Document:

tetonex10_2.htm

    TRANSITIONAL ADMINISTRATIVE
AND

     

     MANAGEMENT SERVICES
AGREEMENT

     

    THIS TRANSITIONAL ADMINISTRATIVE AND
MANAGEMENT SERVICES AGREEMENT (this “Agreement”)
is dated as of ___________, 2008, between GAMCO Investors, Inc., a New York
corporation (“GAMCO”),
and Teton Advisors, Inc., a Delaware corporation (“TETON”)
(sometimes referred to herein individually as “Party”, or together, as
“Parties”).

     

    WHEREAS, following the
consummation of the distribution (the “Distribution”)
contemplated by the Separation and Distribution Agreement dated as of
___________, 2008 among GAMCO and TETON (the “Distribution
Agreement”), TETON desires that GAMCO provide certain administrative and
management services to TETON; and

     

    WHEREAS, subject to the terms
and conditions of this Agreement, GAMCO is willing to provide such services to
TETON for a transitional period.

     

    NOW, THEREFORE, GAMCO and
TETON agree as follows:

     

    SECTION
1. Services. 
GAMCO agrees to provide, or to coordinate the provision by others to TETON of,
the following transitional services (“Services”):

     

    (a) Financial
accounting and consolidation;

     

    (b) Treasury,
including, without limitation, insurance and risk management services and
administration of benefits;

     

    (c) Human
resources, including but not limited to the sourcing of permanent and temporary
employees as needed, recordkeeping, performance reviews and
terminations;

     

    (d) Legal and
compliance advice, including the services of a Chief Compliance
Officer;

     

    (e) Technical/technology
consulting;

     

    (f) Operations
and general administrative, including:

     

    
      	
              1)  

            	
              Office
      space;

            

    

     

    
      	
              2)  

            	
              Office
      equipment and furniture;

            

    

     

    
      	
              3)  

            	
              Payroll;

            

    

     

    
      	
              4)  

            	
              Procurement;

            

    

     

    
      	
              5)  

            	
              Administrative
      personnel; and

            

    

     

    (g) Management
services, as further described in Section 2.

     

    Without
limiting the foregoing, the parties may modify the Services from time to time
and may identify additional services to incorporate into this Agreement. 
In connection with the office space and the office equipment and furniture, in
accordance with Section 4.9 of the Distribution Agreement, TETON may elect to be
added with GAMCO to the lease for the premises at 401 Theodore Fremd Avenue,
Rye, New York and, to the extent feasible and appropriate, substituted on any
leased office equipment, paying its proportionate share of any expenses related
to such premises or equipment.

     

    
      	
              SECTION
      2.

            	
              Provision
      of Management Services.

            

    

     

    (a) Management
Services.  As part of the Services, commencing at the time of the
Distribution, GAMCO shall provide general corporate management services (the
“Management
Services”) to TETON, which may include, but not be limited to,
operations, supervision of operating subsidiaries, strategic planning,
acquisition analysis, investment banking and financial advisory services,
supervision of the preparation of corporate tax returns, supervision of
financial reporting and other applicable regulatory matters.  In providing
the Services, including the Management Services, GAMCO may, subject to the prior
written consent of TETON, employ consultants and other advisors in addition to
utilizing its own employees.  Such Management Services are intended to be
generally comparable in type and quantity to that which GAMCO provided to TETON,
it affiliates and its businesses prior to the Distribution.

     

    
            
(b)Mutual Fund Administrative Services.  As further part of the
Management Services, GAMCO shall provide mutual fund administration services to
Teton in connection with Teton’s management and administration of the GAMCO
Westwood Balanced Fund, GAMCO Westwood Equity Fund, GAMCO Westwood SmallCap
Equity Fund, GAMCO Westwood Income Fund, GAMCO Westwood Intermediate Bond Fund,
and the GAMCO Westwood MightyMites Fund (collectively the
“Funds”).  GAMCO reserves the right to delegate all or a portion of
the mutual administration services to be performed by it to another
entity.

       

    

    (c) Limitation of
Liability; Indemnification of TETON.  GAMCO shall have no liability
to TETON with respect to GAMCO’s furnishing any of the Management Services
hereunder except for liabilities arising out of willful misconduct or gross
negligence occurring after the Distribution.  GAMCO will indemnify, defend
and hold harmless TETON, its affiliates and its businesses in respect of all
liabilities related to, arising from, asserted against or associated with such
willful misconduct or gross negligence.  Such indemnification obligation
shall be a liability of GAMCO.  In no event shall GAMCO have any liability
for any incidental, indirect, special or consequential damages, whether or not
caused by or resulting from negligence or breach of obligations hereunder and
whether or not informed or aware of the possibility of the existence of such
damages.

     

    (d) Limitation of
Liability; Indemnification of GAMCO.  TETON shall indemnify and hold
harmless GAMCO, its affiliates and its businesses in respect of all liabilities
related to, arising from, asserted against or associated with GAMCO’s furnishing
or failing to furnish the Management Services provided for in this Agreement,
other than liabilities arising out of the willful misconduct or gross negligence
of GAMCO following the Distribution.  Such indemnification obligation shall
be a liability of TETON.  In no event shall TETON have any liability for
any incidental, indirect, special or consequential damages, whether or not
caused by or resulting from negligence or breach of obligations hereunder and
whether or not informed or aware of the possibility of the existence of such
damages.

     

    (e) Subrogation of
Rights Vis-A-Vis Third Party Contractors.  In the event any
liability arises from the performance of Management Services hereunder by a
third party contractor, upon indemnification of GAMCO and/or its
representatives, including but not limited to GAMCO’s officers, directors,
employees, accountants, counsel, investment bankers, financial advisors and
consultants, TETON shall be subrogated to such rights, if any, as GAMCO may have
against such third party contractor with respect to the Management Services
provided by such third party contractor.

     

    (f) Laws and
Governmental Regulations.  TETON shall be solely
responsible for compliance with all laws, rules and regulations including the
Investment Advisers Act of 1940.

     

    (g) Relationship of
Parties. 
Nothing in this Agreement shall be deemed or construed by the parties or any
third party as creating the relationship of principal and agent, partnership or
joint venture between the parties, it being understood and agreed that no
provision contained herein, and no actions of the parties, shall be deemed to
create any relationship between the parties other than the relationship of
independent contractor nor be deemed to vest any rights, interest or claims in
any third parties.

     

    
      	
              SECTION
      3.

            	
              Term;
      Standard of Care.  GAMCO shall provide the Services, including
      the Management Services, to TETON as TETON may request for a period of up
      to twenty-four (24) months from the date of the Distribution; provided
      that any or all of the Services may be terminated by either Party at any
      time and for any reason on not less than thirty (30) days’ prior written
      notice to the other Party.  In providing the Services hereunder,
      GAMCO will exercise the same degree of care as it has exercised in
      providing such Services to its affiliates prior to the date hereof,
      including the same level of quality, responsiveness and timeliness as has
      been exercised by GAMCO with respect to the
  Services.

            

    

     

    
      	
              SECTION
      4.

            	
              Compensation.  GAMCO
      will charge TETON a monthly fee of $15,000 for the provision of Services
      pursuant to this Agreement; provided that in addition to the monthly fee,
      GAMCO shall charge TETON all costs of GAMCO with respect to (i) the hiring and compensation of
      individuals hired solely to provide TETON Services pursuant to this
      Agreement or (ii) the purchase or
      maintenance of equipment or furniture to be used solely by TETON
      reasonably related to the provision of Services pursuant to this
      Agreement. The cost of such Services in accordance with this Section 4
      shall be invoiced to TETON on a quarterly basis and shall constitute full
      compensation to GAMCO for providing the Services.  TETON will pay or
      otherwise satisfy quarterly, no later than 45 days after receipt of the
      invoice, the aggregate costs incurred during the previous quarter;
      provided, however, that if TETON disagrees with any such charge, TETON
      shall send written notice to GAMCO specifying the reason for such
      disagreement, and GAMCO and TETON will negotiate in good faith to promptly
      resolve any such disagreement.  In
      addition Teton will pay GAMCO twenty basis points on
      the net assets managed in the Funds as compensation to GAMCO for providing
      mutual fund administration services to the
      Funds.

            

    

     

    
      	
              SECTION
      5.

            	
              Consents of
      Third Parties.  GAMCO shall use commercially reasonable
      efforts, at TETON’s direction and expense, to obtain any consents or
      software licenses from third parties necessary for the continuation of the
      requested Services; provided, that GAMCO
      shall have no obligation to provide Services for which such consent is
      required and shall not have been
obtained.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              SECTION
      6.

            	
              Limitations;
      Indemnity for Services Other Than Management Services.
        Except as otherwise provided by Section 2 hereof with
      respect to Management Services, GAMCO will indemnify, defend and hold
      harmless TETON, its affiliates and its businesses in respect of all
      liabilities related to, arising from, asserted against or associated with
      the provision of the Services by GAMCO.  Such indemnification
      obligation shall be a liability of GAMCO.  In no event shall GAMCO
      have any liability for any incidental, indirect, special or consequential
      damages, whether or not caused by or resulting from negligence or breach
      of obligations hereunder and whether or not informed or aware of the
      possibility of the existence of such damages.  Teton will
      indemnify, defend and hold harmless GAMCO, its affiliates and its
      businesses in respect of all liabilities related to, arising from,
      asserted against or associated with the provision of the Services by
      GAMCO.  Such indemnification obligation shall be a liability of
      TETON.  In no event shall TETON have any liability for any
      incidental, indirect, special or consequential damages, whether or not
      caused by or resulting from negligence or breach of obligations hereunder
      and whether or not informed or aware of the possibility of the existence
      of such damages.

            

    

     

    
      	
              SECTION
      7.

            	
              Disclaimer
      of Warranties.  SUBJECT TO SECTION 3 HEREOF, GAMCO
      DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, BUT NOT LIMITED TO, THE
      IMPLIED WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR
      PURPOSE, WITH RESPECT TO THE SERVICES PROVIDED TO TETON.  GAMCO
      MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY, SUITABILITY OR
      ADEQUACY OF THE SERVICES FOR ANY PURPOSE OR
USE.

            

    

     

    
      	
              SECTION
      8.

            	
              Miscellaneous
      Provisions.

            

    

     

    (a) Complete
Agreement; Construction.  This Agreement shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments and writings with respect
to such subject matter.

     

    (b) Counterparts. 
For the convenience of the parties hereto, this Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and which counterparts shall together constitute the same
agreement.

     

    (c) Notices. 
Any notice, request, instruction or other document to be given hereunder by any
Party to the other shall be in writing and shall be deemed to have been duly
given (i) on the date of delivery if delivered by facsimile (upon confirmation
of receipt) or personally, (ii) on the first business day following the date of
dispatch if delivered by Federal Express or other next-day courier service, or
(iii) on the third business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid. 
All notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the Party to receive such
notice:

     

                   
If to GAMCO,
at:                  
GAMCO Investors, Inc.

                                                                   
One Corporate Center

                                                                   
Rye, NY 10580-1422

                                                                   
Attn: Legal Department

                                                                   
Telecopy: (914) 921-5098

                                                                   
Telephone: (914) 921-5020

    

     

                   
If to TETON,
at:                    
Teton Advisors, Inc.

                                                                   
401 Theodore Fremd Avenue

                                                                   
Rye, NY 10580

                                                                   
Attn:  Chief Executive Officer

                                                                   
Telecopy: (914) 921- 5105

                                                                   
Telephone: (914) 921- 5118

    

     

    (d) Waivers. 
The failure of any Party hereto to require strict performance by any other Party
of any provision in this Agreement will not waive or diminish that Party’s right
to demand strict performance thereafter of that or any other provision
hereof.

     

    (e) Modification or
Amendments.  The parties hereto may modify or amend this Agreement
by written agreement executed and delivered by authorized officers of the
respective parties.

     

    (f) Assignment;
Successors and Assigns.  No Party to this Agreement shall convey,
assign or otherwise transfer any of its rights or obligations under this
Agreement without the express written consent of each of the other parties
hereto in its sole and absolute discretion.  Any such conveyance,
assignment or transfer without the express written consent of each of the other
parties shall be void ab
initio.  No assignment of this Agreement or any rights hereunder
shall relieve each of the assigning parties of its obligations hereunder. 
Any successor by merger to a Party to this Agreement shall be substituted for
such Party as a party to this Agreement, and all obligations, duties and
liabilities of the substituted party under this Agreement shall continue in full
force and effect as obligations, duties and liabilities of the substituting
party, enforceable against the substituting party as a principal, as though no
substitution had been made.

     

    (g) Third Party
Beneficiaries.  This Agreement is for the purpose of defining the
respective rights and obligations of the parties hereto and is not for the
benefit of any employee, creditor or other third party, except as may be
expressly set forth herein.

     

    (h) Indemnification
for Expenses; Attorney Fees.  A Party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other parties hereto for and
against all out-of-pocket expenses, including, without limitation, reasonable
legal fees, incurred by such other Party by reason of the enforcement and
protection of its rights under this Agreement, should such Party prevail in such
action.  The payment of such expenses is in addition to any other relief to
which such other Party may be entitled hereunder or otherwise.

     

    (i) Captions. 
All Article, Section and paragraph captions herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.

     

    (j) Specific
Performance.  In the event of any actual or threatened default in,
or breach of, any of the terms, conditions and provisions of this Agreement, the
Party or Parties who are or are to be thereby aggrieved shall have the right of
specific performance and injunctive relief giving effect to its or their rights
under this Agreement, in addition to any and all other rights and remedies at
law or in equity, and all such rights and remedies shall be cumulative. 
The parties agree that the remedies at law for any breach or threatened breach,
including monetary damages, are inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is hereby waived.

     

    (k) Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to its
conflicts of law principles.

     

    (l) Severability.
 If any provision of this Agreement or the application thereof to any
Person or circumstance is determined to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to Persons or
circumstances other than those remaining provisions hereof, or the application
of such provision to Persons or circumstances other than those as to which it
has been held invalid or unenforceable, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any Party.  Upon any such determination,
the parties shall negotiate in good faith in an effort to agree upon a suitable
and equitable substitute provision to effect the original intent of the
parties.

     

    (m) Cooperation;
Further Assurances.  The parties will use good faith efforts to
cooperate with each other in all matters relating to the provision of the
Services. Each Party will take such actions as may be necessary or reasonably
appropriate to implement or give effect to this Agreement.

     

    (n) Records;
Confidentiality.  GAMCO shall keep full and detailed records dealing
with all aspects of the Services performed by it and shall provide access to
TETON to such records at all reasonable times.  Each Party hereto shall
keep, and shall cause its officer, directors, employees, accountants, counsel,
investment bankers, financial advisors, consultants and other representatives
("Representatives")
to keep, the other Party's’ information, whether furnished orally or in writing
or by any other means or gathered by inspection and regardless of whether the
same is specifically marked or designated as “confidential” or “proprietary,”
together with any and all notes, memoranda, analyses, compilations, studies or
other documents (whether in hard copy or electronic media) prepared by the
receiving Party or any of its Representatives which contain or otherwise reflect
such information, together with any and all copies, extracts or other
reproductions of any of the same (the "Information"),
strictly confidential and will disclose such Information only to such of its
Representatives who need to know such Information, and who agree to be bound by
this Section 7(n) and not to disclose such Information to any other
person.  Without the prior written consent of the other parties, no Party
nor any of its respective Representatives shall disclose the other Party’s
Information to any person or entity except as may be required by law or judicial
process and in accordance with this Section 7(n).  The term “Information”
does not include information that: (i) is or becomes generally available to the
public through no wrongful act of the receiving Party or its Representatives;
(ii) is or becomes available to the receiving Party on a non-confidential basis
from a source other than the providing Party or its Representatives, provided
that such source is not known by the receiving Party to be subject to a
confidentiality agreement with the providing Party; or (iii) has been
independently acquired or developed by the receiving Party without violation of
any of the obligations of the receiving Party or its Representatives under this
Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (o) Arbitration. 
Any dispute with respect to this Agreement shall be arbitrated in Westchester
County, NY, in accordance with the rules of the American Arbitration Association
and judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.  There will be a single neutral
arbitrator selected who resides in Westchester County, NY.  The American
Arbitration Association will provide a list of five (5) neutral
arbitrators.  The claimant and respondent will take turns, with the
respondent going first, striking one name at a time from the list of five
neutral arbitrators.  Each Party will have no more than twenty-four (24)
hours to take its turn striking a name of a neutral arbitrator.  The final
remaining arbitrator will serve as the neutral arbitrator.  Either Party
may apply to the arbitrator seeking injunctive relief until the arbitrator's
award is rendered or the controversy is otherwise resolved.  Either Party
also may, without waiving any remedy under this agreement, seek from any New
York court having jurisdiction, any interim or provisional relief that is
necessary to protect the rights and/or property of that Party, pending the
determination of the arbitrator.

     

    [Signature Page
Follows]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.

     

    GAMCO
INVESTORS, INC.

     

    

     

    

     

    By____________________________

     

    Name:
Douglas R. Jamieson

     

    Title:  
President and Chief Operating Officer

     

    TETON
ADVISORS, INC.

     

    

     

    

     

    By____________________________

     

    Name:
Nicholas F. Galluccio

     

    Title:  
Chief Executive Officer and PresidentExhibit 10.1 

STRATEGIC ALLIANCE
AGREEMENT 

        THIS
AGREEMENT dated for reference the 5th day of December 2008. 

BETWEEN: 

	 	
GOLD
RESOURCE CORPORATION, a company organized under the laws of the State of
Colorado, with registered office located at 222 Milwaukee Street, Suite 301, Denver, CO
80206 (“GRC” or “the  Company”) 

      AND: 

	 	
HOCHSCHILD
MINING HOLDINGS LIMITED, a private limited company organized under the laws
of England and Wales, with registered office located at 46 Albemarle Street, London,
England W1S 4JL (“HOC”)  

WHEREAS: 

     A.    
          The Company is a mineral exploration and development company engaged in the
          acquisition and exploration, as well as development of mineral properties (the
          “Properties”) in Mexico through its Mexican subsidiaries with
          prospects for hosting gold, silver and base metal deposits, and through such
          subsidiaries holds interests in several mineral resource properties, including
          but not limited to (i) El Aguila, (ii) Las Margaritas, (iii) Solaga, and (iv) El
          Rey located in Oaxaca, Mexico (the “Existing Properties”); 

     B.    
          HOC is an Affiliate of Hochschild Mining plc., a leading underground precious
          metals producer operating in the Americas with a primary focus on silver and
          gold; 

     C.    
          The Company and HOC believe that their respective corporate strategies are
          compatible and, as such, wish to establish a strategic alliance on the terms and
          conditions set forth herein; 

     D.    
          The Company and HOC are entering into this Agreement as a condition to and in
          furtherance of the investment in Shares (as defined below) contemplated in the
          Subscription Agreement dated December 5, 2008 (the “Subscription
          Agreement”) between the Company and HOC without the Company having
          executed and delivered this Agreement; and 

     E.    
          The Board of Directors has authorized the Company to enter into this Agreement. 

        NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual premises, covenants
and agreements contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by both parties, the parties hereby
covenant and agree as follows: 

ARTICLE 1 

INTERPRETATION 

1.1     Definitions.
In this Agreement, unless the context otherwise requires:  

          	 	(a) 	
               “Acceptance Notice” has the meaning ascribed to it in Section
               4.1(e); 

               

          	 	(b) 	
               “Additional Securities” has the meaning ascribed to it in
               Section 4.1(a); 

               

          	 	(c) 	
               “Additional Shares” has the meaning ascribed to it in Section
               2.1; 

               

          	 	(d) 	
               “Affiliate” shall have the meaning ascribed thereto in the
               Securities Act; 

               

          	 	(e) 	
               “Agreement” means this strategic alliance agreement and any
               instrument amending this Agreement and “hereof”,
               “hereto”, “hereunder” and similar expressions
               mean and refer to this Agreement and not to a particular Article, Section,
               Subsection or Paragraph; 

               

          	 	(f) 	
               “Alternative Proposal” has the meaning ascribed to it in
               Section 9.1; 

               

          	 	(g) 	
               “Authority” and “Authorities” means any (i)
               multinational, federal, provincial, state, regional, municipal, local or other
               government, governmental or public department, securities commission (including
               the Securities Commissions), central bank, court, tribunal, arbitral body,
               commission, board, bureau or agency, domestic or foreign, (ii) any subdivision,
               agent, commission, board, or authority of any of the foregoing, or (iii) any
               quasi-governmental or private body exercising any regulatory, expropriation or
               taxing authority under or for the account of any of the foregoing, and includes
               a stock exchange and any other self-regulatory authority; 

               

          	 	(h) 	
               “Board of Directors” means the board of directors of the
               Company; 

               

          	 	(i) 	
               “Business Day” means any day which is not a Saturday, a Sunday
               or a day on which banks are generally closed for business in Denver, Colorado or
               London, England; 

               

          	 	(j) 	
               “Claims” means all losses, damages, expenses, Liabilities,
               claims and demands of whatever nature or kind, including all reasonable legal
               fees and disbursements; 

               

          	 	(k) 	
               “Closing Date” has the meaning given to it in the Subscription
               Agreement; 

               

          	 	(l) 	
               “Commencement of Production” has the meaning given to it in
               Section 2.3; 

               

          	 	(m) 	
               “Common Stock” has the meaning given to it in Section 4.1(a); 

               

          	 	(n) 	
               “Company” has the meaning given to it in the preamble hereto; 

               

          	 	(o) 	
               “Company Indemnitees” has the meaning given to it in Section
               11.2; 

               

          	 	(p) 	
               “Convertible Securities” means all warrants, rights,
               agreements, options, or Debt Instruments present or future, contingent or
               absolute, or any right or privilege capable of becoming a right, agreement or
               option, for the purchase, subscription or issuance of any Shares in the Company
               or any other security or Debt Instruments convertible or exchangeable for
               Shares, including options granted to officers, directors or employees, and
               whether issued pursuant to the Stock Option Plan; 

               

2 

          	 	(q) 	
               “Debt Instrument” means any loan, bond, debenture, promissory
               note or other instrument evidencing material indebtedness of the Company for
               borrowed money or other material liability; 

               

          	 	(r) 	
               “Equity Securities” means Shares, Convertible Securities and
               any other equity or voting securities of the Company; 

               

          	 	(s) 	
               “Existing Properties” has the meaning given to it in the
               preamble hereto; 

               

          	 	(t) 	
               “Financing Election” has the meaning ascribed to it in Section
               2.3; 

               

          	 	(u) 	
               “HOC Director” has the meaning ascribed to it in Section 5.1; 

               

          	 	(v) 	
               “HOC Entities” means HOC and its Affiliates, and any person
               acting jointly or in concert with any of them, excluding, for greater certainty,
               the Company and any of its Subsidiaries to the extent they may be or become
               Affiliates at any relevant point in time; 

               

          	 	(w) 	
               “HOC Indemnitees” has the meaning ascribed to it in Section
               11.1; 

               

          	 	(x) 	
               “HOC JV Acceptance Notice” has the meaning ascribed to it in
               Section 6.2(b); 

               

          	 	(y) 	
               “HOC Option” has the meaning ascribed to it in Section 2.1; 

               

          	 	(z) 	
               “Joint Venture Proposal Notice” has the meaning ascribed to it
               in Section 6.2(a); 

               

          	 	(aa) 	
               “JV Negotiation Period” has the meaning ascribed to it in
               Section 6.2(b); 

               

          	 	(bb) 	
               “Laws” means any and all applicable (i) laws,
               constitutions, treaties, statutes, codes, ordinances, orders, decrees, rules,
               regulations and municipal by-laws, (ii) judicial, arbitral, administrative,
               ministerial, departmental or regulatory judgments or orders of any Authorities,
               and (iii) policies, guidelines and protocols; 

               

          	 	(cc) 	
               “Liabilities” means, with respect to any Person, any liability
               or obligation of such Person of any kind, character or description, whether
               known or unknown, absolute or contingent, accrued or unaccrued, disputed or
               undisputed, liquidated or unliquidated, secured or unsecured, joint or several,
               due or to become due; 

               

          	 	(dd) 	
               “Lien” means any mortgage, easement, encroachment,
               adverse claim, and assignment by way of security, security interest, servitude,
               pledge, charge, lien, assignment, hypothecation, conditional sale agreement,
               title retention, preferential right, trust arrangement, right of set-off,
               counterclaim or banker’s lien, financing statement, privilege or priority,
               or other encumbrance of any kind having the effect of security, any designation
               of loss payees or beneficiaries or any similar arrangement under or with respect
               to any insurance policy or any preference of one creditor over another arising
               by operation of law; 

               

          	 	(ee) 	
               “Market Purchases” has the meaning ascribed to it in Section
               3.1; 

               

3 

          	 	(ff) 	
               “Option Exercise Notice” has the meaning ascribed to it in
               Section 2.1; 

               

          	 	(gg) 	
               “Option Expiration Date” has the meaning ascribed to it in
               Section 2.1; 

               

          	 	(hh) 	
               “Options” means outstanding options to acquire Shares under the
               Stock Option Plan; 

               

          	 	(ii) 	
               “Other Purchasers” has the meaning ascribed to it in Section
               4.1(a); 

               

          	 	(jj) 	
               “Parties” means the Company and HOC and their successors and
               permitted assigns; and “Party” means any one of them; 

               

          	 	(kk) 	
               “Person” means an individual, partnership, unincorporated
               association, organization, syndicate, corporation or trust or a trustee,
               executor, administrator or other legal or personal representative; 

               

          	 	(ll) 	
               “Private Agreement Purchases” means purchases of Equity
               Securities other than on any stock exchange on which the Shares are then listed
               or quoted provided such purchases are made in accordance with applicable Laws,
               including applicable Securities Laws; 

               

          	 	(mm) 	
               “Pro Rata Interest” has the meaning ascribed to it in Section
               4.1(a); 

               

          	 	(nn) 	
               “Proposed Joint Venture” has the meaning ascribed to it in
               Section 6.1(a); 

               

          	 	(oo) 	
               “Properties” has the meaning ascribed to it in the Preamble
               hereto; 

               

          	 	(pp) 	
               “Purchased Shares” shall mean the shares of Common Stock to be
               acquired by HOC pursuant to the terms of the Subscription Agreement. 

               

          	 	(qq) 	
               “Rights Notice” has the meaning ascribed to it in Section
               4.1(c); 

               

          	 	(rr) 	
               “Securities Exchange Act” means the Securities Exchange Act of
               1934; 

               

          	 	(ss) 	
               “Securities Commissions” means the securities regulator in each
               jurisdiction whose Securities Laws are applicable to the Company; 

               

          	 	(tt) 	
               “Securities Laws” means the Laws relating to securities of the
               Company, and the regulations and rules made and forms prescribed thereunder
               together with all applicable published policy statements, blanket orders,
               rulings and notices adopted by the Securities Commissions of each such
               jurisdiction or applicable in such jurisdictions; 

               

          	 	(uu) 	
               “Shareholders” means the holders of Shares; 

               

          	 	(vv) 	
               “Shares” means common shares or any other securities into which
               the common shares in the capital of the Company are reorganized, exchanged or
               converted; 

               

          	 	(ww) 	
               “Stock Option Plan” means any stock option plan, agreement or
               arrangement adopted by the Company from time to time which provides for the
               issuance of options to acquire Shares; 

               

4 

     (xx)    
          “Subscription Agreement” has the meaning ascribed to it in the
          Preamble hereto; 

     (yy)    
          “Subsequent Closing Date” has the meaning ascribed to it in
          Section 2.1; 

     (zz)    
          “Transactions” means the transactions contemplated in this
          Agreement. 

1.2    Gender
and Certain References. Whenever the context requires, the gender of all words used
shall include the masculine, feminine and neuter, and the number of all words shall
include the singular and plural. The terms “hereof”, “herein” or
“hereunder”shall refer to this Agreement as a whole and not to any particular
Article or Section hereof. All titles and headings to Articles and Sections in this
Agreement are included for convenience and ease of reference. Titles and headings shall
not affect in any way the meaning or interpretation of Articles or Sections of this
Agreement. Any references to specific Articles or Sections shall mean the Articles and
Sections in this Agreement.  

ARTICLE 2 
ADDITIONAL INVESTMENTS
BY HOC 

2.1     HOC
Option to Purchase Additional Shares. From and after the Closing Date and until 5:00
pm Denver time on the date which is eighty (80) days from the Closing Date (the “Option
Expiration Date”), HOC shall have the option (the “Option”), at
its sole discretion, to subscribe for all, but not less than all, of an additional
4,330,000 Shares from the Company (the “Additional Shares”) at a price
of US$3.00 per share, or a total of US$12,990,000. If HOC wishes to exercise the Option,
it shall give written notice to the Company (the “Option Exercise Notice”)
prior to the Option Expiration Date in the manner set forth in Section 12.1 of this
Agreement. If HOC fails to deliver the Option Exercise Notice on or before the Option
Expiration Date, HOC shall be deemed to have waived its rights under this Section 2.1.
In the event HOC exercises the Option, one or more of the HOC Entities shall subscribe
and pay for and the Company shall issue to the relevant HOC Entities, free and clear of
any liens or encumbrances, the Additional Shares and the Parties shall exchange
representations and warranties substantially similar to those contained in the
Subscription Agreement and execute such documents as may be necessary to complete the
subscription and sale of the Additional Shares. Closing of the purchase and sale of the
Additional Shares shall take place within ten (10) business days of the delivery of the
Option Exercise Notice, such date being referred to as the “Subsequent Closing
Date”. 

2.2    Use
of Proceeds. In the event HOC exercises the Option, the Company agrees to use not
less than five million U.S. Dollars (US$5,000,000) of the proceeds from the subscription
of the Purchased Shares and the Additional Shares to fund exploration activities
(including but not limited to drilling, assaying and staking new claims) on the El
Aguila project. The Company further agrees that the balance of the proceeds from the
subscription of the Purchased Shares and the Additional Shares shall be used as follows:
(i) ten million U.S. Dollars (US$10,000,000) to fund the development and construction of
the mine and plant for the El Aguila project; and (ii) three million U.S. Dollars
(US$3,000,000) for working capital of the Company and other investments in the El
Aguila project.  

5 

     2.3.    
          Additional Financing. Subject to the provisions of Section 8.2, if the
          Company determines to solicit additional equity financing subsequent to exercise
          of the Option but prior to Commencement of Production (hereinafter defined) at
          the El Aguila project, it shall provide written notice to that effect to
          HOC and HOC shall be entitled to exclusively provide such financing upon the
          terms and conditions hereinafter set forth. For purposes of the preceding
          sentence, “Commencement of Production” shall be defined as the
          production and delivery to the point of sale (refiner) by the Company (either
          directly or through a subsidiary) of not less than 4,000 ounces of gold within a
          45 day period. HOC shall have ten (10) Business Days from delivery of such
          notice in which to notify the Company that it desires to provide all of such
          financing (the “Financing Election”). If HOC delivers the
          Financing Election, the purchase price for each share shall be equal to eighty
          percent (80%) of the average closing price of the Shares during the thirty (30)
          calendar days preceding the date HOC delivers the Financing Election. Closing of
          the subscription, purchase and sale shall be at such place and time as the
          Parties agree but not more than ten (10) days from delivery of the Financing
          Election. If HOC delivers the Financing Election, one or more of the HOC
          Entities shall pay the purchase price for, and the Company shall issue,
          additional Shares, free and clear of all liens and encumbrances. The Parties
          shall exchange representations and warranties, in form and in substance
          substantially similar to those provided in the Subscription Agreement and
          execute such documents as may be necessary to complete the subscription and sale
          of the Shares. In the event HOC fails to provide the Financing Election as set
          forth above, the Company shall be free to obtain such financing from one or more
          additional parties, free of any obligation to HOC. 

ARTICLE 3 
MARKET PURCHASES AND
PRIVATE PURCHASES 

3.1    Market
Purchases.Subject to compliance with applicable laws, the HOC Entities shall at any
time and from time to time, in their sole discretion, be entitled to make purchases of
the Company’s common stock in the over-the-counter market or on any stock exchange
on which its common stock is then quoted or listed (the “Market Purchases”);
provided, however, that for a period of two (2) years following the Closing Date, unless
the Parties otherwise agree, the HOC Entities do not beneficially own, directly or
indirectly, more than forty percent (40%) of the Company’s outstanding common stock
on an undiluted basis, following any Market Purchase and any Private Agreement Purchase.
For purposes of this Agreement, beneficial ownership shall be determined in accordance
with the provisions of Rule 13d-3 of the Securities Exchange Act.  

3.2    Private
Purchase.In addition to Market Purchases, as described in Section 3.1 above, HOC
shall be entitled to make Private Agreement Purchases, provided that such purchases are
made in accordance with all applicable laws; and provided further, that for a period of
two (2) years following the Closing Date, unless the Parties otherwise agree, the HOC
Entities will not beneficially own more than forty percent (40%) of the Company’s
outstanding common stock on an undiluted basis following any Market Purchase and/or
Private Agreement Purchase. At the request of HOC, the Company shall introduce HOC to
persons whom the Company believes may be interested in selling its common stock.  

6 

ARTICLE 4 
PRE-EMPTIVE RIGHT 

4.1     HOC’s
Pre-emptive Right.  

          		    (a)       
               Subject to the provisions of subsection (g) of this Section 4.1 and Section 8.2
               hereof, if at any time after the Closing Date, the Company proposes to issue or
               sell Equity Securities (“Additional Securities”) other than (i)
               under any Stock Option Plan, (ii) pursuant to the exercise of options under any
               Stock Option Plan, (iii) upon the exercise, exchange or conversion of any
               Convertible Securities, or (iv) for property other than money, the HOC Entities
               shall have the right to subscribe for and purchase Additional Securities, at the
               price at which such Additional Securities are offered for sale to other
               purchasers (the “Other Purchasers”), up to its Pro Rata
               Interest (as defined below) prior to giving effect to the issuance or sale of
               such Additional Securities. “Pro Rata Interest” means, at any
               relevant time, the ownership interest of HOC, expressed as a percentage, equal
               to: (i) the number of outstanding shares of common stock of the Company
               (“Common Stock”) beneficially owned by the HOC Entities,
               including all shares of Common Stock issuable upon the conversion, exercise or
               exchange of all Convertible Securities beneficially owned by the HOC Entities
               divided by (ii) the aggregate number of outstanding shares of Common Stock, plus
               the number of shares of Common Stock issuable upon the conversion, exercise or
               exchange of all outstanding Convertible Securities; 

               

          		    (b)       
               If the Company issues Equity Securities in circumstances that would not give
               rise to the rights of the HOC Entities pursuant to Section 4.1(a) (the
               “Non-Participating  Transaction”), then in any
               concurrent or subsequent transaction which does give rise to the rights of the
               HOC Entities pursuant to Section 4.1(a) (the “Participating
               Transaction”), the Company shall allow the HOC Entities to subscribe
               for and purchase Additional Securities in an amount greater than HOC’s Pro
               Rata Interest; provided that in the Participating Transaction, HOC shall not be
               entitled to purchase any more than its Pro Rata Interest of the securities sold
               collectively in the Non-Participating Transaction and the Participating
               Transaction. 

               

          		    (c)       
               If the Company intends to authorize and/or issue equity securities that give
               rise to the rights of HOC pursuant to Section 4.1(a), the Company shall
               provide notice to HOC (the “Rights Notice”) no less than ten
               (10) business days before the date on which the Company intends to issue equity
               securities giving rise to the rights of HOC in Section 4.1(a). 

               

          		    (d)       
               The Rights Notice shall specify sufficient information regarding the particulars
               of the issuance or sale of the Additional Securities to allow HOC to make a
               reasoned decision in respect of making the investment, including to the extent
               any such terms are determinable at such time: (i) the total number of equity
               securities outstanding as of the date thereof; (ii) the total number of
               Additional Securities which are being offered; (iii) the rights, privileges,
               restrictions, terms and conditions of such Additional Securities; (iv) the
               amount payable by HOC for the Additional Securities to which it is entitled
               pursuant to Section 4.1(a); and (v) the proposed closing date, and
               thereafter, to the extent it is not included in the Rights Notice, the Company
               shall immediately provide notice to HOC of such information as it is determined. 

               

          		    (e)       
               HOC shall give notice (an “Acceptance Notice”) to the Company
               not later than 5:00 p.m. (Denver time) on the tenth business day following the
               deemed receipt of any Rights Notice given under paragraph 4.1(c) setting
               out the number of Additional Securities, if any, which any of HOC Entities
               intends to subscribe for and purchase and, if applicable, the name and address
               of HOC Entity whose name in which such securities should be registered, provided
               that if HOC, acting reasonably, determines that it has insufficient information
               to make such investment decision, HOC shall notify the Company of the
               information required to make such investment decision and thereafter shall have
               the longer of (i) the remainder of the ten (10) Business Days set out in the
               first sentence of this paragraph; or (ii) two (2) Business Days from the receipt
               of such additional information to make the investment decision and deliver or
               refrain from delivering the Acceptance Notice. Notwithstanding the preceding
               sentence, the Rights Notice shall be deemed to include sufficient information to
               make such investment decision if it includes the information specified in items
               (i) to (iv) of Section 4.1(d). If no Acceptance Notice has been provided to
               the Company within the required time, HOC will be deemed to have elected not to
               subscribe for or purchase any such Additional Securities. 

               

7 

          		    (f)       
               Following delivery of the Acceptance Notice, if any, the HOC Entities shall pay
               for, and the Company shall issue to the relevant HOC Entities, free and clear of
               any liens, the number of Additional Securities specified in the Acceptance
               Notice and, except as otherwise agreed, the Company shall provide HOC with
               substantially the same closing documents, including opinions, if applicable, as
               are delivered to the other persons subscribing for Additional Securities on the
               closing date for such issuance. 

               

          		    (g)       
               The rights granted to HOC under this Article 4 shall terminate and be of no
               further force or effect if HOC does not exercise Option and complete the
               purchase of the Additional Shares. 

               

ARTICLE 5
BOARD REPRESENTATION 

5.1    Appointment
of HOC Nominee. If, but only if HOC exercises the Option and completes the
acquisition of the Additional Shares, HOC shall be entitled to nominate one (1)
individual to the Board of Directors (the “HOC Director”). Upon receipt
of such nomination and its satisfaction that the individual nominated by HOC meets the
qualification requirements for directors under applicable laws, the Board of Directors
further agrees to expand its membership to four (4) positions and appoint the individual
nominated by HOC to the newly-created vacancy. The Board of Directors further agrees that
if HOC maintains a Pro Rata Interest of at least 14.5%, it shall nominate such individual
to the slate of directors at each subsequent annual meeting so long as the provisions of
Section 8.2 are not invoked.  

5.2    Increase
in Membership of the Board of Directors. If HOC acquires the Additional Shares and
subsequently acquires additional Shares such that it holds a Pro Rata Interest of 40% or
more, HOC shall be entitled to appoint one (1) additional individual to the Board of
Directors. For greater clarity, if HOC exercises the Option and holds a Pro Rata Interest
of at least 40%, HOC shall be entitled to appoint a total of two (2) individuals to the
Board of Directors. Upon receipt of a nomination from HOC for the second director and its
satisfaction that the individual meets the qualification requirements for directors under
applicable law, the Board of Directors agrees to expand its membership to five positions
and appoint the individual nominated by HOC to the newly created vacancy. The Board of
Directors further agrees that so long as HOC maintains a Pro Rata Interest of at least
35%, it shall nominate such individual to the slate of directors at each subsequent
annual meeting so long as the provisions of Section 8.2 are not invoked. The Company
further agrees that if HOC exercises the Option and so long as the provisions of Section
8.2 are not invoked, it will not take any action to authorize and will cause the Board of
Directors not to authorize any proposal to expand the Board beyond five (5) members
without the advance written approval of HOC.  

8 

5.3    Board
Meetings. At all times when the provisions of Section 5.1 are satisfied, the Company
shall provide HOC Director(s) not less than 7 (seven) Business Days advance written
notice of the date on which any meeting of the Board of Directors shall be held. In
providing such notice, the Company shall take into consideration the matters to be
discussed at the meeting, the proximity to the place of the meeting and the time zone in
which the HOC Director is resident.  

5.4    Resignation
of HOC Director(s). If (x) one or both HOC Directors do not meet the individual
qualifications for a director prescribed by applicable laws, (y) the Pro Rata Interest of
HOC falls below 14.5%, or (z) the provisions of Section 8.2 hereof become applicable
and the Company delivers notice to HOC to that effect, all of the HOC Directors shall
forthwith resign; provided, however, that in the event of (x), HOC shall then be entitled
to appoint an individual to replace the resigning director(s) and such resigning
director(s) shall be afforded the benefits of any indemnity and insurance as may exist
for all matters occurring prior to such resignation.  

5.5    Indemnification
and Director’s and Officer’s Insurance. So long as HOC is entitled to
nominate and maintain a director pursuant to this Article 5, the Company shall indemnify
each current and former HOC Director and shall maintain director’s and officer’s
liability insurance for the benefit of each such director, with the same rights and
benefits as are accorded the directors of the Company generally.  

ARTICLE 6 
RIGHT OF FIRST OFFER 

The provisions of this Article 6
shall apply if, but only if, HOC exercises the Option and acquires the Additional Shares
and so long as the provisions of Section 8.2 do not apply: 

6.1     Joint
Venture  

	 	
(a)
                                               If the
Company or any of its Subsidiaries decides to seek a joint venture
                    partner to develop, acquire or otherwise earn an interest in any
Properties                     including the Existing Properties, in circumstances where
the Company’s                     participation in such joint venture is not
dependent on the participation of a                     particular third party as joint
venture partner (such as in the case of an                     earn-in) (each a “Proposed
Joint Venture”), the Company shall                     immediately provide
notice to HOC (the “Joint Venture Proposal                     Notice”)
specifying sufficient information regarding the particulars of                     the
Proposed Joint Venture to allow HOC to make a reasoned decision in respect
                    of participating in the Proposed Joint Venture, including to the
extent any such                     terms are determinable at such time: (A) a
description of the Property in                     respect of which the Proposed Joint
Venture relates, and (B) the terms,                     including the purchase price, for
the Proposed Joint Venture, and if applicable,                     a true copy of any
related term sheet setting forth such terms.  

        
   Notwithstanding
the foregoing, nothing in this Section 6.1 shall prevent the Company from
concurrently negotiating with third parties with respect to those matters set out in this
Section 6.1. 

	 	
(b)
                                               If HOC,
acting reasonably, determines that the Joint Venture Proposal Notice
                    contains insufficient information to make a reasoned decision in
respect of                     participating in the Proposed Joint Venture, it shall
notify the Company of the                     information required to make such decision
and thereafter shall have the greater                     of (i) five (5) Business Days
from the receipt of such information from the                     Company, and (ii) the
days remaining in the period specified in Section 6.2                     to make
such decision and deliver or refrain from delivering the HOC JV
                    Acceptance Notice in accordance with such Section 6.2.
Notwithstanding the                     foregoing, a copy of the term sheet for the
Proposed Joint Venture shall be                     deemed to be sufficient information
to make such reasoned decision, if it                     includes the information
specified in Section 6.1(a).  

9 

6.2     Joint
Venture Proposal  

	 	
(a)
                                               Receipt
of the Joint Venture Proposal Notice by HOC shall be deemed to
                    constitute an invitation to HOC Entities to participate in the
Proposed Joint                     Venture.  

	 	
(b)
                                               If any
of HOC Entities provides the Company an acceptance (the “HOC JV
                    Acceptance Notice”) in writing in respect of the
Joint Venture                     Proposal Notice, within fifteen (15) Business Days of
receipt thereof or such                     shorter period as may be specified in the
Joint Venture Proposal Notice of a                     determination in respect of the
Proposed Joint Venture, the Company shall                     negotiate exclusively in
good faith with HOC to finalize terms of the Proposed                     Joint Venture
acceptable to each of the Parties, acting reasonably, within a                     period
of sixty days or such additional period as the Parties may from time to
                    time agree in writing (the “JV Negotiation Period”),
                    failing which the Company shall be entitled to pursue other partners
for the                     Proposed Joint Venture. If HOC does not provide HOC JV
Acceptance Notice to the                     Company within fifteen (15) Business Days or
such shorter period as may be                     specified in the Joint Venture Proposal
Notice, of receiving of the Joint                     Venture Proposal Notice, the
Company may enter into negotiations with any other                     person regarding
the Proposed Joint Venture. If the Company truncates the period
                    during which the HOC JV Acceptance Notice is required to be returned
by HOC, it                     shall include in the Joint Venture Proposal Notice a
statement certified by an                     officer of the Company that the Company has
determined that it is necessary to                     truncate such period to avoid
losing the opportunity to make such acquisition or                     other related
transaction and that it has used commercially reasonable efforts                     to
avoid truncating such period.  

ARTICLE 7 
STANDSTILL 

The provisions of this Article 7
shall apply if HOC acquires the Additional Shares and for a period of two (2) years after
the Subsequent Closing Date: 

7.1     Standstill  

          	 	(a) 	
               HOC covenants and agrees that, except as otherwise contemplated in this
               Agreement, HOC will not, and will not allow any HOC Entities to, in either case,
               without the prior written consent of the Company, directly or indirectly: 

               

	 	(i)  	acquire
or enter into any agreement to acquire or make any proposal or offer to           acquire
in any manner any equity securities of the Company (whether issued or           unissued)
that would result in a Pro Rata Interest greater than 40% other than           (A) as a
result of a stock dividend or distribution made by or a           recapitalization of the
Company, (B) in accordance with the terms of any           dividend reinvestment or share
purchase plan made available from time to time by           the Company to holders of
equity securities; (C) pursuant to the exercise of           rights issued pursuant to a
rights offering made by the Company to the holders           of its equity securities; or
(D) pursuant to the exercise of rights issued           pursuant to any shareholder
rights plan of the Company and attached to equity           securities;  

10 

	 	(ii)  	assist,
encourage or advise any other person to acquire or agree to acquire in           any
manner any equity securities;  

	 	(iii)  	propose
or support or engage in any discussions or negotiations with respect to,           or
enter into any agreement, commitment or understanding with any third party to
          effect, any tender offer, merger, business combination, asset or share
          transaction, financing transaction or corporate restructuring involving the
          Company;  

	 	(iv)  	make
or participate directly or indirectly in any solicitation of proxies from
          shareholders of the Company;  

	 	(v)  	form,
join or in any way participate in any group acting jointly or in concert           with
any of the foregoing; or  

	 	(vi)  	make
any public disclosure of any intention in connection with the foregoing;  

	 	
(each
an "Acquisition Proposal"). 

	(b) 	       
                 Notwithstanding
Section 6.1, none of the HOC Entities shall be prohibited           from making an
Acquisition Proposal:  

	 	(i)  	in
the event the Company materially breaches its obligations under Section 2.3
          (Additional Financing), Article 4 (Pre-Emptive Right), Article 5 (Board
          Representation) or Article 6 (Right of First Offer), provided that HOC has
          notified the Company of any alleged breach and the Company has failed to cure
          such alleged breach, if curable, within thirty days of such notice;  

	 	(ii)  	from
the date any public announcement of or public disclosure of an intention to
          commence or enter into any agreement with respect to any of the following is
          made by any person (other than any HOC Entity) to the date of the withdrawal or
          cancellation of the Tender Offer Transaction or Business Combination
Transaction           (each as defined below):  

	 	A)  	a
tender offer or an intention to undertake a tender offer for equity securities
               of the Company by any person or group of persons (other than any HOC
Entities)                which if completed would result in such tender offer person or
group of persons                holding 20% or more on a non-diluted basis of any class
of then outstanding                equity securities of the Company (a “Tender
Offer                Transaction”); or  

11 

	 	B)  	any
acquisition (excluding a Tender Offer Transaction), merger, asset purchase
               and sale, business combination transaction or other extraordinary
transaction                involving or relating to the Company or any of its
subsidiaries, or an intention                to make an offer to the Company and/or its
subsidiaries to undertake such a                transaction, by any person or group of
persons (other than any HOC Entities)                which would, if completed, result in
(I) any class of outstanding equity                securities being converted into cash
or securities of another person resulting                in shareholders holding less
than 50% of the equity and/or voting securities of                the resulting entity;
or (II) all or substantially all of the Company’s                assets being sold
to any person or group of persons (other than any HOC                Entities) (a “Business
Combination Transaction”),                provided that in the case of
this Section 6.1(b)(ii)(B) HOC must make such                Acquisition Proposal
confidentially to the Board of Directors and not by way of                public offer to
the shareholders.  

	 	
For
greater certainty, if HOC has commenced an Acquisition Proposal in reliance on this
Section 6.1(b)(ii) or in respect of Section 6.1(b)(ii)(B), has agreed with the Company to
an Acquisition Proposal, prior to the withdrawal or cancellation of such Tender Offer
Transaction or Business Combination Transaction, HOC shall not be precluded from
continuing with such Acquisition Proposal by reason only of the withdrawal or
cancellation of any relevant Tender Offer Transaction or Business Combination
Transaction; or 

	 	(iii)  	if
a person or group of persons other than any of the HOC Entities, the Company           or
its subsidiaries obtains proxies carrying a majority of the votes attached to
          all outstanding voting securities of the Company and exercises such votes to
          replace the Board of Directors.  

7.2    Most
Favored Nation. The Company shall immediately inform HOC and provide HOC with a copy
of any other standstill provisions in any agreement pertaining to the matters set forth
in this Article 6, entered into by the Company with another person subsequent to the date
hereof, and notwithstanding delivery of such notice and a copy of any such provisions,
HOC shall have the full benefit of any materially more favourable terms, in the opinion
of HOC, contained in such standstill and Section 6.1 shall be deemed to be amended
accordingly.  

ARTICLE 8 
COVENANTS 

8.1    Designation
of Consulting Geologists. During the time up to the Option Expiration Date, and
thereafter if HOC exercises the Option and acquires the Additional Shares and the
provisions of Section 8.2 do not apply, HOC shall have the right to designate one full or
part time geologist to act as a consultant to the Company at any of its Existing
Properties for the purpose of advising the Company with regard to ongoing exploration and
development. The Company shall provide such geologist with room and board while such
geologist is on-site at any of the Existing Properties. HOC, however, shall be
responsible for payment of any compensation for such geologist. Other consulting services
which may be required by the Company, including metallurgical, underground mining
engineering or concentrate contract negotiations, may be requested from HOC, and provided
that HOC agrees to deliver those services, any charges for such services shall be billed
by HOC to the Company at no more than HOC’s actual cost plus 1%.  

12 

8.2    Termination
of Certain HOC Rights. Notwithstanding anything in this Agreement to the contrary, in
the event (i) HOC shall hold a Pro Rata Interest less than 14.5% or (ii) HOC shall have
achieved a Pro Rata Interest greater than 14.5% but subsequently sells or otherwise
disposes of 20% or more of its Pro Rata Interest in any one or more transactions, the
benefits provided to HOC pursuant to the provisions of Section 2.3 (Additional
Financing), Article 4 (Pre-Emptive Rights), Article 5 (Board Representation), Article 6
(First Offer) and Section 8.1 (Designation of Geologist) above shall immediately
terminate and be of no further force or effect. Furthermore, any HOC Director nominated
and appointed pursuant to the provisions of Section 5.1 or 5.2 shall immediately
resign in the event that the provisions of subsection (i) or (ii) above shall be
applicable.  

ARTICLE 9 
ADDITIONAL COVENANTS 

9.1     Covenants
of the Company.  

          	 	(a) 	
               Prior to the Option Expiration Date, the Company shall not and shall not permit
               its Affiliates, agents or other representatives (including any director,
               officer, investment banker, legal advisor or accountant retained by the Company
               or any of its Susidiaries) to: 

               

	 	(i)  	initiate,
solicit, promote or encourage, directly or indirectly, inquiries or                the
submission of proposals or offers from any Person with respect to any
               proposal or offer or action that would reasonably be expected to delay,
prevent                or frustrate the Transactions or any part thereof (an “Alternative
               Proposal”);  

	 	(ii)  	encourage,
or participate or engage in negotiations concerning, or furnish to                any
Person other than to HOC Entities, any non-public information with respect
               to, or otherwise co-operate in any way with, or participate in, or
facilitate or                encourage any Person to make an Alternative Proposal; or  

	 	(iii)  	endorse,
accept, approve or recommend a proposal of, or enter into any Contract                or
understanding with , any Person relating to an Alternative Proposal, or
               otherwise facilitate any effort or attempt to make or implement an
Alternative                Proposal.  

          	 	(b) 	
               Notwithstanding anything else in this Section 9.1, if the Company or any of its
               subsidiaries receives an unsolicited Alternative Proposal prior to the Option
               Exercise Date, the Board of Directors may participate in discussions with,
               furnish information to, or enter into an agreement with the Person that
               initiated the Alternative Proposal only if: (x) the Board of Directors
               determines in good faith, after consultation with outside counsel, that such
               action is necessary in order for them to act in a manner consistent with their
               fiduciary duty under applicable Laws; (y) the Company shall have provided to HOC
               notice at least five (5) Business Days prior to the date on which the agreement
               to effect such Alternative Proposal is to be entered into specifying the terms
               of the Alternative Proposal; and (z) after taking into account modifications to
               this Agreement proposed by HOC during such five Business Day period, such
               proposal would constitute a superior proposal (“Superior
               Proposal”). If HOC makes a proposal to amend this Agreement to increase
               the purchase price payable for the Additional Shares, such that the proposal of
               such other Person shall no longer be a Superior Proposal, and shall complete the
               purchase of the Additional Shares upon such terms, then neither the Company nor
               its subsidiaries shall enter into such Alternative Proposal. 

               

13 

          	 	(c) 	
               The Company shall comply with all securities regulatory filing requirements on a
               timely basis in connection with the issuance of any Equity Securities of the
               Company to any HOC Entity, including filing within the periods stipulated under
               Securities Laws, at the Company’s expense, all private placement forms
               required to be filed by the Company and paying all filing fees required to be
               paid in connection therewith so that such issuance may lawfully occur without
               the necessity of filing a prospectus, registration statement or any similar
               document under the Securities Laws. 

               

          	 	(d) 	
               The Company shall, to the extent and for so long as HOC Entities hold at least
               14.5% of the Shares on a non-diluted basis, upon HOC’s request, permit
               representatives of the HOC Entities to have access to the site and any of the
               premises where the business and operations of the Company and its Subsidiaries
               are conducted and access and duplicating rights (and use commercially reasonable
               efforts to cause persons or firms possessing such documentation or information
               to give similar access and duplicating rights) to the Company and its
               Subsidiaries’ books of account and records and such other documents,
               communications, items and matters, within the knowledge, possession or control
               of the Company, which HOC may reasonably request, at HOC’s own cost (other
               than those it is permitted to examine and make copies of free of charge pursuant
               to applicable Laws) provided that, except to the extent the information can be
               provided in the necessary course of business of the Company, acting reasonably
               including to provide HOC Entities with information to assist the HOC Entities
               and their advisors with the preparation of the financial statements for such HOC
               Entities, nothing herein shall require the Company to provide HOC Entities with
               any information which would constitute a material fact with respect to the
               Company which has not been generally disclosed. 

               

          	 	(e) 	
               In the event the Company shall breach any representation or warranty, covenant
               or any other right of HOC under this Agreement in any material respect,
               including but not limited to, the rights afforded to HOC under Articles 2, 4, 5,
               6 and 8 hereof, then at the request of HOC, the Company shall promptly prepare
               and file with the SEC a registration statement on Form S-l or S-3 (or, if Form
               S-l or S-3 is not then available, on such form of registration statement as is
               then available to effect a registration for resale of the Purchase Shares and
               the Additional Shares (“Registration Statement”)), covering the resale
               of all of the Shares owned by HOC; provided, however, that if prior to the
               filing of the Registration Statement, the provisions of Rule 144 of the
               Securities Act of 1933, as amended (the “1933 Act”) allow the sale of
               all of the Shares in compliance with that Rule, the Company shall not be
               obligated to file such Registration Statement so long as the Company at its own
               expense, does the following: (i) complies with any necessary filing or reporting
               requirements (under the 1933 Act or otherwise) to permit such sale, (ii)
               cooperates with HOC in removing any legend on the certificates representing the
               Shares, including but not limited to instructing its transfer agent to remove
               such restrictive legend and (iii) provides HOC with an opinion of counsel
               confirming that such sale is permitted under Rule 144. Such Registration
               Statement also shall cover, to the extent allowable under the 1933 Act and the
               rules promulgated thereunder (including Rule 416), such indeterminate number of
               additional shares of Common Stock resulting from stock splits, stock dividends
               or similar transactions with respect to the Shares. The Company shall pay all
               expenses associated with the registration, including filing and printing fees,
               counsel and accounting fees and expenses, and State “Blue Sky” fees
               and expenses. The Company shall use its commercially reasonable efforts to have
               the Registration Statement declared effective by the SEC as soon as practicable.
               The Company shall notify HOC by facsimile or e-mail as promptly as practicable,
               and in any event, within three (3) business days, after the Registration
               Statement is declared effective and shall simultaneously provide HOC with copies
               of any related prospectus to be used in connection with the sale or other
               disposition of the securities covered thereby. 

               

14 

          	 	(f) 	
               In connection with the foregoing, the Company shall indemnify and hold harmless
               HOC against any losses, claims, damages or liabilities to which it may become
               subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
               or liabilities (or actions in respect thereof) arise out of or are based upon
               (i) any untrue statement or alleged untrue statement of any material fact
               contained in the Registration Statement or any other public filing by the
               Company, so long as such statement has not been provided to the Company by HOC
               for inclusion in such registration statement; (ii) the omission or alleged
               omission to state therein a material fact required to be stated therein or
               necessary to make the statements therein not misleading, so long as such
               omission or alleged omission does not relate to HOC or the manner of sale for
               the Shares as provided to the Company by HOC; or (iii) any violation of the 1933
               Act, any rule or regulation thereunder or any other securities law, rule or
               regulation applicable to the Company and relating to the action or inaction
               required of the Company in connection therewith. The foregoing indemnification
               obligation shall extend to the fees and expenses of any counsel retained by HOC
               in connection with any such loss, claim, damage or liability. 

               

ARTICLE 10 
REPRESENTATIONS &
WARRANTIES 

10.1     Representations
and Warranties of the Company. The Company represents, warrants and agrees with HOC as
of the date of this Agreement, that:  

	 	
(a)
                                               The
Company is a corporation duly incorporated under the laws of the State of
                    Colorado, and is validly existing and in good standing under the laws
of the                     State of Colorado and no proceedings have been instituted or
are pending for the                     dissolution or liquidation of the Company;  

	 	
(b)
                                               The
Company has all requisite legal and corporate power and authority to
                    execute, deliver and perform its obligations under this Agreement;  

	 	
(c)
                                               This
Agreement has been duly authorized by all necessary corporate action on
                    the part of the Company and has been duly executed and delivered by
the Company                     and constitutes a valid and legally binding obligation of
the Company                     enforceable against the Company in accordance with its
terms; and  

15 

	 	
(d)
                                               The
execution and delivery of this Agreement and the performance by the Company
                    of its obligations hereunder and the consummation of the
Transactions, do not                     and will not conflict with, or result in a
breach or violation of, any of the                     terms or provisions of, or
constitute a default under (whether after notice or                     lapse of time or
both): (i) the constating documents of the Company;                     (ii) the
resolutions of the shareholders or directors (or any committee
                    thereof) of the Company which are in effect at the date hereof; (iii) any
                    mortgage, note, indenture, contract, agreement, instrument, lease or
other                     document to which the Company is a party or by which it is
bound; or                     (iv) any judgement, writ, injunction, decree or order,
of any court or of                     any Authority that is binding the Company or the
property or assets of the                     Company.  

10.2     Representations
and Warranties of HOC. HOC represents, warrants and agrees with the Company as of the
date of this Agreement, that:  

          	 	(a) 	
               HOC is a limited company incorporated under the Companies Act 1985
               (England) as a limited company, registered in England and Wales, and is
               validly existing and in good standing under the laws of England and no
               proceedings have been instituted or are pending for the dissolution or
               liquidation of HOC; 

               

          	 	(b) 	
               HOC has all requisite legal and corporate power and authority to execute,
               deliver and perform its obligations under this Agreement; 

               

          	 	(c) 	
               this Agreement has been duly authorized by all necessary corporate action on the
               part of HOC and has been duly executed and delivered by HOC and constitutes a
               valid and legally binding obligation of HOC enforceable against HOC in
               accordance with its terms; and 

               

          	 	(d) 	
               the execution and delivery of this Agreement and the performance by HOC of its
               obligations hereunder and the consummation of the Transactions, do not and will
               not conflict with, or result in a breach or violation of, any of the terms or
               provisions of, or constitute a default under (whether after notice or lapse of
               time or both): (i) the constating documents of HOC; (ii) the
               resolutions of the shareholders or directors (or any committee thereof) of HOC
               which are in effect at the date hereof; (iii) any mortgage, note,
               indenture, contract, agreement, instrument, lease or other document to which HOC
               is a party or by which it is bound; or (iv) any judgement, writ,
               injunction, decree or order, of any court or of any Authority that is binding on
               HOC or the property or assets of HOC. 

               

ARTICLE 11 
INDEMNIFICATION 

11.1     Indemnification
by the Company.  

	 	
The
Company will indemnify and save harmless the HOC Entities and the directors, officers,
employees and agents of the HOC Entities (collectively, the “HOC Indemnitees”)
from and against all Claims incurred by any one or more of the HOC Indemnitees directly or
indirectly resulting from any breach of any covenant, representation or warranty of the
Company contained in this Agreement. 

16 

11.2     Indemnification
by HOC.  

	 	
HOC
will indemnify and save harmless the Company and the directors, officers, employees and
agents of the Company (collectively, the “Company Indemnitees”) from and
against all Claims incurred by any one or more of the Company Indemnitees directly or
indirectly resulting from any breach of any covenant, representation or warranty of HOC
contained in this Agreement. 

11.3     Injunctive
Relief.  

	 	
Notwithstanding
any other provision of this Agreement, nothing herein is intended to or shall restrict a
Party from seeking and receiving injunctive relief (whether as a temporary restraining
order, preliminary injunction or otherwise) or specific performance. 

ARTICLE 12 
MISCELLANEOUS
PROVISIONS 

12.1    Notices.
 All notices or other communications required or permitted to be given by one party to
another by the terms hereof shall be given in writing by personal delivery or facsimile
delivered to such other party as follows:  

	 	
To
the Company: 

	 	
Gold
Resource Corporation                            
222 Milwaukee St., Suite 301

                           Denver, CO  80206                            
Attention:
 William Reid, President                            
Facsimile No.: (303) 320-7835 

	 	
To
HOC: 

	 	
Hochschild
Mining Holdings Limited                            
Calle La Colonia 180

                           Surco, Lima 33, Peru                            
Attention:  VP
& General Counsel                            
Facsimile No.:  +511-437-5009 

or at such other address or facsimile
number as may be given by either of them to the other in writing from time to time and
such other notices or communications shall be deemed to have been received when delivered
or, if by facsimile, on the next business day after such notice or other communication has
been transmitted by facsimile (with receipt confirmed). 

17 

12.2    Further
Assurances. Each of the parties hereto upon the request of each of the other parties
hereto, whether before or after the date of this Agreement, shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and delivered all
such further acts, deeds, documents, assignments, transfers, conveyances, powers of
attorney and assurances as may reasonably be necessary or desirable to complete the
transactions contemplated herein.  

12.3    Costs
and Expenses. All costs and expenses (including, without limitation, the fees and
disbursements of legal counsel) incurred in connection with this Agreement and the
transactions herein contemplated shall be paid and borne by the party incurring such
costs and expenses.  

12.4    Applicable
Law. This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New York and the
laws of the United States applicable therein. Any and all disputes arising under this
Agreement, whether as to interpretation, performance or otherwise, shall be subject to
the non-exclusive jurisdiction of the courts of Colorado and each of the parties hereto
hereby irrevocably attorns to the jurisdiction of the courts of such province.  

12.5    Entire
Agreement. This Agreement constitutes the entire agreement between the parties with
respect to the transactions contemplated herein and cancels and supersedes any prior
understandings, agreements, negotiations and discussions between the parties. There are
no representations, warranties, terms, conditions, undertakings or collateral agreements
or understandings, express or implied, between the parties hereto other than those
expressly set forth in this Agreement or in any such agreement, certificate, affidavit,
statutory declaration or other document as aforesaid.  

12.6    Amendment
and Waivers. No amendment of this Agreement will be effective unless made in writing
and signed by the Parties. A waiver of any default, breach or non-compliance under this
Agreement is not effective unless in writing and signed by the Party to be bound by the
waiver. No waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach or non-observance or by anything done
or omitted to be done by the other Party in respect of any default, beach or
non-observance or by anything done or omitted to be done by the other Party. The waiver
by any Party of any default, breach or non-compliance under this Agreement shall not
operate as a waiver of that Party’s rights under this Agreement in respect of any
continuing or subsequent default, breach or non-observance (whether of the same or any
other nature).  

12.7    Severability. If
any one or more provisions in this Agreement, for any reason, shall be determined to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of any such provision in any other respect and the remaining provisions of
this Agreement shall not be in anyway impaired.  

12.8    Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original and all of which together shall constitute one and the same
Agreement. Counterparts may be delivered either in original or faxed form and the parties
adopt any signature received by a receiving fax machine as original signatures of the
parties.  

12.9    Assignment.
This Agreement may not be assigned by either party except with the prior written
consent of the other parties hereto.  

18 

12.10    Enurement.
This Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, successors (including any successor by reason of
the amalgamation or merger of any party), administrators and permitted assigns.  

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

GOLD RESOURCE CORPORATIOn  

By: ___________________________________________              

       
      Authorized Signing
Officer 

HOCHSCHILD MINING HOLDINGS LIMITED  

By: ___________________________________________              

       
      Authorized Signing
Officer 

19

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