Common use of Exercise of First Option Clause in Contracts

Exercise of First Option. 4.1 In order to exercise the First Option, the Optionee must not be in breach of any term of this Agreement and must: (a) pay to the Optionor $240,000 as follows: (i) pay the Optionor a $20,000 by December 31, 2011; (ii) pay the Optionor a further $20,000 by June 30, 2012; (iii) pay the Optionor a further $20,000 by December 31, 2012; (iv) pay the Optionor a further $30,000 by June 30, 2013; (v) pay the Optionor a further $50,000 by December 31, 2013; and (vi) pay the Optionor a further $100,000 by December 31, 2014; (b) issue and deliver Shares to the Optionor, as follows: (i) at the signing or the deemed signing of this Agreement, but not later than March 4, 2011, issue and deliver to the Optionor 3,000,000 Shares (which was done); (ii) issue and deliver to the Optionor a further 2,000,000 Shares by December 31, 2011; (iii) issue and deliver to the Optionor a further 2,000,000 Shares by December 31, 2012; (iv) issue and deliver to the Optionor a further 3,000,000 Shares by December 31, 2013; (v) issue and deliver to the Optionor a further 3,000,000 Shares by December 31, 2014; and (vi) issue and deliver to the Optionor a further number of Shares being equal to 10% of the number of issued and outstanding shares in the capital of the Optionee at the time of the election under Section 7.1(a) or (b) or deemed election under Section 7.1, such Shares to be delivered: (A) within five Business Days of such election or deemed election; and (B) not later than March 31, 2015; (c) incur further Exploration Expense of at least $4,000,000 as follows: (i) incur Exploration Expense of at least $150,000 by March 31, 2012 (which is a firm commitment); (ii) incur Cumulative Exploration Expense of at least $350,000 by December 31, 2012 (which is a firm commitment); (iii) incur Cumulative Exploration Expense of at least $1,000,000 by December 31, 2013; and (iv) incur Cumulative Exploration Expense of at least $4,000,000 by December 31, 2014; (d) subject to Section 4.2, by February 28, 2013, cause the common shares of the Optionee to be fully listed on a Canadian Stock Exchange; (e) do and pay for all things necessary in order for the drafting of a Pre-feasibility Report and have drafted and pay for a Pre-feasibility Report pertaining to the Property and deliver a copy of that Pre-feasibility Report to the Optionor, all by June 30, 2015; (f) keep the Property in good standing until June 30, 2015; and (g) deliver to the Optionor a Notice of Exercise of Option & Compliance Certificate by June 30, 2015. 4.2 In the event that following February 20, 2013 and prior to February 28, 2013, the Optionee determines that it will be unable to comply with Section 4.1(d) by February 28, 2013, the Optionee may elect to pay the Optionor $30,000 not later than February 28, 2013, in which case the date by which the requirement set forth in Section 4.1(d) must be completed will be extended to May 31, 2013 provided that the Optionee delivers to the Optionor a certificate to the satisfaction of the Optionee, acting reasonably, executed by each of the Chief Executive Officer and the Chief Financial Officer of the Optionee on behalf of the Optionee and in no way in their own personal capacities, stating the steps that the Optionee has performed to comply with Section 4.1(d). 4.3 In the event that the Optionee fails to incur Exploration Expense in accordance with Section 4.1(c), the Optionee may make payment to the Optionor by cash, certified cheque, money order or wire transfer in the amount of deficiency of such required Exploration Expense within 30 days of the relevant date set out in Section 4.1(c), in which case the Optionee will be deemed to have incurred the required Exploration Expense within the required period. 4.4 At the sole election of the Optionor made from time to time, each of such elections to be made at least 10 Business Days prior to the dates set out in Section 4.1(a), the Optionee, instead of paying any of the amounts set out in Section 4.1(a) in cash, will instead pay such elected payment set out in Section 4.1(a) by issuing and delivering to the Optionor, Shares at the deemed price being equal to the Discounted Market Price as of the date being 10 Business Days prior to the dates set out in Section 4.1(a), and such Shares will be delivered to the Optionor by the dates set out in Section 4.1(a). 4.5 Notwithstanding any term of this Agreement, the Optionee may, at its sole option, pay any money amount, issue and deliver any Shares, incur Exploration Expense and do such other things set out in Section 4.1 prior to the dates set out in Section 4.1 provided that the Optionee has first given the Optionor the opportunity to make an election under Section 4.4.

Exercise of First Option. 4.1 In order to exercise the First Option, the Optionee must not be in breach of any term of this Agreement and must: (a) pay to the Optionor $240,000 as follows: (i) pay the Optionor a $20,000 by December 31, 2011; (ii) pay the Optionor a further $20,000 by June 30, 2012; (iii) pay the Optionor a further $20,000 by December 31, 2012; (iv) pay the Optionor a further $30,000 by June 30, 2013; (v) pay the Optionor a further $50,000 by December 31, 2013; and (vi) pay the Optionor a further $100,000 by December 31, 2014; (b) issue and deliver Shares to the Optionor, as follows: (i) at the signing or the deemed signing of this Agreement, but not later than March 4, 2011, issue and deliver to the Optionor 3,000,000 Shares (which was done); (ii) issue and deliver to the Optionor a further 2,000,000 Shares by December 31, 2011; ; (iii) issue and deliver to the Optionor a further 2,000,000 Shares by December 31, 2012; (iv) issue and deliver to the Optionor a further 3,000,000 Shares by December 31, 2013; (v) issue and deliver to the Optionor a further 3,000,000 Shares by December 31, 2014; and (vi) issue and deliver to the Optionor a further number of Shares being equal to 10% of the number of issued and outstanding shares in the capital of the Optionee at the time of the election under Section 7.1(a) or (b) or deemed election under Section 7.1, such Shares to be delivered: (A) within five Business Days of such election or deemed election; and (B) not later than March 31, 2015; (c) incur further Exploration Expense of at least $4,000,000 as follows: (i) incur Exploration Expense of at least $150,000 by March 31, 2012 (which is a firm commitment); (ii) incur Cumulative Exploration Expense of at least $350,000 by December 31, 2012 (which is a firm commitment); (iii) incur Cumulative Exploration Expense of at least $1,000,000 by December 31, 2013; and (iv) incur Cumulative Exploration Expense of at least $4,000,000 by December 31, 2014; (d) subject to Section 4.2, by February 28, 2013, cause the common shares of the Optionee to be fully listed on a Canadian Stock Exchange; (e) do and pay for all things necessary in order for the drafting of a Pre-feasibility Report and have drafted and pay for a Pre-feasibility Report pertaining to the Property and deliver a copy of that Pre-feasibility Report to the Optionor, all by June 30, 2015; (f) keep the Property in good standing until June 30, 2015; and (g) deliver to the Optionor a Notice of Exercise of Option & Compliance Certificate by June 30, 2015. 4.2 In the event that following February 20, 2013 and prior to February 28, 2013, the Optionee determines that it will be unable to comply with Section 4.1(d) by February 28, 2013, the Optionee may elect to pay the Optionor $30,000 not later than February 28, 2013, in which case the date by which the requirement set forth in Section 4.1(d) must be completed will be extended to May 31, 2013 provided that the Optionee delivers to the Optionor a certificate to the satisfaction of the Optionee, acting reasonably, executed by each of the Chief Executive Officer and the Chief Financial Officer of the Optionee on behalf of the Optionee and in no way in their own personal capacities, stating the steps that the Optionee has performed to comply with Section 4.1(d). 4.3 In the event that the Optionee fails to incur Exploration Expense in accordance with Section 4.1(c), the Optionee may make payment to the Optionor by cash, certified cheque, money order or wire transfer in the amount of deficiency of such required Exploration Expense within 30 days of the relevant date set out in Section 4.1(c), in which case the Optionee will be deemed to have incurred the required Exploration Expense within the required period. 4.4 At the sole election of the Optionor made from time to time, each of such elections to be made at least 10 Business Days prior to the dates set out in Section 4.1(a), the Optionee, instead of paying any of the amounts set out in Section 4.1(a) in cash, will instead pay such elected payment set out in Section 4.1(a) by issuing and delivering to the Optionor, Shares at the deemed price being equal to the Discounted Market Price as of the date being 10 Business Days prior to the dates set out in Section 4.1(a), and such Shares will be delivered to the Optionor by the dates set out in Section 4.1(a). 4.5 Notwithstanding any term of this Agreement, the Optionee may, at its sole option, pay any money amount, issue and deliver any Shares, incur Exploration Expense and do such other things set out in Section 4.1 prior to the dates set out in Section 4.1 provided that the Optionee has first given the Optionor the opportunity to make an election under Section 4.4.