Document:

ex102.htm

 

MINING OPTION AGREEMENT

 

 

THIS MINING OPTION AGREEMENT made as of 1st of February, 2012 (the “Agreement”);

 

BY AND BETWEEN:

            

             MINERALES HOLDINGS CAN CORP., a Belize corporation  having an address of Cor 12 Baymen Ave and Calle Al Mar, Belize City, Belize

 (the “ Optionor”)

OF THE FIRST PART

 

	
AND:

	 

 

PANA-MINERALES S.A., a Nevada corporation, of First Floor Commercial Area, Calle 53, Marbella, Panama City, Panama

 (the “Optionee”)

OF THE SECOND PART

 

BACKGROUND

 

	
A.  

	
The Optionor holds an option for 100% of the claims comprising the Property more particularly detailed on Schedule A appended hereto (the Property”).

 

	
B.  

	
The Optionee wishes to option a 100% interest in and to the Property from the Optionor, subject only to a 2% Net Smelter Royalty.

 

In consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each of the parties) the parties hereto covenant and agree each with the other as follows:

 

1. Interpretation

 

1.1. Definitions.  In this Agreement:

 

	
(a)  

	
“Acts” means all legislation, as amended from time to time, of the jurisdiction in which the Property is located, applicable to the Property, including title to, and Mining Operations on, the Property.

 

	
(b)  

	
 “Agreement” means this agreement, including the recitals, and schedules, all as amended, supplemented or restated from time to time.

 

	
(c)  

	
“AMI” means the area outlined in this Agreement or the Schedules hereto  and shall constitute an Area of Mutual Interest, between the Optionor and the Optionee and any Operator  which shall remain in force and effect for the term of this Agreement, and any Operating Agreement or Joint Venture Agreement which shall survive this Agreement.

 

	
(d)  

	
“Business Day” means a day other than a Saturday, Sunday or statutory holiday in the United States of America.

  

1

  

 

	
(e)  

	
“Effective Date” means February 1, 2012.

 

	
(f)  

	
“Encumbrances” means security interests, liens, royalties, charges, mortgages, pledges and encumbrances of any nature or kind whatsoever, whether written or oral, direct or indirect.

 

	
(g)  

	
 “Expenditures” means all costs, expenses and charges, direct or indirect, of or incidental to the Mining Operations incurred by the Optionee, which costs, expenses and charges shall be determined in accordance with the Optionee’s accounting practices applicable from time to time to the extent that those practices are consistent with Canadian generally accepted accounting principles.

 

	
(h)  

	
“Government” means any federal, provincial, regional, municipal or other government, governmental department, regulatory authority, commission, board, bureau, agency or instrumentality that have lawful authority to regulate or administer or govern a business, property or affairs of any person, and for the purposes of this Agreement also includes any corporation or other entity owned or controlled by any of the foregoing and any stock exchange in which shares of a party are listed for trading.

 

	
(i)  

	
“MDU” means map designated unit.

 

	
(j)  

	
“Minerals” means the end products produced or derived from operating the Property as a mine.

 

	
(k)  

	
“Mining Operations” means every kind of work done on or in respect of the Property or the Minerals derived from the Property during the Option Period by or under the direction of the Optionee including, without limiting the generality of the foregoing, the work of assessment, geophysical, geochemical and geological surveys, studies and mapping, investigating, drilling, assaying, prospecting, designing, examining, equipping, improving, surveying, shaft-sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, ores and metals, surveying and bringing any mining claims to lease or patent, reclaiming and all other work usually considered to be prospecting, exploration, development, mining and reclamation work; in paying wages and salaries of workers engaged in the work and in supplying food, lodging, transportation and other reasonable needs of the workers; in paying assessments or premiums for workers' compensation insurance, contributions for unemployment insurance or other pay allowances or benefits customarily paid in the district to those workers; in paying rentals, licence renewal fees, taxes and other governmental charges required to keep the Property in good standing; in purchasing or renting plant, buildings, machinery, tools, appliances, equipment or supplies and in installing, erecting, detaching and removing them; mining, milling, concentrating, rehabilitation, reclamation, and environmental protections and in the management of any work which may be done on the Property or in any other respect necessary for the due carrying out of the prospecting, exploration and development work.

 

	
(l)  

	
“Net Smelter Return”  has the meaning set out in Schedule "B" hereto.

 

	
(m)  

	
 “Operator” shall be Optionor, who may appoint a designated party to undertake its duties and has the meaning as set out in Schedule “C” appended hereto.

 

	
(n)  

	
“Option” has the meaning set out in Section 3.1 of this Agreement.

 

	
(o)  

	
“Option Period” means the period commencing on the Effective Date and ending on the earlier of January 31, 2015, and the date on which the Option is terminated or lapses in accordance with this Agreement.

 

  

2

  

 

	
(p)  

	
 “Permitted Encumbrance” means

 

	
(i)  

	
a current Option Agreement between the Optionor and the owner of the Claims as disclosed to the Optionee;

 

	
(ii)  

	
easements, rights of way, servitudes or other similar rights in land including, without limiting the generality of the foregoing, rights of way and servitudes for railways, sewers, drains, gas and oil pipelines, gas and water mains, electrical light, power, telephone, telegraph or cable television conduits, poles, wires and cables;

 

	
(iii)  

	
the right reserved to or vested in any Government or Regulatory Authority or other public authority by the terms of any or by any statutory provision, to terminate, revoke or forfeit any of the lease or mining claims or to require annual or other periodic payments as a condition of the continuance thereof;

 

	
(iv)  

	
rights reserved to or vested in any municipality or governmental, statutory or public authority to control or regulate in any manner, and all applicable laws, rules and orders of any governmental authority;

 

the reservations, limitations, provisos and conditions in any original grants from the Crown or interests therein and statutory exceptions to title.

 

	
  

	
(q)   

	
“Property” means all of the subject claims in the Province of Quebec, Canada more particularly described in Schedule “A” attached hereto, and, when the context so implies, the lands and premises subject thereto, and includes any replacement or successor permit or claims, and all mining leases and other mining interests derived from any such permit covering the same area of land.

 

	
  

	
(r)   

	
“Regulatory Authorities” means any and all securities regulatory authorities having jurisdiction over this Agreement and the transactions contemplated herein.

 

1.2. Headings.  The division of this Agreement into Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and includes any variation or amendment hereto from time to time and any agreement supplemental hereto.  Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Agreement.

 

1.3. Legislation.  Any reference to a provision in any legislation is a reference to that provision as now enacted, and as amended, re-enacted or replaced from time to time, and in the event of such amendment, re-enactment or replacement of any reference to that provision shall be read as referring to such amended, re-enacted or replaced provision.

 

1.4. Extended Meanings.  In this Agreement words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine and neuter genders and vice versa and words importing persons shall include individuals, partnerships, associations, trusts, unincorporated organizations and corporations. All references to mineral claims shall include map designated units.

 

1.5. Currency.  All references to currency herein are to lawful money of the U.S, unless otherwise specified.

  

3

  

 

1.6. Non-Merger. The provisions contained in this Agreement shall survive the Effective Date and the completion of the transactions contemplated by this Agreement and shall not merge in any conveyance, transfer, assignment, novation agreement or other document or instrument delivered pursuant hereto or in connection herewith.

 

1.7. Construction Clause. This Agreement has been negotiated and approved by the parties hereto, who may have retained independent counsel and, notwithstanding any rule or maxim of construction to the contrary, any ambiguity or uncertainty will not be construed against any party hereto by reason of the authorship of any of the provisions hereof.

 

1.8. No partnership. Nothing contained in this Agreement shall be construed as creating a partnership of any kind or as imposing on any party any partnership duty, obligation or liability to any other party.

 

2. Representations, Warranties and Covenants

 

2.1. Representations, Warranties and Covenants of the Optionor.  The Optionor represents, warrants and covenants to the Optionee that:

 

	
(a)  

	
the Optionor is a corporation duly incorporated, organized and subsisting under the laws of Belize with the corporate power to own its assets and to carry on its business in the jurisdiction in which the Property is located;

 

	
(b)  

	
the Optionor has good and sufficient authority to enter into and deliver this Agreement and to transfer its legal and beneficial interest in the Property as required under this Agreement to the Optionee;

 

	
(c)  

	
other than disclosed herein there is no contract, option or any other right of another form binding upon the Optionor to option, sell, transfer, assign, pledge, charge, mortgage, explore or in any other way option, dispose of or encumber all or part of the Property or any portion thereof or interest therein other than pursuant to the provisions of this Agreement;

 

	
(d)  

	
the execution, delivery and performance of this Agreement by the Optionor, and the consummation of the transactions herein contemplated will not (i) violate or conflict with any term or provision of any agreements in regard to the property entered into by the Optionor; (ii) violate or conflict with any term or provision of any order of any court, Government or Regulatory Authority or any law or regulation of any jurisdiction in which the Optionor’s business is carried on; or (iii) conflict with, accelerate the performance required by or result in the breach of any agreement to which it is a party or by which it is currently bound;

 

	
(e)  

	
the Optionor holds an option for 100% of the right, title and working interest in and to the Property, which, to the best of the Optionor’s knowledge without having made any inquiries, is free and clear of all Encumbrances except for those Permitted Encumbrances;

 

	
(f)  

	
the Property is properly and accurately described in Schedule “A” hereto and is in good standing under the laws of the jurisdiction in which the Property is located up to and including at least the expiry dates set forth in Schedule “A”;

 

	
(g)  

	
this Agreement has been duly authorized, executed and delivered by the Optionor and constitutes a valid and binding obligation of the Optionor enforceable against the Optionor in accordance with its terms, except as enforcement may be limited by

  

4

  

 

	
  

	
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought; and

 

	
(h)  

	
the Optionor shall, during the Option Period:

 

	
(i)  

	
remain in good standing in the respective jurisdiction in which the Optionor is registered, and all jurisdictions as required to hold the Property, failure to do so will result in a default under this Agreement and the Optionee shall have the right to register title to the Property in its name to protect its interest in and to the Property;

 

	
(ii)  

	
promptly provide the Optionee with any and all notices and correspondence from the title holder, the Government or Regulatory Authorities in respect of the Property;

 

	
(iii)  

	
co-operate with the Optionee in obtaining any permits or licences required by authorities in the jurisdictions in which the Property is situated;

 

	
(iv)  

	
not do or permit or suffer to be done any act or thing which would or might in any way adversely affect the rights of the Optionee hereunder.

 

2.2. Representations, Warranties and Covenants of the Optionee.  The Optionee represents, warrants and covenants to the Optionor that:

 

	
(a)  

	
the Optionee is a corporation duly incorporated, organized and subsisting under the laws of Nevada with the corporate power to own its assets and will register the required documentation, if required,  to carry on its business in the jurisdiction in which the Property is located;

 

	
(b)  

	
the Optionee has all necessary power and authority to own or lease its assets and carry on its business as presently carried on, to carry out its obligations herein and to enter into this Agreement and any agreement or instrument referred to in or contemplated by this Agreement and to do all such acts and things as are required to be done, observed or performed by it, in accordance with the terms of this Agreement and any agreement or instrument referred to in or contemplated by this Agreement;

 

	
(c)  

	
the execution, delivery and performance of this Agreement by the Optionee, and the consummation of the transactions herein contemplated will not (i) violate or conflict with any term or provision of any of the articles, by-laws or other constating documents of the Optionee; (ii) violate or conflict with any term or provision of any order of any court, Government or Regulatory Authority or any law or regulation of any jurisdiction in which the Optionee’s business is carried on; or (iii) conflict with, accelerate the performance required by or result in the breach of any agreement to which it is a party or by which it is currently bound;

 

	
(d)  

	
this Agreement has been duly authorized, executed and delivered by the Optionee and constitutes a valid and binding obligation of the Optionee enforceable against the Optionee in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought;

 

	
(e)  

	
the Optionee shall promptly apply for and use it reasonable best efforts to obtain all approvals, orders or acceptances required in connection with this Agreement, including,

  

5

  

 

	
 

	
but not limited to those required by the Exchange, any Government or Regulatory Authorities, the shareholders of the Optionee and the Agency; and the Optionee shall deliver to the Optionor copies of all such approvals, orders and acceptances, as the case may be, forthwith upon receipt of them by the Optionee; and

 

	
(f)  

	
the Optionee shall, during the Option Period:

 

	
(i)  

	
promptly provide the Optionor with any and all notices and correspondence from Government or Regulatory Authorities in respect of the Property;

 

	
(ii)  

	
co-operate with the Optionor in obtaining any permits or licences required by authorities in the regions which have authorization over the Property;

 

	
(iii)  

	
deliver to the Optionor, from time to time, copies of any and all geological reports and assay results that pertain to the Property, within thirty (30) days of receipt of the aforementioned data;

 

	
(iv)  

	
not do or permit or suffer to be done any act or thing which would or might in any way adversely affect the rights of the Optionor hereunder; and

 

	
(v)  

	
maintain its corporate existence.

 

2.3. Reliance and Survival.  The representations, warranties and acknowledgements set out in this Section 2 have been relied on by the parties in entering into this Agreement.  All representations and warranties made herein will survive the delivery of this Agreement to the parties and the completion of the transactions contemplated hereby and, notwithstanding such completion, will continue in full force and effect for the benefit of the parties to whom they are provided, as the case may be, indefinitely.

 

3. Grant of Option

 

3.1. Grant of Option. The Optionor grants to the Optionee an exclusive option (the “Option”) with respect to the Property, for the period commencing on the Effective Date and expiring on  December 31, 2013, subject to Sections 3.7 and 5 herein, to acquire an undivided one hundred (100) percent interest in the Property. This right may be exercised in the manner referred to in Section 9.

 

3.2. Consideration. In consideration of the grant of the Option, the Optionee shall issue to the Optionor the shares of common stock of the Optionor on the terms as follows:

 

	
(i)  

	
22,500,000 shares of common stock upon execution of this Agreement;

 

	
(ii)  

	
10,000,000 shares of common stock on or before February 1, 2013;

 

	
(iii)  

	
7,500,000 shares of common stock on or before December 31, 2013.

 

3.3. Working Right. During the Option Period, the Optionee shall have the exclusive working right on the Property, and to permit any other person or persons as it may in its sole discretion decide to, enter on and conduct the Mining Operations on the Property as the Optionee in its sole discretion may decide. The Optionee shall have quiet and exclusive possession during the Option Period with full power and authority to the Optionee, its servants, agents, workers or contractors, to carry on Mining Operations in searching for minerals in such manner as the Optionee in its discretion may determine, including the right to erect, bring and install on the Property all buildings, plant, machinery, equipment, tools, appliances or supplies as the Optionee shall deem necessary and proper and the right to remove therefrom reasonable quantities of rocks, ores and minerals and to transport them for the purposes of sampling, metallurgical testing and assaying. The Optionee shall conduct all Mining Operations in a careful and miner-like manner and in compliance in all material respects with all Acts, regulations, by-laws, orders and judgments and all

  

6

  

 

applicable directives, rules, consents, permits, orders, guidelines and policies of any Government or Regulatory Authority with jurisdiction over the Property.

 

3.4. Maintenance of the Option.  In order to maintain in force the Option granted to it, and to exercise the Option, the Optionee must:

 

	
(a)  

	
incur Expenditures in an aggregate amount of $525,000 as follows:

 

	
(i)  

	
subject to section 3.6 herein, at least $100,000  before December 31 , 2012;

 

	
(ii)  

	
$125,000 on or before December 31, 2013

 

	
(iii)  

	
$300,000 on or before December 31, 2014.

 

	
(b)  

	
during the Option Period, keep the Property in good standing by paying all taxes, assessments and other charges and by doing all other acts and things that may be necessary in that regard, which payments shall be made from the Expenditures as detailed in 3.4(a) above.

 

Subject to section 3.6 herein, if the incurred Expenditures are less than the required Expenditures as per Section 3.4, the Optionee must pay to the Optionor an amount equal to the difference between the required Expenditures and the Expenditures actually incurred by the Optionee (the “Shortfall Payment”)  by certified cheque by the respective dates specified in all of Section 3.4  in order to maintain the Option, in addition to the payment of an administration fee equal to five (5) percent of the Shortfall Payment.

 

3.5 Lapse or acceleration of Option. In addition to the provisions of termination set out in Section 5 herein, the Optionee may let the working right and Option lapse by failing to incur Expenditures or perform any of the obligations set out in Section 3.4, provided only that the Optionee’s obligations under Section 5.3 are satisfied.  Further, the Optionee may accelerate any or all of the Expenditures.

 

3.6 Agency. Subject to and in accordance with this Agreement the Optionor hereby irrevocably appoints the Optionee or his assignee to conduct the Mining Operations contemplated by this Agreement as agent for the Optionee.  For greater certainty, the Optionee shall remain liable as principal under this Agreement, notwithstanding the appointment of an agent for the purpose of conducting the Mining Operations.

 

4. Optionee Conduct

 

4.1. Maintenance of Property. During the Option Period, the Optionee shall carry out sufficient assessment work to maintain the Property in good standing and pay all taxes, assessments and other charges lawfully levied or assessed against the Property, which expenditures shall be covered in the Expenditures defined in 3.4(a)  above. The Optionor shall transmit promptly to the Optionee any notices pertaining to the taxes, assessments and other charges.

 

4.2. Abandonment. The Optionee may at any time, during the Option Period, abandon any one or more of the claims which comprise the Property. The Optionee shall give the Optionor notice in writing of any abandonment. If any of the claims comprising the Property are abandoned (including the termination of this Option Agreement without the Optionee having exercised the Option), the Optionee will retransfer such claims to the Optionor (if they are then in the name of the Optionee), which shall be in good standing for a period of at least ninety days from the notice of abandonment.

 

4.3. Assessments. The Optionee shall, during the Option Period, in consultation with the Optionor, file, in whole or in part, the assessment credits as may become available from Mining Operations conducted on the Property during the Option Period. If the Optionee and Optionor do not agree on the assessment credits to be filed, the Optionee's decision shall prevail.

  

7

  

 

4.4. Insurance.

 

	
(a)  

	
The Optionee shall provide, maintain and pay for the following insurance which costs shall be covered in the Expenditures defined in 3.4(a) above.  Said insurance shall be placed with an insurance company or companies and in a form as may be acceptable to the Optionor:

 

	
(i)  

	
comprehensive general liability insurance protecting the Optionee and Optionor and their respective employees, agents, contractors, invitees and licencees against damages arising from personal injury (including death) and from claims for property damage which may arise directly or indirectly out of the operations of the Optionee and Optionor under this Agreement, including coverage for liability arising out of products, whether manufactured or supplied by the Optionee and Optionor, completed operations, contingent employer's liability and contractual liability, and

 

	
(ii)  

	
automobile insurance on the Optionee's owned and non-owned vehicles, if any, protecting the Optionee and its employees, agents, contractors, invitees and licencees against damages arising from bodily injury (including death) and from claims for property damage arising out of the operations of the Optionee and Optionor under this Agreement.

 

	
(b)  

	
Each policy of insurance contemplated in this Section shall:

 

	
(i)  

	
be in an amount which is  not less than $1,000,000 inclusive of any one occurrence;

 

	
(ii)  

	
and the policy of insurance referred to in  Section 4.4(a)(i) shall:

 

	
1.  

	
include a standard form of cross-liability clause;

 

	
2.  

	
contain a clause waiving the insurer's right of subrogation against the Optionor; and

 

	
3.  

	
indicate that the insurer will give the Optionor thirty days' prior written notice of cancellation or termination of the coverage.

 

	
(c)  

	
The Optionee shall provide the Optionor with such evidence of insurance as the Optionor may request.

 

4.5. Access. The Optionee shall, during the Option Period, submit to the Optionor periodic progress reports of Mining Operations completed on the Property, which reports shall be submitted not less than quarterly on an annual basis and shall provide the Optionor with access to all records, data and information relating to the Property which is in the possession of the Optionee. The Optionor may, at its own risk and expense and at reasonable times agreed to by the Optionee, enter on the Property and examine the Mining Operations; provided, that the Optionor will not, in the opinion of the Optionee, interfere with it.

 

4.6. Environmental Matters. During the Option Period, the Optionee shall:

 

	
(a)  

	
receive, handle, use, store, treat, ship and dispose of any and all environmental contaminants (as established from time to time by applicable legislation or regulation or by-law) in strict compliance with all applicable environmental, health or safety laws, regulations, order or approvals; and will remove prior to the lapse or termination of the Option, from and off the Property all environmental contaminants.

  

8

  

 

	
(b)  

	
not release into the environment, or deposit, discharge, place, or dispose of at, on or near the Property any hazardous or toxic materials, substances, pollutants, contaminants or wastes as a result of the mining operations conducted by it; and

 

	
(c)  

	
not use the Property, not permit any other person to use the Property as a landfill or waste disposal site.

 

4.7. Environmental assessment. Whenever requested by the Optionor, the Optionee shall provide the Optionor with access, during reasonable business hours and on reasonable prior notice, to the Property for the purpose of conducting an environmental assessment of the Property, provided that the assessment is conducted in a manner that will not unreasonably interfere with the Optionee’s operations. The environmental assessment shall be at the Optionor’s sole expense. If the environmental assessment conducted by the Optionor reveals any release of hazardous substances on or under the Property that, in the opinion of the Optionor, acting reasonably, occurred after the date hereof, then the Optionor may give written notice to the Optionee of remedial measures as the Optionor may, based on the results of the environmental assessment, consider necessary, which measures the Optionee shall, at its expense, promptly undertake. If the Optionee fails to undertake diligently the remedial measures specified by the Optionor within 60 days of the receipt of notice, the Optionor may undertake such remedial measures and the Optionee shall be liable to the Optionor for any such costs related thereto.

 

5. Termination

 

5.1. Termination. The Option and this Agreement shall automatically terminate and be of no force and effect if, during the Option Period:

 

	
(a)  

	
With the exception of a default under Section 5.1(b) herein, the Optionee is in default in any material respect of any term or condition of this Agreement and fails to cure such default within thirty (30) Business Days of receiving notice from the Optionor specifying the particulars of such default;

 

	
(b)  

	
the Optionee fails to incur all of the Expenditures within the time periods set out herein;

 

	
(c)  

	
the Optionee fails to carry out the assessment work or pay the taxes, assessments and other charges described in Section 3.4 and fails to cure such default within 30 days of receiving notice from the Optionor specifying the particulars of such default;

 

	
(d)  

	
the Optionee fails to make the Exploration Program Advances as set out in this Agreement; or

 

	
(e)  

	
the Optionee fails to file the required assessment credits in respect of the Mining Operations in a timely manner, as prescribed herein and by the jurisdiction to which fees must be paid.

 

5.2. Any termination under this Section shall occur automatically, without any further action by the Optionor.

 

5.3. Surrender of Rights.  Subject to Section 5.4, the Optionee may at any time during the Option Period give the Optionor written notice of its intentions to surrender all of its rights hereunder, whereupon the Option and this Agreement shall terminate and the working right herein shall lapse.

 

5.4. Obligations on Termination.  Notwithstanding any other provisions of this Agreement, in the event of lapse, termination or surrender of the Option and termination of this Agreement, the Optionee shall:

 

	
(a)  

	
ensure that any claims or map designated units comprising the Property are in good standing for a period of at least 90 days from the lapse, termination or surrender of the

  

9

  

 

	 	
Option and/or this Agreement, as the case may be, and upon request of the Optionor, retransfer the Property to the Optionor (if it is then in the name of the Optionee) free and clear of all Encumbrances;

 

	
(b)  

	
ensure that the Property is in at least the same state concerning environmental and hazardous conditions as the Property was on the date of this Agreement and that it is free and clear of all liens, claims and encumbrances that may have been created by the Optionee;

 

	
(c)  

	
deliver to the Optionor any and all reports, maps, assessment reports and maps, samples, assay results, drill cores, data and other information of any kind whatsoever pertaining to the Property or related to Mining Operations which have not been previously delivered to the Optionor;

 

	
(d)  

	
remove all materials supplies and equipment from the Property; provided however, that the Optionor may at the cost of the Optionee, dispose of any such materials, supplies or equipment not removed from the Property within 90 days of receipt of such notice by the Optionee; and

 

	
(e)  

	
not engage in any form of conduct, or make any statements or representations that disparage or may disparage or otherwise harm the Optionor’s reputation, good will or commercial interest.

 

5.5. Survival of provisions. The Optionee and Optionor shall remain liable to one another for all claims, matters, demands and causes of action arising prior to the termination of this Agreement that relate in any way to the provisions of this Agreement, and in particular, without limiting the generality of the foregoing, the provisions of Section 6 and section 3.2 of this Agreement shall survive any termination of this Agreement.

 

6. Indemnification

 

6.1. Indemnity.

 

	
(a)  

	
The Optionee shall and does hereby indemnify and save the Optionor harmless from and against all losses, liabilities, claims, demands, damages, expenses, suits, injury or death in any way referable to Mining Operations conducted by or on behalf of the Optionee after the date hereof; provided that the Optionor shall not be indemnified for any loss, liability, claim, demand, damage, expense, suit, injury or death resulting from the negligence or wilful misconduct of the Optionor or its employees, agents or contractors. For further clarity, the parties intend that the Optionee shall be responsible for all liabilities, known or unknown, contingent or otherwise, which were incurred or arose during the Option Period, relating to or arising out of:

 

	
(i)  

	
the conduct of activities in, on or under the Property;

 

	
(ii)  

	
the environmental protection, clean-up, remediation, and reclamation of the Property including, but not limited to, the obligations and liabilities arising out of or related to:

 

	
1.  

	
the disturbance or contamination of land, water (above or below surface) or the environment by exploration, mining, processing or waste disposal activities;

  

10

  

 

	
2.  

	
any failure to comply with all past, current or future governmental or regulatory authorizations, licenses, permits, and orders and all non-governmental prohibitions, covenants, contracts and indemnities;

 

	
3.  

	
any act or omission causing or resulting in the spill, discharge, leak, emission, ejection, escape, dumping or release of hazardous or toxic substances, materials, or wastes as defined in any federal, provincial, or local law or regulation in connection with or emanating from the Property; and

 

	
4.  

	
the long-term reclamation and remediation of the Property and the care and monitoring of the Property, and the posting and maintaining of bonds or other financial assurances required in connection therewith.

 

	
(b)  

	
Each party hereto shall indemnify and save harmless the other, as well as its officers, directors and shareholders, from and against any and all claims, losses, liabilities, damages, fees, fines, penalties, interests, deficiencies, costs and expenses, of any nature or kind whatsoever (collectively, the “Claims”), arising by virtue or in respect of any breach of covenant contained herein or failure to comply with any provision herein, or any inaccuracy, misstatement, misrepresentation or omission made by such party in connection with any matter set out herein, and any and all actions, suits, proceedings, demands, claims, costs, legal and other expenses related or incidental thereto.

 

	
(c)  

	
Notwithstanding any other provision of this Agreement and any termination of this Agreement, the indemnities provided herein shall remain in full force and effect until all possible liabilities of the persons indemnified thereby are extinguished by the operation of law and will not be limited to or affected by any other indemnity obtained by such indemnified persons from any other person.

 

	
(d)  

	
No investigation made by or on behalf of either of the parties hereto at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representation, warranty or covenant made by the other party herein or pursuant hereto.  No waiver by either of the parties hereto of any condition herein, in whole or in part, shall operate as a waiver of any other condition herein.

 

7. Force majeure

 

7.1. Force majeure. Notwithstanding anything contained in this Agreement to the contrary, if any party is prevented from or delayed in performing any obligation under this Agreement and failure is occasioned by any cause beyond its reasonable control, excluding only lack of finances then, subject to Section 7.2, the time for the observance of the condition or performance of the obligation in question shall be extended for a period equivalent to the total period the cause of the prevention or delay persists or remains in effect regardless of the length of the total period.

 

7.2. Notice. Any party claiming suspension of its obligations shall promptly notify the other party to that effect and shall take all reasonable steps to remove or remedy the cause and effect of the force majeure described in the notice in so far as it is reasonably able so to do and as soon as possible; provided, that the terms of settlement of any labour disturbance or dispute, strike or lock-out shall be wholly in the discretion of the party claiming suspension of its obligations by reason thereof; and that party shall not be required to accede to the demands of its opponents in any labour disturbance or dispute, strike or lock-out solely to remedy or remove the force majeure thereby constituted.

 

7.3. Extension. The extension of time for the observance of conditions or performance of obligations as a result of force majeure shall not relieve the Optionee from its obligations to keep the Property in good standing, and to issue the Payment Shares within the prescribed periods.

  

11

  

 

8. Financial Reporting

 

8.1. Audit. An audit shall be prepared annually by the Optionee.  Each annual audit shall be final and not subject to adjustment unless the Optionor delivers to the Optionee written exceptions in reasonable detail within six months after the Optionor receives the report.  The Optionor shall not have access to any books and records of the Optionee.  The audit shall be conducted by a chartered or certified public accountant of recognized standing.  The Optionee shall have the right to condition access to its books and records on execution of a written agreement by the auditor that all information will be held in confidence and used solely for purposes of audit and resolution of any disputes related to the Report.  A copy of the Optionor’s report shall be delivered to the Optionee upon completion, and any discrepancy between the amount actually paid by the Optionee and the amount which should have been paid according to the Optionor’s report shall be paid in a timely manner, one party to the other.  If the discrepancy requires a payment to the Optionor of an amount in excess of 10% of the amount which was paid to the Optionor for the audited period, the entire cost of the audit shall be borne by the Optionee, and the Optionee shall reimburse the Optionor accordingly; otherwise, the Optionor shall bear the entire cost of the audit.

 

8.2. No restriction on staking.  Nothing contained in this Agreement shall have the effect of restricting in any way the entitlement of the Optionor to stake or otherwise acquire, directly or indirectly, interests and rights in MDUs and mining claims, and licenses, leases, grants, concessions, permits and patents relating to a mineral property.  However, any mineral properties shall be subject to the AMI as defined herein.

 

9. Transfer of Interest

 

9.1. Option Exercise. If the Optionee has made the payments referred to in Section 3.2 and incurred the Expenditures referred to in Section 3.4, all within the prescribed periods, and filed the required assessment credits as contemplated herein, then the Optionee has the right, by giving written notice to the Optionor on or before December 31, 2015, to become the owner of a 100% undivided interest in all or those part(s) of the Property as the Optionee may elect.

10. Notices & Payments

 

10.1. Notice.  Any demand, notice or other communication (the “Notice”) to be made or given in connection with this Agreement shall be made or given in writing and may be made or given by personal delivery or facsimile addressed to the recipient at the addresses or facsimile numbers of the parties provided on the first page of this Agreement or such other address or individual as may be designated by notice by any party to the other.  Any Notice made or given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof, and if made or given by facsimile, on the day, other than a day which is not a Business Day, following the day it was sent. 

 

10.2. Payments.  Payments hereunder shall be made addressed to the recipient at the addresses of the recipient parties provided on the first page of this Agreement or such other address or individual as may be designated by notice by the recipient party in accordance with Section 10.1.  If any payment herein becomes due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day.

  

12

  

 

11. Public Announcements

 

11.1. Public Announcements.  The Optionee shall not, without the prior consent of the Optionor, make any disclosure regarding the existence, purpose, scope, content, terms or conditions of this Agreement or other agreements relating thereto save to the extent such disclosure comprises information substantially already publicly available or unless it is necessary for any party to make such disclosure in order to comply with a statutory obligation or the requirements of a competent government or statutory agency or Regulatory Authority; provided that, where practicable, a copy of any proposed announcement or statement shall be furnished to the Optionor in advance of the proposed date of publication, and the Optionee shall make every reasonable effort to incorporate the Optionor’s comments prior to dissemination.

 

12. General Provisions

 

12.1. Entire Agreement.  This Agreement, including all the Schedules hereto, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes any and all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no warranties, representations or other agreements among the parties in connection with the subject matter hereof except as specifically set forth herein and therein. Each party acknowledges that this Agreement is entered into after full investigation and that no party is relying on any statement or representation made by any other which is not embodied in this agreement. Each party acknowledges that it shall have no right to rely on any amendment, promise, modification, statement or representation made or occurring subsequent to the execution of this Agreement unless it is in writing and executed by each of the parties.

 

13.   Each party represents and warrants to the other party that it has the authority to enter into this Agreement and that execution and delivery of this Agreement has been duly approved by resolution of the board of directors.  Each individual (the “Authorized Signatory”) executing this Agreement on behalf of each party represents and warrants that he or she is duly authorized to execute and deliver this Agreement on behalf of said party.

 

13.1. Assignment of Interest.  Neither the Optionee or the Optionor may sell, transfer or otherwise dispose of all or any portion of its interest in and to the Property and this Option Agreement without the prior written consent of the other party, being the Optionor and Optionee respectively, which consent may not be unreasonably withheld.

 

13.2. Right to Purchase.  In the event of Optionor’s insolvency or bankruptcy, the Optionee shall have the right to purchase at fair market value, based on an independent third party appraisal, the Optionor’s interest and rights to the Property.

 

13.3. Encumbrances. During the Option Period, neither the Optionor nor the Optionee shall grant an Encumbrance, other than a Permitted Encumbrance, in their respective interest in the Property.

 

13.4. Confidentiality of information. During the Option Period, the Optionee shall keep all information and data concerning or derived from the Mining Operations confidential and, except to the extent required by law, regulation or policy of any Regulatory Authority, or in connection with the filing of an annual information form or a prospectus by the Optionee or any of its Affiliates, no information derived from the Mining Operations shall be disclosed to any person other than an Affiliate without the prior consent of the Optionor, which consent shall not unreasonably be withheld or delayed. Each party shall, where practicable, use reasonable commercial efforts to cause the text of any news releases or other public statements which a party desires to make with respect to the Property to be made available to the other party prior to publication and the other party shall have the right to make suggestions for changes therein.

  

13

  

 

13.5. Waiver.  The failure of a party in any one or more instances to insist upon strict performance of any of the terms of this Agreement or to exercise any right or privilege arising under it shall not preclude it from requiring by reasonable notice that any other party duly perform its obligations or preclude it from exercising such a right or privilege under reasonable circumstances, nor shall waiver in any one instance of a breach be construed as an amendment of this Agreement or waiver of any later breach.

 

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

 

13.7. Further Assurances.  The parties hereto shall from time to time at the request of any of the other parties hereto and without further consideration, execute and deliver all such other additional assignments, transfers, instruments, notices, releases and other documents and shall do all such other acts and things as may be necessary or desirable to assure more fully the consummation of the transactions contemplated hereby.

 

13.8. Time.  Time shall be of the essence of this Agreement.

 

13.9. Expenses. Each party shall be responsible for its own expenses in connection with negotiating and settling this Agreement.

 

13.10. Amendment.  This Agreement may be amended or varied only by agreement in writing signed by each of the parties.

 

13.11. Arbitration.

 

	
(a)  

	
If there is a dispute between the parties with respect to this Agreement, or the interpretation of this Agreement, the Optionee and the Optionor shall, firstly, be obligated to use best efforts to reconcile and settle each and every dispute.  In the event that a settlement or agreement cannot be reached between the parties, the aggrieved party (“Claimant”) shall, pursuant to Section 10.1 herein, deliver an arbitration notice (“Arbitration Notice”) to the other party (the “Respondent”) detailing the nature of the dispute, the facts and the relevant evidence.  Within 7 days that the Respondent receives the Arbitration Notice, each of the Claimant and the Respondent shall appoint a nominee.  The two nominees so appointed shall, within 21 days of the date of the Arbitration Notice, in turn select a single arbitrator (the “Arbitrator”) to settle all matters arising from the dispute.  In the event that either the Claimant or Respondent, or their selected nominees, fail to appoint the Arbitrator within the prescribed periods, the party in default of the time provisions shall automatically accept the arbitrator selected by the party not in default, as being the Arbitrator to settle all matters arising from the dispute.

 

	
(b)  

	
The Claimant shall deposit with the Arbitrator a full and complete formal statement of claim, which shall not be subject to amendment at any time during the arbitration process unless otherwise permitted by the Arbitrator, within 30 days of the date that the Arbitrator was selected.  Unless otherwise required by the Regulatory Authorities, neither the Claimant nor the Respondent shall announce publicly the alleged claims or

  

14

  

 

	
 

	
dispute until such time as a formal statement of claim has been deposited with the Arbitrator.

 

	
(c)  

	
Each of the Claimant and the Respondent shall jointly instruct the Arbitrator to create an arbitration protocol in a timely manner dealing with the timing and procedures (including security for costs) of all matters that are subject to the dispute, taking into consideration: (i) the fact that each of the Claimant and the Respondent are reporting issuers, as that term is described in applicable securities legislation, and; (ii) the seasonality of the Mining Operations and what correlative effects the process may have on logistics.

 

	
(d)  

	
The award made by the Arbitrator shall be final and binding upon the parties, and shall in all respects be kept and observed.  The Arbitrator shall have the authority to award and direct that the parties, or either of them, execute and deliver such releases, conveyances, deeds, assurances and other documents as the Arbitrator thinks fit, and these releases, conveyances, deeds, assurances and other documents shall be executed and delivered accordingly

 

	
(e)  

	
All costs of the arbitral proceedings shall be in the discretion of the Arbitrator who may direct to and by whom, and in what manner, (including allocation between the parties) the costs or any part of them shall be paid, it being the intention of the parties that the first principle in the exercise of the Arbitrator’s discretion shall be that the costs of the arbitral proceedings shall follow the event of the award.  The costs of the arbitral proceedings and the award shall include, but not be limited to, the sum of (i) the Arbitrator’s fees and applicable taxes, (ii) all actual, reasonable legal fees and disbursements of the Arbitrator and the parties to the dispute, and (iii) a sum equal to the product of $200 multiplied by the number of days in the period commencing on the date that is 90 days prior to the date of the arbitral hearing (or trial) and ending on the last date of such hearing or trial.

 

	
(f)  

	
The Arbitrator may proceed ex parte in case either party, or any of their witnesses, shall at any time neglect or refuse to attend the arbitration proceedings after 7 days’ notice in writing under the hand of the Arbitrator given to each party or to the parties’ solicitor, unless the party, prior to the time fixed to attend, presents to the Arbitrator what the latter considers sufficient cause for failure to attend.

 

	
(g)  

	
The Arbitrator and any nominee under Subsection 12.11(a) must be a resident of Alberta and either of a practising notary, lawyer, advocate, accountant, professor, in the State of Nevada, or a retired justice of any of the courts of the State of Nevada.  An Arbitrator selected outside of the jurisdiction of Nevada may only be effective if agreed to in writing by each of the Claimant and the Respondent. The language to be used in the arbitral proceedings shall be English.

 

	
(h)  

	
Any award made by the Arbitrator may, at the instance of either of the parties to the dispute and without notice to the other of them, be made an Order of the Courts of Nevada

 

13.12. Governing Law and Attornment.  This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada and the federal laws of the United States of Americaapplicable therein and the parties hereby irrevocably attorn to the jurisdiction of the Courts of the State of Nevada.  For the purpose of all legal proceedings, this Agreement shall be deemed to have been executed in the State of Nevada and the courts of the State of Nevada shall have exclusive jurisdiction to entertain any action arising under this Agreement

  

15

  

 

-  –

 

 

13.13. Language.  It is the express wish of the parties hereto that this Agreement and all documents contemplated hereby shall be drawn up in English.

 

13.14. Counterparts.  This Agreement may be executed by facsimile and in as many counterparts as are necessary and shall be binding on each party when each party hereto has signed and delivered one such counterpart.  When a counterpart of this Agreement has been executed by each party, all counterparts together shall constitute one agreement.

REST OF PAGE INTENTIONALLY LEFT BLANK

  

16

  

THE PARTIES, intending to be contractually bound, have entered into this Agreement as of the date set out on the first page.

 

 

	
PANA-MINERALES S.A.

 

By:

 

 

(Authorized Signatory)

	  	  
	
 

MINERALES HOLDINGS CAN CORP.

 

 

By:

 

 

(Authorized Signatory)

	  	  

  

17

  

 

SCHEDULE "A"

DESCRIPTION OF THE PROPERTY

 

 

-OMITTED-

  

18

  

 

 

SCHEDULE "B"

 

To an Agreement made as of February 1, 2012 by and between Pana-Minerales S.A. and Minerales Holdings Can Corp.

 

NET SMELTER RETURNS

 

 

	
1.  

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

 

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

 

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

 

actual sales and brokerage costs, if any, and

 

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

 

 

	
2.  

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

  

19

  

 

SCHEDULE “C”

To an Agreement made as of February 1, 2012 by and between Pana-Minerales S.A. and Minerales Holdings Can Corp.

Operator

 

1.                      INTERPRETATION

 

1.01                      Terms defined in the Agreement shall, subject to any contrary intention, have the same meanings herein.  In this Schedule the following words, phrases and expressions shall have the following meanings:

 

	
  

	
(a)

	
“Agreement” means the Agreement to which this Schedule is attached.

 

	
(b)  

	
“Program” means the work plan and budget of Mining Operations conducted during the Option Period and adopted pursuant to Section 4 of the Agreement.

 

	
(c)  

	
“Costs” means all items of outlay and expense whatsoever, direct or indirect, with respect to Mining Operations, recorded by the Operator after the date hereof in accordance with this Agreement and prior to the formation of the Joint Venture and shall include all obligations and liabilities incurred or to be incurred with respect to the protection of the environment such as future decommissioning, reclamation and long-term care and monitoring, even if not then due and payable so long as the amounts can be estimated with reasonable accuracy, and whether or not a mine reclamation trust fund has been established.

 

2.           OPERATOR

 

2.01                      The Optionor shall act as Operator and may appoint such other parties as Operator as they may determine to undertake the operations as required under the operating agreement until such time as the Optionee has earned all of its interest pursuant to Page 5, Section 4.1 of the Option Agreement of which this Schedule C forms a part.

 

2.02                      The party acting as Operator may resign as Operator on at least 90 days' notice to all the parties.

 

2.03                      Upon ceasing to be Operator, the former Operator shall forthwith deliver to the Optionee and Optionor custody of all books, records, and other property both real and personal which it prepared or maintained in its capacity as Operator.

 

3.           RIGHTS, DUTIES AND STATUS OF OPERATOR

 

3.01                      The Operator in its operations hereunder shall be deemed to be an independent contractor.  The Operator shall not act or hold itself out as agent for any of the parties nor make any commitments on behalf of any of the parties unless specifically permitted by this Agreement or directed in writing by a party.

  

20

  

 

3.02                      Subject to any specific provision of this Agreement and subject to it having the right to reject any direction on reasonable grounds by virtue of its status as an independent contractor, the Operator shall perform its duties hereunder in accordance with the directions of the Optionee and in accordance with this Agreement.

 

3.03                      The Operator shall manage and carry out Mining Operations substantially in accordance with Programs adopted by the Optionee and in connection therewith shall, in advance if reasonably possible, notify the Optionee of any change in Mining Operations which the Operator considers material and if it is not reasonably possible, the Operator shall notify the Optionee so soon thereafter as is reasonably possible.

 

3.04                      The Operator shall have the sole and exclusive right and authority to manage and carry out all Mining Operations in accordance herewith and to incur on behalf of the Optionee the Costs required for that purpose.  In so doing the Operator shall:

 

	
(a)  

	
comply with the provisions of all agreements or instruments of title under which the Property or Assets are held;

 

	
(b)  

	
pay all Costs properly incurred promptly as and when due;

 

	
(c)  

	
maintain books of account in accordance with the normal industry accounting procedure, and the judgment of the Operator as to matters related to the accounting shall govern if the Operator's accounting practices are in accordance with accounting principles generally accepted in the mining industry in Canada; and

 

	
(d)  

	
perform its duties and obligations hereunder in a sound and workmanlike manner, in accordance with sound mining and engineering practices and other practices customary in the Canadian mining industry, and in substantial compliance with all applicable federal, provincial, Territorial and municipal laws, by-laws, ordinances, rules and regulations.

 

4.           EXPLORATION PROGRAMS

 

4.01                      The Operator shall prepare draft Programs for consideration by the Optionee.  Unless otherwise agreed to by the Optionee, each Program shall cover a calendar year.  The draft Program shall contain a statement in reasonable detail of the proposed Mining Operations, estimates of all Costs to be incurred and an estimate of the time when they will be incurred, and shall be delivered to the Optionee by no later than May 1st of each year to which the draft Program relates.  Each draft Program shall be accompanied by such reports and data as are reasonably necessary for the Optionee to evaluate and assess the results from the Program for the then current year and, to the extent not previously delivered, from earlier Programs.

 

4.02                      The Optionee shall review the draft Program prepared and, if it deems fit, adopt the Program with such modifications, if any, as the Optionee deems necessary.  The Operator shall be entitled to an allowance for Cost overruns of 10 percent in addition to any budgeted Costs and any Costs so incurred shall be deemed to be included in the Program, as adopted.

  

21

  

 

4.03                      The Operator shall be entitled to invoice the Optionee:

 

	
  

	
(a)

	
no more frequently than monthly, for the Costs incurred and paid by the Operator in carrying out a Program; or

 

	
  

	
(b)

	
not more than 120 days in advance of requirements, for an advance of the Costs estimated to be incurred and paid by the Operator in carrying out a Program or portion thereof.

 

Each invoice shall be signed by an officer of the Operator.  The Optionee shall pay to the Operator the amount invoiced within 20 days of receipt of the invoice.  If the Optionee protests the correctness of an invoice it shall nevertheless be required to make the payment.

 

4.04           If the Optionee fails to pay an invoice within the 20-day period referred to in Section 4.03, the Optionee shall be deemed to have elected to terminate the Program then in effect, and accordingly, the Operator shall have no further obligations under this Agreement in respect of that Program.

 

4.05           If the Operator suspends or prematurely terminates a Program, any funds advanced by a Participant in excess of Costs incurred prior to the suspension or premature termination shall be refunded within 30 days of the suspension or premature termination.  Unless approved by the Optionee, the Operator shall be exclusively liable for the payment of all Costs incurred in excess of 110 percent of any budgeted Costs.

 

4.06           Unless otherwise directed by the Optionee, the Operator may suspend or terminate prematurely any Program, by delivering notice to that effect to the Optionee, when the Operator, in good faith, considers that conditions are not suitable for the proper continuation or completion of the Program or the results obtained to that time eliminate or substantially impair the technical rationale on which the Program was based.  The Optionee may suspend or terminate prematurely any Program at any time by delivering notice to that effect to the Operator. If any Program is terminated prematurely, the Operator shall, within 30 days of such termination, refund to the Optionee the amount by which the amounts advanced by the Optionee to the Operator on account of projected Costs exceeds the sum of such Costs and the amounts payable to the Operator under Section 5 of this Schedule.

 

4.07             If the Operator fails to submit a draft Program by the date set out in this Agreement, the following shall apply:

 

	
  

	
(a)

	
the Operator shall not be entitled to submit a draft Program for the subject period;

 

	
  

	
(b)

	
the Optionee may submit a draft Program (the “Non-Operator's Program”) for the subject period for consideration by the Operator;

 

	
  

	
(c)

	
if the Operator elects to proceed with the Non-Operator's Program, it shall remain as the operator for the duration of the Non-Operator's Program; and

 

	
  

	
(d)

	
if the Operator elects not to proceed with the Non-Operator’s Program, it shall cease to be the Operator for the duration of the Non-Operator's Program, and the Optionee shall carry out the Non-Operator Program itself.

 

  

22

  

 

5.           OPERATOR'S FEE

 

5.01                      Except if Subsection 4.07(d) applies, the Optionee shall pay the Operator a fee for its services with respect to Programs as follows, which amount shall be paid promptly upon being invoiced:

 

	
  

	
(a)

	
10% for each individual contract which is not more than $100,000;

 

	
  

	
(b)

	
8% for each individual contract which exceeds $100,000;

 

	
  

	
(c)

	
10% of all other Costs not included in clauses 5.01(a) and 5.01(b).

 

6.           INFORMATION AND DATA

 

6.01                      While Programs are being carried out, the Operator shall use its best efforts to furnish the Optionee with monthly progress reports and with a final report within 90 days following the conclusion of each Program.  The final report shall show the Mining Operations performed and the results obtained and shall be accompanied by a statement of Costs and copies of pertinent plans, assay maps, diamond drill records and other factual engineering data.

 

6.02                      All information and data concerning or derived from the Mining Operations shall be kept confidential and, except to the extent required by law or by regulation of any securities regulatory authority or stock exchange, shall not be disclosed to any person other than an Affiliate without the prior consent of all the other parties to this Agreement, which consent shall not unreasonably be withheld.

 

6.03                      The text of any news releases or other public statements which a party intends to make with respect to the Property or this Agreement shall, to the extent practicable, be made available to the other parties prior to publication and the other parties shall have the right to make suggestions for changes therein.

 

7.           LIABILITY OF THE OPERATOR

 

7.01                      Subject to Section 7.02, the Optionee shall indemnify and save the Operator harmless from and against any loss, liability, claim, demand, damage, expense, injury or death (including, without limiting the generality of the foregoing, legal fees) resulting from any acts or omissions of the Operator or its officers, employees or agents.

 

7.02                      Notwithstanding Section 7.01, the Operator shall not be indemnified nor held harmless by any of the parties for any loss, liability, claim, damage, expense, injury or death, (including, without limiting the generality of the foregoing, legal fees) resulting from the negligence or willful misconduct of the Operator or its officers, employees or agents.

 

7.03                      An act or omission of the Operator or its officers, employees or agents done or omitted to be done:

 

	
  

	
(a)

	
at the direction of, or with the concurrence of, the Optionee; or

 

	
  

	
(b)

	
unilaterally and in good faith by the Operator to protect life or property

 

shall be deemed not to be negligence or willful misconduct.

 

  

23

  

 

7.04                      The Operator shall not be liable to any other party nor shall any party be liable to the Operator in contract, tort or otherwise for special or consequential damages, including, without limiting the generality of the foregoing, loss of profits or revenues.

 

8.         AMI

 

8.01                      The area of interest shall comprise that area which is included within five (5) miles of the outermost boundary of the mineral properties which constitute the Property as outlined in Schedule “A” to the Agreement.

 

  

24Exhibit 10.1 Deferred Compensation Plan

COHERENT, INC.
2005 DEFERRED COMPENSATION PLAN

PREAMBLE
This Coherent, Inc. 2005 Deferred Compensation Plan is adopted by Coherent, Inc. for the benefit of certain of its Employees and members of its Board of Directors, effective as of January 1, 2005 (the “Effective Date”).  The purpose of the Plan is to provide supplemental retirement income and to permit eligible Participants the option to defer receipt of Compensation, pursuant to the terms of the Plan.  The Plan is intended to be an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and is intended to comply with Section 409A of the Internal Revenue Code.  Participants shall have the status of unsecured creditors of Coherent, Inc. with respect to the payment of Plan benefits. 
From and after the Effective Date, this Plan replaces the Coherent, Inc. 1995 Deferred Compensation Plan, the Coherent, Inc. Supplementary Retirement Plan and the Director Deferred Compensation Plan, which have been frozen to new deferrals as of December 31, 2004 so as to qualify these prior plans for “grandfather” treatment under Internal Revenue Code Section 409A.
    

	TABLE OF CONTENTS

				
	 
	 
	Page
	

	 
	 
	 

	ARTICLE I Definitions
	1
	

	 
	1.1    Definitions
	1
	

	ARTICLE II Participation
	4
	

	 
	2.1    Date of Participation
	4
	

	 
	2.2    Resumption of Participation Following Return to Service
	4
	

	 
	2.3    Change in Employment Status
	5
	

	ARTICLE III Contributions
	5
	

	 
	3.1    Deferral Contributions
	5
	

	 
	3.2    Accounts
	6
	

	 
	3.3    Company Discretionary Contributions
	7
	

	 
	3.4    Cancellation of Elections Due to 401(k) Hardship Withdrawal or Unforeseeable Emergency Distribution
	7
	

	ARTICLE IV Participants' Accounts
	7
	

	 
	4.1    Individual Accounts
	7
	

	 
	4.2    Accounting for Distributions
	8
	

	 
	4.3    Separate Accounts
	8
	

	ARTICLE V Investment of Contributions
	8
	

	 
	5.1    Manner of Investment
	8
	

	 
	5.2    Investment Decisions
	8
	

	ARTICLE VI Distributions
	8
	

	 
	6.1    Certain Distributions to Participants and Beneficiaries
	8
	

	 
	6.2    Subsequent Election to Delay or Change Form of Payment.
	9
	

	 
	6.3    Lump-Sum Distribution Timing
	10
	

	 
	6.4    Installment Amounts
	10
	

	 
	6.5    Unforeseeable Emergency Distributions
	10
	

	 
	6.6    Scheduled In-Service Distribution
	11
	

	 
	6.7    Death
	11
	

	 
	6.8    Notice to Trustee
	12
	

	 
	6.9    Time of Distribution
	12
	

	 
	6.10    Limitation on Distributions to Covered Employees Prior to a Change of Control
	12
	

	 
	6.11    Domestic Relations Order Distributions
	12
	

	 
	6.12    Conflicts of Interest and Ethics Rules Distributions
	12
	

	 
	6.13    FICA and Related Income Tax Distribution
	13
	

	TABLE OF CONTENTS

				
	 
	 
	Page
	

	 
	6.14    State, Local and Foreign Tax Distribution
	13
	

	 
	6.15    Code Section 409A Distribution
	13
	

	 
	6.16    Tax Withholding
	13
	

	 
	6.17    Special 2008 Election
	13
	

	ARTICLE VII Change of Control
	13
	

	 
	7.1    No New Participants Following Change of Control
	13
	

	 
	7.2    Discretionary Termination and Accelerated Plan Distributions 30 Days Prior to or Within 12 Months Following a Change in Control
	13
	

	ARTICLE VIII Termination Due to Corporate Dissolution or Pursuant to Bankruptcy Court Approval
	14
	

	 
	8.1    Corporate Dissolution
	14
	

	 
	8.2    Bankruptcy Court Approval
	14
	

	ARTICLE IX Amendment and Termination
	14
	

	 
	9.1    Amendment by Employer
	14
	

	 
	9.2    Retroactive Amendments
	14
	

	 
	9.3    Plan Deferral Termination
	14
	

	 
	9.4    Distribution upon Certain Plan Terminations
	14
	

	ARTICLE X The Trust
	15
	

	 
	10.1    Establishment of Trust
	15
	

	ARTICLE XI Miscellaneous
	15
	

	 
	11.1    Limitation of Rights
	15
	

	 
	11.2    Nontransferability; Domestic Relations Orders
	15
	

	 
	11.3    Facility of Payment
	15
	

	 
	11.4    Information between Employer and Trustee
	16
	

	 
	11.5    Notices
	16
	

	 
	11.6    Governing Law
	16
	

	 
	11.7    No Guarantees Regarding Tax Treatment; Disclaimer
	16
	

	ARTICLE XII Plan Administration
	16
	

	 
	12.1    Powers and responsibilities of the Administrator
	16
	

	 
	12.2    Nondiscriminatory Exercise of Authority
	17
	

	 
	12.3    Claims and Review Procedures
	17
	

	 
	12.4    Exhaustion of Claims Procedure and Right to Bring Legal Claim
	20
	

	 
	12.5    Plan's Administrative Costs
	20
	

	 
	 
	 

ARTICLE I 
Definitions
1.1    Definitions.  Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context: 
(a)    “Account” means an account established on the books of the Employer for the purpose of recording amounts credited on behalf of a Participant and any expenses, gains or losses included thereon.
(b)    “Administrator” means the Employer, or the Committee, if one has been designated by such Employer.
(c)    “Bankruptcy Court Approval” means the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A).
(d)    “Beneficiary” means the person or persons entitled under Section 6.7 to receive benefits under the Plan upon the death of a Participant. 
(e)    “Change of Control Event” means a change in ownership or effective control of the Company or in the ownership of a substantial portion of the Company’s assets, as defined under Code Section 409A.
(f)    “Code” means the Internal Revenue Code of 1986, as amended from time to time.
(g)    “Code Section 409A” means Code Section 409A and the proposed or final (as applicable) Treasury regulations and other official guidance promulgated thereunder.
(h)    “Code Section 409A Distribution” means a distribution pursuant to Section 6.15 hereof.
(i)    “Committee” means the Deferred Compensation Committee composed of three or more individuals appointed by the Compensation Committee of the Board of Directors of the Employer, or following a Change of Control, appointed by the Committee, to function as the Administrator.  Once appointed, the Deferred Compensation Committee shall interpret and administer this Plan and take such other actions as may be specified herein.
(j)    “Company” means the Employer and any of its Subsidiaries.
(k)    “Compensation” means (i) with respect to Eligible Employees, base salary, commissions, variable compensation plan bonuses, and, to the extent that they qualify as Sales Commissions under Code Section 409A, sales commission plan bonuses and sales incentive bonuses, including amounts that are otherwise excludable from the gross income of the Participant 

1

under a salary reduction agreement by reason of the application of Sections 125 or 402(a)(8) of the Code, and (ii) with respect to Outside Directors, all cash retainers and cash meeting fees, excluding expense reimbursements.  Compensation does not include any severance payments or benefits.
(l)    “Corporate Dissolution” means a dissolution of the Company that is taxed under Code Section 331.
(m)    “Deferral Contributions” means, for each Participant, the amount deferred pursuant to Section 3.1 hereof.
(n)    “Disability” means the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Company employees.
(o)    “Domestic Relations Order” means a court order that qualifies as a domestic relations order under Code Section 414(p)(1)(B).
(p)    “Eligible Participant” means (i) any employee with an annual base salary in excess of the amount specified by the Committee, (ii) any Outside Director, and (iii) any other employees designated as eligible by the Committee.
(q)    “Employee” means any employee of the Employer.
(r)    “Employer” means Coherent, Inc. and any successors and assigns unless otherwise provided herein.
(s)    “Entry Date” means (i) January 1 (which is also the Entry Date for employees who are promoted or given a base salary increase so as to become an Eligible Participant for the first time and for re-hires who were previously Eligible Participants), (ii) for new employees who are Eligible Participants (including re-hires who were not previously Eligible Participants), the first day of the next payroll period commencing after the next paydate following receipt of their deferral election by the Company; provided, however, that such new employee’s deferral election must be submitted no later than 30 days following their becoming newly eligible, or (iii) for Non-Employee Directors who are Eligible Participants for the first time, the first day of the next Company fiscal quarter following their becoming a Non-Employee Director; provided, however, that such new Non-Employee Director’s deferral election must be submitted no later than 30 days following their becoming a newly eligible Non-Employee Director.
(t)    “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to time amended.

2

(u)    “FICA Amount” means the aggregate Federal Insurance Contributions Act (FICA) tax imposed on any Account under Code Sections 3101, 3121(a) and 3121(v)(2), as applicable and any corresponding tax withholding provisions of applicable state, local or foreign tax laws as a result of the payment of the FICA amount.
(v)    “401(k) Plan” means the Coherent, Inc. Employee Retirement and Investment Plan.
(w)    “Outside Director” means a member of the Board whom is not an Employee.
(x)    “Participant” means any Employee or Outside Director who participates in the Plan in accordance with Article 2 hereof.
(y)    “Plan” means this Coherent, Inc. 2005 Deferred Compensation Plan.
(z)    “Plan Year” means the 12-consecutive month period beginning January 1 and ending December 31.
(aa)    “Prior Plans” means the Coherent, Inc. 1995 Deferred Compensation Plan, the Coherent, Inc. Supplementary Retirement Plan and the Director Deferred Compensation Plan.
(bb)    “Retirement” means a Participant’s Separation from Service after attaining 50 years of age. 
(cc)    “Sales Commission”  means “sales commission compensation” as such term is defined in Treasury Regulation §1.409A-2(a)(12)(i).
(dd)    “Separation From Service” means a separation from service as defined under Code Section 409A.  For this purpose, the employment relationship will be treated as continuing intact while the Participant is on military leave, sick leave or other bona fide leave of absence, except that if the period of such leave exceeds six (6) months and the Participant does not retain a right to re-employment under an applicable statute or by contract, then the employment relationship will be deemed to have terminated on the first day immediately following such six-month period.  A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Company.  
(ee)    “Specified Employee” means a Participant who, as of the date of his or her Separation from Service, is a key employee of the Company.  For this purpose, a Participant is a key employee if he or she meets the requirements of Code section 416(i)(1)(A)(i), (ii) or (iii) (disregarding Code section 416(i)(5)).  As of 2008, this generally includes (i) the top fifty (50) Company officers with compensation greater than $150,000 per year, (ii) a 5% owner of the Company, or (iii) a 1% owner of the Company with compensation greater than $150,000 per year.  For purposes of the preceding sentence, “compensation” means compensation as such term is defined in the 401(k) Plan for Code section 415 purposes.  The determination of who is a Specified 

3

Employee shall be made on December 31 of each year and shall include any employee who qualified as a Specified Employee at any time during the preceding twelve-month period.  Once so determined, the list of Specified Employees shall be initially effective on the following April 1 and shall remain effective for twelve months (i.e., through March 31 of the following year).
(ff)    “Subsidiary” means a subsidiary of the Employer, as such term is defined in Code section 424(f).
(gg)    “Trading Day” means a day upon which the major U.S. national stock exchanges are open for trading.
(hh)    “Trust” means the trust fund established pursuant to the terms of the Plan.
(ii)    “Trustee” means the corporation or individuals named in the agreement establishing the Trust and such successor and/or additional trustees as may be named in accordance with the Trust Agreement.
(jj)    “Unforeseeable Emergency” means (a) a severe financial hardship to a Participant resulting from an illness or accident of the Participant or his or her spouse, beneficiary or dependent (as defined in section 152 of the Code, but without regard to subsections (b)(1), (b)(2) and (d)(1)(B) thereof), (b) loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster), or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
(kk)    “Year of Service” means a period of 12 consecutive months during which the Participant is employed by the Employer or serves as a Board member.  Service commences on the date the Participant first commences service for the Employer and ends on the date that the Participant quits, retires, is discharged, is determined to be Totally Disabled or dies.
(ll)    “Valuation Date” means (i) for re-allocations of amounts previously deferred, the date of re-allocation, or, if that date is not a Trading Day, then the next Trading Day, (ii) for distributions hereunder, the last day of the preceding month, or, if that day is not a Trading Day, then the most recently concluded Trading Day,  and (iii) for allocations of deferrals, the next Trading Day following the payday to which the deferral relates.
ARTICLE II Participation
2.1    Date of Participation.  Each Eligible Participant shall be become a Participant as of the Entry Date next following their timely filing of an election to defer Compensation in accordance with Section 3.1.
2.2    Resumption of Participation Following Return to Service.  If a Participant ceases to be an Employee or Outside Director and thereafter returns to the service of the Employer he or she will again become a Participant as of the Entry Date following the date on which he or she 

4

re‐commences service with the Employer, provided he or she is an Eligible Participant and has timely filed an election to defer Compensation pursuant to Section 3.1.  Any scheduled Plan payments the Participant has been receiving shall continue to be paid as previously scheduled.
2.3    Change in Employment Status.  If any Employee Participant continues in the employ of the Employer but ceases to be an Eligible Participant, the individual shall continue to be a Participant until the entire amount of his benefit is distributed; provided, however, the individual shall not be entitled to make Deferral Contributions during subsequent Plan Years in which he or she is not an Eligible Participant.  In the event an Employee Participant ceases to be an Eligible Participant, if such individual has not undergone a Separation From Service, he or she shall continue to make Deferral Contributions under the Plan through the end of the Plan Year in which he or she ceases to be an Eligible Participant.  Thereafter, such individual shall not make any further Compensation deferral contributions to the Plan unless or until he or she again becomes an Eligible Participant.  In the event that the individual subsequently again becomes an Eligible Participant, the individual may resume full participation on the next Entry Date in accordance with Section 3.1.

ARTICLE III Contributions
3.1    Deferral Contributions.  
(a)    Annual Open Enrollment.  Prior to the beginning of each Plan Year, each Eligible Participant (including newly eligible Eligible Participants who were formerly Eligible Participants) may elect to execute a compensation reduction agreement with the Employer to reduce his Compensation by a specified percentage not exceeding, (i) for Eligible Employees, 75% of their base salary and 100% of their other Compensation, and (ii) for Outside Directors, 100% of their Compensation, equal in either case to whole number multiples of one (1) percent, and in a scheduled amount of not less than $10,000.  Such agreement shall become irrevocable as of the last day of the calendar year in which it is made and shall be effective, with respect to Eligible Employees, with the first payday in the following Plan Year and with respect to Outside Directors, with the first day of service in the following Plan Year.  Except with respect to payroll periods that cross-over from one calendar year to the next, the election shall not be effective with respect to Compensation relating to services already performed.  With respect to Compensation that qualifies as a Sales Commission, the services relating to such Compensation shall be deemed performed in the year in which the customer pays the Company.  An election once made will remain in effect for paydays falling in the duration of the Plan Year.  After the beginning of a Plan Year, a Participant will not be permitted to change, terminate or revoke his or her Compensation Deferral election for such Plan Year, except to the limited extent provided in Section 3.4. Amounts credited to a Participant’s Account prior to the effective date of any new election will not be affected and will be paid in accordance with that prior election.
(b)    Newly Eligible Participants.  The same rules as in Section 3.1(a) above shall also apply to individuals who become Eligible Participants for the first time, except (i) such new 

5

Eligible Participants shall have no more than thirty (30) days following their becoming eligible for the first time under the Plan or any other non-qualified deferred compensation plans of the Employer required to be aggregated with the Plan in which to elect to have their Compensation reduced, and (ii) the agreement shall become effective, with respect to Eligible Employees, with the first full payroll period commencing following the receipt of their election by the Company and with respect to Outside Directors, with the first day of service following the receipt of their election by the Company.  Newly eligible Outside Directors may not, however, defer quarterly fees payable on account of the Company’s fiscal quarter in which the election is made.
(c)    Variable Compensation Plan, Sales Commission Plan and Sales Incentive Bonuses Payable in a Subsequent Year.  If a Variable Compensation Plan, Sales Commission Plan or Sales Incentive Bonus (so long as such Sales Commission Plan and Sales Incentive Bonus qualifies as Sales Commissions under Section 409A) is earned in one calendar year and would normally be paid in the first quarter of the ensuing calendar year, it shall be deferred and distributed based upon the election made by the Eligible Participant in the open enrollment period in the year prior to the year in which it was earned.  For newly Eligible Participants, any such Variable Compensation Plan, Sales Commission Plan or Sales Incentive Bonus shall be deferred and distributed based upon their initial election made with respect to the year in which it was earned (or the year in which it was paid to the Company, with respect to Sales Commissions); provided, however, that such election may apply to no more than the total amount of such compensation multiplied by the ratio of the number of days remaining in the applicable performance period after such election becomes irrevocable over the total number of days in the applicable performance period.
EXAMPLE:  In the December, 2005 open enrollment period, an Eligible Participant elects to defer 75% of her Sales Incentive Bonus for 2006.  The 2006 Sales Incentive Bonus is normally paid in March, 2007.  The deferral and distribution of her 2006 Sales Incentive Bonus otherwise payable in March 2007 are controlled by her election made in the 2005 open enrollment period. 
(d)    Year-End Cross-Over Payroll Periods.  Paydays relating to periods of service that cross-over the calendar year end shall be covered by the Participant’s deferral election in effect for the later year, consistently with the default rules under Treasury Regulation §1.409A-2(a)(13).
(e)    Limitation on Deferral Changes.  The dollar amount of any Plan deferrals shall not be reduced or increased during any Plan Year by virtue of any Participant election to increase, decrease or terminate his or her rate of deferral in any other employee benefit plan, including the Company’s employee stock purchase plan; except as permitted by Code Section 409A with respect to changes in deferral elections under the Company’s 401(k) Employee Savings Plan and Code section 125 flexible benefits plan (or as otherwise permitted under Code Section 409A).
3.2    Accounts.  The Employer shall credit an amount to the Account maintained on behalf of the Participant corresponding to the amount of said reduction.  Under no circumstances may an election to defer Compensation be adopted retroactively.
3.3    Company Discretionary Contributions.  The Company may, in its sole discretion, 

6

make a contribution to a Participant’s Account, subject to such vesting and distribution conditions and limitations as the Company, in its sole discretion, shall impose.  To the extent such Company contributions do not vest, corresponding debits will be made to a Participant's Account, including any earnings on such forfeited amounts.
		
	3.4
	Cancellation of Elections Due to 401(k) Hardship Withdrawal or Unforeseeable Emergency Distribution. 

(a)    401(k) Hardship Withdrawal.  A Participant’s deferral election shall be automatically cancelled in the event the Participant obtains a hardship distribution from the Employer’s 401(k) Plan pursuant to Treasury Regulation §1.401(k)-1(d)(3).  The Participant, if still an Eligible Participant, may re-enroll in the Plan in the next open enrollment period.
(b)    Unforeseeable Emergency Distribution.  A Participant’s deferral election shall be automatically cancelled in the event the Participant obtains an unforeseeable emergency distribution from the Plan pursuant to Section 6.5 hereof.  The Participant, if still an Eligible Participant, may re-enroll in the Plan in the next open enrollment period.
(c)    Special 2005 Elections.  
(i)    In accordance with Internal Revenue Service Notice 2005-1, Q&A-21, Eligible Participants may make a deferral election with respect to 2005 Compensation that has not been paid or become payable at the time of election, and superseding their prior election, if any, with respect to such Compensation, on or before March 15, 2005, or such earlier time as is determined by the Administrator (or its designee) in its sole discretion.
(ii)    In accordance with Internal Revenue Service Notice 2005-1 and the proposed Treasury regulations promulgated under Code Section 409A, and notwithstanding any contrary provision of the Plan, a Participant may elect to rescind or reduce his or her 2005 Compensation deferral election made under Section 3.1 by filing a form specified by the Administrator (or its designee) with the Administrator (or its designee) no later than December 31, 2005, or such earlier time as is determined by the Administrator (or its designee), in its sole discretion.  The amount subject to such election shall be distributed to the Participant in a single lump sum payment of cash (or its equivalent) in calendar year 2005 or, if later, the Participant’s taxable year in which the amount becomes earned and vested.
ARTICLE IV     
Participants’ Accounts
4.1    Individual Accounts.  The Administrator will establish and maintain an Account for each Participant which will reflect Deferral Contributions credited to the Account on behalf of the Participant with earnings, expenses, gains and losses credited thereto, attributable to the investments made with the amounts in the Participant’s Account.  Participants will be furnished statements of 

7

their Account values at least once each Plan Year.
4.2    Accounting for Distributions.  As of any date of a distribution to a Participant or a Beneficiary hereunder, the distribution to the Participant or to the Participant’s Beneficiary(ies) shall be charged to the Participant’s Account.
4.3    Separate Accounts.  A separate account under the Plan shall established and maintained to reflect the Account for each Participant with subaccounts to show separately the earnings, expenses, gains and losses credited or debited to that Account.
ARTICLE V     
Investment of Contributions
5.1    Manner of Investment.  All amounts credited to the Accounts of Participants shall be treated as though invested only in eligible investments selected by the Employer.
5.2    Investment Decisions.  
(a)    Accounts shall be treated as invested as directed by the Participant among the eligible investment alternatives selected by the Employer.  Participants may change their investment allocations as specified by the Committee.
(b)    All dividends, interest, gains and distributions of any nature earned in respect of an investment alternative in which the Account is treated as investing shall be credited to the Account in an amount equal to the net increase or decrease in the net asset value of each investment option since the preceding Valuation Date.
ARTICLE VI     
Distributions
6.1    Certain Distributions to Participants and Beneficiaries.  
(a)    Earliest Distributions
(i)Regular Participants.  Except as permitted by the Plan and Code Section 409A in connection with a Change of Control Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a conflicts of interest or ethics rule distribution under Section 6.12, a FICA and related income tax distribution under Section 6.13, a state, local or foreign tax distribution under Section 6.14, or a Code Section 409A Distribution, in no event may the account of a Participant who is not a Specified Employee be distributed earlier than (i) the Participant’s Separation From Service, (ii) the Participant’s Disability, (iii) the Participant’s death, (iv) a specified time under Section 6.6 hereunder, (v) a Change in Control, (vi) the occurrence of an Unforeseeable Emergency, or (vii) as required to satisfy a Domestic Relations Order.

8

(ii)Specified Employee Participants.  Except as permitted by the Plan and Code Section 409A in connection with a Change of Control Event, a Corporate Dissolution, pursuant to a Bankruptcy Court Approval, a conflicts of interest or ethics rules distribution under Section 6.12, a FICA and related income tax distribution under Section 6.13, a state, local or foreign tax distribution under Section 6.14, or a Code Section 409A Distribution, in no event may a Specified Employee’s account be distributed earlier than (i) six (6) months following the Specified Employee’s Separation From Service (or if earlier, the Specified Employee’s death), (ii) the Specified Employee’s Disability, (iii) the Specified Employee’s death, (iv) a specified time under Section 6.6 hereunder, (v) a Change in Control, (vi) the occurrence of an Unforeseeable Emergency, or (vii) as required to satisfy a Domestic Relations Order.  In the event a Specified Employee’s Plan distributions are delayed due to the six-month delay requirement, the amounts otherwise payable to the Specified Employee during such period of delay shall be paid on a date that is at least six months and one day following Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends (or, if earlier, within 60 days following the death of the Specified Employee).  The Participant’s other scheduled distributions, if any, shall not be affected by the period of delay.
(b)    Lump-Sum or Installment Payment Initial Elections Upon Retirement or Disability.  At the same time their initial elections for any Plan Year are made, Participants shall elect to have their Compensation deferrals for that Plan Year paid out, either following their Retirement or their Disability, in one of the following forms of payment:
(i)    Lump sum cash payment; or
(ii)    Two to fifteen substantially equal annual installments.
In no event shall any Plan payments be made more than sixteen (16) years following a Participant’s Separation From Service.  Any payment scheduled to be made more than sixteen (16) years following a Participant’s Separation From Service shall be paid with the last scheduled payment with the sixteen (16) year period.
(c)    Other Plan Payments.  All Plan payments not specified in Section 6.1(b), except for certain scheduled in-service withdrawals as specified in Section 6.6, shall be made in the form of a lump-sum payment.
(d)    Installment Payments Treated as Single Payments.  All installment payments under the Plan are considered a single payment for purposes of complying with Code Section 409A.
6.2    Subsequent Election to Delay or Change Form of Payment.  
(i)    A Participant’s initial election to receive a Retirement, Disability or in‐service distribution may be delayed or the form of payment changed by filing an election, in the form required by the Administrator, at least one year in advance of the date upon which any distribution would otherwise have been made pursuant to the prior election.  Such election shall not 

9

be effective for a period of one (1) year, and must delay the initial payment by a period of at least five (5) years, but may not result in the initial payment occurring more than then ten (10) years following Retirement or Disability.  In the absence of such timely filed election, the value of such Participant’s Account shall be distributed in accordance with their previously timely filed Account election. 
(ii)    Because Plan installment payments are considered a single payment for purposes of Code Section 409A, a subsequent election may accelerate the method of distribution.  For example, if a Participant initially elected to receive Retirement or Disability payments in five annual installments following her Separation From Service, she could make a timely election to instead take a lump-sum distribution five years following her Separation From Service.  Moreover, a subsequent election may change a lump-sum distribution to an installment election, so long as, in either case, the initial payment is delayed for a period of at least five (5) years, the election is not effective for one (1) year and is made at least one (1) year in advance of the date upon which the first distribution would have otherwise been made.  
(iii)    Because installment payments are treated as a single payment, any subsequent election must apply to all of the installment payments.  For example, if a Participant initially elected to receive Retirement or Disability payments in five annual installments following her Separation From Service, the Participant may not elect to defer the 1st, 2d, 3rd and 5th installments only, but must also defer the 4th installment.
6.3    Lump-Sum Distribution Timing.    Except as elected otherwise for Plan Years prior to the 2009 Plan Year, for Participants receiving a lump-sum distribution, the value of their Account (or portion thereof specified in the Participant’s election) shall be paid in a lump-sum cash payment in the first February following their Separation From Service, or, for Specified Employees (or their estates or beneficiaries), if later, at least six months and one day after the date upon which they incur a Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends or, if earlier, upon their death.
6.4    Installment Amounts.  For purposes of this Section 6, installment payments shall be determined by dividing the value of the Participant’s Account at the time of such installment by the number of payments remaining.  Except as elected otherwise for Plan Years prior to the 2009 Plan Year, installment payments other than in-service distributions shall commence in the next February following the triggering distribution event, or, for Specified Employees undergoing a Separation From Service triggering event, as soon as is practicable at least six months and one day after the date upon which they incur a Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends.  However, in no event may installment payments be made over a period exceeding fourteen years following the first installment, even if the payments are postponed pursuant to an election made under Section 6.2 hereof.  In-service distributions will commence in the February of the specified year.
6.5    Unforeseeable Emergency Distributions.  With the consent of the Administrator, a Participant may withdraw up to one hundred percent (100%) of his or her Account as may be 

10

required to meet a sudden Unforeseeable Emergency of the Participant.  Such distribution may only be made if the amounts distributed with respect to an Unforeseeable Emergency may not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).
6.6    Scheduled In-Service Distribution.  A Participant may elect, as provided in his or her Participant deferral election, to receive one or more scheduled in-service (i.e., commencing while employed by the Company, or, for outside director Participants, while serving as a Board member) distributions relating to the Plan Year to which the deferral election relates.  Such in-service distributions may only be scheduled for years at least two full calendar years following the end of the calendar year to which the deferrals relate. Participants may elect to receive in-service distributions of deferrals in annual installments of up to five years.
EXAMPLE:  In the December, 2005 open enrollment period, an Eligible Participant elects to receive an in-service distribution of 50% of her 2006 plan deferrals, plus earnings and losses thereon, in 2009.  This includes a variable compensation plan bonus paid in 2007 but earned in 2006.  Because the scheduled in-service distribution is at least two full calendar years following the end of 2006 (the end of the year to which the deferrals relate), the election is permissible.
Each scheduled in-service distribution may only be postponed in accordance with Section 6.2 hereof.  In the event a Participant incurs a Separation From Service prior to receiving the first scheduled payment, then the scheduled in-service distribution election shall be without further force and effect and the applicable Separation From Service distribution provisions of the Plan and the Participant’s deferral election shall control.  Similarly, in the event a Participant incurs a Separation From Service after receiving the first scheduled in-service distribution payment, and if the Separation From Service is not pursuant to Retirement, Disability or death, then any scheduled future installments of the in-service distribution election shall be without further force and effect and the applicable Separation From Service distribution provisions of the Plan and the Participant’s deferral election shall control.  If, however, a Participant incurs a Separation From Service due to his or her Retirement, Disability or death after receiving their first scheduled in-service distribution payment, then the scheduled in-service distributions will be made according to their schedule and will take precedence over the Participant’s other deferral elections; provided, however, that the first scheduled payment following the Separation From Service for a Specified Employee shall be paid on a date that is at least six months and one day following Separation From Service, but no later than the end of the calendar year in which such six month and one day period ends (or, if earlier, upon the death of the Specified Employee).  
6.7    Death.  Except with respect to certain in-service distributions as provided below, if a Participant dies, his or her designated Beneficiary or Beneficiaries will receive the balance of his or her Account in a lump-sum.  Moreover, if such death occurs prior to a Separation From Service, the 

11

Account shall vest 100% as to any previously unvested Account balance.  Distribution to the Beneficiary or Beneficiaries will be made as soon as is practicable in the year following the year of death.
A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries by giving notice to the Administrator on a form designated by the Administrator (spousal consent to such change may be required on the form designated by the Administrator).  If more than one person is designated as the Beneficiary, their respective interests shall be as indicated on the designation form.
If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant’s Account, the amount as to which there is no designated Beneficiary will be paid to his or her surviving spouse or, if none, to his or her estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan).
6.8    Notice to Trustee.  The Administrator will notify the Trustee in writing whenever any Participant or Beneficiary is entitled to receive benefits under the Plan.  The Administrator’s notice shall indicate the form, amount and frequency of benefits that such Participant or Beneficiary shall receive.
6.9    Time of Distribution.  In no event will distribution to a Participant be made later than the date specified by the Participant in his or her election to defer Compensation; provided, however, that if a Participant is a Specified Employee, his or her election shall be subject to the six (6) month distribution delay requirements of the Plan and Code Section 409A.
6.10    Limitation on Distributions to Covered Employees Prior to a Change of Control.  Notwithstanding any other provision of this Article VI, in the event that, prior to a Change of Control, the Participant is a “covered employee” as that term is defined in Section 162(m)(3) of the Code, or would be a covered employee if his or her Account were distributed in accordance with his or her election, and the Administrator reasonably anticipates that Participant’s scheduled Plan distributions would cause the Employer to forego an income tax deduction with respect to such distribution by virtue of Code Section 162(m), then such Participant’s distributions shall be delayed until the earlier of (i) the earliest date at which the Administrator reasonably anticipates that the Employer’s deduction related to the distribution will not be limited by virtue of Code Section 162(m), or (ii) the calendar year in which the Participant undergoes a Separation From Service, subject to complying with any six (6) month distribution delay requirements of this Plan and Code Section 409A.
6.11    Domestic Relations Order Distributions.  The Committee, in its sole discretion, may accelerate a payment (or payments) make such payments to an individual other than the Participant as necessary to comply with the terms of a Domestic Relations Order.
6.12    Conflicts of Interest and Ethics Rules Distributions.  The Committee, in its sole discretion, may accelerate a payment (or payments) as necessary (i) for any U.S. federal officer or 

12

employee in the executive branch of the U.S. federal government to comply with an ethics agreement with the U.S. federal government, or (ii) to avoid violating a U.S. federal, state, local or foreign ethics law or conflicts of interest law, as specified under Code Section 409A.
6.13    FICA and Related Income Tax Distribution.  The Committee, in its sole discretion, may permit a distribution from a Participant’s Account sufficient to pay any FICA Amounts due upon the vesting of any Company contribution as well as to satisfy the income tax withholding requirements with respect to the FICA Amount and income tax payments under this Section 6.13.  In no event may the total payment under this Section 6.13 exceed the aggregate of the FICA Amount and the related income tax withholding. 
6.14    State, Local and Foreign Tax Distribution.  The Committee, in its sole discretion, may permit a distribution from a Participant’s Account sufficient to pay any state, local or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan prior to the scheduled distribution of such amount.  In the event the Committee exercises such discretion, the Committee may also permit a distribution sufficient to pay related income tax withholding in accordance with Code Section 409A.  In no event may the total payment under this Section 6.14 exceed the aggregate amount of such taxes due.
6.15    Code Section 409A Distribution.  In the event that the Plan fails to satisfy the requirements of Code Section 409A, then the Committee, in its sole discretion, may permit a distribution from a Participant’s Account up to the maximum amount required to be included in income as a result of the failure to comply with Code Section 409A. 
6.16    Tax Withholding.  Payments under this Article VI shall be subject to all applicable withholding requirements for state and federal income taxes and to any other federal, state or local taxes that may be applicable to such payments.
6.17    Special 2008 Election.  Notwithstanding other Plan provisions, pursuant to and in accordance with IRS Notice 2007-86, in the 2008 Plan Year, the Committee had the discretion to permit Participants to change the time and form or payment of Accounts with respect to amounts credited on and after January 1, 2005 so long as the change did not (i) accelerate payment of amounts that would otherwise be payable in a future year into the year of the new election, and (ii) apply to amounts that would otherwise be paid in the year of the election.
ARTICLE VII     
Change of Control
7.1    No New Participants Following Change of Control.  No individual may commence participation in the Plan following a Change of Control Event.
7.2    Discretionary Termination and Accelerated Plan Distributions 30 Days Prior to or Within 12 Months Following a Change in Control.  The Administrator, in its sole discretion, may 

13

terminate the Plan and accelerate all scheduled Plan distributions within 30 days prior to or 12 months following a Change in Control Event by means of an irrevocable election; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A. 
ARTICLE VIII     
Termination Due to Corporate Dissolution or Pursuant to Bankruptcy Court Approval
8.1    Corporate Dissolution.  The Administrator, in its sole discretion, may terminate the Plan and accelerate all scheduled Plan distributions within 12 months following a Corporate Dissolution; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.
8.2    Bankruptcy Court Approval.  The Administrator, in its sole discretion, may terminate the Plan and accelerate all scheduled Plan distributions pursuant to Bankruptcy Court Approval; provided that such termination and distribution acceleration complies with the requirements of Code Section 409A.
ARTICLE IX     
Amendment and Termination
9.1    Amendment by Employer.  The Employer reserves the authority to amend the Plan.  Any such change notwithstanding, no Participant’s Account shall be reduced by such change below the amount to which the Participant would have been entitled if he had voluntarily left the employ of the Employer immediately prior to the date of the change.  The Employer may from time to time make any amendment to the Plan that may be necessary to satisfy Code Section 409A or ERISA.
9.2    Retroactive Amendments.  An amendment made by the Employer in accordance with Section 9.1 may be made effective on a date prior to the first day of the Plan Year in which it is adopted if such amendment is necessary or appropriate to enable the Plan and Trust to satisfy the applicable requirements of Code Section 409A or ERISA or to conform the Plan to any change in federal law or to any regulations or rulings thereunder, so long as such retroactive amendment is permitted by applicable law.
9.3    Plan Deferral Termination.  The Employer has adopted the Plan with the intention and expectation that deferrals will be permitted indefinitely.  However, the Employer has no obligation to maintain the Plan for any length of time and may discontinue future Compensation deferrals under the Plan in advance of any Plan Year by written notice delivered to Eligible Participants without any liability for any such discontinuance.
9.4    Distribution upon Certain Plan Terminations.  Upon termination of the Plan other than pursuant to a Change of Control Event, Corporate Dissolution or pursuant to a Bankruptcy Court Approval, no further Deferral Contributions or Employer Contributions shall be made under the 

14

Plan, but Accounts of Participants maintained under the Plan at the time of termination shall continue to be governed by the terms of the Plan until paid out in accordance with the terms of the Plan, Participants’ deferral elections and the requirements of Code Section 409A, which latter shall take precedence over the terms of the Plan and Participants’ deferral elections in the event of any conflict.
ARTICLE X     
The Trust
10.1    Establishment of Trust.  The Employer shall establish the Trust between the Employer and the Trustee, in accordance with the terms and conditions as set forth in a separate agreement, under which assets are held, administered and managed, subject to the claims of the Employer’s creditors in the event of the Employer’s insolvency, until paid to Participants and their Beneficiaries as specified in the Plan.  The Trust is intended to be treated as a grantor trust under the Code, and the establishment of the Trust is not intended to cause Participants to realize current income on amounts contributed thereto.    
ARTICLE XI     
Miscellaneous
11.1    Limitation of Rights.  Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against the Employer, Administrator or Trustee, except as provided herein; and in no event will the terms of employment or service of any Participant be modified or in any way affected hereby
11.2    Nontransferability; Domestic Relations Orders.  The right of any Participant, any Beneficiary, or any other person to the payment of any benefits under this Plan shall not be assigned, transferred, pledged or encumbered; provided, however, that a Deferral Account hereunder may be transferred to a Participant’s former spouse pursuant to a Domestic Relations Order.
11.3    Facility of Payment.  In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may direct the Trustee to disburse such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient.  The receipt by such person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Trust for the payment of benefits hereunder to such recipient.
11.4    Information between Employer and Trustee.  The Employer agrees to furnish the 

15

Trustee, and the Trustee agrees to furnish the Employer with such information relating to the Plan and Trust as may be required by the other in order to carry out their respective duties hereunder, including without limitation information required under the Code or ERISA and any regulations issued or forms adopted thereunder.
11.5    Notices.  Any notice or other communication in connection with this Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified:
(a)    If it is sent to the Employer or Administrator, it will be at the address specified by the Employer;
(b)    If it is sent to the Trustee, it will be sent to the address set forth in the Trust Agreement; or, in each case at such other address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressor’s then effective notice address.
11.6    Governing Law.  The Plan will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the state of California. 
11.7    No Guarantees Regarding Tax Treatment; Disclaimer.  Participants (or their Beneficiaries) will be completely responsible for all taxes with respect to any benefits under the Plan.  The Administrator, the Board of Directors and the Employer make no guarantees regarding the tax treatment to any person of any deferrals or payments made under the Plan.  The Plan is intended to comply with the provisions of Code Section 409A.  Neither the Employer nor any of their employees shall have any liability to any Participant should the Plan or its administration fail to comply with Code Section 409A.
ARTICLE XII     
Plan Administration
12.1    Powers and responsibilities of the Administrator.  The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA.  The Administrator’s powers and responsibilities include, but are not limited to, the following:
(a)    To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;
(b)    The discretionary authority to construe and interpret the Plan, its interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under the Plan;
(c)    To decide all questions concerning the Plan and the eligibility of any person to 

16

participate in the Plan;
(d)    To administer the claims and review procedures specified in Section 12.3;
(e)    To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;
(f)    To determine the person or persons to whom such benefits will be paid;
(g)    To authorize the payment of benefits;
(h)    To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;
(i)    By written instrument, to allocate and delegate its responsibilities. 
12.2    Nondiscriminatory Exercise of Authority.  Whenever, in the administration of the Plan, any discretionary action by the Administrator is required, the Administrator shall exercise its authority in a nondiscriminatory manner so that all persons similarly situated will receive substantially the same treatment.
12.3    Claims and Review Procedures.  
(a)    Purpose.  Every Participant or Beneficiary (or his or her representative who is authorized in writing by the Claimant to act on his or her behalf) (hereinafter collectively, “Claimant”) shall be entitled to file with the Administrator (and subsequently with the individual(s) designated to review claims appealed after being initially denied by the Administrator (the “Review Panel”)) a written claim for benefits under the Plan.  The Administrator and Review Panel shall each be able to establish such rules, policies and procedures, consistent with ERISA and the Plan, as it may deem necessary or appropriate in carrying out its duties and responsibilities under this Section 12.3.  In the case of a denial of the claim, the Administrator or Review Panel, as applicable, shall provide the Claimant with a written or electronic notification that complies with Department of Labor Regulation Section 2520.104b-1(c)(1).
(b)    Denial of Claim.  If a claim is denied by the Administrator (or its authorized representative), in whole or in part, then the Claimant shall be furnished with a denial notice that shall contain the following:
(i)    specific reason(s) for the denial;
(ii)    reference to the specific Plan provision(s) on which the denial is based;
(iii)    a description of any additional material or information necessary for the 

17

Claimant to perfect the claim, and an explanation of why the material or information is necessary; and
(iv)    an explanation of the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a denial on review (as set forth in Section 12.4 below).
The denial notice shall be furnished to the Claimant no later than ninety (90)-days after receipt of the claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the claim.  If the Administrator determines that an extension of time for processing is required, then notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90)-day period.  In no event shall such extension exceed a period of ninety (90)-days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefits determination.
(c)    Claim Review Procedure.  The Claimant may request review of the denial at any time within sixty (60) days following the date the Claimant received notice of the denial of his or her claim.  The Administrator shall afford the Claimant a full and fair review of the decision denying the claim and, if so requested, shall:
(i)    provide the Claimant with the opportunity to submit written comments, documents, records and other information relating to the claim for benefits;
(ii)    provide that the Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information (other than documents, records and other information that is legally-privileged) relevant to the Claimant’s claim for benefits; and
(iii)    provide for a review that takes into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
(d)    If the claim is subsequently also denied by the Review Panel, in whole or in part, then the Claimant shall be furnished with a denial notice that shall contain the following:
(i)    specific reason(s) for the denial;
(ii)    reference to the specific Plan provision(s) on which the denial is based; and
(iii)    an explanation of the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following the denial on review.

18

(e)    The decision on review shall be issued within sixty (60) days following receipt of the request for review.  The period for decision may, however, be extended up to one hundred twenty (120) days after such receipt if the Review Panel determines that special circumstances require extension.  In the case of an extension, notice of the extension shall be furnished to the Claimant prior to the expiration of the initial sixty (60)-day period.  In no event shall such extension exceed a period of sixty (60) days from the end of such initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefits determination.
(f)    Special Procedure for Claims Due to Disability.  To the extent an application for distribution as a result of a Disability requires the Administrator or the Review Panel, as applicable, to make a determination of Disability under the terms of the Plan, then such determination shall be subject to all of the general rules described in this Article, except as they are expressly modified by this Section.
(i)    The initial decision on the claim for a Disability distribution will be made within forty-five (45) days after the Plan receives the Claimant’s claim, unless special circumstances require additional time, in which case the Administrator will notify the Claimant before the end of the initial forty-five (45)-day period of an extension of up to thirty (30) days.  If necessary, the Administrator may notify the Claimant, prior to the end of the initial thirty (30)-day extension period, of a second extension of up to thirty (30) days.  If an extension is due to the Claimant’s failure to supply the necessary information, then the notice of extension will describe the additional information and the Claimant will have forty-five (45) days to provide the additional information.  Moreover, the period for making the determination will be delayed from the date the notification of extension was sent out until the Claimant responds to the request for additional information.  No additional extensions may be made, except with the Claimant’s voluntary consent.  The contents of the notice shall be the same as described in Section 13.3(b) above.  If a disability distribution claim is denied in whole or in part, then the Claimant will receive notification, as described in Section 13.3(b).
(g)    If an internal rule, guideline, protocol or similar criterion is relied upon in making the adverse determination, then the denial notice to the Claimant will either set forth the internal rule, guideline, protocol or similar criterion, or will state that such was relied upon and will be provided free of charge to the Claimant upon request (to the extent not legally-privileged) and if the Claimant’s claim was denied based on a medical necessity or experimental treatment or similar exclusion or limit, then the Claimant will be provided a statement either explaining the decision or indicating that an explanation will be provided to the Claimant free of charge upon request.
(h)    Any Claimant whose application for a Disability distribution is denied in whole or in part, may appeal the denial by submitting to the Review Panel a request for a review of the application within one hundred and eighty (180) days after receiving notice of the denial.  The request for review shall be in the form and manner prescribed by the Review Panel.  In the event of such an appeal for review, the provisions of Section 13.3(c) regarding the Claimant’s rights and responsibilities shall apply.  Upon request, the Review Panel will identify any medical or vocational 

19

expert whose advice was obtained on behalf of the Review Panel in connection with the denial, without regard to whether the advice was relied upon in making the determination.  The entity or individual appointed by the Review Panel to review the claim will consider the appeal de novo, without any deference to the initial denial.  The review will not include any person who participated in the initial denial or who is the subordinate of a person who participated in the initial denial.
(i)    If the initial Disability distribution denial was based in whole or in part on a medical judgment, then the Review Panel will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment, and who was neither consulted in connection with the initial determination nor is the subordinate of any person who was consulted in connection with that determination; and upon notifying the Claimant of an adverse determination on review, include in the notice either an explanation of the clinical basis for the determination, applying the terms of the Plan to the Claimant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request.
(j)    A decision on review shall be made promptly, but not later than forty-five (45) days after receipt of a request for review, unless special circumstances require an extension of time for processing.  If an extension is required, the Claimant will be notified before the end of the initial forty-five (45)-day period that an extension of time is required and the anticipated date that the review will be completed.  A decision will be given as soon as possible, but not later than ninety (90) days after receipt of a request for review.  The Review Panel shall give notice of its decision to the Claimant; such notice shall comply with the requirements set forth in paragraph (h) above.  In addition, if the Claimant’s claim was denied based on a medical necessity or experimental treatment or similar exclusion, then the Claimant will be provided a statement explaining the decision, or a statement providing that such explanation will be furnished to the Claimant free of charge upon request.  The notice shall also contain the following statement:  “You and your Plan may have other voluntary alternative dispute resolution options, such as mediation.  One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.” 
12.4    Exhaustion of Claims Procedure and Right to Bring Legal Claim.  No action in law or equity shall be brought more than one (1) year after the Review Panel’s affirmation of a denial of the claim, or, if earlier, more than four (4) years after the facts or events giving rise to the Claimant’s allegation(s) or claim(s) first occurred.
12.5    Plan’s Administrative Costs.  The Employer shall pay all reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator and the Trustee in administering the Plan and Trust.

20

IN WITNESS WHEREOF, the Employer by its duly authorized officer(s), has caused this Plan to be adopted initially effective January 1, 2005, and amended and restated as of November 14, 2006, November 20, 2008, November 20, 2009 and January 1, 2011.
	
		
	 
	COHERENT, INC.

	 
	 

	By:
	 /s/ HELENE SIMONET

	 
	Helene Simonet

	 
	 

	Date:
	February 2, 2012

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00198-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00198-of-00352.parquet"}]]