Document:

Exhibit 10.3

 

*** OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED UNDER
17 C.F.R. SECTION 240.24b-2

 

AMENDMENT NO. 4 TO

RESEARCH AND DEVELOPMENT AGREEMENT

 

This Amendment No. 4 to Research and Development Agreement,
dated November 5, 2013 (this “Amendment”), is entered into by and between INTERCEPT PHARMACEUTICALS, INC., a
corporation organized and existing under the laws of Delaware, with its registered office at 18 Desbrosses Street, New York, NY
10013, USA (“INTERCEPT”) on the one hand and TES Pharma Srl, a corporation organized and existing under the
laws of Italy, with its registered office at Via Settevalli 556, 06129, Perugia, Italy (“TES”) on the other
hand.

 

RECITALS

 

WHEREAS, INTERCEPT and TES have
entered into a Research and Development Agreement, effective as of August 1, 2011 (the “Original Agreement”), as amended
by Amendment No. 1 to Research and Development Agreement, dated as of July 27, 2012 (the “First Amendment”), Amendment
No. 2 to Research and Development Agreement, dated as of February 15, 2013 (the “Second Amendment”), and Amendment
No. 3 to Research and Development Agreement, dated as of August 1, 2013 (the “Third Amendment” and, the Original Agreement,
as amended by the First Amendment, the Second Amendment and the Third Amendment, the “Agreement”);

 

WHEREAS, the Term (as defined in
the Original Agreement), as extended, was further extended until September 30, 2013 pursuant to the Third Amendment;

 

WHEREAS, INTERCEPT and Les Laboratories
Servier and Institut De Recherches Servier (collectively, “Servier”) have agreed to extend the term of their collaboration
under the Product Research, Development, License and Commercialization Agreement, dated as of August 1, 2011, as amended (the “Servier
Agreement”); and

 

WHEREAS, the parties have decided
to extend such Term.

 

NOW, THEREFORE,
in consideration of the foregoing premises, INTERCEPT and TES hereby agree as follows:

 

ARTICLE
1: GENERAL

 

This Amendment shall be of effect starting
on October 1, 2013, and the Term under the Agreement is extended for a two year period starting on October 1, 2013 (hereinafter
the “Extended Term”).

 

Exhibit
A of the Agreement shall be deleted and replaced in their entirety with Exhibit A attached to this Amendment. During the Extended
Term, TES shall conduct research activities as set forth in the Research Program attached as Exhibit A to this Amendment.

 

TES will allocate for the performance of the research activities
[***] full time equivalent (“FTE”) chemists and [***] FTEs [***] during the Extended Term. INTERCEPT will pay to TES
a maximum amount of €250,000 for each three-month period of service during the Extended Term of the Agreement, provided such
FTEs are allocated and activities are performed in accordance with the Research Program as amended. Payments will be made within
five (5) business days of the commencement of each three-month period of service during the Extended Term; provided, that the payment
for the first three-month period shall be made within five (5) business days of the date of this Amendment.

 

    	Page 1 of 5

    	 

    

 

TES shall submit to INTERCEPT a final report in accordance with
the terms of the Original Agreement.

 

ARTICLE
2: ROYALTY

 

Article 2 of the Agreement shall be amended
by adding the following text as Article 2.5:

 

		2.5	Royalties

 

 2.5.1  General

 

INTERCEPT
shall pay to TES a royalty of [***] percent ([***]) of Net Sales in each year following the First Commercial Sale. Royalties
shall be paid in on a Product by Product and country by country basis from [***]
until (i) [***] or (ii) [***],
whichever occurs later. The aggregate Net Sales shall not include the portion of the Net Sales for which a reduced royalty is applicable
because of the occurrence of royalty reduction events as set forth in article 2.5.2 below.

 

2.5.2  Royalty
Reduction Events

 

If at any time following the
First Commercial Sale in a country, one or several Generic Competitor(s) of a Product in a given country for which royalties would
otherwise be due under this Article represent(s) in units [***]%
or more of the market share in that country for any calendar quarter, then the royalty rate for sales in that country for such
quarter shall be [***]% of Net Sales.

 

If INTERCEPT or SERVIER has
to pay royalties prospectively to Third Parties for patent rights that cover the manufacture, use, sale, importation, or offer
to sell Products (regardless of whether such payments are pursuant to a license, a settlement agreement, a court order or a similar
obligation), then, the royalty payment made by INTERCEPT to TES hereunder shall be reduced by the amount paid to such Third Party
(“Royalty Reduction”). The Royalty Reduction shall be determined on a Product by Product basis and shall be carried
forward for application in future periods until such Third Party payments have been offset as provided herein.

 

The above notwithstanding, under
no circumstances may the application of the royalty reduction events result in the royalty rate being reduced below [***]%.

 

2.5.3  Royalty
Payments and Reports

 

INTERCEPT shall provide a report
to TES within sixty (60) days after the end of each Calendar Quarter, certified by an executive officer of INTERCEPT as accurate
and in accordance with generally accepted accounting principles, on a country-by-country basis and a Product-by-Product basis,
setting forth (a) the amount of gross sales of Products in such Calendar Quarter, (b) any deductions, withholding, provision from
such amount of gross sales as permitted pursuant to the definition of Net Sales, (c) a calculation of Net Sales of each Product
for such Calendar Quarter, (d) the amount of aggregate Net Sales of each Product on a cumulative per year basis for the current
year, and (e) the amount of royalty due on Net Sales with respect to such Calendar Quarter. Within fifteen (15) days after sending
the abovementioned report, INTERCEPT shall make all royalty payments payable to TES under this Agreement with respect to such Calendar
Quarter. Along with such payments, INTERCEPT shall also provide detailed information regarding the calculation of royalties due
pursuant to this Article, including without limitation allowable deductions in the calculation of Net Sales of Products.

 

    	Page 2 of 5

    	 

    

 

In respect of Net Sales in the
SERVIER Territory, the parties agree that any certificate provided by SERVIER to INTERCEPT shall satisfy INTERCEPT’s reporting
obligations relating to such territories.

 

2.5.4  Currency

 

All amounts due and payable
and calculations relating to Net Sales and royalties hereunder shall be in Euros. As applicable, Net Sales shall be translated
from other currencies into euros using the monthly average of daily rates of exchange published by European Central Bank for the
monthly period in which Net Sales are accounted or into U.S. Dollars using the monthly average daily rates of exchange based on
the noon buying rate published by the Federal Reserve Bank of New York.

 

2.5.5  Definitions. Unless
specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the meanings
set forth below.

 

		(a)	“Calendar Quarter” means each period of three (3) consecutive calendar
months ending on March 31, June 30, September 30 and December 31.

 

		(b)	“Clinical Trial” means a Phase I Clinical Trial, Phase II Clinical Trial or
Phase III Clinical Trial, as applicable.

 

		(c)	“First Commercial Sale” means [***].

 

		(d)	“Generic Competitor” means, with respect to any Product in a country, a product
containing the same active ingredient as the Product, and which Marketing Authorization and commercial sale of such product in
such country is by an entity other than INTERCEPT, SERVIER, or their respective Affiliates or Sublicensees (not including distributors).

 

		(e)	“Marketing Authorization” or “Regulatory Approval” means
all approvals from the relevant Regulatory Authority necessary to market and sell a Product in any country.

 

		(f)	“Net Sales” Except as provided below with respect to clinical trial samples,
in the case of sales by or for the benefit of INTECEPT, SERVIER, and their respective Affiliates and sublicensees (the “Seller”)
to independent, unrelated persons (“Buyers”) in bona fide arm’s length transactions, “Net Sales”
means the gross amount billed or invoiced by Seller with respect to the Product, less the following deductions, in each case to
the extent actually allowed and taken by such Buyers and not otherwise recovered by or reimbursed to Seller in connection with
such  Product (“Permitted Deductions”): [***].
“Net Sales” shall not include any consideration received with respect to a sale, use or other disposition of any Product
in a country as part of a clinical trial necessary to obtain Regulatory Approval in such country. All of the foregoing elements
of Net Sales calculations shall be determined in accordance with IFRS or successor standards and guidelines thereto. In the case
of transfers of Product among any of INTERCEPT, SERVIER, their respective sublicensees and affiliates of any of the foregoing,
for subsequent sale, rental, lease or other transfer of such Products to third parties, Net Sales shall be
the gross invoice or contract price charged to the third party customer for that Product, less the deductions set forth in clauses
[***] above. In the event that a Product consists of a combination
of the Compound with one or more other active agents, Net Sales, for the purpose of determining royalty payments, shall be [***].
In the case of any sale or other disposal other than in an arm’s length transaction exclusively for cash, such as barter
or counter-trade, of any Product, or part thereof, Net Sales shall be [***].
Finally, [***], shall be included in the calculation of Net Sales.
For the avoidance of doubt, the parties agree that there shall be no duplication of Net Sales made by INTERCEPT and its affiliates
and sublicensees and Net Sales made by SERVIER and its affiliates and sublicensees, and any adjustments made by INTERCEPT in its
sole discretion to remove such duplication shall be final.

 

    	Page 3 of 5

    	 

    

 

		(g)	“Product” means any pharmaceutical preparation containing the Compound, as an
active ingredient, either alone or in combination with one or more other active ingredient(s), (i) for sale by prescription, over-the-counter
or any other method; or (ii) for administration to human patients in a Clinical Trial.

 

		(h)	“Regulatory Authority” means any applicable government regulatory authority
involved in granting approvals for the manufacturing and/or marketing of a Product in the world, including European Medicines Agency
in the European Union or the Food and Drug Administration in the United States.

 

		(i)	“SERVIER Territory” means worldwide except (i) the United States of America
and their possessions and territories and (ii) Japan.

 

		(j)	“Valid Patent Claim” means (a) any claim of an issued and unexpired patent included
within the Patent Rights of INTERCEPT or SERVIER (whether jointly or individually held) which claims Compound or Product as a composition
of matter or any use thereof or method of synthesis, or formulation, which has not been permanently revoked or held unenforceable
or invalid by a decision of a court or other governmental agency of competent jurisdiction (which decision is not appealable or
has not been appealed within the time allowed for appeal), and which claim has not been abandoned, disclaimed, denied or admitted
to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise or (b) any claim of a pending patent
application included within the Patent Rights of INTERCEPT or SERVIER (whether jointly or individually held) which claims Compound
or Product as a composition of matter or any approved use thereof, which has not been abandoned or finally disallowed without the
possibility of appeal or re-filing of the application.

 

ARTICLE
3: MISCELLANEOUS

 

This Amendment shall be governed by and
construed under the laws of the State of New York, U.S., without giving effect to the conflict of law principles thereof.

 

Any and all provisions of the Agreement
not modified hereinabove shall remain in full force and effect.

 

[Remainder of Page Intentionally Left
Blank; Signature Page Follows]

 

 

    	Page 4 of 5

    	 

    

 

In
witness whereof, the Parties have executed this amendment by their proper officers as of the date first set forth above.

 

 

	 	INTERCEPT PHARMACEUTICALS, INC.
	 	 
	 	 
	 	/s/ Mark Pruzanski	 
	 	Name: Mark Pruzanski
	 	Title: President and Chief Executive Officer
	 	 
	 	 
	 	TES PHARMA SRL
	 	 
	 	 
	 	/s/ Roberto Pellicciari	 
	 	Name: Roberto Pellicciari
	 	Title: President

 

 

 

 

 

 

[Signature Page – TES Agreement
(TGR5) – Amendment No. 4]

    	Page 5 of 5

    	 

    

 

Exhibit A

 

Action Plan

 

 

[***]

Exhibit A pg. 1 of 16

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 2 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 3 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 4 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 5 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 6 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 7 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 8 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 9 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 10 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 11 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 12 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 13 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 14 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 15 of 16

 

 

 

 

 

    	 

    	 

    

 

[***]

Exhibit A pg. 16 of 16ex10-1.htm

EXHIBIT 10.1

 

 ASSET PURCHASE AND OPTION AGREEMENT

 

This Asset Purchase and Option Agreement (hereinafter “Agreement”) is dated for reference December 24, 2013 and executed by the following parties: Sutton Enterprises, a General Partnership whose partners are Brad Sutton and Mark Sutton with principal place of business at P.O. Box 305, Vallecito, California 95251 and dba Carson Hill Rock Products, dba Carson Hill Concrete, and dba Carson Hill Rock Aggregate with principal place of business at 4795 Highway 49, Angels Camp, California 95222 (hereinafter collectively “Seller”), hereby represented by the authorized undersigned agent Brad Sutton and Oro East Mariposa, LLC, a California limited liability company with principal place of business at 7817 Oakport Street, Suite 205, Oakland, California 94621, a wholly owned subsidiary of Oro East Mining, Inc. (OTCBB: OROE) (hereinafter “Buyer”), hereby represented by the authorized undersigned agent Denise Chung.

 

RECITALS

 

WHEREAS, Seller is the holder of certain minerals, mineral rights and claims, tailings, tangible property and other entitlements therein that Seller refers to as WMUs, as further described in Exhibit A, attached hereto and incorporated by reference (hereinafter “Assets”); and

 

WHEREAS, Seller is the holder of certain 39 parcels of real property, categorized as Groups A, B, C, and D, the improvements thereon plus the subsurface mineral rights and other entitlements therein, with assigned APNs as further described in Exhibit B, attached hereto and incorporated by reference (hereinafter “Subject Property”); and

 

WHEREAS, Seller wishes to sell and Buyer wishes to purchase the Assets as set forth in this Agreement and in the attachments and documents as incorporated by reference; and

 

WHEREAS, Seller wishes to sell and Buyer wishes to reserve an option to purchase the Subject Property and all assets as further described or listed in Exhibit B (the “Additional Property”) for option terms as set forth herein.

 

AGREEMENT

 

NOW THEREFORE, the undersigned parties integrate the foregoing recitals into the binding body of this Agreement and hereby agree to be bound for good and valuable consideration as follows:

 

	
1.  

	
Assets Purchase. Buyer shall purchase the Assets, as described in the Recitals above, hereby incorporated into the binding body of this Agreement. The purchase transaction shall be for the entirety of the Assets as described.

	
2.  

	
Assets Contract Price and Assets Closing.

a.           In consideration of Seller’s sale of the Assets to Buyer, Buyer shall pay to Seller $6,000,000.00 (Six Million) U.S. Dollars (the “Installments”) and 30% net royalties on all sales generated from the Assets (hereinafter the “Royalty” and, together with the Installments, the “Assets Contract Price”) pursuant to Sections 3 through 6 below and the installment terms as set forth herein for the Assets.

b.           The closing of the purchase and sale of the Assets (“Assets Closing”) shall take place at a time mutually agreed upon by the parties on the  seventh business day following receipt of (i) allowance or express permission by the Regional Water Quality Control Board’s Waste Discharge Requirements applicable to the Assets, which will be to allow for the processing of the ore from the Assets and the discharge of the tailings to the Subject Property and (ii) written consent to this Agreement of Carson Hill Gold Mining Corporation (“CHGMC”) or its parent company BHP-Billiton (“BHP”) (“Assets Closing Date”), at the offices of 7817 Oakport Street, Suite 205, Oakland, California 94621 or other mutually agreed upon location,  At the Assets Closing, Buyer shall pay Seller the First Installment in good funds.

 

	
3.  

	
Assets Installments Payment Terms. The Installments portion of the Assets Contract Price shall be paid by Buyer to Seller as follows:

	
a.  

	
$1,000,000.00 (One Million) U.S. Dollars paid at the Assets Closing (hereinafter “First Installment”).

	
b.  

	
An additional $1,000,000.00 (One Million) U.S. Dollars shall be paid within 60 (Sixty) days after the due date of the First Installment (hereinafter “Second Installment”).

  

1

  

 

	
c.  

	
An additional $1,000,000.00 (One Million) U.S. Dollars shall be paid within 90 (Ninety) days after the due date of the Second Installment (hereinafter “Third Installment”).

	
d.  

	
An additional $1,000,000.00 (One Million) U.S. Dollars shall be paid within 120 (One Hundred Twenty) days after the due date of the Third Installment (hereinafter “Fourth Installment”).

	
e.  

	
Thereafter, commencing on the month immediately following the due date for the Fourth Installment, the remaining $2,000,000.00 (Two Million) U.S. Dollars of the Installments portion of the Assets Contract Price shall be payable in monthly installments of $100,000.00 (One Hundred Thousand Dollars) for 20 (Twenty) months interest-free and with no pre-payment penalties, with each monthly installment due on or before the 5th day of each month.

 

	
4.  

	
Production of Mineral Concentrates. Upon execution of this Agreement and completion of Covenant 2(b) above, then the parties shall work collaboratively in good faith for the production of mineral concentrates as to be determined from the Assets, and the sale of mineral concentrates yielded from the Assets shall be the source of the Royalties as set forth herein (hereinafter “Production of Gold from Assets”), provided, however, that full-scale production, i.e., building the plant production facilities at the WMU sites, shall not occur until the conditions set forth in Covenant 2(b) have occurred. Buyer shall have the right to enter the Subject Property at all times at Buyer’s own risk in the collaboration for the production of mineral concentrates from the Assets. Seller agrees to collaborate with Buyer on the production of mineral concentrates from the Assets at Seller’s own risk. The parties shall bear their own risks of loss and neither party shall be liable to the other for risks of loss unless otherwise stated in writing in this Agreement.  Each such party’s efforts shall continue until the sooner of (i) exhaustion of gold production from the Assets, (ii) the closing of the purchase and sale of the Subject Property and Additional Property in accordance with the option set forth below, (iii) unless extended by mutual agreement of the parties, and Ten (10) years after the date of this Agreement

	
5.  

	
Royalties on Assets. Seller shall receive 30% royalties on the Net Profit earned on sales of the gold produced from the Assets and sold (hereinafter “Royalty” or “Royalties”). Royalty shall be calculated quarterly in conformity with U.S. Generally Accepted Accounting Principles (hereinafter “GAAP”), except that (i) revenues will be accounted for on a cash basis, not an accrual basis and (ii) costs of equipment and capital costs incurred by the parties before the Assets Closing Date will not be taken into account in determining Net Profit or Royalty. Royalty shall be paid on or before the 15th day of the month following the preceding quarter. Sales, marketing, accounting, and business control over Assets remain absolutely and exclusively with Buyer at all times, though in accounting for Net Profit Buyer must at all times observe GAAP as modified above. Buyer shall use commercially reasonable efforts to maximize Net Profit for the parties.  Accountings shall be provided at the end of each quarter.  Seller shall have the right to review all accountings. On the cash basis, revenue will not be deemed revenue received until actual payment has been made by third parties to Buyer. Upon exhaustion of gold production from the Assets or the closing date of the purchase and sale of the Subject Property and Additional Property in accordance with the Option as set forth in this Agreement, whichever occurs first, further accrual of the Royalties shall cease (hereinafter “Termination of Royalty”).

	
6.  

	
Seller’s Royalties Share Held in Escrow. To secure Seller’s obligations in Section 7 below, Seller’s Royalties on Assets as set forth in the previous covenant shall be held in escrow by a mutually agreed upon escrow agent on mutually agreeable terms and shall serve as collateral that Buyers may realize upon to recover its costs as set forth in the subsequent covenant.  The escrow will terminate on the Closing Date of the Asset Sale.

	
7.  

	
Secured Collateral. Seller makes the representations and warranties and agrees to the contingencies as set forth herein. In the event of any material Seller breach of this Agreement prior to the Assets Closing Date or Early Termination of this Agreement, Buyer is entitled to the full sum of its monies tendered pursuant to Exhibit C, which is further secured by Seller’s Royalties as previously stated and secured by a lien on all proceeds paid or payable to Seller under the Third Agreement to Amend Letter of Intent executed between Seller and Carson Hill Gold Mining Corporation executed December 2, 2013, all attachments, exhibits, and amendments inclusive, a true and correct copy of which has been provided to Buyer upon which Buyer may rely on, the proceeds from which Buyer shall provide a lien to Seller up to the dollar amount owed to Seller (hereinafter “Collateral”). To reserve Buyer’s security interest in the Collateral, the parties agree that Buyer may file a UCC-1 financing statement for said Collateral. In the event of such a breach or Early Termination, Buyer may collect only monies actually tendered pursuant to Exhibit C from the Collateral and any balance shall remain the entitlement of Seller.  Notwithstanding the foregoing, the security interest shall terminate upon repayment of all amounts actually tendered pursuant to Exhibit C.

 

  

2

  

 

	
8.  

	
Irrevocable Asset Purchase and Specific Enforcement. Seller and Buyer intend the Assets Purchase to be irrevocable upon execution of this Agreement. The Parties acknowledge and agree that the performance obligations arising from this Agreement are unique, and irreparable harm and substantial detriment would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which they may be entitled at law or equity.

	
9.  

	
Assets Delivery and Bailment; Tailing Residuals. Buyer shall remove the Assets from the present locations on Subject Property at Buyer’s expense. Buyer agrees to remove the Assets in a reasonably timely and commercially practicable manner, but remaining Assets on the Subject Property shall be held by the Seller as a bailor until all Assets may be removed by Buyer, provided that, as the then-owner of the Assets, Buyer shall be responsible for costs of insurance, fencing, security, as to the Assets only, though insurance, fencing, security, etc. generally for the Subject Property shall remain the responsibility and liability of Seller. Assets remaining on Subject Property as bailment and shall be held by Sutton Enterprises, Carson Hill Rock, and Brad Sutton as bailors. The term of the bailment shall be for the reasonably practicable period of time that Buyer needs to remove the Assets from the Subject Property, though the term is not to exceed 10 (Ten) years, or sooner closing of the sale of the Subject Property and Additional Property following exercise of the Option. In addition, after the refinery process performed on the tailings removed from the WMUs, or the Assets, Buyer may return the residual waste to the WMUs or to selected locations for remedial activities associated with the Reclamation Plan on Subject Property and Seller consents to permitting Buyer to return the residual waste to the WMUs on Subject Property after the production process for the mineral concentrates. Consideration for the bailment and return of the waste residuals shall be the royalties paid to Seller as set forth in the next covenant covering royalties on Assets.

	
10.  

	
Buyer’s Reasonable Right of Entry and Access to Assets. Seller grants Buyer the right to use the Subject Property in any reasonable manner and to access said Subject Property any time at Buyer’s discretion, for the purpose of producing mineral concentrates from the Assets and for removing the Assets from the WMUs or selling or transporting the Assets for mineral concentrate production. However when on Subject Property, Buyer assumes all risk and sole responsibility for construction, operation, equipment use, production processing, and other activities that may reasonably arise from the purpose of producing mineral concentrates from the Assets. Buyer reserves the right to use the above portion of the Subject Property for the limited purpose as set forth herein and no other. The right of entry conferred shall automatically cease upon abandonment, termination of this Agreement, or exhaustion of the Assets.

	
11.  

	
Buyer Retains Full Rights to All Buyer-Purchased Property. All equipment, supplies, tools, and other personal property paid for by Buyer that is at Subject Property shall remain the property of Buyer and, subject to Buyer’s obligations under Sections 4 and 5 above, may be removed from the Subject Property by Buyer at any time. Seller has a first right of refusal to purchase any said equipment, supplies, tools, or other personal property from Buyer.

	
12.  

	
Full Scale Facilities and Production Costs. Buyer is responsible for all costs associated with the construction, operation, and environmental compliance associated with the implementation of full-scale processing of the WMUs. However, the environmental liabilities of CHGMC under that certain Purchase and Sale Agreement, dated December 20, 1996, between CHGMC and Seller (item 2 on Exhibit D) shall remain the sole environmental liabilities of CHGMC, indemnifying and holding harmless Buyer, to the extent provided therein. Seller will use reasonable efforts to have CHGMC consent to an assignment of those CHGMC obligations to Buyer at closing of the sale of the Subject Property, but Seller believes no such assignment is required as long as Buyer purchases the Additional Property.

	
13.  

	
Exclusivity. Without Buyer’s written consent, the rights and interests conferred by this Agreement shall not in any way or at any time conflict with the rights and interests Seller confers at any time to third parties. In the event of conflicts, either Buyer’s rights and interests shall trump and prevail over third parties or, in the alternative, Buyer may (subject to its obligations to close hereunder) at its election assume and entitle itself to the benefits otherwise conferred to Seller from said third parties. Buyer is aware of the Third Agreement to Amend Letter of Intent executed between Seller and Carson Hill Gold Mining Corporation executed December 2, 2013, and consents thereto.

 

  

3

  

 

	
14.  

	
Option to Purchase Subject Property and Additional Property. . Subject to Buyer’s purchase of the Assets as provided above, Seller grants to Buyer for good and valuable consideration as set forth herein an option to purchase the Subject Property, and all mining claim rights, transfers or assignments of permits as applicable, subsurface rights, assets, tangible and intangible, and all Additional Property (hereinafter “Option”), the consideration for which shall be the Royalties as previously set forth, for the purchase price of $32,000,000.00 (Thirty Two Million) U.S. Dollars less the $6,000,000.00 (Six Million) paid for the Assets and any amounts paid by Buyer pursuant to Exhibit C (hereinafter “Subject Property Contract Price”). The period for exercising the Option shall be 180 (One Hundred and Eighty) days from the date of execution of this Agreement (hereinafter “Option Term”), and Buyer must exercise the Option in a signed, dated writing to Seller with clear, unambiguous notice of the exercise of the Option. Closing of the purchase and sale of the Subject Property and Additional Property shall occur within Thirty (30) days of the date such notice is delivered, in accordance with this Agreement and Exhibit E, attached hereto. On the date that Buyer closes the purchase of the Subject Property and Additional Property, accrual of Royalties shall terminate effective that date and there shall be no more Royalties as set forth in the covenant “Royalties on Assets” above paid to Seller thereafter.

	
15.  

	
Due Diligence Period. Upon execution of this Agreement, Buyer shall furnish a set of due diligence questionnaires to Seller, which Seller shall have authorized agents, partners, directors, or officers with personal knowledge to respond in writing to the questionnaires and furnish all requested documents to Buyer, and where none are available, certify and represent that none are available. Buyer shall provide Seller 30 (Thirty) days to complete the questionnaires and Seller’s diligent cooperation, disclosure, and timely submissions in response to the questionnaires are condition precedent to the enforceability of the Option purchase as contemplated herein against Buyer under this Agreement. Upon Buyer’s actual physical receipt of the complete responses to all questionnaire inquiries and requests, Buyer shall have an additional 150 (One Hundred and Fifty) days to complete geological testing, surveys, excavation, and other studies to determine the expected recovery, projections, and reserves of Project. Thus, commencing on the date of execution of this Agreement and that Buyer concurrently is to furnish the due diligence questionnaires to Seller, Buyer shall have a total of 180 (One Hundred and Eighty) days for due diligence (“Due Diligence Period”). During the Due Diligence Period, Buyer may enter the Subject Property to drill, excavate, or remove from the Subject Project property or claims up testing samples as reasonably or foreseeably needed for geological testing, assay, and study, at Buyer’s sole cost, risk and expense. Buyer may at its complete discretion, with or without cause, cancel, null, and/or void the Option at any time during the Due Diligence Period.

	
16.  

	
Representations and Warranties. Within Sixty (60) days of the date of this Agreement, Seller will provide a set of documents to Buyer upon which Buyer may rely on in entering this Agreement, as listed in Exhibit D, attached hereto and incorporated by reference, though for each day after the date of execution of this Agreement that the documents in Exhibit D are not furnished to Seller, Seller may extend the Due Diligence Period for a reciprocal number of days that the documents are not tendered. But for reliance on the accuracy of said documents, Buyer would not have consented to executing this Agreement. Seller hereby represents and warrants the truth, accuracy, and authenticity of all documents set forth in Exhibit D and is inducing Buyer to rely on the truth, accuracy, and authenticity of the documents. If at any time prior to closing of the purchase and sale of the Subject Property and Additional Property Buyer discovers that any material statement made in documents 1, 2, 6, 7, 8, 9, 11, 13, and/or 31 of Exhibit D are false, inaccurate, or not authentic, then Buyer reserves the right to terminate the Option or this Agreement immediately, demand that all monies of the Contract Price or payments made pursuant to Exhibit C be returned or reimbursed promptly. The scope of the representations and warranties set forth in this paragraph are limited to Exhibit D only.

 

	
17.  

	
Contingencies. The parties agree to the following additional contingencies (hereinafter “Contingencies”) during the Due Diligence Period (or other times specified below), which shall be conditions precedent to the enforceability of the Option.  Buyer shall notify Seller in writing of the satisfaction or removal of any contingency below when and if obtained.  If any contingency is not satisfied or removed during the Due Diligence Period, then Buyer reserves the right to terminate the Option:

	
a.  

	
Enforceability of the Option purchase as contemplated herein against Buyer is contingent on Buyer’s ability to obtain a commitment from a lender for acceptable loan terms to finance the purchase of the Subject Property and Additional Property as contemplated herein within 100 (One Hundred) days of the date of execution of this Agreement.

  

4

  

 

	
b.  

	
Enforceability of the Option purchase as contemplated herein against Buyer is contingent on property inspections of the Subject Property.

	
c.  

	
Enforceability of the Option purchase as contemplated herein against Buyer is contingent on Seller’s proof and/or grant of all permits and licenses applicable to Buyer’s contemplated business objectives with regard to the Subject Property, which the parties understand to be the production of gold, small scale or large scale mining, and gold or other precious or semi-precious metals exploration and/or production, consistent with the above-described Production of Gold from Assets. If Seller fails to obtain all necessary permits for Buyer’s contemplated business objectives, then Buyer may cancel, null and void the Option purchase as contemplated herein.

	
d.  

	
Enforceability of the Option purchase as contemplated herein against Buyer is contingent on Buyer’s acceptance of the results and reports obtained during the Due Diligence Period. If for any reason the results, testing, or reports obtained during the Due Diligence Period are found unacceptable to Buyer, then then Buyer may cancel, null and void the purchase.

	
e.  

	
Enforceability of the Option purchase as contemplated herein against Buyer is contingent on transfer of clean title to the Subject Property under the representation and warranty to Buyer that the Subject Property shall be conveyed to Buyer free and clear of any liens or third party claims against the Subject Property or any mineral rights, mining rights, or other claims thereof. Such title shall be evidenced by a standard-form CLTA Owner’s Title Policy, subject only to exceptions for (i) taxes and assessments not yet due, (ii) the policy’s standard preprinted exceptions, and (iii) such other exceptions as may be approved by Buyer in its sole discretion. To assist in confirming these matters, Seller shall provide Buyer with a preliminary title report and copies of all subject documents.  Buyer shall identify in writing all objectionable items within 30 days after receiving all such items, and any item not objected to shall be deemed accepted.  If the parties cannot agree on how to resolve the objected matters within an additional 30 days, then Buyer reserves the right to terminate the Option.

	
f.  

	
Enforceability of the Agreement against Buyer is contingent on confirmation that Seller has full right and authority to transfer all assets and property as contemplated herein this Agreement.

 

	
18.  

	
Authority. The undersigned parties hereby represent and warrant that he or she has been duly authorized by its corporate entity or principal to enter into this Agreement and to bind that corporate entity or principle to the terms hereof.

	
19.  

	
No Waiver or Cumulative Remedies. No failure or delay on the part of any undersigned party to this Agreement in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

	
20.  

	
Inurement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

	
21.  

	
Merger and Integration. This Agreement and the exhibits attached hereto contain the entire agreement of the parties with respect to the subject matter of this Agreement, and supersede all prior negotiations, agreements and understandings with respect thereto. This Agreement may only be amended by a written document duly executed by the undersigned parties.

	
22.  

	
Force Majeure. Neither party shall be liable to the other for failure to perform any obligation under this Agreement to the extent caused by unforeseen disasters, events, or conditions that the parties were not able to contemplate at the execution of this Agreement, such as sabotage, riots, terrorism, political or governmental complications, market conditions, or natural occurrences such as hurricanes, floods, earthquakes, etc. or other Acts of God (a “Force Majeure Event”), provided that the party claiming a Force Majeure Event shall promptly notify the other party in writing, and takes reasonable measures to remove or alleviate the Force Majeure Event as soon as reasonably possible. Liability shall be borne by the parties separately for their own risks of loss.

 

  

5

  

 

	
23.  

	
Severability and Contract Interpretation. If any term or provision of this Agreement shall to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

	
24.  

	
Further Assurances. Each party shall execute all escrow instructions and sign all further documents required to complete the transactions provided under this Agreement.

	
25.  

	
Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.

	
26.  

	
Descriptive Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. Unless the context of this Agreement otherwise requires, references to "hereof," "herein," "hereby," "hereunder" and similar terms shall refer to this entire Agreement.

 

IN WITNESS WHEREOF, the undersigned parties cause this Agreement to be duly signed and executed on the date first set forth above and by signing below represent and warrant to be the agent of the Company as represented below authorized to enter into this Agreement and bind said Company to the terms thereof.

 

SIGNED AND EXECUTED this 24th day of December in the year 2013 in Oakland, CA:

 

	
Seller:

	  	
Buyer:

	
X     /s/  BRAD SUTTON

	  	
X     /s/  DENISE CHUNG

	  	  	  	  	  
	
Company:

	
Sutton Enterprises

	  	
Company:

	
Oro East Mariposa, LLC

	
Signor’s Name:

	
Brad Sutton

	  	
Signor’s Name:

	
Denise Chung

	
Position/Title:

	
General Partner

	  	
Position/Title:

	
Managing Member

 

  

6

  

 

EXHIBIT A

 

DESCRIPTION OF ASSETS

 

 

 

/List of WMUs Attachment/

 

 

 

  

7

  

 

EXHIBIT B

 

DESCRIPTION OF SUBJECT PROPERTY

 

 

Seller represents that Seller is the true and correct owner in the totality of all property set forth in Exhibit B and that Seller is authorized to enter into this Agreement for said property.

 

 

/Legal Description Attachment/

 

 

 

  

8

  

 

ADDITIONAL PROPERTY” ALSO TO BE ACQUIRED UPON

 

EXERCISE OF OPTION

 

 

	
Asset Description

	
Owner(s)

	
Seller’s Initials

	
Sutton Enterprises

	
Brad Sutton (50%)

Mark Sutton (50%)

	
/s/  B.S.

	
Tailings in the WRDs

	
Sutton Enterprises

	
/s/  B.S.

	
List of Equipment as provided by Patrick Sullivan, attached hereto and integrated into this Exhibit

	
Sutton Enterprises

	
/s/  B.S.

	
All assets and accounts of Carson Hill Concrete, a DBA of Sutton Enterprises

	
Sutton Enterprises

	
/s/  B.S.

	
All assets and accounts of Carson Hill Rock Aggregate, a DBA of Sutton Enterprises

	
Sutton Enterprises

	
/s/  B.S.

	
All assets and accounts of Carson Hill Rock Products, a DBA of Sutton Enterprises

	
Sutton Enterprises

	
/s/  B.S.

	
All copyrights, patents, trademarks, trade names, trade secrets, customer lists, databases, and other intellectual property of Sutton Enterprises

	
Sutton Enterprises

	
/s/  B.S.

	
Provided, that the foregoing excludes all attorney-client communications and relationships, including in particular Seller’s communications and relationships with Wulfsberg Reese & Colvig Professional Corporation, f/k/a Wulfsberg Reese Colvig & Firstman Professional Corporation.

	  	
/s/  B.S.

 

  

9

  

 

EXHIBIT C

 

SELLER’S SECURED OBLIGATIONS ON SUBJECT PROPERTY

 

 

	
Description

	
Current Balance ($)

	
Ref. No. 25010331

	
$218,379.11

	
Ref. No. 32005909

	
$1,150,933.78

	
Ref. No. 25008233

	
$756,884.85

	  	  
	
Wulfsberg Reese

	
$293,000.00 *

	
Two B of A loans

	
$129,500 ($34,500  + $95,000)

	
Oneto Brothers

	
$50,000

	
Dave Price

	
$190,000

 

The undersigned, Brad Sutton, hereby affirms that the amounts identified above are true and accurate as of December 24, 2013, and that the foregoing represents the complete and truthful disclosure of all secured obligations on Subject Property.

 

 

*  Through September, 2013; are additional fees for this transaction.

 

  

10

  

 

EXHIBIT D

 

DOCUMENTS TO BE PROVIDED BY SELLER

 

 

Seller hereby represents and warrants the truth, accuracy, authenticity and validity of the following documents that it has provided Buyer with:

 

 

	
1.  

	
Grant Deed to Sutton Enterprises, recorded May 12, 1997

	
2.  

	
Purchase and Sale Agreement, dated December 20, 1996, between Carson Hill Gold Mining Corporation and Sutton Enterprises, Inc.

	
3.  

	
Cash Flow Analysis and Projections for the Operations of Sutton Enterprises and Carson Hill Rock Products

	
4.  

	
Certified 2012 Profit and Loss Statements for Carson Hill Rock Products

	
5.  

	
Certified 2008 Carson Hill Rock Appraisal of All Equipment and Tangible Properties

	
6.  

	
2013 Summary Statement and Briefing of Carson Hill Rock Products (CHRP) Asset and Business Value

	
7.  

	
Carson Hill Rock Products – Phase I Environmental Assessment Report

	
8.  

	
Carson Hill Rock Products – Resource Evaluation and Property Value Assessment

	
9.  

	
2008 WMUs Resource Evaluation Report

	
10.  

	
Wiebe Land Surveying Report – WMUs Surveying Report

	
11.  

	
Calaveras County Use Permit

	
12.  

	
CRWQCB Waste Discharge Requirements, Order No. 5-01-150

	
13.  

	
Site Maps and Locations of WMUs

	
14.  

	
CAO Requirements Data Sheets

	
15.  

	
Sutton Enterprises – General Partnership Agreement

	
16.  

	
Sutton Enterprises – 2012, 2011, 2010, 2009, and 2008 Tax Returns

	
17.  

	
Sutton Enterprises – 2012, 2011, 2010, 2009, and 2008 Profit and Loss Statements

	
18.  

	
Sutton Enterprises – List of All Tangible Assets and Estimate Fair Market Value

	
19.  

	
Sutton Enterprises – List of All Debts and Obligations, Secured and Unsecured

	
20.  

	
Carson Hill Rock – Entity/Business Registration Documentation

	
21.  

	
Carson Hill Rock – 2012, 2011, 2010, 2009, and 2008 Tax Returns

	
22.  

	
Carson Hill Rock – 2012, 2011, 2010, 2009, and 2008 Profit and Loss Statements

	
23.  

	
Carson Hill Rock – List of All Tangible Assets and Estimate Fair Market Value

	
24.  

	
Carson Hill Rock – List of All Debts and Obligations, Secured and Unsecured

	
25.  

	
CHRP Waste Classification Report, October 28, 2013

	
26.  

	
Sutton Enterprises, Form 1065s for 2008, 2009, 2010, 2011, and 2012

	
27.  

	
Sutton Enterprises, Payroll Reports, 2010, 2011, 2012, and 2013

	
28.  

	
Carson Hill Rock, Payroll Reports, 2010, 2011, 2012, and 2013

	
29.  

	
CHRP Equipment List and CHRP Property List, October 21, 2013

	
30.  

	
Certified and Signed Due Diligence Questionnaire

	
31.  

	
Third Agreement to Amend Letter of Intent by CHGMC and Sutton, executed December 2, 2013.

 

The undersigned, Brad Sutton, hereby affirms that the foregoing statements made are true.

 

  

11

  

 

EXHIBIT E

 

ADDITIONAL TERMS FOR PURCHASE OF

 

SUBJECT PROPERTY AND ADDITIONAL PROPERTY

 

 

	
1.  

	
Subject Property Purchase Price:  As described in Agreement Section 13, payable in good funds on closing.

 

	
2.  

	
Closing Date:  As described in Agreement Section 13.

 

	
3.  

	
Transfer Documents:  Grant Deed for Subject Property; General Assignment for Additional Property.

 

	
4.  

	
Escrow/Title:  First American Title in Angels Camp, California.

 

	
5.  

	
Title to Subject Property:  As determined in Agreement Section 16.f.

 

	
6.  

	
Title and Escrow Costs and Prorations:  Buyer and Seller shall each pay 50% of regular escrow charges and fees, and 50% of the standard Owner’s CLTA Owner’s title policy.  Buyer shall be responsible for any endorsements, surveys and other matters required by Buyer’s lender.  Seller shall pay the regular Calaveras County documentary transfer tax.  All other costs shall be paid per custom of Calaveras County California.  Non-delinquent real property taxes and assessments shall be prorated at closing.

 

	
7.  

	
No Broker Representation:  Buyer and Seller represent and warrant to each other that neither has dealt with any real estate or business broker or salesperson in connection with this transaction  If any person  asserts a claim to a finder’s fee, brokerage commission, or any other compensation on account of alleged employment as a finder or broker or performance of services as a finder or broker in connection with this transaction, the party under whom the finder or broker is claiming shall indemnify and hold the other party harmless from and against any such claim and all costs, expenses and liabilities incurred in connection with such claim or any action or proceeding brought on account of such claim.  This indemnity shall survive the closing of the sale of the Subject Property or cancellation or termination of the Agreement.

  

12

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