extraction works can be performed.

4.3. The Company shall be required to complete all Extraction works as required to prepare and present to the DNPM the respective final mineral prospection reports relating to the Mineral Rights, in accordance with the provisions of Executive Order No. 227, of February 28, 1967, and of Executive Order No. 62934, of July 2, 1968, which have created, respectively, the Brazilian Mining Code and the Brazilian Mining Code Regulation, as amended, as well as with all other applicable laws, regulations and rules, to measure and determine the mineral reserves held by the Company.

4.4. During performance of the Extraction works, Rogério shall be entitled to analyze all data obtained by the Company, and he may also request information in writing on the progress of the Extraction works to the Company, which shall answer him within up to fifteen (15) days.

	
V.

	
INVESTMENT FOR MINERAL EXTRACTION

5.1. Investment for Extraction. Buyer shall invest the minimum amount equivalent in Brazilian Reais to three million five hundred thousand United States dollars (USD$3,500,000.00) in the Company for the Extraction works in the Mineral Rights area, upon development of an extensive extraction program (“Extraction Program”).

5.1.1. Sellers shall be granted the right to audit the Extraction Program upon a fifteen (15)-day notice thereof to the Company, it being understood that Sellers shall incur the audit costs.

	
VI.

	
REPRESENTATIONS AND WARRANTIES OF BUYER

6.1. Representations and Warranties of Buyer. Buyer represents and warrants to Sellers that Buyer is a company duly organized and existing in accordance with the laws of Nevada, United States of America, duly registered with the United States Securities and Exchange Commission, having all required power to execute and comply with the obligations contemplated in this Agreement and in the other agreements contemplated herein, having performed all corporate actions required to authorize execution hereof and complied with all applicable laws, regulations and rules. Buyer is further disposed to comply with all obligations assumed to Sellers as provided in this Agreement.

 

  

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6.2. Advisory Board of the Company. The Parties agree that this is the body entitled to issue opinions on the general business policy of the Company, among other matters, pursuant to the provisions of the Articles of Association of the Company.

6.2.1.       Structure. The Advisory Board to be created in the Company shall be composed of at least two (2) and at most five (5) members, of whom one shall be the Chairperson and the other members shall have no specific designation, whether quotaholders or not, resident in Brazil or not, and who shall be elected and removed from office by members representing a majority of the capital stock of the Company, in a Meeting of Members, for a term of office of three (3) years, reelection being permitted.

6.2.2.       Meetings of the Advisory Board of the Company. The Advisory Board shall meet at least once a year and the meeting shall be called by the Chairperson of the Advisory Board. The meetings shall be held within up to five (5) days after issuance, by letter, telegram or facsimile, of a notice in this regard. Such notice shall specify the agenda of the meeting. For the meetings of the Advisory Board to be valid, a majority of its members shall attend the meeting, be represented by an attorney-in-fact with specific powers or send its vote by letter, telegram or facsimile before the meeting begins.

6.2.3.       Resolutions of the Advisory Board of the Company. The resolutions and decisions of the Advisory Board shall be valid provided they are approved by a majority vote of its members, and they shall be signed by all attending members and recorded in the Minutes of Meeting of the Advisory Board. However, these decisions are not binding to third parties and do not waive obtainment of any other authorization by the Company’s members and/or managers, as established in the other provisions of the Articles of Association of the Company.

6.2.4.       Powers of the Advisory Board of the Company. The Advisory Board of the Company shall be empowered to resolve on the following matters of interest to the Company:

(a)           general policy of the Company with regard to the extraction of gold, silver and their byproducts;

(b)           development of the Company’s business, especially the extraction of gold, silver and their byproducts, as well as inspection of these matters;

(c)           operations not included in the Company purpose or execution of agreements and assumption of obligations that may be especially important to the Company, either in view of their duration or for any other reason; or, finally, the performance of acts, facts, business or similar actions outside the ordinary course of business of the Company; and

 

  

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(d)           any matter that may be presented by one of the members of the Advisory Board or by the Company’s manager.

6.2.5. The Parties hereby agree that Buyer shall appoint for the first term of office Rogério as one of the members of the Advisory Board of the Company, subject to the provisions of the Articles of Association of the Company with regard to the term of office, possibility of reelection, attributions, powers, duties, and responsibilities. Rogério’s remuneration, as well as the remuneration of the other members of the Advisory Board of the Company, shall observe the amounts currently paid by the Brazilian companies that operate in the same industries as the Company with regard to the remuneration of members of the Advisory Board or members of the Board of Directors of such companies, as the case may be.

6.3. Extraction Costs. Buyer warrants that it shall be solely, directly and exclusively liable for all investments, expenses and costs required for performance of the mineral prospection works, economic feasibility study, loans, obtainment of licenses, mine construction and implementation works, among others, until construction and commissioning of the processing plant of the mining undertaking to be installed on the Mineral Rights areas. Similarly, Buyer represents that Buyer shall be responsible for management of all services and works, production and operation of the mine and the sale of ore in the Mineral Rights areas, it being understood that Buyer and the Company may not claim from Sellers reimbursement for any amounts, at any time and for any reason.

6.4. Perishing of Mineral Rights. Should one and/or all Mineral Rights perish in view of failure to comply with the applicable law, Buyer warrants that it shall pay Sellers the fine established in Brazilian Reais equivalent to three million United States dollars (USD$3,000,000.00), in addition to being liable for losses, damages and/or ceasing profits in excess of this amount, which shall be assessed in accordance with the provisions of Law No. 10,406, of January 10, 2002, which creates the Brazilian Civil Code, as amended.

6.5. Access to Extraction Rights. Buyer shall grant Sellers, upon a forty-eight (48)-hour prior notice, access to all information relating to the Extraction or to the Mineral Rights as of the date hereof, and Sellers may inspect all technical works hereunder and under the Mineral Rights. However, Sellers may not interfere in any way in these works, and they shall be exclusively liable for all costs resulting from the aforementioned inspection.

6.6. Maintenance of Mineral Rights. The Company shall exclusively liable for maintenance of the Mineral Rights and legal commitments before the DNPM, soil owners, environmental control bodies, City Governments, Judicial District Courts, among others, as of the date hereof, and it shall not be entitled to any claim against Sellers.

6.7. Financial Commitments. Soil Owner. Buyer is aware of and agrees to pay the financial commitments existing before the date hereof, as well as to make the monthly payments from now on to Ms. Carla Andrea do Nascimento, soil owner, pursuant to the provisions of the agreement executed with her.

 

  

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6.8. Encumbrance of Mineral Rights. Until completion of the Pre-Feasibility study and of the corresponding final mineral prospection reports relating to the Mineral Rights, Buyer may not spin-off, transfer, alienate, encumber, burden and/or offer as guarantee to third parties the Mineral Rights, in whole or in part, under penalty of nullity of the assignment. During this period, Buyer also warrants that it shall keep the Mineral Rights free and clear of any judicial and/or extrajudicial liens, under penalty of payment of the fine contemplated in Section 6.4 hereof.

	
VII.

	
REPRESENTATIONS AND WARRANTIES OF SELLERS

7.1. Representations and Warranties of Sellers. Sellers represent and warrant to Buyer, in their individual capacity as Sellers and as members and managers of the Company, that the representations contained in this Article are true and correct on the date hereof, unless otherwise provided in any exhibit hereto.

7.2. Organization. The Company is an entrepreneurial limited liability company duly organized and existing in accordance with the laws of the Federative Republic of Brazil, having all required power to execute and comply with the obligations contemplated in this Agreement and in the other agreements contemplated herein, having performed all corporate actions required to authorize execution hereof and complied with all applicable laws, regulations, and rules.

7.3. Capital Stock. The capital stock of the Company is forty-two thousand one hundred and ninety Brazilian Reais (R$42,190.00), duly subscribed and paid in Brazilian currency, it being understood that all Quotas are free and clear of any and all liens, charges, encumbrances, usufruct rights, debts, doubts, actions or contingencies of any kind.

7.4. Ownership of Mineral Rights. The Company is the exclusive owner of the Mineral Rights. No Party other than the Company has any right, title or interest in or to the Mineral Rights of Serra do Ouro, and there are no restrictions, obstacles, guarantees, options or any other equity interest of any kind or nature on the mineral rights of Serra do Ouro, except for the rights held by the Company, which are free and clear of any and all debts, liabilities, encumbrances, charges, rights and any other rights, contingent or otherwise, of any other person.

7.5. Litigation. By the date hereof, there are no proceedings, legal actions, administrative proceedings, including notices of infraction or legal or extrajudicial actions of any kind, brought by or against the Company, its assets and rights or against Sellers, and Sellers are not aware, by the date hereof, of any fact, act or failure to act that may originate any future filing, inception or notice of infraction.

7.6. Agreements. Sellers hereby declare that they have executed two (2) agreements, in the name of Isabela, with the owners and/or possessors of the soil, which properties encompass part of the Mineral Rights areas, which has granted them free access to those areas, in accordance with the copies of such documents attached hereto as Exhibit 7.6. Sellers hereby agree to transfer the rights and obligations relating to such agreements to the Company.

 

  

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7.7. Tax Matters. By the date hereof, there are no duties, taxes, fees, contributions and/or charges of any kind, including, without limitation to, of a business, contractual, labor, mining, land and/or insurance nature, for which the Company is liable and which have not been paid, and there are no legal actions, administrative proceedings, notices of infraction or any other measures relating to these obligations.

7.8. Labor Matters. By the date hereof, the Company does not have any collective bargaining agreement or employment contract involving liabilities, obligations or severance pay, in addition to those usually required by law, and the Company has not agreed to pay, granted or paid any remuneration, bonus, indemnification not contemplated in the applicable law, benefit plan, profit sharing, interest or commission resulting from the intermediation of customers, management or obtainment of current and future accounts, pension and retirement, nor any other benefit or advantages, nor is the Company required to grant salary increases above the limits established in union agreements or collective bargaining or any other benefit, advantage or interest, on any account, other than those required by law. The Company has not engaged third parties to provide services under conditions that could somehow be deemed an employment relationship.

7.9. Financial Statements. The financial statements of the Company, duly signed by Sellers and by the Company’s accountants, as included in Exhibit 7.9 to this Agreement, duly represent, in all material respects, the consolidated financial conditions and the consolidated results of cash flow operations of the Company on their respective dates or for the respective periods indicated therein, all in accordance with the Brazilian accounting principles, already adjusted to the accounting principles adopted in the United States of America (USGAAP). By the date hereof, the Company’s records are permanent and there is no obligation or liability of any kind not recorded in the accounting books or registered in other amount than the actual amount thereof, or which is recorded but not covered by reserves or provisions ensuring full liquidity thereof, it being understood that all debits and credits due and coming due are duly recorded, as well as all operations conducted by the Company and based on proper documents that ensure the legitimacy, effectiveness, regularity and good liquidity thereof.

7.10. Business Agents. By the date hereof, the Company has no business agents in Brazil and/or abroad.

7.11. Intellectual Property. By the date hereof, the Company has no rights relating to intellectual property, including, without limitation to, trademarks, patents and industrial design.

7.12. Compliance with Environmental Rules. By the date hereof, Sellers and the Company have observed and complied with all environmental laws, regulations and rules relating to conduction of the Company’s activities, and there are no lawsuits, administrative proceedings or any other measures relating to these obligations.

7.13. Authorizations. Sellers and the Company have performed all required actions to implement the transaction contemplated herein, and they have obtained all prior authorizations from the competent bodies, as well as all third-party consents required for implementation of the transaction contemplated herein.

 

  

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[7.14. Assignment of Interest in the Fixed Prices and Variable Income. Sellers, with the express consent of Buyer and the Company, which is hereby granted, are hereby authorized to assign to the Assignee the equivalent to ten percent (10%) of all rights contemplated in Sections 2.3, 2.5 and 2.6 hereof, for these payments to be directly credited, in the proportion informed above, to a bank account held by the Assignee to be indicated in due course.

	
VIII.

	
FINE AND INDEMNIFICATION

8.1. Fine and Indemnification. Compliance or failure to comply with any provision hereof, as well as the inaccuracy or violation of any of the representations and warranties contemplated in this Agreement shall subject the nonperforming party to pay a fine equivalent to twenty percent (20%) of the price actually paid for the Quotas hereby sold, duly adjusted for inflation as from the date hereof by the IGP-M/FGV – General Market Price Index, as compiled and disclosed by the Getúlio Vargas Foundation (or another official index that may replace it as determined by the Federal Government), without prejudice to the payment of damages to the innocent party in excess of this amount, which shall be calculated in accordance with the provisions of Law No. 10406, of January 10, 2002, which created the Brazilian Civil Code, as amended, provided the events contemplated in Sections 3.1 and 6.4 above.

8.2. Liability for actions performed. Subject to the terms and conditions contemplated in this Agreement, Sellers shall be liable for the actions performed and losses resulting therefrom before the date hereof, and Buyer shall be liable for the actions performed and losses resulting therefrom after the date hereof.

	
IX.

	
GENERAL PROVISIONS

9.1. Entire Agreement. This Agreement, along with all subsidiary agreements executed for consummation of the transactions contemplated herein, constitutes the entire agreement between the contracting Parties with regard to the purchase and sale of Quotas, superseding all previous agreements in this regard, whether oral or written, it being understood that the Memorandum of Understanding executed on January 4, 2011 and the Pledge Agreement executed on February 25, 2001 hereby become null and void, for all legal purposes.

9.2. Irrevocability. This Agreement is irrevocably and irreversibly executed, and it shall be binding upon the Parties, their successors and/or legal representatives, on any account.

9.3. Amendments. Any and all amendments to this Agreement shall only be deemed valid if prepared in writing and signed by all Parties.

9.4. Severability. Should any provision contained in this Agreement or application thereof to any person or circumstance be deemed invalid or unenforceable, in whole or in part, the part of this or the other provisions not deemed invalid or unenforceable and application thereof to persons or circumstances not affected by such invalidity or unenforceability shall remain in full force and effect, it being understood that the Parties shall be required to revalidate the null or annulled provision, as permitted by law, so that the Parties’ intent expressed therein prevails, to the possible extent.

 

  

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9.5. Confidentiality. Except as required by the laws of the Federative Republic of Brazil and by the applicable laws, regulations and rules of the United States of America, especially those issued by the United States Securities and Exchange Commission, any other public announcements involving this Agreement or the transactions contemplated herein, including the applicable prices and conditions, shall only be made upon the mutual consent of Buyer and Sellers. Buyer and Sellers agree not to disclose to any person or to third parties any fact related to this Agreement or to the transactions contemplated herein for a term of five (5) years after the date of execution hereof.

9.6. Notices. All communications and notices hereunder shall be in writing and sent by certified mail, delivered in person or sent by facsimile or e-mail, and they shall be addressed to the Parties’ addresses informed below. The following shall be accepted as proof of receipt, as the case may be: the AR – Return Receipt of the Mail Service, stamp of the addressee, confirmation of receipt of facsimile or e-mail transmission:

To Sellers:

 

Rogério Antonio

Avenida Dante Micheline, n° 1.845, apto. 101

Bairro Mata da Praia

CEP 29066-430

Vitória - ES

Email: rantoniobz@hotmail.com

Facsimile: [55] 27-3041-5215

Isabela Cianni Portugal

Avenida Dante Micheline, n° 1.845, apto. 101

Bairro Mata da Praia

CEP 29066-430

Vitória - ES

with copy to:

Carlos Alberto de Melo Lacerda

Rua 7 Setembro 55 grupo 1902

Centro

CEP 20050-004

Rio de Janeiro – RJ

Email: c.lacerda@globo.com

Facsimile: [55] 21-2221-2205

To Buyer:

Ardent Mines Limited

100 Wall Street, 21st, Floor

New York, NY 10005

Attention:                Leonardo Alberto Riera, President & Chief Executive Officer

Emails:                    info@ardentmines.com

Facsimile:               561 989 3201

 

  

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with copy to:

WUERSCH & GERING LLP

100 Wall Street, 21st Floor

New York

New York 10005

Attention:                Mr. Travis L. Gering

Email:           travis.gering@wg-law.com

Facsimile:                610-819-9104

and to:

Xavier, Bernardes, Bragança, Sociedade de Advogados

Avenida Brasil, n° 1008

Jardim América

São Paulo - SP

CEP 01430-001

Attention:             Mr. João Claudio De Luca Junior

Mr. Guilherme Filardi

Emails:                 joaoclaudio@xbb.com.br

guilhermefilardi@xbb.com.br

Facsimile:            (11) 3069 4301

and to:

Luciano de Freitas Borges

SRTN, Quadra 701, Centro Empresarial Norte, Bloco A, salas 108/110

Brasília – Distrito Federal

CEP 70719-903

Email:                  luciano@adhocadvisors.com.br

Facsimile:           (61) 3039-6780

9.6.1. The applicable Party shall inform the other involved Parties of any change in the address above.

9.7. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the Federative Republic of Brazil (“Governing Law”).

9.8. Arbitration. Any and all disputes relating to the construction or performance hereof shall be resolved by arbitration, in accordance with the Arbitration Rules of the Center of Arbitration and Mediation of the Brazil-Canada Chamber of Commerce (“CCBC”), with head office in the City of São Paulo, State of São Paulo, at Rua do Rócio, no 220, cj.121, 12o andar. Arbitration shall be conducted in the City of São Paulo, State of São Paulo.

 

  

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9.8.1. Arbitration shall be conducted in Portuguese, based on the Governing Law, no arbitration in equity being permitted, by a panel composed of three (3) arbitrators chosen from among the arbitrators listed by the CCBC or others, provided all of them meet the requirements established in the CCBC Regulation, and especially who have a widely known and vast experience in mining, corporate, tax and accounting matters. Sellers shall individually or collectively designate one arbitrator, Buyer shall designate the second arbitrator, and after both arbitrators are designated without any valid objection or challenge, they shall agree on the third arbitrator, who shall chair the panel.

9.8.2. In any case, the Parties shall equally share the costs of arbitration between them, and each party shall incur its costs. The arbitrators may decide, in the final arbitration award, on the division of the arbitration costs.

9.8.3. The Parties agree that any of them may need a preliminary injunction. The request for a preliminary injunction by any of the parties, either before or after commencement of the arbitration procedure, shall not be deemed incompatible with or construed as a release from the provisions of this Section, even if the parties acknowledge that the arbitral tribunal has powers to grant injunctions, including provisional remedies that may be deemed fair and unbiased. For purposes of this Section, the Parties elect the Central Courts of the Judicial District of the Capital City of São Paulo.

9.9. Currency. All amounts expressed in foreign currency in this Agreement shall be converted into the Brazilian currency on the date of closing of the Foreign Exchange Contract, in accordance with the rules of the Central Bank of Brazil. The use of Foreign currency as reference for amounts expressed in this Agreement is intimately related to the fact that Buyer is a company headquartered abroad and needs these amounts to be expressed in Foreign currency.

9.10. Relationship between the Parties. This Agreement neither creates any partnership between the Parties nor imposes any other responsibility on the Parties in addition to those related to compliance with the provisions and obligations established herein. Each Party shall be free to engage in other activities involving the prospection, research, extraction, processing, manufacture and sale of ore outside the geographic scope of the Mineral Rights areas.

9.11. Binding Effects. It is the intention of the Parties that Seller’s rights contemplated herein produce binding effects, for which purpose they are entitled to register or cause this Agreement to be registered with any Registration Bodies.

9.1.1. Buyer and the Company hereby agree to cooperate and grant any written consent, if necessary, with regard to any documents or actions reasonably required for these registrations, as well as to allow Sellers to have access to the records of the Mineral Rights in progress in the DNPM/MME, regardless of express authorization, it being understood that the provisions of this Section shall be deemed a special authorization for such purpose, which authorization may not be cancelled or annulled by Buyer and by the Company during validity hereof.

 

  

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9.12. Special Provisions. The Parties are fully aware of the conditions hereby formalized, and they neither admit any substantial error with regard to the declarations of will expressed herein, nor do they deem that there is an immediate and considerable damage on any account. In addition, the Parties are not in need of execution hereof, because they deem that the obligations assumed hereunder are not excessively burdensome, nor are they executing this Agreement in view of a pressing necessity, because the obligations assumed hereunder are proportional to their capacity and experience with regard to the subject matter hereof. This Agreement is executed in accordance with the probity and good-faith doctrines, limited to the social function hereof.

IN WITNESS WHEREOF, the Parties execute this Quota Purchase Agreement and other Covenants in three (3) counterparts of equal contents and form, in the presence of the two (2) witnesses identified below.

São Paulo – State of São Paulo, May 4, 2011

Sellers:

ROGÉRIO ANTONIO

ISABELA CIANNI PORTUGAL

Buyer:

ARDENT MINES LIMITED

By: Leonardo Alberto Riera

Position: President and Chief Executive Officer

Intervening Party:

GOLD HILLS MINING LTDA.

By: Rogério Antonio and Isabela Cianni Portugal

Position: Managing Partners

Assignee:

CARLOS ALBERTO DE MELO LACERDA

OAB/RJ No. 28.266

CPF/MF No. 228.339.517-87

 

  

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Witnesses:

	
1.________________________________

	
2. ________________________________

	
Name:

	
Name:

	
CPF/MF:

	
CPF/MF:

	
ID:

	
ID:

 

  

17

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