Document:

exhibit_10-2.htm

EXHIBIT 10.2

FORM OF COMMON STOCK PURCHASE WARRANT

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

 LAREDO OIL, INC.

 

 

Warrant Shares: [ _____ ]     Initial Exercise Date: July [__], 2010

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [ _____ ] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Laredo Oil, Inc., a Delaware corporation (the “Company”), up to [ _____ ] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.                      Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated July 26, 2010, among the Company and the purchasers signatory thereto.

 

Section 2.                      Exercise.

 

a)           Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer of immediately available funds or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

  

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b)           Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $0.50, subject to adjustment hereunder (the “Exercise Price”).

 

c)           Cashless Exercise.  This Warrant may be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

	 	 (A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;
	 	 
	 	

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

	 	 
	 	

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

d)          Mechanics of Exercise.

 

i.      Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”).   The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid.

 

ii.          Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part and has not expired, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

  

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iii.          Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the 3rd Trading Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.         Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the third Trading Day following the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.         No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  Whenever any fraction of a share of Common Stock would otherwise be required to be issued or distributed, the actual issuance or distribution made shall reflect a rounding of such fraction to the nearest whole share (up or down), with half shares or less being rounded down and fractions in excess of half of a share being rounded up.  The Holder by the acceptance of this Warrant expressly waives his right to receive any fractional share of Common Stock upon exercise of this Warrant.  If certificates evidencing more than one Warrant shall be presented for exercise at the same time by the same Holder, the number of full shares of Common Stock which shall be issuable upon such exercise thereof shall be computed on the basis of the aggregate number of Warrants to be so exercised.

 

vi.         Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses, other than income taxes, shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

  

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vii.         Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e)           Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

  

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f)           Legends.  This Warrant originally issued to a Holder and each Warrant issued upon registration of transfer of, or upon exchange for or in lieu of, any Warrant shall bear a legend substantially in the following form:

 

“THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SECURITIES ARE REGISTERED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO AN EXEMPTION THEREFROM OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

Section 3.                      Certain Adjustments.

 

a)           Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)           Subsequent Equity Sales.  If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective price per share less than the Exercise Price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment.  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance.  The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised

 

  

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c)           Subsequent Rights Offerings.  If the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the VWAP on the record date mentioned below, then the Exercise Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP.  Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants.

 

d)           Pro Rata Distributions.  If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

e)           Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.

 

  

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f)           Additional Equity Financing.  Within the 6 month anniversary of the Closing Date, the Company shall raise gross proceeds the aggregate minimum amount of $5,000,000 through the sale and issuance of Common Stock and equity of the Company.  If the Company does not raise at least $5,000,000 within the 6 month period, then the Exercise Price shall be reduced by $0.25, , subject to adjustment herein, but not to less than $0.0001.

 

g)           Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.  The adjustments required by this Section 3 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price that would otherwise be required shall be made unless and until such adjustment by itself increases or decreases the Exercise Price immediately prior to the making of such adjustment by at least 1%.

 

h)           Notice to Holder.

 

i.      Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.      Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such 

 

  

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Section 4.                      Transfer of Warrant.

 

a)           Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  The Holders of this Warrant will cause any proposed purchase, assignee or transferee to agree to take and hold such securities subject to the provisions and conditions specified in this Section 4 and Section 2(a) hereof. Subject to Section 2(d) hereof, upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)           New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant including, without limitation, as to the legend contained herein and except as to the number of Warrant Shares issuable pursuant thereto.

 

c)           Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)           Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws covering the proposed transfer, sale, assignment or pledge, the Holder thereof shall give written notice to the Company of such Holder’s intention to effect such transfer, sale, assignment or pledge.  Each such notice shall describe the manner and circumstances of the proposed transfer, sale or assignment in sufficient detail and, subject to Section 4.2 of the Purchase Agreement, shall be accompanied, at such Holder’s expense, by a written opinion of legal counsel (who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company) addressed to the Company to the effect that the proposed transfer of the securities may be effected without registration under the Securities Act.  At the time of such transfer, sale or assignment, the Company may require, as a condition of allowing such transfer, sale or assignment, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

 

  

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e)           Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.                      Miscellaneous.

 

a)           No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).

 

b)           Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)           Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)           Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

  

9

  

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)           Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f)           Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)           Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)           Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

i)           Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)           Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)           Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)           Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)           Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)           Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

(Signature Page Follows)

 

  

10

  

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

 

	
LAREDO OIL, INC.

 

 

	
By:__________________________________________

     Name:

     Title:

 

  

11

  

NOTICE OF EXERCISE

TO:           LAREDO OIL, INC.

(1)      The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)      Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[ ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)      Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

_______________________________

_______________________________

_______________________________

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

(5)           Investment Intent.                                The undersigned acknowledges that the Warrant Shares are “restricted securities” as defined in Rule 144(a)(3) promulgated pursuant to the Securities Act of 1933, as amended (the “Act”), and may not be resold without registration under the Act or an exemption therefrom.

[SIGNATURE OF HOLDER]

Name of Investing Entity: _______________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: _______________________________________________________________________________________

  

12

  

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

_______________________________________________________________

_______________________________________________________________

Dated:  ______________, _______

Holder’s Signature:                                _____________________________

Holder’s Address:                                 _____________________________

                  _____________________________

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

13Bridgeport Ventures Inc. - Exhibit 4.12 - Filed by newsfilecorp.com

Exhibit 4.12

OPTION AGREEMENT FOR PURCHASE OF MINING CONCESSIONS

RIO CONDOR RESOURCES S.A. 

AND 

SOCIEDAD LEGAL MINERA ELIANA I UNA DE LA SIERRA SAN MARCOS

 

In Copiapó, on , on November 5th 2009, before me, HERNAN
  CAÑAS VALDES, Lawer, Public Notary and Permanent Mining Conservator
  of this Province with trade in O’higgins street number 776, there appear:
  RIO CÓNDOR RESOURCES S.A., closely held stock corporation engaged
  in the mining business, , TPN 76,072,443-2, properly represented, as will be
  evidenced by Mr. Francisco Schuberts Seiffert, Chilean, married, mechanical
  engineer, national identification card No. 6,095,824-6, both domiciled in the
  city of Santiago, and in transit through this city, at Camino del Sol Number
  3895-7, municipality of Lo Barnechea, hereinafter indistinctly “RCR”
  or the “Beneficiary” for one part; and for the other SOCIEDAD
  LEGAL MINERA ELIANA I UNA DE LA SIERRA SAN MARCOS, properly represented
  by its shareholders Mr. JAIME BARAHONA BALBONTÍN, Chilean, married,
  miner, national identification card No. 8.893.132 -7, domiciled at Salitrera
  Laguna No 2210, villa El Palomar, Copiapó, for 50 shares and Mr. CARLOS
  BARAHONA TIRADO, Chilean, married with separation on marital property, miner,
  national identification card No. 12,803,560-5, domiciled at Parcela No
  16, Nantoco, municipality of Tierra Amarilla, for 50 shares; the appearing parties
  of legal age, who evidenced their identity with the aforementioned cards and
  state:

1

FIRST. MINING CONCESSIONS SUBJECT OF THE AGREEMENT. 

The Offeror declares that it is the only and exclusive owner
  of the mining claim called “ELIANA I 1 to 20”, whose constitutive
  sentence and survey certificate are registered on folio 2759 over number 2076
  of the Registry of Property corresponding to the year 2006 of the Registrar
  of Mines of Copiapó. For all purposes of this Agreement, the Offeror declares
  that the aforementioned mining claims are in accordance with the law, that they
  are not liable to encumbrances, prohibitions, embargos or litigations, with
  the exception of(i) a lease agreement in favor of Mr. JAIME ENRIQUE BARAHONA
  BALBONTÍN, that is evidenced in public deed of October 10, 2008,
  delivered in the Notary of Copiapó of Mr. Hernán Cañas Valdés,
  registered on folio 130, number 52 of the Registry of Mortgages and Encumbrances
  of the year 2008 of the Registrar of Mines of Copiapó and (ii) a lease
  agreement in favor of Mr. Sergio Barahona Tirado, that is evidenced also in
  public deed of October 10, 2008, delivered in the Notary of Copiapó of
  Mr. Hernán Cañas Valdés, registered on folio 132, number 53 of
  the Registry of Mortgages and Encumbrances of the year 2008 of the Registrar
  of Mines of Copiapó. 

The situation of location and extension of the mining claims
identified above is detailed in a sketch that is contained in Annex A, which
properly signed by the parties is understood to form part of this instrument,
being notarized under number 15 of repertory of this deed.

SECOND. DENOMINATION OF THE CONCESSIONS. 

The parties agree that the group of mining claims identified in
the first clause above, constitute the subject of the mining Option matter of
this Agreement, which will hereinafter be called for the purposes of this
Agreement the “Properties” .

THIRD. PURPOSE OF THE AGREEMENT 

The Offeror hereby grants in favor of RCR Option to purchase
and offers it irrevocably to sell, assign and transfer, in the terms of article
169 final paragraph of the Mining Code, the Properties identified in the first
clause hereof, in the form, conditions and modalities that are expressed in the following
clauses. Mr. Francisco Schuberts Seiffert, in the representation with
which he is vested, accepts for RCR, in the terms of article 169 of the Mining
Code, the Option referred, to RCR reserving the authority of accepting or
rejecting the offer in the form, conditions and modalities that are expressed in
this instrument. 

2

The period within which the beneficiary of the Option or its
assignees or successors may freely accept or reject the offer of purchase of the
Properties will expire at midnight of the last day of the period of 48 months as
of this date. Therefore, at any time before the expiration of such period, RCR
or whoever may succeed it in its rights, if up to date in the payments to which
clause six refers, may express its will to enter into the purchase sale in which
case it must only pay the balance of price that is pending, after imputing the
sums already paid, in accordance with the sixth clause of this Agreement. In the
event RCR or whoever succeeds it in its rights, does not express its intention
within the period indicated or does not pay any of the installments that are
detailed in letter (b) to (e) of number 6.1 of the sixth clause below, it will
be understood that it does not wish to persevere in the business and
consequently the Option will lapse. The payment of the sums pending payment of
the purchase sale price at the time the Option is exercised, shall be made
either directly to the Shareholders of the Offeror or else if it cannot be done
in that way, leaving in the hands of the Notary before whom the deed of
acceptance of the offer is issued, that shall be the same Notary that authorize
this deed or replace, substitute or succeed it, a sight draft or check issued in
favor of such Shareholders divided proportionally according to the shares each
one owns in the society, with irrevocable instructions granted to such Notary of
delivering to each Shareholder of the Offeror or who represents its rights, such
document once the registration of the Properties is evidenced in favor of the
beneficiary free from any encumbrance, prohibition, embargo or litigation. 

The acceptance of the offer must be expressed within the period
indicated, by public deed delivered before the attesting Notary, or before
whoever may replace or succeed him in his Notary’s office, copy of which,
together with copy of the payment instructions of any pending balance of the
price at the date of the exercise of the Option, as has been stated previously, must be sent to
each one of the Shareholders of the Offeror to the address indicated in the
appearance of this instrument, or that which any of such Shareholders may have
informed in writing to the Beneficiary before the period of acceptance by
certified letter on the business day following that of the date of its delivery.
In such event the Registrar of Mines of Copiapó, having in sight authorized copy
of this deed and authentic copy of the deed of acceptance delivered by RCR, or
by whoever succeeds him a beneficiary or assignee of the Option will register
the dominion of the Properties in favor of RCR or, in its case, in the name of
its successors or assignees, as provided for in the final paragraph of article
169 of the Mining Code. Likewise, with the sole merit of the deeds referred to
and at the request of their bearer, the Registrar of Mines of Copiapó will
proceed to release and cancel the prohibitions and limitations that are hereby
constituted in favor of the Beneficiary of the Option and to make the
annotations of the relevant release on the margin of the registrations that are
made of this Option in the pertinent Registries of such Registrar. The parties
agree that it will be a requirement for the acceptance that in the deed issued
by RCR for the purpose, the attesting Notary shall leave evidence that RCR has
delivered a sight draft or check in favor of ech one of the Shareholders of the
Offeror with the balance of the price still unpaid at the date of acceptance of
the Option. 

3

In the event that for any reason or motive RCR does not
exercise the purchase Option of the Properties subject of this Contract, any sum
that it has already paid to the Shareholders of the Offeror on account of the
price of the purchase sale offered, will remain in favor of such Shareholders
for advanced and only indemnification for any damage that the non exercise of
the Option could cause. If RCR according to the contract, rejects the option or
doesn’t exercise it in the fixed time period, with the sole merit of this deed,
or the document in which the Beneficiary of this option manifest her decision of
not exercising it, the Offeror, by any of their Shareholders, may require the
Registrar of Mines of Copiapó, before referred, the release and cancellation of
all registration, sub-registration and annotation that may have been done in
relation with this contract. Likewise, it is hereby expressly stated that RÍO CONDOR RESOURCES S.A.
  has agree a Miner Option Contract with SOCIEDAD LEGAL MINERA ROSARIO UNA
  DE LA SIERRA SAN MARCOS, with regard to the claims called “ROSARIO
  UNA A ROSARIO DIEZ”, National Roll 03203-1239-6, constituted by public
  deed of this same date and before this Notary, Repertory No 1985/2009.
  In the event the Beneficiary accepts the option contained in the contract before
  indicated, he will be bind to accept the option contained in this contract.

4

FOURTH. EXPLORATION AUTHORIZATION 

Pursuant to what is provided by Article 53 paragraph 2 of the
Mining Code and in is case, by articles 107, 113 and 116 of the same legal body,
the Offeror hereby grants to RCR authorization to carry out all the works that
may be necessary to recognize the geological potential of the lands comprised by
the Properties subject of this Agreement. The Offeror hereby authorizes RCR, to
perform exclusively exploration and prospecting work on the Properties while
this Agreement lasts. Making use of the right of exploration and within the
period indicated RCR is understood authorized to effect pro se and through its
technical personnel or with the concourse or participation of third parties, all
kinds of investigation, of reconnaissance, of exploration and of prospecting,
and for this purpose may make geophysical, geological studies, obtain samples
and make them its own, open test pits, make analyses, drillings, galleries,
tunnels, roads and other reconnaissance works. RCR will also be especially
authorized to request in favor of the Properties, mining easements of those
contemplated in Article 120 and following and 126 and following of the Mining
Code, being RCR responsible for the payment of the compensations or
indemnifications caused by the constitution of such easements while this
Agreement is effective, without any charge to the Oferrors nor their
Shareholders. RCR shall be responsible for all the activities executed in the
Properties subject of this Agreement. Likewise, RCR binds itself to carry out
its activities in accordance with the technical regulations of protection of the
environment and of safety established in the pertinent legal norms, requesting
the permissions and authorizations as appropriate. In no event does
RCR assume any responsibility for the present conditions of the place where the
mining claims are established, derived from the activities developed prior to
this date, responsibility that is for the exclusive account of the Offeror . 

5

FIFTH. MAINTENANCE OF THE PROPERTY.

5.1. While this Agreement is effective, it will be the
responsibility of RCR to carry out all the actuations contemplated by mining
legislation destined to the defense of the Property from any action of third
parties that pretends to obtain its caducity or extinction, or overlap, RCR
being obliged to take charge only while this Agreement is in effect, of the
payment of the claim fees to which the Properties are subject, under its
exclusive cost and responsibility as well as any cost related with the
maintenance and protection of the Properties, without any charge to the Oferrors
nor their Shareholders, and without being able to repeat against this last ones,
or impute to the agreed price.

5.2. The parties leave evidence of the fact that RCR,
acting in the name and in representation of the Offeror will be authorized to
cover the Properties with a layer of exploration and/or exploitation mining
concessions overlapping them, concessions that if the Option is not exercised
must be transferred to the Offeror by RCR in the state of their proceedings,
free of cost.

5.3. In order to authorize RCR to defend the Properties
judicially, the Offeror, properly represented hereby grants to RCR a special
mandate as broad as may be necessary for the proper fulfillment of its mission
mandate that can be exercised by RCR through any of its ordinary or special
attorneys-in-fact, being free from the obligation to present and justify
accounts of this assignment, and RCR shall inform Offeror in a timely about the
actuations that they may perform in accordance with this mandate.
Notwithstanding the foregoing, the Oferror may keep by his account the oversight
of the defense of the Properties, being able to execute the acts that such
defense suppose, prior notice to the Beneficiary of such acts according to
maintain a due coordination between the parties.

6

SIXTH. PRICE OF THE PURCHASE SALE OFFERED.

6.1. The price will be the equivalent of US$ 5.282.353,
to be paid by RCR on the following opportunities: (a) US$ 132.059 that RCR pays
in this act, in the terms that are detailed in section 6.4 following, the
Shareholders declaring that they have received them to their full satisfaction;
(b) US$ 396.176 after the period of 12 months has elapsed since the date of this
deed; (c) US$ 686.706 after 24 months from the signing of this deed have
elapsed; (d) US$ 898.000 after 36 months have elapsed from the signing of
this deed, and (e ) US$ 3.169.412, after 48 months have elapsed from the signing
of this deed and against the acceptance by RCR of the Offer and the registration
in its name of the Properties in the Registry of Property of the Registrar of
Mines of Copiapó. In the event RCR should decide to exercise the Option before
the period of 48 months of effectiveness of the Option subject of this Agreement
has expired, it must advance the payment of any sum that for account of this
party, fixes the price of the purchase sale that it is owing at the date of the
exercise of the Option in such a way that the fixed part of the price of the
purchase sale is fully paid. 

6.2. Should RCR wish to desist from the Option subject
of this Agreement, RCR binds itself to give notice of this in writing to the
Offeror, through its representative, in a period that cannot be less than 30
days from the expiration date of the payment that it is pertinent to make on
account of the fixed part of the purchase sale price. In the event that for any
reason or motive RCR delays in making any of the payments detailed in letter (b)
to (e) referred to above, then RCR, will have a period of waiting of 15 days
from the date of expiration of the respective installment to get up to date with
the payment. If RCR does not make the pertinent payment within such period, it
will be understood that it desists from exercising the Option subject of this
Agreement and the Agreement will terminate ipso facto, without the need of
judicial or arbitral declaration whatsoever.

7

6.3. The payment of each one of the installments of the
price in letters (b) to (e ) of number 6.1 above will be made in the office of
the attesting Notary of this deed or before whoever succeeds, replaces or substitutes him, against
the joint signature of all the Shareholders of the Offeror, of the corresponding
public deed of receipt. The charge or optional obligation of the Beneficiary
with the Offeror of paying each one of the installments of price mentioned in
this section will be understood fully and duly complied with the delivery to the
Notary that authorizes this deed, of a sight draft issued in the name of each
one of the Shareholders of the Offeror, for the sum that corresponds to each in
proportion to the participation of each one of such Shareholders in the capital
of the Offeror. For the purpose of what is provided in this section, the
Beneficiary will be based on the distribution evidenced on the date of this
instrument, in accordance with following section 6.4, any Shareholder always
being able to inform in writing to RCR about variations of the composition of
the existing Shareholders of the Offeor or of any of them, attaching a
Certificate of Shareholders of the Registrar of Mines of Copiapó (of an ageing
of not more than five days) with at least 10 days of advance from the expiration
of the period of the pertinent installment, or within the five days following
the date on which such information may be required by RCR, as the case may be.
Each sight draft must be delivered at the latest within the times periods that
are mentioned in literals (b) to e) of Section 6.1 above. The sight drafts must
be issued for the quantity corresponding to the installment in question in
proportion to the participation of each one of the respective Shareholders in
the capital of the Offeror, in accordance with the published exchange rate that
corresponds to the date of payment. The Notary will not deliver to any of the
Shareholders of the Offeror the sight draft that corresponds to him/her, except
against the joint signature of all of them of the public deed of reception. The
minutes of the public deed of reception shall be delivered by RCR to the
intervening Notary. The notarial dues that are caused by reason of these
payments will be for account of the Beneficiary. 

6.4. In this act, the Beneficiary pays to the
Shareholders of the Offeror, who declare that they have received to their entire
satisfaction the installment identified in letter a) of section 6.1 above, for
the total of US$ 132.059, which is distributed to the Shareholders of the
Offeror, according to the proportion that corresponds to each one of them in their capital and for the amounts that are
  indicated in each case: (a) Mr. JAIME BARAHONA BALBONTÍN, for
  50 shares, the sum of his equivalent in national currency of $ 35.094.019; and
  (b) Mr. CARLOS BARAHONA TIRADO, for 50 shares, the sum of his equivalent
  in national currency of $35.094.01. The aforementioned shareholders declare
  that they have received to their entire satisfaction the payment of this first
  installment on account of the price of the purchase sale offered. 

8

SEVENTH: OVERPRICE 

Once the following conditions are complied, and the Option is
fully paid: One) (a) that RCR starts to commercially exploit the
Properties, decision that is a matter of exclusive resolution of RCR, then RCR
must pay to the Offeror, together with the Legal Mining Companies owners of the
mining claims “Rosario 1 to 10” (National Roll number 03203-1239-6),
“Julia 1 al 18” (National Roll number 03203-4307-0); “Eliana II 1 al
22” (National Roll number 03203-4829-3) and “Eliana III 1 al 2”
(National Roll number 03203-4830-7), an overprice consisting in a royalty – the
“Royalty” calculated on the basis of the sales of the minerals that are obtained
from the Properties, considered either in individual form or else jointly with
such mining claims hereinafter the “Mineral Products”. From such Royalty or NSR,
SOCIEDAD LEGAL MINERA ELIANA I UNA DE LA SIERRA SAN MARCOS, will be
entitled to receive 52.82% of the amount that must be paid to RCR in accordance
with the liquidation that it must deliver quarterly to the beneficiaries of such
NSR as detailed in this respect in number the following number Eight. The
Royalty will commence to accrue from the date on which RCR starts the commercial
sale of the commercial production of “Mineral Products”- The Royalty will be
calculated on the basis of the production and sale of the “Mineral Products”
equivalent to two per cent of the “Net Smelter Return” – NSR –. The Royalty must
be paid throughout the period when the Properties are exploited. Two) For
these purposes “Net Smelter Return” – NSR – will be understood to be the gross
credit that RCR receives in any certain quarter for the concept of the sale of
Mineral Products, as this term is defined in the following number four,
corresponding to the commercial value of the metals contained less successively:

9

(i) in the case RCR makes sales of
concentrates or precipitates, the costs of the smelting toll, including, as may
be pertinent, metallurgical deductions, charges for fusion and refining, charges
for treatment, fines for impurities and costs of sales and of handling, charged
by the smelter, refinery or other buyer; (ii) the costs of handling,
transportation and insurance of the mineral of direct smelting (as this is
defined hereinbelow) from the Properties or from a –concentrator, whether it is
situated inside or outside the Properties (considered either individually or
jointly with the mining claims referred to in number One above), to a smelter,
refinery or other place of treatment, and (iii) taxes that are applied on the
value of the production or on the basis of the quantity produced, excluding
income taxes; Three) “Direct mineral smelting” will be understood to be
any mineral of such quality that it will have commercial value, and can be
treated directly in smelter without passing through prior treatments of
concentration, extracted from the Properties (considered either individually or
else jointly with the mining claims referred to in number One above).
Four). “Mineral Products” will be understood to be the concentrate,
precipitate or any other material, substance or products, metallic or non
metallic, marketable, derived from the mineral or extracted from the Properties
(considered either individually or else jointly with the mining claims referred
to in number One above), except concentrates, precipitates, or other material or
products that come from other mining exploitations of RCR other than from the
Properties and those concessions referred to in number One) above, and that are
treated jointly with the minerals extracted from the Properties (considered
either individually or else jointly with the mining claims referred to in number
One above) in which case, such concentrates. precipitates or other materials or
products shall not be considered as “Mineral Products”; It will be understood
also that “Mineral Products” are, in its case: metal doré or other refined
metallic product that RCR: may obtain from the mining operations related with
the Properties (considered either individually or else jointly with the mining
claims referred to in number One above) and that are marketed as such, deducting
from their sale price the costs of fusion and refining incurred actually to
obtain it; and the direct mineral smelting that RCR obtains from the mining operations related with the Properties (considered
either individually or else jointly with the mining claims referred to in number
One above) and that are marketed as such, adding to their sale price the costs
incurred by whoever processes it. 

10

 Five) At the latest, within the sixty
days following each quarter after the initiation of the commercial production of
the Properties and of the first sale of Mineral Products, RCR will present to
the Shareholders of the Offeror - applying in section 6.4 of the sixth clause
above- a reasonably detailed statement, (recovery, grades, production, cost and
other relevant for the determination of the NSR) on the last day of the quarter
immediately preceding or that of the reinitiating of commercial production and
first sale of Mineral Products in the case of the first payment, of the
calculation of the Royalty to be paid to the Offeror with respect to the
pertinent quarter; Six) Any adjustment of calculation of the Royalty that
could have its origin in accordance with what has been exposed, as for example,
as a result of a quarterly statement to which reference is made in number Eight
of this clause, shall be effected in the immediately following quarterly
statement; Seven) For the purposes of the calculation of the amount of
the Royalty, if RCR should sell a Mineral Product to one of its related,
subsidiary or affiliated companies, without having negotiated their sale price
in an equal manner, in such case, and only for he purposes of the calculation of
the NSR and regardless of the actual amount of the pertinent sale price, RCR
must add to the actual amount of such sale price, the sum that is sufficient so
that such sale price constitutes a net reasonable sale price of the Mineral
Product, as if it had been negotiated in an equal manner, after considering all
the pertinent circumstances (including without limitation, the market conditions
then prevailing with respect to the Mineral Product concentrates or other
materials or products similar to the corresponding product). Through
notification RCR will inform the Offeror about the amount of the reasonable sale
price and if the Offeror does not object to it within the sixty days following
the receipt of such notice, such amount will be definitive and compulsory for
the purposes of this clause; Eight) RCR will prepare a quarterly
statement of the royalty at the latest within the sixty days following the
closing of each quarter and RCR shall deliver to the Shareholders of the Offeror
immediately a copy of such statement; 

11

 Nine) RCR binds itself to maintain complete updated records as
regards the production and sale of Mineral Products, including accounts,
registries, statements and returns related with the provisions of treatment and
smelting of the Mineral Product, the Shareholders of the Offeror, acting jointly
with the legal mining companies offerors of the mining claims referred to in
number one above and through a sole representative being authorized, at all
reasonable times, even during a period of sixty days after the termination or
revocation of this deed, to inspect such registries, statements and returns, and
to make copies thereof in order to verify the amount of the payments of Royalty
that RCR must make to the Offeror in accordance with what is herein provided.
The Offeror shall be entitled to ask Independent external auditors, at its own
cost, to make an annual audit of such accounts. Ten) All the payments for
the concept of Royalty will be considered concluding in the full compliance of
all the obligations of RCR in this connection, if such payments or their
calculation are not refuted by the Offeror, acting in the way indicated in the
preceding number, within the sixty days following the receipt by the Offeror of
the quarterly statement referred to in number Eight. Eleven) RCR will
give notice to the Offeror of the date of commencement of the Commercial
production and of the first commercial sale of Mineral Products. RCR may extract
reasonable quantities of mineral and rocks from the Properties (considered
either individually or else jointly with the mining claims referred to in number
one above) for purposes of sampling in volume and of assay, without having to
pay Royalty for it to the Offeror, unless income is generated for the pertinent
mineral and rocks; Twelve) RCR will be entitled to mix with minerals of
the Properties (considered either individually or else jointly with the mining
claims referred to in number one above) the mineral obtained from other
properties, subject to the fact that prior to such mixture, RCR must adopt and
apply reasonable practices and procedures of weighing, determination of the
humidity content, sampling and assays, and also must use reasonable recovery and
accurate factors to establish the quantities of products derived from or
attributable to the mineral extracted and produced of the Properties. RCR will
maintain exact records of the results of the samplings, weight and analyses of
the mineral extracted and produced from the Properties (considered either individually or else jointly with the mining
clams referred to in number one above).

12

 Thirteen) In any time from this
date, RCR will be entitled to acquire royalty both from the Offeror and the
legal mining companies offerors of the mining claims referred to in number One
above, once commercial production starts in the Properties, paying as sole price
for such purchase the sum of US$ 2,000,000 in cash, after which the obligation
of RCR of paying the Royalty to the Offeror will end. From such sum, the Offeror
will be entitled to receive 52.82% . Fourteen) Since the commencement of
the production, the Offeror, acting always jointly with the legal mining
companies offerors of the mining claims referred to in Number One above, will
have always the possibility selling to a third party their right to collect the
Royalty agreed, subject to the procedure denominated “first refusal” which is
described below. In the event the Offeror, acting always jointly with the legal
mining companies offerors of the mining claims referred to in number One above,
decide to sell such right to a third party, they will be obliged to notify RCR
in writing about the offer that it receives from the third party, commencing to
accrue since the date of reception of the notice in the domicile of the
contractual mining company in a period of 60 days for RCR to take a decision
about such offer. RCR will be entitled to match the offer notified by the
Offeror, and for this purpose it must send a written notice to the Offeror
within such period of 60 days. If it does not reply within such period, it will
be understood that it has decided not to acquire the right of the Offeror,
always jointly with the legal mining companies offerors of the mining claims
referred to in number One above, to collect and receive the Royalty agreed.
Should RCR decide to acquire such right in the price and conditions offered by
the third party to the Offeror, then the purchase of the rights of the Offeror,
jointly with the same right of the legal mining companies offerors of the mining
claims referred to in number One above, must be implemented through a public
deed within the 30 days following the expiration of the period of 60 days
already referred to. In the event RCR does not reply or decides not to acquire
such rights within the period mentioned, then the Offeror, always jointly with
the legal mining companies offerors of the mining claims referred to in number
One above, will be authorized to sell its rights to such third party and in the
conditions (price and modalities, if applicable) reported in the written notice
sent to RCR. The respective Contract, that must be evidenced by public deed must
be executed between the Offeror, always jointly with the legal mining companies
offerors of the mining claims referred to in number One above, and the third in
the maximum period of 60 days counted from the expiration of the original period
of 60 days that RCR has to respond to the notice of the Offeror. If the Contract
is not executed with the third party within the aforementioned time period, it
will be understood that such offer has not been successful, what is provided for
in this number having application again. 

13

EIGHTH: OBLIGATION OF THE OFFEROR WITH RESPECT TO THE
PROPERTIES. 

The Properties subject of this Option, must be maintained
during their effectiveness by the Offeror free from any encumbrance, prohibition
(with the exception of mortgage and prohibition that in this same instrument it
constitutes in favor of RCR and of the lease agreement referred to in the first
clause above) embargo and litigation. The Offeror will be obliged to carry out
at its cost all the actuations that may be required by RCR during the
effectiveness of the Option tending to solve any defect or objection of the
titles of dominion of the Properties. If this is not done, RCR may request the
arbitrator to retain in his hands all or part of the price of the Option until
such time as it is corrected at law. 

As the Property is affected by two lease agreement both
constituted by public deed dated October 10th 2008, delivered in the
Notary of Copiapó of Mr. Hernán Cañas Valdés, one in favor of Mr. Jaime
Enrique Barahona Balbontín, registered on folio 130, number 52; and other in
favor of Mr. Sergio Barahona Tirado, registered on folio 132, number 53,
both of the Registry of Mortgages and Encumbrances of the year 2008 of the
Registrar of Mines of Copiapó, in this act Mr. Jaime Enrique Barahona Balbontín
and Mr. Sergio Barahona Tirado, both before individualized, binds themselves, to
terminate this lease agreements, issuing the documents that may be necessary for such purpose jointly with the administrator
  of the Offeror, releasing all the pertinent registrations in the Registry of
  Encumbrances prior to the expiration of the period of 48 months referred to
  in the third clause above. If such termination does not occur, Mr. JAIME
  ENRIQUE BARAHONA BALBONTÍN and MR. SERGIO BARAHONA TIRADO,
  and the Offeror hereby confer special power of attorney to RCR, as broad as
  may be necessary for the proper fulfillment of its commission, to terminate
  such contracts and proceed to request the release of the registrations in the
  pertinent Registrars, any payment that as a consequence of such termination
  must be paid by RCR must be for the exclusive account of the Offeror. And such
  sum shall be deducted from the value that the Offeror is entitled to receive
  for the payment of the price of the purchase sale.

14

NINTH: STATE IN WHICH THE PROPERTIES WILL BE SOLD.

The Properties will be sold as they are, with all their uses,
entitlements, rights and registered easements, the seller responding for the
clearance of titles in accordance with the law.

TENTH: RESPONSIBILITY FOR OBTAINMENT OF PERMITS. 

The parties leave on record that the obtainment of any kind of
permits that are required for the exploration and/or exploitation of the
Properties will be for the exclusive account of RCR, and in any case the Offeror
must provide all the collaboration possible. 

ELEVENTH: ASSIGNMENT OF RIGHTS

It is hereby convened that RCR will be authorized to be able to
assign either fully or partially the rights and obligations that arise for it
under this Agreement, the assignee becoming responsible for the same obligations
that RCR contracts in this instrument and about which express evidence must be
left in the assignment contract, and for this the sending to the Offeror of a
written notice of such assignment, to which a true copy of the Assignment
Contract will be attached will suffice. The Offeror may not assign any of its rights and
obligations without the prior written consent of RCR.

15

TWELFTH: FORCE MAJEURE 

It is hereby convened that the obligations assumed by RCR by
virtue of this Agreement in favor of the Offeror, specifically those relating to
the payment of the purchase sale price detailed in the sixth clause above, will
be suspended in cases when events occur that are constitutive of Force Majeure,
according to the concept defined by Article 45 of the Civil Code including
events such as, but without this being restrictive, expropriation or
confiscation of the facilities, fulfillment of orders or requirements of any
governmental authority, absolute and insurmountable opposition of the owners of
surface lands comprised by the Properties, acts of war, rebellion, sabotage and
damage resulting therefrom, fire, flood, earthquake, explosion or accidents,
riots, illegal strikes or any other similar case, whether of the same class or
nature or that have not been within the control of RCR and that, even exercising
reasonable painstaking care, could not have been forestalled. The above does not
release RCR from its obligation of maintenance of the Properties, including the
payment of its claim fees. RCR shall notify the Shareholders of the Offeror, in
writing, of any case of Force Majeure within a period of ten (10) calendar days,
counted from the date on which such event occurred, which must also be
communicated by RCR in writing; the fulfillment of the obligations shall be
resumed immediately. In case of disagreement in the judgement of force majeure,
the Offeror may occur to the designed arbitrator at this instrument, asking what
they considerer convenient to their rights.

THIRTEENTH: NOTICE OF TERMINATION OF AGREEMENT 

At its sole discretion, during the effectiveness of this
Agreement RCR may terminate it at any time giving notice in writing to the
Shareholders of the Offeror – applying what is provided in Numeral six point
four of the sixth clause above - thirty days in advance, subject to its
complying with its obligations that are detailed in the following fourteenth
clause. In any event, if the Option is not exercised within the period of 48 months given in this Agreement, notwithstanding
such notice is not sent, it will be understood that RCR has waived such
exercise. Since the date of such notice, RCR will cease to have any obligation
with respect to the Properties and payments to the Shareholders of the Offeror,
with the exception of what is convened in the following fourteenth clause. 

16

FOURTEENTH: OBLIGATIONS OF RCR UPON TERMINATION OF THE
AGREEMENT 

If for any reason the purchase sale offered is not implemented,
RCR must deliver free to the Offeror the information obtained as a result the
exploration made in accordance with this Agreement, both geological, of
drillings, samplings, geophysics, analyses, drill cores, grades, etc., the above
enumeration merely being an example. Likewise, RCR must completely vacate from
the Properties to which this Contract refers and which will be the object of the
exploration, from personnel, constructions, installations, equipments,
provisions and machinery. RCR must comply with these obligations within the
maximum period of sixty days counted as may be pertinent from the date on
whichits decision is notified by certified letter that it will not persevere in
the purchase sale Agreement offered or else when the period of effectiveness of
the Option expires.

FIFTEENTH: EXCHANGE RATE 

The sums expressed in dollars in this deed will be liquidated
in pesos, national currency, at the exchange rate of the observed dollar of the
United States of America published in the Official Gazette on the day of the
respective calculation, in accordance with what is provided in number six of
Chapter One of the Compendium of Norms of Foreign Exchange. In the absence of
such exchange rate, the exchange rate referred to in article 20 paragraph 1 of
the Law 18,010 will be applied. 

17

SIXTEENTH: COMMUNICATIONS AND NOTICES 

Any notice or communication that one of the parties must give
to the other as stipulated in this instrument, and provided that in this a
special form of notice is not contemplated, must be sent in writing in Spanish –
applying what is provided in Number six point four of the sixth clause above -
and will be considered delivered if the party notified receives it in his
domicile indicated at the commencement of this Contract, or if it is sent by
certified mail, the Notary Public sends it with the prepaid dues and the letter
is addressed to such party in his domicile previously indicated. In the notices
by certified letter the party to whom it is addressed will be understood
notified on the fifth business day after its remittance. Either of the parties
may, through notice sent to the other in the way provided for in this Clause,
change its domicile for the reception of such notices. The notices may also be
sent by fax or electronic mail, but in any case the original must be sent by
Mail or by hand within the following twenty four hours. 

SEVENTEENTH: MORTGAGE AND PROHIBITION 

The Offeror hereby constitutes in favor of RCR for which its
representatives accept, first degree mortgage with respect to the Properties and
prohibition to encumber, alienate or dispose in any way of the Properties, or
enter into acts or Contracts that limit or affect the tenancy, possession or
ownership thereof, without the prior and written consent of RCR, including among
the Properties the exploration concessions or mining claims that succeed or
substitute such Properties, for which the Offeror must concur by simple
requirement of RCR to the execution of the deeds that may be necessary to
materialize such mortgages and prohibitions. Upon the granting of the acceptance
of the offer of purchase dealt with in this Contract, or if such Option is
waived, such mortgage and prohibitions will have no value or effect and their
release may be requested from the Registrar of Mines of Copiapó. 

EIGHTEENTH: RELEASE. 

Mr. JULIO CÉSAR MORALES NEYRA, before individualized,
  in representation of SERVICIOS JURÍDICOS E INVERSIONES KOPIAP Y COMPAÑÍA
  LIMITADA, by this act releases the prohibition that affects the claim
“ELIANA I 1 to 20”, agreed in favor of his represented by public deed
constituted at this Notary dated September 2nd 2004, which inscription is
pending.

18

NINETEENTH: RIGHT TO EXPLOIT THE PROPERTIES 

19.1 During the effectiveness of this Option Agreement,
the Offeror will be entitled to exploite, when it’s legally proper, the mining
claims “ELIANA I 1 to 20”, right that will be extinguished ipso facto on
the date of the acceptance of the option on the part of RCR and payment of the
last installment of the price indicated in section 6.1 of the sixth clause
above. RCR recognizes this right of exploiting the Properties during the
effectiveness of this Option Agreement, with a monthly total limit of up to
4,000 tons of mineral.

19.2 Without prejudice to the above in the event RCR
should require to carry out exploration works, in the terms of the above Clause
Four in places where the Offeror executes mining operations, the latter shall
coordinate with RCR in order to allow it to carry out the respective prospecting
work. For these purposes, the Offeror binds itself to deliver to RCR a sketch
with the location of the present extraction work, within the period of 10 days,
counted from this date. Likewise, in the event of carrying out new extraction
work, these must be reported in writing to RCR, attaching sketches with their
location, with an advance of at least 30 days from the commencement of the
respective works. 

19.3 RCR will be authorized to request the Offeror the
detail of exploitation that it develops monthly in the Properties. 

19.4 The Offeror must perform the mining exploitation
works for which it is authorized in accordance with this clause in line with the
applicable norms of mining, labor and environmental safety that may be
pertinent, whose timely fulfillment are its exclusive responsibility.

19

TWENTIETH: EXPENSES 

The notarial dues and those of the Registrar of Mines and Real
Estate shall be for account of RCR. 

TWENTY- FIRST: ARBITRATION 

Should there arise any discrepancy, difficulty, difference of
opinion or controversy between the parties in relation with the effectiveness of
this Agreement, the validity, interpretation, breach, partial fulfillment,
execution or total or partial lack of execution or resolution thereof or any
other cause with relation to this Agreement, it will be resolved by arbitration,
designing already for this purpose and in the following order Mr. RAFAEL
VERGARA GUTIERREZ, if he couldn’t make it, Mr. MARIO MATURANA CLARO
and if he couldn’t make it Mr. JUAN LUIS OSSA BULNES. If none of them
could make it, the respective arbitrator will be designee in accordance with the
Regulations of Centro de Arbitrajes of Camara de Comercio de Santiago A.G.,
whose provisions are evidenced in the public deed of December 10, 1992 delivered
in the Notary of Santiago of Mr. Sergio Rodriguez Garcés and its subsequent
modifications, that forming an integral part of this clause, the parties declare
they know and accept. The parties will appoint the arbitrator ex aequo et bono
by mutual agreement and in case of disagreement, the parties grant special
irrevocable mandate to Camara de Comercio de Santiago A.G. so that, at the
written request of either of them, it may designate the arbitrator ex aequo et
bono from among the members of the arbitral corps of the Arbitrator Center of
that Chamber who is or has been Professor Of Mining Law at any of the Faculties
of Law of the Universidad de Chile or Universidad Católica de Chile, or
otherwise, Professor of Civil Law of any of such Faculties. There will be no
remedy against the resolutions of the arbitrator, so the parties expressly waive
them. The arbitrator is especially authorized to resolve any matter related with
his competence and/or jurisdiction. 

TWENTY-SECOND: JURISDICTION 

For all legal purposes that can be derived from this Agreement,
the parties establish their domicile in the city of Santiago. 

20

TWENTY THIRD: FACULTY 

The bearer of a certified copy of this deed is authorized to
request the registrations subregistrations and annotations that may be pertinent
in the Registrars’ offices. 

TWENTY-FOURTH: AUTHORIZATION 

It is placed on record that the Offeror has been expressly
authorized by its shareholders to enter into this Option Agreement, in
accordance with resolutions taken at the General Shareholders Meetings evidenced
by public deed delivered before this same Notary and on this same date.

TWENTY-FIFTH: DEFINITIVE AND UNIQUE AGREEMENT 

The appearing parties declare that this Option Agreement
constitutes the only and definitive agreement between them with respect to the
Properties declaring furthermore the fulfillment of the Letter of Intent
executed between the Shareholders of the Offeror and Mr. Francisco Schuberts
Seiffert, by private instrument authorized before the Notary of Copiapó of Mr.
Luis Contreras Fuentes, on September 24 of this year, respectively, grating each
other the broadest and most complete release in respect of them.

AUTHORITIES 

The authority of Mr. Francisco Schuberts Seiffert to
appear on behalf of RIO CONDOR RESOURCES S.A. is evidenced in public deed
delivered on July 3, 2009 in the Notary of Santiago of Mr. Raúl Iván Perry
Pefauer, which is not inserted as it is known to the parties and to the
attesting Notary.

/s/ Francisco Schuberts Seiffert                                   

Francisco Schuberts Seiffert

/s/ Jaime Barahona Balbontin                                       

JAIME BARAHONA BALBONTIN

/s/ Carlos Barahona Tirado                                           

CARLOS BARAHONA TIRADO

21

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