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.-:~ .,~ _ ~ IIIIIIIIIIIIIIIIIII ~, ~~ r~~;~-~=~~ . ~~ov ~ t9~a OPTION AND JOINT VENTURE AGREEMENT i'fi,`•:rO ~,=',Pvi.; THiS OPTION AND JOINT VENTU7IE AGREEMENT entered as of the 17th day of May, 1984; BETWEEN: Peerless Resources, Inc., (PRI) 9 Exchange Place, Suite 200 Salt Lake City, Utah 84111 AND: Durango Coal Company, (DCC) 5528 Indian Rock Rd. Salt Lake City, Utah 84117 WHEREAS By Sublease dated the 16th day of Mey, 1984, (hereinafter called the "1984 Sublease", a copy of which is attached hereto as Exhibit "A" and incorporated by this reference) made between Arness-McGritfin Coal Company, as sublessor, and Durango Coel Company, as sublessee, the said sublessor leased the mining property described in the 1964 Sublease (hereinafter called "the Property" to DCC for sixteen (16) years for the purpose of exploring, developing and producing minerals and concentrates, together with the right and option to continue operations thereafter, subject to payment by DCC of a royalty equal to 5% o[ gross receipts but not less than $1.25 per ton as provided in the 1984 Sublease; AND WHEREAS PRI and DCC have agreed to enter into this Option and Joint Venture Agreement to put the Property into production; NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto, in consideration o[ the premises and of the respective covenants and agreements on the part of each of them herein contained, do hereby covenant and agree each with the other as follows: 1. INTERPRETATION 1.01. In this Agreement, the following words, phrases and expressions shall have the following meanings: (s) "Affiliated Corporation" means a corporation that, in relation to a party, is the parent or subsidiary of that party or a subsidiary of the same parent as that party or is controlled by the same person or persons as that party. For the purpose hereof, a body corporate is deemed to be controlled by a person or persons if shares of the body corporate, carrying voting rights sufficient to elect a majority o[ the directors of the body corporate, are held directly or indirectly, other than by way o[ security only, by or on behalf of that person or persons. The relationship of parent and subsidiary is deemed to exist where one body corporate is controlled by another body corporate. (b) "Assets" means all tangible and intangible property, rights, goods, chattels end other items acquired, erected, .installed, held or used under this Agreement at the direction of the Operator in connection with the operations and, without restricting the generality of the foregoing, includes, lend, buildings, equipment, repair expenses and pre-production exploration and .development.