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EXHIBIT 10.9

 
STOCK CANCELLATION AND
DEBT FORGIVENESS AGREEMENT

 
This Stock Cancellation and Debt Forgiveness Agreement (this “Agreement”) is
made and entered into by and among Coyote Resources, Inc., a Nevada corporation
(the “Company”), and Gary Prager and Brittany Prager (collectively, the
“Stockholder”), effective as of the date this Agreement is accepted by the
Company in accordance with Section 2 hereof.
 
RECITALS
 
WHEREAS, as of the Closing (as defined below), the Stockholder is the record and
beneficial owner of an aggregate of three million seven hundred forty eight
thousand seven hundred ninety eight (3,748,798) shares (the “Shares”) of the
Company’s common stock, par value $0.001 per share (the “Common Stock”);
 
WHEREAS, the Company intends to enter into a financing transaction with a note
holder of the Company (the “Financing Agreement”); and
 
WHEREAS, in consideration of the investor’s willingness to enter into the
transactions contemplated by the Financing Agreement, (a) the Stockholder
desires to have cancelled and the Company desires to cancel all of the Shares
effective as of the Closing, and (b) the Stockholder shall release the Company
from any obligation to pay any monies due to the Stockholder pursuant to the
Promissory Note dated December 28, 2006, as amended, in exchange for Twenty Five
Thousand Dollars ($25,000).
 
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties, the
parties hereto agree as follows:
 
1. Events to Occur on or Prior to Closing. The following events shall occur on
or prior to Closing:
 
(a) Cancellation of Shares.  Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, the Shares shall be cancelled and shall
be of no further force or effect. Upon the execution of  this Agreement by the
Stockholder, the Stockholder shall deliver to the Company the certificate or
certificates representing the Shares, duly executed for transfer, or accompanied
by stock powers duly executed in blank (with a medallion guarantee or such other
evidence of signature as the Company’s transfer agent may require).
 
(b) Payment of Debt.  At the Closing, the Company shall pay to Stockholder
Twenty Five Thousand Dollars ($25,000) in good and immediately available funds.
 
(c) Forgiveness of Debt. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing, the Stockholder hereby releases the Company
from any obligation to pay any monies due to the Stockholder pursuant to the
Promissory Note dated December 28, 2006, as amended. All amounts due to
Stockholder together with any accrued interest to date above and beyond Twenty
Five Thousand Dollars ($25,000) are hereby forgiven by the Stockholder.
 
 
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2. Effectiveness of this Agreement.  The consummation of the transactions
contemplated hereby (the “Closing”) shall take place at the offices of the
Company or at such other place as the parties may mutually agree, prior to or
concurrent with the closing of the Financing Agreement.  In the event the
Company does not close the Financing Agreement, this Agreement shall not be
executed by the Company and shall not become effective.  In that event, the
Company shall deliver to the Stockholder all certificates representing the
Shares.
 
3. Representations of Stockholder.  The Stockholder represents and warrants to
the Company, as of the date the Stockholder executes this Agreement and as of
the Closing Date, that:
 
(a) The Stockholder has the legal capacity to execute, deliver and perform its
obligations under this Agreement. This Agreement has been duly executed and
delivered by the Stockholder and is a valid and legally binding agreement of the
Stockholder enforceable against the Stockholder in accordance with its terms.
 
(b) The Stockholder is the sole holder of record of the Shares (the
“Stockholder’s Shares”), and is the beneficial owner of the Stockholder’s
Shares, free and clear of all liens, and there exists no restriction on the
transfer of the Stockholder’s Shares to the Company. The Stockholder shall
deliver to the Company at Closing good and marketable title to the Stockholder’s
Shares free and clear of all liens.
 
(c) No action has been taken by the Stockholder that would give rise to a claim
against the Company for a brokerage commission, finder’s fee or other like
payment with respect to the transactions contemplated by this Agreement.
 
4. Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada without regard to
conflict-of-laws rules.
 
5. Undertakings.  The Stockholder and the Company hereby agrees to take whatever
additional action and execute whatever additional documents may be reasonably
necessary or advisable in order to carry out or effect one or more of the
provisions of this Agreement.
 
6. Counterparts.  This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
 
7. Entire Agreement.  This Agreement and the agreements and instruments to be
delivered by the parties at Closing represent the entire understanding and
agreement between the parties and supersede all prior oral and written and all
contemporaneous oral negotiations, commitments and understandings.

 
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IN WITNESS WHEREOF, the parties have executed this Stock Cancellation and Debt
Forgiveness Agreement as of the dates set forth below.

COYOTE RESOURCES, INC.,

a Nevada corporation

By:
/s/  Earl Abbott  
Date:
August 13, 2010                                                   
   
Earl Abbott
       
Its:
President
       

 

 
BRITTANY PRAGER
 

 
/s/  Brittany Prager  
Date:
August 13, 2010                                                
   
Brittany Prager
              
 
 
       

GARY PRAGER
 

 
/s/  Gary Prager  
Date:
August 13, 2010                                                
   
Gary Prager
       
 
 
       

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