Binding Letter of Intent for Purchasing the Redbank Mining Claims

1.  

Purchase LOI. Oro East would like to purchase all assets, real property, and claims as detailed in Schedule A and all permits, personal property, intellectual property, corporate shares, and equity as detailed in Schedule B, attached hereto and incorporated by reference, which have been represented as the Trust Assets as further described in the Trust Agreement in Schedule E, tendered for consideration in the form of restricted unregistered shares of OROE stock as set forth in this LOI, valued at $2,000,000.00 (Two Million U.S. Dollars) payable as described herein and conditioned on Oro East’s full satisfaction of its due diligence investigations.

2.  

Due Diligence Period. Oro East shall furnish a set of due diligence questionnaires to Seller, which Seller shall have authorized agents, directors, or officers with personal knowledge to respond in writing to the questionnaires and furnish all requested documents to Oro East, and where none are available, certify and represent that none are available. Oro East shall provide Seller 60 (sixty) days to complete the questionnaires and Seller’s full and absolute cooperation, disclosure, and timely submissions in response to the questionnaires is a condition precedent to the LOI. Upon Oro East’s actual physical receipt of the complete responses to all questionnaire inquiries and requests, Oro East shall have an additional 100 (one hundred) days to complete geological testing, surveys, excavation, and other studies to determine the expected recovery, projections, and reserves of Project. Thus, commencing on the date that Oro East furnishes the due diligence questionnaires to Seller, Oro East shall have a total of 160 (one hundred and sixty) days for due diligence (“Due Diligence Period”). During the Due Diligence Period, Oro East may drill, excavate, or remove from the Project property or claims up to 2,000 tons of sample ore for geological testing. Oro East may at its complete discretion, with or without cause, cancel, null, and/or void the LOI or any Agreements between Oro East and Seller regarding Project during the due diligence period.

3.  

Conditions Precedent; Representations of Seller. Neither LOI nor any subsequent Agreement is binding against Oro East if the following are not met: (1) all necessary permits for mining, exploration, drilling, production, and mine development at Project are obtained; (2) geological due diligence testing and surveys by certified, licensed, and experienced geologists of Oro East’s choosing verify the good values of gold, silver and other mineral deposit; (3) clean title to all assets, real or personal, related to Project, free and clear, can be transferred to Oro East by Seller; (4) Oro East’s full, complete, and absolute satisfaction of the due diligence questionnaire responses and due diligence inspections; and (5) legal opinion from qualified legal counsel affirming that the transactions contemplated by this LOI are in full compliance with all applicable laws and regulations, including but not limited to U.S. securities law. Furthermore, Seller warrants that the Project subject to this LOI and all subsequent Agreements for Project are assets where mining claims may be lawfully located or acquired and that the claims, all rights and privileges thereto appertaining are properly covered by valid and subsisting Mining Lease Contracts, Declarations of Location, Mining Lease Applications and Surveys issued in accordance with the provision of applicable laws. Effective and active permits for the exploration, mining, excavation, and operation as contemplated by the full agreement for Project are a condition precedent for the efficacy of this LOI and any subsequent Agreements. If Seller fails to furnish all proper permits and licenses for the work Oro East contemplates by this LOI, then it shall be deemed automatically null and void or, at Oro East’s sole discretion, the time periods governing the agreements between the parties may be extended by a written addendum signed by Oro East allowing additional time for Seller to secure at Seller’s cost any and all applicable permits, clear any clouds on title, or correct any other deficiency in compliance with the terms herein. Seller hereby represents and warrants to Oro East that the claims of Project bear all applicable permits and licenses and all rights to the claims of the Project free and clear in free simple with clean title.

4.  

Contract Payment Terms. Upon Oro East’s approval after the Due Diligence Period and assent to continue with the purchase, Seller having met all conditions precedent, Oro East shall tender consideration valued at $2,000,000.00 (Two Million U.S. Dollars) as follows:

 

a.  

b.  

Payment to Yan Ming Wu, an individual and named Beneficiary of the Redbank Trust Agreement, who shall be a third party beneficiary of this LOI, of $1,000,000.00 (“Second One Million U.S. Dollars”) in the form of a Convertible Promissory Note and Convertible Note Purchase Agreement executed and transferred on or before the anniversary of the date of Closing for the First One Million U.S. Dollars.

i.  

Consideration shall be tendered at a mutually set date and time per the terms herein, at which time all equitable title interest to the Mining Claims and Mineral Rights shall be vested and transferred to Purchaser. Seller shall execute Purchaser’s standard stock Convertible Promissory Note (“Note”) and Convertible Note Purchase Agreement, a true and correct copy of which is attached hereto and the terms therein incorporated and integrated by reference.

 

ii.  

The executed principal amount on the face of the Note shall be $1,000,000.00 (Second One Million U.S. Dollars) plus the interest rate, maturity date, and conversion price and terms as set forth in the attached and incorporated Convertible Promissory Note and Convertible Note Purchase Agreement.

 

iii.  

The parties hereby acknowledge and represent that the Note falls within the scope of Rule 903(b)(3) of Regulation S as promulgated pursuant to the Securities Act of 1933 and as amended, as Investor is a non-U.S. citizen, a citizen and resident of the People’s Republic of China, that the offering as contemplated by this LOI is made outside of the United States, and that there are no directed selling efforts being made in the United States, no brokers, dealers, and/or finders involved in the transaction as contemplated herein.

 

iv.  

Seller represents and warrants that Yan Ming Wu is either a Foreign Investor covered under Rule 903(b)(3) of Regulation S or an Accredited Investor pursuant to Regulation D or meets the Purchaser’s guidelines for a sophisticated investor. An Accredited Investor is one of the following: (1) a director, executive officer, or general partner of Oro East Mining, Inc., (2) a purchaser whose net worth either individually or jointly with the purchaser’s spouse equals or exceeds $1,000,000.00 USD, (3) a natural person purchaser who has income in excess of $200,000.00 USD in each of the two most recent years and who reasonably expect an income in excess of $200,000.00 USD in current year (or $300,000 USD jointly with the person’s spouse), or (4) a business entity, which can be treated as a single accredited investor, unless it was organized for the specific purpose of acquiring the securities offered, in which case each beneficial owner of the security is counted separately. A sophisticated investor is one who meets the guidelines as set forth in Section 10 in the LOI herein. Yan Ming Wu hereby represents and warrants that Yan Ming Wu meets one of the foregoing qualifications. Closing date, time, and location (“Closing for the Second One Million U.S. Dollars”) shall be mutually agreed upon by the parties, with neither party unreasonably withholding assent, at which time 100% equitable interest shall be conferred to Purchaser.

5.  

Rights Granted. In addition to the Leasehold, Purchaser shall have the right to use the surface of the Mining Claims, being granted the following interests:

 

a.  

A right of entry easement for reasonable and necessary ingress and regress that the parties by this LOI consent to recordation,

 

b.  

An easement for utilities,

 

c.  

A mine entrance site or sites,

 

d.  

A fifty-five (55) acre single parcel located at a site mutually agreeable to the parties on Mining Claims to locate office, machinery, tools, equipment, waste dump, and tailings,

 

e.  

Such area or areas as are necessary to comply with all applicable federal and state laws, regulations, and requirements, and

 

f.  

A reasonable area for settling ponds as provided for in Schedule B, attached hereto and incorporated by reference.

 

g.  

The parties acknowledge that Seller shall cause this LOI to be recorded in the applicable county clerk-recorder’s office to record the easement and it is the parties express intent that such an irrevocable easement as set forth in this section be created and terminated only upon exhaustion of the gold and silver set forth in this LOI.

6.  

Force Majeure. In the event of unforeseen disasters, events, or conditions that the parties were not able to contemplate at the execution of this LOI, such as sabotage, riots, terrorism, political or governmental complications, market conditions, or natural occurrences such as hurricanes, floods, earthquakes, etc. or other Acts of God (“Force Majeure”), which causes Purchaser to cease its operations as contemplated under this LOI, Purchaser reserves the right to suspend payment of royalties to Seller and, if the Force Majeure frustrates the purpose of this LOI, renders Purchaser’s business operations commercially or reasonably impracticable or even impossible, then Purchaser has the right to cancel, null, and/or void this LOI effective immediately upon written notice to Seller, on the grounds of Force Majeure.

7.  

Termination. If at any time it is discovered that Seller has made misrepresentations of any kind to Purchaser, intentional, negligent, or otherwise, which causes Purchaser to receive less consideration than Purchaser was otherwise led to believe Purchaser was receiving under this LOI or causes any damages or harm to Purchaser or Seller does not own Mining Claims and Mineral Rights in absolute fee simple, free and clear of any and all liens or encumbrances, then Purchaser shall have the right to  cancel, null, and/or void this LOI effective immediately upon written notice to Seller, on said grounds. If Purchaser breaches the LOI, Seller agrees to send a notice of breach in writing to Purchaser and provide Purchaser a reasonable opportunity to cure the breach. If Purchaser fails to cure the breach, then Seller may deem Seller in breach of this LOI and proceed accordingly per the legal remedies available at law.

8.  

Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser that: (a) Seller’s rights to the Mining Claims and Mineral Rights as granted under this LOI are valid rights in good standing, free and clear under Seller and Seller has absolute rights to execute this LOI with Purchaser, (2) Seller possesses all applicable effective and active permits for the exploration, mining, excavation, and operation of Mining Claims pursuant to this LOI and per the Purpose of this LOI for the full duration and term of this LOI, (3) Mining Claims is not federal lands and Seller has the right to convey the Mineral Rights to Purchaser under this LOI, (4) the Mining Claims is free and clear of any lien, encumbrance, overriding royalty, or other burden or adverse interest.

9.  

Service of Summons. In the event that a cause of action or suit arises from this LOI, the undersigned parties hereby agree and consent to service of summons at the following addresses:

 

a.  

Seller. Redbank Trust, Attn: Ruo Fang Yin, Trustee, 5081 Smith Road, Suite D, Mariposa, CA 95338.

 

b.  

Purchaser. Oro East Mining, Inc., 7817 Oakport Street, Suite 205, Oakland, California 94621.

10.  

Tailings and Residue. All residue and tailings remaining after ore is processed and before being deposited in a tailings pile or remaining after any subsequent processing by Purchaser shall belong to Purchaser. Seller shall have no interest of any kind therein, other than for any royalties as set forth herein.

11.  

New and Additional Claims. If during the term of this Leasehold, Seller acquires any new or additional mining claims situated within ten (10) miles of any of the Mining Claims or Mineral Rights and Seller intends to enter into a mineral lease on said claims, then Purchaser shall be granted the first right and option to lease said claims upon the same terms and conditions of this LOI and to meet any bona fide offer of lease offered by a third party purchaser.

12.  

Representations. The undersigned parties hereby mutually represent to one another that: (1) they are authorized agents of the entities they represent, that they are fully authorized and have the power to enter into this LOI and bind the entities they represent; (2) they have duly obtained all necessary and applicable licenses and/or permits required or reasonably foreseeably required for performance of this LOI; (3) they are the owners, licensees, and/or otherwise authorized to use any corresponding intellectual property rights that would be required or reasonably foreseeably required for performance of this LOI; and (4) the parties hereby indemnify and hold one another harmless of any damages or potential damages that may arise from the falsity or inaccuracy of the foregoing representations.

13.  

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

14.  

Right of Transfer. Purchaser has the free and clear right to transfer, sub-lease, assign any of its rights under this LOI to third parties. In the event of such transfer, Purchaser agrees to provide written notice of the transfer transaction to Seller. Seller agrees not to restrict or frustrate Purchaser’s right of transfer of its rights hereunder this LOI in any way.

15.  

General Indemnification. Both parties hereunder agrees to indemnify and hold harmless the other against loss or threatened loss or expense by reason of the liability or potential liability of one another for or arising out of any claims for damages and/or causes of action, including payment and compensation for reasonably-incurred attorney’s fees and other related professional fees. In the event of claims or actions raised against one another, both parties shall bear their own costs of suit and attorney’s fees.

16.  

Specific Enforcement. The undersigned parties acknowledge and agree that the goods or services arising from this LOI are unique and irreparable harm and substantial detriment would occur in the event that any of the provisions of this LOI were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this LOI and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which they may be entitled at law or equity.

17.  

Final Integration; Mining Lease and Royalties Agreement between Oro East Mariposa, LLC and Redbank Mine Partnership. This LOI and the exhibits attached hereto contain the entire agreement of the parties with respect to the subject matter of this LOI, and supersede all prior negotiations, agreements and understandings with respect thereto. This LOI may only be amended by a written document duly executed by the undersigned parties. Specifically, the parties intend the Mining Lease and Royalties Agreement executed on June 24, 2013 by and between Redbank Mine Partnership (Redbank Trust) and Oro East Mariposa, LLC to be null and void upon execution of this LOI. However, if for any reason whatsoever the purchase transaction intended by this LOI and any referenced subsequent agreements are voided or terminated, then the Mining Lease and Royalties Agreement shall automatically be restored to full force and effect. A copy of the Mining Lease and Royalties Agreement is attached hereto and integrated by reference as Schedule E.

18.  

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

X        /s/ RUO FANG YIN

X        /s/ TIAN Q. CHEN

Company:

Redbank Trust

Company:

Oro East Mining, Inc.

Signor’s Name:

Ruo Fang Yin

Signor’s Name:

Tian Q. Chen

Position/Title:

Trustee

Position/Title:

Chief Executive Officer

X        /s/ YAN MING WU

Company:

Redbank Trust

Signor’s Name:

Yan Ming Wu

Position/Title:

Beneficiary

On

   before me,

Date

Name and Title of Officer

personally appeared

Name(s) of Signor(s)

q

personally known to me; or

q

proved to me on the basis of satisfactory evidence

Signature of Notary Public