Document:

Exhibit 10.1

 

Execution Copy

 

FOURTH AMENDMENT TO
 NOTE PURCHASE AGREEMENT

 

THIS FOURTH AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of January 8, 2019 (this “Amendment”), is entered into by and among ASSERTIO THERAPEUTICS, INC., a Delaware corporation, as successor-in-interest to DEPOMED, INC. (the “Borrower”), the other Credit Parties party hereto, the Purchasers party hereto, and DEERFIELD PRIVATE DESIGN FUND III, L.P., a Delaware limited partnership, as a Purchaser and as collateral agent (in such latter capacity, the “Agent”).

 

BACKGROUND STATEMENT

 

A.                                    The Borrower, the Purchasers and the Agent entered into that certain Note Purchase Agreement, dated as of March 12, 2015, as amended by (1) that certain Consent and First Amendment to Note Purchase Agreement, dated as of December 29, 2015, (2) that certain Waiver and Second Amendment to Note Purchase Agreement, dated as of December 4, 2017 (the “Second Amendment”), (3) that certain Waiver, Consent and Third Amendment to Note Purchase Agreement and Partial Release of Security Interest, dated as of August 2, 2018, and (4) that certain Consent to Note Purchase Agreement and Assumption Agreement, dated as of August 14, 2018 (as the same may be amended, modified, restated or otherwise supplemented from time to time, the “Purchase Agreement”), pursuant to which the Borrower issued up to $575,000,000 aggregate principal amount of secured notes to the Purchasers.  Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Purchase Agreement.

 

B.                                    The Borrower has requested that the Purchasers agree to (1) replace the minimum EBITDA covenant in Section 6.7 of the Purchase Agreement with a senior secured debt leverage ratio and a minimum net sales covenant, (2) change the Prepayment Premium, including to remove the reduction thereof set forth in Section 8.1 of the Second Amendment, and (3) make certain other amendments to the Purchase Agreement.

 

C.                                    The Purchasers are willing to agree to the aforementioned replacements and amendments, in each case, in accordance with, and subject to, the terms and conditions set forth herein, including without limitation, the amendments to the Purchase Agreement set forth below.

 

STATEMENT OF AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

 

ARTICLE I

 

AMENDMENTS TO PURCHASE AGREEMENT

 

1.1                              Defined Terms.

 

(a)                                The defined term “Adjusted EBITDA” in Section 1.1 of the Purchase Agreement is hereby amended by (x) inserting the word “and” before clause (C) and relabeling clause “(D)” as clause “(ii)” and (y) relabeling the prior clause “(ii)” as clause “(iii)”.

 

(b)                                The defined term “Asset Disposition” in Section 1.1 of the Purchase Agreement is hereby amended by adding the following sentence to the end thereof:

 

For the avoidance of doubt, the sale, assignment, transfer or other disposition of Royalty Assets to a third party shall constitute an Asset Disposition.

 

(c)                                 The defined term “Commercialization Agreement” in Section 1.1 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

“Commercialization Agreement” means that certain Commercialization Agreement, dated as of December 4, 2017, by and between the Borrower and Collegium Pharmaceutical, Inc., a Virginia corporation, and Collegium NF, LLC, a Delaware limited liability company and wholly-owned subsidiary of Collegium Pharmaceutical, Inc., as amended, modified or supplemented from time to time in accordance with this Agreement.

 

(d)                                 The defined term “EBITDA” in Section 1.1 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

“EBITDA” means, with respect to any Person for any Test Period, Consolidated Net Income for such Person for such Test Period (determined without giving effect to the impact on the timing of recognition of revenues arising from the Commercialization Agreement and other licensing transactions effected by Accounting Standard Codification 606 and excluding for the Borrower, net income attributable to Depo DR or any Royalty Monetization Subsidiary, except to the extent distributed to the Borrower) plus (i) to the extent deducted in determining Consolidated Net Income for such Person for such Test Period, (A) interest expense, (B) provision for taxes paid or accrued, (C) depreciation and amortization, (D) non-cash expenses related to stock based compensation, (E) extraordinary expenses or losses (excluding extraordinary cash expenses and losses from discontinued operations), (F) any unrealized losses in respect of Hedge Agreements, (G) [reserved] and (H) (1) non-cash expenses or losses (to the extent not included in clause (i)(E) above), other than write-downs of current assets or non-cash charges that are reserves for cash charges to be taken in the future, (2) [reserved] and (3) costs and expenses relating to, and judgments and settlements of, any litigation, investigations or other proceedings disclosed in the Borrower’s most recent SEC-filed annual or quarterly periodic report on Form 10-K or 10-Q and any similar litigation, investigations or proceedings relating to opioid sales and marketing that may arise from time to time in an aggregate amount not to exceed 10% of Adjusted EBITDA for such period (as calculated prior to giving effect to this clause (i)(H)(3)) plus (if negative) or minus (if positive), without duplication, (ii) adjustments relating to purchase price allocation accounting or any other non-cash accounting adjustments relating to fair value accounting in connection with the transactions contemplated by the Commercialization Agreement and other licensing transactions minus, without duplication, (iii) to the extent

 

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included in Consolidated Net Income for such Person for such Test Period, (A) interest income (to the extent not netted against interest expense in the calculation of interest expense), (B) income tax credits and refunds (to the extent not netted from tax expenses), (C) extraordinary income or gains (provided that, for the avoidance of doubt, cash income or gains arising out of any licensing or royalty sale or monetization transactions shall not constitute extraordinary income or gains), (D) any unrealized income or gains in respect of Hedge Agreements (to the extent not included in clause (i)(F)) above or netted against interest expense in the calculation of interest expense) and (E) non-cash income or gains (to the extent not included in clause (iii)(C) above).  For the avoidance of doubt, the foregoing additions to, and subtractions from, for the Borrower shall not give effect to any items attributable to Depo DR or any Royalty Monetization Subsidiary.  For the avoidance of doubt, for purposes hereof, “extraordinary” shall have the meaning specified under GAAP prior to the effectiveness of FASB ASU 2015-01.

 

(e)                                 The defined term “Excluded Account” in Section 1.1 of the Purchase Agreement is hereby amended by removing the word “and” prior to clause (vii) thereof and adding the following after the end thereof:

 

and (viii) any escrow or other similar account into which solely the proceeds of Royalty Assets are deposited in connection with any Permitted Royalty Monetization.

 

(f)                                  The defined term “Excluded Subsidiary” in Section 1.1 of the Purchase Agreement is hereby amended by deleting in its entirety clause (i) thereof and replacing it with the following:

 

(i)                                     Depo DR and each Royalty Monetization Subsidiary,

 

(g)                                 The defined term “Net Sales” in Section 1.1 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

“Net Sales” means, as of the end of any fiscal quarter, the sum of (x) the line item “Product sales, net” (which includes a reduction for product sales allowances), of the Consolidated Entities for the Test Period ending on such date, determined consistent with past practices on a consolidated basis in accordance with GAAP, plus (y) to the extent not included in clause (x), all revenues in respect of cosytropin depot (without giving effect to the impact on the timing of recognition thereof effected by Accounting Standard Codification 606) of the Consolidated Entities for the Test Period ending on such date, determined consistent with past practices on a consolidated basis in accordance with GAAP, plus (z) cash receipts received by the Consolidated Entities, net of cash payments made by the Consolidated Entities, under the Commercialization Agreement for the Test Period ending on such date.

 

(h)                                The defined term “Prepayment Premium” in Section 1.1 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

“Prepayment Premium” means, with respect to any prepayment of the principal amount of the Notes, an amount equal to (i) 3% of the principal amount of Notes to be prepaid, if such prepayment occurs on or prior to April 14, 2020; and (ii) 1% of the principal amount of Notes to be prepaid, if such prepayment occurs thereafter.

 

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(i)                                     The following defined terms are hereby added to Section 1.1 of the Purchase Agreement in proper alphabetical order:

 

“Ironwood” means Ironwood Pharmaceuticals, Inc., a Delaware corporation.

 

“Ironwood License Agreement” means that certain Research Collaboration and License Agreement, effective as of July 25, 2011, between the Borrower and Ironwood, as amended, supplemented or otherwise modified from time to time.

 

“Permitted Royalty Monetization” means (1) any sale (either directly or indirectly through a Royalty Monetization Subsidiary) of Royalty Assets, or interests therein, arising under the Ironwood License Agreement to a third party or to Ironwood or any of its Affiliates and (2) any amendment, restructuring or other modification of the Ironwood License Agreement resulting in one or more prepayments of royalties and/or milestones thereunder in excess of $5,000,000 in the aggregate.

 

“Royalty Assets” means any accounts receivables, royalties, milestones, payment intangibles and other financial assets, together with other assets that are customarily transferred, sold and/or pledged in connection with the foregoing, and the proceeds thereof.

 

“Royalty Monetization Subsidiary” means any direct or indirect wholly-owned Subsidiary of the Borrower (x) which engages in no activities other than in connection with the receipt and simultaneous disposition of Royalty Assets, or interests therein, arising under the Ironwood License Agreement, in each case, solely in connection with a Permitted Royalty Monetization, under clause (1) of the definition thereof and (y) to which no Credit Party has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results (other than pursuant to Standard Securitization Undertakings).

 

“Senior Secured Debt” means, as of any date of determination, the aggregate principal amount of Indebtedness of the Consolidated Entities (other than the Indebtedness described in clause (xi) thereof) at such time that is then secured by a Lien on any property or assets of any Consolidated Entity.  For the avoidance of doubt, obligations in respect of a Permitted Royalty Monetization, to the extent characterized as Indebtedness, shall not be deemed to be Senior Secured Debt.

 

“Senior Secured Debt Leverage Ratio” means, as of the last day of any fiscal quarter of the Borrower, the ratio of Senior Secured Debt on such date to Adjusted EBITDA of the Borrower for the Test Period ending on such date.  For the avoidance of doubt, any calculation of Adjusted EBITDA for purposes of this definition (and EBITDA in connection therewith) is being calculated for purposes of Section 6.7.

 

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“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Borrower or any Subsidiary thereof in connection with a Permitted Royalty Monetization which are reasonably customary (as determined in good faith by the Borrower) in a royalty financing transaction in the commercial paper, term securitization, royalty finance or structured lending market.

 

1.2                              Existing Section 5.2(c).  Section 5.2(c) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(c)                                  With respect to its obligations under Section 6.7, the Borrower shall,

 

(i)                                     in each annual report on Form 10-K or quarterly report on Form 10-Q filed by it or the earnings press release issued by it and furnished on Form 8-K for the related fiscal year or quarter (or in any combination of such report and press release), commencing with the Form 10-Q (or press release) for the quarter ending March 31, 2019, (A) disclose whether or not it is in compliance with Sections 6.7(a) and 6.7(b) for the Test Period ending as of the last day of the last fiscal quarter covered by such report or press release; (B) present a computation of Adjusted EBIDTA for the Borrower (as calculated for purposes of Section 6.7) for the Test Period ending as of the last day of the last fiscal quarter covered by such report or press release; (C) to the extent not included in the line item “Product sales, net” in each of the Borrower’s consolidated statements of operations for the Test Period ending as of the last day of the last fiscal quarter covered by such report or press release, disclose the revenues received by the Consolidated Entities in respect of cosytropin depot (without giving effect to the impact on the timing of recognition thereof effected by Accounting Standard Codification 606) for such Test Period; and (D) disclose the amount of cash receipts received by the Consolidated Entities, net of cash payments made by the Consolidated Entities, under the Commercialization Agreement for the Test Period ending as of the last day of the last fiscal quarter covered by such report or press release.

 

(ii)                                  deliver to the Purchasers, concurrently with each delivery of the financial statements described in Sections 5.1(a) and 5.1(b), a certificate certified by the Borrower’s president or chief financial officer presenting in reasonable detail the computation of the financial covenant set forth in Sections 6.7(a) and 6.7(b) as of the last day of the period covered by such financial statements.

 

1.3                              Last Paragraph of Section 5.2.

 

(a)                                The last paragraph of Section 5.2 is amended by adding the following language at the end of clause (ii) thereof:

 

(provided that during the period of good faith negotiations, a Restricted Purchaser may direct the Borrower to send such 5.2(a) Notice to one of its advisors or agents, including without limitation, its attorneys, for review)

 

(b)                                 The last paragraph of Section 5.2 is adding the following language at the end thereof:

 

The Borrower expressly acknowledges and agrees that no Purchaser and none of its agents or representatives shall have any duty of trust or confidence with respect to, or a duty not to trade on the basis of, any Section 5.2(a) Notice provided to it in violation of this paragraph.

 

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(c)                                 For clarity, except as set forth in this Section 1.3, no amendment is made by this Amendment to the last two paragraphs of Section 5.2.

 

1.4                              Existing Section 6.2.  Section 6.2 of the Purchase Agreement is hereby amended by adding a new clause (xx) to the end thereof:

 

(xx)                          any Permitted Royalty Monetization (to the extent such transaction is characterized as Indebtedness); provided that the Asset Disposition Proceeds thereof are used to prepay the Notes as required by Section 2.7.

 

1.5                              Existing Section 6.3.  Section 6.3 of the Purchase Agreement is hereby amended by adding a new clause (xxxi) to the end thereof:

 

(xxxi)                Liens on Royalty Assets incurred in connection with any Permitted Royalty Monetization (to the extent such transaction is characterized as Indebtedness).

 

1.6                              Existing Section 6.4.  Section 6.4 of the Purchase Agreement is hereby amended by adding the following clause (xviii):

 

(xviii)                 Investments in a Permitted Monetization Subsidiary connection with a Permitted Royalty Monetization.

 

1.7                              Existing Section 6.5.  Section 6.5(b)(iii) of the Purchase Agreement is hereby amended by adding the following parenthetical to the end thereof:

 

(together with cash in lieu of fractional shares and cash payments in respect of any current accrued and unpaid cash interest on any such Indebtedness (but specifically excluding any accrued and unpaid interest that had been previously added to principal of such Indebtedness))

 

1.8                              Existing Section 6.6.  Section 6.6 of the Purchase Agreement is by replacing the word “and” prior to clause (d) thereof with a comma and adding the following to the end of clause (d):

 

and (e) transactions with the applicable Royalty Monetization Subsidiary in connection with a Permitted Royalty Monetization.

 

1.9                              Existing Section 6.7.  Section 6.7 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

 

6.7                               Financial Covenants.

 

(a)  Senior Secured Debt Leverage Ratio.  Permit the Senior Secured Debt Leverage Ratio as of the last day of any fiscal quarter to be greater than the

 

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amount set forth below opposite such fiscal quarter (or opposite the period that includes such fiscal quarter):

 

	
Period
    	
 
    	
Senior Secured Debt
   Leverage Ratio
    
	
1st Fiscal Quarter   of 2019
    	
 
    	
2.25:1.0
    
	
2nd and 3rd Fiscal Quarters of 2019
    	
 
    	
2.0:1.0
    
	
4th Fiscal Quarter   of 2019
    	
 
    	
1.75:1.0
    
	
1st Fiscal Quarter   of 2020
    	
 
    	
1.5:1.0
    
	
2nd Fiscal Quarter   of 2020
    	
 
    	
1.25:1.0
    
	
Thereafter
    	
 
    	
1.0:1.0
    

 

(b)  Net Sales.  Commencing with the fiscal quarter ending March 31, 2019, permit Net Sales as of the last day of any fiscal quarter to be less than $195,000,000.00.

 

1.10                       Existing Section 6.12.  Section 6.12 of the Purchase Agreement hereby amended by replacing the word “and” prior to clause (J) thereof with a comma and adding the following to the end of clause (J):

 

and (K) any encumbrance, restriction or condition pursuant to customary restrictions and conditions contained in agreements relating to a Permitted Royalty Monetization; provided that such restrictions and conditions apply solely to (I) Royalty Assets involved in such Permitted Royalty Monetization and (II) any applicable Royalty Monetization Subsidiary.

 

1.11                       Existing Section 8.1 of the Second Amendment.  The last sentence of Section 8.1 of the Second Amendment is hereby deleted in its entirety.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Purchasers to enter into this Amendment, the Borrower hereby represents and warrants to the Agent and the Purchasers as follows:

 

2.1                               Representations and Warranties.  Both immediately before and after giving effect to this Amendment and the transactions contemplated hereby, each of the representations and warranties of each Credit Party contained in the Purchase Agreement and each other Credit Document is true and correct in all material respects on and as of the date hereof with the same effect as if made on and as of the date hereof (except to the extent any such representation or warranty is expressly stated to have been made as of a specific date, in which case such representation or warranty was true and correct as of such date).

 

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2.2                               No Default.  Both immediately before and after giving effect to this Amendment and the transactions contemplated hereby, no Default or Event of Default has occurred and is continuing.

 

2.3                               Authorization; Approvals.  The execution, delivery and performance of this Amendment and the transactions contemplated hereby (a) are within the corporate or limited liability company authority, as applicable, of each Credit Party, (b) have been duly authorized by all necessary corporate or limited liability company action, as applicable, of each Credit Party, (c) do not and will not contravene any other Requirement of Law to which any Credit Party is subject or any judgment, order, writ, injunction, license or permit applicable to any Credit Party,  and (d) do not violate or breach any provision of the governing documents of any Credit Party or any agreement or other instrument binding upon any Credit Party. The execution, delivery and performance of this Amendment by each Credit Party does not require the approval or consent of, or filing with, any Governmental Authority.

 

2.4                               Enforceability.  This Amendment has been duly executed and delivered by each Credit Party and constitutes each Credit Party’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors’ rights generally or by general equitable principles.

 

ARTICLE III

 

EFFECTIVENESS

 

3.1                               The amendments set forth in ARTICLE I shall become effective as of the date when, and only when, each of the following conditions precedent shall have been satisfied (such date, the “Effective Date”):

 

(a)                                 The Agent shall have received an executed counterpart of this Amendment from each Credit Party and each of the Purchasers.

 

(b)                                 The Borrower shall have paid all fees and expenses due in accordance with ARTICLE VI hereof.

 

(c)                                  Both immediately before and after giving effect to this Amendment and the transactions contemplated hereby, each of the representations and warranties contained in this Amendment shall be true and correct in all material respects on and as of the Effective Date, with the same effect as if made on and as of such date.

 

(d)                                 The Purchasers shall have received such other documents, agreements, instruments, certificates, opinions or other confirmations as the Purchasers may reasonably request.

 

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ARTICLE IV

 

SECURITIES ACT RELATED OBLIGATIONS

 

4.1                               On or before 8:00 a.m., New York time, on the Business Day immediately following the Effective Date, the Borrower shall file a Current Report on Form 8-K with respect to this Amendment meeting all of the requirements of Item 1.01 thereof, which Form 8-K shall at a minimum (a) disclose the Borrower’s entry into this Amendment and (b) include this Amendment in its entirety as an exhibit thereto.

 

ARTICLE V

 

AFFIRMATION OF OBLIGATIONS

 

Each of the Credit Parties hereby acknowledges and consents to all of the terms and conditions of this Amendment and agrees that this Amendment and all documents executed in connection herewith do not operate to reduce or discharge such Credit Party’s obligations (as applicable) under the Purchase Agreement, the Guaranty, the Security Agreement and the other Credit Documents to which it is a party.  Further, each of the Credit Parties hereby (i) ratifies and confirms its pledge of and grant of a security interest in and Lien on all of its collateral to the Agent made pursuant to the Security Agreement and the other Credit Documents to which it is a party, which security interest and Lien shall continue in full force and effect without interruption, and shall constitute the single grant of a security interest and Lien, (ii) confirms and agrees that, after giving effect to this Amendment, the Purchase Agreement, the Guaranty, the Security Agreement and the other Credit Documents to which it is a party remain in full force and effect and enforceable against such Credit Party in accordance with their respective terms and shall not be discharged, diminished, limited or otherwise affected in any respect, and (iii) represents and warrants to the Agent and the Purchasers that it has no knowledge of any claims, counterclaims, offsets, or defenses to or with respect to its obligations under the Credit Documents, or if such Credit Party has any such claims, counterclaims, offsets, or defenses to the Credit Documents or any transaction related to the Credit Documents, the same are hereby waived, relinquished, and released in consideration of the execution of this Amendment.  Each of the Credit Parties further waives any defense to its guaranty liability occasioned by this Amendment.  This acknowledgement and confirmation by each of the Credit Parties is made and delivered to induce the Agent and the Purchasers to enter into this Amendment, and each Credit Party acknowledges that the Agent and the Purchasers would not enter into this Amendment in the absence of the acknowledgement and confirmation contained herein.

 

ARTICLE VI

 

FEES AND EXPENSES

 

6.1                               Amendment Fee.  The Borrower shall pay to the Purchasers a non-refundable amendment fee in the amount of $3,248,750, which amendment fee shall be fully earned as of the Effective Date and shall be due and payable on or before the Effective Date.

 

6.2                               Expenses.  Whether or not the Effective Date occurs, the Borrower agrees, on demand, to pay all reasonable out-of-pocket costs and expenses of the Agent and each Purchaser (including, without limitation, reasonable fees and expenses of counsel) in connection with the preparation, negotiation, execution and delivery of this Amendment.

 

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ARTICLE VII

 

MISCELLANEOUS

 

7.1                               Effect of Amendment.  From and after the Effective Date, all references to the Purchase Agreement set forth in the Purchase Agreement and any other Credit Document or other agreement or instrument shall, unless otherwise specifically provided, be references to the Purchase Agreement as amended by this Amendment.  This Amendment is limited as specified and shall not constitute or be deemed to constitute an amendment, modification or waiver of any provision of the Purchase Agreement except as expressly set forth herein.  Nothing herein shall be deemed to entitle the Borrower or any other Credit Party or Person to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Purchase Agreement or any other Credit Document in similar or different circumstances.  For the avoidance of doubt, this Amendment shall be deemed a Credit Document.

 

7.2                               Governing Law.  This Amendment shall be governed by and construed and enforced in accordance with, the law of the State of New York (including Sections 5-1401 and 5-1402 of the New York General Obligations Law, but excluding all other choice of law and conflicts of law rules).

 

7.3                               Severability.  To the extent any provision of this Amendment is prohibited by or invalid under the applicable law of any jurisdiction, such provision shall be ineffective only to the extent of such prohibition or invalidity and only in any such jurisdiction, without prohibiting or invalidating such provision in any other jurisdiction or the remaining provisions of this Amendment in any jurisdiction.

 

7.4                               Successors and Assigns.  This Amendment shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto.

 

7.5                               Construction.  The headings of the various sections and subsections of this Amendment have been inserted for convenience only and shall not in any way affect the meaning or construction of any of the provisions hereof.

 

7.6                               Counterparts; Integration.  This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  This agreement or any counterpart may be executed and delivered by facsimile or electronic mail, each of which shall be deemed an original. This Amendment and the other Credit Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

 

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IN WITNESS WHEREOF, the undersigned Agent, Purchasers, the Borrower and the other Credit Parties have caused this Amendment to be duly executed as of the date first above written.

 

	
 
    	
Borrower:
    
	
 
    	
 
    
	
 
    	
ASSERTIO   THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Arthur Higgins
    
	
 
    	
Name:
    	
Arthur Higgins
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    
	
 
    	
Other Credit Parties:
    
	
 
    	
 
    
	
 
    	
DEPO NF SUB, LLC
    
	
 
    	
 
    
	
 
    	
By: Assertio   Therapeutics, Inc., its sole member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Arthur Higgins
    
	
 
    	
Name:
    	
Arthur Higgins
    
	
 
    	
Title:
    	
CEO
    

 

 

	
 
    	
Agent and Purchasers:
    
	
 
    	
 
    
	
 
    	
DEERFIELD PRIVATE DESIGN FUND   III, L.P., as Collateral Agent and a Purchaser
    
	
 
    	
 
    
	
 
    	
By:
    	
Deerfield   Mgmt III, L.P.
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By: 
    	
J.E.   Flynn Capital III, LLC
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David J. Clark
    
	
 
    	
Name:
    	
David J. Clark
    
	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DEERFIELD PARTNERS, L.P., as a   Purchaser
    
	
 
    	
 
    
	
 
    	
By:
    	
Deerfield   Mgmt, L.P.
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
J.E.   Flynn Capital, LLC
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David J. Clark
    
	
 
    	
Name:   
    	
David   J. Clark
    
	
 
    	
Title:   
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DEERFIELD SPECIAL SITUATIONS   FUND, L.P., as a Purchaser
    
	
 
    	
 
    
	
 
    	
By:
    	
Deerfield   Mgmt, L.P.
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
J.E.   Flynn Capital, LLC
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David J. Clark
    
	
 
    	
Name:   
    	
David   J. Clark
    
	
 
    	
Title:   
    	
Authorized   Signatory
    

 

 

	
 
    	
DEERFIELD PRIVATE DESIGN FUND   II, L.P., as a Purchaser
    
	
 
    	
 
    
	
 
    	
By:
    	
Deerfield   Mgmt, L.P.
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
J.E.   Flynn Capital, LLC
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David J. Clark
    
	
 
    	
Name:
    	
David   J. Clark
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DEERFIELD PRIVATE DESIGN   INTERNATIONAL II, L.P., as a Purchaser
    
	
 
    	
 
    
	
 
    	
By:
    	
Deerfield   Mgmt, L.P.
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
J.E.   Flynn Capital, LLC
    
	
 
    	
 
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David J. Clark
    
	
 
    	
Name:
    	
David   J. Clark
    
	
 
    	
Title:
    	
Authorized   SignatoryExhibit 10.3 

         

         

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
   

    
    
      	 		 

    

    

    
     
 ACQUISITION
                                         AGREEMENT December 7, 2018 This Acquisition Agreement (this "Agreement") is
                                         entered into to be effective as of December 7, 2018 (the "Effective Date")
                                         by and between Seven Hundred Seventy 7, Inc. a Wyoming corporation ("777"),
                                         and Desert Mountain Gold, Inc., a Utah corporation ("Desert Mountain"). 777
                                         and Desert Mountain are referred to individually herein as a "Party" and collectively
                                         as the "Parties." RECITALS A. Desert Mountain owns 83 unpatented lode-mining
                                         claims (the "Mining Claims") and two state mining leases (the "State Leases")
                                         which are located in Juab County, Utah (collectively, the "Property"). The
                                         Property, formerly known as Coyote Knolls Mine, is more particularly described in Parts
                                         I and II of Exhibit A and is depicted on the map attached as Exhibit B. B. 777 desires
                                         to acquire the Property from Desert Mountain and Desert Mountain desires to sell the
                                         Property to 777 under the terms and conditions of this Agreement. AGREEMENT In consideration
                                         of the foregoing and of the mutual promises and covenants contained in this Agreement,
                                         the Parties agree as follows: ARTICLE 1 DEFINITIONS .1 Definitions. In addition to the
                                         definitions set out above, the following capitalized terms shall have the meanings ascribed
                                         to them: (a) "Guaranteed Minimum Annual Royalty Payment" means that on the
                                         first day of the second year of this Agreement, 777 will pay an NSR payment to DMG. 777
                                         agrees to pay the greater of the NSR or the Guaranteed Minimum Royalty Payment as outlined
                                         in the schedule attached hereto as Exhibit "C" (b) "Binding Arbitration"
                                         means arbitration conducted in accordance with any dispute regarding this Agreement.
                                         (c) "Environmental Law" means all applicable statutes, treaties, regulations,
                                         rules, ordinances, codes, licenses, permits, orders, approvals, authorizations and similar
                                         items of all federal, state, and local governmental branches, agencies, departments,
                                         commissions, boards, bureaus or instrumentalities, having jurisdiction and all applicable
                                         judicial and administrative and regulatory decrees, judgments and orders and all covenants
                                         running with the land that relate to the protection of health or the environment whether
                                         now existing or hereafter adopted, including without limitation those that relate to
                                         Hazardous Materials or reclaiming of real property, and all obligations relating to protection
                                         of the environment arising out of any material contract or mining lease relating to the
                                         Property. (d) "Expenditures" means all costs properly incurred in connection
                                         with Exploration, Environmental and Metallurgical Evaluations, conducted on or for the
                                         benefit of the Property, recorded in accordance with generally accepted accounting principles
                                         consistently applied. As used in this context, the phrase "for the benefit of"
                                         means expenditures made outside the boundaries of the Property that are directly related
                                         to or support Exploration on the Property, but shall not include any allocation of 777
                                         corporate overhead or any costs relating solely to any other properties. Expenditures
                                         shall include, without limitation: (i) The actual salaries, benefit costs, and wages
                                         of part-time and full-time employees, consultants or contractors of 777 directly assigned
                                         to and actually performing Exploration on or for the benefit of the Property, including
                                         geologists, geophysicists, engineers, engineering assistants, technicians, draftsmen,
                                         engineering clerks, and other personnel performing services connected with Exploration,
                                         and related travel expenses, transportation, subsistence and housing expenses for such
                                         personnel; (ii) actual costs and expenses for use of machinery, equipment, fuel and supplies
                                         necessary or convenient for Exploration, whether such machinery or equipment is owned
                                         by 777, purchased by 777 for use on the Property or leased or rented from third parties,
                                         including the transportation, storage and maintenance of same; all payments to contractors
                                         for work on or for the benefit of the Property, including airborne geophysics, aerial
                                         photography, drilling, trenching, and excavation; costs of sampling, costs of assays,
                                         metallurgical testing and analysis, preparation of geological, geochemical and geophysical
                                         surveys and mapping of the results and all other costs incurred to determine the potential
                                         quantity and quality of Products that might exist in, on and under the Property, including
                                         pre-feasibility and feasibility studies; (iii) costs incurred to obtain permits and approvals,
                                         rights-ofway and other similar rights of access in connection with such activities; costs
                                         incurred in preparation and acquisition of environmental and other permits needed to
                                         commence and complete Exploration on the Property, costs of title search and remediation
                                         and curative work, costs of community relations activities, and all other costs reasonable
                                         or necessary to comply with local, state or federal regulatory requirements, including
                                         local zoning and land use permits; (iv) expenses incurred in holding and maintaining
                                         any interest in the Property, such costs and expenses to include payments to maintain
                                         the Property and any related leases and agreements; all taxes levied against the Property
                                         or any interest in the Property that are paid by 777; the cost of insurance premiums
                                         or bonds; (v) costs and proportionately allocated local office and camp expenses incurred
                                         directly in support of Exploration on the Property, any expenses incurred by Desert Mountain
                                         that are reimbursed to Desert Mountain by 777 pursuant to this Agreement, and any home
                                         and office costs incurred directly by 777 in support of Exploration: and (vi) any other
                                         cost or expense that would ordinarily be chargeable for Exploration. (e) "Exploration"
                                         means all activities directed toward ascertaining the existence, location, quantity,
                                         quality or commercial value of deposits of valuable minerals, including but not limited
                                         to additional drilling required after discovery of potentially commercial mineralization,
                                         feasibility analyses and related environmental compliance. (f) "Hazardous Materials"
                                         means any substance: (i) the presence of which requires reporting, investigation, removal
                                         or remediation under any Environmental Law, including without limitation, mine tailings,
                                         waste dumps and other materials; (ii) that is defined as a "hazardous waste,"
                                         "hazardous substance" or "pollutant" or "contaminate" under
                                         any Environmental Law; (iii) that is toxic, explosive, corrosive, flammable, ignitable,
                                         infectious, radioactive, reactive, carcinogenic, mutagenic or otherwise hazardous and
                                         is regulated under any Environmental Law; (iv) the presence of which on a property causes
                                         or threatens to cause a nuisance upon the property or to adjacent properties or poses
                                         or threatens to pose a hazard to the health or safety of persons on or about the property;
                                         (v) that contains gasoline, diesel fuel or other petroleum hydrocarbons; or (vi) that
                                         contains PCBs, asbestos or urea formaldehyde foam insulation. (g) "Initial Payment"
                                         means the initial Payment of $200,000 to be paid in-part at the Closing and in subsequent
                                         payments. (h) "Mining Claims" means the 83 unpatented lode-mining claims listed
                                         in Part! of Exhibit A. (i) "Net Smelter Return" or "NSR" has the
                                         meaning provided in Paragraph 1(F) in Exhibit D. (j) "NSR Royalty" means the
                                         royalty payable to Desert Mountain for production of mineral products as defined in Exhibit
                                         "D." (k) "Products" means all ores, minerals and mineral resources
                                         produced from the Property and sold. (1) "Reclamation Bond" means that certain
                                         bond to be issued by Utah State Department of Natural Resources Division of Oil, Gas
                                         and Mining to secure the performance by 777 of reclamation on Coyote Knolls. (in) "State
                                         Lease" means Mineral Leases ML- 51979 and ML 53490 issued by the State Institutional
                                         Trust Lands Administration of Utah. ARTICLE 2  

    
    
      	 		 

    

    

    
     
 PURCHASE
                                         AND SALE; CLOSING .1 Purchase and Sale of Property. 777 agrees to purchase the Property
                                         from Desert Mountain and Desert Mountain agrees to sell the Property to 777, on the terms
                                         and conditions set forth in this Agreement. 2.2 The Closing. The Closing of the transaction
                                         contemplated by this Agreement (the "Closing") shall take place on December
                                         7, 2018 at local time (the "Closing Date") at the offices of Young & Young
                                         in Provo, Utah or at such other time or place mutually agreeable to the Parties. .3 Deliveries
                                         at the Closing. At the Closing, (a) 777 shall deliver to Desert Mountain the first of
                                         four $50,000 payments to Desert Mountain of the $200,000 initial payment, as described
                                         in section 3.1 below; (b) Desert Mountain will convey the Mining Claims and will assign
                                         the State Leases by executing and delivering a Deed and Assignment in the form attached
                                         as Exhibit "F", and Desert Mountain will execute and deliver any additional
                                         form required by the State of Utah for assignment of the State Lease; (c) If requested
                                         by 777, Desert Mountain will assign to 777 any permits or approvals it currently holds
                                         with respect to Exploration of the Property; and (d) The Parties have executed the Letter
                                         of Intent attached to this Agreement as Exhibit "F." ARTICLE 3 PAYMENTS AND
                                         WORK COMMITMENT .1 Initial Payment. In partial consideration for the execution of this
                                         Agreement and the conveyance of the Property to 777, at the Closing 777 shall pay to
                                         Desert Mountain the first payment of $50,000 of the $200,000. 777 agrees that the balance
                                         of the Initial Payment will be paid in 3 successive payments of $50,000 on or before
                                         90,180 and 270 days after the Closing date. .2 Guaranteed Minimum Royalty Payments. In
                                         order to keep this Agreement in effect and retain the Property, 777 shall pay to Desert
                                         Mountain, a Guaranteed Minimum Royalty Payment pursuant to the schedule attached hereto
                                         as Exhibit "C" beginning on or before December 7th, 2019 and on or before December
                                         7th of each successive year to and including December 7th, 2028 provided that this Agreement
                                         is in effect on December 7th of the relevant year. 3.3 Work Commitment. 777 agrees to
                                         use its reasonable best efforts, subject to any delay that might occur in obtaining necessary
                                         permits and access or adverse weather conditions, to incur the Work Commitment pledged
                                         to Desert Mountain as defined in Paragraph 2 of the Letter of Intent, which is incorporated
                                         by reference and attached hereto as Exhibit "G". In the event that 777 is unable
                                         to complete such Work Commitment by April 30, 2021, 777 agrees to arbitration where a
                                         remedy is mutually agreed upon, after a one-year period to cure any deficiency in its
                                         fulfillment of the Work Commitment. 3.4 Reclamation Bond. will apply for a 10-acre small
                                         mine permit and associated reclamation bond as soon as practical following the Closing,
                                         at no additional cost to DMG. ARTICLE 4 NSR ROYALTY .1 NSR Royalty. Upon commencement
                                         of Commercial Production (as defined in Exhibit "D") from the Property, Desert
                                         Mountain shall be entitled to receive and 777 shall pay to Desert Mountain a 3.5% NSR
                                         Royalty calculated as set out in Exhibit "D." 777 shall be entitled to deduct
                                         from any royalty payment the amount of any Advance Royalty Payments not previously deducted
                                         against the NSR Royalty. The NSR Royalty shall be paid annually within 60 days of the
                                         end of each fiscal year of 777 during which the Property is in Commercial Production.
                                         If all data necessary to compute such payment are not available at the time a payment
                                         is due, 777 shall make such payment on a best estimate basis and shall finalize such
                                         payment as soon as possible thereafter. If Commercial Production is commenced during
                                         the time 777 is required to make Advance Royalty Payments and the NSR Royalty payable
                                         for any year is equal to or less than the Advance Royalty Payments paid by 777 to Desert
                                         Mountain during such year, then the NSR Royalty will be deemed to have been paid and
                                         no further royalty will be due for such year. Each payment of NSR Royalty shall be accompanied
                                         by a detailed statement setting out the calculation of the royalty for such year. 4.2
                                         Option to Purchase 1.5 Percent of the Royalty. In consideration of the covenants of the
                                         Parties under this Agreement, either during the term of this Agreement or at any time
                                         thereafter, Desert Mountain grants to 777 the exclusive option to purchase 1.5% of the
                                         total 3.5% NSR Royalty for the sum of $1.5 million. If 777 gives notice of its intention
                                         to purchase the 1.5% of the NSR Royalty, Desert Mountain will convey such interest to
                                         777 by way of a Special Warranty Deed, warranting that Desert Mountain has not sold,
                                         encumbered or entered into any agreement with respect to such interest, and 777 shall
                                         simultaneously pay the purchase price to Desert Mountain. In the event that 777 purchases
                                         1.5% of the NSR Royalty, the term "NSR Royalty" shall thereafter refer to the
                                         remaining 2.0% NSR Royalty retained by Desert Mountain. ARTICLE 5 This section is left
                                         intentionally blank. ARTICLE 6 REPRESENTATIONS AND WARRANTIES .1 Mutual Representations.
                                         Each Party represents and warrants to the other that: (a) It is an entity duly organized
                                         and validly existing in the jurisdiction of its incorporation and is qualified to do
                                         business and is in good standing under the laws of the State of Incorporation. (b) It
                                         has the corporate power and authority and has taken all necessary corporate action to
                                         authorize the execution and delivery of this Agreement and the other agreements and instruments
                                         to be executed and delivered in connection herewith and to undertake the performance
                                         by it of its respective obligations hereunder, and has obtained all necessary consents
                                         of the applicable governmental and regulatory organizations for entering into this Agreement
                                         and the performance of its obligations herein. (c) This Agreement, when executed and
                                         delivered by each respective Party, shall have been duly executed and delivered on behalf
                                         of each such Party and shall constitute valid and binding obligations of each Party enforceable
                                         against it in accordance with the terms of this Agreement (subject, as to enforcement,
                                         to bankruptcy, insolvency, reorganization and other similar laws of general applicability
                                         relating to or affecting creditors' rights and to the availability of equitable remedies)
                                         and will not result in any violation of, or any default under, any other agreement to
                                         which such Party or its Affiliates is a Party, including without limitation any agreement
                                         or obligation relating to the Property. For purposes of this Agreement, "Affiliate"
                                         means any person, partnership, limited liability company, joint venture, corporation,
                                         or other form of enterprise that controls, is controlled by, or is under common control
                                         with a Party. (d) It is not subject to any suit, administrative proceeding, arbitration
                                         or any other proceeding, judgment, decree, or order enjoining or otherwise restraining
                                         or restricting it with respect to the transactions contemplated by this Agreement and
                                         to its knowledge, no such suit or proceeding is threatened against it. (e) Neither it
                                         nor any of its representatives, agents, or employees has dealt or consulted with any
                                         real estate broker or agent in connection with the transactions contemplated herein.
                                         (0 6.2 Additional Representations by Desert Mountain. Desert Mountain represents and
                                         warrants to 777 with respect to the Property that, except as set out on Exhibit E: (a)
                                         With respect to the Mining Claims, subject to the paramount title of the United States
                                         and the requirements of a valid discovery, (i) Desert Mountain holds record title and
                                         is in exclusive possession of such claims; (ii) the Mining Claims were properly laid
                                         out and monumented; (iii) all required location and validation work was properly performed;
                                         (iv) location notices and certificates were properly recorded and filed with appropriate
                                         governmental agencies; (v) all assessment work and claim rental and/or maintenance payments
                                         required to hold such claims has been performed or paid, as applicable, through the assessment
                                         year ending September 1, 2019; (vi) all affidavits of assessment work and/or other filings
                                         required to maintain such claims in good standing have been properly and timely recorded
                                         or filed with appropriate governmental agencies; (vii) the Mining Claims are free and
                                         clear of liens, encumbrances, leases, royalties, options or agreements of any kind (recorded
                                         or unrecorded); and (viii) the Mining Claims are not subject to any conflicting mining
                                         claims held by third parties. (b) With respect to the State Leases, subject to the paramount
                                         title of the State of Utah, (i) Desert Mountain holds record title to and is in exclusive
                                         possession of such leases; (ii) all rental and/or maintenance payments required to hold
                                         the lease have been paid through a date that is at least 30 days after the date of this
                                         Agreement; (iii) Desert Mountain has not received and notice or other correspondence
                                         from the State of Utah suggesting that the lease is not in good standing; (iv) the claims
                                         are free and clear of liens, encumbrances, leases, royalties, options or agreements of
                                         any kind (recorded or unrecorded); and (v) the lease is not subject to any conflicting
                                         lease held by third parties; (c) With respect to the Property, (i) Desert Mountain has
                                         no knowledge of any reclamation obligations currently  

    
    
      	 		 

    

    

    
     
 affecting
                                         the Property; (ii) there are no pending or threatened actions, suits, claims or proceedings
                                         involving the Property; (iii) Desert Mountain has not received any notice of violation
                                         or agency claim alleging any violation of any law, rule, regulation or permit, including
                                         without limitation any Environmental Law and Desert Mountain is not aware of any facts
                                         that could give rise to any such notice or agency claim; and (iv) there are no Hazardous
                                         Materials or other adverse environmental conditions on or affecting the Property and
                                         no past or present activities on the Property have caused or contributed to any Hazardous
                                         Materials or other adverse environmental condition on other lands. (d) Desert Mountain
                                         has delivered to 777 copies, or originals where essential, of all information concerning
                                         title to the Property in Desert Mountain's possession or control. (e) Desert Mountain
                                         has no contractual commitments or obligations which relate to or affect the Property.
                                         The representations and warranties set forth above shall survive the execution and delivery
                                         of any documents of transfer provided under this Agreement. 6.3 Disclosures. Each of
                                         the Parties represents and warrants to the other that it is unaware of any material facts
                                         or circumstances which have not been disclosed in this Agreement and which should be
                                         disclosed to the other Party in order to prevent the representations in this Article
                                         6 from being materially misleading. 6.4 No Partnership. Nothing contained in this Agreement
                                         shall be deemed to constitute either Party the partner of the other or, except as otherwise
                                         expressly provided, to constitute either Party the agent or legal representative of the
                                         other or to create any fiduciary relationship between them. It is not the intention of
                                         the Parties to create, nor shall this Agreement be construed to create, any mining, commercial
                                         or other partnership. Neither Party shall have any authority to act for or to assume
                                         any obligation or responsibility on behalf of the other Party, except as otherwise expressly
                                         provided herein. 6.5 Other Activities. Each of the Parties may be engaged on its own
                                         behalf and on behalf of persons other than the Parties in the general mining business
                                         outside of the Property, and each of the Parties hereby consents to such involvement
                                         by the other without consulting the other Party or inviting or allowing the other Party
                                         to participate. The legal doctrine of "corporate opportunity" sometimes applied
                                         to persons occupying a fiduciary status shall not apply in the case of any endeavor of
                                         either Party other than the endeavors within the boundaries of the Property. ARTICLE
                                         7 COVENANTS .1 Covenants of 777. During the term of this Agreement, 777 shall: (a) Except
                                         as provided for in Section 14.1, keep the Property in good standing by doing and filing
                                         of assessment work or by making payments in lieu thereof, by paying all required federal
                                         claim maintenance fees and fees required to maintain the State Lease, and by the doing
                                         of all other acts and things and making all other payments which may be necessary in
                                         that regard. Notwithstanding the foregoing, 777 shall not be held liable for the loss
                                         of any portion of the Property due to any act of government provided that 777 has taken
                                         all reasonable and legal means to protect and maintain such portion of the Property in
                                         good standing; (b) Pay or cause to be paid any rates, taxes, duties, royalties, assessments
                                         or fees levied with respect to the Property or 777's operations thereon; (c) Keep the
                                         Property free and clear of liens and encumbrances arising from its operations hereunder,
                                         provided that a lien or encumbrance on the Property shall not constitute a default if
                                         777, in good faith, disputes the validity of the claim, in which event the continued
                                         existence of the lien or encumbrance shall constitute a default 30 days after the validity
                                         of the lien or encumbrance has been adjudicated adversely to 777; (d) Conduct all work
                                         on or with respect to the Property in a miner like manner and in accordance with the
                                         applicable laws of the state of Utah and the federal laws of the United States applicable
                                         therein; and (e) Obtain and maintain, or cause any contractor engaged by 777 to obtain
                                         and maintain, during any period in which active work is carried out hereunder, adequate
                                         workers' compensation insurance and liability insurance in accordance with the applicable
                                         laws of the State of Utah and the federal laws of the United States applicable therein.
                                         7.2 Covenants and Acknowledgements of Desert Mountain. (a) Desert Mountain agrees to
                                         provide 777 with copies, or originals where essential, of all of the data and information
                                         in its possession or under its control relating to the mineral potential of the Property
                                         and to Desert Mountain's or its predecessor's exploration activities on and in the vicinity
                                         of the Property including but not limited to reports, maps, and surveys. All data and
                                         information due to 777 at closing. (b) Where Desert Mountain becomes aware that any omission
                                         by it to act would have the effect, either immediately or upon the passage of time, of
                                         rendering any of the representations of Desert Mountain herein to be untrue, Desert Mountain
                                         shall notify 777 forthwith of all relevant circumstances in respect of such matter. ARTICLE
                                         8 TERMINATION .1 Termination. (a) Provided that 777 pays to Desert Mountain all of the
                                         Initial  

    
    
      	 		 

    

    

    
     
 Payment
                                         and the Guaranteed Minimum Royalty Payments, and except for the NSR Royalty as provided
                                         for in Article 4, payments under this Agreement shall terminate on December 7, 2028 or
                                         at any earlier time that 777 has paid to Desert Mountain all of the Advance Royalty Payments
                                         and has incurred all of the Expenditures required in Article 1. If this Agreement terminates
                                         pursuant to this Section 8.1 (a), 777 shall have no further rights or obligations to
                                         Desert Mountain under this Agreement except for (i) its obligations to pay Desert Mountain
                                         the NSR Royalty as provided for in Section 4.1, and (ii) its right to acquire 1.5% of
                                         the NSR Royalty as set out in Sections 4.2. (b) 777 may terminate this Agreement at any
                                         time before paying all of the Advance Royalty Payments or incurring all of the Expenditures
                                         by giving 60 days' written notice of such termination to Desert Mountain. In addition,
                                         this Agreement will automatically terminate upon the failure by 777 to pay all of the
                                         Advance Royalty Payments or incur all of the Expenditures in a timely manner (subject
                                         to 777's right to cure any such failures as provided in this Agreement). If this Agreement
                                         terminates pursuant to this Section 8. I (b), except for the provisions of 8.1 (c), this
                                         Agreement shall be of no further force and effect. (c) If this Agreement is terminated
                                         as provided for in Section 8.1 (b), 777 shall: (i) Quitclaim all of its interest in the
                                         Property to Desert Mountain, free and clear of all liens and encumbrances arising by,
                                         through or under 777, and in good standing with respect to the performance of assessment
                                         work or the payment of claim maintenance fees that come due within the 60-day period
                                         following the notice of termination; (ii) deliver to Desert Mountain as soon as possible
                                         copies of all information that must be reported to any federal or state agency, pursuant
                                         to federal or state law, or a stock exchange; (iii) remove from the Property within 180
                                         days of the effective date of termination all mining facilities erected, installed or
                                         brought upon the Property by or at the instance of 777, and any mining facilities remaining
                                         on the Property after the expiration of the said period shall, without compensation to
                                         777, become the property of Desert Mountain; (iv) complete all cleanup, rehabilitation
                                         and reclamation obligations with respect to any work it has conducted hereunder with
                                         respect to the Property in accordance with the requirements of all applicable regulations;
                                         and (v) pay to Desert Mountain the full amount of any of the payments set out in Section
                                         3.2 that became due prior to the date of the notice of termination and have not been
                                         paid. (vi) Transfer any mining permits and reclamation bonds held on the Property to
                                         Desert Mountain Gold. ARTICLE 9 REPORTS, AUDITS AND OBJECTIONS ARTICLE 10 ACCESS TO PUBLIC
                                         INFORMATION .1 Access to 777's Public Information. shall make available to Desert Mountain,
                                         its employees and agents, all disclosures that are required by any applicable law, government
                                         regulation, or stock exchange rule, and shall direct Desert Mountain to such governmental
                                         agency or stock exchange website that contains such information. ARTICLE 11 CONFIDENTIALITY
                                         .1 Confidentiality of Agreement. Except as provided in Section 11.4 and 15.4 below, neither
                                         Party may disclose the terms of this Agreement without the prior written consent of the
                                         other Party, which consent shall be at the other Party's sole discretion; provided that
                                         either Party may (i) disclose this Agreement to potential purchasers of a Party's interest
                                         in the Property or in this Agreement, provided that such potential purchasers execute
                                         a confidentiality agreement consistent with the provisions of this Article, and (ii)
                                         make such disclosures as, in the opinion of its counsel, are required by any applicable
                                         law, government regulation, stock exchange rule, existing contract or legal process,
                                         provided that in such a case the disclosing Party shall promptly notify the other Party
                                         of such request or requirement, so that the other Party may seek an appropriate protective
                                         order or waive compliance with the Agreement. In the absence of a protective order or
                                         the receipt of a waiver, the disclosing Party will give the other Party written notice
                                         (unless prohibited by law) of the information to be disclosed as far in advance as practicable
                                         and exercise all reasonable efforts to obtain reliable assurance that confidential treatment
                                         shall be afforded to that information. .2 Confidentiality of Information and Data. (a)
                                         With respect to any information or data disclosed or subject to disclosure under Articles
                                         9 and 10, each Party agrees to keep the data and other information disclosed by the other
                                         Party confidential and not to disclose the data to any person or entity other than (i)
                                         its Affiliates and its and their officers, directors, partners, members, employees, attorneys,
                                         and accountants; (ii) its outside mining and engineering consultants; (iii) potential
                                         purchasers of a Party's interest in the Property or in this Agreement; or (iv) lenders
                                         or financial advisors who have a bona fide need to have access to such data; (v) such
                                         other persons as the  

    
    
      	 		 

    

    

    
     
 Parties
                                         jointly agree in writing may receive such data (which agreement may be withheld for any
                                         reason or for no reason); and (vi) as may be required, in the opinion of a Party's counsel,
                                         by judicial, administrative, or governmental proceeding, whether or not made pursuant
                                         to a valid subpoena or applicable order or as otherwise-required by law or the rules
                                         of any stock exchange; provided that any disclosure made pursuant to law shall be strictly
                                         limited in scope and content to the extent possible given the requirements of legal compliance,
                                         and subject to each Party's reasonable prior review and revision; and provided further
                                         that in the case of (ii), (iii) and (iv), only if such parties have agreed in writing
                                         to be likewise bound by these terms of confidentiality. (b) If this Agreement terminates
                                         as provided for in Section 8.1 (b) and 777 retains the Property, 777 shall have sole
                                         discretion with respect to its use of the information and data and Desert Mountain may
                                         use the information or data for its own purposes but may not disclose the data to any
                                         third party without the prior written consent of 777, unless such disclosure is permitted
                                         or such data is required to be disclosed as provided above. If this Agreement terminates
                                         as provided for in Section 8.1 (b) and 777 quitclaims the Property back to Desert Mountain,
                                         Desert Mountain shall have sole discretion with respect to its use of the information
                                         and data and 777 may use the information or data for its own purposes but may not disclose
                                         the data to any third party without the prior written consent of Desert Mountain, unless
                                         such disclosure is permitted or such data is required to be disclosed as provided above.
                                         (c) Nothing in this Agreement shall affect either Party's rights to use, disclose or
                                         retain any of the data and information which (i) is in the public domain or later enters
                                         the public domain other than by a breach by either Party or any of its agents of any
                                         of the obligations of either Party under this Agreement, or (ii) is disclosed to either
                                         Party or the general public by a third party which is in rightful possession of the data
                                         and information in circumstances where the disclosure violated no confidentiality obligations,
                                         or (iii) either Party can show was known to it at the time of disclosure. .3 Use of Information.
                                         Neither Party makes any representation or warranty of any nature concerning the quality,
                                         accuracy, reliability or completeness of the information or data provided or exchanged,
                                         and each Party hereby acknowledges that it relies on any data received from the other
                                         Party solely at its own risk. ALL SUCH INFORMATION AND DATA ARE PROVIDED ON AN "AS-IS/WHERE-IS"
                                         BASIS, WITHOUT ANY EXPRESS OR IMPLIED WARRANTY WHATSOEVER. Further, to the extent either
                                         Party is permitted to disclose such data received from the other Party under this Agreement,
                                         the disclosing Party agrees to provide actual notice to such third parties of the terms
                                         and limitations imposed by this Section 11.3 and to indemnify the other Party against
                                         any third-party claims arising from or relating to such disclosure. 11.4 Press Releases
                                         and Other Disclosures. Except for in the event of insider knowledge in connection with
                                         Desert Mountain making a public offering, or where 777 is in discussions to purchase
                                         Desert Mountain or other properties belonging to Desert Mountain, either party may make
                                         public announcements, press releases, or other disclosure to the general public, and
                                         pursuant to applicable laws and regulations, or the rules of any stock exchange. ARTICLE
                                         12 DEFAULT AND CURE; INDEMNIFICATION .1 Default in Performance of Obligations. Except
                                         for matters related disputes with respect to Expenditures which will be resolved as set
                                         out in Section 9.3, if either Party believes that the other Party is in default in the
                                         observance or performance of any of its covenants or obligations hereunder, the Party
                                         alleging default shall give the other Party written notice of default, expressly denominated
                                         as a "Notice of Default" and specifying the details of the same. 12.2 Opportunity
                                         to Cure. If the alleged default relates to a payment due to Desert Mountain under this
                                         Agreement, 777 shall have 15 days from receipt of such notice to remedy such default.
                                         With respect to any other default except for those matters specifically addressed in
                                         Section 9.3, the defaulting Party shall have a reasonable time of not more than 30 days
                                         within which to remedy such default or, with respect to a default which cannot be cured
                                         within the 30-day period, to commence within the 30 days such action as may be necessary
                                         to remedy such default and to diligently prosecute such action until the default is cured.
                                         Unless the defaulting Party shall so comply or commence to comply, this Agreement may
                                         be terminated at the option of the other Party, or the other Party may seek such other
                                         remedies as it might have in law or in equity. 12.3 Disagreement Over Alleged Default.
                                         In the event the Party against whom a default is alleged believes that it is not in default,
                                         it may give written notice to the other Party within such 15-day or 30-day period, as
                                         applicable, setting forth such fact. The Parties shall then follow the procedure set
                                         forth in Section 12.4 in attempting to resolve such dispute. In the event that the Parties
                                         agree through informal consultation or determine through a judicial decision that there
                                         has been a default, this Agreement shall not be terminated if the defaulting Party shall
                                         cure the default within 30 days following such agreement or determination, or if such
                                         default cannot be satisfied solely by the payment of money, by commencing to comply within
                                         30 days after such agreement or determination and diligently pursuing such compliance
                                         to completion. If the defaulting Party shall fail to satisfy such determination in the
                                         time allowed, then the other Party may terminate this Agreement and may seek such other
                                         remedies as it might have in law or in equity. 12.4 Dispute Resolution. (a) The Parties
                                         agree to devote such time, resources, and attention as are needed to attempt to resolve
                                         disputes at the earliest time possible. A Party claiming a dispute shall give notice
                                         of the dispute within 30 days of the Party's actual knowledge of the act, event, or omission
                                         that gives rise to the dispute, unless this Agreement provides otherwise. At a minimum,
                                         the Parties shall hold one informal meeting within 30 days after notice to attempt to
                                         resolve the disputed issue(s). (b) If  

    
    
      	 		 

    

    

    
     
 the
                                         dispute is a dispute as to whether 777 has made adequate Expenditures in any required
                                         period and is not resolved at the informal meeting, the Party claiming a dispute may,
                                         within 30 days after the last meeting, submit the dispute to Binding Arbitration. (c)
                                         All other disputes shall be resolved in a legal proceeding in a court in the State of
                                         Utah. (d) Any of these time periods may be reasonably extended or shortened by agreement
                                         of the Parties. Unless otherwise agreed among the Parties, each Party shall bear its
                                         costs for its own participation in the informal dispute resolution process. If either
                                         Party commences any court proceeding, the prevailing Party in such proceeding shall be
                                         entitled to recover reasonable attorneys' fees and expenses, including fees and expenses
                                         on appeal and petition for review, as determined by the court. 12.5 Indemnification.
                                         Subject to the provisions of this Agreement, each Party assumes responsibility for the
                                         work done by it or its Affiliates on the Property and specifically shall indemnify, defend
                                         and hold harmless the other Party and its Affiliates for and on account of any Liability
                                         that may be asserted against the same as a result of any action, suit, demand or proceeding
                                         commenced or asserted by any person or entity (including without limitation any governmental
                                         entity), arising out of or related to the Party's operations on the Property, including
                                         without limitation (i) any violation of applicable law, including without limitation
                                         any Environmental Law, in connection with the indemnifying Party's operations on the
                                         Property and, in the case of Desert Mountain, with respect to operations on the Property
                                         prior to the Effective Date (subject to Section 14.2 (a) below); and (ii) any breach
                                         of the indemnifying Party's representations, warranties or obligations under this Agreement.
                                         The rights of the indemnified Party and its Affiliates hereunder shall apply except to
                                         the extent such Liability may have been occasioned, brought about, or caused in part
                                         by the indemnified Party or its Affiliates or any negligence, fault, strict liability,
                                         acts or omissions of the indemnified Party or its Affiliates, or their contractors and
                                         their subcontractors. ARTICLE 13 ASSIGNMENTS AND TRANSFERS .1 Assignment. Neither Party
                                         may dispose of all or any part of its interest in and to this Agreement, the Royalty,
                                         or the Property to any third party (an "Assignee"), provided, however, that
                                         777 may assign its rights or delegate its obligations, in whole or in part, without such
                                         consent, to (a) one or more of its Affiliates, or (b) an entity that acquires all or
                                         substantially all of the business or assets of such party to which this Agreement pertains,
                                         whether by merger, reorganization, acquisition, sale, or otherwise, provided that, as
                                         a condition precedent to any such assignment, the Assignee shall have delivered to the
                                         non-assigning Party a covenant that: (a) to the extent of the disposition, the Assignee
                                         agrees to be bound by the terms and conditions of this Agreement as if it had been an
                                         original party hereto; and (b) it shall subject any further disposition of the interest
                                         acquired to the restrictions contained in this Section. ARTICLE 14 PARTIAL RELINQUISHMENT;
                                         RECLAMATION - DEFENSE OF TITLE .1 Partial Relinquishment. Notwithstanding Section 7.1
                                         (a), 777 shall have the right at any time to release all or any portion of the Property
                                         from this Agreement by giving to Desert Mountain 60 days' prior written notice, subject
                                         to any requirements imposed by any agreement related to the Property; provided that prior
                                         to such release, 777 shall first offer to convey the Property to be released to Desert
                                         Mountain and Desert Mountain shall be given 10 days from the date of receipt of such
                                         notice to notify 777 if it desires to accept conveyance of such Property. Upon the release
                                         of the Property or the conveyance to Desert Mountain, all right, title, and interest
                                         of 777 under this Agreement shall terminate with respect to that portion of the Property
                                         described in such notice and 777 shall be relieved of all further obligations set forth
                                         in this Agreement with respect to such portion except for the obligation for any reclamation
                                         required by applicable Environmental Law that directly results from 777's operations.
                                         Partial termination of this Agreement shall not affect the aggregate amount of the Advance
                                         Royalty Payments or the amount of Expenditures required to be expended under this Agreement.
                                         The Property, as reduced in area, will be identified through the preparation and execution
                                         of an amendment to this Agreement and the Memorandum of Agreement, to which amended exhibits
                                         shall be attached that describe the area to be retained. Any portions of the Property
                                         not retained by 777 shall be released by a recordable  

    
    
      	 		 

    

    

    
     
 document
                                         executed by 777, but shall remain subject to this Agreement only for as long as is necessary
                                         for 777 to comply with outstanding reclamation, closure, and other regulatory requirements
                                         resulting from its operations on such portion. 14.2 Reclamation Obligations. (a) Desert
                                         Mountain shall remain responsible for all payment, land disturbance, reclamation, environmental
                                         liabilities or other obligations with respect to the Property arising before the Effective
                                         Date, except to the extent that such land disturbance, reclamation or other obligations
                                         are increased by 777's operations on the Property. (b) 777 shall be solely responsible
                                         for all environmental liabilities and/or reclamation obligations resulting from its Exploration
                                         on the Property. 14.3 Title Defects, Defense, and Protection. (a) If in 777's opinion
                                         (i) Desert Mountain's title to all or any part of the Property at the time of this Agreement
                                         is defective, encumbered, less than as represented in this Agreement or is contaminated
                                         with Hazardous Materials; or (ii) Desert Mountain's title, as so represented, is contested
                                         or challenged by any person or entity, and Desert Mountain is unable or unwilling to
                                         promptly correct the alleged defect, encumbrance, or impairment; then 777 shall have
                                         the right to terminate this Agreement without further obligation (including being excused
                                         from any obligation to incur any Expenditures) and/or shall have the right, but not the
                                         obligation, to attempt to perfect or defend Desert Mountain's title including, without
                                         limitation, the right to amend or relocate any of the Mining Claims. If 777 elects to
                                         perfect or defend Desert Mountain's title, 777 shall not be liable to Desert Mountain
                                         if 777 is unsuccessful in, withdraws from, or discontinues litigation or other curative
                                         work. Time being of the essence, if 777 does attempt to perfect or defend Desert Mountain's
                                         title, Desert Mountain shall execute all documents and shall take such other actions
                                         as are reasonably necessary to assist 777 in its efforts. Any improvement or perfection
                                         of title to the Property shall inure to the benefit of Desert Mountain and 777 in the
                                         same manner and to the same extent as if such improvement or perfection has been made
                                         prior to the execution of this Agreement. (b) If title is, in 777's opinion, defective,
                                         encumbered, materially less than as represented in this Agreement or is contaminated
                                         with Hazardous Materials, then without waiving any right that it may have, the costs
                                         and expenses of perfecting or defending title shall be deductible by 777 against subsequent
                                         Advance Royalty Payments or NSR Royalty payments to be made to Desert Mountain under
                                         this Agreement and, if 777 releases the portion of the Property so affected from this
                                         Agreement, 777's liability to pay to Desert Mountain the Advance Royalty Payment shall
                                         be reduced in proportion to the number of acres of the Property for which title is defective,
                                         encumbered, less than as represented in this Agreement or is contaminated bears to the
                                         entire acreage of the Property. ARTICLE 15 MISCELLANEOUS .1 Force Majeure. Neither Party
                                         shall be liable to the other Party, and neither Party shall be deemed in default under
                                         this Agreement, for any failure or delay to perform any of its covenants and agreements
                                         when such performance is prevented by Force Majeure. For the purposes of this Agreement,
                                         "Force Majeure" means any cause not within the control of the Party, despite
                                         reasonable commercial efforts, including that performance of the covenants violates any
                                         law, ordinance, order, rule or regulation of any governmental (civil or military) agency
                                         or authority, including all governing bodies claiming jurisdiction over the issuance
                                         of permits, opposition or litigation initiated by local or national non-governmental
                                         interest groups or individuals opposed to the project, or contrary to any written agreement
                                         concerning the Property; provided that lack of funds shall not, in any case, be an event
                                         of Force Majeure. Such causes shall also include, without limitation, acts of God, acts
                                         of the public enemy, riots, fire, storm, flood, explosion, government restriction, failure
                                         to obtain on reasonable terms any permits, authorizations or approvals required from
                                         regulatory authorities, including environmental protection agencies, despite diligent
                                         attempts and the timely provision to such authorities of all information lawfully requested,
                                         lack of available equipment, qualified personnel or materials or other causes beyond
                                         the reasonable control of the affected Party, whether of the kind enumerated above or
                                         otherwise and whether foreseen, foreseeable or unforeseeable. Any period for performance
                                         affected by such events shall be extended for a period commensurate with the period of
                                         the delay. So far as possible, the Party affected will make all reasonable steps to remedy
                                         the delay caused by the events referred to above as soon as feasible; provided, however,
                                         that nothing contained in this Section 15.1 shall require any Party to settle any industrial
                                         dispute or to test the constitutionality of any law. The Party claiming Force Majeure
                                         shall promptly notify the other Party in writing of such event, of the steps being taken
                                         to resolve the delay and to resume performance, and of the time that the condition of
                                         Force Majeure has been alleviated. 15.2  

    
    
      	 		 

    

    

    
     
 Notices.
                                         Notices shall be in writing and shall be delivered either (a) personally, (b) by registered
                                         or certified mail, postage prepaid, (c) by any reputable commercial courier service,
                                         or (d) by confirmed e-mail transmission, and addressed or transmitted as follows: If
                                         to Desert Mountain: If to 777: Desert Mountain Gold, Inc. HPS Law Group LLC North 300
                                         West, Suite 3 North Centennial Way, Suite 205 Kaysville, Utah 84037 Mesa, AZ 85201 Attention:
                                         0. Jay Gatten Attention: Brint Hiatt Telephone: 801-544-3421 Telephone: 602-687-5851
                                         E-Mail: ojgatten@nae-xploration.com E-Mail: brint@hpslawgroup.com All notices shall be
                                         effective upon actual receipt if received during the normal business hours of the receiving
                                         Party and on the next normal business day of the receiving Party if delivered other than
                                         during normal business hours. The Parties may change the place to which notice is to
                                         be delivered by giving written notice to the other Party in accordance with this Section
                                         15.2. 15.3 Payments & Currency. All payments made under this Agreement shall be made
                                         in United States currency. 15.4 Letter of Intent. The Parties shall execute a letter
                                         of intent, in the form of Exhibit G ("Letter of Intent"). Neither Party shall
                                         record or disclose this Agreement or any shortened form of this Agreement, except the
                                         Letter of Intent, except where required to be disclosed to comply with applicable laws
                                         or regulations to any federal or state agency or to their foreign equivalents, to comply
                                         with the rules of any stock exchange, or to comply with a court or administrative order.
                                         15.5 Entire Agreement. This Agreement, together with all its attached Exhibits, represents
                                         the entire understanding of the Parties relating to the subject matter of this Agreement.
                                         No modification of this Agreement shall be effective unless it is in writing and is executed
                                         by the Parties. 15.6 Governing Law. This Agreement shall be construed, interpreted and
                                         governed by the laws of the State of Utah, without regard to conflict-of-laws or choiceof-laws
                                         rules that would permit or require application of the laws of any other jurisdiction.
                                         15.7 Rule Against Perpetuities. As to any provision in this Agreement, Desert Mountain
                                         and 777 do not intend that there shall be any violation of the Rule against Perpetuities
                                         or any rule relating to restraints upon alienation. If any provision of this Agreement
                                         would violate the Rule Against Perpetuities or some analogous statutory provision or
                                         any other statutory or common-law rule imposing time limits, then such provision shall
                                         continue only until 21 years, less one day, after the death of all the individuals who
                                         execute this Agreement on behalf of the Parties. Otherwise, if any such violation should
                                         inadvertently occur, it is the intent and desire of the Parties hereto that the appropriate
                                         court shall reform such provision in such a way as to approximate most closely the intent
                                         of the Parties hereto within the limits permissible under such rule or related rule.
                                         15.8 Agreement to Run with the Land. All of the covenants, conditions, and provisions
                                         of this Agreement shall run with the land and shall inure to the benefit of and be binding
                                         upon the Parties, their respective heirs, executors, administrators, successors and assigns.
                                         15.9 Counterparts. This Agreement may be executed in counterparts, each of which when
                                         so executed shall be deemed to be an original, and all such counterparts together shall
                                         constitute one and the same agreement. The Parties agree that this 1 Agreement may be
                                         transmitted between them by facsimile machine or an e-mailed pdf file. The Parties intend
                                         that signatures so transmitted constitute original signatures and that an agreement so
                                         transmitted containing the signatures (original, facsimile or pdf) of both Parties is
                                         binding on the Parties. 15.10 Waiver. No waiver of any breach of this Agreement shall
                                         be binding unless evidenced in writing, executed by the Party against whom the waiver
                                         is asserted. Any waiver shall extend only to the particular breach so waived and shall
                                         not limit any rights with respect to any future breach. 15.11 Further Assurances. Each
                                         Party shall execute such documents, assignments, endorsements, instruments and evidences
                                         of transfer and give such further assurances as shall be necessary or appropriate in
                                         connection with the performance of its obligations under this Agreement. 15.12 Severability.
                                         If any term or condition contained in this Agreement shall be in conflict with or inconsistent
                                         with applicable law, the same shall be deemed to be severable from, and shall not invalidate,
                                         the remaining terms and conditions of this Agreement. This Agreement, with any such terms
                                         and conditions so severed, shall continue in full force and effect. 15.13 Headings. The
                                         headings to the respective Articles and Sections hereof shall not be deemed as part of
                                         this Agreement but shall be regarded as having been used for convenience only. 15.14
                                         Survival. The following provisions of this Agreement shall survive termination or expiration
                                         of this Agreement: Article 4, Article 6 and Article 1 1, Section 8.1, Section 12.5,  

    
    
      	 		 

    

    

    
     
 Section
                                         14.1, Section 14.2, Section 14.3, Section 15.2 and Section 15.6. In addition, the rights
                                         of Desert Mountain under Sections 10.1 and 10.2 shall survive termination of expiration
                                         of this Agreement to the extent necessary to confirm that payments of the Royalty are
                                         correct. [SIGNATURE PAGE FOLLOWS] YJ Executed by 777 Corporation and Desert Mountain
                                         to be effective as of the Effective Date. Desert Mountain Gold, Inc. By: Name: Ja Title:
                                         President Seven Hundred Seventy 7, Inc. By: Name: Lisa Averbuch Title: President 777
                                         EXHIBIT A PROPERTY DESCRIPTION pal II. ilefft 04/41117!7 TtE 12111202 10112.1104 LIM
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                                         EXHIBIT B PROPERTY MAP CONFIDENTIALITY AGREEMENT MAP W O = M= .1111 .1..-+. Coyote Mine
                                         Project Map Leuend curvia.cr, Juab County, Utah, USA con A_NopowAiro44, I) (w Oattbot
                                         ;C M S two. b- API EXHIBIT C GUARANTEED MINIMUM ANNUAL ROYALTY 777 will make an annual
                                         advance royalty payment to DMG which will be the greater of the 3.5% NSR or: $100,000
                                         beginning year 2 $110,000 beginning year 3 $120,000 beginning year 4 $130,000 beginning
                                         year 5 $150,000 all remaining years EXHIBIT D NET SMELTER RETURN I. Definitions. Capitalized
                                         terms used in this Exhibit shall have the meaning specified in the Agreement or the following
                                         assigned meanings: A. "Applicable Period" means the one-year period coincident
                                         with the fiscal year of 777 following commencement of Commercial Production; provided
                                         that if 777 commences or discontinues Commercial Production other than on the first day
                                         of its fiscal year, Applicable Period shall include the period ending 12 months from
                                         the cessation of all mining activities. B. "Applicable Royalty Percentage"
                                         means the percentage set out in Section .1 of the Agreement, subject to the rights of
                                         777 set out in Section 4.2 C. "Bullion Value" means the sum of (i) the number
                                         of troy ounces of Gold Bullion returned or credited by the refinery to 777 during the
                                         Applicable Period multiplied by the average selling price during such period plus (ii)
                                         the number of troy ounces of Silver Bullion returned or credited by the refinery to 777
                                         during the Applicable Period multiplied by the average London Silver Market Fixing Ltd.
                                         closing market quotation during such period. The average price for the Applicable Period
                                         shall, in each case, be determined by dividing the sum of all daily prices posted during
                                         such period by the number of days that prices were posted. The posted price shall be
                                         obtained from The Wall Street Journal, Reuters, or other reliable source. If either the
                                         London Gold Market Fixing Ltd. P.M Fixing or the London Silver Market Fixing Ltd. Fixing
                                         ceases to be published, the parties shall agree upon a similar alternative method for
                                         determining the average daily spot market price for gold or silver, as the case may be,
                                         or upon failure to so agree, the average of the daily calculated spot COMEX closing price
                                         during such period, as determined by Amnor, shall be used. D. "Bullion" means
                                         gold or silver bullion refined to a form that meets good delivery standards in the London
                                         Bullion Market, or comparable terminal market. E. "Commercial Production" shall
                                         mean the production of Valuable Minerals in commercial quantities and grades after 777
                                         has begun continuous mining operations on the Property. F. "Net Smelter Return"
                                         shall mean the following for the applicable year: (a) For Gold and Silver Bullion refined
                                         and returned from a refinery to 777 during an applicable period, Net Smelter Return shall
                                         be deemed to be the Bullion Value less: (i) Refining Costs, (ii) Selling and Delivery
                                         Costs and (iii) Taxes. (b). For Other Products, Net Smelter Return shall mean the amount
                                         of Revenues actually received by 777 less: (i) Refining Costs, (ii) Selling and Delivery
                                         Costs and (iii) Taxes. G. "Other Products" means any ores, concentrates, precipitates,
                                         cathodes, leach solutions or any other primary, intermediate or final product or any
                                         other mineral substance other than Gold and Silver Bullion obtained from substances mined
                                         and removed from the Property. H. "Refining Costs" means all costs and expenses
                                         of smelting and refining, including without limitation, all costs of assaying, sampling,
                                         custom-smelting and refining, all independent representative and umpire charges, and
                                         the costs of transporting the material concentrates or dore metal from the property to
                                         the refinery or smelter, as the case may be. I "Revenues" means the amount
                                         of revenues actually received by 777 from the physical sale of Other Products during
                                         the applicable period. In the case of physical sales to affiliates of 777, the revenues
                                         shall be determined on an arm's length basis. J. "Selling and Delivery Costs"
                                         means all costs and expenses incurred with, or in connection with, the transporting,
                                         insuring, stockpiling, warehousing, shipping, moving, selling and marketing of Valuable
                                         Minerals produced from the Property and the delivery of such minerals to the ultimate
                                         delivery to customers, including without limitation, all transportation costs, insurance
                                         costs and expenses, shipping and delivery costs, agency and brokerage fees and commissions,
                                         storage charges, and the costs of any currency conversions. K. "Taxes" mean
                                         all imposts, royalties, duties, assessments, and taxes (other than income taxes) imposed
                                         upon or in connection with producing, transporting and selling Bullion or Other Products
                                         by any federal, state or local governmental entity or subdivision thereof. II. Calculation
                                         and Payment of the NSR Royalty. A. Calculation. The amount of the NSR Royalty due to
                                         Owner in any Applicable Period shall be the product of: (1) the sum of the Net Smelter
                                         Return for Bullion for such year plus the Net Smelter Return for Other Products for such
                                         year; (2) multiplied by the Applicable Royalty Percentage. B. Payment. Payment of the
                                         NSR Royalty will be at the time and place specified in the Agreement and subject to the
                                         bookkeeping, annual reports, and other provisions of the Agreement. Ill. Accounting Matters.
                                         A. Accounting Principles. All records associated with sales of Bullion or Other Products
                                         and with calculation of the NSR Royalty shall be determined in accordance with generally
                                         accepted accounting principles and practices consistently applied by 777. t>( B. Records.
                                         shall keep accurate records of tonnage, volume of products, analyses of products, weight,
                                         moisture, assays of pay metal content and other records, as appropriate, related to the
                                         computation of the NSR Royalty. C. Confidentiality. All information and data provided
                                         to Desert Mountain regarding the determination of the NSR Royalty shall be confidential
                                         and subject to the confidentiality restrictions of the Agreement. EXHIBIT E EXCEPTION
                                         TO THE REPRESENTATIONS AND WARRANTIES Dutch Peak Resources LLC and/or Amnor Energy Corporation
                                         ("Dutch Peak") currently has a mining permit covering some of the mining claims
                                         which are the subject of the acquisition agreement between 777 and DMG. DMG agrees to
                                         take whatever action legally and reasonably available to have such permit terminated,
                                         should Dutch Peak attempt to assert any claims to the detriment of 777. Should DMG be
                                         unable to take such actions, and should 777 be required to defends its claims, any costs
                                         incurred shall be reimbursed from any future Guaranteed Minimum Annual Royalty Payments
                                         and/or NSR Royalty payments. EXHIBIT F FORM OF DEED AND ASIGNMENT To be completed within
                                         7 days of execution of contract EXHIBIT G Letter of Intent Letter of Intent Personal
                                         & Confidential Desert Mountain Gold, LLC RE: Purchase Rights to Lease Agreement Dear
                                         Gentlemen: This letter sets forth our mutual understanding regarding the lease of Coyote
                                         Knolls Mining Claims. This transaction will be subject to (a) the negotiation and execution
                                         of Agreements containing appropriate representations and warranties, as well as customary
                                         covenants and conditions and (b) due diligence requirements. The agreement will provide
                                         that: . The lease will have a $200,000 payment which shall be made as follows: upon signing
                                         of this LOI, a due diligence quiet period will begin. Upon the satisfactory completion
                                         of a 30-day due diligence period (extended to -day should information not be made available
                                         in a timely manner), a $50,000 payment will be made. An additional $50,000 payment per
                                         quarter for quarters will be made such that it is completely paid in 12 months. The lease
                                         term shall be for 10 years renewable for 5 year periods. . There shall be an initial
                                         work commitment as follows: $400,000 in the first 18 months after executing a signed
                                         contract and $300,000 in year 2 starting after the initial 18 month period. Estimates
                                         of the work commitment include the items listed below. Small Mine Permit and Reclamation
                                         Bond. $ 75,000 NEPA Study (if required) $ 25,000 Water Well and Permitting $ 50,000 Drill
                                         Commitment (5 holes of 300 to 600 meters) $ 250,000 . .5% NSR as per definition. Net
                                         Production less Transportation and Refining. . Minimum Annual Maintence Fee as follows:
                                         • 777 will make an annual maintenance payment to DMG which will be the greater of
                                         the 3.5% NSR or: $100,000 beginning year 2 $110,000 beginning year 3 $120,000 beginning
                                         year 4 $130,000 beginning year 5 $150,000 all remaining years . DMG will offer an Option
                                         to 777 to purchase 1.5% of the NSR for a $1,500,000 cash payment to be exercised before
                                         the end of the 5th anniversary of this Agreement. 6. 777 has the rights to sublease this
                                         agreement should the need arise under conditions set forth in the contract. 7. Copies
                                         of all drill data, testing and evaluations completed by the 777 will be provided to DMG
                                         as soon as reasonably completed. This information will be held confidential among the
                                         parties. 8. The parties will attempt to complete the transaction as promptly as possible.
                                         9. The parties will each bear its respective expenses incurred in connection with the
                                         negotiation, preparation and consummation of the contemplated transaction. 10. This letter
                                         shall not constitute a binding contract between the parties, but purports to set forth
                                         their present intent with respect to the terms proposed to be incorporated in the Agreements.
                                         11. This Letter of Intent shall be governed by, and construed in accordance with, the
                                         internal laws of the State of Nevada, County of Clark applicable to contracts to be performed
                                         in such state, without regard to the conflicts of law principles of such state. The Letter
                                         of Intent may be executed in counterparts, each of which shall be an original, but all
                                         of which shall constitute one letter. Please indicate your acceptance and approval of
                                         this letter by signing and dating below. Dated on the day of September, 2018. Br: Lisa
                                         Averbuch, President 77 Acknowledged and Accepted: By: . 7" T

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