Common use of Grant and Exercise of Option Clause in Contracts

Grant and Exercise of Option. 2. 1 The Optionor hereby grants to the Optionee the sole and exclusive right and option to acquire a 70% undivided interest in and to the Property free and clear of all charges, encumbrances and claims on the following terms and subject to the following conditions: (a) The Option shall be exercised by the Optionee: (i) paying the Optionor $1,000 US on the execution of this Agreement, the receipt of which is hereby acknowledged by the Optionor; (ii) incurring Exploration Expenditures of $75,250 US on the Property as follows; (A) $24,000 US on or before November 30, 2002; (B) further $20,000 US on or before November 30, 2003; and (C) a further $31,250 US on or before November 30, 2004. (b) In the event that the Optionee spends, in any of the above periods, less than the specified sum, it may pay to the Optionor the difference between the amount it actually spent and the specified sum before the expiry of that period in full satisfaction of the Exploration Expenditures to be incurred. In the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the Exploration Expenditures to be incurred in succeeding periods. (c) Upon exercise of the Option, a 70% undivided right, title and interest in and to the Property shall vest in the Optionee free and clear of all charges, encumbrances and claims, subject only to the following payments required pursuant to the R.T. Heard & Associates Agreement: (i) payment of $50,000 CDN per year, with $25,000 CDN payable on May 27 and November 27 of each year, as provided by Section 2 of the R.T. Heard & Associates Agreement (the "R.T. Heard & Associates Royalty"); (ii) payment of a 4% Gross Overriding Royalty, as provided by Section 4 of the R.T. Heard & Associates Agreement (the "R.T. Heard & Associates ▇▇▇▇"); (iii) payment of a 2% Net Smelter Return Royalty, as provided by Section 4 of the R.T. Heard & Associates Agreement (the "R.T. Heard & Associates NSR").

Grant and Exercise of Option. 2. 1 4.1 The Optionor hereby grants to the Optionee the sole and exclusive right and option (the "Option") to acquire up to a 70% undivided fifty-one percent (51%) interest in and the Property, such 51% interest, subject to the Property Underlying Royalty, to be free and clear of all liens, charges, encumbrances encumbrances, security interests and adverse claims on arising from or through the following terms Optionor, and subject to the following conditionslaws applicable to the Property. 4.2 The Optionee has approximately four and one-half (4.5) years to earn a fifty-one percent (51%) interest in the Property (the "Earn-In"). The Optionee must incur fifty percent (50%) or more of its Expenditures and fifty percent (50%) or more of its Option Payments before any earn-in is realized. Once the 50% in Work Commitments and the 50% in Option Payments has been reached, the Optionee will have a twenty-five and one-half percent (25.5%) interest in the Property and the Optionee's interest will increase proportionate to its Work Commitments and Option Payments to the maximum of a fifty-one percent (51%) interest in the Property at which point both the Optionee' interest and the Optionor's interest will be converted to working interests. 4.3 The Optionee must incur or caused to be incurred expenditures of not less than an aggregate of US$10,000,000 (the "Work Commitments") with minimum expenditures as follows: (a) US$1,800,000 by November 30, 2008; (b) US$2,200,000 by November 30, 2009; (c) US$2,800,000 by November 30, 2010; and (d) US$3,200,000 by November 30, 2011. If the Optionee does not meet the minimum expenditures by the due date set out in this §4.3, the Optionor will deliver written notice to the Optionee and the Optionee will have 30 calendar days from the date of receipt of such notice to meet the overdue minimum payments, including making a cash payment directly to the Optionor for the difference between the actual and the required expenditures or by prepaying its Work Commitments and paying its Option Payments. If the Optionee defaults under this §4.3, the Earn-In right is suspended until written consent of the Optionor is obtained waiving the default. 4.4 The Option shall must make or cause to be exercised made, payments to the Optionor of not less than an aggregate of €3,000,000 (the "Option Payments") over four years as follows: (a) €30,000 by May 22, 2007; which Option Payment has now been made; (b) €270,000 on the Closing Date; (c) €600,000 by November 30, 2008; (d) €900,000 by November 30, 2009; and (e) €1,200,000 by November 30, 2010. The €30,000 payment to be paid by May 22, 2007 as set out in §4.4(a) is non-refundable once paid. 4.5 Following the Earn-In by the Optionee, the Optionor and the Optionee will form a Joint Venture for the purpose of carrying out further development work and production on the Property and will in good faith use their reasonable commercial efforts to negotiate and execute a Joint Venture Agreement, substantially in the form of Schedule C hereto; within 90 calendar days of the completion of the Earn-In by the Optionee; and said agreement shall include, but not be limited to, the following provisions representing the parties' current intentions herein: (ia) paying the Optionor $1,000 US on initial participating interests of the execution of this Agreement, parties in the receipt of which is hereby acknowledged by Joint Venture will be twenty-five and one-half percent (25.5%) as to the Optionee and seventy-four and one-half percent (74.5%) as to the Optionor; (ii) incurring Exploration Expenditures of $75,250 US on the Property as follows; (A) $24,000 US on or before November 30, 2002; (B) further $20,000 US on or before November 30, 2003; and (C) a further $31,250 US on or before November 30, 2004. (b) In the event that the Optionee spends, in any shall be the initial manager of the above periods, less than the specified sum, it may pay to the Optionor the difference between the amount it actually spent Joint Venture and the specified sum before Optionee shall remain the expiry of that period manager until its resignation. Property claims shall be registered in full satisfaction the name of the Exploration Expenditures to be incurred. In manager on behalf of the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the Exploration Expenditures to be incurred in succeeding periods.Joint Venture; (c) Upon exercise the operations of the OptionJoint Venture will be overseen by a management committee (the "Management Committee") comprised of five members of whom two (2) members will be selected by the Optionor, two (2) members will be selected by the Optionee and the fifth member will be the Vice-President, Exploration of the Optionee who will also act as Chair of the Management Committee. The parties acknowledge that ▇▇▇▇▇▇▇ ▇▇▇▇▇ is currently the Vice President, Exploration of the Optionee; (d) once the Work Commitments totalling US$10,000,000 have been incurred by the Optionee under this Agreement, the participating interests of the parties in the Joint Venture will be subject to dilution for non-contribution to costs in proportion to their interests, on a 70straight line basis. For example, if after the Optionee has earned its fifty-one percent (51%) interest by fulfilling the Work Commitments and Option Payments, the Property is explored with a further US$5,000,000 and the Optionor does not pay its proportionate share of US$2,450,000, the Optionor's forty-nine percent (49%) working interest will be reduced to 49% undivided rightx (US$10,000,000 / (US$10,000,000 + US$5,000,000) = 32.7%; (e) the working interest of the Optionor can fall to no less than ten percent (10%) at which point it will be converted into a carried interest and the Optionee will have the right to purchase the Optionor's 10% carried interest by paying US$10,000,000 to the Optionor; (f) notwithstanding any other provisions contained in this Agreement, title the Optionor will retain a Net Smelter Return Royalty of two percent (2%) should any area within the Property be developed into an operating mine; said Net Smelter Return Royalty to be calculated in accordance with the provisions of the proposed Schedule D; (g) each party will have 15 calendar days following adoption of work programs to elect to participate therein and invoices rendered to participating parties in respect of any work program shall be payable within 20 calendar days; (h) each party will grant to the other a 21 calendar day right of first refusal with respect to any proposed sale of such party's working interest in and the Joint Venture to a third party. If a sale is completed the third party must agree to be bound to the Property shall vest in terms of the Optionee free and clear of all charges, encumbrances and claims, subject only to the following payments required pursuant to the R.T. Heard & Associates Joint Venture Agreement:; and (i) payment of $50,000 CDN per year, with $25,000 CDN payable on May 27 and November 27 of each year, as provided by Section 2 of in the R.T. Heard & Associates Agreement (the "R.T. Heard & Associates Royalty"); (ii) payment event of a 4% Gross Overriding Royalty, as provided by Section 4 of dispute in reaching a binding Joint Venture Agreement the R.T. Heard & Associates Agreement (the "R.T. Heard & Associates ▇▇▇▇"); (iii) payment of parties shall refer any such dispute to binding arbitration to have a 2% Net Smelter Return Royalty, as provided by Section 4 of the R.T. Heard & Associates Agreement (the "R.T. Heard & Associates NSR")binding agreement imposed on themselves.

Grant and Exercise of Option. 2. 1 3.1 The Optionor Optionors hereby grants grant to the Optionee the sole and exclusive right and option (the “Option”) in accordance with this Section 3, to acquire a 70% undivided interest in and to the Property free and clear of all chargespurchase, encumbrances and claims on the following terms and subject to the following conditions: (a) The Option shall be exercised by the Optionee: (i) paying the Optionor $1,000 US on the execution of this AgreementNSR Royalty, the receipt of which is hereby acknowledged by the Optionor; (ii) incurring Exploration Expenditures of $75,250 US on the Property as follows; (A) $24,000 US on or before November 30, 2002; (B) further $20,000 US on or before November 30, 2003; and (C) a further $31,250 US on or before November 30, 2004. (b) In the event that the Optionee spends, in any 100% of the above periods, less than the specified sum, it may pay to the Optionor the difference between the amount it actually spent and the specified sum before the expiry of that period in full satisfaction of the Exploration Expenditures to be incurred. In the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the Exploration Expenditures to be incurred in succeeding periods. (c) Upon exercise of the Option, a 70% undivided right, title and interest in and to the Property shall vest in the Optionee Claims, free and clear of all charges, encumbrances and claimsEncumbrances. 3.2 To exercise the Option, subject only to the following payments required pursuant terms and conditions of this Agreement, the Optionee must: (a) issue in the name of Golden Arc and deliver to the R.T. Heard & Associates lawyer for the Optionor 100,000 Shares by January 7, 2005 (which was done); (b) pay to the Optionor $30,000 by January 7, 2005, by delivering to the lawyer for the Optionor a certified cheque or bank draft made payable to the lawyer for the Optionor in Trust (which was done); (c) issue and deliver to the Optionor 200,000 Shares by January 7, 2005 (which was done); (d) pay to the Optionor $40,000 by May 6, 2005, by delivering to the lawyer for the Optionor a certified cheque or bank draft made payable to the lawyer for the Optionor in Trust (which was done); (e) issue and deliver to the Optionor a further 200,000 Shares by February 25, 2005 (which was done); (f) to cause the filing of an application under Rule 15c2-11 of the United States Securities Exchange Act of 1934 and then cause the filing to be accepted by the National Association of Securities Dealers and then cause the commencement of trading of the shares of the Optionee on the United States Bulletin Board (which was done); (g) issue and deliver to the Optionor a further 400,000 Shares by September 5, 2005 (which was done); (h) issue and deliver to the Optionor 400,000 Shares at the signing of this Agreement; (i) pay the Optionors their reasonable legal expenses relating to (a) the quiet title action and (b) the various breaches of this Agreement by the Optionee and the resulting amendments, including the preparation of this Agreement at the close of a private placement of shares and full warrants at the price of $0.30 per share caused by the Optionors and, the Optionee will do all such things as may be necessary to facilitate such private placement in an expeditious manner, including the making of all applications and the obtaining of all necessary approvals; (j) by July 31, 2006, or as soon as possible thereafter: (i) payment prepare a technical report prepared in accordance with National Instrument 43- 101 and it is agreed that the author of $50,000 CDN per year, with $25,000 CDN payable on May 27 and November 27 of each year, as provided by Section 2 such report need not be independent of the R.T. Heard & Associates Agreement (the "R.T. Heard & Associates Royalty")Optionee; (ii) payment prepare and deliver to the Optionors an Exploration Expense Report for the period from December 3, 2004 to June 30, 2006; and (iii) deliver to the Optionors all data, information and reports on work carried out by the Optionee during the Option Period on the Claims, all drill core, assay pulps, maps, drilling logs, assay results and other technical data compiled by the Optionee with respect to the Claims and copies of a 4% Gross Overriding Royaltyall books, as provided accounts and records of operations conducted by Section 4 or on behalf of the R.T. Heard & Associates Agreement Optionee on the Claims and not previously delivered to the Optionors, all of which material is to presented in both electronic (the "R.T. Heard & Associates ▇▇▇▇"if available) and hard copy; (k) prepare technical reports in accordance with Subsection 12.1(e); (l) incur cumulative Exploration Expense of not less than $500,000 on the Claims by December 31, 2006, including at least $200,000 of cumulative Exploration Expense on the Golden Arc Claims (which the Optionee agrees and commits to incur), and it is agreed that none of such $200,000 of cumulative Exploration Expense includes any amounts listed in (i), (ii), (iii), (iv), (vi), (x) payment of a 2% Net Smelter Return Royalty, as provided by Section 4 or (xi) of the R.T. Heard & Associates Agreement definition of Exploration Expense; (m) incur cumulative Exploration Expense of not less than $2,000,000 on the Claims by December 31, 2007; (n) issue and deliver to the Optionor 500,000 Shares by December 31, 2007; (o) incur cumulative Exploration Expense of not less than $4,000,000 on the Claims by December 31, 2008; (p) prepare and pay for a Pre-Feasibility Study on the Claims and deliver that study to the Optionors by June 30, 2009; and (q) deliver by June 30, 2009 to the Optionors a written notice that all things sets out in Subsection 3.2 have been completed within the time frames set out therein and that the Optionee elects to exercise the Option (the "R.T. Heard & Associates NSR"“Notice of Exercise”). 3.3 If the shares of the Optionee are subdivided into a greater number of shares of the Optionee the number of shares deliverable hereunder will be increased proportionately as the case may be.