Effective as from January 25, 2010

by and
between

TEMASEK INVESTMENTS INC.

as Optionor

and

CONSTITUTION MINING CORP.

as Optionee

_________________________________

MINERAL RIGHT OPTION AGREEMENT

__________________________________

 
 

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MINERAL RIGHT OPTION AGREEMENT

THIS MINERAL RIGHT OPTION AGREEMENT (hereinafter the “Agreement”) made effective
as of the 25th day of January, 2010 (hereinafter the “Effective Date”) is
executed by and between:

TEMASEK INVESTMENTS INC., a company duly incorporated and organized under the
laws of Panama with address for delivery and notice located at 16th Floor,
MMG  Tower, Ubanzacion Marbella, 53rd E Street, Panama City, Panama (hereinafter
the "Optionor" or “TEMASEK”) of the first part; and

CONSTITUTION MINING CORP., a company organized under the laws of Delaware,
United States of America, with address for delivery and notice located at Pasaje
Mártir Olaya 129, Oficina 1203, Centro Empresarial José Pardo Torre A,
Miraflores, Lima, Perú, (hereinafter the “Optionee” or “CONSTITUTION”), of the
second part.

Optionor and Optionee collectively referred to as the Parties, and individually
and indistinctively referred to as the Party.

WHEREAS

(i)           Both Parties are mining exploration and development companies with
experience in the identification and development of mining projects,
particularly in the region of South America.

(ii)           CONSTITUTION is interested in acquiring the ownership and title
of certain claim applications, claims, and assorted mining rights, including all
obligations arisen therefrom, with respect to certain areas located in Peru as
detailed in Annex I hereto (hereinafter the “Mineral Rights”) that are of the
property and title of Minera Saramiriza S.A.C.., a company duly incorporated and
organized under the laws of Peru (hereinafter “MINERA SARAMIRIZA”).

(iii)           TEMASEK is the indirect beneficial owner of 100% interest in the
Mineral Rights through the direct and indirect control of different wholly owned
subsidiaries, as detailed below.

(iii)           The ownership of TEMASEK in the Mineral Rights is evidenced
through (a) the direct ownership of 1 share of the shareholding of MINERA
SARAMIRIZA, and (b) the direct ownership of 100% of the outstanding shareholding
in WOODBURN INVESTMENTS, INC., a company duly incorporated and organized under
the laws of Panama, with address for delivery and notice at 16th Floor,
MMG  Tower, Ubanzacion Marbella, 53rd E Street, Panama City, Panama (hereinafter
“WOODBURN”), being WOODBURN the registered owner of 999 shares in MINERA
SARAMIRIZA. WOODBURN and TEMASEK are the registered owners of 100% of the
outstanding shareholding in MINERA SARAMIRIZA represented in 1,000 shares.
 
 
 
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(iv)           The Optionor has agreed to grant three exclusive options
(hereinafter, collectively referred to as the “Options”, and each individually
and indistinctively referred to as the “Option”) to the Optionee, and the
Optionee has agreed to receive the Options, each such Options entitling the
Optionor to acquire a one third (1/3) undivided interest in and to the Mineral
Rights in the manner hereto below described, for an aggregate interest of a one
hundred percent (100%) undivided interest if all three Options are exercised, as
detailed herein.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
and agreements hereinafter set forth the parties agree that:

REPRESENTATIONS, WARRANTIES AND COVENANTS

1.1           The Optionor represents, warrants and covenants (representation,
warrants and covenants that are extensive, when applicable, to the situation of
its subsidiaries WOODBURN and MINERA SARAMIRIZA) to and with the Optionee that:

a) it has been duly incorporated and validly exists as a corporation in good
standing under its laws of origin;

b) it is qualified to do business in those jurisdictions where it is necessary
to fulfil its obligations under this Agreement, and it has the full power and
authority to enter into this Agreement and any agreement or instrument referred
to or contemplated by this Agreement;

c) it has the requisite power, authority and capacity to fulfil its obligations
under this Agreement;

d) the execution and delivery of this Agreement and the agreements contemplated
hereby have been duly authorized by all necessary action on its part;

e) prior to the Effective Date, it has obtained all authorizations, approvals,
including regulatory approval, or waivers that may be necessary or desirable in
connection with the transactions contemplated in this Agreement;

f) there are no other consents, approvals or conditions precedent to the
performance of this Agreement which have not been obtained;

g) it is not in breach of any laws, ordinances, statutes, regulations, by-laws,
orders or decrees to which is subject or which apply to it;

h) the making of this Agreement and the completion of the transactions
contemplated hereby and the performance of and compliance with the terms hereof
does not and will not conflict with or result in a breach of or violate any of
the terms, conditions or provisions of any law, judgment, order, injunction,
decree, regulation or ruling of any court or governmental authority, domestic or
foreign, to which the Optionor is subject;

i) it is now, and will also be thereafter at the time of legal transfer of
interests in the Mineral Rights when any of the Options are exercised, the
registered and beneficial owner of the Mineral Rights free and clear of all
liens, charges and claims of others and no taxes, royalties or lease payments or
like amounts are due in respect of any of the mineral claims that comprised the
Mineral Rights;
 
 
 
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j) there is no adverse claim or challenge against or to the ownership of or
title to the interest it has on WOODBURN and MINERA SARAMIRIZA and on the
Mineral Rights, nor to its knowledge is there any basis therefore, and there are
no outstanding agreements or options to acquire or purchase any shares in
WOODBURN and MINERA SARAMIRIZA and on the Mineral Rights or any portion thereof,
and no person other than the Optionor pursuant to the provisions hereof, has any
interest whatsoever in WOODBURN and MINERA SARAMIRIZA and in the production from
any of the mineral claims comprising the Mineral Rights;

k) the Mineral Rights have been duly and validly located and recorded in a good
and miner-like manner pursuant to applicable mining laws in Peru;

l) all permits and licenses covering the Mineral Rights as they currently stand
have been duly and validly issued pursuant to applicable mining laws in Peru and
are in good standing by the proper doing and filing of assessment work and the
payment of all fees, taxes and rentals in accordance with the requirements of
applicable mining laws in Peru and the performance of all other actions
necessary in that regard; and

m) it requires no third party consent of any kind to enter into this Agreement
and grant the Options contemplated hereby.

1.2           The Optionee represents, warrants and covenants to and with the
Optionor that:
 
a) it has been duly incorporated and validly exists as a corporation in good
standing under its laws of origin;
 
b) neither the execution and delivery of this Agreement by the Optionee nor the
performance by the Optionee of its obligations hereunder conflicts with the
Optionee’s constating documents or any agreement to which it is bound;
 
c) the execution, delivery and performance by the Optionee of this Agreement and
any other agreement or instrument to be executed and delivered by it hereunder
and the consummation by it of all the transactions contemplated hereby and
thereby have been duly authorised by all necessary corporate action on the part
of the Optionee; and
 
d) excepting only as otherwise disclosed herein, the Optionee is not subject to,
or a party to, any charter or by-law restriction, any law, any claim, any
encumbrance or any other restriction of any kind or character which would
prevent the execution of its obligations as hereof or the consummation of the
transaction contemplated by this Agreement or any other agreement or instrument
to be executed and delivered by the Optionee hereunder.
 
The representations and warranties contained hereof are provided for the
exclusive benefit of the other Party and a breach of any one or more thereof may
be waived by the non-breaching Party in whole or in part at any time without
prejudice to its rights in respect of any other breach of the same or any other
representation or warranty.
 
GRANT AND EXERCISE OF OPTIONS
 
2.1           The Optionor hereby grants to the Optionee the sole and exclusive
right and option to acquire a one hundred percent (100%) undivided interest in
the Mineral Rights, such 100% interest to be free and clear of all liens,
charges, encumbrances, security interests and adverse claims.
 
 
 
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2.2           The Parties agreed that the Optionee may exercise the Options in
three separate  increments, as described below, each such increment being its
own Option.
 
2.3           The Optionee agrees to issue, within 30 business days as from the
Effective Date, 500,000 Optionee Shares to the order and the direction of the
Optionor, or whoever persons the Optionor indicates.
 
(a)           33% Option
 
The Optionee may exercise the initial thirty-three percent (33%) option to
acquire a 33% interest in the Mineral Rights in accordance with the terms set
out below (hereinafter, the “33% Option”).
 
In order to exercise the 33% Option the Optionee, within 12 months as from the
Effective Date, shall:
 
(i) have issued the 500,000 Optionee Shares within 30 days of the Effective
Date;
 
(ii) pay $ 250,000 (United States Dollars Two Hundred Fifty) to the order and
the direction of the Optionor; and
 
(ii) issue 1,000,000 Optionee Shares to the order and the direction of the
Optionor, or whoever persons the Optionor indicates.
 
For the purposes of this Agreement the Optionee is deemed to have fully
exercised the 33% Option only once all three obligations described above in
points (i), (ii) and (iii) have been completed.
 
Upon exercise of the 33% Option by the Optionee, the Optionor will immediately
proceed to transfer to Optionee, or to the person the Optionee indicates, 33% of
all of the outstanding shareholding in WOODBURN.
 
(c)           66% Option
 
Subject to the prior and due and complete exercise by the Optionee of the 33%
Option in accordance with the paragraph before, the Optionee may exercise the
option to acquire an additional thirty-three percent (33%) interest in the
Mineral Rights, in accordance with the terms set out below (hereinafter, the
“66% Option”).
 
In order to exercise the 66% Option the Optionee, within 24 months as from the
Effective Date, shall:
 
(i) have exercised and completed the 33% Option; and
 
(ii) pay $ 1,000,000 (United States Dollars One Million) to the order and the
direction of the Optionor; and
 
(iii) issue 1,000,000 Optionee Shares to the order and the direction of the
Optionor, or whoever persons the Optionor indicates.
 
 
 
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For the purposes of this Agreement the Optionee is deemed to have fully
exercised the 66% Option only once all three obligations described above in
points (i), (ii) and (iii) have been completed.
 
Upon exercise of the 66% Option by the Optionee, the Optionor will immediately
proceed to transfer to Optionee, or to the person the Optionee indicates, an
additional thirty-three percent (33%) of all the outstanding shareholding in
WOODBURN.
 
(d)           100% Option
 
Subject to the prior and due and complete exercise by the Optionee of the 66%
Option in accordance with the paragraph before, the Optionee may exercise the
third and final option to acquire an additional 34% interest in the Mineral
Rights, in accordance with the terms set out below (hereinafter, the “100%
Option”).
 
In order to exercise the 100% Option the Optionee, within 36 months as from the
Effective Date, shall:
 
(i) have exercised and completed the 66% Option; and
 
(ii) pay $ 2,000,000 (United States Dollars Two Million) to the order and the
direction of the Optionor; and
 
(iii) issue 2,000,000 Optionee Shares to the order and the direction of the
Optionor, or whoever persons the Optionor indicates.
 
For the purposes of this Agreement the Optionee is deemed to have fully
exercised the 100% Option only once all three obligations described above in
points (i), (ii) and (iii) have been completed.
 
Upon exercise of the 100% Option by the Optionee, the Optionor will immediately
proceed to transfer to Optionee, or to the person the Optionee indicates, the
final and remaining 34% of all the outstanding shareholding in WOODBURN.
Additionally, upon exercise of the 100% Option, the Optionor shall become holder
of the one (1) share that currently holds in MINERA SARAMIRIZA as nominee and on
trust for the exclusive and sole benefit and interest of the Optionee. The
Optionor hereby undertakes to the Optionee at all times to exercise all rights
in respect of the share that holds in MINERA SARAMIRIZA strictly in accordance
with the Optionee instructions.
 
On completion of the 100% Option the Optionee shall be the owner of one hundred
percent (100%) undivided interest in the Mineral Rights through the direct
ownership of 100% of the outstanding shareholding of WOODBURN and indirect
ownership of 100% of the outstanding shareholding of MINERA SARAMIRIZA.

NET RETURNS ROYALTY
 
3.1           Upon completion by Optionee of the 100% Option, the Optionee shall
recognize to the Optionor a 2.5% Net Returns Royalty, where Net Returns Royalty
has the meaning set out in Annex II (hereinafter the “NET RETURN ROYALTY”). The
NET RETURN ROYALTY will be calculated and paid to the Optionor or to its
appointed nominees in accordance with the Annex II.
 
3.2           As from 90 days from the exercise and completion of the 100%
Option, the Optionee shall have the right to acquire 1% of NET RETURN ROYALTY
from the Optionor for the total amount of $ 2,000,000 (United States Dollars Two
Million).
 
 
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JOINT VENTURE DEVELOPMENT
 
4.1           Following the due and complete acquisition by the Optionee of 66%
interest in the Mineral Rights under this Agreement and with the Optionee
failing to acquire the 100% interest in the Mineral Rights, for any reason
whatsoever, the Optionor and the Optionee will thereby be deemed to form a Joint
Venture for the purpose of carrying out further development work and production
on the Mineral Rights and will, in good faith, negotiate and execute a Joint
Venture Agreement, under which the Optionee will be the operator of the mining
project to develop. The interest of the Parties in the Mineral Rights shall be
the interest of the Parties under the Joint Venture Agreement (hereinafter the
“Joint Venture Development”).
 
4.2           Under the Joint Venture Development, the Optionee shall have the
whole responsibility for developing a feasible mining project and all necessary
facilities for the extraction, crushing, processing and beneficiation of
commercially valuable minerals, including all necessary facilities for
compliance with the applicable laws, including environmental laws governing
mining activity in Peru (hereinafter the “Feasible Project”). All necessary
costs and investment required for the developing of a Feasible Project shall be
supported exclusively by the Optionee. Optionor shall have a carried free
interest in the Mineral Rights.
 
4.3           If under the Joint Venture Development, a Feasible Project is not
developed within 3 years as from the Effective Date, the Optionee shall pay to
the Optionor and advance minimum mining royalty per year of $ 500,000 (United
States Dollars Five Hundred Thousand), that will be deducted from the NET RETURN
ROYALTY (hereinafter the “Advance Minimum Royalty”).

 
OBLIGATIONS OF OPTIONOR DURING OPTION PERIOD
 
5.1           During the 36 months as from the Effective Date, the Optionor
will:
 
a) maintain in good standing the Mineral Rights that are in good standing on the
date hereof by the performance of all actions (except for those economic
obligations arisen as from the Effective Date of this Agreement, which shall be
of the responsibility of the Optionee) which may be necessary under Peruvian law
in that regard and in order to keep such Mineral Rights free and clear of all
liens and other charges arising from the Optionee’s activities thereon except
those at the time contested in good faith by the Optionee;

b) maintain in good standing both WOODBURN and MINERA SARAMIRIZA, and the
shareholding of both companies free and clear of all liens;
 
c) restrain from issuing any additional shares or cause to issue any additional
shares either in WOODBURN and/or MINERA SARAMIRIZA;
 
 
 
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d) restrain from transferring any of its shares in WOODBURN and/or in MINERA
SARAMIRIZA to any other third party and/or cause to transfer any shares in
MINERA SARAMIRIZA to any other third party;
 
e) permit the directors, officers, employees and designated consultants of the
Optionee, at their own risk, access to the Mineral Rights at all reasonable
times, and providing the Optionee agrees to indemnify the Optionor against and
to save the Optionor harmless from all costs, claims, liabilities and expenses
that the Optionor may incur or suffer as a result of any injury (including
injury causing death) to any director, officer, employee or designated
consultant of the Optionee while on the Mineral Rights;
 
OBLIGATIONS OF OPTIONEE DURING OPTION PERIOD
 
6.1           During the 36 months as from the Effective Date, the Optionee
will:
 
a) do all work on the Mineral Rights in a good and workmanlike fashion and in
accordance with all applicable laws, regulations, orders and ordinances of any
governmental authority; and
 
b) indemnify and save the Optionor harmless in respect of any and all costs,
claims, liabilities and expenses arising out of the Optionee’s activities
through WOODBURN and MINERA SARAMIRIZA and/or on the Mineral Rights.
 
ARBITRATION
 
7.1           All questions or matters in dispute with respect to the
interpretation of this Agreement will, insofar as lawfully possible, be
submitted to arbitration pursuant to the terms hereof using “final offer”
arbitration procedures.
 
7.2           It will be a condition precedent to the right of any party to
submit any matter to arbitration pursuant to the provisions hereof, that any
party intending to refer any matter to arbitration will have given not less than
10 days’ prior written notice of its intention so to do to the other party
together with particulars of the matter in dispute.
 
7.3           On the expiration of such 10 days, the party who gave such notice
may proceed to commence procedure in furtherance of arbitration as provided in
this Section.
 
7.4           The party desiring arbitration (the “First Party”) will nominate
in writing three proposed arbitrators, and will notify the other party (the
“Second Party”) of such nominees, and the other party will, within 10 calendar
days after receiving such notice, either choose one of the three or recommend
three nominees of its own. All nominees of either party must hold accreditation
as either a lawyer, accountant or mining engineer. If the First Party fails to
choose one of the Second Party’s nominees then all six names shall be placed
into a hat and one name shall be randomly chosen by the president of the First
Party and that person if he/she is prepared to act shall be the nominee. Except
as specifically otherwise provided in this Section the arbitration herein
provided for will be conducted in accordance with the UNCITRAL Arbitration Rules
and the place of arbitration shall be Reno, Nevada, United States of America.
The parties shall thereupon each be obligated to proffer to the Arbitrator
within 21 calendar days of his/her appointment a proposed written solution to
the dispute and the arbitrator shall within 10 calendar days of receiving such
proposals choose one of them without altering it except with the consent of both
parties.
 
 
 
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7.5           The expense of the arbitration will be paid as specified in the
award.
 
7.6           The parties agree that the award of the arbitrator will be final
and binding upon each of them.
 
DEFAULT AND TERMINATION
 
8.1           If at any time during the term of this Agreement either party
fails to perform any obligation hereunder or any representation or warranty
given by it proves to be untrue, then the other party may terminate this
Agreement (without prejudice to any other rights it may have) providing:
 
 
(i)
it first gives to the party allegedly in default a notice of default containing
particulars of the obligation which such has not performed, or the warranty
breached;

 
 
(ii)
the other party does not dispute the default, then if it is reasonably possible
to cure the default without irreparable harm to the non-defaulting party, the
defaulting party does not, within 30 calendar days after delivery of such notice
of default, cure such default by appropriate payment or commence to correct such
default and diligently prosecute the matter until it is corrected.

NOTICES

9.1           All notices and other communications in connection with this
Agreement must be in writing and given by (i) hand delivery (ii) through a major
international courier service, or (iii) facsimile transmissions, in each case
addressed as specified below or in any subsequent notice from the intended
recipient to the party sending the notice. Such notices and communications will
be effective upon delivery if delivered by hand, upon receipt if sent by
international courier service, or upon receipt if sent by facsimile
transmission. Notices shall be addressed as follows:

CONSTITUTION
Pasaje Mártir Olaya 129, Oficina 1203
Centro Empresarial José Pardo Torre A
Miraflores, Lima, Perú

TEMASEK
16th Floor, MMG  Tower
Ubanzacion Marbella
53rd E Street, Panama

GOVERNING LAW

10.1           This assignment agreement and any dispute arising hereunder will
be governed by the laws of the state of Delaware, United States of America,
without giving effect to the conflict of laws provisions thereof.

10.2           Each of the Optionor and the Optionee hereby irrevocable submits
to the exclusive jurisdiction of the courts of the state of Delware, United
States of America, in respect of any action or proceeding brought against it by
the Optionor or the Optionee, respectively, arising under this Agreement.

ENTIRE AGREEMENT

11.1           This Agreement represents the final agreement between the Parties
with respect to the subject matter hereof and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the Parties.
 
 
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EXECUTION IN COUNTERPARTS

11.2           This Agreement is executed in two (2) counterparts and by the
Parties hereto in separate counterparts, each of which when so executed will be
deemed to be an original and both of which when taken together will constitute
one and the same agreement.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first above written.

TEMASEK INVESTMENTS INC.
 
CONSTITUTION MINING CORP.
 
 
By: /s/ Jose Silva                                             
            Jose Silva
By:  /s/ Michael Stocker                               
             Michael Stocker

 

 

 
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ANNEX I

 
Name
 
 
Area (ha)
 
Department
 
Province
 
District
 
Observation
 
Aixa 1
 
 
1000
 
Loreto
 
Datem del Marañon
 
 
Manseriche
 
 
Alana 1
 
600
 
Loreto
 
Datem del Marañon
 
Manseriche-Morona
Overlaps
010188704, 010188604, 010188504
 
Alana 2
 
 
600
 
Loreto
 
Datem del Marañon
 
 
Manseriche- Morona
 
 
Alana 3
 
 
800
 
Loreto
 
Datem del Marañon
 
 
Manseriche
Overlaps 010045107
 
Casandra
1
 
 
1000
 
Loreto
 
Datem del Marañon
 
 
Barranca-Manseriche
 
 
Casandra
2
 
 
1000
 
Loreto
 
Datem del Marañon
 
 
Barranca- Morona
 
 
Casandra
3
 
900
 
Loreto
 
Datem del Marañon
 
 
Barranca- Morona
 
 
Casandra
4
 
 
1000
 
Loreto
 
Datem del Marañon
 
 
Barranca
 
 
Casandra
 5
 
 
1000
 
Loreto
 
Datem del Marañon
 
 
Barranca
 

 
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graphic2 [graphic2.jpg]

 
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ANNEX II

NET RETURNS ROYALTY

Pursuant to the Agreement to which this Exhibit is attached, Optionee (for the
purposes herein the “Payee”) will be entitled to a royalty equal to 2.5% of net
returns (the “Net Returns Royalty”) payable by Optionor (“Payor”) as set forth
below.

Net Returns Royalty

A.     “Net Returns Royalty” means the aggregate of:
 
 
1.
all revenues from the sale or other disposition of ores, concentrates or
minerals produced from the mineral properties arisen as from the Mineral Rights
(the “Properties”); and
 

 
2.
all revenues from the operation, sale or other disposition of any facilities the
cost of which is included in the definition of “Operating Expenses”, “Capital
Expenses” or “Exploration Expenses”; less (without duplication) Working Capital,
Operating Expenses, Capital Expenses and Exploration Expenses.
 

 
B.      “Working Capital” means the amount reasonably necessary to provide for
the operation of the mining operation on the Properties and for the operation
and maintenance of the Facilities for a period of six months.
 
C.      “Operating Expenses” means all costs, expenses, obligations, liabilities
and charges of whatsoever nature or kind incurred or chargeable directly or
indirectly in connection with Commercial Production from the Properties and in
connection with the maintenance and operation of the Facilities, all in
accordance with generally accepted accounting principles, consistently applied,
including, without limiting the generality of the foregoing, all amounts payable
in connection with mining, handling, processing, refining, transporting and
marketing of ore, concentrates, metals, minerals and other products produced
from the Property, all amounts payable for the operation and maintenance of the
Facilities including the replacement of items which by their nature require
periodic replacement, all taxes (other than income taxes), royalties and other
imposts and all amounts payable or chargeable in respect of reasonable overhead
and administrative services.
 
D.       “Capital Expenses” means all expenses, obligations and liabilities of
whatsoever kind (being of a capital nature in accordance with generally accepted
accounting principles) incurred or chargeable, directly or indirectly, with
respect to the development, acquisition, redevelopment, modernization and
expansion of the Properties and the Facilities, including, without limiting the
generality of the foregoing, interest thereon from the time so incurred or
chargeable at a rate per annum from time to time equal to prime rate established
by the Bank of America, New York Branch, New York, plus 2 percent per annum, but
does not include Operating Expenses nor Exploration Expenses.
 
E.         “Exploration Expenses” means all costs, expenses, obligations,
liabilities and charges of whatsoever nature or kind incurred or chargeable,
directly or indirectly, in connection with the exploration and development of
the Properties including, without limiting the generality of the foregoing, all
costs reasonably attributable, in accordance with generally accepted accounting
principles, to the design, planning, testing, financing, administration,
marketing, engineering, legal, accounting, transportation and other incidental
functions associated with the exploration and mining operation contemplated by
this agreement and with the Facilities, but does not include Operating Expenses
nor Capital Expenses.
 
 
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F.          “Facilities” means all plant, equipment, structures, roads, rail
lines, storage and transport facilities, housing and service structures, real
property or interest therein, whether on the Properties or not, acquired or
constructed exclusively for the mining operation on the Properties contemplated
by this Agreement (all commonly referred to as “infrastructure”).
 
G.           “Commercial Production” means the operation of the Properties or
any portion thereof as a producing mine and the production of mineral products
therefrom (but does not include bulk sampling, pilot plant or test operations).

Payment
 
              Net Returns shall be calculated for each calendar quarter in which
Net Returns are realized, and payment as due hereunder shall be made within 30
days following the end of each such calendar quarter. Such payments shall be
accompanied by a statement summarizing the computation of Net Returns and copies
of all relevant settlement sheets. Such quarterly payments are provisional and
subject to adjustment within 90 days following the end of each calendar
year.  Within ninety days after the end of each calendar year, Payor shall
deliver to Payee an unaudited statement of royalties paid to Payee during the
year and the calculation thereof. All year end statements shall be deemed true
and correct six months after presentation, unless within that period Payee
delivers notice to Payor specifying with particularity the grounds for each
exception.  Payee shall be entitled, at Payees’s expense, to an annual
independent audit of the statement by a national firm of chartered accountants,
only if Payee delivers a demand for an audit to Payor within four months after
presentation of the related year-end statement.

 
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