Document:

Exhibit

EXHIBIT D
Lease Option Agreement

This Lease Option Agreement (this “Agreement”) is made on ______ , 2019, (the “Effective Date”) between COMSTOCK MINING INC., a Nevada corporation (the “Optionor”) and Tonogold Resources, Inc., a Delaware corporation (“Tonogold”), on behalf of Comstock Mining LLC, a Nevada limited liability company, and/or its affiliates or assignees (the “Optionee”).

WHEREAS, Optionor is the fee owner of certain real property being, lying and situated in Storey County, Nevada, and personal property and fixtures located thereon (the “Property”).

WHEREAS, the Optionor desires to grant the Optionee an option to lease the Property, subject to the terms and conditions set forth herein, pursuant to the terms set forth in an agreement to lease the American Flat property, plant, and equipment, in the Lease Option Addendum Exhibit attached hereto (the “American Flat Net Lease Agreement”).

NOW, THEREFORE, for and in consideration of the covenants and obligations contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Optionor hereby grants to Optionee an exclusive option to lease the aforementioned “Property.”

The parties hereto hereby agree as follows:

1.  OPTION TERM. The right to lease the Property commences on the Effective Date and expires at 5:00 p.m. Pacific time on the sixth (6th) anniversary of the date of this Agreement (the “Expiration Time”); provided, that the Optionor’s obligation to maintain ownership of the Property, as described in section 6.2 of this Agreement, shall terminate on the third (3rd) anniversary of the date of this Agreement (the “Optionor Obligation Termination Date”).

2. NOTICE REQUIRED TO EXERCISE OPTION. To exercise the right to lease the Property, the Optionee must deliver to the Optionor written notice of Optionee’s intent to lease the Property on or prior to the Expiration Time. Upon receipt of such notice, the Optionor and the Optionee shall be obligated to immediately execute and deliver the American Flat Net Lease Agreement in the form attached hereto save for the date, which shall be the date of execution.

3. OPTION CONSIDERATION. As consideration for this Agreement, the Optionee shall reimburse all of the Optionor’s costs and expenses to maintain and hold the Property in its current condition, including, without limitation, all Carrying Costs, as defined in Section 4 (the “Net Lease Maintenance Costs”). All payments of the Net Lease Maintenance Costs shall be nonrefundable.

No later than thirty (30) days after the Effective Date, Optionee shall conduct an inspection of the Property and propose a maintenance plan (the "Maintenance Plan") in cooperation with Optionor in order to hold the Property in its current condition. The Maintenance Plan, as may be supplemented or amended from time to time by Optionee, shall be implemented by Optionor under the direction of Optionee. Optionee shall reimburse all of the Optionor’s costs and expenses to maintain and hold the Property in accordance with the Maintenance Plan, including, without limitation, all Carrying Costs, as defined in Section 4. Optionor shall be liable for any non-routine damage to the Property caused by Optionor.

All payments made by Optionee to Optionor shall be paid by wire transfer of immediately available funds to an account designated by Optionor. The Optionee’s failure to pay all Net Lease Maintenance Costs within thirty (30) days’ from the date that the Optionor delivers notice of such failure to the Optionee shall automatically terminate this Agreement and all rights hereunder. 

4. OPTIONOR OBLIGATIONS. Unless this Agreement shall terminate earlier in accordance with Section 3 of this Agreement, from the date hereof, 
(i) Optionor will maintain the Property in its current condition, normal wear and tear excepted; 
(ii) Optionor will obtain and maintain commercially available insurance coverage on the Property; 
(iii) Optionor will work with Optionee to maintain the existing permits relating to the Property, and will cooperate with Optionee in working with county, state, and federal regulators to obtain any permit modifications or new permits reasonably necessary for the Optionee’s processing plans; 
(iv) Optionor will have the right to use the Property for any purpose which does not conflict with Optionee’s processing plans, including but not limited to, testing, removing, and/or selling previously stacked and leached material or any another material on or near the Property, or any other activity that does not increase the reclamation liability; and 
(v) Optionor will pay all costs associated with ownership and maintenance of the Property, and all costs associated with permits, as detailed in Exhibit D3 of the American Flat Net Lease Agreement (the “Carrying Costs”). Optionee shall reimburse the Optionor for all the Net Lease Maintenance Costs in accordance with Section 3 above.  Optionee will pay statutory fees for any of the permits held in Optionee’s name directly to the appropriate Federal, State, and County agencies.
(vi) Optionor will make its professional staff available to assist Optionee at reasonable times and upon reasonable notice, subject to prior commitments.  Optionor will invoice this time to Optionee at cost, without profit mark ups, but with actual employee benefit burden included in the cost.

5. EXCLUSIVITY OF OPTION. This Agreement is exclusive and non-assignable and exists solely for the benefit of the named parties above. Should Optionee attempt to assign, convey, delegate, or transfer this option to lease without the Optionor’s express written permission, any such attempt shall be deemed null and void.

6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS

6.1 The parties are executing this Agreement voluntarily and without any duress or undue influence. The parties have carefully read this Agreement and have asked any questions needed to understand its terms, consequences, and binding effect and fully understand them. The parties have sought the advice of an attorney of their respective choice if so desired prior to signing this Agreement.

6.2 Optionor and Optionee agree that Optionor can continue to use the American Flat Property for any lawful purpose from the Effective Date until this Option is exercised, so long as the current facilities remain available for Optionee’s use under this Agreement. In the event that Optionor continues to use the Property after the Effective Date, Optionor shall be liable for any non-routine damage to the Property caused by Optionor.

6.3 Optionor and Optionee agree that, subsequent to the Effective Date, they will work together, in consultation with the regulatory agencies, to timely bifurcate any permits, such as the Reclamation Permit, Air Quality permit, and any others that include aspects relating to both the American Flat Property subject to this Agreement and the Lucerne Properties covered by the Membership Interest Purchase Agreement, or to leave the permits as-is, so long as Optionee can operate according to its plans on the Lucerne Properties, and Optionor can operate as it sees fit on the American Flat property, until such time as this Option is exercised.

6.4 In the event that the Option is exercised, the parties agree they will work together to allocate the current reclamation bond, covering the existing reclamation liability between the Lucerne Properties and the American Flat Property.

6.5 Optionor agrees that if an event occurs with respect to the American Flat Property that results in an insurance claim (an “Insurance Event”), funds received from such claim will be applied towards restoring the American Flat Property as it was prior to the Insurance Event. Optionor shall continue to maintain insurance coverage against loss on the Property that Optionor determines to be commercially reasonable. Optionor shall be solely responsible for any insurance deductible expense and any and all damage which exceeds the scope of insurance coverage.

6.6 Optionor agrees for a period of three years from the Effective Date, it shall not to sell or otherwise dispose of any or all of the American Flat property, facilities, or equipment.

6.7 Optionor agrees, beginning from the Effective Date, it shall not pledge, directly or indirectly, the American Flat Property assets as surety for any obligation.

6.8 Optionor agrees that, after three years from the Effective Date, unless the Option has been exercised, if it were to receive a genuine, bon-fide, unconditional cash offer to acquire some or all of the process facility assets from a third-party that it is prepared to accept, it shall immediately advise Optionee in writing (enclosing a copy of the offer), giving Optionee at least 90 days in which to match that offer (a right of first refusal). During such 90 day right of first refusal period, Optionee may elect to exercise the Option. In the event that Optionee elects not to exercise its right of first refusal or the Option, subject to the terms of this Agreement, Optionor shall be entitled to accept the third-party offer. For the avoidance of any doubt, any contemplated sale of all the process facility assets to a third-party shall include provisions that require the third-party to recognize and honor the terms of this Agreement in its entirety, and agree to execute an agreement or deed of assignment with Optionee to ensure the terms of the Agreement shall be enforceable.

6.9 Optionor and Optionee agree that Optionor is the exclusive owner of any residual leached materials, mine dumps and tailings currently on the Property, along with the reclamation liability for those materials. Optionor may, at any time, reprocess, remove, or reclaim these materials to and thereby reduce its reclamation liability, with no compensation to Optionee.

6.10 Optionor makes no representation or warranty, express or implied, to any matter whatsoever relating to the Property or any other matter, including as to (i) merchantability or fitness for any particular use or purpose, (ii) any proposed processing or other business or operations, (iii) the adequacy of the existing permits for the operations planned by Optionee; (iv) the likelihood of governmental authority or regulatory approval of any proposed mining, processing or other business or operations or (v) the probable success or profitability of any proposed mining,  processing or other business or operations;
 
6.11 Optionee represents that it has sufficient experience in the mining of ores and processing methods similar to its planned use for the Property, and agrees that: (i) in making its decision to enter into this Agreement, Optionor has relied solely on its own investigation and the express representations of Optionor made in this Agreement; (ii) it has examined the data from previous operations of the facility by Optionor; (iii) it has reviewed the permits held by Optionor relating to the Property; and (iv) it has inspected the American Flat Property and is satisfied with its current condition.

7. GOVERNING LAW AND VENUE. This Agreement shall be governed, construed and interpreted by, through and under the Laws of the State of Nevada. The parties further agree that the venue for any and all disputes related to this Agreement shall be Storey County, Nevada.

8. ENTIRE AGREEMENT. This document and the American Flat Net Lease Agreement set forth the entire agreement and understanding between the parties relating to the subject matter herein and supersedes all prior discussions between the parties. This agreement may only be amended by an instrument in writing signed by both Parties. No waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged. 

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[Signatures on following page.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COMSTOCK MINING INC. 

By: ______________________
Name: Corrado DeGasperis
Title: Executive Chairman, President and CEO

TONOGOLD RESOURCES, INC. 

By: ______________________
Name: Mark Ashley
Title: Chief Executive Officer

LEASE OPTION ADDENDUM EXHIBIT

American Flat Net Lease Agreement
 
This American Flat Net Lease Agreement (this “Agreement”) is made and entered into by and between Comstock Mining Inc., a Nevada corporation, and Comstock Mining LLC, a Nevada limited liability company.

RECITALS
 
	
		
	A.
	Comstock Mining Inc. (“Comstock”) is the owner of and in possession of certain real estate, residual materials including ores, heap leaching pads, crushing and stacking equipment, and Merrill-Crowe processing facilities located in Storey County, Nevada and described in Exhibits D1 and D2, and shown in Figure D1 (the “Property”) attached to and by this reference incorporated in this Agreement.

 
	
		
	B.
	Comstock, Comstock Mining LLC (the “Company”), and Tonogold Resources Inc (“Tonogold”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”), dated January 24, 2019 whereby Comstock sold its membership interest in the Company to Tonogold.

	C.
	Comstock desires to lease the Property to the Company and the Company desires to lease the Property from Comstock, subject to the terms and conditions set forth herein.

  
NOW THEREFORE, in consideration of their mutual promises, the parties agree as follows:
 
ARTICLE 1
NET LEASE 

		
	1.1
	Definitions. The following defined terms, wherever used in this agreement, shall have the meanings described below:

		
	(a)
	“Lease Date” shall mean _________, 2019.

		
	(b)
	“Lessor” shall mean Comstock Mining Inc.

		
	(c)
	“Lessee” shall mean Comstock Mining LLC.

		
	(d)
	“Carrying Costs” shall mean the total direct and indirect costs and expenses incurred by Lessor that are associated with owning and maintaining the Property for eventual use by Lessee, as described in Exhibit D3 of this Agreement. 

		
	(e)
	“Lucerne Properties” shall have the same meaning as defined in the Purchase Agreement.

		
	(f)
	“Ore” shall mean materials produced from the Property, the nature and composition of which, in the sole judgment of Lessee justifies either (i) mining or removing from place and shipping and selling the same, or delivering the same to a processing plant for physical or chemical treatment; or (ii) leaching in place.

		
	(g)
	“Product” shall mean: (i) all Ore shipped and sold prior to treatment; and (ii) all metals, minerals, concentrates, and precipitates produced by Lessee from Ore.

		
	(h)
	"Ton" shall mean a unit of weight equal to 2,000 pounds avoirdupois (907.19kg).

1.2 Lease.  The Lessor grants to the Lessee an exclusive Agreement to lease the Property for processing Ore. The Agreement has two distinct phases: Production, and Reclamation.  Subject to the terms and conditions of this Agreement, so long as all conditions of the Agreement are met, and to the extent permitted by applicable federal, state and local laws regulations and ordinances, Lessor agrees to lease the Property to Lessee for the purposes of producing valuable metal and other mineral substances and products from ore-bearing materials and rocks of every kind.

1.3 Uses.  Lessee is granted the right, insofar as Lessor may lawfully grant the right, to use the Property, including but without being, limited to, the full right, authority and privilege of constructing, erecting, maintaining, and using all buildings, structures, plants, roadways, pumps, pipelines, electrical power lines and facilities, stockpiles, waste plies, heap leach pads, tailings ponds and facilities, settling ponds, and all other improvements, property and fixtures for beneficiating, concentrating, smelting, extracting, leaching (in place or otherwise), refining and shipping of Ores, minerals or Product, or for any incidental activities, whether presently contemplated or known to be used in the extraction, production or processing of minerals.

1.4 Term.  The Agreement is effective commencing on the Lease Date, and expiring (if not terminated previously) on the 20th anniversary of the Lease Date. Once the Production phase begins, the lease will continue in effect past the expiration date, until the Reclamation phase is complete.  However terminated, Lessee’s obligation for reclamation relating to its activities on the American Flat property will continue until all reclamation is complete to the satisfaction of the applicable County, State, and Federal regulators.

(a)The Production phase begins on the Lease Date.  On the Lease Date, Lessee shall have delivered notice to Lessor that it intends to exercise the Lease Option, and the first quarterly Fixed Rate Payment (as defined below) to Lessor. Following the receipt of the first quarterly Fixed Rate Payment, the parties will work together, with the objective of Lessor providing Lessee with knowledge of the operating procedures and protocols for operating the facility. During the Production phase:

(i) Lessee will assume full operation control of the Property, and will maintain and operate the facility using industry best practices; 
(ii) Lessee will pay Lessor a lease payment of $1,000,000 per year, payable quarterly in advance (the “Fixed Rate Payment”) subject to adjustment as provided in clause 1.5 (b) of this Agreement, plus $1 per ton for any ore processed, payable quarterly in arrears (the “Variable Rate Payment”) subject to adjustment as provided in clause 1.5(c) of this Agreement, and will continue to pay the Carrying Costs; 
(iii) Lessee will be responsible for all capital costs for any refurbishment, upgrades, and expansions of the processing facility reasonably required, in its sole discretion, to achieve its processing plan; 
(iv) Lessee will operate the facility and will pay all associated operating costs and overhead; and 
(v) Lessor remains liable for the reclamation associated with the American Flat facility as of the Lease Date (the “Current Liability”) and Lessee will assume liability for any modifications to or expansions of the facility and for additional material stacked, stockpiled, or otherwise moved onto the American Flat property (the “Additional Liability”).

For clarity, during the Production phase, Lessor is granting Lessee the exclusive right to construct leach pads, waste dumps, stockpiles, ponds, and other infrastructure anywhere on the Property that Lessee determines is necessary in order to carry out its operations, at its own expense, and in compliance with all applicable County, State, and Federal laws and regulations. Lessee will be responsible for the reclamation of all added construction and infrastructure, and will maintain bonds with the appropriate agencies in an amount adequate to cover the entire cost of such Additional Liability reclamation.

Lessee shall grant Lessor reasonable access to the Property in order for Lessor to be satisfied that Lessee is operating the facilities in a safe and environmentally responsible manner.

For the sake of clarity, the Fixed rate will be payable on a continuous basis, whether or not Lessee has any production during any given quarter.  Subject to clauses 1.5(b) and 1.5(c) of this Agreement, the Fixed Rate and Variable Rate Payments will continue through the end of the quarter in which Lessee ceases operating the plant, after notifying Lessor at least three months in advance of its intent to cease operations (the “Shutdown Notice”).

		
	(b)
	The Reclamation phase begins when Lessee ceases operating the plant after giving the Shutdown Notice, and will continue until all reclamation is complete to the satisfaction of all applicable County, State, and Federal regulators, and Lessee provides evidence, satisfactory to Lessor, that all reclamation due to Lessee’s operations is complete and the applicable bonds have been released. During the Reclamation phase, 

(i) Lessee will continue to pay the Carrying Costs;
(ii) Lessor and Lessee will negotiate what portions of the Plant and Property will be fully reclaimed, and which portions Lessor wishes to leave in place for possible future operations; 
(iii) Lessee will pay all costs for reclamation due to its activities, except for any portions of the infrastructure the parties have agreed to leave in place; and
(iv) Lessor will pay all costs for reclamation due to its previous operations as of the Lease Date, or will defer its share of the reclamation in anticipation of future opportunities, in its sole discretion.

Any additions to the physical plant that are not fixed and are capable of being removed shall be removed by Lessee during the Reclamation phase, unless otherwise agreed by the parties. After reclamation is complete, any remaining infrastructure becomes the property of Lessor, with no compensation due to Lessee. Any stockpiled or leached or otherwise processed material remaining on the property also becomes the property of Lessor.

1.5 Payments.  Lessee shall make the following payments to Lessor.

(a)Carrying Costs.  During all phases of the Agreement, the Carrying Costs paid by Lessor will be invoiced to the Lessee monthly, and shall be due upon receipt.
 
(b)Fixed Rate.  The Fixed Rate Payment lease payment shall be paid at the rate of $250,000 quarterly, in advance, beginning on the Lease Date and continuing through the end of the quarter in which the Shutdown Notice is given, or the end of the quarter during which the aggregate cumulative amount of the Fixed Rate Payments plus Variable Rate Payments received by Lessor from Lessee equals $25,000,000, whichever comes first. 

(c)Variable Rate.  As provided in Section 1.4(a) of this Agreement, the initial Variable Rate Payment shall be $1 per ton, payable quarterly in arrears.  Commencing on the date that the aggregate cumulative amount of the Fixed Rate Payments plus Variable Rate Payments received by Lessor from Lessee equals $15,000,000 and thereafter, the Variable Rate Payments shall be reduced to $0.50 per ton (the "Adjusted Variable Rate Payment"). Commencing on the date that the aggregate cumulative amount of the Fixed Rate Payments plus all Variable Rate Payments received by Lessor from Lessee equals $25,000,000 and thereafter, the Variable Rate Payment shall be reduced to $0.25 per ton, but not less than $100,000 per quarter (the "Subsequent Variable Rate Payment").  

(d)Method of Payment.  All payments made by Lessee to Lessor shall be paid by wire transfer of immediately available funds to an account designated by Lessor.

(e)Audit.  Lessor or its authorized agents shall have the right to audit and inspect Lessee’s accounts and records used in calculating the Variable Rate Payments, which right may be exercised as to each payment at any reasonable time during a period of ninety (90) days from the date on which the payment was made by Lessee. If no such audit is performed during such period, such accounts, records and payments shall be conclusively deemed to be true, accurate and correct. If it is determined that an overpayment or underpayment was made, neither Lessor nor Lessee will be required to make an additional payment or a refund, as applicable, but the overpayment or underpayment shall be corrected with the next quarterly payment.

(f)Penalties.  Any amounts not timely paid shall draw interest at the rate of eighteen percent (18%) per annum on the unpaid balance from the due date until paid in full. After 60 days, Lessor may file a lien on the stacked ore, concentrates, precipitates, and dore on the Property.

1.6. Acceptance of Payments.  The lease contemplated by this Agreement shall be deemed and construed to be a “net lease”, and, except as expressly provided to the contrary in this Agreement, all costs, expenses, charges, impositions and other payments of every kind and nature whatsoever relating to the Property, or the use, operation or maintenance thereof, which may arise or become due during or in respect of the lease Term shall be timely paid by Lessee, and Lessee assumes full responsibility for the condition, operation, repair, alteration, improvement, replacement, maintenance and management of the Property.  

1.7 Relationship of the Parties.

(a) No Partnership: This Agreement shall not be deemed to constitute any party, in its capacity as such, the partner, agent or legal representative of any other party, or to create any mining partnership or other partnership or other partnership relationship, or fiduciary relationship between them for any purpose whatsoever.

(b) Competition: Except as expressly provided in this Agreement, each party shall have the free and unrestricted right independently to engage in and receive the full benefits of any and all business endeavors of any sort whatsoever outside the Property or outside the scope of this Agreement, whether or not competitive with the endeavors contemplated herein, without consulting the other or inviting or allowing the other therein. In particular, without limiting the foregoing, neither party to this Agreement shall have any obligation to the other as to any opportunity to acquire any money, property, interest or right offered to it outside the scope of this Agreement.

ARTICLE 2
REPRESENTATIONS, WARRANTIES AND AGREEMENTS

2.1  Lessor and Lessee agree that, subsequent to the Lease Date, they will work timely, in consultation with the regulatory agencies, to bifurcate any permits, such as the Reclamation Permit, Air Quality permit, and any others that include aspects relating to both the Property and the Lucerne Properties covered by the Purchase Agreement, or to leave the permits as-is, so long as the goal is met that Lessee can operate according to its plans on the Lucerne Properties, and Lessor can operate as it sees fit on the Property, until the Lease Date. 

2.2 The parties agree they will work together to allocate the current reclamation bond, covering the existing reclamation liability between the Lucerne Properties and the Property, and to separately bond Lessee’s reclamation liability for its changes to the Property and its operations under this agreement.

2.3 Lessor agrees that if an event occurs with respect to the Property that results in an insurance claim (an “Insurance Event”), funds received from such claim will be applied towards restoring the Property as it was prior to the insurance event. Lessee shall be solely responsible for any insurance deductible expense and any and all damage which exceeds the scope of insurance coverage.

2.4 Lessor agrees not to sell or otherwise dispose of any or all of the Property until the Shutdown Notice is given.

2.5 Lessor agrees not to pledge, directly or indirectly, the Property as surety for any obligation.

2.6 Lessor makes no representation or warranty, express or implied, to any matter whatsoever relating to the Property or any other matter, including as to (i) merchantability or fitness for any particular use or purpose, (ii) any proposed processing or other business or operations, (iii) the adequacy of the existing permits for the operations planned by Lessee; (iv) the likelihood of governmental authority or regulatory approval of any proposed mining, processing or other business or operations or (v) the probable success or profitability of any proposed mining,  processing or other business or operations;

2.7 Lessee represents that it has sufficient experience in the mining of ores and processing methods similar to its planned use for the Property, and agrees that: (i) in making its decision to enter into this Agreement, Lessor has relied solely on its own investigation and the express representations of Lessor made in this Agreement; (ii) it has examined the data from previous operations of the facility by Lessor; (iii) it has reviewed the permits held by Lessor relating to the Property; and (iv) it has inspected the Property and is satisfied with its current condition.

2.8 Lessor and Lessee agree that, once Lessee’s operating plans for the Property are complete, it will notify Lessor of any equipment being replaced as part of an upgrade to the facilities, or otherwise not useful to Lessee for its planned Operations.  Lessor can then move the equipment to a location on the property that will not interfere with Lessee’s planned operations, or remove the un-needed equipment, at Lessor’s expense, for sale or use at another location.

2.9 Lessor and Lessee agree that Lessor is the exclusive owner of any residual leached materials, mine dumps and tailings currently on the Property, along with the reclamation liability for those materials. Lessor may, at any time during any phase of this agreement, reprocess, remove, or reclaim these materials and thereby reduce its reclamation liability, with no compensation to Lessee, provided that during the Production phase, these activities by Lessor shall not unreasonably interfere with Lessee’s operations on the Property.

ARTICLE 3
MISCELLANEOUS

3.1 Compliance with the Law: The exercise by Lessee of any rights, privileges, grants and uses under this Agreement shall conform at all times with the applicable laws and regulations of the state in which the Property is situated and the United States of America. Lessee shall be fully responsible for compliance with all applicable federal, state and local reclamation statutes, regulations and ordinances relating to such work, all at Lessee’s cost, and Lessee shall indemnify and hold harmless Lessor from any and all claims, assessments, fines and actions arising from Lessee’s failure to perform the foregoing obligations. Lessor agrees to cooperate with Lessee in Lessee’s application for governmental licenses, permits and approvals, the costs of which shall be borne by Lessee.

3.2 Operating Practices; Inspection of Data Reports; Insurance:

(a) Operations: Lessee shall conduct operations on the Property in a safe and environmentally responsible manner, in accordance with industry best practice.

(b) Inspection of Data: During the term of this Agreement, Lessor shall have the right to examine reports and data regarding the Property in Lessee’s possession during reasonable business hours and upon prior notice, provided, however, that the rights of Lessor to examine such data shall be exercised in a manner such that inspection does not unreasonably interfere with the operations of Lessee.

(c) Insurance: Lessee shall obtain and maintain all workers’ compensation insurance as required by state law, as well as liability insurance and policies of insurance against risks in amounts customarily obtained in similar mining operations and shall furnish Lessor proof of insurance prior to the commencement of any operations. Lessee shall, at Lessee’s expense, during the term of this Agreement and any extension thereof, obtain and maintain insurance which insures the Property for public liability in amounts not less than those set out by the State of Nevada and amounts reasonably satisfactory to Lessor, naming Lessor as an additional insured and protecting against all claims, demands, actions, suits or causes of action and judgments, settlements or recoveries, for bodily injury, death or property damage arising out of Lessee’s use or occupancy of or operations conducted upon the Property. Lessee agrees to provide Lessor with a certificate of insurance. The companies issuing such policies shall also be required to furnish the Lessor written notice thirty (30) days prior to cancellation, termination, or other change of any such insurance. The Lessor shall periodically review the level of the indemnification insurance and may require the amount of such insurance to be increased or decreased to reflect changes in risk exposure.

3.3 Reclamation and Bonding: The exercise by Lessee of any rights, privileges, grants and uses under this Agreement shall conform at all times with the applicable laws and regulations of the state in which the Property is situated and the United States of America. Lessee shall be fully responsible for compliance with all applicable federal, state and local reclamation statutes, regulations and ordinances relating to such work, all at Lessee’s cost, and Lessee shall indemnify and hold harmless Lessor from any and all claims, assessments, fines and actions arising from Lessee’s failure to perform the foregoing obligations.

Bonding: Lessee is required to carry bonding for the Additional Liability in the amount determined by regulatory authorities for each area to be bonded. Lessee may qualify for self-bonding if the Lessee meets the requirements of C.F.R. Title 30 § 800.23 and any additional requirements in the State or Federal program. Alternatively, Lessee may support its mine reclamation bonding requirements through third-party bonding facilities.

3.4 Production Records: Lessee shall keep accurate records of the sale or shipment of Product from the Property, and these records shall be available for inspection and copying by Lessor at all reasonable times.

3.5 Liens and Notices of Non-Responsibility: Lessor and Lessee agree to keep the Property at all times free and clear of all liens, charges and encumbrances of any and every nature and description done, made or caused by them, and to pay all indebtedness and liabilities incurred by or for them which may or might become a lien, charge or encumbrance against the Property before such indebtedness or liability shall become a lien, charge or encumbrance.

3.6  Real Property Taxes: Lessor shall pay promptly, before delinquency, all taxes and assessments, general, special, ordinary and extraordinary, that may be levied or assessed during the term of the Agreement, and upon the Property then remaining subject to this Agreement. Such tax payments will be invoiced to Lessee as part of the Carrying Costs to be reimbursed.  Neither Lessor nor Lessee shall be responsible for the payment of any such taxes which are based upon revenues income or production from the Property assessed solely to the other party. Lessee always shall have the right to contest, in the courts or otherwise, in its own name or in the name of Lessor, the validity or amount of any such taxes or assessments if it deems the same unlawful, unjust, unequal or excessive, or to take such other steps or proceedings as it may deem necessary to secure a cancellation, reduction, readjustment or equalization thereat before it shall be required to pay the same.

Delivery of Tax Notices: If Lessee receives tax bills or claims which are Lessor’s responsibility, Lessee shall promptly forward them to Lessor for appropriate action. 

3.7 Inspection: Lessor, or Lessor’s duly authorized representatives, shall be permitted to enter on the Property, and the processing facilities thereon at all reasonable times for the purpose of inspection. Lessor shall have the right to take samples of material from the Property for the purpose of assuring proper and accurate determination and payment of the Tonnage Charge, but it shall enter on the Property at its own risk, and in such a manner as not to unreasonably hinder, delay or interfere with the operations of Lessee. Lessor shall indemnify and hold Lessee harmless from any and all damages, claims or demands arising out of injury to Lessor, Lessor’s agents or representatives, or any of them, on the Property or on the approaches thereto.

3.8 Termination by Lessor: In the event of any default or failure by Lessee to comply with any of the covenants, terms or conditions of this Agreement, Lessor shall give Lessee written notice of the default, specifying details of the same. If such default is not remedied within thirty (30) days after receipt of the notice, then this Agreement shall be deemed canceled and terminated effective on the thirtieth (30th) day after the receipt of the notice.

3.9 Termination: Lessee may at any time terminate this Agreement by giving written notice to Lessor. If during the Production phase of the lease, the notice must be given in the form described as the Shutdown Notice. On or promptly after delivery of the notice of termination, Lessee shall execute and deliver to Lessor a written release of this Agreement in proper form for recording. If Lessee terminates this Agreement, Lessee shall still be required to pay any Fixed Rate and Variable Rate charges and Carrying Costs which accrued prior to the termination date, which shall be the date Lessee’s notice is delivered. On expiration, termination or surrender of this Agreement, Lessee shall return the Property, or any part of the Property surrendered, in a state of compliance with applicable laws, regulations and ordinances of any governmental agency or authority having jurisdiction of the Property. If Lessee’s compliance is incomplete at such time, Lessee shall diligently take the actions necessary to complete compliance.

3.10 Removal of Equipment: Lessee shall have six (6) months after termination of this Agreement to remove from the Property all buildings, structures and equipment placed on the property by Lessee, and to restore or diligently act to restore the Property to an environmentally acceptable state as may be required by local, state or federal authorities. Any buildings, structures or equipment, including personal property, remaining on the Property after the time described in this Section shall be deemed to be owned by Lessor with no further action or the part of the parties.

3.11 Data: Upon termination of this Agreement, Lessor shall have the right to request a copy of all reports and data regarding the Property in Lessee’s possession at the time of termination. Lessee agrees that it will, within thirty (30) days after receipt of a written demand by Lessor, deliver to Lessor a copy of all such reports and data. Lessee shall have no liability on account of any such information received or acted on by Lessor or any other party to whom Lessor delivers such information.

3.12 Confidentiality: The data and information, including the terms of this Agreement, coming into the possession of Lessor by virtue of this Agreement, shall be deemed confidential, and shall not be disclosed to outside third parties except as may be required to publicly record or protect title to the Property, or to publicly announce and disclose information under the laws and regulations of the United States, any state or local government or any country, or under the rules and regulations of any stock exchange on which stock of any party, or the parent or affiliates of any party, is listed. Lessor agrees, with respect to any public announcements (other than those exceptions set forth in the preceding sentence), including the announcement of the execution of this Agreement, if any, to inform Lessee of the contents of the announcement or disclosure in advance of its intention to make such announcement in sufficient time to permit Lessee to jointly or simultaneously make a similar public announcement or disclosure if the other party so desires, except that in the event any party anticipates selling or assigning all or a portion of its interest or negotiations to procure loans from third parties are undertaken, such party shall have the right to furnish information to the party to whom such conveyance or assignment is anticipated, or with whom such negotiations or cans are under-taken, upon obtaining from such party art agreement to hold confidential any information so furnished. Nothing in this Agreement shall limit or restrict the right of Lessee to provide, deliver or release to parent companies, companies with a common parent, subsidiary companies, affiliated or related companies and/or coventurers the data and information, including the terms of this Agreement, coming into the possession of Lessee by virtue of this Agreement.

3.13 Notices: All notices shall be in writing to the applicable address set forth below and shall be given by personal delivery or recognized international overnight courier. All notices shall be effective and shall be deemed delivered on the date of delivery if delivered before 5:00 p.m. local destination time on a business day, otherwise on the next business day after delivery. Each party will send a copy of their notice by email, as a courtesy, but the notice will not be valid until delivered in writing. Any notice delivered by email shall only be deemed to be official notice hereunder if the Party receiving such email confirms receipt in writing.  
 
  
	
		
	 
	

Each party may change its address from time to time by notice given in the manner described above

3.14 Binding Effect of Obligations: This Agreement shall be binding upon and inure to the benefit of the respective parties and their heirs, successors and assigns.

3.15 Whole Agreement: The parties agree that the whole agreement between them is written in this Agreement, and in a memorandum of agreement of even date which is intended to be recorded. There are no terms or conditions, express or implied, other than expressly stated in this Agreement. This Agreement may be amended or modified only by an instrument in writing, signed by the parties with the same formality as this Agreement.

3.16 Governing Law: This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada.
 
3.17 Multiple Counterparts: This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which shall constitute the same Agreement.

3.18 Severability: If any part, term or provision of this Agreement is held by a court of competent jurisdiction to be illegal or in conflict with any law of the United States or any state, the validity of the remaining portions or provisions shall not be affected and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular part, term or provision held to be invalid.

3.19 Bankruptcy or Insolvency Proceedings by Lessee: If Lessee be adjudged bankrupt or insolvent, or shall make an assignment for benefit of creditors, this Agreement shall thereupon immediately terminate, and it being further understood and agreed that this Agreement shall not be assignable by any process of law, nor be treated as an asset of Lessee in any bankruptcy or insolvency proceedings; nor shall it pass under the control of any trustee or assignee of Lessee by virtue of any proceedings in bankruptcy or insolvency, or under any assignment by Lessee for the benefit of creditors.

3.20 Assignment: Upon providing written notice to the other party in accordance with the terms of this Agreement, either party may assign its respective rights and obligations under this Agreement, provided that the assignee executes an assumption of all of the assignor’s obligations hereunder and agrees to be bound by all the terms and conditions of this Agreement. No such assignment shall in any way enlarge or diminish the right or obligations of Lessee or Lessor hereunder. Upon the assumption by the assignee of the assignor’s obligations, the assigning party shall be fully released from, and shall not be liable or responsible to the non-assigning party in any way for any duties, costs, payments or other liabilities or obligations that thereafter arise or accrue directly or indirectly under this Agreement. A fully executed memorandum of assignment in recordable form shall be provided to the non-assigning party by the assigning party.
 
  
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Lease Date.
 

	
			
	 
	 
	 

	TONOGOLD RESOURCES, INC.

	 
	 

	By:___________________________________
	 
	 

	Name: Mark Ashley
	 

	Title:   Chief Executive Officer
	 
	 

	

	COMSTOCK MINING LLC

	 
	 

	By:____________________________________
	 
	 

	Name: Corrado DeGasperis
	 

	Title: Executive Chairman, President and CEO
	 
	 

	

	COMSTOCK MINING INC.

	 
	 

	By:_______________________________________
	 
	 

	Name: Corrado DeGasperis
	 

	Title: Executive Chairman, President and CEO
	 
	 

 

Exhibit D1 – “Properties”
(American Flat Net Lease Agreement)

The following patents, fee land, and unpatented mining claims are included in the American Flat Net Lease Agreement, and are shown in Figure D1, below.

	
								
	D1.1: CMI-Owned Properties Included in Lease Option

	 
	 
	 
	 
	 
	 
	 
	 

	Parcel No
	Description
	Current Owner
	TYPE
	Acres
	County
	NSR %
	Royalty Owner

	004-331-08
	Texas
	Comstock Mining LLC
	Fee
	37.5
	Storey
	0%
	None

	004-331-19
	Baltimore Patent Homesite
	Comstock Mining LLC
	Fee
	9.0
	Storey
	0%
	None

	004-331-22
	Salzwimmer 79 Acres
	Comstock Mining Inc.
	Fee
	77.9
	Storey
	0%
	None

	004-331-27
	Salzwimmer House & "Barn"
	Comstock Mining Inc.
	Fee
	11.0
	Storey
	0%
	None

	004-331-28
	Salzwimmer House & "Barn"
	Comstock Mining Inc.
	Fee
	3.5
	Storey
	0%
	None

	004-331-36
	American Flat Process Site
	Plum Mining Co LLC
	Fee
	77.0
	Storey
	0%
	None

	004-331-37
	American Flat Process Site
	Plum Mining Co LLC
	Fee
	4.7
	Storey
	0%
	None

	004-331-40
	Texas
	Comstock Mining LLC
	Fee
	150.0
	Storey
	0%
	None

	016-091-33
	Texas
	Comstock Mining LLC
	Fee
	32.8
	Lyon
	0%
	None

	800-002-06
	Baltimore Patent Pcl 1
	Comstock Mining LLC
	Patent
	9.0
	Storey
	0%
	None

	800-002-10
	Ledge No 2
	Comstock Mining Inc.
	Patent
	14.5
	Storey
	0%
	None

	800-002-14
	Baltimore Patent Pcl C
	Comstock Mining LLC
	Patent
	1.4
	Storey
	0%
	None

	800-002-22
	Baltimore Patent PCl 3
	Comstock Mining Inc.
	Patent
	9.0
	Storey
	0%
	None

	800-002-38
	Baltimore Patent Pcl 2
	Comstock Mining LLC
	Patent
	8.9
	Storey
	0%
	None

	800-002-45
	Baltimore Patent Pcl 4
	Comstock Mining Inc.
	Patent
	7.5
	Storey
	0%
	None

	 
	 
	 
	 
	 
	 
	 
	 

	D1.2: CMI-Owned Unpatented Claims Included in Lease Option

	 
	 
	 
	 
	 
	 
	 
	 

	BLM No
	Description
	Current Owner
	TYPE
	Acres
	County
	Underlying 
NSR %
	Underlying 
Royalty Owner

	NMC1105470
	CMI Mill Site 1
	Comstock Mining LLC
	Mill
	0.38
	Storey
	0
	None

	NMC1108961
	MS 38 B
	Comstock Mining LLC
	Lode
	1.82
	Storey
	0
	None

	NMC1108962
	MS 38 C
	Comstock Mining LLC
	Lode
	6.3
	Storey
	0
	None

	NMC1108963
	MS 38 D
	Comstock Mining LLC
	Lode
	3.67
	Storey
	0
	None

	NMC1108964
	MS 38 E
	Comstock Mining LLC
	Lode
	9.83
	Storey
	0
	None

	NMC871506
	Comstock 129
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC871507
	Comstock 130
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC871508
	Comstock 131
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC871509
	Comstock 132
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC871510
	Comstock 133
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC871511
	Comstock 134
	Comstock Mining LLC
	Lode
	20.67
	Lyon,Storey
	0
	None

	NMC871512
	Comstock 135
	Comstock Mining LLC
	Lode
	20.67
	Lyon,Storey
	0
	None

	NMC871513
	Comstock 136
	Comstock Mining LLC
	Lode
	20.67
	Storey,Lyon
	0
	None

	NMC871514
	Comstock 137
	Comstock Mining LLC
	Lode
	20.67
	Storey,Lyon
	0
	None

	NMC871515
	Comstock 138
	Comstock Mining LLC
	Lode
	20.67
	Storey,Lyon
	0
	None

	NMC871516
	Comstock 139
	Comstock Mining LLC
	Lode
	14.36
	Storey
	0
	None

	NMC871517
	Comstock 140
	Comstock Mining LLC
	Lode
	18.33
	Storey
	0
	None

	NMC871518
	Comstock 141
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC871519
	Comstock 142
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC983374
	Comstock Lode 121
	Comstock Mining LLC
	Lode
	2.72
	Storey
	0
	None

	NMC983375
	Comstock Lode 122
	Comstock Mining LLC
	Lode
	17.93
	Storey
	0
	None

	NMC983376
	Comstock Lode 123
	Comstock Mining LLC
	Lode
	1.76
	Storey
	0
	None

	NMC983377
	Comstock Lode 124
	Comstock Mining LLC
	Lode
	20.66
	Storey
	0
	None

	NMC983379
	Comstock Lode 126
	Comstock Mining LLC
	Lode
	20.69
	Storey
	0
	None

	NMC983380
	Comstock Lode 127
	Comstock Mining LLC
	Lode
	14.49
	Storey
	0
	None

	NMC983381
	Comstock Lode 128
	Comstock Mining LLC
	Lode
	9.95
	Storey
	0
	None

	NMC983382
	Comstock Lode 129
	Comstock Mining LLC
	Lode
	2.42
	Storey
	0
	None

	NMC983383
	Comstock Lode 130
	Comstock Mining LLC
	Lode
	0.76
	Storey
	0
	None

	NMC983384
	Comstock Lode 131
	Comstock Mining LLC
	Lode
	1.65
	Storey
	0
	None

	NMC983385
	Comstock Lode 132
	Comstock Mining LLC
	Lode
	6.91
	Storey
	0
	None

	NMC983386
	Comstock Lode 133
	Comstock Mining LLC
	Lode
	15.84
	Storey
	0
	None

	NMC983387
	Comstock Lode 134
	Comstock Mining LLC
	Lode
	14.92
	Storey
	0
	None

	NMC983388
	Comstock Lode 135
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC983389
	Comstock Lode 136
	Comstock Mining LLC
	Lode
	18.57
	Storey
	0
	None

	NMC983390
	Comstock Lode 137
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC983391
	Comstock Lode 138
	Comstock Mining LLC
	Lode
	9.1
	Storey
	0
	None

	NMC983392
	Comstock Lode 139
	Comstock Mining LLC
	Lode
	20.67
	Storey
	0
	None

	NMC983393
	Comstock Lode 140
	Comstock Mining LLC
	Lode
	6.86
	Storey
	0
	None

Figure D1 "American Flat Properties
Exhibit D2 – "American Flat Plant and Equipment" 
(American Flat Net Lease Agreement)

Draft for discussion purposes.

	
				
	Asset Category
	Description 1
	Description 2
	Description 3

	 
	 
	 
	 

	Building
	 
	Office Buildings - 1200 A,D-F
	 

	Building
	1200 B
	3-wide modular
	 

	Building
	1200 B
	modular installation
	Priceless construction

	Building
	1200 B
	modular skirting
	Groves Manufactured Homes

	Building
	1200 C
	Shop Facility
	 

	Building
	 
	Waste Storage Building
	Added to back side of shop

	Building
	 
	Warehouse
	Upgrades to shop?

	Building
	 
	Salzwimmer Building Improvement
	 

	Building
	 
	Plant Lighting
	 

	Building
	 
	Security Gates and Signs
	process+office campus?

	Building
	 
	Heating system
	Merrill Crowe?

	Building
	 
	Water Well
	Blain, RL, Rain

	 
	 
	 
	 

	F&F
	 
	CCD Security Camera System
	plant+office

	F&F
	 
	Other
	 

	F&F
	 
	Satellite
	unclear

	F&F
	 
	Communication system
	 

	F&F
	 
	Monitor Pro - by EHS
	 

	 
	 
	 
	 

	Water
	Permit 76650
	 
	14.33 AF

	Water
	Permit 77679
	 
	6.00 AF

	Water
	Permit 82209
	Gash Well-Now WS-4
	4.00 AF

	Water
	Permit 82970
	Gash Replacement Well WS-4
	100.00 AF

	Water
	Storey County
	Storey County Water Agreement
	150.00 AF

	 
	 
	 
	 

	Processing
	Crush & Stack
	Crusher
	 

	Processing
	 
	Crushing System
	 

	Processing
	 
	Crusher capacity improvements
	 

	Processing
	 
	Crusher HP Suspended Electromagnet
	 

	Processing
	 
	Crusher Feeder
	 

	Processing
	 
	Apron Feeder
	Direct Force

	Processing
	 
	Conveyor/Stacker
	88

	Processing
	 
	Conveyer Belt
	Goodfellow

	Processing
	 
	Grid Power @ Crusher & Process
	 

	Processing
	 
	20 FT Control Van
	 

	Processing
	 
	2007 Goodfellow Stat Conveyor
	 

	Processing
	 
	40 FT Gear Control Van
	 

	Processing
	Leach Pads
	Leach Pad
	Coons and Mach 4

	Processing
	 
	heap capacity improvements
	 

	Processing
	 
	Cells 6&7
	 

	Processing
	 
	Cells 8A
	 

	Processing
	 
	Cells 9
	 

	Processing
	 
	Cell 10
	design only - engineering fees

	Processing
	 
	Cells 11/12
	design only - engineering fees

	Processing
	Ponds & Pumps
	Ponds
	Mach 4

	Processing
	 
	Fresh Water Pond
	 

	Processing
	 
	Event Pond
	 

	Processing
	 
	Pond Liner
	Comanco Environmental Corporation

	Processing
	 
	93,000 Gallon Water Tank-Process Site
	Water Well - Oct. 2012

	Processing
	 
	8,000 Gallon Water Tank on Ophir Grade
	Water Well

	Processing
	 
	Bird Disks
	Phoenix Plastics Inc

	Processing
	 
	Bird Disks
	Phoenix Plastics Inc

	Processing
	 
	Barren Pump
	 

	Processing
	 
	Barren Pump
	 

	Processing
	 
	Polecat Evaporator
	SMI Super Polecat 480V 25HP fan motor

	Processing
	 
	Polecat Evaporator
	SMI Super Polecat 480V 25HP fan motor

	Processing
	 
	Polecat Evaporator
	SMI Super Polecat 480V 25HP fan motor

	Processing
	 
	Polecat Evaporator
	SMI Super Polecat 480V 25HP fan motor

	Processing
	 
	Polecat Evaporator
	SMI Super Polecat 480V 25HP fan motor

	Processing
	 
	Polecat Evaporator
	SMI Super Polecat 480V 25HP fan motor

	Processing
	M-C
	Merrill Crowe
	 

	Processing
	 
	Merrill Crowe Building
	Expansion?

	Processing
	 
	Merrill Crowe Capacity Upgrade
	 

	Processing
	 
	Merrill Crowe Clarifiers
	 

	Processing
	 
	Merrill Crowe DO Tower
	 

	Processing
	 
	Clarifiers
	 

	Processing
	 
	Processing Equipment
	 

	Processing
	 
	Filter Leaves
	Scotia

	Processing
	Refinery
	Furnace
	Scotia

	 
	 
	 
	 

	Vehicle
	MT02
	Fuel and Lube Truck
	1998 KENWORTH T800

	Vehicle
	WT801
	1992 GMC Water Truck
	 

	Vehicle
	 
	Water Truck
	Western Star

	Vehicle
	 
	2001 John Deere 310G 4X4 Loader/Backhoe
	Richie Bros.

	Vehicle
	P14
	Ford F350 Service Pickup w/ Utility Bed and tools
	RocTech

	Vehicle
	 
	RT740B Grove crane
	Cashman

	Vehicle
	 
	Cat TH460B Telehandler
	 

	Vehicle
	 
	Forklift
	Hertz

	Vehicle
	 
	2 Magnum Light Towers
	Hertz

	Vehicle
	 
	10,000 gal self erecting water tower
	T.E. Bertagnolli

	Vehicle
	 
	Kline Water Tank
	 

	Vehicle
	P11
	2000 Ford F250 4WD
	Hertz

	Vehicle
	P13
	1998 Chevy 4 X 4
	 

	Vehicle
	P01
	2004 Ford F-150 Pick-up - Blue
	 

	Vehicle
	 
	29' Conex Trailer
	at pit?

	 
	 
	 
	 

	Other
	 
	HPDE Pipe Welder
	P&F Distributors 2

	Other
	 
	RAM 28 BUTT Fusion Machine
	HDPE Supply

	Other
	 
	Generator - 3516 Genset (Model 3516)
	Cashman 77

	Other
	 
	Metallurgical Lab
	 

	Other
	 
	Met Lab
	 

	Other
	 
	Lab Equipment
	 

	Other
	 
	Lab Equipment
	 

	Other
	 
	Lab Oven
	 

	Other
	 
	Self Contained Shower unit
	Quick Space 76

	Other
	 
	Security System
	plant, office, both?

	Other
	 
	Weather Station
	 

	Other
	 
	Mine Communications Upgrade
	 

	Other
	 
	Environmental Monitoring System
	TSI x

Exhibit D3 – “Estimated Costs”
(American Flat Net Lease Agreement)

The following estimated costs will be the responsibility of Lessee from the Effective Date of the Lease Option Agreement. The costs will be paid by Lessor, and will be invoiced to Lessee monthly.  These costs are estimates only, for planning purposes.  Lessee will pay the actual expenses incurred.

	
				
	 
	 
	Annual $
	Notes

	Property Tax
	 
	 
	 

	Real
	3,489
	 
	Storey

	Personal
	168,529
	 
	Storey

	Total Property Tax
	 
	172,017
	 

	Claim Fees
	 
	 
	 

	BLM
	5,890
	 
	 

	Storey Co
	496
	 
	 

	Lyon County
	100
	 
	 

	Total Claim Fees
	 
	6,486
	 

	Insurance
	 
	154,710
	LP Insurance, estimated at 80% of total annual costs.  Largest cost is environmental.

	Reclamation Bond
	 
	129,080
	Smith-Manus, estimated at 90% of total annual costs

	Utilities
	 
	95,187
	Propane, power, water

	Consulting
	 
	21,500
	Air Quality and Reclamation Bond work

	Other
	 
	102,153
	Maintenance and other

	Total Estimated Costs
	 
	681,134
	 

	 
	 
	 
	 

	Storey County Water Annual Minimum
	 
	57,545
	 

	Less Consulting
	 
	(21,500)
	 

	 
	 
	 
	 

	Net Re-Occurring
	 
	717,179
	 

	 
	 
	 
	 

	Payroll (Excludes third-party technical/consultive support and payroll taxes/benefits)

	Environmental & Safety Manager
	138,000
	 

	Maintenance
	 
	100,000
	 

	External Relations
	 
	110,000
	 

	Professional Staff Assistance
	 
	As-needed
	Invoiced at burdened payroll cost

	 
	 
	 
	 

	Total Estimated Costs
	 
	1,065,179
	 

	
	
	1Exhibit
10.24

 

EXCLUSIVE
LICENSE AGREEMENT

 

THIS
LICENSE AGREEMENT is made and entered into as of 31st day of July, 2019, (the “Effective Date”) by and
between PetVivo Holdings, Inc., a corporation of the State of Nevada, having its principal place of business at 5251 Edina Industrial
Blvd., Edina, MN 55439, (hereinafter referred to as “Licensor”), and Emerald Organic Products, Inc., a corporation
of the State of Nevada, having its principal place of business at 331 Dante Ct. St E, Holbrook, NY 11741, and its operating subsidiary,
Pura Vida Health, LLC (hereinafter collectively referred to as “Licensee”).

 

WITNESSETH:

 

WHEREAS,
Licensor owns and/or has the exclusive rights to Technology including Patents and Know-how related to protein-based active agent
delivery systems, processes and active agent carrier formulations and excipients for utilization in nutritional supplement applications.

 

WHEREAS,
Licensor intends to engage in the manufacture and distribution of products derived from the Technology, including protein-based
active agent delivery systems and formulations which the parties believe are beneficial for the delivery of hemp-based cannabinoids,
caffeine and citicoline.

 

WHEREAS,
the Technology owned and/or licensed by Licensor includes confidential information (including trade secrets and other know-how)
which is proprietary to Licensor and of which Licensor desires to continue to maintain the confidentiality of such information.

 

WHEREAS,
Licensee is engaged in the manufacture and sale of products for use in the nutritional supplements field, and wishes to acquire
an exclusive license of and to use Licensor’s Intellectual Property rights relating to hemp-based cannabinoid, caffeine
and citicoline delivery in nutritional supplement products for human consumption, including patents, pending patent applications,
and regulatory, manufacturing, marketing and advanced technology “know-how” relating to such products.

 

WHEREAS,
Licensor and Licensee are parties to a Mutual Confidential Disclosure Agreement dated November 18, 2018 (“Prior Disclosure
Agreement”);

 

AGREEMENTS:

 

NOW
THEREFORE, in consideration of the representations, warranties, covenants and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the parties mutually agree as follows:

 

    	1

    	 

    

 

ARTICLE
1 

DEFINITIONS

 

1.1
Specific Definitions. As used in this Agreement, the following definitions and terms shall have the designated meanings:

 

“Affiliate”
of a specified person (natural or juridical) means a person that directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, the person specified. “Control” shall mean ownership of more
than 50% of the shares of stock entitled to vote for the election of directors in the case of a corporation, and more than 50%
of the voting power in the case of a business entity other than a corporation.

 

“Agreement”
means this Agreement and all Exhibits and Schedules hereto.

 

“Confidential
Information” means know-how, trade secrets, and unpublished information disclosed (whether before or during the term
of this Agreement) by or on behalf of one of the parties (the “disclosing party”) to the other party (the “receiving
party”) or generated under this Agreement, excluding information which:

 

(a)
was already in the possession of the receiving party prior to its receipt from the disclosing party (provided that the receiving
party is able to provide the disclosing party with written proof thereof and, if received from a third party, that such information
was acquired without any party’s breach of a confidentiality or non-disclosure obligation to the disclosing party related
to such information);

 

(b)
is or becomes part of the public domain by reason of acts not attributable to the receiving party;

 

(c)
is or becomes available to the receiving party from a source other than the disclosing party which source has rightfully obtained
such information and has no obligation of non-disclosure or confidentiality to the disclosing party with respect thereto; or

 

(d)
has been independently developed by or for the receiving party without breach of this Agreement or use of any Confidential Information
of the other party.

 

“Cost
of Goods Sold” means the total amount of the cost of the materials used in creating a Sales Unit of Licensed Products along
with the direct labor costs used to produce a Sales Unit of Licensed Products.

 

“Expiration”
or “Expired” means, with respect to a particular patent, the patent’s expiration, abandonment, cancellation,
disclaimer, award to another party other than Licensor in an interference proceeding, or declaration of invalidity or unenforceability
by a court or other authority of competent jurisdiction (including final rejection in a re-examination or re-issue proceeding).
“Unexpired” shall mean a patent that has not Expired.

 

    	2

    	 

    

 

“Field”
means the use of an excipient formulation for the delivery of one or more hemp-based cannabinoids, caffeine and/or citicoline
as a nutritional supplement for human consumption, which excipient formulation is either (x) the PetVivo Delivery Formulation
as defined in Exhibit A that includes one or more hemp-based cannabinoids, caffeine and/or citicoline and is manufactured in single
dose Sales Units, or (y) a substance that includes one or more hemp- based cannabinoids, caffeine and/or citicoline in an excipient
formulation different from that identified in Exhibit A, but includes a formulation disclosed or suggested in the Intellectual
Property of Licensor as identified in Exhibit B, but not (z) a substance that requires a new PMA or other regulatory approval
submission.

 

“First
Commercial Sale” means the first commercial sale (excluding sales for use in test trials or other testing) of a Licensed
Product for which royalties are due under Section 4.1 in the United States.

 

“Intellectual
Property” means U.S. and foreign patents and patent applications, trademarks, service marks and registrations thereof
and applications therefor, copyrights and copyright registrations and applications, mask works and registrations thereof, know-how,
trade secrets, inventions, discoveries, ideas, technology, data, information, processes, drawings, designs, licenses, computer
programs and software, and technical information including but not limited to information embodied in material specifications,
processing instructions, equipment specifications, product specifications, confidential data, electronic files, research notebooks,
invention disclosures, research and development reports and the like related thereto, and all amendments, modifications, and improvements
to any of the foregoing.

 

“Invention”
means any invention, discovery, know-how, trade secret, data, information, technology, process or concept, whether or not patented
or patentable, and whether or not memorialized in writing.

 

“Know-How”
means all know-how, trade secrets, expertise, inventions, discoveries and technical information now or hereafter owned by or licensed
(with the right to sublicense) to Licensor which are necessary or useful for using or selling products for use in the Field, including
but not limited to information embodied in drawings, designs, copyrights, copyright registrations and applications, trademarks,
service marks and registrations thereof and applications therefor, patent applications, material specifications, processing instructions,
formulas, equipment specifications, product specifications, confidential data, computer software, electronic files, research notebooks,
invention disclosures, research and development reports and the like related thereto, and all amendments, modifications and improvements
to any of the foregoing.

 

“Licensed
Products” means drug delivery devices manufactured in separate single dosage Sales Units (e.g. wafers, lozenges, pills...)
that include one or more hemp-based cannabinoids (“CBD”), caffeine and/or citicoline and the PetVivo Delivery Formulation
or other acceptable delivery formulation agreed upon by the Parties and disclosed or suggested in the Intellectual Property and/or
Know-How of the Licensor, wherein said drug delivery devices are packaged in accordance with Licensee’s specifications,
as long as such specifications fall within the normal packaging standards, specifications and/or protocols of the Nutritional
Supplement industry.

 

    	3

    	 

    

 

“Patents”
means (a) the patents and patent applications, together with any patents that may issue based thereon, set forth on Exhibit B;
(b) any other patents or patent applications now or hereafter owned by or licensed (with the right to sublicense) to Licensor
that are necessary or useful for using or selling products for use in the Field; (c) all continuation, continuation-in-part, divisional,
re-issue, re-examination and substitution applications that may be filed by or for the benefit of Licensor based on the foregoing
referenced patents or patent application, together with any patents that may issue based thereon; and (d) all foreign applications
that may be filed by or for the benefit of Licensor based on the foregoing referenced U.S. patents and patent applications, together
with all patents which may issue based thereon.

 

“PetVivo
Delivery Formulation” means the product, delivery system and/or the formulation as identified in Exhibit A.

 

“Quarter”
means a calendar quarter.

 

“Royalty
Year” means the twelve-month period corresponding to four (4) sequential Quarters. The first Royalty Year shall begin
with the first day of the first Quarter that occurs after the First Commercial Sale by Licensee. Subsequent Royalty Years begin
with the first Quarter after the end of the first Royalty Year as defined herein.

 

“Sales
Unit” means a product that consists of a single dosage of one or more hemp-based cannabinoids, caffeine and/or citicoline
included in an industry acceptable carrier amount of PetVivo Delivery Formulation or other acceptable delivery formulation agreed
upon by the Parties and disclosed or suggested in the Intellectual Property and/or Know-How of the Licensor; each Sales Unit shall
be produced in single dosage configuration agreed upon by the Parties (e.g. wafer, lozenge, disc, pill, sheet, sprays...).

 

“Technology”
means the Know-How and the Patents, which shall include the corresponding intellectual property rights thereto.

 

“Territory”
means the entire United States, Canada and the European Union subject to the provisions of Section 4.2.

 

Notwithstanding
the above, if any Licensed Product is sold both separately and as an integral part of a combination product containing one or
more integral components in addition to that Licensed Product, gross sales of Licensed Product resulting from sales of that combination
product will be calculated by multiplying the gross sales for the combination product as calculated above by the fraction A/B
where A is the invoice price of the Licensed Product as sold separately and B is the invoice price of the combination product.

 

A
Licensed Product shall be considered sold when it is shipped or when it is invoiced, whichever is earlier. To assure Licensor
the full royalty payment contemplated in this Agreement, Licensee agrees that in the event any Licensed Product is sold to an
Affiliate for purposes of resale, Earned Royalties for that Licensed Product shall be computed upon the selling price at which
such Licensed Product would ordinarily be sold to a non-Affiliate, rather than on the selling price of Licensee to the Affiliate.

 

    	4

    	 

    

 

1.2
Other Terms. Other terms may be defined elsewhere in the text of this Agreement and shall have the meaning indicated throughout
this Agreement.

 

1.3
Definitional Provisions.

 

The
words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement,
shall refer to this Agreement as a whole and not to any particular provisions of this Agreement.

 

The
terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

 

References
to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of the Exhibits or Schedules
attached to or referenced in this Agreement, and references to an “Article” or a “Section” are, unless
otherwise specified, to one of the Articles or Sections of this Agreement.

 

The
term “person” includes any individual, partnership, joint venture, corporation, trust, unincorporated organization
or government or any department or agency thereof.

 

The
term “dollars” or “$” shall refer to the currency of the United States of America.

 

ARTICLE
2

LICENSE
TO LICENSEE

 

2.1
Grant of License.

 

(a)
Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee and its Affiliates an exclusive, sublicensable
(subject to Section 2.1(b)), license to the Technology , in the Territory, to: (a) manufacture, use, distribute, sell, offer to
sell and have sold Licensed Products in the Field; (b) practice methods of manufacture and use related to delivery of the active
agent, hemp-based cannabinoids, caffeine and/or citicoline, in a formulation covered by the Technology] and utilizing corresponding
Licensed Products in the Field; and (c) otherwise to commercialize and exploit Licensed Products in the Field.

 

(b)
The license granted to Licensee under Section 2.1(a) shall include the right to grant sublicenses with respect to the license
granted to Licensee directly from Licensor; each sublicense is conditioned upon the Licensee receiving written approval from the
Licensor prior to closing a sublicense with a third party sublicensee. In the event that Licensee grants a sublicense to the Technology,
all such sublicense agreements shall contain no terms which are contradictory to or exceed the scope of the terms contained in
this Agreement and each such sublicensee shall agree to be bound by the provisions of Sections 4.5 and 7.2 of this Agreement.
Licensee shall provide a summary of the material terms of any sublicense to Licensor.

 

    	5

    	 

    

 

2.2
Assistance. Licensor shall, upon Licensee’s reasonable request from time to time, provide to Licensee at no charge
writings, drawings and materials, if any, that document the Technology, including copies of any patents, patent applications and
documents representing embodiments of the Technology. In addition, Licensor will provide reasonable explanation and assistance
to Licensee to allow Licensee to understand the inventions covered by the Technology. For any further assistance beyond that stated
herein, Licensor will be reimbursed at an amount agreed upon in writing by the parties for Licensor’s assistance and/or
services.

 

ARTICLE
3

DEVELOPMENT

 

3.1
Development. Licensor shall work in cooperation with Licensee to complete the final design, development and manufacture
of the Sales Units utilized as the Licensed Products in the Field; this will include the sharing and/or providing of Know-How
and expertise in the preparation of such Licensed Products from internal personnel and/or consultants introduced to Licensee by
Licensor. Licensee shall enter into services/consulting agreements and compensate Licensor and/or third-party consultants introduced
by Licensor for all fees and expenses incurred in the sharing and/or providing of the Know-How and expertise identified herein.
Licensee shall be responsible for the manufacture and commercialization of Licensed Products in the Field, but will consider and,
if determined beneficial, implement recommendations provided by Licensor.

 

3.2
Regulatory Approval. Licensee shall be responsible for obtaining any regulatory approvals, if necessary, for Licensee’s
commercial sale of the Licensed Products in the Field, including any pre-clinical and clinical studies. All regulatory approvals
for the Licensed Products will be in Licensee’s name and owned jointly by Licensor and Licensee.

 

ARTICLE
4

ROYALTIES
AND REPORTS

 

4.1
Sales Unit Royalties. Subject to the terms of this Agreement, Licensee shall pay to Licensor a royalty equal to Twenty-five
Cents ($0.25) (“Royalty Rate”) of each Sales Unit of Licensed Products including the Technology sold by Licensee at
a sales price equaling four times the Cost of Goods Sold for a Licensed Product sold as the First Commercial Sale (“First
Sales Price”). For all Licensed Products sold by Licensee at a sales price greater than the First Sales Price, the Royalty
Rate will.increase from Twenty-five Cents ($0.25) to an amount proportionate with the increase in sales price that is greater
than the First Sales Price. For example, if Licensor sells Licensed Product at a sales price of Two Dollars and Fifty Cents ($2.50)
per Sales Unit and the First Sales Price was One Dollar and Twenty Five Cents ($1.25), the Royalty shall be Fifty Cents ($0.50),
to wit. No more than one (1) payment calculated in accordance with this Section 4.1 shall be paid on any single Sales Unit of
Licensed Product covered by the License. The Parties further agree that if exclusivity is removed for failure to meet the Minimum
Royalties terms and conditions of Section 4.2, the Royalty Rate shall be reduced to an amount of Fifteen Cents ($0.15) per Sales
Unit of Licensed Product sold by Licensee; the reduced Royalty Rate shall still remain subject to adjustments as identified within
this Section 4.1 and all other adjustments as identified in this Agreement.

 

    	6

    	 

    

 

4.2
Minimum Royalties and Exclusivity. The Parties agree that Licensee shall complete a First Commercial Sale of a Licensed
Product in each of the three identified Territories within eighteen (18) months of execution of this Agreement to retain the License
for that particular country and/or region of the Territory as identified herein. For each Royalty Year commencing with the Thirty
(30) month anniversary date following the First Commercial Sale, Licensee will pay Licensor a minimum royalty amount against royalties
per Royalty Year to maintain its exclusive rights (“Maintenance Amount”) based on quota/performance criteria agreed
to by Licensor and Licensor. The Maintenance Amount payable for any Royalty Year shall be agreed to by Licensor and Licensor before
commencement of such Royalty Year. If the parties are unable to reach agreement on the Maintenance Amount for a Royalty Year before
commencement of such Royalty Year, the parties will engage a mutually agreed upon third-party neutral to facilitate such agreement
until an agreement is reached

 

4.3
Payment Reductions. The provisions of Section 4.1 shall be subject to the provisions of this Agreement relating to reductions
in payments described in Section 8.5 relating to indemnification of Licensee for breach of representations and warranties of Licensor.

 

4.4
Reports and Payments. Within thirty (30) days after the end of each Quarter, Licensee shall provide Licensor with a written
report indicating the amount of Sales Units of Licensed Products for which royalties are due under Section 4.1 during such preceding
Quarter and the amount of the royalties due for such Quarter. Simultaneously with making such report, Licensee shall pay to Licensor
the amount of royalties then due (i.e. royalties shall be paid within thirty (30) days of the end of each Quarter).

 

4.5
Records. Licensee agrees to keep accurate written records sufficient in detail to enable the royalties payable under this
Agreement by Licensee to be determined and verified. Such records for a particular Quarter shall be retained by Licensee for a
period of not less than three (3) years after the end of such Quarter.

 

4.6
Audit of Records. Upon reasonable notice and during regular business hours, Licensee shall from time to time (but no more
frequently than once annually, unless Licensor discovers and notifies Licensee of an understatement of more than ten percent (10%)
in the amount of royalties due for any Quarter as reported pursuant to Section 4.4) make available the records referred to in
Section 4.5 for audit at Licensor’s expense by independent representatives selected by Licensor and reasonably acceptable to Licensee
to verify the accuracy of the reports provided to Licensor. Such representatives shall execute a suitable confidentiality agreement
reasonably acceptable to Licensee prior to conducting such audit. Such representatives may disclose to Licensor only their conclusions
regarding the accuracy and completeness of royalty payments and of records related thereto, and shall not disclose Licensee’s
confidential business information to Licensor without the prior written consent of Licensee unless there is an error in Licensee’s
accounting. In the event such audit uncovers an understatement of more than ten percent (10%) in the amount of royalties due for
any Quarter as reported pursuant to Section 4.4, Licensee shall be responsible for the cost of such audit. No claim may be asserted
by Licensor against Licensee for errors discovered in the audit unless Licensor provides Licensee with detailed written notice
and explanation of such understatement within six (6) months following completion of such examination or audit made pursuant to
this Section 4.6 and unless such claim is asserted by Licensor within two (2) years following completion of such examination or
audit made pursuant to this Section 4.6.

 

    	7

    	 

    

 

ARTICLE
5 

INTELLECTUAL
PROPERTY

 

5.1
Confidentiality. The parties agree to maintain and abide by the terms of the Prior Disclosure Agreement unless contrary
to the terms identified herein. In such instance of contrary terms, the terms of the present Agreement will govern and all other
remaining terms of the Prior Disclosure Agreement will remain enforceable. Additionally, the parties agree to maintain the confidentiality
of all non-public information regarding the Technology, including but not limited to the status of any patent applications included
in Exhibit B. Each party agrees not to disclose or use (except as permitted or required for performance by the party receiving
such Confidential Information of its rights or duties hereunder) any Confidential Information of the other party obtained during
the term of this Agreement. Each party further agrees to take appropriate measures to prevent any such prohibited disclosure by
its present and future employees, officers, agents, subsidiaries, or consultants.

 

5.2
Protection of Technology.

 

(a)
During the term of this Agreement, Licensor shall promptly inform Licensee and Licensee will inform Licensor of any Invention,
improvement, upgrading or modification relating to the Technology to which Licensor has rights.

 

(b)
Licensor agrees to protect the Technology licensed by it by ensuring that appropriate patent rights are obtained and maintained
as recommended by reputable patent counsel which counsel has been approved by Licensee and Licensor. Licensee shall have the right
to review and approve any filings or other correspondence relating to the Patents with the appropriate patenting authority. If
Licensee determines, in its sole discretion, that any Invention conceived, reduced to practice or otherwise made, developed or
acquired by one or more employees or agents of Licensor and having application to the Field is not being adequately protected
by Patents, Licensee may so inform Licensor. If Licensee decides that Licensor’s response has been inadequate, Licensee may take
whatever action it deems necessary at its expense to protect such Invention, provided, however, that Licensee agrees that it shall
provide Licensor with notice of any action having a material impact on Licensor’s rights to the Patents outside of the Field
prior to taking any proposed action, and, if Licensor determines in good faith that such proposed action would materially impair
Licensor’s rights to the Patents outside the Field then Licensor shall provide Licensee with written notice of such determination
and relevant personnel from each party shall meet to discuss Licensor’s concerns. To a commercially reasonable degree, Licensee’s
actions shall take into consideration Licensor’s reasonable concerns. Each party shall execute and deliver such forms of
assignment, power of attorney and other documents which are necessary to give effect to the provisions hereof, and shall provide
its best efforts to make available the appropriate personnel, including any inventors, who are necessary to give effect to the
provisions hereof. Furthermore, Licensor shall not abandon a claim of a pending patent application nor fail to pay any maintenance
fees for a patent without first giving Licensee sufficient notice so that Licensee, may, if it desires, continue the prosecution
of such claim or pay such maintenance fee.

 

    	8

    	 

    

 

5.3
Ownership of Intellectual Property. Subject to the rights and licenses granted to Licensee by this Agreement, (a) any Intellectual
Property that includes the Technology and is conceived, reduced to practice or otherwise made, developed or acquired by one or
more employees or agents of Licensor and/or Licensee shall be the property of Licensor.

 

5.4
Prosecution of Infringement of Technology.

 

(a)
Each of Licensor and Licensee shall promptly notify the other if it knows or has reason to believe that rights to the Technology
are being infringed or misappropriated by a third party within the Field of Use or that such infringement or misappropriation
is threatened. Licensor shall, after learning of and investigating such alleged infringement or misappropriation, send notice
to Licensee electing to do one of the following: (i) prosecute such alleged infringement or misappropriation for Licensor’s
own account; (ii) offer Licensee the choice of participating in or engaging in such prosecution on behalf of Licensor, or (iii)
decline to prosecute such alleged infringement or misappropriation.

 

(b)
In the event Licensor elects to prosecute such alleged infringement or misappropriation for its own account pursuant to 5.4(a)(i)
above, Licensor shall be solely responsible for payment of all of its own costs of prosecution and of negotiating settlement,
and shall retain all proceeds from such prosecution. Licensor shall have the right to join Licensee as a party plaintiff to any
such proceeding if Licensor believes it is necessary to successfully prosecute such infringement or misappropriation. Licensee
shall cooperate in connection with the initiation and prosecution of such suit initiated by Licensor. Licensor shall retain all
proceeds from such prosecution after reimbursement of Licensor’s and Licensee’s costs and expenses out of the proceeds
of such matter.

 

(c)
In the event Licensor offers Licensee the choice of participating in such prosecution pursuant to 5.4(a)(ii) above, upon receipt
of Licensor’s notice, Licensee shall have thirty (30) days in which to notify Licensor in writing of Licensee’s election
to participate in the prosecution of such alleged infringement or misappropriation. If Licensee elects to participate, Licensee
shall be obligated to pay fifty percent (50%) of the costs and expenses incurred by Licensor and Licensee in connection with such
prosecution and shall be entitled to receive fifty percent (50%) of the net proceeds realized from Licensor’s and Licensee’s
prosecuting of such matter and remaining after reimbursement of Licensor’s and Licensee’s costs and expenses out of
the proceeds of such matter.

 

(d)
In the event Licensor elects not to prosecute pursuant to 5.4(iii) above, Licensee shall be entitled to prosecute such alleged
infringement or misappropriation for its own account, in which event Licensee shall be solely responsible for all costs of prosecution
and of negotiating settlement and shall retain all proceeds from such prosecution. Licensee shall have the right to join Licensor
as a party plaintiff to any such proceeding if Licensee believes it is necessary to successfully prosecute such infringement or
misappropriation. Licensor shall cooperate in connection with the initiation and prosecution by Licensee of such suit and Licensee
will reimburse Licensor for all costs and expenses incurred for their assistance in such matter.

 

    	9

    	 

    

 

ARTICLE
6 

RIGHT
OF FIRST OFFER

 

6.1
New Nutritional Supplement Product. A “New Nutritional Supplement Product” shall mean any substance and/or
formulation for delivery of an active agent as a nutritional supplement for human consumption that is not within the scope of
the Field. Licensor agrees that it will provide Licensee with detailed written notice of any New Nutritional Supplement Product
that the Licensor desires to pursue commercialization.

 

6.2
Right of First Offer. Prior to offering for sale or license any New Nutritional Supplement Product, Licensee shall have
the right of first offer regarding sale or licensing of the New Nutritional Supplement Product. Licensor will negotiate in good
faith with Licensee for a period of not less than 30 days for Licensee to acquire an exclusive license to rights in the New Nutritional
Supplement Product. This 30 day period shall begin on the day Licensee receives written notice and documentation of the New Nutritional
Supplement Product. During such 30 day period, Licensee shall be entitled to conduct due diligence with the reasonable cooperation
of Licensor. If Licensor and Licensee do not enter into an agreement with respect to such New Nutritional Supplement Product during
such 30 day period, Licensor shall be free to enter into an agreement with respect to the New Nutritional Supplement Product with
a third party and subsequently consummate such an agreement and/or commercialize the New Nutritional Supplement Product.

 

ARTICLE
7 

REPRESENTATIONS
AND WARRANTIES

 

7.1
Representations of Licensor. Licensor represents, warrants and covenants to Licensee that:

 

(a)
Licensor is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada and has
full corporate power to conduct the business in which it is presently engaged and to enter into and perform its obligations under
this Agreement.

 

(b)
Licensor has taken all necessary corporate action under the laws of the state of its incorporation and its certificate of incorporation
and by-laws to authorize the execution and consummation of this Agreement and, when executed and delivered by Licensor, this Agreement
shall constitute the valid and legally binding agreement of Licensor enforceable against Licensor in accordance with the terms
hereof, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

 

(c)
Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein will violate
any provision of the certificate of incorporation or bylaws of Licensor or any law, rule, regulation, writ, judgment, injunction,
decree, determination, award or other order of any court or governmental agency or instrumentality, domestic or foreign, or conflict
with or result in any breach of any of the terms of or constitute a default under or result in termination of or the creation
or imposition of any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature pursuant
to the terms of any contract or agreement to which Licensor is a party or by which Licensor or any of its assets is bound.

 

    	10

    	 

    

 

(d)
Licensor exclusively owns, or has valid and subsisting exclusive license rights (with the right to sublicense) to, all of the
Technology and Licensed Products, subject to no lien, charge, security interest, mortgage, pledge, restriction, adverse claim
or any other encumbrance whatsoever (and without any obligation to any person or entity for royalties, fees or commissions). Exhibits
A and B set forth a true, correct and complete list of the Technology and the Licensed Products in existence as of the Effective
Date,. No current or former stockholder, employee or consultant of Licensor has any rights in or to any of the Technology. To
the best of Licensor’s knowledge, the Technology is valid and enforceable. The Technology has not been challenged in any
judicial or administrative proceeding. As of the Effective Date, Licensor has the rights and authority to enter into this Agreement
and to grant the license granted herein. To the best of Licensor’s knowledge, no person or entity nor such person’s or entity’s
business or products has infringed, misused, misappropriated or conflicted with the Technology or currently is infringing, misusing,
misappropriating or conflicting with such Technology. To the best of Licensor’s knowledge, the manufacture, use, sale and
importation of the PetVivo Delivery Formulation do not and will not infringe the Intellectual Property of any third party.

 

(e)
There are no actions, suits, claims, disputes or proceedings or governmental investigations pending or, to Licensor’s knowledge,
threatened against Licensor or any of its Affiliates with respect to the Technology or the Licensed Products or the use thereof
by Licensor, either at law or in equity, before any court or administrative agency or before any governmental department, commission,
board, bureau, agency or instrumentality, or before any arbitration board or panel whether located in the United States or a foreign
country. Licensor has not failed to comply with any law, rule, regulation, writ, judgment, injunction, decree, determination,
award or other order of any court or other governmental agency or instrumentality, domestic or foreign, which failure in any case
would in any material respect impair any rights of Licensee under this Agreement.

 

(f)
All Technology identified in Exhibit B has the status indicated therein and all applications are still pending in good standing
and have not been abandoned. Exhibit B includes all of the current patent applications having applicability to the Licensed Products
and the use of the Technology in the Field, and to which Licensor owns or has received a license (with a right to sublicense).

 

(g)
All PetVivo Delivery Formulations will comply with the specifications set forth in Exhibit A.

 

7.2
Representations of Licensee. Licensee represents, warrants and covenants to Licensor that:

 

(a)
Licensee is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada and has
full corporate power to conduct the business in which it is presently engaged and to enter into and perform its obligations under
this Agreement.

 

    	11

    	 

    

 

(b)
Licensee has taken all necessary corporate action under the laws of the state of its incorporation and its articles of incorporation
and bylaws to authorize the execution and consummation of this Agreement and, when executed and delivered by Licensee, this Agreement
shall constitute the valid and legally binding agreement of Licensee enforceable against Licensee in accordance with the terms
hereof, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

 

(c)
Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein will violate
any provision of the articles and bylaws of Licensee or any law, rule, regulation, writ, judgment, injunction, decree, determination,
award or other order of any court or governmental agency or instrumentality, domestic or foreign, or conflict with or result in
any breach of any of the terms of or constitute a default under or result in termination of or the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature pursuant to the terms of
any contract or agreement to which Licensee is a party or by which Licensee or any of its assets is bound.

 

ARTICLE
8 

INDEMNIFICATION/LIMITATION
OF LIABILITY

 

8.1
Indemnification by Licensor. Licensor shall indemnify, defend and hold harmless Licensee and each of its subsidiaries,
officers, directors, shareholder, employees, agents and affiliates (collectively, all such indemnitees are referred to in this
Section as “Licensee”) against and in respect of any and all third party claims, demands, losses, obligations, liabilities,
damages, deficiencies, actions, settlements, judgments, costs and expenses which Licensee may incur or suffer or with which it
may be faced (including reasonable costs and legal fees incident thereto or in seeking indemnification therefor), (referred to
as “Costs”) arising out of or based upon: (i) the breach by Licensor of any of its representations, warranties, covenants
or agreements contained or incorporated in this Agreement or any agreement, certificate or document executed and delivered to
Licensee by Licensor in connection with the transactions hereunder; (ii) personal injury, harm or death caused by the PetVivo
Delivery Formulation arising from or related to the negligence or failure on the part of Licensor; or (iii) any allegation that
the PetVivo Delivery Formulation, or its use as provided hereunder, infringes or misappropriates any intellectual property rights
of any third party. An amount for which Licensee is entitled to indemnification pursuant hereto is referred to as an “Indemnified
Amount.”

 

8.2
Indemnification by Licensee. Licensee shall indemnify, defend and hold harmless Licensor and each of its subsidiaries,
officers, directors, shareholder, employees, agents and affiliates (collectively, all such indemnitees are referred to in this
Section as “Licensor”) against and in respect of any and all third party claims, demands, losses, obligations, liabilities,
damages, deficiencies, actions, settlements, judgments, costs and expenses which Licensor may incur or suffer or with which it
may be faced (including reasonable costs and legal fees incident thereto or in seeking indemnification therefor), (referred to
as “Costs”) arising out of or based upon: (i) the breach by Licensee of any of its representations, warranties, covenants
or agreements contained or incorporated in this Agreement or any agreement, certificate or document executed and delivered to
Licensor by Licensee in connection with the transactions hereunder or (ii) personal injury, harm or death caused by the manufacture
and commercialization of Licensed Products by Licensee arising from or related to the negligence or failure on the part of Licensee.
An amount for which Licensor is entitled to indemnification pursuant hereto is referred to as an “Indemnified Amount.”

 

    	12

    	 

    

 

8.3
Third Party Claims. If a claim by a third party is made against any indemnified party, and if the indemnified party intends
to seek indemnity with respect thereto under this Article 8, such indemnified party shall promptly notify the indemnifying party
of such claim; provided, however, that failure to give timely notice shall not affect the rights of the indemnified party so long
as the failure to give timely notice does not adversely affect the indemnifying party’s ability to defend such claim against a
third party. The indemnifying party shall be entitled to settle or assume the defense of such claim, including the employment
of counsel reasonably satisfactory to the indemnified party. If the indemnifying party elects to settle or defend such claim,
the indemnifying party shall notify the indemnified party within ten (10) days of the indemnifying party’s intent to do so. If
the indemnifying party elects not to settle or defend such claim or fails to notify the indemnified party of the election within
thirty (30) days (or such shorter period provided above) after receipt of the indemnified party’s notice of a claim of indemnity
hereunder, the indemnified party shall have the right to contest, settle or compromise the claim without prejudice to any rights
to indemnification hereunder. Regardless of which party is controlling the settlement of defense of any claim, (a) both the indemnified
party and indemnifying party shall act in good faith, (b) the indemnifying party shall not thereby permit to exist any lien, encumbrance
or other adverse charge upon any asset of any indemnified party or of its subsidiaries, (c) the indemnifying party shall permit
the indemnified party to participate in such settlement or defense through counsel chosen by the indemnified party, with all fees,
costs and expenses of such counsel borne by the indemnified party, (d) no entry of judgment or settlement of a claim may be agreed
to without the written consent of the indemnified party, provided that such consent shall not be unreasonably withheld or delayed,
and (e) the indemnifying party shall promptly reimburse the indemnified party for the full amount of such claim and the related
expenses as incurred by the indemnified party pursuant to this Article 8. So long as the indemnifying party is reasonably contesting
any such third party claim in good faith and the foregoing clause (b) is being complied with, the indemnified party shall not
pay or settle any such claim. The controlling party shall upon request deliver, or cause to be delivered, to the other party copies
of all correspondence, pleadings, motions, briefs, appeals or other written statements relating to or submitted in connection
with the settlement or defense of any such claim, and timely notices of any hearing or other court proceeding relating to such
claim.

 

8.4
Limitation of Liability. In no event shall either party be directly liable to the other party for special, indirect, incidental,
consequential or punitive damages of any kind or nature whatsoever, whether arising under contract, warranty, or tort (including
negligence or strict liability) or any other theory of liability either party may have against the other party. Notwithstanding
the previous sentence, the parties agree that Costs shall not be considered to be special, indirect, incidental, consequential
or punitive damages.

 

8.5
Set-Off. In the event Licensee is entitled to indemnification under this Article 8, Licensee shall be entitled in its discretion,
without limitation of any other rights or remedies of Licensee, to set-off against any amounts which are then owed or thereafter
become owed by Licensee to Licensor: (i) one hundred percent (100%) of any finally determined Indemnified Amount; (ii) fifty percent
(50%) of any Indemnified Amount that is not finally determined, provided, however, that Licensee may set-off one hundred percent
(100%) of such Indemnified Amount when such Indemnified Amount becomes finally determined. If Licensee defers payment of any amount
to Licensor past the scheduled payment date because there exists a pending indemnification claim by Licensee pursuant to this
Article the amount of which has not then been finally determined, the excess, if any, of such deferred amount over the finally
determined amount of the indemnification claim shall be promptly paid upon such final determination, together with simple interest
at the rate of eight percent (8%) per annum on such excess accrued from the originally scheduled payment date for such deferred
amount.

 

    	13

    	 

    

 

ARTICLE
9

TERM
AND TERMINATION

 

9.1
Term of License. Unless otherwise terminated under provisions of Section 9.2, this Agreement and the license (and/or sublicense
as the case may be) granted under Section 2.1 shall continue until such time as all Patents have Expired or a period of fifteen
(15) years following the first bona fide commercial sale of such Licensed Product has expired, whichever is longer, at which time
the exclusive license (or sublicense as the case may be) rights of Licensee set forth in Section 2.1 shall be deemed to be a fully
paid, exclusive, irrevocable, sublicensable, royalty-free license to use the Know-How in connection with the development, manufacture,
sale, marketing and other exploitation of Licensed Products in the Territory.

 

9.2
Termination. Either party may terminate this Agreement, at its option and without prejudice to any of its other legal and
equitable rights and remedies, in the event that the other party is in material breach of this Agreement, by giving the other
party ninety (90) days notice in writing, particularly specifying the breach. Such notice of termination shall not be effective
if the breaching party cures the specified breach within such ninety (90) day period. Further, this Agreement will terminate automatically
if a party has not notified the other party that it has received its board’s approval of this Agreement within thirty (30)
business days after the Effective Date.

 

9.3
Effect of Termination. Upon termination of this Agreement for any reason:

 

(a)
all sublicenses granted by Licensee under this Agreement shall immediately cease;

 

(b)
Licensee shall have the right, pursuant to the terms of this Agreement, to sell any Licensed Product that Licensee has remaining
in inventory prior to the termination of this Agreement;

 

(c)
all monies due and owed by Licensee as of the termination date shall be paid by Licensee in accordance with this Agreement;

 

(d)
each party shall promptly return the other party’s Confidential Information and all copies thereof; and

 

(e)
in the event of termination by Licensor or Licensee pursuant to Section 9.2, the license granted to Licensee in Section 2.1 of
this Agreement shall terminate.

 

    	14

    	 

    

 

ARTICLE
10 

FORCE
MAJEURE

 

10.1
Force Majeure. Neither party shall be in default because of any failure to perform such party’s obligations under this
Agreement if such failure arises from causes beyond the control of such party (“the first party”) and without the
fault or negligence of such first party, including without limitation, Acts of God or of the public enemy, acts of the Government
in either its sovereign or contractual capacity, fires, floods, earthquakes, epidemics, quarantine restrictions, strikes, or freight
embargoes. In each instance, the failure to perform must be beyond the reasonable control and without the fault or negligence
of the first party.

 

10.2
Notice. If it appears that performance of obligations may be delayed by an event of Force Majeure, the first party will
immediately notify the other party as soon as practicable in writing at the address specified in this Agreement. During the period
that the performance by one of the parties of its obligations has been suspended by reason of an event of Force Majeure, the other
party may likewise suspend the performance of all or part of its obligations hereunder to the extent that such suspension is commercially
reasonable.

 

ARTICLE
11 

MISCELLANEOUS

 

11.1
Assignment. Neither party shall have the right to assign or otherwise transfer its rights and obligations under this Agreement
(whether by merger, share exchange, combination or consolidation of any type, operation of Law, purchase or otherwise) except
with the prior written consent of the other party, provided that: (i) Licensor or Licensee may assign its rights pursuant to this
Agreement to an Affiliate; and (ii) Licensor or Licensee or any Affiliate of Licensor or Licensee may assign its rights pursuant
to this Agreement to any entity who, by merger, share exchange, combination or consolidation of any type, purchase, operation
of law, asset purchase or otherwise, acquires substantially all of the business of Licensor or Licensee or such Affiliate, to
which this Agreement relates. Any prohibited assignment shall be null and void and, notwithstanding Section 8.2, the non-assigning
party may immediately terminate this Agreement.

 

11.2
Complete Agreement. This Agreement and the Exhibits and Schedules hereto constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior agreements whether written or oral relating hereto.

 

11.3
Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada,
including all matters of construction, validity, performance and enforcement, without giving effect to principles of conflict
of laws.

 

11.4
Waiver, Discharge, Amendment, Etc. The failure of any party hereto to enforce at any time any of the provisions of this
Agreement shall not, absent an express written waiver signed by the party making such waiver specifying the provision being waived,
be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part thereof
or the right of the party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall
be held to be a waiver of any other or subsequent breach. Any amendment to this Agreement shall be in writing and signed by the
parties hereto.

 

    	15

    	 

    

 

11.5
Notices. All notices or other communications to a party required or permitted hereunder shall be in writing and shall be
delivered personally or by facsimile (receipt confirmed electronically) to such party (or, in the case of an entity, to an executive
officer of such party) or shall be sent by a reputable express delivery service or by certified mail, postage prepaid with return
receipt requested, addressed as follows:

 

if
to Licensee, to:

 

Emerald
Organic Products, Inc.

Attn: Ian Parker

331
Dante Ct. St E

Holbrook, NY 11741

 

if
to Licensor, to:

 

PetVivo
Holdings, Inc

Attn: John Lai

5251
Edina Industrial Blvd.

Edina, MN 55439

 

Any
party may change the above-specified recipient and/or mailing address by notice to all other parties given in the manner herein
prescribed. All notices shall be deemed given on the day when actually delivered as provided above (if delivered personally or
by facsimile) or on the day shown on the return receipt (if delivered by mail or delivery service).

 

11.6
Expenses. Except as expressly provided herein, Licensor and Licensee shall each pay their own expenses incident to this
Agreement and the preparation for, and consummation of, the transactions provided for herein.

 

11.7
Titles and headings; Construction. The titles and headings to Sections and Articles herein are inserted for the convenience
of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. This Agreement
shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this
Agreement to be drafted.

 

11.8
Severability. If any provision of this Agreement is held invalid, illegal or unenforceable, such provision shall be enforced
to the maximum extent permissible and the remaining provisions shall nonetheless be enforceable according to their terms.

 

11.9
Relationship. This Agreement does not make either party the employee, agent or legal representative of the other for any
purpose whatsoever. Neither party is granted any right or authority to assume or to create any obligation or responsibility, express
or implied, on behalf of or in the name of the other party. In fulfilling its obligations pursuant to this Agreement, each party
shall be acting as an independent contractor.

 

    	16

    	 

    

 

11.10
Benefit. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties to
this Agreement or their respective successors or permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.

 

11.11
Survival. All of the representations, warranties, and covenants made in this Agreement, and all terms and provisions hereof
intended to be observed and performed by the parties after the termination hereof, shall survive such termination and continue
thereafter in full force and effect, including but not limited to indemnification, payment obligations, audit right, limitation
of liability and record retention, subject to applicable statutes of limitations.

 

11.12
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed as original and
all of which together shall constitute one instrument.

 

11.13
Execution of Further Documents. Each party agrees to execute and deliver without further consideration any further applications,
licenses, assignments or other documents, and to perform such other lawful acts as the other party may reasonably request to fully
secure and/or evidence the rights or interests herein.

 

11.14
Public Announcement. In the event any party proposes to issue any press release or public announcement concerning any provisions
of this Agreement or the transactions contemplated hereby, such party shall so advise the other parties hereto, and the parties
shall thereafter use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued. Neither
party will publicly disclose or divulge any provisions of this Agreement or the transactions contemplated hereby without the other
party’s written consent, except as may be required by applicable law or stock exchange regulation or government regulation,
and except for communications to such party’s employees or customers or investors or prospective investors (subject to appropriate
confidentiality obligations); provided that, prior to disclosure of any provision of this Agreement that either party considers
particularly sensitive or confidential to any governmental agency or stock exchange, the parties shall cooperate to seek confidential
treatment or other applicable limitations on the public availability of such information.

 

11.15
Alternative Dispute Resolution. Any dispute arising out of or relating to this Agreement (including the formation, interpretation
or alleged breach thereof) shall be settled by final and binding alternative dispute resolution conducted under the auspices of,
and in accordance with, the provisions set forth in Exhibit C. The results of such arbitration proceedings shall be binding upon
the parties hereto, and judgment may be entered upon the arbitration award in any court having jurisdiction thereof. Notwithstanding
the foregoing, either party may seek interim injunctive relief from any court of competent jurisdiction.

 

[Signature
Page to Follow]

 

    	17

    	 

    

 

IN
WITNESS WHEREOF, each of the parties has caused this License Agreement to be executed in the manner appropriate to each.

 

	 	PETVIVO
    HOLDINGS, INC.
	 	 
	 	 
	 	John
    Lai
	 	President
	 	 
	 	EMERALD
    ORGANIC PRODUCTS, INC.
	 	 
	 	 
	 	Ian
    Parker
	 	President

 

    	18

    	 

    

 

EXHIBIT
A

 

Licensed
Products Specification

 

    	19

    	 

    

 

EXHIBIT
B

 

Patents

 

1.
US Patent No. 8,529,939

2.
CA Patent No. 2,548,822

3.
EP Patent No. 1691746

 

    	20

    	 

    

 

EXHIBIT
C

 

Alternative
Dispute Resolution

 

The
parties recognize that bona fide disputes as to certain matters may arise from time to time during the term of this
Agreement which relate to either party’s rights and/or obligations. To have such a dispute resolved by this Alternative
Dispute Resolution (“ADR”) provision, a party first must send written notice of the dispute to the other party
for attempted resolution by good faith negotiations between their respective presidents (or their designees) of the affected
subsidiaries, divisions, or business units within twenty-eight (28) days after such notice is received (all references to
“days” in this ADR provision are to calendar days).

 

If
the matter has not been resolved within twenty-eight (28) days of the notice of dispute, or if the parties fail to meet within
such twenty-eight (28) days, either party may initiate an ADR proceeding as provided herein. The parties shall have the right
to be represented by counsel in such a proceeding.

 

	1.
    	To
    begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within
    fourteen (14) days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR,
    add additional issues to be resolved within the same ADR.
	 	 
	2.
    	Within
    twenty-one (21) days following receipt of the original ADR notice, the parties shall select a mutually acceptable neutral
    to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable
    neutral within such period, either party may request the President of the CPR Institute for Dispute Resolution (“CPR”),
    366 Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to the following procedures:

 

(a)
The CPR shall submit to the parties a list of not less than ten (10) candidates within fourteen (14) days after receipt of the
request, along with a Curriculum Vitae for each candidate. No candidate shall be an employee, director, or shareholder
of either party or any of their subsidiaries or affiliates. To the extent possible, CPR shall include former judges of one of
the U.S. District Courts or one of the U.S. Court of Appeals in the list.

 

(b)
Such list shall include a statement of disclosure by each candidate of any circumstances likely to affect his or her impartiality.

 

(c)
Each party shall have the right to eliminate from the list up to three (3) candidates, with or without any reason. Each party
shall number the other candidates (the “Remaining Candidates”) in order of preference (with the number one (1) signifying
the greatest preference) and shall deliver the list to the CPR within seven (7) days following receipt of the list of candidates.
If a party believes a conflict of interest exists regarding any of the Remaining Candidates, that party shall provide a written
explanation of the conflict to the CPR along with its list showing its order of preference for the remaining candidates. Any party
failing to return a list of preferences on time shall be deemed to have no order of preference.

 

    	21

    	 

    

 

(d)
If the parties collectively have identified fewer than three (3) of the Remaining Candidates deemed to have conflicts, the CPR
immediately shall designate as the neutral the Remaining Candidate for whom the parties collectively have indicated the greatest
preference. If a tie should result between two Remaining Candidates, the CPR may designate either candidate. If the parties collectively
have identified three (3) or more Remaining Candidates deemed to have conflicts, the CPR shall review the explanations regarding
conflicts and, in its sole discretion, may either (i) immediately designate as the neutral the Remaining Candidate for whom the
parties collectively have indicated the greatest preference, or (ii) issue a new list of not less than ten (10) candidates, in
which case the procedures set forth in subparagraphs 2(a) - 2(d) shall be repeated.

 

	3.
    	No
    earlier than twenty-eight (28) days or later than one hundred and twelve (112) days after selection, the neutral shall hold
    a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place in Minneapolis, Minnesota.
	 	 
	4.
    	The
    parties shall have the right to conduct and enforce limited pre-hearing document discovery under the control of and enforceable
    by the neutral. The neutral shall permit and facilitate such other limited discovery as the neutral shall determine is appropriate
    under the circumstances, provided there shall be no prehearing depositions. The neutral shall decide discovery disputes. The
    neutral is empowered:

 

(a)
to issue subpoenas to compel pre-hearing document discovery;

 

(b)
to enforce the discovery rights and obligations of the parties; and

 

(c)
to otherwise control the scheduling and conduct of the proceedings.

 

Notwithstanding
any contrary foregoing provisions, the neutral shall have the power and authority to, and to the fullest extent practicable shall,
abbreviate arbitration discovery in a manner that is fair to all parties in order to expedite the arbitration proceeding.

 

	5.
    	Within
    45 days after filing of notice of demand for binding arbitration, the neutral shall hold a pre-hearing conference to establish
    schedules for completion of discovery, for exchange of exhibit and witness lists, for arbitration briefs, for the hearing,
    and to decide procedural matters and all other questions that may be presented.
	 	 
	6.
    	The
    hearing shall be limited to no more than five (5) days and be governed by the following rules:

 

(a)
Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents
or other evidence, to cross-examine witnesses, and to make a closing argument. Cross-examination of witnesses shall occur immediately
after their direct testimony, and cross-examination time shall be charged against the party conducting the cross-examination.

 

    	22

    	 

    

 

(b)
The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues
it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement,
also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents,
other evidence, and closing arguments shall proceed in the same sequence.

 

(c)
Except when testifying, witnesses shall be excluded from the hearing until closing arguments.

 

(d)
Settlement negotiations, including any statements made therein, shall not be admissible under any circumstances.

 

(e)
The neutral shall establish all other procedural rules for the conduct of the arbitration, including the admissibility of any
evidence, in accordance with the rules of arbitration of the CPR.

 

	7.
    	Within
    seven (7) days following completion of the hearing, each party may submit to the other party and the neutral a post-hearing
    brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence.
	 	 
	8.
    	The
    neutral shall render a final decision within twenty eight (28) days following completion of the hearing. The neutral shall
    not issue any written opinion or otherwise explain the basis of the ruling.
	 	 
	9.
    	The
    neutral shall be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses
    of the prevailing party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any
    expenses for a hearing room, shall be paid as follows:

 

(a)
If the neutral rules in favor of one party on all disputed issues in the ADR, the losing party shall pay 100% of such fees and
expenses.

 

(b)
If the neutral rules in favor of one party on some issues and the other party on other issues, the neutral shall issue with the
rulings a written determination as to how such fees and expenses shall be allocated between the parties. The neutral shall allocate
fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR, with the party prevailing on more issues,
or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses.

 

	10.
    	Except
    as required by law, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including
    exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral
    shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information.
	 	 
	11.
    	In
    no event may a notice of demand of any kind be filed more than two years after the date the claim, dispute, controversy, or
    other matter in question was asserted by one party against another, and if such demand is not timely filed, the claim, dispute,
    controversy, or other matter in question referenced in the demand shall be deemed released, waived, barred, and unenforceable
    for all time, and barred as if by statute of limitations.
	 	 
	12.
    	The
    neutral may not award punitive damages. The parties hereby waive the right to punitive damages.
	 	 
	13.
    	The
    hearings shall be conducted in the English language.

 

    	23

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