Document:

Unassociated Document

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (this “Agreement”) is being delivered to the purchaser identified on the signature page to this Agreement (the “Subscriber”) in connection with its investment in Valor Gold Corp.  f/k/a Felafel Corp., a Delaware corporation (the “Company”). The Company is conducting a private placement (the “Offering”) of shares (the “Shares” or the “Securities”) of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Stock”) at a purchase price of $0.40 per Share.

 

The Company intends to acquire certain gold assets and change its business to a junior gold exploration company.  The Company will initially acquire from Pershing Gold Corporation (“Pershing”) through a merger transaction (the “Merger”) contemporaneously with the closing of this Offering, certain gold assets in consideration for (i) the issuance of 25,000,000 shares of Common Stock, (ii) a cash payment of $2,000,000 and (iii) a promissory note in the principal amount of $500,000.  The gold assets to be acquired will be acquired through the acquisition of Pershing’s wholly owned subsidiary, the sole member of each of Arttor Gold LLC (“Arttor Gold”) and Noble Effort Gold LLC (“Noble Effort”) which own the rights to explore the North Battle Mountain Mineral Prospect and Red Rock Mineral Prospect located in Lander County, Nevada (collectively, the “Gold Mining Properties”).  Additional information including important risks related to the Gold Mining Properties can be found in the filings with the SEC made by Pershing (the “Pershing SEC Filings”).  When used herein, the term “Risk Factors” shall include the risk factors related to the Gold Mining Properties and gold mining in general in the Pershing SEC Filings.

 

Each Subscriber will receive a draft of the Current Report on Form 8-K describing the Merger and the Gold Mining Properties, including a description of important risks and other considerations, and will be required to reconfirm their purchase of Shares prior to the Initial Closing of Offering (as defined below).

 

In connection with the Subscriber’s subscription the Company may pay one or more placement agents (the “Placement Agent”) a fee up to ten (10%) of the amount subscribed, plus reimbursement of expenses.

 

IMPORTANT INVESTOR NOTICES

 

NO OFFERING LITERATURE OR ADVERTISEMENT IN ANY FORM MAY BE RELIED UPON IN THE OFFERING OF THESE SECURITIES EXCEPT FOR THIS SUBSCRIPTION AGREEMENT AND ANY SUPPLEMENTS HERETO (THE “AGREEMENT”), AND NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS EXCEPT THOSE CONTAINED HEREIN.

 

THIS AGREEMENT IS CONFIDENTIAL AND THE CONTENTS HEREOF MAY NOT BE REPRODUCED, DISTRIBUTED OR DIVULGED BY OR TO ANY PERSONS OTHER THAN THE RECIPIENT OR ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY.  EACH PERSON WHO ACCEPTS DELIVERY OF THIS AGREEMENT, ACKNOWLEDGES AND AGREES TO THE FOREGOING RESTRICTIONS.

 

THIS AGREEMENT DOES NOT PURPORT TO BE ALL-INCLUSIVE OR TO CONTAIN ALL OF THE INFORMATION THAT YOU MAY DESIRE IN EVALUATING THE COMPANY, OR AN INVESTMENT IN THE OFFERING. THIS SUBSCRIPTION AGREEMENT DOES NOT CONTAIN ALL OF THE INFORMATION THAT WOULD NORMALLY APPEAR IN A PROSPECTUS FOR AN OFFERING REGISTERED UNDER THE SECURITIES ACT.  YOU MUST CONDUCT AND RELY ON YOUR OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, IN DECIDING WHETHER TO INVEST IN THE OFFERING.

 

THIS AGREEMENT CONTAINS A SUMMARY OF CERTAIN PROVISIONS OF VARIOUS DOCUMENTS RELATING TO THE OPERATIONS OF THE COMPANY.  THESE SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF THE ORIGINAL DOCUMENTS.

 

  

 

  

 

THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION OF AN OFFER TO ANY PERSON OR IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION IS UNLAWFUL OR NOT AUTHORIZED.  EACH PERSON WHO ACCEPTS DELIVERY OF THIS SUBSCRIPTION AGREEMENT AGREES TO RETURN IT AND ALL RELATED DOCUMENTS IF SUCH PERSON DOES NOT PURCHASE ANY OF THE SECURITIES DESCRIBED HEREIN.

 

NEITHER THE DELIVERY OF THIS AGREEMENT AT ANY TIME NOR ANY SALE OF SECURITIES HEREUNDER SHALL IMPLY THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.  THE COMPANY WILL EXTEND TO EACH PROSPECTIVE INVESTOR (AND TO ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL, IF ANY) THE OPPORTUNITY, PRIOR TO ITS PURCHASE OF SHARES OF PREFERRED STOCK, TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY CONCERNING THE OFFERING AND TO OBTAIN ADDITIONAL INFORMATION, TO THE EXTENT THE COMPANY POSSESSES THE SAME OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE, IN ORDER TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH HEREIN.  ALL SUCH ADDITIONAL INFORMATION SHALL ONLY BE PROVIDED IN WRITING AND IDENTIFIED AS SUCH BY THE COMPANY THROUGH ITS DULY AUTHORIZED OFFICERS AND/OR DIRECTORS ALONE; NO ORAL INFORMATION OR INFORMATION PROVIDED BY ANY BROKER OR THIRD PARTY MAY BE RELIED UPON.

 

NO REPRESENTATIONS, WARRANTIES OR ASSURANCES OF ANY KIND ARE MADE OR SHOULD BE INFERRED WITH RESPECT TO THE ECONOMIC RETURN, IF ANY, THAT MAY ACCRUE TO AN INVESTOR IN THE COMPANY.

 

THIS AGREEMENT CONTAINS FORWARD-LOOKING STATEMENTS REGARDING THE COMPANY’S PERFORMANCE, STRATEGY, PLANS, OBJECTIVES, EXPECTATIONS, BELIEFS AND INTENTIONS.  THE OUTCOME OF THE EVENTS DESCRIBED IN THESE FORWARD-LOOKING STATEMENTS IS SUBJECT TO SUBSTANTIAL RISKS, AND ACTUAL RESULTS COULD DIFFER MATERIALLY.  THE SECTIONS ENTITLED “EXECUTIVE SUMMARY,” “RISK FACTORS,” AND “DESCRIPTION OF BUSINESS,” IN ANY SEC FILING OR REPORT, AS WELL AS THIS AGREEMENT GENERALLY, CONTAINS DISCUSSIONS OF SOME OF THE FACTORS THAT COULD CONTRIBUTE TO THESE DIFFERENCES.

 

THIS SUBSCRIPTION AGREEMENT AND THE SEC FILINGS AND REPORTS INCLUDE DATA OBTAINED FROM INDUSTRY PUBLICATIONS AND REPORTS, WHICH THE COMPANY BELIEVES TO BE RELIABLE SOURCES; HOWEVER, NEITHER THE ACCURACY NOR COMPLETENESS OF THIS DATA IS GUARANTEED. WE HAVE NEITHER INDEPENDENTLY VERIFIED THIS DATA NOR SOUGHT THE CONSENT OF SUCH SOURCES TO REFER TO THEIR REPORTS IN THIS SUBSCRIPTION AGREEMENT.

 

THE OFFERING PRICE OF THE SHARES OF PREFERRED STOCK HAS BEEN DETERMINED ARBITRARILY.  THE PRICE OF THE SHARES OF PREFERRED STOCK DOES NOT NECESSARILY BEAR ANY RELATIONSHIP TO THE ASSETS, EARNINGS OR BOOK VALUE OF THE COMPANY, OR TO POTENTIAL ASSETS, EARNINGS, OR BOOK VALUE OF THE COMPANY.  THERE IS NO ACTIVE TRADING MARKET IN THE COMPANY’S COMMON STOCK OR PREFERRED STOCK AND THERE CAN BE NO ASSURANCE THAT AN ACTIVE TRADING MARKET IN ANY OF THE COMPANY’S SECURITIES WILL DEVELOP OR BE MAINTAINED.  A LIMITED NUMBER OF SHARES OF COMMON STOCK MAY BE ELIGIBLE FOR TRADING PRIOR TO REGISTRATION OF THE SECURITIES SOLD IN THE OFFERING, AND SUCH REGISTRATION MAY BE DELAYED IN CERTAIN CIRCUMSTANCES.  THE PRICE OF SHARES QUOTED ON THE OTC BULLETIN BOARD OR TRADED ON ANY EXCHANGE MAY BE IMPACTED BY A LACK OF LIQUIDITY OR AVAILABILITY OF SHARES FOR PUBLIC SALE AND ALSO WILL NOT NECESSARILY BEAR ANY RELATIONSHIP TO THE ASSETS, EARNINGS, BOOK VALUE OR POTENTIAL PROSPECTS OF THE COMPANY OR APPLICABLE QUOTED OR TRADING PRICES THAT MAY EXIST FOLLOWING REGISTRATION OR THE LAPSE OF RESTRICTIONS ON THE SECURITIES SOLD PURSUANT TO THE OFFERING OR UPON THE LAPSE OF ANY LOCKUP AGREEMENTS OR OTHER RESTRICTIONS. SUCH PRICES SHOULD NOT BE CONSIDERED ACCURATE INDICATORS OF FUTURE QUOTED OR TRADING PRICES THAT MAY SUBSEQUENTLY EXIST FOLLOWING REGISTRATION OR WHEN SUCH LOCKUP AGREEMENTS OR RESTRICTIONS LAPSE.

 

  

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THE COMPANY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART FOR ANY REASON OR FOR NO REASON. THE COMPANY IS NOT OBLIGATED TO NOTIFY RECIPIENTS OF THIS SUBSCRIPTION AGREEMENT WHETHER ALL OF THE SHARES OF PREFERRED STOCK OFFERED HEREBY HAVE BEEN SOLD.

 

SUBSCRIBERS MAY BE DEEMED TO BE IN POSSESSION OF MATERIAL NON-PUBLIC INFORMATION WITHIN THE MEANING OF THE UNITED STATES SECURITIES LAWS AND REGULATIONS REGARDING A PUBLIC COMPANY. THIS AGREEMENT CONTAINS CONFIDENTIAL INFORMATION CONCERNING THE COMPANY, AND HAS BEEN PREPARED SOLELY FOR USE IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN. ANY USE OF THIS INFORMATION FOR ANY PURPOSE OTHER THAN IN CONNECTION WITH THE CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OF THE COMPANY THROUGH THE OFFERING DESCRIBED HEREIN MAY SUBJECT THE USER TO CIVIL AND/OR CRIMINAL LIABILITY. THE RECIPIENT, BY ACCEPTING THIS SUBSCRIPTION AGREEMENT, AGREES NOT TO: (I) DISTRIBUTE OR REPRODUCE THIS SUBSCRIPTION AGREEMENT, IN WHOLE OR IN PART, AT ANY TIME, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY; (II) TO KEEP CONFIDENTIAL THE EXISTENCE OF THIS DOCUMENT AND THE INFORMATION CONTAINED HEREIN OR MADE AVAILABLE IN CONNECTION WITH ANY FURTHER INVESTIGATION OF THE COMPANY; AND (III) REFRAIN FROM TRADING IN THE PUBLICLY-TRADED SECURITIES OF THE COMPANY OR ANY OTHER RELEVANT COMPANY FOR SO LONG AS SUCH RECIPIENT IS IN POSSESSION OF THE MATERIAL NON-PUBLIC INFORMATION CONTAINED HEREIN. SUBSCRIBERS ARE ADVISED THAT THEY SHOULD SEEK THEIR OWN LEGAL COUNSEL PRIOR TO EFFECTUATING ANY TRANSACTIONS IN THE PUBLICLY TRADED COMPANY’S SECURITIES.

 

FOR RESIDENTS OF ALL STATES

 

THIS OFFERING IS BEING MADE SOLELY TO “ACCREDITED INVESTORS,” AS SUCH TERM IS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE AND WILL BE OFFERED AND SOLD IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(2) THEREUNDER AND REGULATION D (RULE 506) OF THE SECURITIES ACT AND CORRESPONDING PROVISIONS OF STATE SECURITIES LAWS.

 

THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTION ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

  

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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (“SEC”), ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THIS AGREEMENT AS INVESTMENT, LEGAL, BUSINESS, OR TAX ADVICE.  EACH INVESTOR SHOULD CONTACT HIS, HER OR ITS OWN ADVISORS REGARDING THE APPROPRIATENESS OF THIS INVESTMENT AND THE TAX CONSEQUENCES THEREOF, WHICH MAY DIFFER DEPENDING ON AN INVESTOR’S PARTICULAR FINANCIAL SITUATION.  IN NO EVENT SHOULD THIS AGREEMENT BE DEEMED OR CONSIDERED TO BE TAX ADVICE PROVIDED BY THE COMPANY.

 

FOR FLORIDA RESIDENTS ONLY

 

THE SHARES OF PREFERRED STOCK REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER § 517.061 OF THE FLORIDA SECURITIES ACT.  THE SHARES OF PREFERRED STOCK HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA.  IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE COMPANY, AN AGENT OF THE COMPANY, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.

 

  

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1.           SUBSCRIPTION AND PURCHASE PRICE

 

(a)           Subscription.  Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees to purchase the number of Shares indicated on page 15 hereof on the terms and conditions described herein.

 

(b)           Purchase of Shares.  The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange for the Shares shall be set at $0.40 per Share, for an aggregate purchase price as set forth on page 15 hereof (the “Aggregate Purchase Price”). The Subscriber’s delivery of this Agreement to the Company shall be accompanied by payment for the Shares subscribed for hereunder, payable in United States Dollars, by wire transfer of immediately available funds delivered contemporaneously with the Subscriber’s delivery of this Agreement to the Company in accordance with the wire instructions provided on Exhibit A and pursuant to and in accordance with the Escrow Agreement, attached hereto as Exhibit B (the “Escrow Agreement”). The Subscriber understands and agrees that, subject to Section 2 and applicable laws, by executing this Agreement, it is entering into a binding agreement.

 

2.           ACCEPTANCE, OFFERING TERM AND CLOSING PROCEDURES

 

(a)           Acceptance or Rejection. Subject to full, faithful and punctual performance and discharge by the Company of all of its duties, obligations and responsibilities as set forth in this Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription (collectively, the “Transaction Documents”), the Subscriber shall be legally bound to purchase the Shares pursuant to the terms and conditions set forth in this Agreement.  For the avoidance of doubt, upon the occurrence of the failure by the Company to fully, faithfully and punctually perform and discharge any of its duties, obligations and responsibilities as set forth in any of the Transaction Documents, which shall have been performed or otherwise discharged prior to the Closing, the Subscriber may, on or prior to the Closing (as defined below), at its sole and absolute discretion, elect not to purchase the Shares and provide instructions to the escrow agent under the Escrow Agreement to receive the full and immediate refund of the Aggregate Purchase Price. The Subscriber understands and agrees that the Company reserves the right to reject this subscription for Shares in whole or part in any order at any time prior to the Closing for any reason, notwithstanding the Subscriber’s prior receipt of notice of acceptance of the Subscriber’s subscription.  In the event the Closing does not take place because of (i) the rejection of subscription for Shares by the Company; or (ii) the election not to purchase the Shares by the Subscriber; or (iii) failure to complete an Initial Closing on or before July 2, 2012 (unless extended in the discretion of the Board of Directors, for any reason or no reason, this Agreement and any other Transaction Documents shall thereafter be terminated and have no force or effect, and the parties shall take all steps, including the execution of instructions to the escrow agent, to ensure that the Aggregate Purchase Price held in accordance with the Escrow Agreement shall promptly be returned or caused to be returned to the Subscriber without interest thereon or deduction therefrom.

 

(b)           Closing.  The closing of the purchase and sale of the Shares hereunder (the “Closing”) shall take place at the offices of Sichenzia Ross Friedman Ference, LLP, 61 Broadway, 32nd Floor, New York, NY 10006 or such other place as determined by the Company and may take place in one of more closings.  Closings shall take place on a Business Day promptly following the satisfaction of the conditions set forth in Section 7 below, as determined by the Company (the “Closing Date”). “Business Day” shall mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time) of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required to be closed. The Shares purchased by the Subscriber will be delivered by the Company promptly following the Final Closing Date (as defined in below) of the Offering.  The initial closing of the Offering shall be referred to as the “Initial Closing” and such date of the Initial Closing shall be referred to as the “Initial Closing Date”.  The last Closing of the Offering shall be referred to as the “Final Closing” and such date of the Final Closing, shall be referred to as the “Final Closing Date”.

(c)           Following Acceptance or Rejection.  The Subscriber acknowledges and agrees that this Agreement and any other documents delivered in connection herewith will be held by the Company. In the event that this Agreement is not accepted by the Company for whatever reason, which the Company expressly reserves the right to do, this Agreement, the Aggregate Purchase Price received (without interest thereon) and any other documents delivered in connection herewith will be returned to the Subscriber at the address of the Subscriber as set forth in this Agreement. If this Agreement is accepted by the Company, the Company is entitled to treat the Aggregate Purchase Price received as an interest free loan to the Company until such time as the Subscription is accepted.

 

  

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 (d)           Favored Nations Provision.  Other than in connection with (i) full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity, (ii) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights equal to or greater than those granted to the Subscribers, (iii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to plans that have been approved by a majority of the board of directors or in existence as such plans are constituted on the date of this Agreement, (iv) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement on the terms in effect on the Closing Date including the permissible amendment thereof after the closing date,  (v) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to consultants and service providers, and (vi) any and all securities required to be assumed by the Company by the terms thereof as a result of any of the foregoing even if issued by a predecessor acquired in connection with a business combination, merger or share exchange (collectively, the foregoing (i) through (vi) are “Excepted Issuances”), if at any time after the date hereof, the Company shall agree to or issue (the “Lower Price Issuance”) any Common Stock or securities convertible into or exercisable for shares of Common Stock (or modify any of the foregoing which may be outstanding) to any person or entity at a price per share or conversion or exercise price per share which shall be less than the per Share price hereunder in effect at such time, without the consent of the Subscriber, then the Company shall issue such additional number of shares of Preferred Stock to the Subscriber such that the Subscriber will have received in total under this Agreement, that number of shares of Preferred Stock had such Subscriber paid a per Share purchase price equal to the per share price of the Lower Price Issuance.  Common Stock issued or issuable by the Company for no consideration or for consideration that cannot be determined at the time of issue will be deemed issuable or to have been issued for $0.0001 per share of Common Stock.  The rights of Subscriber set forth in this Section 2 are in addition to any other rights the Subscriber has pursuant to this Agreement, and any other agreement referred to or entered into in connection herewith or to which Subscriber and Company are parties.  Notwithstanding anything herein or in any other agreement to the contrary: (i) the Company shall only be required to make a single adjustment with respect to any Lower Price Issuance, regardless of the existence of multiple basis therefore and (ii) no adjustment to the effective per Share purchase price shall be made for any Lower Price Issuance  that is made by the Company that is below $0.20.

 

(e)           Extraordinary Events Regarding Common Stock.  In the event that the Company shall (a) issue additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of Common Stock, then, in each such event, the purchase price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the purchase price then in effect. The purchase price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein.

 

(f)           Certificate as to Adjustments.  In each case of any adjustment or readjustment in the Shares, the Company at its expense will promptly cause its Executive Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms hereof and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Purchase Price in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided herein. The Company will forthwith mail a copy of each such certificate to the Subscriber and any Agent of the Company.

 

  

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3.           THE SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Subscriber hereby acknowledges, agrees with and represents, warrants and covenants to the Company, as follows:

 

(a)           The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).

 

(b)           The Subscriber acknowledges its understanding that the Offering and sale of the Securities is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) of the Securities Act and the provisions of Regulation D promulgated thereunder (“Regulation D”).  In furtherance thereof, the Subscriber represents and warrants to the Company and its affiliates as follows:

 

(i)           The Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s representations contained herein, the Subscriber is merely acquiring the Securities for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intention.

 

(ii)           The Subscriber realizes that the basis for exemption would not be available if the Offering is part of a plan or scheme to evade registration provisions of the Securities Act or any applicable state or federal securities laws.

 

(iii)           The Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Securities.

 

(iv)           The Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing for its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.

 

(v)           The Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “Advisors”) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a prospective investment in the Securities. If other than an individual, the Subscriber also represents it has not been organized solely for the purpose of acquiring the Securities.

 

(vi)           The Subscriber (together with its Advisors, if any) has received all documents requested by the Subscriber, if any, has carefully reviewed them and understands the information contained therein, prior to the execution of this Agreement.

 

(c)           The Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal, tax, economic and related considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted with, only its Advisors. Each Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is annexed to this Agreement) the specific details of any and all past, present or future relationships, actual or contemplated, between the Advisor and the Company or any affiliate or sub-agent thereof.

 

(d)           The Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully understands that the Securities are a speculative investment that involves a high degree of risk of loss of the Subscriber’s entire investment. Among other things, the Subscriber has carefully considered each of the risks described under the heading “Risk Factors” in the Company’s SEC Filings (as defined below) and the Pershing SEC Filings, including the Risk Factors contained therein, as they relate to the Gold Mining Properties and gold mining in general, which risk factors are incorporated herein by reference, and any additional disclosures in the nature of Risk Factors described herein, including, without limitation, the additional disclosures in Section 3(u), below.

 

  

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 (e)           The Subscriber will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of its purchase because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available.  In particular, the Subscriber is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The Subscriber also understands that the Company is under no obligation to register the Securities on behalf of the Subscriber or to assist the Subscriber in complying with any exemption from registration under the Securities Act or applicable state securities laws. The Subscriber understands that any sales or transfers of the Securities are further restricted by state securities laws and the provisions of this Agreement.  The Subscriber understands that the Company may limit further the right to sell or transfer shares by establishing procedures for approval of any such transfer, limiting counsel authorized to review and approve Rule 144 transactions and approving opinion fees, for transfers sought to be permitted under Rule 144, which may result in delays in desired sales or transfers by Subscribers.

 

(f)           No oral or written representations or warranties have been made, or information furnished, to the Subscriber or its Advisors, if any, by the Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in connection with the Offering, other than any representations of the Company contained herein, and in subscribing for the Shares, the Subscriber is not relying upon any representations other than those contained herein.

 

(g)           The Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s net worth, and an investment in the Securities will not cause such overall commitment to become excessive.

 

(h)           The Subscriber understands and agrees that the certificates for the Shares and the shares of Common Stock underlying the Shares shall bear substantially the following legend until (i) such Securities shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel for the Company, such Securities may be sold without registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.

 

(i)           Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved the Securities or passed upon or endorsed the merits of the Offering. There is no government or other insurance covering any of the Securities.

 

(j)           The Subscriber and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the Offering and the business, financial condition, results of operations and prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors, if any.

 

  

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(k)           The Subscriber is unaware of, is in no way relying on, and did not become aware of, the Offering through or as a result of, any form of general solicitation or general advertising, including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or electronic mail over the Internet, in connection with the Offering and is not subscribing for Shares and did not become aware of the Offering through or as a result of any seminar or meeting to which the Subscriber was invited by, or any solicitation of a subscription by, a person not previously known to the Subscriber in connection with investments in securities generally.

 

(l)           The Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby.

 

(m)           The Subscriber is not relying on the Company or any of its employees, agents, or advisors with respect to the legal, tax, economic and related considerations of an investment in the Shares, and the Subscriber has relied on the advice of, or has consulted with, only its own Advisors.

 

(n)           The Subscriber acknowledges that any estimates or forward-looking statements or projections furnished by the Company to the Subscriber were prepared by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by the Company or its management and should not be relied upon.

 

(o)           No oral or written representations have been made, or oral or written information furnished, to the Subscriber or its Advisors, if any, in connection with the Offering that are in any way inconsistent with the information contained herein.

 

(p)           (For ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (i) is responsible for the decision to invest in the Company; (ii) is independent of the Company and any of its affiliates; (iii) is qualified to make such investment decision; and (iv) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on any advice or recommendation of the Company or any of its affiliates.

 

(q)           This Agreement is not enforceable by the Subscriber unless it has been accepted by the Company, and the Subscriber acknowledges and agrees that the Company reserves the right to reject any subscription for any reason.

 

(r)           The Subscriber will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors, affiliates and shareholders, and each other person, if any, who controls any of the foregoing from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) (a “Loss”) arising out of or based upon any representation or warranty of the Subscriber contained herein or in any document furnished by the Subscriber to the Company in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or therein; provided, however, that the Subscriber shall not be liable for any Loss that in the aggregate exceeds the Subscriber’s Aggregate Purchase Price tendered hereunder.

 

(s)           The Subscriber is, and on each date on which the Subscriber continues to own restricted Securities from the Offering will be, an “Accredited Investor” as defined in Rule 501(a) under the Securities Act. In general, an “Accredited Investor” is deemed to be an institution with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 (excluding such person’s residence) or annual income exceeding $200,000 or $300,000 jointly with his or her spouse.

 

(t)           The Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the Offering, and has so evaluated the merits and risks of such investment. The Subscriber has not authorized any person or entity to act as its Purchaser Representative (as that term is defined in Regulation D of the General Rules and Regulations under the Securities Act) in connection with the Offering. The Subscriber is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

  

- 9 -

  

 

(u)           The Subscriber has reviewed, or had an opportunity to review, all of the SEC Filings, and all “Risk Factors” and “Forward Looking Statements” disclaimers contained therein, as well as review the SEC Filings of Pershing and the Risk Factors contained therein as they relate to the Gold Mining Properties and gold mining in general.  In addition, the Subscriber has reviewed and acknowledges it has such knowledge, sophistication, and experience in securities matters, and understands the following additional Risk Factor related to the Company:

 

SPECIAL RISK FACTOR INVOLVING INVESTOR RELATIONS ACTIVITIES, NOMINAL “FLOAT” AND SUPPLY AND DEMAND FACTORS THAT MAY AFFECT THE PRICE OF OUR STOCK.

 

The Company expects to utilize various techniques such as non-deal road shows and investor relations campaigns in order to create investor awareness for the Company.  These campaigns may include personal, video and telephone conferences with investors and prospective investors in which our business practices are described.  The Company may provide compensation to investor relations firms and pay for newsletters, websites, mailings and email campaigns that are produced by third-parties based upon publicly-available information concerning the Company.  The Company will not be responsible for the content of analyst reports and other writings and communications by investor relations firms not authored by the Company or from publicly available information.  The Company does not intend to review or approve the content of such analysts’ reports or other materials based upon analysts’ own research or methods.  Investor relations firms should generally disclose when they are compensated for their efforts, but whether such disclosure is made or complete is not under our control.   In addition, investors in the Company may, from time to time, also take steps to encourage investor awareness through similar activities that may be undertaken at the expense of the investors.  Investor awareness activities may also be suspended or discontinued which may impact the trading market our common stock.

  

 The SEC and FINRA enforce various statutes and regulations intended to prevent manipulative or deceptive devices in connection with the purchase or sale of any security and carefully scrutinize trading patterns and company news and other communications for false or misleading information, particularly in cases where the hallmarks of “pump and dump” activities may exist, such as rapid share price increases or decreases.  We, and our shareholders may be subjected to enhanced regulatory scrutiny due to the small number of holders who initially will own the registered shares of our common stock publicly available for resale, and the limited trading markets in which such shares may be offered or sold which have often been associated with improper activities concerning penny-stocks, such as the OTC Bulletin Board or the OTCQB Marketplace (Pink OTC) or pink sheets.  Until such time as the common stock  underlying the Preferred Stock sold in the Offering is registered and until such time as our restricted shares are registered or available for resale under Rule 144, there will continue to be a small percentage of shares held by a small number of investors, many of whom acquired such shares in privately negotiated purchase and sale transactions, that will constitute the entire available trading market.  The Supreme Court has stated that manipulative action is a term of art connoting intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities.  Often times, manipulation is associated by regulators with forces that upset the supply and demand factors that would normally determine trading prices.  Since a small percentage of the outstanding common stock of the Company will initially be available for trading, held by a small number of individuals or entities, the supply of our common stock for sale will be extremely limited for an indeterminate amount of time, which could result in higher bids, asks or sales prices than would otherwise exist.  Securities regulators have often cited factors such as thinly-traded markets, small numbers of holders, and awareness campaigns as hallmarks  of claims of price manipulation and other violations of law when combined with manipulative trading, such as wash sales, matched orders or other manipulative trading timed to coincide with false or touting press releases.  There can be no assurance that the Company’s or third-parties’ activities, or the small number of potential sellers or small percentage of stock in the “float,” or determinations by purchasers or holders as to when or under what circumstances or at what prices they may be willing to buy or sell stock will not artificially impact (or would be claimed by regulators to have affected) the normal supply and demand factors that determine the price of the stock.

 

  

- 10 -

  

 

SHARES MAY BE PURCHASED BY AFFILIATES OF THE PLACEMENT AGENT AND/OR THE COMPANY AND SHOULD NOT BE DEEMED EVIDENCE OF AN ENDORSEMENT OF THE OFFERING BY INDEPENDENT PURCHASERS.

Shares may be purchased by the Placement Agent and its officers, employees and affiliates, and by the Company’s officers, directors, employees and affiliates (including current stockholders and their respective affiliates).  Accordingly, investors in the Offering should understand and recognize that not all subscribers will necessarily have made an independent investment decision with no affiliation with either the Company or the Placement Agent.

 

4.           THE COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Company hereby acknowledges, agrees with and represents, warrants and covenants to the Subscriber, as follows:

 

(a)           Organization and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware.  The Company is duly qualified to do business, and is in good standing in the states required due to (a) the ownership or lease of real or personal property for use in the operation of the Company's business or (b) the nature of the business conducted by the Company.  The Company has all requisite power, right and authority to own, operate and lease its properties and assets, to carry on its business as now conducted, to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party, and to carry out the transactions contemplated hereby and thereby.  All actions on the part of the Company and its officers and directors necessary for the authorization, execution, delivery and performance of this Agreement and the other Transaction Documents, the consummation of the transactions contemplated hereby and thereby, and the performance of all of the Company's obligations under this Agreement and the other Transaction Documents have been taken or will be taken prior to the Closing.  This Agreement has been, and the other Transaction Documents to which the Company is a party on the Closing will be, duly executed and delivered by the Company, and this Agreement is, and each of the other Transaction Documents to which it is a party on the Closing will be, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

 

(b)           Issuance of Securities.  The Securities to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms of this Agreement, will be duly and validly issued and will be fully paid and non-assessable.

 

(c)           Authorization; Enforcement.  The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company, and the consummation of the transactions contemplated hereby and thereby, will not (a) constitute a violation (with or without the giving of notice or lapse of time, or both) of any provision of any law or any judgment, decree, order, regulation or rule of any court, agency or other governmental authority applicable to the Company, (b) require any consent, approval or authorization of, or declaration, filing or registration with, any person, (c) result in a default (with or without the giving of notice or lapse of time, or both) under, acceleration or termination of, or the creation in any party of the right to accelerate, terminate, modify or cancel, any agreement, lease, note or other restriction, encumbrance, obligation or liability to which the Company is a party or by which it is bound or to which any assets of the Company are subject, (d) result in the creation of any lien or encumbrance upon the assets of the Company, or upon any Shares or other securities of the Company, (e) conflict with or result in a breach of or constitute a default under any provision of those certain articles of incorporation or those certain bylaws of the Company, or (f) invalidate or adversely affect any permit, license, authorization or status used in the conduct of the business of the Company.

 

(d)           SEC Filings. The Company is subject to, and in full compliance with, the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has made available to each Subscriber through the EDGAR system true and complete copies of each of the Company’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K (collectively, the “SEC Filings”), and all such SEC Filings are incorporated herein by reference.

 

  

- 11 -

  

 

(e)           No Financial Advisor. The Company acknowledges and agrees that the Subscriber is acting solely in the capacity of an arm’s length purchaser with respect to the Securities and the transactions contemplated hereby. The Company further acknowledges that the Subscriber is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Subscriber or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Subscriber’s purchase of the Shares. The Company further represents to the Subscriber that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(f)           Indemnification.  The Company will indemnify and hold harmless the Subscriber and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all Loss arising out of or based upon any representation or warranty of the Company contained herein or in any document furnished by the Company to the Subscriber in connection herewith being untrue in any material respect or any breach or failure by the Company to comply with any covenant or agreement made by the Company to the Subscriber in connection therewith; provided, however, that the Company’s liability shall not exceed the Subscriber’s Aggregate Purchase Price tendered hereunder.

 

(g)           Capitalization and Additional Issuances.  The authorized and outstanding capital stock of the Company on a fully diluted basis as of the Closing Date is set forth on Schedule 4(g).  Except as set forth on Schedule 4(g), there are no options, warrants, or rights to subscribe to, securities, rights, understandings or obligations convertible into or exchangeable for or giving any right to subscribe for any shares of capital stock or other equity interest of the Company or any of the Subsidiaries.  The only officer, director, employee and consultant stock option or stock incentive plan or similar plan currently in effect or contemplated by the Company is described on Schedule 4(g).  There are no outstanding agreements or preemptive or similar rights affecting the Company's Common Stock.

 

(h)           Private Placements.  Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 3, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Subscribers as contemplated hereby.

(j)           Investment Company.  The Company is not, and is not an affiliate of, and immediately after receipt of payment for the Shares will not be or be an affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

 

5.           OTHER AGREEMENTS OF THE PARTIES

 

(a)           Furnishing of Information.  As long as any Subscriber owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  As long as any Subscriber owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Subscribers and make publicly available in accordance with Rule 144(c) under the Securities Act such information as is required for the Subscribers to sell the Securities under Rule 144.  The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such person to sell such Securities without registration under the Securities Act within the limitation of the exemptions proved by Rule 144 under the Securities Act.

 

(b)           Shareholder Rights Plan.  No claim will be made or enforced by the Company or, to the knowledge of the Company, any other person that any Subscriber is an “Acquiring Person” under any shareholder rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that any Subscriber could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Subscribers.

 

(c)           Securities Laws Disclosure; Publicity.  The Company and each Subscriber shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and no Subscriber shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, which consent shall not unreasonably be withheld.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Subscriber, or include the name of any Subscriber in any filing with the SEC or any regulatory agency, without the prior written consent of such Subscriber, except to the extent such disclosure is required by law.

 

  

- 12 -

  

 

(d)           Integration.  The Company shall not, and shall use its best efforts to ensure that no affiliate of the Company shall, after the date hereof, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Subscribers.

 

(e)           Reservation of Securities.  The Company shall maintain a reserve from its duly authorized shares of Preferred Stock (and shares of Common Stock upon conversion thereof) for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents.  In the event that at any time the then authorized shares of Preferred Stock or Common Stock, as the case may be, are insufficient for the Company to satisfy its obligations in full under the Transaction Documents, the Company shall promptly take such actions as may be required to increase the number of authorized shares.

 

(f)           Use of Proceeds.  The Company anticipates using the gross proceeds from the Offering as follows: (i) $2,000,000 payment to Pershing Gold Corporation in connection with the Merger and (ii) the balance of the proceeds from the Offering for general working capital.

 

6.           INTENTIONALLY OMITTED.

7.           CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION

 

The Company’s right to accept the subscription of the Subscriber is conditioned upon satisfaction of the following conditions precedent on or before the date the Company accepts such subscription:

 

(a)           As of the Closing, no legal action, suit or proceeding shall be pending that seeks to restrain or prohibit the transactions contemplated by this Agreement.

 

(b)           The representations and warranties of the Company contained in this Agreement shall have been true and correct in all material respects on the date of this Agreement and shall be true and correct as of the Closing as if made on the Closing Date.

 

	
8.

	
MISCELLANEOUS PROVISIONS

 

(a)           All parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of the fact that such party’s counsel was or was not the principal draftsman of this Agreement.

 

(b)           Each of the parties hereto shall be responsible to pay the costs and expenses of its own legal counsel in connection with the preparation and review of this Agreement and related documentation.

 

(c)           Neither this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, modification, discharge or termination is sought.

 

(d)           The representations, warranties and agreement of the Subscriber and the Company made in this Agreement shall survive the execution and delivery of this Agreement and the delivery of the Securities.

 

(e)           Any party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth on the signature page of this Agreement or to the Company at its primary office (including personal delivery, expedited courier, messenger service, fax, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties written notice in the manner herein set forth.

 

  

- 13 -

  

 

(f)           Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement and their heirs, executors, administrators, successors, legal representatives and assigns.  If the Subscriber is more than one person or entity, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments contained herein shall be deemed to be made by, and be binding upon, each such person or entity and its heirs, executors, administrators, successors, legal representatives and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

 

(g)           This Agreement is not transferable or assignable by the Subscriber.

 

(h)           This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of law principles.

 

(i)           The Company and the Subscriber hereby agree that any dispute that may arise between them arising out of or in connection with this Agreement shall be adjudicated before a court located in the City of New York, Borough of Manhattan, and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of New York located in the City of New York, Borough of Manhattan with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.

 

(j)           WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(j)           This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Signature Pages Follow]

 

  

- 14 -

  

 

ALL SUBSCRIBERS MUST COMPLETE THIS PAGE

IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the ____ day of _____, 2012.

 

	  	
 x $0.40  for each Share           =         

	  
	
Shares subscribed for

	  	
      Aggregate Purchase Price

Manner in which Title is to be held (Please Check One):

 

	
1.

	
___

	
Individual

	
7.

	
___

	
Trust/Estate/Pension or Profit sharing Plan

Date Opened:______________

	
2.

	
___

	
Joint Tenants with Right of Survivorship

	
8.

	
___

	
As a Custodian for

________________________________

Under the Uniform Gift to Minors Act of the State of

________________________________

	
3.

	
___

	
Community Property

	
9.

	
___

	
Married with Separate Property

	
4.

	
___

	
Tenants in Common

	
10.

	
___

	
Keogh

	
5.

	
___

	
Corporation/Partnership/ Limited Liability Company

	
11.

	
___

	
Tenants by the Entirety

	
6.

	
___

	
IRA

	  	  	  

ALTERNATIVE DISTRIBUTION INFORMATION

 

To direct distribution to a party other than the registered owner, complete the information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA INVESTMENT.

 

Name of Firm (Bank, Brokerage, Custodian):

 

Account Name:

 

Account Number:

 

Representative Name:

 

Representative Phone Number:

 

Address:

 

City, State, Zip:

 

 

[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT – ______________________________]

 

  

- 15 -

  

 

IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.

INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 16.

SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 17.

 

EXECUTION BY NATURAL PERSONS

 

	
_____________________________________________________________________________

Exact Name in Which Title is to be Held

	
 

_________________________________

Name (Please Print)

	  	
 

_________________________________

Name of Additional Purchaser

	
 

_________________________________

Residence: Number and Street

	  	
 

_________________________________

Address of Additional Purchaser

	
 

_________________________________

City, State and Zip Code

	  	
 

_________________________________

City, State and Zip Code

	
 

_________________________________

Social Security Number

	  	
 

_________________________________

Social Security Number

	
 

_________________________________

Telephone Number

	  	
 

_________________________________

Telephone Number

	
 

_________________________________

Fax Number (if available)

	  	
 

________________________________

Fax Number (if available)

	
 

_________________________________

E-Mail (if available)

	  	
 

________________________________

E-Mail (if available)

	
 

__________________________________

(Signature)

 

 

	  	
 

________________________________

(Signature of Additional Purchaser)

	
ACCEPTED this ___ day of _________ 2012, on behalf of the Company.

	  	
 

By:_________________________________

Name:

Title:

	  	  

 

[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT – ______________________________]

 

  

- 16 -

  

 

EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY

(Corporation, Partnership, LLC, Trust, Etc.)

 

	
_____________________________________________________________________________

Name of Entity (Please Print)

	
Date of Incorporation or Organization:

 

	
State of Principal Office:

 

	
Federal Taxpayer Identification Number:

 

____________________________________________

Office Address

 

____________________________________________

City, State and Zip Code

 

____________________________________________

Telephone Number

 

____________________________________________

Fax Number (if available)

 

____________________________________________

E-Mail (if available)

 

	  	
By: _________________________________

Name:

Title:

	
[seal]

 

Attest: _________________________________

(If Entity is a Corporation)

	
 

 

_________________________________

 

_________________________________

Address

	  	  
	
ACCEPTED this ____ day of __________ 2012, on behalf of the Company.

	  	
 

 

By: _________________________________

Name:

Title:

 

 

[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT – ______________________________]

 

  

- 17 -

  

 

INVESTOR QUESTIONNAIRE

 

Instructions:  Check all boxes below which correctly describe you.

 

	
o

	
You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in an individual or fiduciary capacity, (iii) a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv) an insurance company as defined in Section 2(13) of the Securities Act, (v) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi) a business development company as defined in Section 2(a)(48) of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii) a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1) the decision that you shall subscribe for and purchase shares of preferred stock (the “Shares”), is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (2) you have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Shares is made solely by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe for and purchase the Shares is made solely by persons or entities that are accredited investors.

 

	
o

	
You are a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended.

 

	
o

	
You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust or a partnership, in each case not formed for the specific purpose of making an investment in the Shares and its underlying securities in excess of $5,000,000.

 

	
o

	
You are a director or executive officer of the Company.

 

	
o

	
You are a natural person whose individual net worth, or joint net worth with your spouse, exceeds $1,000,000 (excluding residence) at the time of your subscription for and purchase of the Shares.

 

	
o

	
You are a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable expectation of reaching the same income level in the current year.

 

	
o

	
You are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares and whose subscription for and purchase of the Shares is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

 

	
o

	
You are an entity in which all of the equity owners are persons or entities described in one of the preceding paragraphs.

 

  

- 18 -

  

 

Check all boxes below which correctly describe you.

 

With respect to this investment in the Shares, your:

 

	
Investment Objectives:   

	
p Aggressive Growth  

	
p Speculation

	  
	 	 	 	 
	
Risk Tolerance: 

	
o Low Risk 

	
o Moderate Risk  

	
p High Risk  

 

Are you associated with a FINRA Member Firm? o Yes o No

 

Your initials (purchaser and co-purchaser, if applicable) are required for each item below:

 

	
____   ____ 

	
I/We understand that this investment is not guaranteed.

 

	
____   ____ 

	
I/We are aware that this investment is not liquid.

 

	
____   ____ 

	
I/We are sophisticated in financial and business affairs and are able to evaluate the risks and merits of an investment in this offering.

 

	
____   ____ 

	
I/We confirm that this investment is considered “high risk.” (This type of investment is considered high risk due to the inherent risks including lack of liquidity and lack of diversification.  Success or failure of private placements such as this is dependent on the corporate issuer of these securities and is outside the control of the investors. While potential loss is limited to the amount invested, such loss is possible.)

 

The Subscriber hereby represents and warrants that all of its answers to this Investor Questionnaire are true as of the date of its execution of the Subscription Agreement pursuant to which it purchased the Shares.

 

	
 

 

___________________________________

Name of Purchaser  [please print]

 

___________________________________

Signature of Purchaser (Entities please

provide signature of Purchaser’s duly

authorized signatory.)

 

___________________________________

Name of Signatory (Entities only)

 

___________________________________

Title of Signatory (Entities only)

	
 

 

___________________________________

Name of Co-Purchaser  [please print]

 

___________________________________

Signature of Co-Purchaser

 

 

[SIGNATURE PAGE TO INVESTOR QUESTIONAIRRE AGREEMENT – ______________________________]

 

  

- 19 -

  

 

VERIFICATION OF INVESTMENT ADVISOR/BROKER

 

I state that I am familiar with the financial affairs and investment objectives of the investor named above and reasonably believe that a purchase of the securities is a suitable investment for this investor and that the investor, either individually or together with his or her purchaser representative, understands the terms of and is able to evaluate the merits of this offering.  I acknowledge:

 

	
  

	
(a)

	
that I have reviewed the Subscription Agreement and forms of securities presented to me, and attachments (if any) thereto;

 

	
  

	
(b)

	
that the Subscription Agreement and attachments thereto have been fully completed and executed by the appropriate party; and

 

	
  

	
(c)

	
that the subscription will be deemed received by the Company upon acceptance of the Subscription Agreement.

 

	
Deposit securities from this offering directly to purchaser’s account?

	
o Yes 

	
o No

 

If “Yes,” please indicate the account number: _____________________________________

 

 

	
_____________________________________

	
____________________________________

	
Broker/Dealer

	
Account Executive

	
  

_____________________________________

	
  

____________________________________

	
(Name of Broker/Dealer)

	
(Signature)

	
  

_____________________________________

	
  

____________________________________

	
(Street Address of Broker/Dealer Office)

	
(Print Name)

	
  

_____________________________________

	
  

____________________________________

	
(City of Broker/Dealer Office) (State) (Zip)

	
(Representative I.D. Number)

	
  

_____________________________________

	
  

____________________________________

	
(Telephone Number of Broker/Dealer Office)

	
(Date)

	
  

_____________________________________

	
  

____________________________________

	
(Fax Number of Broker/Dealer Office)

	
(E-mail Address of Account Executive)

 

 

- 20 -Unassociated Document

 

	
Recording Requested by:

	 	 
	 	 	 
	 	 	 
	
 

WHEN RECORDED MAIL TO:

	  	  
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

Affirmation Statement:

 

The undersigned hereby affirm that this document does not contain the personal information of any person or persons.

 

THIS ROYALTY DEED (“Deed”) is made and entered into this 24th day of May, 2012, by and between Arthur Leger, an individual (“Leger”), whose address is 2338 Sunrise Drive, Reno, Nevada 89509, and Pershing Royalty Company, a Delaware corporation (“Pershing Royalty”), whose address is 1656 Cole Blvd., Building 6, Suite 210, Lakewood, Colorado 80401.

 

RECITALS

 

A.           Leger is the sole owner of those certain unpatented mining claims located in Lander County, Nevada, as more particularly described on Exhibit A attached hereto and incorporated herein by reference (the “Claims”).

 

B.           Leger has agreed to grant to Pershing Royalty a one percent (1.0%) net smelter returns production royalty on all minerals produced from the Claims on the terms and conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Leger hereby grants, bargains, sells, transfers, assigns and conveys to Pershing Royalty, its successors and assigns, a non-participating, non-executive perpetual production royalty, as set forth in Exhibit B attached hereto and incorporated herein by reference, of one percent (1.0%) of the Net Smelter Returns (as defined in Exhibit B) from any and all Valuable Minerals (as defined in Exhibit B) produced and sold from the Claims (the “Production Royalty”).  The terms of payment of the Production Royalty and other agreements of the parties pertaining to the Production Royalty are set forth in Exhibit B.

 

  

  

  

 

Leger acknowledges and represents to Pershing Royalty that (i) he has good title to and is the sole owner of the Claims (subject to the paramount title of the United States of America), the Claims are free and clear of any and all encumbrances, the Claims were located, monumented and recorded with the appropriate governmental agencies as required by law and have been continuously maintained since location or relocation by the performance of assessment work or timely payment of claim maintenance fees and filing/recording of evidentiary documents as required by law, and he is not a party to any other agreements with respect to any production royalties from the Claims; (ii) he has agreed to grant to Pershing Royalty a payment of the Production Royalty in connection with the transactions contemplated by that certain Agreement and Plan of Merger by and among Valor Gold Corp., Valor Gold Acquisition Corp., Red Battle Corp., and Pershing Gold Corporation dated as of May 22, 2012, (iii) that granting the Production Royalty to Pershing Royalty is a condition to the closing of such transactions that is required to be satisfied by Valor Gold Corp. and Valor Gold Acquisition Corp.; and (iv) that he has received good, valuable and sufficient consideration from Valor Gold Corp. or Valor Gold Acquisition Corp. for granting the Production Royalty.

 

The parties intend that the Production Royalty granted by Leger in this Deed shall be a covenant running with the Claims, and the parties agree that any conveyance of all or any portion of the Claims shall not be effective unless it includes an express covenant by the transferee to recognize and pay the Production Royalty.  The parties agree that Pershing Royalty may record this Deed in the official records of Lander County, Nevada.

 

TO HAVE AND TO HOLD the Production Royalty unto Pershing Royalty, its successors and assigns forever.

 

[remainder of this page intentionally blank]

 

 

  

  

  

 

IN WITNESS WHEREOF, the parties have executed this Royalty Deed as of the date first set forth above.

 

 

	 	
Arthur Leger, an individual

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	 	 
	 	
Pershing Royalty, a Delaware corporation

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name: Stephen D. Alfers

	 
	 	 	
Title: President and Treasurer

	 

 

 

[Signature Page to Royalty Deed]

 

  

  

  

 

	
STATE OF ____________   

	
)

	 	 
	 	
) ss.

	 	 
	
COUNTY OF __________   

	
)

	 	 

 

The foregoing instrument was acknowledged before me on this _______ day of May, 2012, by Arthur Leger.

 

Witness my hand and official seal.

 

_______________________________

 

Notary Public

 

My Commission expires:

 

_______________________________

 

[SEAL]

 

	
STATE OF ____________   

	
)

	 	 
	 	
) ss.

	 	 
	
COUNTY OF __________   

	
)

	 	 

 

The foregoing instrument was acknowledged before me on this _______ day of May, 2012, by ______________________, as _____________________ of Pershing Royalty, a Delaware corporation.

 

Witness my hand and official seal.

 

_______________________________

  

Notary Public

 

My Commission expires:

 

_______________________________

 

[SEAL]

 

 

[Notary Page to Royalty Deed]

 

  

  

  

 

EXHIBIT A

 

TO ROYALTY DEED

BETWEEN ARTHUR LEGER AND PERSHING ROYALTY

 

DATED MAY 22, 2012

 

CLAIMS

 

The following unpatented lode mining claims in Sections _____, Township ______,

Range ________, Lander County, Nevada:

	  	  	
COUNTY RECORDING INFORMATION

	
CLAIM NAME

	
BLM SERIAL NO. (NMC)

	
BOOK

	
PAGE

	
DOC. NO.

	
LS#l

	
863271

	
526

	
498

	
230790

	
LS#2

	
863272

	
526

	
499

	
230791

	
LS#3

	
863273

	
526

	
500

	
230792

	
LS#4

	
863274

	
526

	
501

	
230793

	
LS#5

	
863275

	
526

	
502

	
230794

	
LS#6

	
863276

	
526

	
503

	
230795

	
LS#7

	
863277

	
526

	
504

	
230796

	
LS#8

	
863278

	
526

	
505

	
230797

	
LS#9

	
863279

	
526

	
506

	
230798

	
LS#11

	
863280

	
526

	
507

	
230799

	
LS#13

	
863281

	
526

	
508

	
230800

	
LS#15

	
863282

	
526

	
509

	
230801

	
LS#17

	
863283

	
526

	
510

	
230802

	
LS#19

	
863284

	
526

	
511

	
230803

	
LS#20

	
863285

	
526

	
512

	
230804

	
LS#21

	
863286

	
526

	
513

	
230805

	
LS#22

	
863287

	
526

	
514

	
230806

	
LS#23

	
863288

	
526

	
515

	
230807

	
LS#24

	
863289

	
526

	
516

	
230808

	
LS#25

	
863290

	
526

	
517

	
230809

	
LS#26

	
863291

	
526

	
518

	
230810

	
LS#27

	
863292

	
526

	
519

	
230811

	
LS#28

	
863293

	
526

	
520

	
230812

	
LS#29

	
863294

	
526

	
521

	
230813

	
LS#30

	
863295

	
526

	
522

	
230814

	
LS#31

	
863296

	
526

	
523

	
230815

	
LS#32

	
863297

	
526

	
524

	
230816

	
LS#33

	
863298

	
526

	
525

	
230817

	
LS#34

	
863299

	
526

	
526

	
230818

	
LS#36

	
863300

	
526

	
527

	
230819

	
LS#38

	
863301

	
526

	
528

	
230820

 

  

A-1

  

 

	 	 	

COUNTY RECORDING INFORMATION

	

CLAIM NAME

	

BLM SERIAL NO. (NMC)

	

BOOK

	

PAGE

	

DOC. NO.

	
LS#40

	
863302

	
526

	
529

	
230821

	
LS#42

	
863303

	
526

	
530

	
230822

	
LS#44

	
863304

	
526

	
531

	
230823

	
LS#45

	
863305

	
526

	
532

	
230824

	
LS#46

	
863306

	
526

	
533

	
230825

	
LS#47

	
863307

	
526

	
534

	
230826

	
LS#48

	
863308

	
526

	
535

	
230827

	
LS#49

	
863309

	
526

	
536

	
230828

	
LS#50

	
863310

	
526

	
537

	
230829

	
LS#51

	
863311

	
526

	
538

	
230830

	
LS#52

	
863312

	
526

	
539

	
230831

	
LS#53

	
863313

	
526

	
540

	
230832

	
LS#54

	
863314

	
526

	
541

	
230833

	
LS#55

	
863315

	
526

	
542

	
230834

	
LS#56

	
863316

	
526

	
543

	
230835

	
LS#57

	
863317

	
526

	
544

	
230836

	
LS#58

	
863318

	
526

	
545

	
230837

	
LS#59

	
863319

	
526

	
546

	
230838

	
LS#60

	
863320

	
526

	
547

	
230839

	
LS#61

	
863321

	
526

	
548

	
230840

	
LS#62

	
863322

	
526

	
549

	
230841

	
LS#63

	
863323

	
526

	
550

	
230842

	
LS#64

	
863324

	
526

	
551

	
230843

	
LS#65

	
863325

	
526

	
552

	
230844

	
LS#66

	
863326

	
526

	
553

	
230845

	
LS#67

	
863327

	
526

	
554

	
230846

	
LS#68

	
863328

	
526

	
555

	
230847

	
LS#69

	
863329

	
526

	
556

	
230848

	
LS#70

	
863330

	
526

	
557

	
230849

	
LS#71

	
863331

	
526

	
558

	
230850

	
LS#72

	
863332

	
526

	
559

	
230851

	
LS#81

	
863333

	
526

	
560

	
230852

	
LS#82

	
863334

	
526

	
561

	
230853

	
LS#83

	
863335

	
526

	
562

	
230854

	
LS#84

	
863336

	
526

	
563

	
230855

	
LS#103

	
863337

	
526

	
564

	
230856

	
LS#104

	
863338

	
526

	
565

	
230857

	
LS#105

	
863339

	
526

	
566

	
230858

	
LS#106

	
863340

	
526

	
567

	
230859

	
LS#107

	
863341

	
526

	
568

	
230860

	
LS#108

	
863342

	
526

	
569

	
230861

	
LS#109

	
863343

	
526

	
570

	
230862

	
LS#110

	
863344

	
526

	
571

	
230863

 

  

A-2

  

 

	 	 	
COUNTY RECORDING INFORMATION

	
CLAIM NAME

	
BLM SERIAL NO. (NMC)

	
BOOK

	
PAGE

	
DOC. NO.

	
LS#111

	
863345

	
526

	
572

	
230864

	
LS#112

	
863346

	
526

	
573

	
230865

	
LS#113

	
863347

	
526

	
574

	
230866

	
LS#118

	
863348

	
526

	
575

	
230867

	
LS#119

	
863349

	
526

	
576

	
230868

	
LS#120

	
863350

	
526

	
577

	
230869

	
LS#200

	
892631

	
540

	
158

	
236815

	
LS#201

	
892632

	
540

	
159

	
236816

	
LS#202

	
892633

	
540

	
160

	
236817

	
LS#203

	
892634

	
540

	
161

	
236818

	
LS#204

	
892635

	
540

	
162

	
236819

	
LS#205

	
892636

	
540

	
163

	
236820

	
LS#206

	
892637

	
540

	
164

	
236821

	
LS#207

	
892638

	
540

	
165

	
236822

	
LS#208

	
892639

	
540

	
166

	
236823

	
LS#209

	
892640

	
540

	
167

	
236824

	
LS#211

	
892641

	
540

	
168

	
236825

	
LS#215

	
892642

	
540

	
169

	
236826

	
LS#216

	
892643

	
540

	
170

	
236827

	
LS#217

	
892644

	
540

	
171

	
236828

	
LS#218

	
892645

	
540

	
172

	
236829

	
LS#219

	
892646

	
540

	
173

	
236830

	
LS#220

	
892647

	
540

	
174

	
236831

	
LS#222

	
892648

	
540

	
175

	
236832

	
LS#223

	
892649

	
540

	
176

	
236833

	
LS#210

	
915264

	
550

	
1

	
239991

	
LS#212

	
915265

	
550

	
2

	
239992

	
LS#213

	
915266

	
550

	
3

	
239993

	
LS#214

	
915267

	
550

	
4

	
239994

	
LS#224

	
915268

	
550

	
5

	
239995

	
LS#224A

	
915269

	
550

	
6

	
239996

	
LS#225

	
915270

	
550

	
7

	
239997

	
LS#225A

	
915271

	
550

	
8

	
239998

	
LS#226

	
915272

	
550

	
9

	
239999

	
LS#227

	
915273

	
550

	
10

	
240000

	
LS#228

	
915274

	
550

	
11

	
240001

	
LS#229

	
915275

	
550

	
12

	
240002

	
LS#230

	
915276

	
550

	
13

	
240003

	
LS#231

	
915277

	
550

	
14

	
240004

	
LS#251

	
915278

	
550

	
15

	
240005

	
LS#252

	
915279

	
550

	
16

	
240006

	
LS#253

	
915280

	
550

	
17

	
240007

	
LS#254

	
915281

	
550

	
18

	
240008·

 

  

A-3

  

 

	 	 	

COUNTY RECORDING INFORMATION

	
CLAIM NAME

	
BLM SERIAL NO. (NMC)

	
BOOK

	
PAGE

	
DOC. NO.

	
LS#255

	
915282

	
550

	
19

	
240009

	
LS#256

	
915283

	
550

	
20

	
240010

	
LS#257

	
915284

	
550

	
21

	
240011

	
LS#258

	
915285

	
550

	
22

	
240012

	
LS#259

	
915286

	
550

	
23

	
240013

	
LS#260

	
915287

	
550

	
24

	
240014

	
LS#261

	
915288

	
550

	
25

	
240015

	
LS#262

	
915289

	
550

	
26

	
240016

	
LS#263

	
915290

	
550

	
27

	
240017

	
LS#264

	
915291

	
550

	
28

	
240018

	
LS#265

	
915292

	
550

	
29

	
240019

	
LS#266

	
915293

	
550

	
30

	
240020

	
LS#267

	
915294

	
550

	
31

	
240021

	
LS#268

	
915295

	
550

	
32

	
240022

	
LS#269

	
915296

	
550

	
33

	
240023

	
LS#270

	
915297

	
550

	
34

	
240024

	
LS#271

	
915298

	
550

	
35

	
240025

	
LS#272

	
915299

	
550

	
36

	
240026

	
LS#273

	
915300

	
550

	
37

	
240027

	
LS#274

	
915301

	
550

	
38

	
240028

	
LS#275

	
915302

	
550

	
39

	
240029

	
LS#276

	
915303

	
550

	
40

	
240030

	
LS#277

	
915304

	
550

	
41

	
240031

	
LS#278

	
915305

	
550

	
42

	
240032

	
LS#279

	
915306

	
550

	
43

	
240033

	
LS#280

	
915307

	
550

	
44

	
240034

	
LS#281

	
915308

	
550

	
45

	
240035

	
LS#282

	
915309

	
550

	
46

	
240036

	
LS#283

	
915310

	
550

	
47

	
240037

	
LS#284

	
915311

	
550

	
48

	
240038

	
LS#285

	
915312

	
550

	
49

	
240039

	
LS#286

	
915313

	
550

	
50

	
240040

	
LS#287

	
915314

	
550

	
51

	
240041

	
LS#288

	
915315

	
550

	
52

	
240042

	
LS#289

	
915316

	
550

	
53

	
240043

	
LS#290

	
915317

	
550

	
54

	
240044

	
LS#291

	
915318

	
550

	
55

	
240045

	
LS#292

	
915319

	
550

	
56

	
240046

	
LS#293

	
915320

	
550

	
57

	
240047

	
LS#294

	
915321

	
550

	
58

	
240048

	
LS#297

	
915322

	
550

	
59

	
240049

	
LS#298

	
915323

	
550

	
60

	
240050

	
LS#299

	
915324

	
550

	
61

	
240051

 

  

A-4

  

 

	 	 	

COUNTY RECORDING INFORMATION

	
CLAIM NAME

	
BLM SERIAL NO. (NMC)

	
BOOK

	
PAGE

	
DOC. NO.

	
LS#299A

	
915325

	
550

	
62

	
240052

	
LS#314

	
915326

	
550

	
63

	
240053

	
LS#315

	
915327

	
550

	
64

	
240054

	
LS#316

	
915328

	
550

	
65

	
240055

	
LS#317

	
915329

	
550

	
66

	
240056

	
LS#318

	
915330

	
550

	
67

	
240057

	
LS#319

	
915331

	
550

	
68

	
240058

	
LS#320

	
915332

	
550

	
69

	
240059

	
LS#321

	
915333

	
550

	
70

	
240060

	
LS#322

	
915334

	
550

	
71

	
240061

	
LS#323

	
915335

	
550

	
72

	
240062

	
LS#324

	
915336

	
550

	
73

	
240063

	
LS#325

	
915337

	
550

	
74

	
240064

	
LS#326

	
915338

	
550

	
75

	
240065

	
LS#327

	
915339

	
550

	
76

	
240066

	
LS#341

	
915340

	
550

	
77

	
240067

	
LS#342

	
915341

	
550

	
78

	
240068

	
LS#343

	
915342

	
550

	
79

	
240069

	
LS#344

	
915343

	
550

	
80

	
240070

	
LS#345

	
915344

	
550

	
81

	
240071

	
LS#346

	
915345

	
550

	
82

	
240072

	
LS#347

	
915346

	
550

	
83

	
240073

	
LS#348

	
915347

	
550

	
84

	
240074

	
LS#349

	
915348

	
550

	
85

	
240075

	
LS#350

	
915349

	
550

	
86

	
240076

	
LS#351

	
915350

	
550

	
87

	
240077

	
LS#352

	
915351

	
550

	
88

	
240078

	
LS#361

	
915352

	
550

	
89

	
240079

	
LS#362

	
915353

	
550

	
90

	
240080

	
LS#363

	
915354

	
550

	
91

	
240081

	
LS#364

	
915355

	
550

	
92

	
240082

	
LS#365

	
915356

	
550

	
93

	
240083

	
LS#366

	
915357

	
550

	
94

	
240084

	
LS#367

	
915358

	
550

	
95

	
240085

	
LS#368

	
915359

	
550

	
96

	
240086

	
LS#369

	
915360

	
550

	
97

	
240087

	
LS#370

	
915361

	
550

	
98

	
240088

	
LS#371

	
915362

	
550

	
99

	
240089

	
LS#372

	
915363

	
550

	
100

	
240090

	
LS#414

	
915364

	
550

	
101

	
240091

	
LS#415

	
915365

	
550

	
102

	
240092

	
LS#416

	
915366

	
550

	
103

	
240093

	
LS#417

	
915367

	
550

	
104

	
240094

 

  

A-5

  

 

	 	 	
COUNTY RECORDING INFORMATION

	
CLAIM NAME

	
BLM SERIAL NO. (NMC)

	
BOOK

	
PAGE

	
DOC. NO.

	
LS#418

	
915368

	
550

	
105

	
240095

	
LS#419

	
915369

	
550

	
106

	
240096

	
LS#420

	
915370

	
550

	
107

	
240097

	
LS#421

	
915371

	
550

	
108

	
240098

	
LS#422

	
915372

	
550

	
109

	
240099

	
LS#423

	
915373

	
550

	
110

	
240100

	
LS#424

	
915374

	
550

	
111

	
240101

	
LS#425

	
915375

	
550

	
112

	
240102

	
LS#426

	
915376

	
550

	
113

	
240103

	
LS#427

	
915377

	
550

	
114

	
240104

	
LS#221

	
930878

	
559

	
37

	
243420

	
LS#222A

	
930879

	
559

	
38

	
243421

	
LS#223A

	
930880

	
559

	
39

	
243422

	
LS#121

	
953638

	
572

	
603

	
247529

	
LS#122

	
953639

	
572

	
604

	
247530

	
LS#123

	
953640

	
572

	
605

	
247531

	
LS#124

	
953641

	
572

	
606

	
247532

	
LS#125

	
953642

	
572

	
607

	
247533

	
LS#126

	
953643

	
572

	
608

	
247534

	
LS#127

	
953644

	
572

	
609

	
247535

	
LS#128

	
953645

	
572

	
610

	
247536

	
LS#129

	
953646

	
572

	
611

	
247537

	
LS#130

	
953647

	
572

	
612

	
247538

	
LS#131

	
953648

	
572

	
613

	
247539

	
LS#132

	
953649

	
572

	
614

	
247540

	
LS#133

	
953650

	
572

	
615

	
247541

	
LS#134

	
953651

	
572

	
616

	
247542

	
LS#135

	
953652

	
572

	
617

	
247543

	
LS#136

	
953653

	
572

	
618

	
247544

	
LS#137

	
953654

	
572

	
619

	
247545

	
LS#138

	
953655

	
572

	
620

	
247546

	
LS#139

	
953656

	
572

	
621

	
247547

	
LS#140

	
953657

	
572

	
622

	
247548

	
LS#141

	
953658

	
572

	
623

	
247549

	
LS#142

	
953659

	
572

	
624

	
247550

	
LS#143

	
953660

	
572

	
625

	
247551

	
LS#144

	
953661

	
572

	
626

	
247552

	
LS#145

	
953662

	
572

	
627

	
247553

	
LS#146

	
953663

	
572

	
628

	
247554

	
LS#147

	
953664

	
572

	
629

	
247555

	
LS#148

	
953665

	
572

	
630

	
247556

	
LS#149

	
953666

	
572

	
631

	
247557

	
LS#150

	
953667

	
572

	
632

	
247558

 

  

A-6

  

 

	 	 	

COUNTY RECORDING INFORMATION

	
CLAIM NAME

	
BLM SERIAL NO. (NMC)

	
BOOK

	
PAGE

	
DOC. NO.

	
LS#151

	
953668

	
572

	
633

	
247559

	
LS#152

	
953669

	
572

	
634

	
247560

	
LS#153

	
953670

	
572

	
635

	
247561

	
LS#154

	
953671

	
572

	
636

	
247562

	
LS#155

	
953672

	
572

	
637

	
247563

	
LS#156

	
953673

	
572

	
638

	
247564

	
LS#328

	
953674

	
572

	
639

	
247565

	
LS#329

	
953675

	
572

	
640

	
247566

	
LS#330

	
953676

	
572

	
641

	
247567

	
LS#331

	
953677

	
572

	
642

	
247568

	
LS#332

	
953678

	
572

	
643

	
247569

	
LS#333

	
953679

	
572

	
644

	
247570

	
LS#334

	
953680

	
572

	
645

	
247571

	
LS#335

	
953681

	
572

	
646

	
247572

	
LS#336

	
953682

	
572

	
647

	
247573

	
LS#337

	
953683

	
572

	
648

	
247574

	
LS#338

	
953684

	
572

	
649

	
247575

	
LS#339

	
953685

	
572

	
650

	
247576

	
LS#340

	
953686

	
572

	
651

	
247577

	
LS#428

	
953687

	
572

	
652

	
247578

	
LS#429

	
953688

	
572

	
653

	
247579

	
LS#430

	
953689

	
572

	
654

	
247580

	
LS#431

	
953690

	
572

	
655

	
247581

	
LS#432

	
1046904

	
623

	
0705

	
0261268

	
LS#433

	
1046905

	
623

	
0706

	
0261269

	
LS#434

	
1046906

	
623

	
0707

	
0261270

	
LS#435

	
1046907

	
623

	
0708

	
0261271

	
LS#436

	
1046908

	
623

	
0709

	
0261272

	
LS#437

	
1046909

	
623

	
0710

	
0261273

	
LS#438

	
1046910

	
623

	
0711

	
0261274

	
LS#439

	
1046911

	
623

	
0712

	
0261275

	
LS#440

	
1046912

	
623

	
0713

	
0261276

	
LS#441

	
1046913

	
623

	
0714

	
0261277

	
LS#442

	
1046914

	
623

	
0715

	
0261278

	
LS#443

	
1046915

	
623

	
0716

	
0261279

	
LS#444

	
1046916

	
623

	
0717

	
0261280

	
LS#445

	
1046917

	
624

	
0718

	
0261281

	
NBAM #1

	
0948649

	
0571

	
0412

	 
	
NBAM #2

	
0948650

	
0571

	
0413

	 
	
NBAM #3

	
0948651

	
0571

	
0414

	 
	
NBAM #4

	
0948652

	
0571

	
0415

	 
	
NBAM #5

	
0948653

	
0571

	
0416

	 
	
NBAM #6

	
0948654

	
0571

	
0417

	 

 

  

A-7

  

 

	 	 	

COUNTY RECORDING INFORMATION

	
CLAIM NAME

	
BLM SERIAL NO. (NMC)

	
BOOK

	
PAGE

	
DOC. NO.

	
NBAM #7

	
0948655

	
0571

	
0418

	 
	
NBAM #8

	
0948656

	
0571

	
0419

	 
	
NBAM #9

	
0948657

	
0571

	
0420

	 
	
NBAM #10

	
0948658

	
0571

	
0421

	 
	
NBAM #11

	
0948659

	
0571

	
0422

	 
	
NBAM #12

	
0948660

	
0571

	
0423

	 
	
NBAM #13

	
0948661

	
0571

	
0424

	 
	
NBAM #14

	
0948662

	
0571

	
0425

	 
	
NBAM #15

	
0948663

	
0571

	
0426

	 
	
NBAM #16

	
0948664

	
0571

	
0427

	 
	
NBAM #17

	
0948665

	
0571

	
0428

	 
	
NBAM #18

	
0948666

	
0571

	
0429

	 
	
NBAM #19

	
0863178

	
0526

	
0597

	 
	
NBAM #20

	
0863179

	
0526

	
0598

	 
	
NBAM #21

	
0863180

	
0526

	
0599

	 
	
NBAM #22

	
0863181

	
0526

	
0600

	 
	
NBAM #23

	
0863182

	
0526

	
0601

	 
	
NBAM #24

	
0863183

	
0526

	
0602

	 
	
NBAM #25

	
0863184

	
0526

	
0603

	 
	
NBAM #26

	
0863185

	
0526

	
0604

	 
	
NBAM #27

	
0863186

	
0526

	
0605

	 
	
NBAM #28

	
0863187

	
0526

	
0606

	 
	
NBAM #29

	
0863188

	
0526

	
0607

	 
	
NBAM #30

	
0863189

	
0526

	
0608

	 
	
NBAM #31

	
0942977

	
0568

	
0142

	 
	
NBAM #32

	
0942978

	
0568

	
0143

	 
	
NBAM #33

	
0942979

	
0568

	
0144

	 
	
NBAM #34

	
0942980

	
0568

	
0145

	 
	
NBAM #35

	
0942981

	
0568

	
0146

	 
	
NBAM #36

	
0942982

	
0568

	
0147

	 

 

  

A-8

  

 

EXHIBIT B

 

TO ROYALTY DEED

BETWEEN ARTHUR LEGER AND PERSHING ROYALTY

DATED MAY 22, 2012

 

PRODUCTION ROYALTY

 

Payor shall pay to Royalty Holder a non-participating, non-executory perpetual royalty (the “Production Royalty”) of one percent (1.0%) of the Net Smelter Returns from all Valuable Minerals mined and removed from the Claims and sold or deemed to have been sold by or for Payor, on the following terms and conditions:

 

(a)           As used herein, “Payor” means the person or entity obligated to pay the Production Royalty to the Royalty Holder, who initially shall be Leger, and shall include all of Payor’s successors-in-interest who acquire an ownership interest in all or any portion of the Claims or to whom Payor assigns the obligation to pay the Production Royalty, including, without limitation, any lessee of the Claims.

 

(b)           As used herein, “Royalty Holder” means the person or entity entitled to receive the Production Royalty, which initially shall be Pershing Royalty, and shall include all of the Royalty Holder’s successors-in-interest, including without limitation assignees, partners, joint venture partners, lessees and, when applicable, mortgagees and affiliated companies having an interest in the Production Royalty.

 

(c)           As used herein, “Net Smelter Returns” means the Gross Returns from the Valuable Minerals, less all Allowable Deductions.

 

(d)           As used herein, “Gross Returns” has the following meanings for the following categories of the Valuable Minerals:

 

(i)           If refined gold that meets or exceeds the generally accepted commercial standards for refined gold is produced by an independent third-party refinery from ores mined from the Claims, for purposes of determining the Production Royalty, the refined gold shall be deemed to have been sold in the calendar month in which it was produced at the Monthly Average Gold Price for that month.  The Gross Returns from such deemed sales shall be determined by multiplying Gold Production during the month by the Monthly Average Gold Price.  As used herein, “Gold Production” means the quantity of refined gold that is outturned to Payor’s account by the refinery during the calendar month on either a provisional or final settlement basis.  If outturn of refined gold is made by the refinery on a provisional basis, the Gross Returns shall be based upon the amount of such provisional settlement, but shall be adjusted in subsequent statements to account for the amount of refined metal established by final settlement by the refinery. As used herein, “Monthly Average Gold Price” means the average London Bullion Market Association P.M. Gold Fix, calculated by dividing the sum of all such prices reported for the month by the number of days for which such prices were reported.  If the London Bullion Market Association P.M. Gold Fix ceases to be published, the Monthly Average Gold Price shall be determined by reference to prices for refined gold for immediate delivery in the most nearly comparable established market selected by Payor as such prices are published in “Metals Week” or a similar publication.

 

  

B-1

  

 

(ii)           If refined silver that meets or exceeds the generally accepted commercial standards for refined silver is produced by an independent third-party refinery from ore mined from the Claims, for purposes of determining the Production Royalty, the refined silver shall be deemed to have been sold in the calendar month in which it was produced at the Monthly Average Silver Price for that month.  The Gross Returns from such deemed sales shall be determined by multiplying Silver Production during the calendar month by the Monthly Average Silver Price.  As used herein, “Silver Production” shall mean the quantity of refined silver that is outturned to Payor’s account by the refinery during the calendar month on either a provisional or final settlement basis.  If outturn of refined silver is made by the refinery on a provisional basis, the Gross Returns shall be based upon the amount of such provisional settlement, but shall be adjusted in subsequent statements to account for the amount of refined metal established by final settlement by the refinery.  As used herein, “Monthly Average Silver Price” shall mean the average New York Silver Price as published daily by Handy & Harman, calculated by dividing the sum of all such prices reported for the calendar month by the number of days for which such prices were reported.  If the Handy & Harman quotation ceases to be published, the Monthly Average Silver Price shall be determined by reference to prices for refined silver for immediate delivery in the most nearly comparable established market selected by Payor as published in “Metals Week” or a similar publication.

 

(iii)           If refined metals (other than refined gold and refined silver), doré or concentrates are produced from ores mined from the Claims or ores from the Claims and sold, the Gross Returns for such refined metals shall be the proceeds actually received by Payor from their sale.  If such sales are to an affiliated party of Payor, the refined metals, doré, concentrates or ore shall be deemed, solely for the purpose of computing Gross Returns, to have been sold at prices and on terms no less favorable to Payor than those which would have been received under similar circumstances from an unaffiliated third party.

 

(iv)           Gross Returns shall also include all insurance proceeds received by Payor for the loss of any Valuable Minerals.

 

(e)           As used herein, “Allowable Deductions” means the following costs, charges, and expenses incurred by Payor:

 

(i)           If Payor sells refined gold or refined silver:

 

(A)           all costs, charges and expenses for smelting and refining doré or concentrates to produce the refined gold or refined silver (including handling, processing, and provisional settlement fees, sampling, assaying costs, umpire charges and penalties); and

 

  

B-2

  

 

(B)           all costs, charges, and expenses for transportation of the doré or concentrates from the Claims to the refinery or smelter and then to the place of sale (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay, and forwarding expenses incurred by reason of or in the course of such transportation).

 

(ii)           If Payor sells refined metals (other than refined gold or refined silver), doré, concentrate or ores:

 

(A)           all costs, charges, and expenses for (i) beneficiation, processing or treatment of such materials at any plant or facility more than five (5) miles from the exterior boundary of the Claims and (ii) smelting or refining to produce a refined metal (including handling, processing, and provisional settlement fees, sampling, assaying and representation costs, penalties, and other processor deductions); and

 

(B)           all costs, charges, and expenses for transportation of ores, minerals, doré, concentrates or other products from the Claims (i) to the place of sale, and (ii) if such ores, materials are beneficiated, processed, treated, smelted or refined at any plant or facility more than five (5) miles from the exterior boundary of the Claims, to such plant or facility and then to the place of sale (including freight, insurance, security, transaction taxes, handling, port, demurrage, delay, and forwarding expenses incurred by reason of or in the course of such transportation).

 

(iii)           All sales, use, severance, and ad valorem taxes and any other tax or governmental levy or fee on or measured by mineral production from the Claims (other than taxes based on income); provided, however, that each of Payor and Royalty Holder shall bear and be responsible for its proportionate share of Nevada net proceeds taxes, and Payor’s share of the same shall not be deducted from Gross Returns.

 

(f)           As used herein, “Valuable Minerals” means any and all ores, metals, minerals, and other materials, of whatever kind and nature, howsoever characterized or defined, that are in, on, under or upon the surface or subsurface of the Claims (or any part thereof), or derived from extralateral rights associated with the Claims, and all doré, concentrates, by-products, co-products and other mineral products, metals or minerals which are derived therefrom

 

(g)           Payor shall have the right to market and sell or refrain from selling refined gold, refined silver and other Valuable Minerals from the Claims in any manner it may elect, including the right to engage in forward sales, future trading or commodity options trading, and other price hedging, price protection, and speculative arrangements (“Trading Activities”) which may involve the possible delivery of gold, silver or other mineral products from the Claims.  With respect to Production Royalty payable on refined gold and refined silver, Royalty Holder shall not be entitled to participate in the proceeds or be obligated to share in any losses generated by Payor’s actual marketing or sales practices or by its Trading Activities and no such profits or losses shall be included in Gross Returns.

 

  

B-3

  

 

(h)           The obligation to pay the Production Royalty shall accrue upon the outturn of refined gold or silver meeting the requirements of the specified standard to Payor’s account with a smelter or refiner or the sale of other refined metals, doré, concentrates, ores or other mineral products, as the case may be.  The Production Royalty shall become due and payable monthly on the last day of each month following the last day of the calendar month in which the same accrued.  Production Royalty payments shall be made by check or wire transfer.  All payments shall be sent by registered or certified mail, return receipt requested, to Royalty Holder at the address set forth in the Deed to which this Exhibit B is attached, or by wire transfer to an account designated by and in accordance with written instructions from Royalty Holder.  The date of placing such payment in the United States mail by Payor, registered or certified with return receipt requested, properly addressed, with postage prepaid, or the date the wire transfer process is initiated, shall be the date of such payment.  Payments of Production Royalty by Payor in the manner herein provided shall discharge fully Payor’s obligation with respect to such payment, and Payor shall have no duty to apportion or allocate any payment due to Royalty Holder, its successors or assigns.

 

(i)           All payments of the Production Royalty shall be accompanied by a statement showing in reasonable detail the quantities and grades of the refined metals, doré, concentrates, ores or other mineral products produced and sold or deemed sold by Payor in the preceding calendar month, the Monthly Average Gold Price, the Monthly Average Silver Price, the proceeds of sale for other mineral products on which Production Royalty is due, Allowable Deductions, and other pertinent information in sufficient detail to explain the calculation of the Production Royalty payment.

 

(j)           Royalty Holder, at its sole election and expense, shall have the right, not more frequently than twice annually following the close of each calendar year, to audit Payor’s books and records relating to payment of the Production Royalty.  Any such audit shall be conducted during regular business hours, at a mutually convenient time, and upon reasonable advance written notice to Payor.  All payments of Production Royalty made in any calendar year shall be considered final and in full satisfaction of all obligations of Payor with respect thereto, unless Royalty Holder gives written notice describing and setting forth a specific objection to the calculation thereof within twenty-four (24) months following the close of that calendar year.  Payor shall account for any agreed upon deficit or excess in the payment of Production Royalty made to Royalty Holder by adjusting the next quarterly payment to account for such deficit or excess.

 

(k)           Not later than March 1 following the end of each calendar year, Payor shall provide Royalty Holder with an annual report of all activities and operations conducted upon or with respect to the Claims during the preceding calendar year.  Such annual report shall include estimates of proposed expenditures upon, anticipated production from, and estimated remaining ore resources/reserves within the Claims for the then current calendar year.  Additionally, and within 30 days of the end of each calendar quarter, Payor shall provide Royalty Holder with a summary of production and all related activities on or with respect to the Claims during the calendar quarter just ended, and access to all data and information pertaining thereto.

 

  

B-4

  

 

(l)           Royalty Holder, or its agents or representatives, on not less than three (3) business days’ notice to Payor, may enter upon the Claims for the purpose of inspecting the Claims and all improvements and operations thereon.  Royalty Holder, or its agents or representatives, shall enter the Claims at Royalty Holder’s own risk and expense, and in compliance with Payor’s normal safety procedures, and may not unreasonably hinder operations on or pertaining to the Claims.

 

(m)           Royalty Holder shall not, without the express written consent of Payor, which consent shall not be unreasonably withheld or delayed, disclose any data or information concerning the operations conducted on the Claims or obtained under this Deed which is not already in the public domain; provided, however, that Royalty Holder may disclose data and information obtained under this Deed without the consent of Payor: (i) if required for compliance with applicable laws, rules, regulations or orders of any governmental agency or stock exchange having jurisdiction over Royalty Holder or any of its parent or affiliate entities; (ii) to any of Royalty Holder’s consultants or advisors; (iii) to any third party to whom Royalty Holder, in good faith, is considering selling or assigning any portion of the Production Royalty; or (iv) to a prospective lender to whom an interest in Production Royalty payments to be made to Royalty Holder hereunder is proposed to be granted as security, provided that any such consultant, advisor or third party shall have agreed in writing to keep such information confidentially in accordance with the provisions of this paragraph (m).  Royalty Holder shall not issue any press release pertaining to the Claims except upon giving Payor three (3) business days’ advance notice of the contents thereof, and the opportunity to comment on the same.  Royalty Holder shall not, without Payor’s consent, issue any press release that implies or infers that Payor endorses or joins in Royalty Holder’s statements or representations contained in any such press release.

 

(n)           All tailings, residues, waste rock, spoiled leach materials and other materials (collectively “Materials”) resulting from Payor’s operations and activities on the Claims shall be the sole property of Payor, but shall be burdened by the obligation to pay the Production Royalty should the same be processed or reprocessed, as the case may be, in the future and result in the production of Valuable Minerals.

 

(o)           In the event any Production Royalty payment is not made with the time provided in paragraph (h), unless within fifteen (15) days after the due date of such payment Royalty Holder shall have received such payment, then Payor shall pay interest on the delinquent payment at the rate of twelve percent (12%) per annum which shall accrue from the day the delinquent payment was due to the date of payment of the required Production Royalty payment and accrued interest.

 

(p)           Reasonable attorney fees and costs shall be paid to the prevailing party by the other party in the event of disputes arising over payments of Production Royalties.

 

  

B-5

  

 

(q)           The Payor shall have the right to commingle, either underground, at the surface, or at processing or other treatment facilities, Valuable Minerals mined and removed from the Claims from which Valuable Minerals are to be produced, with ore, concentrates, minerals and other material mined and removed from other lands and properties; provided, however, that before any Valuable Minerals produced from the Claims are commingled with Valuable Minerals from other properties, the Payor shall calculate from representative samples of ore produced from the Claims the average grade thereof and other measures as are appropriate, and shall weigh (or calculate by volume) the material before commingling.  In obtaining representative samples, calculating the average grade of the ore and average recovery percentages, the Payor may use any procedures accepted in the mining and metallurgical industry which it believes suitable for the type of mining and processing activity being conducted and, in the absence of fraud, its choice of such procedures shall be final and binding on the Royalty Holder.  In addition, comparable procedures may be used by the Payor to apportion among the commingled materials all penalty and other charges and deductions, if any, imposed by the smelter, refiner, or purchaser of such material.  Detailed records shall be kept by Payor showing measures, assays of metal, commercial minerals, and other appropriate content and penalty substances, and gross metal content of the Valuable Minerals.  From this information, Payor shall determine the amount of Production Royalty due and payable to Royalty Holder from Valuable Minerals produced from the Claims that has been commingled with ore from other properties.  Following the expiration of the period for objection described above in paragraph (j), and absent timely objection, if any, made by Royalty Holder, Payor may dispose of the materials and data required to be kept and produced by this paragraph.

 

(r)           All determinations with respect to:  (i) whether ore will be beneficiated, processed or milled by Payor or sold in a raw state; (ii) the methods of beneficiating, processing, milling or leaching any such ore; (iii) the constituents to be recovered therefrom; and (iv) the purchasers to whom any Valuable Minerals may be sold, shall be made by Payor in its sole and absolute discretion.

 

(s)           The mineral content of all Valuable Minerals mined and removed from the Claims (excluding ore leached in place) and the quantities of constituents recovered by Payor shall be determined by Payor, or with respect to Valuable Minerals which are sold, by the mill or smelter to which the Valuable Minerals are sold, in accordance with standard sampling and analysis procedures, and shall be weighted average based on the total amount of ore crushed and sampled, or the constituents recovered, during an entire calendar quarter.

 

(t)           The Production Royalty shall attach to any amendments, relocations or conversions of any of the Claims, or any real property interests which replace the Claims which are created by amendments to or replacements of federal or state mining laws.  The Production Royalty shall be a real property interest that runs with the Claims and shall be a legal and binding obligation of the Payor and its successors and assigns.  If Payor conveys, transfers, or assigns all or any portion of its interest in the Claims (other than in connection with a pledge of the Claims for financing purposes) it shall require the party or parties acquiring such interest to assume in writing the obligation to pay the Production Royalty in accordance with the terms hereof, and provide a copy of the same to Royalty Holder.

 

 

B-6

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