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Schedule 1 to Subscription Agreement

 

NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Effective Date: XXXXXXXVoid After: XXXXXXXX  

 

 

SANTA FE GOLD CORPORATION

 

WARRANT TO PURCHASE COMMON STOCK

 

Santa Fe Gold Corporation., a Delaware corporation (the “Company”), for value received on XXXXXX (the “Effective Date”), hereby issues to XXXXXXXXX (the “Holder”) this Warrant (the “Warrant”) to purchase up to XXXXXXXX shares (each such share as from time to time adjusted as hereinafter provided being a “Warrant Share” or “Share” and all such shares being the “Warrant Shares” or “Shares”) of the Company’s Common Stock (as defined below), at the Exercise Price (as defined below), as adjusted from time to time as provided herein, on or before XXXXXXX (the “Expiration Date”), all subject to the following terms and conditions, including the vesting provisions set forth in Section 1(a).  

 

As used in this Warrant, (i) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of Albuquerque, New Mexico, are authorized or required by law or executive order to close; (ii) “Common Stock” means the common stock of the Company, including any securities issued or issuable with respect thereto or into which or for which such shares may be exchanged for, or converted into, pursuant to any stock dividend, stock split, stock combination, recapitalization, reclassification, reorganization or other similar event; (iii) “Exercise Price” means $XXX per share of Common Stock, subject to adjustment as provided herein; (iv) “Trading Day” means any day on which the Common Stock is traded on the primary national or regional stock exchange on which the Common Stock is listed, or if not so listed, the Pink Sheets, if quoted thereon, is open for the transaction of business; and (v) “Affiliate” means any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, a person, as such terms are used and construed in Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

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1.DURATION AND EXERCISE OF WARRANTS 

 

(a)Exercise Period and Vesting.  The Holder may exercise this Warrant in whole or in part on any Business Day on or before 5:00 P.M., Central Time, on the Expiration Date, at which time this Warrant shall become void and of no value.   

 

(b)Exercise Procedures. 

 

(i)While this Warrant remains outstanding and exercisable in accordance with Section 1(a), the Holder may exercise this Warrant in whole or in part at any time and from time to time by: 

 

(A)delivery to the Company of a duly executed copy of the Notice of Exercise attached as Exhibit A; 

 

(B)surrender of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder; and 

 

(C)payment of the then-applicable Exercise Price per share multiplied by the number of Warrant Shares being purchased upon exercise of the Warrant (such amount, the “Aggregate Exercise Price”) made in the form of cash, or by certified check, bank draft or money order payable in lawful money of the United States of America. 

 

(ii)Upon the exercise of this Warrant in compliance with the provisions of this Section 1(b), the Company shall promptly issue and cause to be delivered to the Holder a certificate for the Warrant Shares purchased by the Holder.  Each exercise of this Warrant shall be effective immediately prior to the close of business on the date (the “Date of Exercise”) that the conditions set forth in Section 1(b) have been satisfied, as the case may be.  On the first Business Day following the date on which the Company has received each of the Notice of Exercise and the Aggregate Exercise Price (the “Exercise Delivery Documents”), the Company shall transmit an acknowledgment of receipt of the Exercise Delivery Documents to the Company’s transfer agent (the “Transfer Agent”). On or before the fifth Business Day following the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall issue and dispatch by overnight courier to the address as specified in the Notice of Exercise, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares.  

 

(d)Partial Exercise.  This Warrant shall be exercisable, either in its entirety or, from time to time, for part only of the number of Warrant Shares referenced by this Warrant. If this Warrant is exercised in part, the Company shall issue, at its expense, a new Warrant, in  

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substantially the form of this Warrant, referencing such reduced number of Warrant Shares that remain subject to this Warrant.

 

(e) Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 16. 

 

2.ISSUANCE OF WARRANT SHARES 

 

(a)The Company covenants that all Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be (i) duly authorized, fully paid and non-assessable, and (ii) free from all liens, charges and security interests, with the exception of claims arising through the acts or omissions of any Holder and except as arising from applicable Federal and state securities laws. 

 

(b)The Company shall register this Warrant upon records to be maintained by the Company for that purpose in the name of the record holder of such Warrant from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner thereof for the purpose of any exercise thereof, any distribution to the Holder thereof and for all other purposes. 

 

(c)The Company will not, by amendment of its certificate of formation, by-laws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all action necessary or appropriate in order to protect the rights of the Holder to exercise this Warrant, or against impairment of such rights. 

 

3.ADJUSTMENTS OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES 

 

(a)The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3(a); provided, that notwithstanding the provisions of this Section 3, the Company shall not be required to make any adjustment if and to the extent that such adjustment would require the Company to issue a number of shares of Common Stock in excess of its authorized but unissued shares of Common Stock, less all amounts of Common Stock that have been reserved for issue upon the conversion of all outstanding securities convertible into shares of Common Stock and the exercise of all outstanding options, warrants and other rights exercisable for shares of Common Stock.  If the Company does not have the requisite number of authorized but unissued shares of Common Stock to make any adjustment, the Company shall use its commercially best efforts to obtain the necessary stockholder consent to increase the authorized number of shares of Common Stock to make such an adjustment pursuant to this Section 3(a). 

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(i)Subdivision or Combination of Stock. In case the Company shall at any time subdivide (whether by way of stock dividend, stock split or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares shall be proportionately increased, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined (whether by way of stock combination, reverse stock split or otherwise) into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares shall be proportionately decreased.  The Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this Section 3(a)(i). 

 

(ii)Dividends in Stock, Property, Reclassification. If at any time, or from time to time, all of the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefore: 

 

(A)any shares of stock or other securities that are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or 

 

(B)additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 3(a)(i) above), then and in each such case, the Exercise Price and the number of Warrant Shares to be obtained upon exercise of this Warrant shall be adjusted proportionately, and the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to above) that such Holder would hold on the date of such exercise had such Holder been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.  The Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this Section 3(a)(ii). 

 

(iii)Reorganization, Reclassification, Consolidation, Merger or Sale. If any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, or other assets or property (an “Organic Change”), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant) such shares of stock,  

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securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable assuming the full exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument reasonably satisfactory in form and substance to the Holder executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.  If there is an Organic Change, then the Company shall cause to be mailed to the Holder at its last address as it shall appear on the books and records of the Company, at least 10 calendar days before the effective date of the Organic Change, a notice stating the date on which such Organic Change is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares for securities, cash, or other property delivered upon such Organic Change; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to exercise this Warrant during the 10-day period commencing on the date of such notice to the effective date of the event triggering such notice.  In any event, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall be deemed to assume such obligation to deliver to such Holder such shares of stock, securities or assets even in the absence of a written instrument assuming such obligation to the extent such assumption occurs by operation of law.  

 

(c)Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall promptly furnish or cause to be furnished to such Holder a like certificate setting forth: (i) such adjustments and readjustments; and (ii) the number of shares and the amount, if any, of other property which at the time would be received upon the exercise of the Warrant. 

 

(d)Certain Events. If any event occurs as to which the other provisions of this Section 3 are not strictly applicable but the lack of any adjustment would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent and principles of such provisions, or if strictly applicable would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent and principles of such provisions, then the Company’s Board of Directors will, in good faith, make an appropriate adjustment to protect the rights of the Holder; provided, that no such adjustment pursuant to this Section 3(d) will increase  

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the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 3.

 

4.TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES 

 

(a)Registration of Transfers and Exchanges. Subject to Section 4(c), upon the Holder’s surrender of this Warrant, with a duly executed copy of the Form of Assignment attached as Exhibit B, to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder, the Company shall register the transfer of all or any portion of this Warrant. Upon such registration of transfer, the Company shall issue a new Warrant, in substantially the form of this Warrant, evidencing the acquisition rights transferred to the transferee and a new Warrant, in similar form, evidencing the remaining acquisition rights not transferred, to the Holder requesting the transfer. 

 

(b)Warrant Exchangeable for Different Denominations. The Holder may exchange this Warrant for a new Warrant or Warrants, in substantially the form of this Warrant, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder, each of such new Warrants to be dated the date of such exchange and to represent the right to purchase such number of Warrant Shares as shall be designated by the Holder. The Holder shall surrender this Warrant with duly executed instructions regarding such re-certification of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder. 

 

(c)Restrictions on Transfers. This Warrant may not be transferred at any time without (i) registration under the Securities Act or (ii) an exemption from such registration and a written opinion of legal counsel addressed to the Company that the proposed transfer of the Warrant may be effected without registration under the Securities Act, which opinion will be in form and from counsel reasonably satisfactory to the Company. 

 

(d)Permitted Transfers and Assignments.  Notwithstanding any provision to the contrary in this Section 4, the Holder may transfer, with or without consideration, this Warrant or any of the Warrant Shares (or a portion thereof) to the Holder’s Affiliates (as such term is defined under Rule 144 of the Securities Act) without obtaining the opinion from counsel that may be required by Section 4(c)(ii), provided, that the Holder delivers to the Company and its counsel certification, documentation, and other assurances reasonably required by the Company’s counsel to enable the Company’s counsel to render an opinion to the Company’s Transfer Agent that such transfer does not violate applicable securities laws. 

 

5.MUTILATED OR MISSING WARRANT CERTIFICATE 

 

If this Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder, the Company will, at its expense, issue, in exchange for and upon cancellation of the mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant, a new Warrant, in substantially the form of this Warrant, representing the right to acquire the equivalent number of Warrant Shares; provided, that, as a prerequisite to the issuance of a substitute Warrant, the Company may require satisfactory evidence of loss, theft or destruction as well as an indemnity from the Holder  

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of a lost, stolen or destroyed Warrant.

 

6.PAYMENT OF TAXES 

 

The Company will pay all transfer and stock issuance taxes attributable to the preparation, issuance and delivery of this Warrant and the Warrant Shares (and replacement Warrants) including, without limitation, all documentary and stamp taxes; provided, however, that the Company shall not be required to pay any tax in respect of the transfer of this Warrant, or the issuance or delivery of certificates for Warrant Shares or other securities in respect of the Warrant Shares to any person or entity other than to the Holder.

 

7.FRACTIONAL WARRANT SHARES 

 

No fractional Warrant Shares shall be issued upon exercise of this Warrant. The Company, in lieu of issuing any fractional Warrant Share, shall round up the number of Warrant Shares issuable to nearest whole share.

 

8.NO STOCK RIGHTS AND LEGEND 

 

No holder of this Warrant, as such, shall be entitled to vote or be deemed the holder of any other securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, the rights of a stockholder of the Company or the right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any corporate action or to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends or subscription rights or otherwise (except as provide herein).

 

Each certificate for Warrant Shares initially issued upon the exercise of this Warrant, and each certificate for Warrant Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form: 

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR “BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.” 

 

9.REGISTRATION UNDER THE SECURITIES ACT OF 1933 

 

The Company is not obligated to register the resale of the Warrant or the Warrant Shares under the Securities Act.   

 

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10.REPORTS TO THE SEC 

 

The Company is presently not current in its reporting obligations under the Exchange Act and will use its best efforts to file all reports required to be filed by it under the Exchange Act.   

 

11.NOTICES 

 

All notices, consents, waivers, and other communications under this Warrant must be in writing and will be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment; (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, if to the registered Holder hereof; or (d) seven days after the placement of the notice into the mails (first class postage prepaid), to the Holder at the address, facsimile number, or e-mail address furnished by the registered Holder to the Company in accordance with the Subscription Agreement by and between the Company and the Holder, or if to the Company at its corporate address, Attention: Frank Mueller, Chief Financial Officer. 

 

12.SEVERABILITY 

 

If a court of competent jurisdiction holds any provision of this Warrant invalid or unenforceable, the other provisions of this Warrant will remain in full force and effect. Any provision of this Warrant held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

13.BINDING EFFECT 

 

This Warrant shall be binding upon and inure to the sole and exclusive benefit of the Company, its successors and assigns, the registered Holder or Holders from time to time of this Warrant and the Warrant Shares.

 

14.SURVIVAL OF RIGHTS AND DUTIES 

 

This Warrant shall terminate and be of no further force and effect on the earlier of 5:00 P.M., Central Time, on the Expiration Date or the date on which this Warrant has been exercised in full.

 

15.GOVERNING LAW 

 

This Warrant will be governed by and construed under the laws of the State of New Mexico without regard to conflicts of laws principles that would require the application of any other law.

 

16.DISPUTE RESOLUTION 

 

In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or 

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arithmetic calculations via facsimile within two Business Days of receipt of the Notice of Exercise giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two Business Days, submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. 

 

17.NOTICES OF RECORD DATE 

 

Upon (a) any establishment by the Company of a record date of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or right or option to acquire securities of the Company, or any other right, or (b) any capital reorganization, reclassification, recapitalization, merger or consolidation of the Company with or into any other corporation, any transfer of all or substantially all the assets of the Company, or any voluntary or involuntary dissolution, liquidation or winding up of the Company, or the sale, in a single transaction, of a majority of the Company’s voting stock (whether newly issued, or from treasury, or previously issued and then outstanding, or any combination thereof), the Company shall mail to the Holder at least ten (10) Business Days, or such longer period as may be required by law, prior to the record date specified therein, a notice specifying (i) the date established as the record date for the purpose of such dividend, distribution, option or right and a description of such dividend, option or right, (ii) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up, or sale is expected to become effective and (iii) the date, if any, fixed as to when the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, transfer, consolation, merger, dissolution, liquidation or winding up.

 

18.RESERVATION OF SHARES 

 

The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock for issuance upon the exercise of this Warrant, free from pre-emptive rights, such number of shares of Common Stock for which this Warrant shall from time to time be exercisable.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation. Without limiting the generality of the foregoing, the Company covenants that it will use commercially reasonable efforts to take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and use commercially reasonable efforts to obtain all such authorizations, exemptions or consents, including but not limited to consents from the Company’s 

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stockholders or Board of Directors or any public regulatory body, as may be necessary to enable the Company to perform its obligations under this Warrant.

 

19.NO THIRD-PARTY RIGHTS 

 

This Warrant is not intended, and will not be construed, to create any rights in any parties other than the Company and the Holder, and no person or entity may assert any rights as third-party beneficiary hereunder.

 

20.SECTION HEADINGS 

 

The Section headings in this Warrant are for purposes of convenience only and shall not constitute a part hereof. 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first set forth above.

 

 

SANTA FE GOLD CORPORATION

 

 

By: ___________________________

Name:Stephen J. Antol 

Title:Chief Financial Officer 

 

 

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EXHIBIT A

 

NOTICE OF EXERCISE

 

(To be executed by the Holder of Warrant if such Holder desires to exercise Warrant)

 

To Santa Fe Gold Corporation:

 

The undersigned hereby irrevocably elects to exercise this Warrant and to purchase thereunder, ___________________ full shares of Santa Fe Gold Corporation common stock issuable upon exercise of the Warrant and delivery of:

 

$_________ (in cash as provided for in the foregoing Warrant) and any applicable taxes payable by the undersigned pursuant to such Warrant.

 

 

The undersigned requests that certificates for such shares be issued in the name of:

 

_________________________________________

(Please print name, address and social security or federal employer
identification number (if applicable))

 

_________________________________________

 

_________________________________________

 

If the shares issuable upon this exercise of the Warrant are not all of the Warrant Shares which the Holder is entitled to acquire upon the exercise of the Warrant, the undersigned requests that a new Warrant evidencing the rights not so exercised be issued in the name of and delivered to: 

 

_________________________________________

(Please print name, address and social security or federal employer

identification number (if applicable))

 

_________________________________________

 

_________________________________________

 

 

Name of Holder (print):_____________________________ 

(Signature):______________________________________ 

(By:)___________________________________________ 

(Title:)__________________________________________ 

Dated:__________________________________________ 

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EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, ___________________________________ hereby sells, assigns and transfers to each assignee set forth below all of the rights of the undersigned under the Warrant (as defined in and evidenced by the attached Warrant) to acquire the number of Warrant Shares set opposite the name of such assignee below and in and to the foregoing Warrant with respect to said acquisition rights and the shares issuable upon exercise of the Warrant:

 

                 

	Name of Assignee

	Address

	Number of Shares

	 

 

	 

	 

	 

 

	 

	 

	 

 

	 

	 

	 

 

	 

	 

 

 

If the total of the Warrant Shares are not all of the Warrant Shares evidenced by the foregoing Warrant, the undersigned requests that a new Warrant evidencing the right to acquire the Warrant Shares not so assigned be issued in the name of and delivered to the undersigned.

 

 

Name of Holder (print):_________________________ 

(Signature):__________________________________ 

(By:)_______________________________________ 

(Title:)______________________________________ 

Dated:______________________________________ 

1220220223_131240_Raven_Scan

 

 

 

 

 

PURCHASE AGREEMENT

 

 

 

This PURCHASE AGREEMENT (the "Agreement")is effective January 04, 2019 (the "Effective Date").

 

 

BETWEEN: Billali Mine, LLC and JC Imperial, LLC (collectively hereinafter the "Seller"), both entities are limited liability companies organized and existing under the laws of the state of Arizona, with their primary mailing address located at:

 

P.O. Box 207 Duncan, AZ 85534

 

 

AND:Mineral Acquisitions, LLC (the "Buyer"), a limited liability company organized and existing under the laws of the State of New Mexico, with its offices located at: 

 

P.O. Box 25201

Albuquerque, New Mexico 87125

 

RECITALS

 

A.Seller is the owner of: 

1.The Billali Lode patented mining claim Patent No. 1021 situated in the Steeple Rock Mining District, Grant County, New Mexico in Section 26, Township 16 South, Range 21 West and is known as The Billali Mine permitted under the State of New Mexico Permit No. GR058MN (the "Billali"). 

 

2.Patented mining claims and unpatented mining claims as set forth on Exhibit A 

 

3.The Lessee's interest in that certain Lease Agreement dated October 28, 2003 by and between Walt Anderson, Lessor, and Leslie Billingsley and Richard Billingsley, collectively Lessee, a true and correct copy of which is attached hereto as Exhibit B (the Water Lease). 

 

B.Buyer desires to purchase the interests of Seller in the Billali, the Jim Crow and Imperial Mines, the Water Lease upon the terms and conditions herein set forth. 

Billali Jim Crow, Imperial Mine Purchase 

Agreement January 2019

 

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C.Seller desires to sell its interests in the Billali, the Jim Crow and Imperial Mines and the Water Lease to Buyer upon the terms and conditions herein set forth. 

 

AGREEMENT

 

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer (the "Parties" and individually a "Party") agree as follows:

 

SALE AND ASSIGNMENT BY SELLER TO BUYER

 

A The Seller agrees to sell, and Buyer agrees to purchase the real properties described in Recital Paragraph A, the patented and unpatented mining clams described in Recital Paragraph B and Seller agrees to assign all of its right title and interest in the Water Lease described in Recital Paragraph C.

B Grant of Use. To the extent required and if any access is owned by Seller and not otherwise conveyed Seller hereby grants use of and access to the Billali, Jim Crow and Imperial Mines to Buyer and its permitted successors and assigns.

C Rights of Buyer. Buyer shall have the following rights in respect of the Billali, Jim Crow and Imperial Mines:

i)Surface. Mining and Access Rights. Subject only to any limitations imposed by federal, state and local regulations, the free, unrestricted and uninterrupted right of access, ingress and egress to the Billali, Jim Crow and Imperial Mines over existing roads or alternate routes approved by Seller and the right to enter upon and occupy the Billali, Jim Crow and Imperial Mines for all purposes reasonably incident to exploring for, developing, mining (by underground mining, surface mining, strip mining or any other surface or subsurface method, including any method later developed), extracting, milling, smelting, refining, stockpiling, storing, processing, removing and marketing there from all ores, metals, minerals, mineral products (including intermediate products) and materials of every nature or sort, and the right to place, construct, maintain, use and thereafter remove such structures, facilities, equipment, roadways, haulage ways, utility lines, reservoirs and water courses, and other improvement as may be necessary, useful or convenient for the full enjoyment of all of the rights granted under this Agreement. Buyer shall have sole and exclusive custody, possession, ownership and control of all ore, rock, drill core and other mineral substances extracted or removed from the Billali, ae4 Jim Crow and Imperial Mines and may sell or otherwise dispose thereof. 

ii)In the exercise of such rights, Buyer shall be subject only to compliance with applicable statutes, rules , regulations and the terms of this Agreement. These rights are also granted 

Billali Jim Crow, Imperial Mine Purchase 

Agreement January 2019

 

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and may be utilized for the purpose or in the course of carrying on exploration, development or mining operations on any other properties in which Buyer may have or acquire any right or interest, provided Seller assents to the same.

iii)Commingling. The right to commingle ore removed from the Billali and Jim Crow or products derived therefrom after treatment, with other ore or products, before or after concentration or beneficiation, so long as the data necessary to determine the weight, grade, and recoverability of both the ore removed from the Billali, Jim Crow and Imperial Mines or products derived therefrom and the ore or products with which it is commingled are obtained by Buyer. Buyer shall then use that data to determine Seller's interest in minerals, metals and/or other products extracted from ores or products so mixed.  Such data and determinations shall be acquired and completed in accordance with generally accepted industry practices. 

iv)Treatment. The right, at Buyer's election and in any manner, it deems fit, to beneficiate, concentrate, process, smelt, refine, and otherwise treat on or off the Billali and Jim Crow any mineral substances taken from the Billali, Jim Crow and Imperial or from adjoining or nearby properties by any physical or chemical method or methods.  In exercising this right, mineral substances may be removed to a plant or plants existing, established or maintained upon the Billali, Jim Crow and Imperial Mines or elsewhere, subject to accurate metallurgical accounting and prompt reporting to Seller. 

v)Water Rights. The right to use any of Seller's water rights, which rights are hereby assigned, on, about, under or appurtenant to the Billali and Jim Crow to facilitate the exploration, mining and processing rights granted in this Agreement. 

2PAYMENTS TO SELLER  

A Purchase Price.

i)The allocation of the Total Purchase Price for all rights and interests of the Billali conveyed herein is Two 1\t1illion Five Hundred Thousand Dollars ($2,500,000.00). 

ii)The allocation of the Total Purchase Price for all rights and interests of the Jim Crow conveyed herein and the assignment of the Water Lease is Seven Million Five Hundred Thousand Dollars ($7,500,000.00). 

iii)The Total Purchase Price is Ten Million Dollars ($10,000,000.00). 

B Payment of the Purchase Price. The Total Purchase Price Will be paid as follows:

i)Twenty-Five Thousand Dollars ($25,000.00) upon closing of the transaction described herein. 

ii)One Hundred Thousand Dollars ($100,000.00) on or before January 31, 2019 . 

iii)One Hundred Thousand Dollars ($100,000.00) on or before February 28, 2019. 

iv)Commencing on July 02, 2019 and on the 30th day of each month thereafter for  a 

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period of twenty (20) months Buyer will pay to Seller the sum of Fifty Thousand Dollars ($50,000.00) per month.

v)Commencing on March l, 2021 and on the 1st day of each month thereafter for a period of fifty (50) months Buyer will pay to Seller the sum of One Hundred Seventy-Five Thousand Do11ars ($175,000.00) per month. 

vi)Each payment made hereunder will be allocated Twenty-Five per cent (25%) to the Billali and Seventy-Five percent (75%) to the Jim Crow, Imperial. 

 

3TITLE MATTERS 

A Representations and Warranties. Seller covenants and warrants to Buyer, which covenants and warranties shall survive termination of this Agreement, as follows:

i)Seller warrants, to the best of its knowledge and belief, that except for a 5% NSR royalty payable to Veris Gold USA Inc., there are no claims, actions, suits or proceedings pending or threatened on account of or as a result of ownership of the real property which, if adversely determined, would prevent or hinder the conditions contained in this Agreement. 

ii)Seller warrants, to the best of its knowledge and belief, it has good and merchantable title to the Billali and the patented/unpatented mining claims as set forth in Exhibit "A" including any reservations contained in patents issued by the United States of America. As to said patented and unpatented claims, that Seller has not entered into any leases, licenses, casements or other agreements, recorded or unrecorded, granting rights to any parties in any of the property and no person or other entity has any right to possess any portion of the property. 

iii)Seller warrants that it has no knowledge of violation of law or ordinance with respect to the use of ownership of the property. 

iv)Seller warrants it has full right, power and capacity to enter  into this  Agreement  under the terms set forth herein. 

v)Buyer shall have quiet and peaceable possession of the Billali and Jim Crow Imperial Mines. 

vi)Seller has no knowledge or information indicating that any reclamation obligations for prior operations on the Billali, Jim Crow and Imperial Mines are unsatisfied. 

vii)Seller warrants that the patented and unpatented claims are in good standing and all required payments to maintain the claims have been timely made, and no liens or encumbrances exist. 

viii)Seller has no knowledge of any existing or threatened violations of  any federal  or state environmental laws or regulations as a result of any condition on the Billali and Jim Crow and Imperial Mines. 

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ix)Title Defects. Defense and Protection. Buyer may at any time cause a title search to be made covering all or any part of the Billali, Jim Crow and Imperial Mines. Seller  shall provide Buyer with any abstracts and other evidences of title in Seller' s possession or control. If, (1) in the opinion of Buyer, Seller's title to all or any part of the Billali and Jim Crow and Imperial Mines are defective or less than as represented in Section 3(A); or (2) Seller's title is contested or questioned by any person or entity Buyer shall notify Seller and Seller shall promptly defend title or correct the alleged defects with thirty (30  days after receipt of written notice In the event Seller is unable or unwilling to promptly correct the alleged defects or defend title, Buyer may attempt to perfect or defend Seller's title. In that event, Seller shall cooperate as reasonably necessary to assist Buyer in its efforts to perfect or defend Seller's title. time being of the essence. Any money expended by Buyer to perfect or defend Seller's title shall be deductible from the payment set forth in Section 2(B) for the month in which such money is spent. Any improvement or perfection of title to the Billali, Jim Crow and Imperial Mines shall inure to the benefit of Buyer in the same manner and to the same extent as if such improvement or perfection had been made prior to the execution of this Agreement. In the event any title defect(s) is discovered after closing and said defect(s) is not cured by either the Seller and/or Buyer the Buyer may at its sole discretion waive the title defect(s) and proceed with the transaction as if the title defect had not been discovered or Buyer may declare this Agreement to be null and void and Buyer shall within thirty (30) days refund to Buyer all money it has paid pursuant to this Agreement. ln the event the Buyer exercises its discretion to declare the Agreement null and void the parties shall upon payment of the sums required to be paid by Seller to Buyer execute all documents necessary to convey, without any restriction, liens or encumbrance, the Billali. the Jim Crow, Imperial Mines and the Water Lease to Seller. In the event the Buyer declares the Agreement to null and void it will make no claim of any nature whatsoever for any improvements it may have made to the Billali and/or the Jim Crow. 

4OBLIGATIONS OF BUYER 

A Outstanding Mineral Interests. Buyer has conducted a mineral review of the Billali and Jim Crow claims described in Exhibit "A". Based on said review, Buyer is not aware of any defects in Seller's title, nor of any other matter that would cause Seller's warranties and representations made herein to be untrue.

B Protection from Liens. Buyer shall keep title to the Billali, Jim Crow and Imperial Mines free and clear from any liens, claims and encumbrances (other than liens for taxes not yet due and delinquent) arising from its operations hereunder. Buyer shall promptly pay for all labor performed upon or material furnished to the Billali, Jim Crow and Imperial Mines at the request of Buyer and shall keep the Billali, Jim Crow and Imperial Mines free and clear from liens of mechanics or materialmen in connection with services performed and material supplied at Buyer's request. Buyer shall, however, have the right in good faith to

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contest the validity of any lien, claim or liability and shall not  be required to remove any such lien , claim or liability so long as Buyer is contesting the validity or the amount thereof The foregoing provision s shall not restrict Buyer from placing a mortgage , trust deed or other lien upon its interest in the Billali, Jim Crow and Imperial Mines for financing purposes, so long as said encumbrance is subordinate to the rights of Seller to terminate this Lease for nonperformance in accordance with its terms . The restrictions set forth in this section shall remain in full force and effect until such time as the Total Purchase Price has been paid in full.

C Taxes and Assessments . Until the Total Purchase Price has been paid in full and except  as provided below, Buyer shall pay promptly before delinquency all taxes and assessments that may be assessed during the term of this Agreement upon the Billali, Jim Crow and Imperial Mines resulting from Buyer's activities and products derived therefrom. This includes all assessments payable to maintain the integrity of the mining claims, on an annual basis, due and payable to Grant County or other required State or US Federal agencies. Buyer will defend the rights  of Seller with respect to other individuals that prospect or overstake Seller's mining claims. However, Buyer shall always have the right to contest, in the courts or otherwise, either in its own name or in the name of Seller, the validity or amount of any such taxes or assessments, or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereof, before it shall be required to pay such taxes or assessments. Notwithstanding the foregoing, Buyer shall not permit any part of the Billali, Jim Crow and Imperial Mines to be conveyed and title lost as the result of nonpayment of such taxes and assessments. Buyer shall provide Seller with copies of all receipts evidencing payment of such taxes and assessments. If Seller should receive tax bills or claims that arc the responsibility of Buyer, Seller shall promptly forward such bills or claims to Buyer for appropriate action.  Buyer shall pay the above-referenced taxes that are assessed from the Effective Date of this Agreement to its date of tem1ination. Nothing in this paragraph shall be construed to obligate Buyer to pay that portion of any tax based upon an assessment of improvements or structures made or placed on the Billali, Jim Crow and Imperial Mines by Seller. Buyer shall not be liable for any taxes levied on or measured by Seller's income or based upon payments made to Seller by Buyer under this Agreement.

D Compliance with Laws and Regulations . Until the Total Purchase Price has been paid in full Buyer shall perform all of its operations on the Billali, Jim Crow and Imperial Mines in compliance with all applicable Federal, State and local laws and regulations pertaining to environmental protection, reclamation and bonding, and any other regulatory authority having rightful jurisdiction in the conduct of exploration, development and production operation s on the Billali, Jim Crow and Imperial Mines including without limitation, requirements applicable to the plugging of drill holes and reclaiming, re-contouring and re-seeding of drill pads, trenches , access roads and other disturbances. Buyer shall have no obligations with respect to prior operations or preexisting conditions on the Billali, Jim Crow and Imperial Mines. The indemnification obligations of Buyer pursuant to Section

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5.C shall specifically be applicable to all of Buyer's environmental obligations. The obligations of Buyer under this Section 4(D) shall survive termination of this Agreement.

E Seller's Right to Inspect. During the ten11 of this Agreement Buyer shall allow Seller and representatives of Seller, at their sole risk and expense, access to the Billali, Jim Crow and Imperial Mines for the purposes of viewing or inspecting Buyer's operations, at times which. in Buyer's discretion, do not unreasonably interfere with its operations. Seller and Seller's representatives agree to indemnify, protect, save and hold harmless Buyer and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employees, agents and corporate affiliates from and against any and all losses, costs, damages, expenses, attorney fees, claims, demands, liabilities, suits and actions of every kind and character that may be imposed upon or incurred by Buyer and its affiliated and direct and indirect parent corporations and their respective directors, partners, officers, employees, agents or corporate affiliates on account of, or arising directly or indirectly from, Seller's rights under this Section 4(E) Seller acknowledges and agrees that information obtained pursuant to this Section 4(E) shall be subject to the confidentiality provisions set forth in Section 10 hereof. BUYER ACKNOWLEDGES, WARRANTS AD AGREES THE TRANSACTION DESCRIBED HEREIN IS A "WHERE IS, AS IS"TRANSACTION AND SELLER MAKES NOW ARRANTIES OR REPRESENTATION OF ANY NATURE WHATSOEVER EXCEPT THOSE SET FORTH IN THIS AGREEMENT.

F No Obligation to Mine. Nothing in this Agreement shall impose any obligation or covenant, express or implied, upon Buyer to conduct any exploration, development or mining operations upon the Billali, Jim Crow and Imperial Mines, it being the intent of the Parties that Buyer shall have sole discretion to determine the technical and economic feasibility, tinting, method, manner and rate of conducting any such operations. Only the express duties and obligations provided under this Agreement shall be binding upon Buyer. The nature, manner and extent of all exploration development, mining and other operations, if any, shall be matters to be determined solely within the discretion of Buyer.

5OBLIGATIONS OF SELLER 

Cooperation by Seller. Seller shall execute all documents and otherwise cooperate with Buyer as needed in connection with the conduct of operations on the Billali, Jim Crow and Imperial Mines including the transfer of ownership of the existing Permit to Buyer, acquisition of additional governmental permits, post-mining reclamation approvals, water rights, and other rights and privileges related to the conduct of operations on the Billali and Jim Crow and reclamation thereof . In that regard, Seller agrees not to protest, challenge or otherwise oppose any water right or operational permit filings that Buyer may make to facilitate operations or proposed operations on or in connection with the Billali, Jim Crow and Imperial Mines.

6TERMINATION 

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A Termination by Seller. In the event Seller declares that Buyer has not complied with any obligation hereunder, Seller shall notify Buyer setting out specifically in what respect it is claimed that Buyer has breached this Agreement. If the alleged breach is not cured within 30 days after notice is given of default or if Buyer has not within that time either commenced to cure the alleged breach and does not thereafter diligently complete such cure Seller may terminate this Agreement by delivering to Buyer written notice of such termination; provided, however, that in the event Buyer challenges the legitimacy of the allegation Buyer may give written notice to Seller within such 30-day period setting forth such fact. If Seller gives written notice within 15 days of Buyer's notice that Seller rejects Buyer's position then this Agreement shall not be terminable by Seller until there is a final judicial determination by a court of competent jurisdiction that a default exists and shall not be terminated thereafter if Buyer shall satisfy such judgment within 30 days following its entry (or if an appeal of such judgment is taken following its affirmance by the highest court to which such an appeal is made). Failure of Seller to give such notice shall constitute agreement by Seller that Buyer is not in default. Seller shall not be entitled to terminate this Agreement for any default which by its nature is not retroactively curable if Buyer has used its best efforts to cure such a default to the extent practical or if Buyer has paid Seller's damages for such default where damages are an appropriate remedy. Seller shall have no right to terminate this Agreement except as expressly provided in this Section 6(A), and termination of this Agreement shall be the sole remedy of Seller. Neither the service of any notice nor the performance of any acts by Buyer intended to meet any such alleged breach shall be deemed an admission or presumption that Buyer has failed to perform all of its obligations under this Agreement.

B Termination by Buyer. Buyer shall have the right to terminate this Agreement at any time with respect to the Billali, Jim Crow, Imperial Mines and the Water Lease by giving Seller written notice of such termination. Tc1mination shall not cause a reduction in the payments already made according to Section 2(B). Upon such termination, all right, title and interest of Buyer under this Agreement shall terminate with respect to the Billali, the Jim Crow, Imperial Mines and the Water Lease. Buyer shall be relieved of all further obligations set forth in this Agreement as to the Billali, the Jim Crow, Imperial Mines and the Water Lease affected except those obligations, if any, which have accrued prior to such termination. Any taxes, assessments and governmental charges for which Buyer was responsible prior to termination shall be prorated as of the termination date.  ln the event The Buyer terminates this Agreement pursuant to this Section it shall immediately surrender possession of the Billali, the Jim Crow, Imperial Mines and re-assign the Water Lease.  Buyer shall make no claim of any nature whatsoever for any improvements it may have made to the Billali and/or the Jim Crow. The Buyer shall immediately execute all documents necessary to transfer the Billali, the Jim Crow and re-assign the Water Lease to Seller.

C Release. Following termination of this Agreement as to all or a part of the Billali and Jim Crow, Buyer shall promptly deliver to Seller a fully executed release of this Agreement

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in recordable form.

D Reclamation: Removal of Property. Upon termination of this Agreement, Buyer shall have a continuing right to enter upon the Billali, Jim Crow and Imperial Mines to complete required reclamation required as a result of Buyer' s activities on the Billali, Jim Crow and Imperial Mines. Buyer shall within ninety (90) days after the date of termination remove from the Billali, Jim Crow and Imperial Mines all of its machinery, buildings, structures, facilities, equipment and other property of every nature and description erected, placed or situated thereon except foundations of a permanent nature, supports, track and pipe placed in shafts, drifts or openings in the Billali, Jim Crow and Imperial Mines. Any property of Buyer not removed by the end of this ninety day period shall become the property of Seller; however, Buyer does not warrant the condition or safety of any such property. Buyer  shall have the right to keep a watchman on the Billali, Jim Crow and Imperial Mines during this ninety day period.

E Return of Mine Permit. Upon termination of this Agreement by Buyer, Buyer shall execute all documents and otherwise cooperate with Seller as needed in connection with the conduct of operations on the Billali and Jim Crow and Imperial Mines including returning ownership of the existing Permit to Seller.

7LIENS 

 

In the event that Buyer fails to promptly pay, when due, taxes, mortgages or other liens levied against the Billali, Jim Crow and Imperial Mines payable by Buyer, Seller shall have the right (but shall not be obligated) to pay such past due amounts and, if Seller does so, Seller shall be subrogated to all the rights of the holders thereof and Buyer shall reimburse Seller for all such payments and for all related costs and expenses paid or incurred by Seller (including, without limitation, related attorney fees) within 30 days after the same are paid or incurred by Seller. The provisions of this Section shall survive termination of this Agreement.

 

8FORCE MAJEURE 

Buyer shall not be liable for failure to perfom1 any of its obligations, other than making payments due under Section 2, during any period in which performance is prevented, in whole or in part, by causes herein termed Force Majeure. For purposes of this Agreement, the termed "Force Majeure" shall include labor disputes; acts of God; action of the elements, including inclement weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws, rules, regulations, orders, directives and requests of governmental bodies or agencies; acts of war or conditions arising out of or attributable to war, whether declared or undeclared: riot; civil strife; fire; explosion; or any other cause whether similar or dissimilar to the foregoing. except for the inability to meet financial commitments. If Buyer invokes the provisions of this Section, Buyer shall give notice of the commencement of the circumstances giving rise to such Force Majeure.  The time for discharging Buyer's obligations with respect to the prevented

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performance, or the time within which Buyer must undertake or complete any activity, shall then be extended for the period of Force Majeure.

9NOTICES AND METHODS OF MAKING PAYMENTS 

A Notices. Any required notice or communication shall be in writing and shall be effective when personally delivered (including delivery by express courier service) to the following addresses, or when addressed as follows and deposited, postage prepaid, in the United States mail for certified delive1y:

 

If to Seller:Billali Mine LLC J C Imperial, LLC 

P.O. Box 207

Duncan, AZ 85534, and

 

Billali Mine LLC

P.O. Box 945 Duncan,

AZ 85534

 

 

If to Buyer:Mineral Acquisitions, LLC 

P.O. Box25201

Albuquerque, New Mexico 87125

 

Either party may, by notice to the other given as aforesaid, change its mailing address for future notices.

 

10CONFIDENTIALITY 

 

Seller shall not, without the express written consent of Buyer not to be unreasonably withheld, disclose any information concerning the terms of this or operations conducted under this Agreement (except information and data that is generally available to the public), nor issue any press releases concerning suchinfo1mation.

 

11MISCELLANEOUS 

A Relationship of the Parties. Nothing contained herein shall be deemed to constitute either Party, in its capacity as such, the partner, agent or legal representative of the other Party, or to create any partnership, mining partnership or other partnership relationship, or fiduciary relationship between them, for any purpose whatsoever. Except as expressly provided in this Agreement, each Party shall have the free, unrestricted and  independent right to engage in and receive the full benefits of any and all business endeavors of any sort whatsoever outside the Billali and Jim Crow or outside the scope of this Agreement, whether or not competitive with the endeavors contemplated herein, without consulting

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the other or inviting or allowing the other therein.

BTransfers. Buyer and its respective successors shall have the right to assign or otherwise transfer their respective interests in this Agreement in whole or in part provided that  the transferee agrees in writing to assume all, or a portion of all if applicable, obligations of Buyer hereunder, and Buyer shows Seller, in writing, that the proposed transferee is financially and technically able to comply with the obligations of the Buyer  under  this Lease, and, in that event, Seller shall be obligated to consent to the transfer, with the understanding that Buyer remains secondarily liable under this Lease.  No such transfer shall be effective until the Seller receives written notice of the proposed transfer in accordance with Section 10, and consents in writing to the same. 

CPayments After a Transfer of Interest. In the event payments should be made to other parties because of any transfer of the interest of any of the persons constituting Seller, payments tendered to the Seller making the transfer or Seller's designated agent, shall conclusively be deemed payment to the transferee until Buyer receives notice and evidence satisfactory to it from both the agent (if applicable) and the transferring Seller that the transferor's interest has been transferred and that payments should be made to the transferee or the transferee's designated agent. 

DBinding Effect. Subject to the provisions of Section 1l(B) above, the provisions of this Agreement shall inureto the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, personal representatives, beneficiaries, successors and assigns. 

EConstruction of Agreement. This Agreement and its Exhibits constitute the entire understanding of the Parties with respect to the Billali, Jim Crow, Imperial Mines and the Water Lease, all previous agreements, promises, representations, negotiations, writings and understandings between the Parties being expressly rescinded. Except for obligations of good faith and fair dealing, there are no terms or conditions, express or implied, other than herein stated. This Agreement shall be subject to all valid and applicable provisions of statutory or common law, rules and regulations. Should this Agreement or any of its provisions or operations be found to be contrary to any such valid law, rule or regulation, the latter shall be deemed to control, and this Agreement shall be regarded as modified accordingly: Subject to the preceding sentence, no modification or alteration of this Agreement shall be effective unless made in \\Titing and executed by the Parties with the same formality as this Agreement. There shall be no modification or amendment by virtue of course of conduct by either party. There shall be no modification or amendment by virtue of any concept of an oral modification of a written agreement. Wherever the term "including" is used herein, it shall be deemed to mean "including without limitation," and wherever the phrase "shall include" is used herein, it shall mean "shall include without limitation." 

FHeadings. The headings used herein are for convenience only and shall be disregarded m construing and enforcing this Agreement. 

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GRule Against Perpetuities. The Parties do not intend nor desire for this Agreement to violate the common law Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land. If any provision of this Agreement does or would violate the Rule Against Perpetuities or any analogous statutory provision or any other statutory or common law rule imposing time limits on the vesting or termination of estates in land, then this Agreement shall not be deemed void or voidable but shall be interpreted in such a way as to maintain and carry out the Parties' objectives to the fullest extent possible by law. 

HApplicable law. This Agreement shall be construed, interpreted and governed by the laws of the State of New Mexico. 

IAttorney Fees. In the event either Party brings any action or proceeding for damages or equitable relief against the other Party for an alleged breach or default of any provision of this Agreement to recover monies due or to enforce, protect or establish any right or remedy of either Party under this Agreement, the prevailing Party shall be entitled to recover as a part of such action or proceeding reasonable attorney fees and court costs. 

JDisputes. Disputes or differences between the Parties shall not interrupt performance of this Agreement or the continuation of operations hereunder, In the event of any dispute or difference, operations may be continued, and payments may be made hereunder in the same manner as prior to such dispute or difference. ln case of suit, adverse claim, dispute or question as to the ownership of the Billali, Jim Crow, Imperial Mine and/or the Water Lease, or any interest therein. Buyer may, in its sole discretion, deposit the payment (or the portion of the payment in dispute, if less than the whole payment, is in dispute) into an escrow account and Buyer shall not be held in default in payment thereof until such suit, claim, dispute or question has been finally disposed of. 

KMultiple Counterparts. This Agreement may be executed in multiple counterparts and all counterparts taken together shall be deemed to constitute one and the same document 

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