Document:

daulton_10ka-ex1005.htm

 

EXHIBIT 10.5

 

HUNKER OPTION AGREEMENT

 

THIS AGREEMENT made as of February 25, 2010

 

BETWEEN:

 

SHAWN RYAN, a businessperson having an address at Box 213, Dawson City, Yukon Territory, Y0B 1G0 (Fax: 867-993-5201) ("Ryan")

 

AND:

 

DAULTON CAPITAL CORP., a corporation incorporated under the laws of Nevada and having its head office at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169, USA (the "Optionee")

 

WHEREAS:

 

	
A.

	
Ryan is the recorded and beneficial owner of 100% of those mining claims situated in the Dawson Mining District, Yukon Territory, more particularly described in Schedule “A” attached hereto, which are generally known and described as the “Hunker Property” (collectively, the “Property”); and

 

	
B.

	
The Optionee desires to obtain an option from Ryan, and Ryan has agreed to grant to the Optionee an option to acquire an undivided 100% right, title and interest in and to the Property.

 

NOW THEREFORE in consideration of the premises and mutual covenants and agreements herein contained, the parties agree as follows:

 

SECTION 1 - INTERPRETATION

 

1.1   Definitions. In this Agreement:

 

	  	
(a)

	
“Advance Royalty” has the meaning set forth in Section 12.

	  	  	  
	  	
(b)

	
“Area of Interest” has the meaning set forth in Section 7;

	  	  	  
	  	
(c)

	
“Commercial Production” means, and is deemed to have been achieved, when the concentrator processing ores, for other than testing purposes, has operated for a period of 30 consecutive production days at an average rate of not less than 60% of design capacity or, if a concentrator is not erected on the Property, when ores have been produced for a period of 30 consecutive production days at the rate of not less than 60% of the mining rate specified in a feasibility study recommending placing the Property in Commercial Production;

	  	  	  
	  	
(d)

	
“Exchange” means the OTC Bulletin Exchange;

	  	  	  
	  	
(e)

	
“Expenditures” means all costs and expenses actually incurred by a party on or with respect to the Property, including, without limitation, monies expended in doing geophysical, geochemical and geological surveys, drilling, drifting and other surface and underground work, assaying and metallurgical testing and engineering; in preparing engineering or technical reports; in acquiring facilities for the Property and equipping the Property for and commencing Commercial Production, including, without limitation, all taxes, management, legal and land fees associated to the management of the Property, net smelter returns royalty and/or net profits interest payments or pre-payments as the case may be; in paying the fees, wages, salaries, travelling expenses, and fringe benefits (whether or not required by law) of all persons engaged in work with respect to and for the benefit of the Property; in paying for the food, lodging and other reasonable needs of such persons and including all costs at prevailing charge out rates for any personnel who from time to time are engaged directly in work on the Property, such rates to be in accordance with industry standards;

 

  

1

  

 

 

	  	
(f)

	
"Lien” means any lien, security interest, mortgage, charge, encumbrance, or other claim of a third party, whether registered or unregistered, and whether arising by agreement, statute or otherwise;

	  	  	  
	  	
(g)

	
“Net Smelter Returns" means actual proceeds received by the Optionee from any mint, smelter, refinery or other purchaser from the sale of minerals, concentrates, metals (including bullion) or products from the Property and sold, after deducting from such proceeds the following charges levied by third parties to the extent that they are not deducted by a smelter, a milling facility or other purchaser in computing payment:

	  	  	  
	  	  	
(i)

	
reasonable cost of transportation and handling of the minerals, concentrates, metals (including bullion) or products from the Property to such smelter, milling facility or other purchaser;

	  	  	  	  
	  	  	
(ii)

	
any smelting, milling and refining charges, including penalties; and

	  	  	  	  
	  	  	
(iii)

	
marketing and insurance on such minerals, concentrates, metals (including bullion) or products from the Property;

	  	  	  	  
	  	
(h)

	
“Operator” means the party responsible for carrying out, or causing to be carried out, all work in respect of the Property during the currency of the Option; and

	  	  	  
	  	
(i)

	
“Option” means the option granted to the Optionee by Ryan in accordance with Section 3.1.

 

SECTION 2 - REPRESENTATIONS AND WARRANTIES

 

	
2.1

	
Ryan hereby represents and warrants to the Optionee that:

	  	  	  	  
	  	
(i)

	
he is of the age of majority and has full power, authority and capacity to enter into this Agreement and to carry out his obligations under this Agreement and is qualified to carry on business in the Yukon Territory;

	  	  	  
	  	
(ii)

	
the claims comprising the Property were properly recorded and filed with appropriate governmental agencies; (ii) all assessment work required to hold the claims comprising the Property has been performed and all governmental fees have been paid and all filings required to maintain the claims comprising the Property in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (iii) he has no knowledge of conflicting mining claims;

 

  

2

  

 

 

	  	
(iii)

	
the Property is properly and accurately described in Schedule "A" hereto;

	  	  	  
	  	
(iv)

	
Ryan is the owner of a 100% registered and beneficial interest in the Property and the Property is free and clear of all Liens and third party interests;

	  	  	  
	  	
(v)

	
there has been no known spill, discharge, deposit, leak, emission or other release of any contaminant, pollutant, dangerous or toxic substance, or hazardous waste on, into, under or affecting the Property and no such contaminant, pollutant, dangerous or toxic substance, or hazardous waste is stored in any type of container on, in or under the Property, except as necessary to carry on exploration on the Property; and

	  	  	  
	  	
(vi)

	
there are no pending or threatened actions, suits, claims or proceedings regarding the Property.

	  	  	  
	
2.2

	
The Optionee hereby represents and warrants that:

	  	  	  	  
	  	
(a)

	
it is a corporation duly incorporated and organised and validly existing under the Business Corporations Act (Nevada);

	  	  	  
	  	
(b)

	
it has full corporate power, authority and capacity to enter into this Agreement and to carry out its obligations under this Agreement and is qualified to carry on business in its jurisdiction of incorporation;

	  	  	  
	  	
(c)

	
it has been duly authorized to enter into, and to carry out its obligations under, this Agreement and no obligation of it in this Agreement conflicts with or will result in the breach of any term in:

	  	  	  	  
	  	  	
(i)

	
its notice of articles or articles; or

	  	  	  	  
	  	  	
(ii)

	
any other agreement to which it is a party.

 

2.3    Each party's representations and warranties set out above will be relied on by the other party in entering into the Agreement and shall survive the execution and delivery of the Agreement. Each Party shall indemnify and hold harmless the other party for any loss, cost, expense, claim or damage, including legal fees and disbursements, suffered or incurred by the other party at any time as a result of any misrepresentation or breach of warranty arising under the Agreement.

 

SECTION 3 - OPTION

 

3.1    Ryan hereby grants to the Optionee the sole and exclusive right Option to acquire an undivided 100% right, title and interest in and to the Property on the terms set out herein.

 

3.2   In order to maintain the Option in good standing, the Optionee must:

 

	  	
(a)

	
pay to Ryan a total of $400,000:

	  	  	  	  
	  	  	
(i)

	
$25,000 no later than April 1st, 2010;

	  	  	  	  
	  	  	
(ii)

	
$75,000 on or before Feb.15th, 2011;

	  	  	  	  
	  	  	
(iii)

	
$100,000 on or before Feb.15th, 2012;

	  	  	  	  
	  	  	
(iv)

	
$100,000 on or before Feb.15th, 2013; and

	  	  	  	  
	  	  	
(v)

	
$100,000 on or before Feb.15th, 2014;

	  	  	  	  
	  	
(b)

	
incur a total of $1,730,000 in Expenditures:

	  	  	  	  
	  	  	
(i)

	
in the amount of $30,000 on or before April 1st, 2010;

	  	  	  	  
	  	  	
(ii)

	
in the additional amount of $150,000 on or before Feb.15th, 2011;

	  	  	  	  
	  	  	
(iii)

	
in additional amount of $300,000 on or before Feb.15th, 2012;

 

  

3

  

 

 

	  	  	
(iv)

	
in the additional amount of $500,000 on or before Feb.15th, 2013; and

	  	  	  	  
	  	  	
(v)

	
in the additional amount of $750,000 on or before Feb.15th, 2014;

	  	  	  	  
	  	
(c)

	
issue and deliver to Ryan:

	  	  	  	  
	  	  	
(i)

	
500,000 common shares of the Optionee on or before April 1st, 2010;

	  	  	  	  
	  	  	
(ii)

	
an additional 500,000 common shares of the Optionee on or before April 15th, 2010;

	  	  	  	  
	  	  	
(iii)

	
a bonus of 500,000 common shares if exploration costs exceed $3,000,000 Canadian dollars. The shares must be issued within 30 days of this expenditure total being reached.

 

3.3    All of the payment, Expenditure or share obligations herein may be accelerated at the Optionee's option.  This Agreement, and in particular, the payment, Expenditure and share obligations herein are subject to acceptance by the Exchange.

 

3.4    The Optionee will have the right to terminate this Agreement at any time up to the date of exercise of the Option by giving notice in writing of such termination to Ryan, and in the event of such termination, this Agreement will, except for the provisions of Sections 2.3, 5.2 and 6, be of no further force and effect save and except for any obligations of the Optionee incurred prior to the effective date of termination.

 

3.5    Once the Optionee has made the payments, incurred the Expenditures and issued and delivered the shares under Section 3.2 on the terms set out herein, the Optionee will be deemed to have exercised the Option and to have acquired an undivided 100% right, title and interest in and to the Property pursuant to this Agreement.

 

3.6    Ryan hereby acknowledges that the Optionee’s ability to issue securities is subject to the rules and policies of the stock exchange on which the common shares of the Optionee are listed and the securities issuable to Ryan hereunder will be subject to resale restrictions imposed by applicable securities laws and the rules of any stock exchange on which the common shares of the Optionee are listed, which rules require that a restrictive legend be placed on all certificates delivered to Ryan under this Agreement and Ryan covenants and agrees with the Optionee to abide by all such resale restrictions.

 

  

4

  

 

 

3.7    Expenditures incurred by any date in excess of the amount of Expenditures required to be incurred by such date shall be carried forward to the succeeding period and qualify as Expenditures for the succeeding period.

 

3.8    Upon the Optionee completing all payments, incurring all Expenditures, and delivering all shares as required under section 3.2, Ryan will register or cause to be registered transfers of the Property in favour of the Optionee, as may be appropriate or desirable to effect the legal transfer of the Property to the Optionee.

 

SECTION 4 - COVENANTS OF RYAN

 

4.1    During the currency of this Agreement, Ryan will:

 

	  	
(a)

	
not do any other act or thing which would or might in any way adversely affect the rights of the Optionee hereunder;

	  	  	  	  
	  	
(b)

	
make available to the Optionee and its representatives all available relevant technical data, geotechnical reports, maps, digital files and other data with respect to the Property in Ryan’s possession or control, including soil samples, and all records and files relating to the Property and permit the Optionee and its representatives at their own expense to take abstracts therefrom and make copies thereof;

	  	  	  	  
	  	
(c)

	
promptly provide the Optionee with any and all notices and correspondence received by Ryan from government agencies in respect of the Property;

	  	  	  	  
	  	
(d)

	
cooperate fully with the Optionee in obtaining any surface and other rights on or related to the Property as the Optionee deems desirable;

	  	  	  	  
	  	
(e)

	
grant to the Optionee, its employees, agents and independent contractors, the sole and exclusive right and option to:

	  	  	  	  
	  	  	
(i)

	
enter upon the Property;

	  	  	  	  
	  	  	
(ii)

	
have exclusive and quiet possession thereof;

	  	  	  	  
	  	  	
(iii)

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

	  	  	  	  
	  	  	
(iv)

	
bring and erect upon the Property such equipment and facilities as the Optionee may consider advisable; and

	  	  	  	  
	  	  	
(v)

	
remove from the Property and dispose of material for the purpose of testing.

 

  

5

  

 

 

SECTION 5 - COVENANTS OF THE OPTIONEE

5.1    During the currency of the Option, the Optionee shall:

 

	  	
(a)

	
keep the Property free and clear of all Liens arising from its operations hereunder (except liens for taxes not yet due, other inchoate liens or liens contested in good faith by the Optionee) and proceed with all diligence to contest or discharge any Lien that is filed;

	  	  	  	  
	  	
(b)

	
pay or cause to be paid all workers and wage earners employed by it or its contractors on the Property, and pay for all materials, services and supplies purchased or delivered in connection with its activities on or with respect to the Property;

	  	  	  	  
	  	
(c)

	
permit Ryan, or its representatives duly authorized by it in writing, at its own risk and expense, access to the Property at all reasonable times and to all records and reports, if any, prepared by the Optionee in connection with work done on or with respect to the Property, and furnish Ryan within 60 days of the completion of a program on the Property with a report with respect to the work carried out by the Optionee on or with respect to said program and material results obtained;

	  	  	  	  
	  	
(d)

	
conduct all work on or with respect to the Property in a careful and minerlike manner and in compliance with all applicable federal, provincial and local laws, rules, orders and regulations, and indemnify and save Ryan harmless from any and all claims, suits, demands, losses and expenses including, without limitation, with respect to environmental matters, made or brought against it as a result of work done or any act or thing done or omitted to be done by the Optionee on or with respect to the Property;

	  	  	  	  
	  	
(e)

	
file all assessment work within the calendar year the work was completed; and

	  	  	  	  
	  	
(f)

	
provide to Ryan within 60 days of the end of each calendar quarter during which any Expenditures have been incurred comprehensive written reports showing the operations carried out and the results obtained and detailing the Expenditures incurred together with evidence of payment thereof.

 

5.2    In the event of termination of the Option for any reason other than through the exercise thereof, the Optionee will:

 

	  	
(a)

	
leave the Property:

	  	  	  	  
	  	  	
(i)

	
in good standing and free and clear of all Liens arising from its operations hereunder,

	  	  	  	  
	  	  	
(ii)

	
in a safe and orderly condition, and

	  	  	  	  
	  	  	
(iii)

	
in a condition which is in compliance with all rules and orders of governmental authorities with respect to reclamation and rehabilitation of all disturbances resulting from the Optionee's use and occupancy of the Property;

	  	  	  	  
	  	
(b)

	
deliver to Ryan, within 90 days of a written request therefor, a report on all work carried out by the Optionee on the Property (limited to factual matters only) together with copies of all sample location maps, drillhole assay logs, assay results and other technical data compiled by the Optionee or its representatives with respect to the Property; and

 

  

6

  

 

 

	  	
(c)

	
have the right (and, if requested by Ryan within 90 days of the effective date of termination, the obligation) to remove from the Property within one year of termination of this Agreement all facilities erected, installed or brought upon the Property by or at the instance of Optionee, failing which, the facilities shall become the property of Ryan.

 

SECTION 6 - CONFIDENTIALITY

 

6.1    All matters concerning the execution and contents of this Agreement and the Property shall be treated as and kept confidential by the parties and there shall be no public release of any information concerning the Property, except as required by applicable securities laws, the rules of any stock exchange on which a party’s shares are listed or other applicable laws or regulations, without the prior written consent of the other party, such consent not to be unreasonably withheld.  Notwithstanding the foregoing, the parties are entitled to disclose confidential information to prospective investors or lenders, who shall be required to keep all such confidential information confidential.

 

SECTION 7 - AREA OF INTEREST

 

7.1    The Property boundaries are defined by the claims in Schedule "A" and as more fully set out in Schedule "B".  In the event either party acquires, directly or indirectly, any interest in any new property which is immediately adjacent to and tied on to the Property, the acquiring party must disclose this acquisition promptly to the other party and the acquiring party's entire property shall form part of the Property and become subject to the terms of this Agreement.

 

SECTION 8 - TERMINATION

 

8.1    In addition to any other termination provisions contained in this Agreement, this Agreement and the Option shall terminate if the Optionee should be in default in performing any requirement herein set forth and has failed to take reasonable steps to cure such default within 30 days after the giving of a notice of default by Ryan.

 

SECTION 9 - ARBITRATION

 

9.1           If any dispute, controversy or claim arises under or in connection with this Agreement and cannot be settled by negotiation, the dispute shall be finally settled by arbitration in accordance with the provisions of the Arbitration Act (Yukon), subject to the following modifications or additions:

 

	  	  	
(i)

	
the arbitration shall be conducted by one arbitrator. Within seven (7) days of written notice to the other party of a dispute, the parties shall attempt to agree upon the person who is to act as the arbitrator. If the parties fail to agree on the arbitrator within this time period, such arbitrator shall be appointed by a Justice of the Yukon Supreme Court;

	  	  	  	  
	  	  	
(ii)

	
the arbitrator shall have such technical and other qualifications as may be reasonably necessary to enable the arbitrator to properly adjudicate upon the dispute;

	  	  	  	  
	  	  	
(iii)

	
the arbitrator shall have the power to obtain the assistance, advice or opinion of any expert as the arbitrator may think fit and shall have the discretion to act upon any assistance, advice or opinion so obtained;

 

  

7

  

 

 

	  	  	
(iv)

	
the arbitrator shall be instructed that time is of the essence in proceeding with his or her determination of the dispute;

	  	  	  	  
	  	  	
(v)

	
unless otherwise decided by the arbitrator, each party shall be responsible for any costs associated with its legal and other advisors. The costs associated with the arbitrator, including any expert retained by the arbitrator, and any facility in which the arbitration takes place, shall be shared equally by the parties;

	  	  	  	  
	  	  	
(vi)

	
the arbitration shall take place in Whitehorse, Yukon; and

	  	  	  	  
	  	  	
(vii)

	
the arbitration decision shall be given in writing and shall be final and binding on the Parties, and shall deal with questions of the costs of the arbitration and all matters related thereto.

 

SECTION 10 - OPERATOR

10.1    During the term of this Agreement, the Optionee shall be the operator for purposes of developing and executing exploration programs to complete the Expenditures

SECTION 11 - ROYALTY

11.1    Upon the commencement of Commercial Production with respect to the Property, the Optionee (the "Payor") shall pay to Ryan (the "Payee") a Net Smelter Returns royalty (the "Royalty"), being equal to 2.0% of Net Smelter Returns.  The Payor shall be entitled at any time and from time to time to purchase 1/2 of the Royalty (i.e., a Royalty equal to 1.0% of Net Smelter Returns) from the Payee for $2,000,000.

 

11.2    Instalments of the Royalty payable shall be paid by the Payor to the Payee immediately upon the receipt by the Payor of the payment from the smelter, refinery or other place of treatment of the proceeds of sale of the minerals, ore, concentrates or other product from the Property.

 

11.3    Within 120 days after the end of each fiscal year, commencing with the year in which commencement of Commercial Production occurs, the accounts of the Payor relating to operations on the Property and the statement of operations, which shall include the statement of calculation of the Royalty for the year last completed, shall be audited by the independent auditors of the Payor at its expense.  The Payee shall have 60 days after receipt of such statements to question the accuracy thereof in writing and, failing such objection, the statements shall be deemed to be correct and unimpeachable thereafter.

 

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

 

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

 

11.6    The Payor agrees to maintain for each mining operation on the Property, up-to-date and complete records relating to the production and sale of minerals, ore, bullion and other product from the Property, including accounts, records, statements and returns relating to treatment and smelting arrangements of such product.  The Payee shall have the right to have such accounts audited by independent auditors at its own expense once each fiscal year.

 

  

8

  

 

 

SECTION 12 - ROYALTY - ADVANCE PAYMENT

12.1    The Optionee will make annual cash advance payments of $30,000 for the Property (the “Advance Royalty”) to Ryan commencing February 15th, 2015 and continuing each year thereafter until commencement of Commercial Production, deductible against the Royalty.

12.2    The Optionee may elect to pay the Advance Royalty in cash or an equivalent amount of common stock of the company, based on the average closing price for its shares in the 10 trading days prior to the due date for the Advance Royalty.

SECTION 13 - GENERAL

 

13.1   Assignment. Any assignment of this Agreement or any rights hereunder in the Property shall be effected by delivering notice to that effect to the other party provided the assignee agrees in writing to be bound by the terms of this Agreement.  Neither party shall be entitled to assign this Agreement or any rights hereunder in the Property without the prior written consent of the other party, such consent not to be unreasonably withheld.  For greater certainty, nothing herein shall prevent any party from entering into any corporate reorganization, merger, amalgamation, takeover bid, plan of arrangement, or any other such corporate transaction which has the effect of, directly or indirectly, selling, assigning, transferring, or otherwise disposing of all or a part of the rights under this Agreement to a purchaser.

 

13.2   Binding. This Agreement inures to the benefit of and binds the parties and their respective successors and permitted assigns.

 

13.3   Further Assurances. Each party shall from time to time promptly execute and deliver all further documents and take all further action reasonably necessary or desirable to give effect to the terms and intent of this Agreement.

 

13.4   Amendment. No amendment, supplement or restatement of any term of this Agreement is binding unless it is in writing and signed by both parties.

 

13.5   Notice. Any notice or other communication required or permitted to be given under this Agreement must be in writing and shall be effectively given if delivered personally or by overnight courier or if sent by fax, addressed in the case of notice to Ryan or the Optionee, as the case may be, to its address set out on the first page of this Agreement. Any notice or other communication so given is deemed conclusively to have been given and received on the day of delivery when so personally delivered, on the day following the sending thereof by overnight courier, and on the same date when faxed (unless the notice is sent after 4:00 p.m. (Vancouver time) or on a day which is not a business day, in which case the fax will be deemed to have been given and received on the next business day after transmission). Either party may change any particulars of its name, address, contact individual or fax number for notice by notice to the other party in the manner set out in this Section 12.6.  Neither party shall prevent, hinder or delay or attempt to prevent, hinder or delay the service on that party of a notice or other communication relating to this Agreement.

 

13.6   Counterparts. This Agreement may be executed by facsimile and in any number of counterparts, each of which shall constitute one and the same agreement.

 

13.7   Severability. If any term of this Agreement is or becomes illegal, invalid or unenforceable, that term shall not affect the legality, validity or enforceability of the remaining terms of this Agreement.

 

  

9

  

 

 

13.8   Schedules. The schedules referenced herein and attached to this Agreement, are incorporated into and form part of this Agreement.

 

13.9   Time. Time is of the essence of this Agreement.

 

13.10   Governing Law. This Agreement shall be governed by and shall be construed and interpreted in accordance with the laws of the Yukon Territory and the laws of Canada applicable in the Yukon Territory.

13.11   Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter herein and supersedes all prior arrangements, negotiations, discussions, undertakings, representations, warranties and understandings, whether written or verbal.

 

The parties hereto intending to be legally bound have executed this Agreement as of the date and year first written above.

	  	
Witness:

	  	  
	
/s/ SHAWN RYAN                                            

SHAWN RYAN

	
_______________________________

(Signature)

	  	  
	  	
_______________________________

(Print Name)

	  	  
	  	
_______________________________

(Address)

_______________________________

 

 

DAULTON CAPITAL CORP. – Terry Fields

 

 

By:  /s/ Terry Fields                                             

Authorized Signatory

 

  

10

  

 

 

SCHEDULE A - DESCRIPTION OF THE PROPERTY

 

	
Grantnumber

	
Label

	
Claim type

	
YC23516

	
CROWN JEWEL 1

	
Quartz

	
YC23517

	
CROWN JEWEL 2

	
Quartz

	
YC23518

	
CROWN JEWEL 3

	
Quartz

	
YC23519

	
CROWN JEWEL 4

	
Quartz

	
YC23520

	
CROWN JEWEL 5

	
Quartz

	
YC23521

	
CROWN JEWEL 6

	
Quartz

	
YC23522

	
CROWN JEWEL 7

	
Quartz

	
YC23523

	
CROWN JEWEL 8

	
Quartz

	
YC23524

	
CROWN JEWEL 9

	
Quartz

	
YC23525

	
CROWN JEWEL 10

	
Quartz

	
YC23526

	
CROWN JEWEL 11

	
Quartz

	
YC23527

	
CROWN JEWEL 12

	
Quartz

	
YC23528

	
CROWN JEWEL 13

	
Quartz

	
YC23529

	
CROWN JEWEL 14

	
Quartz

	
YC23530

	
CROWN JEWEL 15

	
Quartz

	
YC23531

	
CROWN JEWEL 16

	
Quartz

	
YC34425

	
CROWN JEWEL 17

	
Quartz

	
YC34426

	
CROWN JEWEL 18

	
Quartz

	
YC34427

	
CROWN JEWEL 19

	
Quartz

	
YC34428

	
CROWN JEWEL 20

	
Quartz

	
YC34429

	
CROWN JEWEL 21

	
Quartz

	
YC34430

	
CROWN JEWEL 22

	
Quartz

	
YC34431

	
CROWN JEWEL 23

	
Quartz

	
YC34432

	
CROWN JEWEL 24

	
Quartz

	
YC34433

	
CROWN JEWEL 25

	
Quartz

	
YC34434

	
CROWN JEWEL 26

	
Quartz

	
YC34435

	
CROWN JEWEL 27

	
Quartz

	
YC34436

	
CROWN JEWEL 28

	
Quartz

	
YC34437

	
CROWN JEWEL 29

	
Quartz

	
YC34438

	
CROWN JEWEL 30

	
Quartz

	
YC34439

	
CROWN JEWEL 31

	
Quartz

	
YC34440

	
CROWN JEWEL 32

	
Quartz

	
YC34441

	
CROWN JEWEL 33

	
Quartz

	
YC34442

	
CROWN JEWEL 34

	
Quartz

	
YC34643

	
CROWN JEWEL 35

	
Quartz

	
YC34644

	
CROWN JEWEL 36

	
Quartz

	
YC34645

	
CROWN JEWEL 37

	
Quartz

	
YC34646

	
CROWN JEWEL 38

	
Quartz

	
YC34647

	
CROWN JEWEL 39

	
Quartz

	
YC34648

	
CROWN JEWEL 40

	
Quartz

	
YC34649

	
CROWN JEWEL 41

	
Quartz

	
YC34650

	
CROWN JEWEL 42

	
Quartz

	
YC35000

	
CROWN JEWEL 43

	
Quartz

	
YC35001

	
CROWN JEWEL 44

	
Quartz

	
YC35002

	
CROWN JEWEL 45

	
Quartz

	
YC35003

	
CROWN JEWEL 46

	
Quartz

	
YC35004

	
CROWN JEWEL 47

	
Quartz

	
YC35005

	
CROWN JEWEL 48

	
Quartz

	
YC35006

	
CROWN JEWEL 49

	
Quartz

	
YC35007

	
CROWN JEWEL 50

	
Quartz

	
YC35008

	
CROWN JEWEL 51

	
Quartz

	
YC35009

	
CROWN JEWEL 52

	
Quartz

	
YC35010

	
CROWN JEWEL 53

	
Quartz

	
YC35011

	
CROWN JEWEL 54

	
Quartz

	
YC35012

	
CROWN JEWEL 55

	
Quartz

	
YC35013

	
CROWN JEWEL 56

	
Quartz

	
YC35674

	
CROWN JEWEL 101

	
Quartz

	
YC35675

	
CROWN JEWEL 102

	
Quartz

	
YC35676

	
CROWN JEWEL 103

	
Quartz

	
YC35677

	
CROWN JEWEL 104

	
Quartz

 

  

11

  

 

	
Grant

number

	
Label

	
Claim type

	
YC35678

	
CROWN JEWEL 105

	
Quartz

	
YC35679

	
CROWN JEWEL 106

	
Quartz

	
YC35680

	
CROWN JEWEL 107

	
Quartz

	
YC35681

	
CROWN JEWEL 108

	
Quartz

	
YC35682

	
CROWN JEWEL 109

	
Quartz

	
YC35683

	
CROWN JEWEL 110

	
Quartz

	
YC35684

	
CROWN JEWEL 111

	
Quartz

	
YC35685

	
CROWN JEWEL 112

	
Quartz

	
YC35686

	
CROWN JEWEL 113

	
Quartz

	
YC35687

	
CROWN JEWEL 114

	
Quartz

	
YC35688

	
CROWN JEWEL 115

	
Quartz

	
YC35689

	
CROWN JEWEL 116

	
Quartz

	
YC35690

	
CROWN JEWEL 117

	
Quartz

	
YC35691

	
CROWN JEWEL 118

	
Quartz

	
YC35692

	
CROWN JEWEL 119

	
Quartz

	
YC35693

	
CROWN JEWEL 120

	
Quartz

	
YC35694

	
CROWN JEWEL 121

	
Quartz

	
YC35695

	
CROWN JEWEL 122

	
Quartz

	
YC35696

	
CROWN JEWEL 123

	
Quartz

	
YC35697

	
CROWN JEWEL 124

	
Quartz

	
YC35698

	
CROWN JEWEL 125

	
Quartz

	
YC35699

	
CROWN JEWEL 126

	
Quartz

	
YC35700

	
CROWN JEWEL 127

	
Quartz

	
YC35702

	
CROWN JEWEL 129

	
Quartz

	
YC35704

	
CROWN JEWEL 131

	
Quartz

	
YC35710

	
CROWN JEWEL 151

	
Quartz

	
YC35711

	
CROWN JEWEL 152

	
Quartz

	
YC35712

	
CROWN JEWEL 153

	
Quartz

	
YC35713

	
CROWN JEWEL 154

	
Quartz

	
YC35714

	
CROWN JEWEL 155

	
Quartz

	
YC35715

	
CROWN JEWEL 156

	
Quartz

	
YC35716

	
CROWN JEWEL 157

	
Quartz

	
YC35717

	
CROWN JEWEL 158

	
Quartz

	
YC35718

	
CROWN JEWEL 159

	
Quartz

	
YC35719

	
CROWN JEWEL 160

	
Quartz

	
YC35720

	
CROWN JEWEL 161

	
Quartz

	
YC35721

	
CROWN JEWEL 162

	
Quartz

	
YC35722

	
CROWN JEWEL 163

	
Quartz

	
YC35723

	
CROWN JEWEL 164

	
Quartz

	
YC35724

	
CROWN JEWEL 165

	
Quartz

	
YC35725

	
CROWN JEWEL 166

	
Quartz

	
YC35726

	
CROWN JEWEL 167

	
Quartz

	
YC35727

	
CROWN JEWEL 168

	
Quartz

	
YC35728

	
CROWN JEWEL 169

	
Quartz

	
YC35729

	
CROWN JEWEL 170

	
Quartz

	
YC35730

	
CROWN JEWEL 171

	
Quartz

	
YC35731

	
CROWN JEWEL 172

	
Quartz

	
YC35756

	
CROWN JEWEL 133

	
Quartz

	
YC35757

	
CROWN JEWEL 134

	
Quartz

	
YC35758

	
CROWN JEWEL 135

	
Quartz

	
YC35759

	
CROWN JEWEL 136

	
Quartz

	
YC35760

	
CROWN JEWEL 137

	
Quartz

	
YC35761

	
CROWN JEWEL 138

	
Quartz

	
YC35762

	
CROWN JEWEL 139

	
Quartz

	
YC35763

	
CROWN JEWEL 140

	
Quartz

	
YC35764

	
CROWN JEWEL 145

	
Quartz

	
YC35765

	
CROWN JEWEL 146

	
Quartz

	
YC35766

	
CROWN JEWEL 147

	
Quartz

	
YC35767

	
CROWN JEWEL 148

	
Quartz

	
YC35768

	
CROWN JEWEL 149

	
Quartz

	
YC35769

	
CROWN JEWEL 150

	
Quartz

  

12

  

 

 

SCHEDULE B - MAP AND AREA OF INTEREST

 

 

13helix_8k-ex1004a.htm

EXHIBIT 10.4a

 

James Tilton: 504,865 Preferred Shares 

 

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (the “Agreement”), dated as of May __, 2011, is entered into by and between Helix Wind Corp., a Nevada corporation (the “Company”), and James Tilton (the “Holder”).  As used herein, the term “Parties” shall be used to identify the Company and the Holder jointly.

 

WHEREAS:

 

A.           The Holder warrants and represents that he holds all right, title, and interest in and to that certain Convertible Debenture (the “Debenture”) in the current principal amount of Two Hundred Thirty--Three Thousand Five Hundred Dollars ($233,500) (the “Debenture Balance”)  as previously issued by the Company.

 

B.           The Holder warrants and represents that he is willing, subject to this terms and conditions of this Agreement, to exchange the Debenture and relinquish all rights thereunder in exchange for (the “Exchange Transaction”) the Company’s issuance of Five Hundred Four Thousand Eight Hundred Sixty-Five (504,865) shares of the Company’s Series A Preferred Stock (par value $0.001) (the “Preferred Shares”).

C.           The Parties acknowledge and agree that: (i) the Debenture was previously issued by and is, at all times, a debt instrument duly issued by the Company to the Holder; (ii) this Agreement is entered into solely for the purposes of allowing the Company and the Holder to exchange the Debenture solely for the Preferred Shares; (iii) the Company has not paid and will not be paying any other consideration to the Holder in connection with or as result of the Exchange Transaction; (iv) the Company has not paid and will not be paying any commissions, fees, or other compensation in connection with or as a result of the Exchange Transaction; (v) the Holder has not paid and will not be paying any commissions, fees, or other compensation in connection with or as a result of the Exchange Transaction; and (vi) the Parties are entering into this Agreement solely to effect the Exchange Transaction.

D.           The Parties acknowledge and agree that this Agreement and the transactions described herein shall constitute an exchange of securities in accordance with the exemption provided by Section 3(a)(9) of the Securities Act of 1933.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

	
  

	
1.

	
Exchange of Note.

 

a.      Issuance of Preferred Shares.  Upon the following terms and conditions, the Company shall issue to the Holder, and the Holder shall acquire from the Company, the Preferred Shares dated and issued as of the date of this Agreement in the aggregate amount of the Preferred Shares set forth in this Agreement in exchange for the surrender and cancellation of the Debenture. The Company hereby agrees to issue Holder the Preferred Shares within one (1) business day of this Agreement.

 

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

  

  

  

James Tilton: 504,865 Preferred Shares 

 

b.      The Preferred Shares are being issued in substitution for and not in satisfaction of the Debenture, provided, however, the Holder acknowledges and agrees that upon the issuance and acceptance of the Preferred Shares issued pursuant to this Section, the Debenture will be deemed cancelled and will be promptly surrendered to the Company.

 

c.      The date upon which the Preferred Shares are released to the Holder shall be the “Closing Date”.

 

2.        Representations and Warranties of the Holder. The Holder hereby makes the following representations and warranties to the Company:

 

a.      Status as Accredited Investor.   The Holder is an “accredited investor” (as that term, is defined in Rule 501(a)(1) of the Securities Act of 1933, as amended (the “1933 Act”)

b.      Sophistication and Experience of Investor.  The Holder is sophisticated and experienced in acquiring the restricted securities of small, publicly-traded companies whose common stock is traded on a limited and sporadic basis.

c.      Review and Access to Filings and Information.  The Holder has reviewed the Company’s Form 10-K for the fiscal years ending December 31, 2009 and December 31, 2010 (the “Annual Reports”) together with such information and documents as Holder has requested from the Company so as to allow the Holder to make an informed investment decision prior to entering into this Agreement.

d.      Availability of Management for Questions & Answers.  Prior to entering into this Agreement, the Holder had a sufficient opportunity to ask questions of the Company’s management regarding the Company and its affairs and to receive answers to all said questions.

e.      Receipt of Certificate of Designation – Series A Preferred Stock.  Prior to entering into this Agreement, the Holder received and reviewed the Certificate of Designation (attached hereto as Exhibit A) wherein the rights and privileges of the Preferred Shares are listed.

f.      Loss of Rights as a Creditor and as Holder of the Debenture.  The Holder understands that by entering into this Agreement, he will lose all rights as a creditor and all rights provided as a holder of the Debenture.

g.      Understanding Risk Factors.  Prior to entering into this Agreement, the Holder has reviewed and evaluated the Risk Factors listed in the Annual Reports, understands that the Company is insolvent and that it is prepared to lose all of his investment into the Company. Further, he is acquiring the Preferred Shares for investment purposes only and not with a view toward a distribution.

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

  

2

  

James Tilton: 504,865 Preferred Shares 

 

h.      Reliance Upon Own Advisors.  The Holder has relied upon and at all times hereunder has relied upon financial, investment, business, and tax advisors of his own choosing and Holder has not looked to the Company, its officers, directors, employees, agents, or attorneys for any advice regarding the suitability of acquiring the Preferred Shares, the terms or conditions of this Agreement or the transactions contemplated hereby.

i.      Absence of Other Assurances.  The Holder has not received and is not relying upon any other oral or written assurances regarding the Company, the Exchange Transaction, or any matters not expressly recited in this Agreement.

j.      Survival. All of the Holder’s warranties and representations contained in this Agreement shall survive the execution, delivery and acceptance of this Agreement by the Parties hereto and continue for a period of six (6) years after the date of this Agreement.

3.           Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to the Holder:

 

a.       Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement and the Preferred Shares by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith. This Agreement and the Preferred Shares have been duly executed by the Company and, when delivered in accordance with the terms hereof will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

b.       No Conflicts.  The execution, delivery and performance of this Agreement and the Preferred Shares by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien or encumbrance upon any of the properties or assets of the Company.

 

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

  

3

  

James Tilton: 504,865 Preferred Shares 

 

c.      Filings, Consents and Approvals.  The Company is not required to obtain any approval, consent, waiver, authorization or order of, give any notice to, or make any filing, qualification or registration with, any court or other federal, state, local, foreign or other governmental authority or other person or entity in connection with the execution, delivery and performance by the Company of this Agreement or the Preferred Shares.  No further approval or authorization of any stockholder, the Board of Directors or others is required for exchange for and the issuance of sale of the Preferred Shares or any shares of Common Stock issuable upon the conversion or exchange of or otherwise pursuant to the Certificate of Designation.

d.      Issuance and Reservation of Securities.  The Preferred Shares are duly authorized.

e.      Private Placement.  No registration under the 1933 Act is required for the issuance of the Preferred Shares in accordance with the terms hereof and thereof.  The Exchange Transaction and this Agreement are entered into on the basis of the representations that each party has made to the other and is undertaken for the purpose of complying with Section 3(a)(9) of the 1933 Act.

f.      No Inside Information.  Neither the Company nor any Person acting on its behalf has provided the Holder or its counsel with any information that constitutes or might constitute material, non-public information concerning the Company.

g.       Equal Consideration. Except as otherwise set forth herein, no consideration has been offered or paid to any person in connection with the Exchange Transaction, this Agreement, or both of them.

 

h.      Survival. All of the Company’s warranties and representations contained in this Agreement shall survive the execution, delivery and acceptance of this Agreement by the Parties hereto and continue for a period of two (2) years after the date of this Agreement.

 

i.       Holding Period for Preferred Shares.  Pursuant to Rule 144 promulgated under the 1933 Act, the holding period of the Preferred Shares (and the underlying shares of Common Stock issuable upon conversion thereof) shall tack back to the date at which the Debenture was originally issued by the Company.  The Company agrees not to take a position contrary to this paragraph. The Company agrees to take all actions, including, without limitation, the issuance by its legal counsel of any necessary legal opinions, necessary to issue the Preferred Shares (and any shares issuable upon conversion of the Preferred Shares) without restriction and not containing any restrictive legend without the need for any action by the Holder.  The Company is not currently subject to Rule 144(i) but may be subject to it in the future.  The Preferred Shares are being issued in substitution and exchange for and not in satisfaction of the Debenture. The Preferred Shares shall not constitute a novation or satisfaction and accord of the Debenture.

 

 

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

  

4

  

James Tilton: 504,865 Preferred Shares 

 

Without limiting any of the terms, conditions or covenants contained in this Agreement or other documents, if at any time it is determined that any shares of the Company’s Common Stock issuable upon conversion of the Preferred Shares are not freely tradable without restriction or limitation pursuant to Rule 144, then the Holder assumes the risk that it may not be able to sell or transfer the Preferred Shares or any said Common Stock via Rule 144 of the 1933 Act or any other provision thereof.

 

j.      No Event of Default.  Upon consummation of the exchange hereunder, no Event of Default (as defined in the Debenture) shall have occurred and be continuing.

 

k.      Balances.  As of the date hereof, the balance outstanding under the Debenture

 

     4.             Legal Opinion. The Company hereby agrees to cause its legal counsel to issue a legal opinion to the Holder and the Company’s Transfer Agent regarding this Agreement and the transactions contemplated hereby, in form and substance reasonably acceptable to the Holder, including an opinion that all shares issuable upon conversion of the Exchange Note or in payment of interest thereunder) may be sold pursuant to Rule 144 without volume restrictions or manner of sale limitations and that certificates representing any such shares may be issued without a restrictive legend as required pursuant to this Section.

 

 5.           Conversion Procedures.  The form of Conversion Notice included in the Certificate of Designation sets forth the totality of the procedures required of a Holder in order to convert the Preferred Shares except that Exhibit A, as referenced in said Certificate.  No additional legal opinion or other information or instructions shall be required of the Holder to convert the Preferred Shares.  The Company shall honor all conversions of the Preferred Shares and shall deliver the Company’s Common Stock in accordance with the terms, conditions and time periods set forth in the Certificate of Designation.

 

6.           Miscellaneous.

a.            This Agreement may be executed in two or more counterparts and by facsimile signature, delivery of PDF images of executed signature pages by email or otherwise, and each of such counterparts shall be deemed an original and all of such counterparts together shall constitute one and the same agreement.

b.            If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the Parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the Parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The Parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

  

5

  

James Tilton: 504,865 Preferred Shares 

 

c.           Each of the parties hereto agrees to bear its own costs, attorneys’ fees and related expenses associated with this Agreement. The provisions of this Agreement shall be deemed to obligate, extend to and inure to the benefit of the successors, assigns, transferees, grantees, and indemnitees of each of the parties to this Agreement.

d.            This Agreement and Preferred Shares acquired by the Holder shall be governed by and interpreted in accordance with laws of the State of California including its choice of law rules. The parties hereto hereby waive the right to a jury trial in any litigation resulting from or related to this Agreement. Any dispute or claim arising to or in any way related to this Agreement shall be settled by arbitration in San Diego, California but any dispute or controversy arising out of or interpreting this Agreement shall be settled in accordance with the laws of the State of California as if this Agreement were executed and all actions were performed hereunder within the State of California.  All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association ("AAA"). AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party.  Each party shall pay its own expenses associated with such arbitration. A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter has arisen and in no event shall such demand be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statutes of limitations. The decision of the arbitrators shall be rendered within 60 days of submission of any claim or dispute, shall be in writing and mailed to all the parties included in the arbitration.  The decision of the arbitrator shall be binding upon the parties and judgment in accordance with that decision may be entered in any court having jurisdiction thereof.

e.           Each party waives all defenses of lack of personal jurisdiction and forum non conveniens. Process may be served on any party hereto in the manner authorized by applicable law or court rule.

f.           The Holder and the Company hereby agree and provide further assurances that it will, in the future, execute and deliver any and all further agreements, certificates, instruments and documents and do and perform or cause to be done and performed, all acts and things as may be necessary or appropriate to carry out the intent and accomplish the purposes of this Agreement.

g.           The Company acknowledges and agrees, and the Holder represents and agrees, that the Holder has participated in the negotiation hereof with the advice of its own counsel and advisors.

 

 

 

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

  

6

  

James Tilton: 504,865 Preferred Shares 

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth above.

 

 

	
COMPANY:

 

HELIX WIND CORP.

	 
	 	 	 
	
By: 

	/s/  

	 
	Name: 	 

	 
	Title:	 

	 
	 	 	 

	

HOLDER:

 

JAMES TILTON

	 
	 	 	 
	
By: 

	/s/  

	 
	Name: 	 

	 
	 	 	 

 

 

[SIGNATURE PAGE TO EXCHANGE AGREEMENT]

 

 

 

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

  

7

  

James Tilton: 504,865 Preferred Shares 

 

EXHIBIT A

CONVERSION NOTICE

(Attached.)

Exchange Agreement

Helix Wind Corp.

James Tilton

Eight Pages

 

 

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]