Document:

coyote101.htm

Exhibit 10.1

PROMISSORY NOTE

 

                                                                                      August ___, 2012

Davie, Florida

 

WHEREAS, the undersigned, Coyote Resources, Inc., a Nevada corporation (“Maker”), received from ________________ (“Payee”) Sixteen Thousand Seven Hundred Nine Dollars and Fifty Cents ($16,709.50) on July ___, 2012, and Seventy Thousand Dollars ($70,000.00) on August ___, 2012, for a total of Eighty Six Thousand Seven Hundred Nine Dollars and Fifty Cents ($86,709.50) (“Principal”).

 

FOR VALUE RECEIVED, the receipt and sufficiency of which are hereby acknowledged, the undersigned, the Maker hereby promises to pay to Payee the Principal and any accrued interest, in lawful money of the United States of America.

 

ARTICLE I.

PAYMENTS

 

1.1 Principal and Interest. There shall be annual interest of twelve percent (12%) on the Principal evidenced by this Promissory Note. Such interest shall accrue as of the date that those funds were received by the Maker. The Principal evidenced by this Promissory Note together with any accrued interest shall be due and payable on November ___, 2012. All payments shall be made in lawful money of the United States of America.

 

1.2 Manner of Payment. Payment of the indebtedness evidenced by this Promissory Note shall be paid by check at such place as Payee shall designate to Maker in writing. If payment of the indebtedness evidenced by this Promissory Note is due on a day which is not a Business Day, such payment shall be due on the next succeeding Business Day. “Business Day” means any day other than a Saturday, Sunday or legal holiday in the State of Nevada.

 

1.3 Prepayment. Maker may prepay this Note in whole or in part on any date without premium or penalty.

 

ARTICLE II.

DEFAULTS

 

2.1 Events of Default. The occurrence of any one or more of the following events with respect to Maker shall constitute an event of default (“Event of Default”):

 

(a)           In the event, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (a “Bankruptcy Law”), Maker shall (i) commence a voluntary proceeding; (ii) consent to the entry of an order for relief against Maker in an involuntary proceeding; (iii) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official; (iv) make an assignment for the benefit of its creditors; or (v) admit in writing Maker’s inability to pay its debts as those debts become due.

 

(b)           In the event, a court of competent jurisdiction enters an order or decree pursuant to any Bankruptcy Law that (i) is for relief against Maker in an involuntary proceeding; (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Maker or substantially all of Maker’s properties; or (iii) orders the liquidation of Maker, and in each event the order or decree is not dismissed within one hundred twenty (120) days.

 

(c)           In the event Maker fails to pay the Principal and any accrued interest (and any additional amounts provided for under Article I, Section 1.1 of this Agreement) evidenced by this Promissory Note upon demand by Payee.

 

  

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2.2 Notice by Maker. Maker shall notify Payee in writing within ten (10) days after the occurrence of any Event of Default of which Maker acquires knowledge.

 

2.3 Remedies. Upon the occurrence of an Event of Default (unless all Events of Default have been cured or waived by Payee), Payee may, at its option, (i) by written notice to Maker, declare the entire unpaid principal balance evidenced by this Promissory Note immediately due and payable regardless of any prior forbearance, and (ii) exercise any and all rights and remedies available to Payee pursuant to applicable law, including, without limitation, the right to collect from Maker the amount due pursuant to this Promissory Note. Maker shall pay all reasonable costs and expenses incurred by or on behalf of Payee in connection with Payee’s exercise of any or all of its rights and remedies pursuant to this Promissory Note, including, without limitation, reasonable attorneys’ fees.

 

ARTICLE III.

MISCELLANEOUS

 

3.1 Severability. If any provision in this Promissory Note is determined by a court of competent jurisdiction to be invalid or unenforceable, the other provisions of this Promissory Note will remain in full force and effect. Any provision of this Promissory Note determined by a court of competent jurisdiction invalid or unenforceable only in part will remain in full force and effect to the extent not determined to invalid or unenforceable.

 

3.2 Governing Law. This Promissory Note will be governed by the laws of the State of Nevada, without regard to conflicts of laws principles.

 

3.3 Parties in Interest. This Promissory Note shall not be assigned or transferred by Payee without the express prior written consent of Maker, except by operation of law.

 

3.4 Section Headings, Construction. The headings of sections in this Promissory Note are provided for convenience only and will not affect the construction or interpretation of the provisions of this Promissory Note. All references to “section” or “sections” refer to the corresponding section or sections of this Promissory Note unless otherwise specified. All words used in this Promissory Note will be construed to be of such gender or number as the circumstances require.

 

3.5 Entire Agreement.  The Maker and Payee acknowledge and agree that this Promissory Note is the complete and exclusive statement of the mutual understanding of the parties and that it supersedes and cancels all previous written and oral agreements and communications relating to the subject matter of this Promissory Note.

 

IN WITNESS WHEREOF, Maker has executed and delivered this Promissory Note as of the date first specified above.

 

Coyote Resources, Inc.,

a Nevada corporation,

located at 1671 SW 105 Lane

Davie, FL 33324

 

     

	By:	 	 
	 	Guy Martin	 
	Its:	President	 

 

 

 

2Unassociated Document

 

OPTION TO PURCHASE AND ROYALTY AGREEMENT

THIS OPTION TO PURCHASE AND ROYALTY AGREEMENT (this “Agreement”) is made this 11th day of June, 2012, (the “Effective Date”) by and among ARDEN LARSON (“Optionor”) and STANDARD GOLD CORP., a Nevada corporation (“Optionee”).

RECITALS

A.           Optionor is the recorded and beneficial owner of an undivided 100% interest in certain unpatented mining claims in the County of Eureka, the State of Nevada, United States, and in possession of all Data relating there to, known as the Klondike Project, as detailed in the specific description of 64 claims attached hereto and made a part hereof as Exhibit “A” (the “Property”).

B.           Optionor has agreed to grant, and Optionee desires to acquire, an option to earn a 100% right, title and interest in and to the Property on the terms and conditions set out herein;

NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Optionor and Optionee agree as follows:

1.           DEFINITIONS

1.1           Definitions.  The following terms, wherever used in this Agreement, shall have the meanings set forth below:

	
(a)

	
“Closing” means the date to be mutually agreed upon between the parties.

	
(b)

	
“Data” means all information and knowledge, in whatever form, paper, electronic or otherwise, relating to the Property and Area of Interest, including but not limited to, geologic reports, drill core, assay results, geophysical reports, geochemical reports, technical data, analysis, and compilations, feasibility reports, environmental reports, etc.

	
(c)

	
“Minerals” shall mean any products of value derived from the Property;

	
(d)

	
“Mining Operations” means every kind of work done on or in respect of the Property or the product derived from the Property during the Term by, on the behalf of or under the direction of Optionee including, without limiting the generality of the foregoing, the work of assessment, geophysical, geochemical and geological surveys, studies and mapping, investigating, drilling, designing, examining, equipping, improving, surveying, bulk sampling and processing such samples, shaft-sinking, raising, cross-cutting and drifting, searching for, digging, trucking, sampling, working and procuring minerals, including stone, crushed rock or aggregate, ores and metals, surveying and bringing any mining claims to lease or patent, the construction and maintenance of necessary access roads, drill site preparation, and all other work usually considered to be prospecting, exploration, development and mining work; in paying wages and salaries of workers engaged in the work and in supplying food, lodging, transportation and other reasonable needs of the workers including the costs of creating and maintaining a camp on or near the Property; in paying assessments or premiums for workers’ compensation insurance, contributions for unemployment insurance or other pay allowances or benefits customarily paid in the district to those workers; in paying rentals, license renewal fees, taxes and other governmental charges required to keep the Property in good standing in accordance with the laws of the County of Eureka, State of Nevada, United States, including the costs of claim renewal fees and permits; in purchasing or renting plant, buildings, machinery, tools, appliances, equipment or supplies and in installing, erecting, detaching and removing them; mining, milling, concentrating, rehabilitation, reclamation and environmental protection, including the cost of resolving any environmental problems associated with the work on the Property including from creating drill sites or access roads that may affect any grounds or waters surrounding the Property as may be required by any governmental agency or otherwise, and in the management of any work which may be done on the Property or in any other respect necessary for the due carrying out of the prospecting, exploration and development work;

 

  

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(e)

	
“Net Smelter Return” means the proceeds received by Optionee from any smelter or other purchaser from the sale of any ores, concentrates or minerals produced from the Property;

	
(f)

	
“Option” means the right granted by Optionor to Optionee to acquire up to a 100% undivided right, title and interest in and to the Property as provided in Section 4 hereof;

	
(g)

	
“Royalty” means the net smelter return royalty schedule described in Exhibit “B” attached hereto;

	
(h)

	
“Term” means the period during the term of this Agreement from the Effective Date to and including the date of exercise of the Option;

1.2           Headings.  The headings of this Agreement and the exhibits are solely for convenience of reference and do not affect the interpretation of it or define, limit or construe the contents of any provision of this Agreement.

1.3           Number and Gender.  Words importing the singular number shall include the plural and vice versa, words importing the neuter gender shall include the masculine and feminine genders, and words importing persons shall include firms and corporations and vice versa.

1.4           Governing Law. This Agreement and the rights and obligations and relations of the parties shall be governed by and construed in accordance with the laws of the State of Nevada  and the federal laws of the United States applicable therein (but without giving effect to any conflict of law rules). The parties agree that the courts of the State of Nevada shall have jurisdiction to entertain any action or other legal proceedings based on any provisions of this Agreement. Each party attorns to the jurisdiction of the courts of the State of Nevada.

1.5           Currency.  All references to currency in this Agreement are references to the lawful currency of the United States unless otherwise specifically stated.

 

  

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2.           REPRESENTATIONS AND WARRANTIES

2.1           Optionor Representations and Warranties.  Optionor represents and warrants to Optionee that:

	
(a)

	
Optionor is the registered and beneficial owner and, at the time of transfer to Optionee of an interest in the unpatented mining claims comprising the Property, they will be the registered and beneficial owners of all of the unpatented mining claims comprising the Property free and clear of all liens, charges and claims of others, save and except the Royalty, and no taxes or rentals are due in respect of any thereof;

	
(b)

	
the unpatented mining claims comprised in the Property have been duly and validly located and recorded, and are in good standing in the office of the mining recorder or such other applicable regulatory agency having jurisdiction over the Property;

	
(c)

	
there are no known adverse claims or challenges against or to the ownership of or title to any of the unpatented mining claims comprising the Property, nor to the knowledge of Optionor is there any basis therefore, and there are no outstanding agreements or options to acquire or purchase the Property or any portion thereof, and no known person having any royalty or other interest whatsoever in production from any of the unpatented mining claims comprising the Property;

	
(d)

	
Optionor has duly obtained all authorizations for the execution of this Agreement and for the performance of this Agreement by it, and the consummation of the transaction herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under any indenture, agreement or other instrument whatsoever to which Optionor is a party or by which it is bound or to which it may be subject, nor does it conflict with any applicable law by which Optionor is bound; and

	
(e)

	
no proceedings are pending for, and Optionor is unaware of any basis for the institution of any proceedings leading to, the dissolution or winding up, or the placing of Optionor in bankruptcy or subject to any other laws governing the affairs of insolvent persons.

2.2           Waiver and Survival.  The representations and warranties contained in Section 2.1 are provided for the exclusive benefit of Optionee, have been relied upon by Optionee in entering into this Agreement and a breach of any one or more thereof may be waived by Optionee in whole or in part at any time without prejudice to its rights in respect of any other breach of the same or any other representation or warranty; and the representations and warranties contained in Section 2.1 will survive Closing hereunder.

2.3           Optionee’s Representations, Warranties and Covenants.  Optionee represents and warrants to Optionor that:

	
(a)

	
Optionee has been duly incorporated and validly exists as a corporation in good standing under the laws of the State of Nevada;

 

  

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(b)

	
it has duly obtained all corporate authorizations for the execution of this Agreement and for the performance of this Agreement by it, and the consummation of the transaction herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under the provisions of, the Articles or the constating documents of Optionee or any shareholders’ or directors’ resolution, indenture, agreement or other instrument whatsoever to which Optionee is a party or by which it is bound or to which it may be subject, nor does it conflict with any applicable law by which Optionee is bound; and

	
(c)

	
no proceedings are pending for, and Optionee is unaware of any basis for the institution of any proceedings leading to, the dissolution or winding up of Optionee or the placing of Optionee in bankruptcy or subject to any other laws governing the affairs of insolvent persons.

2.4           Waiver and Survival. The representations and warranties contained in Section 2.3 are provided for the exclusive benefit of Optionor, have been relied upon by Optionor in entering into this Agreement and a breach of any one or more thereof may be waived by Optionor in whole or in part at any time without prejudice to it rights in respect of any other breach of the same or any other representation or warranty; and the representations and warranties contained in Section 2.3 will survive Closing hereunder.

3.           ACQUISITION AND EXERCISE OF THE OPTION

3.1           Grant of Option.  Optionor hereby grants to Optionee the sole and immediate working right and option with respect to the Property, for the period from the Effective Date of this Agreement until the 10th anniversary of the Effective Date, to earn a One Hundred Percent (100%) interest in and to the Property (the “Option”) free and clear of all charges encumbrances and claims, save and except for the Royalty.

3.2           Exercise of the Option. In order to maintain in force the working right and Option granted to it, and to exercise the Option, Optionee must:

Pay to Optionor a total sum of United States FIVE HUNDERED SEVENTY FIVE THOUSAND AND NO/100 DOLLARS (US $575,000.00) in cash in the amounts on or before the dates as set forth below:

	
Payment Date:

	
Payment Amount:

	
Effective Date

	
US $25,000.00

	
Six (6) Months after Effective Date

	
US $25,000.00

	
1st Anniversary of Effective Date

	
US $30,000.00

	
2nd Anniversary of Effective Date

	
US $35,000.00

	
3rd Anniversary of Effective Date

	
US $40,000.00

	
4th Anniversary of Effective Date

	
US $45,000.00

	
5th Anniversary of Effective Date

	
US $50,000.00

	
6th Anniversary of Effective Date

	
US $55,000.00

	
7th Anniversary of Effective Date

	
US $60,000.00

	
8th Anniversary of Effective Date

	
US $65,000.00

	
9th Anniversary of Effective Date

	
US $70,000.00

	
10th Anniversary of Effective Date

	
US $75,000.00

 

  

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In the event commercial production is achieved prior to completion of the payment schedule as described above, the balance due shall become payable upon such event.  For purposes herein, the date that commercial production is achieved shall be the first day of the first full month after no less than 90% sustained material throughput of processing plant nameplate capacity has been achieved for a period of not less than three continuous months.

Upon Optionee making all cash payments to Optionor as set forth above, Optionee shall have exercised the Option and shall have earned a one hundred percent (100%) interest in and to the Property free and clear of all charges encumbrances and claims, save and except for the Royalty.  Upon exercise of the Option, Optionor shall deliver to Optionee, or such designee as Optionee may designate, within thirty (30) days an executed and recorded version of the Quitclaim Deed and Reservation of Royalty Interest in substantially the same form as set forth in Exhibit “B” (the “Recorded Quitclaim Deed”).

3.4           Royalty. Upon Optionor’s delivery of the Recorded Quitclaim to Optionee, Optionee shall pay to Optionor a Royalty as set forth in the Recorded Quitclaim Deed.  Notwithstanding the forgoing, at Optionee’s sole and absolute discretion prior to the commencement of commercial production, Optionee shall have the right at any time to purchase or buy-down up to one half of any, each or all of the three Royalty components from Optionor by making payments of US $500,000.00 per 0.25% of base net smelter return royalties for Gold, Silver and/or Other Products to Optionor, which shall be exercised only in one-half increments of percentage points.  In the event that Optionee exercises the right to purchase or buy-down the Royalty, Optionor shall deliver to Optionee any documents as Optionee may require, in its sole and absolute discretion, evidencing such reduction of Optionor’s Royalty interest.  For clarification, the parties understand that any royalty payments made by Optionee to Optionor prior to the election to purchase the Royalty may not be credited toward the purchase or buy-down price.

 

  

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Base Net Smelter Return Royalty (%)

 

	
 

 

 

 

Average Market Price

	
 

Maximum Buy-Down Net Smelter Return Royalty (%)

 

	
GOLD:

	
1.00

	
less than $1,200/troy oz.

	
0.50

	  	
1.50

	
$1,201 to $1,600/troy oz.<

	
0.75

	  	
2.00

	
$1,601 to $2,000/troy oz.<

	
1.00

	  	
2.50

	
$2,001 to $2,400/troy oz.<

	
1.25

	  	
3.00

	
$2,401 to $2,800/troy oz.<

	
1.50

	  	
3.50

	
$2,801 to $3,200/troy oz.<

	
1.75

	  	
4.00

	
greater than $3,200/toy oz.<

	
2.00

	  	  	  	  
	
SILVER:

	
1.00

	
less than $15/troy oz.

	
0.50

	  	
1.50

	
$15.01 to $30/troy oz.<

	
0.75

	  	
2.00

	
$30.01 to $45/troy oz.<

	
1.00

	  	
2.50

	
$45.01 to $60/troy oz.<

	
1.25

	  	
3.00

	
$60.01 to $75/troy oz.<

	
1.50

	  	
3.50

	
$75.01 to $90/troy oz.<

	
1.75

	  	
4.00

	
greater than $90/toy oz.<

	
2.00

	  	  	  	  
	
OTHER PRODUCTS:

	
 

2.00

	
 

As determined by products

	
 

1.00

At the option of Optionor, the royalty due from commercial production of gold and/or silver during any given calendar quarter may be paid to Optionor in cash or in kind based on the average prevailing market prices during such calendar quarter; provided however, if payment is made in kind, Optionor shall be responsible for all transaction costs, including insurance and transportation charges, incurred to deliver in kind gold and/or silver as designated by Optionor.

3.5           Working Right.  During the Term, Optionee shall have the sole and exclusive working right to enter on and conduct the Mining Operations on the Property as Optionee in its sole and absolute discretion.  Optionee shall have quiet and exclusive possession from the date of this agreement and thereafter during the currency of the working right and option, with full power and authority to Optionee, its servants, agents, workers or contractors, to carry on Mining Operations in searching for minerals in such manner as Optionee in its discretion may determine, including the right to erect, bring and install on the Property all buildings, plant, machinery, equipment, tools, appliances or supplies as Optionee shall deem necessary and proper and the right to remove therefrom reasonable quantities of rocks, ores and minerals and to transport them for the purposes of sampling, metallurgical testing and assaying. All Mining Operations conducted by Optionee shall be in accordance with good exploration, development and mining practice, and in compliance with all applicable legislation.

3.6           Operator.  During the Term, Optionee shall be the Operator of the work to be carried out on the Property and shall be free to contract out such parts of the work as it should choose in its sole and absolute discretion.

3.7           Maintaining the Property. During the Term, Optionee shall pay all of the applicable property taxes and fees necessary to keep the Property in good standing and file such assessment material as may be required under the laws of the County of Eureka, the State of Nevada and the United States.  Notwithstanding the forgoing and in acknowledgement that record title of the Property shall remain in the name of Optionor until such time as exercise of the Option, Optionor shall cooperate with and assist Optionee with the preparation of documentation required for the payment of such taxes and fees, and assessment filings.  In the event that Optionor fails to cooperate with and assist Optionee with the preparation of documentation required for the payment of such taxes and fees, and assessment filings, Optionor hereby grants Optionee the full power of attorney to make all such payments and take all actions necessary or prudent, in Optionee’s sole and absolute discretion, to preserve the property, and any such reasonable costs incurred by Optionee shall be deducted from any cash payments due Optionor pursuant to Section 3.2(a) hereunder.

 

  

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3.8           Option to Purchase Property Only.  This Agreement is an option to purchase only.  Optionee shall not earn any interest in the Property until it has completed all of the payments in Section 3.2 herein.

3.9           Area of Interest.

	
(a)

	
There shall be an area of mutual interest which shall comprise that area which is within one and one-half miles of the outermost boundary of each of the unpatented mining claims which constitute the Property (the “Area of Interest”) as at the date of this Agreement.

	
(b)

	
If at any time during the Term, any party (in this section only called the “Acquiring Party”) stakes, locates or otherwise acquires, directly or indirectly, any right to or interest in any unpatented mining claim, license, lease, grant, concession, permit, patent, fee land or other mineral property located wholly or partly within the Area of Interest, the Acquiring Party shall forthwith give notice to the other parties of that staking or acquiring, the costs thereof and all details in possession of that party with respect to the nature of the property and the known mineralization.

	
(c)

	
Each party may, within 30 days of the receipt of the Acquiring Party’s notice, elect by notice to the Acquiring Party, to require any such mineral properties and the right or interest acquired be included in the Property and thereafter form part of the Property for all purposes of this Agreement.

	
(d)

	
In the event that Optionee is the Acquiring Party, and Optionor elects to require such mineral properties and rights or interests acquired by Optionee be included in the Property, Optionor shall within 30 days of submission of its election notice to Optionee reimburse Optionee for all acquisition and reasonable transaction costs related to such acquisition.

	
(e)

	
In the event that any such mineral properties or rights acquired and included in the Property as set forth herein are burdened by any form of royalty, such royalty shall be deducted from the Royalty due Optionor hereunder, provided however, that in no event shall Optionor’s Royalty be reduced to less than 0.50% net smelter return for gold, silver and/or other products.

3.10           Transfer of Title on Exercise. Within thirty (30) days following the exercise of the Option, Optionor will prepare, execute and deliver to Optionee all transfer documents necessary to effect the transfer and registration of an undivided one hundred percent (100%) interest in and to the Property into the name of Optionee.

 

  

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3.11           Survival. The provisions of this Agreement are written for the benefit of Optionor and have been relied upon by Optionor in granting the Option to Purchase hereunder and shall survive the expiry of the Term of this Agreement and for a period of ten years thereafter.

4.           OBLIGATIONS OF OPTIONEE DURING OPTION PERIOD

4.1           Optionor Access to Property.  During the Term, and prior to the exercise of the Option by Optionee, Optionee will permit the directors, officers, employees and designated consultants of Optionor, at their own risk, access to the Property at all reasonable times, provided that Optionor agrees to indemnify Optionee against, and to save it harmless from, all costs, claims, liabilities and expenses that Optionee may incur or suffer as a result of any injury (including injury causing death) to any director, officer, employee or designated consultant of Optionor while on the Property.

4.2           Annual Report of Results. During the Term, Optionee will deliver to Optionor within three (3) months after the anniversary of each calendar year a full report (including up-to-date maps if there are any) describing the results of work done in the last completed calendar year.

4.3           Workmanship, Reclamation. During the Term, Optionee will do all work on the Property in a good and workmanlike fashion and in accordance with all applicable laws, regulations, orders and ordinances of any applicable governmental authority including conducting all reclamation required by the applicable regulatory authorities with respect to the work conducted by Optionee on the Property.

4.4           Indemnity. Optionee shall indemnify and save Optionor harmless from and against all losses, liabilities, claims, demands, damages, expenses, suits, injury or death in any way referable to Mining Operations conducted; provided, that Optionor shall not be indemnified for any loss, liability, claim, demand, damage, expense, injury or death resulting from the negligence or willful misconduct of Optionor, or its employees, agents or contractors. Optionee shall cause to be paid all workers and wage earners employed by it or its contractors on the Property and all materials purchased in connection with it.

4.5           Reports on Assays. During the Term, Optionee will deliver to Optionor forthwith after receipt by Optionee any and all assay results for samples taken from the Property, together with reports showing the location from which the samples were taken, the type of samples and any geological interpretation or analysis thereof obtained or performed by Optionee.

4.6           Abandonment.  Optionee may at any time during the Term, abandon any one or more of the unpatented mining claims (the “Abandoned Claims”) which comprise the Property.  Optionee shall give Optionor notice in writing Sixty (60) days prior to any abandonment (the “Notice of Abandonment”).  If requested by Optionor following receipt of Notice of Abandonment, Optionee shall transfer to Optionor, or its nominee, any or all of the claims proposed to be abandoned by Optionee. Upon delivery of the Notice of Abandonment to Optionor, the Abandoned Claims will for all purposes of this Agreement cease to form part of the Property and any of the Abandoned Claims transferred to Optionor shall cease to be part of the Area of Interest pursuant to this Agreement.

 

  

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4.7           Assessment Work. Optionee shall, with the assistance of and in consultation with Optionor, file the necessary documentation for maintenance of claims, thirty (30) days prior to the due date.

4.8           Project Work Commitments.  Optionee shall expend no less than a total sum of EIGHT HUNDRED FIFTY THOUSAND AND N0/100 DOLLARS ($850,000.00) as a minimum work commitment for the benefit of the Property prior to the 5th anniversary of the Effective Date as set forth below:

	
  

	
(i)

	
US $100,000.00 prior to the 1st anniversary of the Effective Date;

	
  

	
(ii)

	
an additional US $150,000.00 prior to the 2nd anniversary of the Effective Date;

	
  

	
(iii)

	
an additional US $200,000.00 prior to the 3rd anniversary of the Effective Date;

	
  

	
(iv)

	
an additional US $200,000.00 prior to the 4th anniversary of the Effective Date; and

	
  

	
(v)

	
an additional US $200,000.00 prior to the 5th anniversary of the Effective Date.

Any amount expended by Optionee in any given year in excess of the amounts as set forth above shall be credited toward the minimum work commitment expenditures for the following years.  In the event that Optionee does not meet the minimum work commitment in any given year as set forth above, then Optionee shall make cash payments to Optionor equal to the difference between the minimum amount required and the amount actually expended multiplied by 50%, provided however, that such payment shall not be due for each of the 12-month periods from the effective in which Optionee terminates this Agreement.

5.           COVENANTS OF OPTIONEE AND OPTIONOR

5.1           Covenants of Optionee. Optionee covenants and agrees with Optionor that so long as Optionee is the Operator of the work carried out on the Property:

	
(a)

	
It will maintain the Property in good standing and will pay all rentals, rates, duties, royalties, assessments, fees, taxes or other government charges levied with respect to the Property or Optionee’s operations thereon which shall fall due during the Term.  Notwithstanding the forgoing, and in acknowledgement that record title of the Property shall remain in the name of Optionor until such time as exercise of the Option, Optionor shall cooperate with and assist Optionee with the preparation of documentation required for the payment of such rentals, rates, duties, royalties, assessments, fees, taxes or other government charges levied with respect to the Property or Optionee’s operation thereon which shall fall due during the Term.  In the event that Optionor fails to cooperate with and assist Optionee with the preparation of documentation required for the payment of such rentals, rates, duties, royalties, assessments, fees, taxes or other government charges levied with respect to the Property or Optionee’s operation thereon which shall fall due during the Term, Optionor hereby grants Optionee the full power of attorney to make all such payments and take all actions necessary or prudent, in Optionee’s sole and absolute discretion, to preserve the property, and any such payments made as well any reasonable costs incurred by Optionee shall be deducted from any cash payments due Optionor pursuant to Section 3.2(a) hereunder;

 

  

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(b)

	
It will carry out its operations on the Property in a careful and miner-like manner and in accordance with applicable laws and regulations of the State of Nevada;

	
(c)

	
It will properly pay all accounts of every nature and kind for wages, supplies, Workers’ Compensation Assessments, or the equivalent under Nevada law, income tax deductions, and all other accounts and indebtedness incurred by it so that no claim or lien arises thereon or upon the ore or minerals contained therein and it will indemnify Optionor and save them harmless from any and all loss, costs, actions, suits, damages or claims which may be made against Optionor in respect of the operations on the Property, provided however, that Optionee shall have the right to contest the validity of any such lien or claim of lien;

	
(d)

	
Upon termination of this Agreement, it will leave the Property in a safe condition in accordance with the applicable regulatory requirements;

	
(e)

	
It will at all times maintain and keep true and correct records of all production and the disposition thereof and of all costs and expenditures incurred as well as all other data necessary or proper for the settlement of accounts between the parties hereto in connection with their rights and obligations under this Agreement;

	
(f)

	
It will obtain all necessary environmental permits prior to commencing operations on the Property and it will be responsible for any environmental assessments made by the governmental bodies as a result of operations on the Property; and

	
(g)

	
It will indemnify and save harmless Optionor from any and all liability arising in relation to the Property including, but not limited to, any liability from environmental damage during the Term, unless such liability was caused by the fault of Optionor, or either of them, or their directors, officers, employees, agents or consultants.

5.2           Covenants of Optionor. Optionor covenants and agrees with Optionee that:

	
(a)

	
During the Term, should Optionor receive any notice, assessment, permit or any other documentation from the applicable regulatory authorities relating to the Property or the Operations of Optionee thereon, Optionor will promptly forward a true copy of the same to Optionee.

 

  

10

  

 

6.           TERMINATION OF OPTION

6.1           Notice of Termination. This Option shall terminate upon Optionee giving thirty (30) days written notice to Optionor of termination, leave in good standing for a period of at least one year from the termination date of the Option those unpatented mining claims comprised in the Property that are in good standing on the date hereof and any other unpatented mining claims comprised in the Property that Optionee acquires after the date hereof, and deliver at no cost to Optionor within 90 days of such termination copies of all reports, maps, assay results and other relevant technical data compiled by or in the possession of Optionee with respect to the Property and not theretofore furnished to Optionor.  Notwithstanding the foregoing, in the event that Optionee terminates the Option, Optionee shall timely quitclaim to Optionor any right, title or interest that it may maintain in the unpatented mining claims comprising the Property, including any right, title or interest in any unpatented mining claims or other interests comprising the Property acquired pursuant to Section 3.9 above.

6.2           Equipment.  In the event that Optionee abandons the working right and Option granted to it under Section 3 or terminates the Option pursuant to Section 6.1, all buildings, plant, equipment, machinery, tools, appliances and supplies which Optionee may have brought on the Property, either before or during the period of the working right and Options, may be removed by Optionee at any time not later than six months after the abandonment of the working right and Options.  Any buildings, plant, equipment, machinery, tools, appliances and supplies left on the Property during the six-month period shall be at Optionee’s sole risk and, if not removed during the six-month period, shall become the property of Optionor thereafter.

6.3           Information. If Optionee abandons the working right and Option granted to it under Section 3, Optionee shall, on request, provide Optionor, at no cost to Optionor, with a copy of all non-interpretative reports, maps, plans, drill logs and surveys of all work pertaining to the Property provided that Optionee does not warrant the accuracy of those reports, maps, plans, drill logs and surveys and shall not be liable for any inaccuracies contained in them.

7.           CONFIDENTIAL INFORMATION

7.1           Treatment of Information.  No information furnished by Optionee to Optionor hereunder in respect of the activities carried out on the Property by Optionee, or related to the sale of product derived from the Property, will be published by Optionor without the written consent of Optionee, but such consent in respect of the reporting of factual data will not be unreasonably withheld, and will not be withheld in respect of information required to be publicly disclosed pursuant to applicable securities or corporation laws.

 

  

11

  

 

8.           ARBITRATION

8.1           Matters for Referral to Arbitration.  All questions or matters in dispute with respect to the accounting of moneys expended by Optionee as provided herein, or with respect to the calculation of or amounts taken into account in the determination of Net Smelter Returns or other products sales and any share of the proceeds of the sale of Minerals or other products from the Property will be submitted to arbitration pursuant to the terms hereof.

8.2           Notice of Referral to Arbitration.  It will be a condition precedent to the right of any party to submit any matter to arbitration pursuant to the provisions hereof, that any party intending to refer any matter to arbitration gives not less than 30 days’ prior written notice of its intention so to do to the other party together with particulars of the matter in dispute.

8.3           Expiry of Notice.  On the expiration of such 30 days, the party who gave such notice may proceed to refer the dispute to arbitration as provided in Section 8.4.

8.4           Appointment of Arbitrators.  The party desiring arbitration will appoint one arbitrator, and will notify the other party of such appointment, and the other party will, within 15 days after receiving such notice, appoint an arbitrator, and the two arbitrators so named, before proceeding to act, will, within 15 days after the appointment of the last appointed arbitrator, unanimously agree on the appointment of a third arbitrator to act with them and be chairman of the arbitration herein provided for.

8.5           Failure to Act.  If the other party will fail to appoint an arbitrator within 15 days after receiving notice of the appointment of the first arbitrator, and if the two arbitrators appointed by the parties will be unable to agree on the appointment of the chairman, the chairman will be appointed by the County of Eureka or by the State of Nevada.

8.6           Arbitration Procedures.  Except as specifically otherwise provided in this Section 8, the arbitration procedures herein provided for will be conducted in accordance with the laws of the State of Nevada.

8.7           Fixing Time and Place. The chairman, or in the case where only one arbitrator is appointed, the single arbitrator, will fix a time and place in Reno, Nevada for the purpose of hearing the evidence and representations of the parties, and he will preside over the arbitration and determine all questions of procedure not provided for under the laws of the State of Nevada  or this Section 8.

8.8           Award in Writing.  After hearing any evidence and representations that the parties may submit, the single arbitrator, or the arbitrators, as the case may be, will make an award and reduce it to writing, and deliver one copy thereof to each of the parties.

8.9           Expenses.  The prevailing party in the arbitration award shall be entitled to recover from the other party all legal fees, costs and expenses reasonably relate to such award.

 

  

12

  

 

8.10           Binding Award.  The parties may agree that the award of a majority of the arbitrators, or in the case of a single arbitrator, of such arbitrator, will be final and binding upon each of them.

9.           DEFAULT AND TERMINATION

9.1           Notice of Default.  Notwithstanding Section 4, if at any time during the Option Period Optionee fails to perform any obligation required to be performed hereunder or is in breach of a warranty or covenant given herein, which failure or breach materially interferes with the implementation of this Agreement, Optionor may terminate this Agreement but only if:

	
(a)

	
it first gives to Optionee a notice of default containing particulars of the obligation which Optionee has not performed, or the warranty or covenant breached; and

	
(b)

	
Optionee does not, within 30 days after delivery of such notice of default, cure such default or commence proceedings to cure such default by appropriate payment or performance (Optionee hereby agreeing that should Optionee so begin to cure any default Optionee will prosecute such curing to completion without undue delay).

 

9.2           Termination.  Should Optionee fail to comply with the provisions of Section 9.1(b) Optionor may thereafter terminate this Agreement, and the provisions of Section 6 will then be applicable.

10.           GENERAL

10.1           Encumbrances.  During the Term, Optionor and Optionee shall not pledge, mortgage, charge or otherwise encumber their beneficial interest in the Property or their rights under this Agreement. However, Optionor agrees not to unreasonably withhold approval of requirements required by Optionee to secure project financing.

10.2           Further Assurances.  The parties shall, without further consideration, from time to time execute and deliver, or cause to be executed and delivered, further instruments and assurances as may be reasonably required for registering or recording changes in ownership interests in the Property in accordance with the regulatory requirements of the United States, the State of Nevada, or otherwise as required to carry out the true intent and purpose of this Agreement.

10.3           Limitation of Obligations of Optionee. It is understood and agreed that:

	
(a)

	
nothing contained in this Agreement, nor any payment made, Mining Operations conducted or incurred by Optionee on or in connection with the Property or part of it, nor the doing of any act or thing by Optionee under the terms of this Agreement shall obligate Optionee to do anything else under this Agreement other than to make payments, perform the work commitments and maintain the Property to the extent that it may have expressly undertaken to do so pursuant to the terms of this Agreement;

 

  

13

  

 

	
(b)

	
subject to the terms of this Agreement, Optionee may at any time abandon the working right and Option granted to it under Section 3.1 and may at any time after exercising the Option granted herein abandon the working right  granted to it under Section 3.5; and

	
(c)

	
in the event that Optionee abandons the Option granted to it under Section 3.1, or the working right Section 3.5, the liabilities and obligations of Optionee shall cease with respect to the Property except that Optionee shall remain liable for any and all liabilities or obligations arising directly or indirectly from the actions of Optionee in conducting work or having conducted work on the Property and the provisions of Section 6 herein.

10.4           Time.  Time shall be of the essence of this Agreement and of every part of it and no extension or variation of this Agreement shall operate as a waiver of this provision.

10.5           Entire Agreement.  With respect to the subject-matter of this Agreement, this Agreement:

	
(a)

	
sets forth the entire agreement between the parties and any persons who have in the past or who are now representing either of the parties;

	
(b)

	
supersedes all prior understandings and communications between the parties or any of them, oral or written; and

	
(c)

	
constitutes the entire agreement between the parties.

Each party acknowledges that this Agreement is entered into after full investigation and that no party is relying on any statement or representation made by any other which is not embodied in this Agreement.  Each party acknowledges that it shall have no right to rely on any amendment, promise, modification, statement or representation made or occurring subsequent to the execution of this Agreement unless it is in writing and executed by each of the parties.

10.6           Notices. All payments and communications which may be or are required to be given by either party to the other shall (in the absence of any specific provision to the contrary) be in writing and delivered or sent by prepaid registered mail to the parties, at following respective addresses:

	
Optionor: 

	
ARDEN LARSON 

2512 Hayes Drive

Grand Junction, CO 81505

  

	
Optionee: 

	
STANDARD GOLD CORP. 

897 Quail Run Drive

Grand Junction, CO 81505

Attention: David Beling

 

  

14

  

 

 

If any payment or communication is sent by prepaid registered mail, it shall, subject to the following sentence, be conclusively deemed to have been received on the third business day following the mailing of it and, if delivered, it shall be conclusively deemed to have been received at the time of delivery. Notwithstanding the foregoing provisions with respect to mailing, in the event that it may be reasonably anticipated that, due to any strike, lock-out or similar event involving an interruption in postal service, any payment or communication will not be received by the addressee by no later than the third business day following the mailing of it, then the mailing of any payment or communication as mentioned shall not be an effective means of sending it but rather any payment or communication must then be sent by an alternative means of transportation which it may reasonably be anticipated will cause the payment or communication to be received reasonably expeditiously by the addressee. Either party may from time to time change its address by notice to the other in accordance with this Section 10.6.

10.7           Counterparts.  This Agreement may be executed in as many counterparts as may be necessary and may be delivered originally or by facsimile and each such counterpart so executed, whether delivered originally or by facsimile, are deemed to be an original and such counterparts and facsimile copies together will constitute one and the same instrument.

10.8           Benefit of Successors.  This Agreement shall inure to the benefit of and be binding on the parties and their respective heirs, executors, administrators, successors and assigns.

[Signature page follows]

 

  

15

  

 

IN WITNESS WHEREOF, this Option to Purchase and Royalty Agreement has been duly executed and delivered by the parties hereto as of the date first above written.

 

 

	 	

OPTIONOR:

	 
	 	 	 	 
	 	

ARDEN LARSON

	 
	 	 	 	 
	
 

	
By: 

	

/s/ Arden Larson

	 
	 	 	

Name: Arden Larson

	 
	 	 	 	 
	 	 	 	 
	 	

OPTIONEE:

	 
	 	 	 	 
	 	

STANDARD GOLD CORP., a Nevada corporation

	 
	 	 	 	 
	 	

By: 

	

/s/ David Beling

	 
	 	 	

Name: David Beling

	 
	 	 	

Its: President & CEO

	 
	 	 	 	 

 

  

16

  

 

EXHIBIT “A”

(Property Description)

The following unpatented mining claims and sites are situated in the Alpha Mining District, Township 25 North, Range 25 East, Mount Diablo Base & Meridian, Eureka County, Nevada.  The Location Notices of which are of record in the office of the County Recorder of Eureka County, Nevada, and filed in the Nevada State Office of the Bureau of Land Management.

	
No.

	
CLAIM NAME

	
INSTRUMENT NO.

	
BLM SERIAL NO.

	
1

	
K 9

	
219493

	
NMC1066206

	
2

	
K 10

	
219494

	
NMC1066207

	
3

	
K 11

	
219595

	
NMC1066208

	
4

	
K 12

	
219496

	
NMC1066209

	
5

	
K 17

	
218800

	
NMC1050330

	
6

	
K 18

	
218801

	
NMC1050331

	
7

	
K 19

	
218802

	
NMC1050332

	
8

	
K 20

	
218803

	
NMC1050333

	
9

	
K 21

	
218804

	
NMC1050334

	
10

	
K 22

	
218805

	
NMC1050335

	
11

	
K 23

	
218806

	
NMC1050336

	
12

	
K 24

	
218807

	
NMC1050337

	
13

	
K 31

	
218808

	
NMC1050338

	
14

	
K 32

	
218809

	
NMC1050339

	
15

	
K 33

	
218810

	
NMC1050340

	
16

	
K 34

	
218811

	
NMC1050341

	
17

	
K 35

	
218995

	
NMC1050342

	
18

	
K 36

	
218996

	
NMC1050343

	
19

	
K 75

	
219410

	
NMC1063737

	
20

	
K 76

	
219411

	
NMC1063738

	
21

	
K 79

	
219412

	
NMC1063739

	
22

	
K 80

	
219413

	
NMC1063740

	
23

	
K 100

	
219498

	
NMC1066164

	
24

	
K 101

	
219499

	
NMC1066165

	
25

	
K 102

	
219500

	
NMC1066166

	
26

	
K 103

	
219501

	
NMC1066167

	
27

	
K 104

	
219502

	
NMC1066168

	
28

	
K 105

	
219503

	
NMC1066169

	
29

	
K 106

	
219504

	
NMC1066170

	
30

	
K 107

	
219505

	
NMC1066171

	
31

	
K 108

	
219506

	
NMC1066172

	
32

	
K 109

	
219507

	
NMC1066173

	
33

	
K 110

	
219508

	
NMC1066174

	
34

	
K 111

	
219509

	
NMC1066175

	
35

	
K 112

	
219510

	
NMC1066176

	
36

	
K 113

	
219511

	
NMC1066177

 

  

A-1

  

 

 

	
37

	
K 114

	
219512

	
NMC1066178

	
38

	
K 115

	
219513

	
NMC1066179

	
39

	
K 116

	
219514

	
NMC1066180

	
40

	
K 117

	
219515

	
NMC1066181

	
41

	
K 118

	
219516

	
NMC1066182

	
42

	
K 119

	
219517

	
NMC1066183

	
43

	
K 120

	
219518

	
NMC1066184

	
44

	
K 121

	
219519

	
NMC1066185

	
45

	
K 122

	
219520

	
NMC1066186

	
46

	
K 123

	
219521

	
NMC1066187

	
47

	
K 124

	
219522

	
NMC1066188

	
48

	
K 125

	
219523

	
NMC1066189

	
49

	
K 126

	
219524

	
NMC1066190

	
50

	
K 127

	
219525

	
NMC1066191

	
51

	
K 128

	
219526

	
NMC1066192

	
52

	
K 129

	
219527

	
NMC1066193

	
53

	
K 130

	
219528

	
NMC1066194

	
54

	
K 131

	
219529

	
NMC1066195

	
55

	
K 132

	
219530

	
NMC1066196

	
56

	
K 133

	
219531

	
NMC1066197

	
57

	
K 134

	
219532

	
NMC1066198

	
58

	
K 135

	
219533

	
NMC1066199

	
59

	
K 136

	
219534

	
NMC1066200

	
60

	
K 137

	
219535

	
NMC1066201

	
61

	
K 138

	
219536

	
NMC1066202

	
62

	
K 139

	
219537

	
NMC1066203

	
63

	
K 140

	
219538

	
NMC1066204

	
64

	
K 141

	
219539

	
NMC1066205

 

  

A-2

  

 

EXHIBIT “B”

(Form of Quitclaim Deed and Reservation of Royalty Interest)

After recording, return to:

Standard Gold Corp.

897 Quail Run Drive

Grand Junction, Colorado 81505

QUITCLAIM DEED

AND RESERVATION OF ROYALTY INTEREST

FOR AND IN CONSIDERATION of royalties reserved hereunder and the promises made under the terms of that certain Option Agreement and Royalty Agreement made and entered into as of the ____ day of June, 2012, ARDEN LARSON, whose address is 2512 Hayes Drive, Grand Junction, CO 81505 (“Grantor”), does hereby quitclaim unto [STANDARD GOLD CORP., a Nevada corporation, or such designee as Standard Gold Corp. may designate, whose address is _____________________________________] (“Grantee”), all of the right, title and interest in and to the following unpatented mining claims located in Eureka County, Nevada (the “Claims”), the location notices of which are of record in the official records of Eureka County, Nevada and in the  Nevada State Office of the Bureau of Land Management as follows:

SEE EXHIBIT “A” ATTACHED HERETO [Insert Property Description at Exhibit “A” to executable version of Quitclaim Deed and Reservation of Royalty Interest]

EXCEPTING AND RESERVING UNTO GRANTOR, a royalty (the “Royalty”) equal to the percentages of net smelter returns of the proceeds, as described below, from the sale or other disposition of all minerals, received from any purchaser of any mineral derived from the ore mined from the Claims after deducting therefrom all charges and penalties (imposed by the purchaser) and the cost of transportation to any processing facility, insurance premiums, sampling and assaying charges incurred after concentrates have left the concentrator and all appropriate sales taxes.  If minerals other than precious metals are mined and sold from the Claims, the Royalty specified herein shall likewise apply to such minerals and shall be calculated as set forth above based on payment received from a purchaser after the creation of a concentrate or otherwise marketable product.  In no case shall the cost of mining, transportation or concentrating costs prior to the creation of the first marketable product be deducted from the selling price in the calculation of Royalty.  If any portion of the precious metals or other minerals extracted and derived from the ore mined from the Claims are sold to a purchaser owned or controlled by the Grantee or treated by a facility owned or controlled by Grantee, the actual proceeds received shall be deemed to be an amount equal to what could be obtained from a purchaser or facility not so owned or controlled by the Grantee after deducting therefrom a charge equal to the transportation cost which would have been incurred had the material been transported to such third party.

 

  

B-1

  

 

Notwithstanding the forgoing, at Optionee’s sole and absolute discretion prior to the commencement of commercial production, Optionee shall have the right at any time to purchase or buy-down up to one half of any, each or all of the three Royalty components from Optionor by making payments of US $500,000.00 per 0.25% of base net smelter return royalties for Gold, Silver and/or Other Products to Optionor, which shall be exercised only in whole percentage points.  In the event that Optionee exercises the right to purchase or buy-down the Royalty, Optionor shall deliver to Optionee any documents as Optionee may require, in its sole and absolute discretion, evidencing such reduction of Optionor’s Royalty interest.  For clarification, the parties understand that any royalty payments made by Optionee to Optionor prior to the election to purchase the Royalty may not be credited toward the purchase or buy-down price.

	  	
 

 

Base Net Smelter Return Royalty (%)

 

	
 

 

 

 

Average Market Price

	
 

Maximum Buy-Down Net Smelter Return Royalty (%)

 

	
GOLD:

	
1.00

	
less than $1,200/troy oz.

	
0.50

	  	
1.50

	
$1,201 to $1,600/troy oz.<

	
0.75

	  	
2.00

	
$1,601 to $2,000/troy oz.<

	
1.00

	  	
2.50

	
$2,001 to $2,400/troy oz.<

	
1.25

	  	
3.00

	
$2,401 to $2,800/troy oz.<

	
1.50

	  	
3.50

	
$2,801 to $3,200/troy oz.<

	
1.75

	  	
4.00

	
greater than $3,200/toy oz.<

	
2.00

	  	  	  	  
	
SILVER:

	
1.00

	
less than $15/troy oz.

	
0.50

	  	
1.50

	
$15.01 to $30/troy oz.<

	
0.75

	  	
2.00

	
$30.01 to $45/troy oz.<

	
1.00

	  	
2.50

	
$45.01 to $60/troy oz.<

	
1.25

	  	
3.00

	
$60.01 to $75/troy oz.<

	
1.50

	  	
3.50

	
$75.01 to $90/troy oz.<

	
1.75

	  	
4.00

	
greater than $90/toy oz.<

	
2.00

	  	  	  	  
	
OTHER PRODUCTS:

	
 

2.00

	
 

As determined by products

	
 

1.00

At the option of Optionor, the royalty due from commercial production of gold and/or silver during any given calendar quarter may be paid to Optionor in cash or in kind based on the average prevailing market prices during such calendar quarter; provided however, if payment is made in kind, Optionor shall be responsible for all transaction costs, including insurance and transportation charges, incurred to deliver in kind gold and/or silver as designated by Optionor.

 

  

B-2

  

 

The Royalty reserved herein shall be subject to the following:

1.           PAYMENT OF ROYALTY

a.           Frequency of Payment of Royalty.  Payment of Royalty hereunder shall be due and payable within thirty (30) business days after the sale proceeds are received during each calendar quarter from any purchaser of minerals or other materials mined from the Claims.

b.           Method of Making Payments.  All payments required hereunder may be mailed or delivered to any single depository as Grantor may instruct.  The Grantee will have no responsibility as to the division of the Royalty payments among parties constituting the Grantor and if the Grantee makes a payment or payments on account of the Royalty in accordance with the provisions of this instrument, it will have no further responsibility for distribution of the Royalty.  All charges of the agent, trustee or depository will be borne solely by the parties receiving payments of Royalty.  The delivery or the deposit in the mail of any payment hereunder on or before the due date thereof shall be deemed timely payment hereunder. At Grantor’s option, royalties for gold and silver shall be made in cash or in kind, based on the average prevailing market prices during each quarter having production.

2.           RECORDS AND REPORTS

a.           Records, Inspection and Audit.  Within ninety (90) days following the end of each calendar year, commencing with the year in which the claims are brought into commercial production (not inclusive of any bulk sampling programs), the Grantee shall deliver to Grantor a statement of the Royalty paid for said calendar year.  The Grantor shall have the right within a period of three (3) months from receipt of such statements to inspect the Grantee’s books and records relating thereto and to conduct an independent audit of such books and records at its own cost and expense.

b.           Objections.  If Grantor does not request an inspection of Grantee’s books and records during the three-month period referred to in the preceding paragraph, all payments of Royalty for the annual period will be considered final and in full satisfaction of all obligations of the Grantee with respect thereto.  If Grantor disputes any calculation of Royalty, Grantor shall deliver to the Grantee a written notice (the “Objection Notice”) describing and setting forth a specific objection within sixty (60) days after receipt by the Grantor of the final statement.  If such audit determines that there has been a deficiency or an excess in the payment made to the Grantor, such deficiency or excess will be resolved by adjusting the next payment due hereunder.  The Grantor will pay all the costs and expenses of such audit unless a deficiency of five (5%) percent or more of the amount due is determined to exist.  The Grantee will pay the costs and expenses of such audit if a deficiency of five (5%) percent or more of the amount due is determined to exist.  All books and records used and kept by the Grantee to calculate the Royalty due hereunder will be kept in accordance with generally accepted accounting principles.

c.           Evidence of Maintenance of the Claims.  Grantee shall deliver to Grantor, not later than the date fifteen (15) days prior to the date for the payment of annual claim maintenance fees (currently September 1), evidence that the fee has been timely paid, and shall thereafter, prior to December 1 of each year, deliver to Grantor a copy of a “Notice of intent to Hold” for the Claims as recorded in the official records of Eureka County, Nevada.

 

  

B-3

  

 

3.           INUREMENT

The Royalty reserved herein shall run with the land and be binding on all subsequent owners of the Claims, including any amendments, relocations, patents of the same or additional or alternative rights to mine as may be conferred by any changes in the mineral laws of the United States.

4.           NOTICES

All notices required or permitted to be given hereunder shall be given in writing and shall be sent by the parties by registered or certified mail, telex, facsimile transmission or by express delivery service to the address set forth in the identification of the parties in the headings of this Quitclaim Deed and Reservation of Royalty Interest or to such other address as either party may later designate by like notice to the other.  All notices required or permitted to be given hereunder shall be deemed to have been given upon the earliest of (1) actual receipt, (2) acknowledgment in any form of receipt of telex or facsimile transmission, (3) the business day next following deposit with an express delivery service, properly addressed, or (4) seventy-two (72) hours after deposit with the U.S. Mails, properly addressed with postage prepaid.

5.           ASSIGNMENTS BY GRANTOR

Grantor may transfer, pledge, mortgage, charge or otherwise encumber all or any part of its right, title and interest in and to its Royalty reserved hereunder; provided, however, that Grantee shall be under no obligation to make its payments hereunder to such assignee, transferee, pledgee or other third party until Grantee’s receipt of Notice concerning the assignment or transfer.

6.           INTERPRETATION

a.           Governing Law; Venue.  The provisions and interpretation of this Quitclaim Deed and Reservation of Royalty Interest shall be governed by the laws of the State of Nevada without regard to conflicts of laws principles.  Any dispute concerning this Quitclaim Deed and Reservation of Royalty Interest shall be adjudicated in either the state or federal courts in and for the State of Nevada.

b.           Invalidity of Provisions.  If any term or other provision of this Quitclaim Deed and Reservation of Royalty Interest is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Quitclaim Deed and Reservation of Royalty Interest shall nevertheless remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Quitclaim Deed and Reservation of Royalty Interest so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

 

  

B-4

  

 

 

IN WITNESS WHEREOF, the Grantor has executed and delivered this Quitclaim Deed and Reservation of Royalty Interest as of the ____ day of ____________, 20____.

 

 

	 	

GRANTOR:

	 
	 	 	 	 
	 	

ARDEN LARSON

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Name: Arden Larson

	 
	 	 	 	 

 

	

STATE OF 

	

)

	 	 
	 	

) ss.

	 	 
	

County of 

	

)

	 	 

 

The foregoing instrument was acknowledged before me this _____ day of __________, 20___ by Arden Larson.

 

____________________________________

Notary Public

The undersigned Grantee hereby accepts this Quitclaim Deed and Reservation of Royalty Interest made therein.

 

 

	 	

GRANTEE:

	 
	 	 	 	 
	 	

[STANDARD GOLD CORP., a Nevada corporation, or such designee as Standard Gold Corp. may designate]

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	

Name: 

	 	 
	 	

Its: 

	 	 
	 	 	 	 

 

	

STATE OF 

	

)

	 	 
	 	

) ss.

	 	 
	

County of 

	

)

	 	 

 

The foregoing instrument was acknowledged before me this _____ day of __________, 20___ by _______________________, _________________ of __________________________ [Standard Gold Corp., or such designee as Standard Gold Corp. may designate], on behalf of the corporation.

 

 

B-5

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