<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended
December 31, 1996.
Commission File Number 0-27272
SUMMO MINERALS CORPORATION
(incorporated in British Columbia)
1776 Lincoln Street, Suite 900
Denver, Colorado 80203
(303) 861-5400
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock: no par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filer pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of 7,608,428 shares of voting stock held by
non-affiliates of the Registrant, based upon the closing sale price of the
Common Stock on March 14, 1997 of $1.07 U.S. per share as reported on the
Toronto Stock Exchange, was $8,141,018. Shares of Common Stock held by each
executive officer and director and by each person who owns 10% or more of the
outstanding Common Stock have been excluded in that such persons may be
deemed affiliates. This determination of affiliate status is not necessarily
a conclusive determination for other purposes.
As of March 14, 1997, the Registrant had 20,003,160 shares of Common Stock
outstanding.
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DOCUMENT INCORPORATED BY REFERENCE
The information required by Parts I, II and III is incorporated by
reference to Registrant's Form 10-K as filed with the Securities and Exchange
Commission on March 31, 1997. The sole purpose of this Amendment is
to file the Exhibits referenced therein.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, effective April 18, 1997.
SUMMO MINERALS CORPORATION
By: /s/ Gregory A. Hahn By: /s/ James D. Frank
Gregory A. Hahn James D. Frank
President and Chief Vice President - Finance and CFO
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934 this
report has been signed below by the following persons in counterpart which
taken together shall constitute execution on behalf of the registrant on the
dates indicated.
Date: April 18, 1997 By: /s/ Mark A. Hellerstein
Mark A. Hellerstein,
Chairman of the Board
Date: April 18, 1997 By: /s/ Gregory A. Hahn
Gregory A. Hahn, Director
Date: April 18, 1997 By: /s/ John E. Robins
John E. Robins, Director
Date: April 18, 1997 By: /s/ Robert Mason
Robert Mason, Director
Date: April 18, 1997 By: /s/ John W. Ivany
John W. Ivany, Director
Date: April 18, 1997 By: /s/ J. Douglas Little
J. Douglas Little,
Director
Date: April 18, 1997 By: /s/ Frank E. Shanley
Frank E. Shanley, Director
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(c) Exhibits
The following exhibits are to be filed with this Report by amendment:
Exhibit
Number
(3) Charter and By-laws
3.1 Memorandum of No. 96 Sail View Ventures Ltd. dated July 20, 1987,
filed July 23, 1987.
3.2 Certificate of Incorporation for No. 96 Sail View Ventures Ltd.
dated July 23, 1987.
3.3 Articles of No. 96 Sail View Ventures Ltd. dated July 20, 1987.
3.4 Special Resolution dated September 9, 1987, filed September 11, 1987.
3.5 Certificate dated September 11, 1987.
3.6 Special Resolution dated September 29, 1993, filed October 15, 1993.
3.7 Certificate of Change of Name dated October 15, 1993.
3.8 Special Resolution dated April 24, 1995, filed May 26, 1995.
(10) Material Contracts
10.1 Termination of Existing Minerals Lease, Bill of Sale, and New Minerals
Lease dated April 20, 1988, among Lisbon Copper Ltd. ("Lisbon
Copper"), Kelmine Corporation and MLP, as amended July 24, 1993.
10.2 Option Agreement dated April 20, 1988 between Lisbon Copper and MLP.
10.3 Utah State Lease for Metalliferous Minerals No. 20569 dated May 28,
1963, as assigned to Summo USA by assignment dated May 23, 1995, as
amended by Amendment dated August 15, 1995.
10.4 Utah State Lease for Metalliferous Minerals No. 17661 dated
February 20, 1959 ("ML17661"), as assigned to Summo USA by assignment
dated June 7, 1995, as amended by Amendment dated August 15, 1995.
10.5 Mineral Lease dated October 26, 1992 between Steve and Mary Lou
Kosanke and MLP.
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10.6 Mineral Lease dated August 3, 1992 between J.F. and Joyce L. Costanza
and MLP.
10.7 Special Use Lease Agreement No. 707 dated December 15, 1986.
10.8 Mining Lease dated October 15, 1973 between Tintic Uranium Company
and Centennial Development Company, as ratified and amended by
Ratification and Amendment dated January 5, 1993 between Tintic
and MLP.
10.9 Utah State Lease for Metalliferous Minerals No. 46431
dated February 22, 1994.
10.10 Purchase Option Agreement dated May 1, 1995 between Lisbon Land &
Livestock Co. and Summo USA and related Escrow Agreement of even
date therewith.
10.11 Exploration and Purchase Option Agreement dated September 1, 1993
between Moretz, et al. and St. Mary, as amended April 18, 1996.
10.12 Option Agreement dated September 27, 1993 between Wanda H. Ahlstrom
and Max J. Peacock as optionors and St. Mary as optionee, as amended
April 17, 1996.
10.13 Exploration and Purchase Option Agreement dated August 1, 1994
between Hill, et al. and St. Mary.
10.14 Exploration and Purchase Option Agreement dated August 1, 1994
between Cook, et al. and St. Mary.
10.15 Acquisition Agreement dated November 16, 1994 among Summo, Summo USA
and St. Mary and Assignment and Quitclaim Deed of even date therewith
whereby St. Mary assigns its interest under the foregoing two
agreements to Summo USA.
10.16 Letter Agreement dated May 20, 1994 between Applied Geologic Studies,
Inc. and St. Mary setting forth the finder's fee agreement for the
Champion Property.
10.17 Stock Option Agreement dated February 23, 1995 granting an option to
John Ivany for 250,000 shares at an exercise price of $1.20 Cdn.
per share.
10.18 Stock Option Agreements dated April 24, 1995 granting options to the
following individuals at an exercise price of $1.20 Cdn. per share.
a. J. Douglas Little for 40,000 shares.
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b. Robert A. Prescott for 100,000 shares.
10.19 Employment Letter Agreement dated April 5, 1995 from the Company to
Robert Prescott.
10.20 Employment Agreement dated December 31, 1995 between the Company
and Gregory A. Hahn.
10.21 Employee Incentive Stock Option Plan of the Company.
10.22 Escrow Agreement dated January 18, 1996 providing for the escrow and
staged release of 8,519,987 shares of Common Stock.
10.23 Form of Stock Option Agreement dated February 1, 1996 granting
options to the following individuals at an exercise price of
$1.20 Cdn. per share.
a. Gregory A. Hahn for 100,000 shares
b. James D. Frank for 100,000 shares
c. Mark A. Hellerstein for 150,000 shares
d. J. Douglas Little for 110,000 shares
e. Frank E. Shanley for 50,000 shares
10.24 Employment Letter Agreement dated January 29, 1996 between the Company
and James D. Frank.
10.25 Master Electric Service Agreement dated October 31, 1996, between
Pacificorp and Summo USA Corporation.
10.26 By-Product Sales Agreement dated December 31, 1996, between Kennecott
Utah Copper Corporation and Summo USA Corporation.
10.27 Purchase Agreement dated February 29, 1996, between Michael L. Wilcox
and Summo USA Corporation.
10.28 Surface Lease Agreement dated June 10, 1996 between Nelson Pacheco
et al. and Summo USA Corporation.
10.29 Form of Stock Option Agreements dated March 26, 1996 granting
options to the following individuals at an exercise price of
$1.10 Cdn. per share.
a. Gregory A. Hahn for 120,000 shares
b. James D. Frank for 120,000 shares
c. Robert A. Precott for 120,000 shares
10.30 Stock Option Agreement dated April 30, 1996 granting 67,500 options
to Matthew J. Mason at an exercise price of $1.51 Cdn. per share.
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10.31 Stock Option Agreement dated April 30, 1996 granting 82,500 options
to Matthew J. Mason at an exercise price of $1.51 Cdn. per share.
10.32 Stock Option Agreement dated June 9, 1996 granting 50,000 options
to Gregory A. Hahn at an exercise price of $2.10 Cdn. per share.
10.33 Stock Option Agreement dated December 24, 1996 granting 150,000
options to John Robins at an exercise price of $1.41 Cdn. per share.
10.34* Loan Commitment Agreements between the Company and ING (U.S.)
Capital Corporation and Heller Financial, Inc. dated March 4, 1997
and March 5, 1997, respectively.
21.1 Subsidiaries of the Registrant
* Confidential treatment requested for portions of this exhibit.
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EXHIBIT 3.1
I HEREBY CERTIFY THAT
THESE ARE COPIES OF
DOCUMENTS FILED WITH THE
REGISTRAR OF COMPANIES ON
JUL 23 1987
-------------------------
-------------------------
ASSISTANT DEPUTY
REGISTRAR OF COMPANIES
FOR THE PROVINCE OF
BRITISH COLUMBIA
FORM 1
(Section 5)
COMPANY ACT
MEMORANDUM
of
NO. 96 SAIL VIEW VENTURES LTD.
I wish to be formed into a company with limited liability under the
Company Act in pursuance of this Memorandum.
1. The name of the Company is NO. 96 SAIL VIEW VENTURES LTD.
2. The authorized capital of the Company consists of Ten Thousand
(10,000) Common shares without par value.
3. I agree to take the number and kind and class of shares in the Company
set opposite my name.
- --------------------------------------------------------------------------------
Full Name, Resident Address and Number (Kind and Class] of
Occupation of Subscriber Shares Taken
- --------------------------------------------------------------------------------
/s/ James A. Speakman
- -----------------------------
JAMES A. SPEAKMAN One (1) Common share
without par value
#205 - 2772 Spruce Street
Vancouver, B.C.
V6H 2R2
Solicitor
TOTAL SHARES TAKEN: One (1) Common share
without par value
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DATED as of the 20th day of July, 1987.
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EXHIBIT 3.2
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA
330743
[SEAL]
Province of British Columbia
Ministry of Finance and Corporate Relations
REGISTRAR OF COMPANIES
COMPANY ACT
CERTIFICATE OF INCORPORATION
I HEREBY CERTIFY THAT
No. 96 SAIL VIEW VENTURES LTD.
HAS THIS DAY BEEN INCORPORATED UNDER THE COMPANY ACT
GIVEN UNDER MY HAND AND SEAL OF OFFICE
AT VICTORIA, BRITISH COLUMBIA,
THIS 23RD DAY OF JULY, 1987.
/s/ Roberta J. London
ROBERTA J. LONDON
DEPUTY REGISTRAR OF COMPANIES
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<PAGE>
EXHIBIT 3.3
ARTICLES
of
NO. 96 SAIL VIEW VENTURES LTD.
TABLE OF CONTENTS
PART ARTICLE SUBJECT
- ---- ------- -------
1 INTERPRETATION
1.1. Definition Construction of Words
1.2. Definitions same as Company Act
1.3. Interpretation Act Rules of Construction apply
2 SHARES
2.1 Member entitled to Certificate
2.2: Replacement of Lost or Defaced Certificate
2.3. Execution of Certificates
2.4. Recognition of Trusts
3 ISSUE OF SHARES
3.1. Directors Authorized
3.2. Conditions of Allotment
3.3. Commissions and Brokerage
3.4. Conditions of Issue
4 SHARE REGISTERS
4.1. Registers of Members, Transfers and Allotments
4.2 Branch Registers of Members
4.3. No Closing of Register of Members
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PART ARTICLE SUBJECT
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5 TRANSFER AND TRANSMISSION OF SHARES
5.1. Transfer of Shares
5.2. Execution of Instrument of Transfer
5.3. Enquiry as to Title not Required
5.4. Submission of Instruments of Transfer
5.5. Transfer Fee
5.6. Personal Representative Recognized on Death
5.7. Death or Bankruptcy
6 ALTERATION OF CAPITAL
6.1. Increase of Authorized Capital
6.2. Other Capital Alterations
6.3. Creation, Variation and Abrogation of Special
Rights and Restrictions
6.4. Special Rights of Conversion or Exchange
6.5. Class Meetings of Members
7 PURCHASE AND REDEMPTION OF SHARES
7.1. Company Authorized to Purchase or
Redeem its Shares
7.2. & 7.3. Redemption of Shares
8 BORROWING POWERS
8.1. Powers of Directors
8.2. Special Rights Attached to and Negotiability of
Debt Obligations
8.3. Register of Debentureholders
8.4. Execution of Debt Obligations
8.5. Register of Indebtedness
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PART ARTICLE SUBJECT
- ---- ------- -------
9 GENERAL MEETINGS
9.1. Annual General Meetings
9.2. Waiver of Annual General Meeting
9.3. Classification of General Meetings
9.4. Calling of Meetings
9.5. Advance Notice for Election of Directors
9.6. Notice for General Meeting
9.7. Waiver for General Meeting
9.8. Notice of Special Business at General Meeting
10 PROCEEDINGS AT GENERAL MEETINGS
10.1. Special Business
10.2. Requirement of Quorum
10.3. Quorum
10.4. Lack of Quorum
10.5. Chairman
10.6. Alternate Chairman
10.7. Adjournments
10.8. Motion Proposed or Seconded by Chairman
10.9. Decisions by Show of Hands or Poll
10.10. Casting Vote
10.11 Manner of Taking Poll
10.12. Retention of Ballots Cast on a Poll
10.13. Casting of Votes
10.14. Ordinary Resolution Sufficient
11 VOTES OF MEMBERS
11.1. Number of Votes Per Share of Member
11.2. Votes of Persons in Representative Capacity
11.3. Representative of a Corporate Member
11.4. Votes by Joint Holders
11.5. Vote by Committee for a Member
11.6. Appointment of Proxyholders
11.7. Execution of Form of Proxy
11.8. Deposit of Proxy
11.9. Form of Proxy
11.10. Validity of Proxy Vote
11.11. Revocation of Proxy
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PART ARTICLE SUBJECT
- ---- ------- -------
12 DIRECTORS
12.1. Number of Directors
12.2. Remuneration and Expenses of Directors
12.3. Qualification of Directors
13 ELECTION AND REMOVAL OF DIRECTORS
13.1. Election at Annual General Meetings
13.2. Eligibility of Retiring Director
13.3. Continuance of Directors
13.4. Election of Less than Required Number of Directors
13.5. Filling a Casual Vacancy
13.6. Additional Directors
13.7. Alternate Directors
13.8. Termination of Directorship
13.9. Removal of Directors
14 POWERS AND DUTIES OF DIRECTORS
14.1. Management of Affairs and Business
14.2. Appointment of Attorney
15 DISCLOSURE OF INTEREST OF DIRECTORS
15.1. Disclosure of Conflicting Interest
15.2. Voting and Quorum re Proposed Contract
15.3. Director May Hold Office or Place of Profit with
Company
15.4. Director Acting in Professional Capacity
15.5. Director Receiving Remuneration from Other
Interests
16 PROCEEDINGS OF DIRECTORS
16.1. Chairman and Alternate
16.2. Meetings - Procedure
16.3. Meetings by Conference Telephone
16.4. Notice of Meeting
16.5. Waiver of Notice of Meetings
16.6. Quorum
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PART ARTICLE SUBJECT
- ---- ------- -------
16.7. Continuing Directors may Act During Vacancy
16.8. Validity of Acts of Directors
16.9. Resolution in Writing Effective
17 EXECUTIVE AND OTHER COMMITTEES
17.1 Appointment of Executive Committee
17.2. Appointment of Committees
17.3. Procedure at Meetings
18 OFFICERS
18.1. President and Secretary Required
18.2. Persons Holding More Than One Office and
Remuneration
18.3. Disclosure of Conflicting Interest
19 INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES
19.1. Indemnification of Directors
19.2. Indemnification of Officers, Employees, Agents
19.3. Indemnification not Invalidated by Non-Compliance
19.4. Company May Purchase Insurance
20 DIVIDENDS AND RESERVES
20.1 Declaration of Dividends
20.2. Declared Dividend Date
20.3. Proportionate to Number of Shares Held
20.4. Reserves
20.5 Receipts from Joint Holders
20.6 No Interest on Dividends
20.7 Payment of Dividends
20.8 Capitalization of Undistributed Surplus
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PART ARTICLE SUBJECT
- ---- ------- -------
21 DOCUMENTS, RECORDS AND REPORTS
21.1. Documents to be Kept
21.2. Accounts to be Kept
21.3. Inspection of Accounts
21.4. & 21.5. Financial Statements and Reports
22 NOTICES
22.1. Method of Giving Notice
22.2. Notice to Joint Holder
22.3. Notice to Personal Representative
22.4. Persons to Receive Notice
23 RECORD DATES
23.1. Record Date
23.2. No Closure of Register of Members
24 SEAL
24.1. Affixation of Seal to Documents
24.2. Mechanical Reproduction of Signatures
24.3. Official Seal for Other Jurisdictions
25 PROHIBITIONS
25.1. No Securities to be Offered to the Public
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PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
OF
NO. 96 SAIL VIEW VENTURES LTD.
PART 1
INTERPRETATION
1.1. In these Articles, unless there is something in the subject or context
inconsistent therewith:
"Board" and "the Directors" or "the directors" mean the Directors or
sole Director of the Company for the time being.
"Company Act" means the Company Act of the Province of British
Columbia as from time to time enacted and all amendments thereto and
includes the regulations made pursuant thereto.
"Memorandum" means the Memorandum of the Company. "month" means
calendar month.
"proxyholder" means the person duly nominated by the registered owner
to represent him at the meeting and includes the duly authorized
representative of a corporation which is the registered owner.
"registered owner" or "registered holder" when used with respect to a
share in the authorized capital of the Company means the person
registered in the register of members in respect of such share.
"seal" means the common seal of the Company.
Expressions referring to writing shall be construed as including
references to printing, lithography, typewriting, photography and other modes of
representing or reproducing words in a visible form.
Words importing the singular include the plural and vice versa; and words
importing male persons include female persons and words importing persons
shall include corporations.
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1.2. The meaning of any words or phrases defined in the Company Act shall,
if not inconsistent with the subject or context, bear the same meaning in these
Articles.
1.3. The Rules of Construction contained in the Interpretation Act shall
apply, mutatis mutandis, to the interpretation of these Articles.
PART 2
SHARES AND SHARE CERTIFICATES
2.1. Every member is entitled, without charge, to one certificate
representing the share or shares of each class held by him; provided that, in
respect of a share or shares held jointly by several persons, the Company shall
not be bound to issue more than one certificate, and delivery of a certificate
for a share to one of several joint registered holders or to his duly authorized
agent shall be sufficient delivery to all; and provided further that the Company
shall not be bound to issue certificates representing redeemable shares, if such
shares are to be redeemed within one month of the date on which they were
allotted. Any share certificate may be sent through the mail by registered
prepaid mail to the member entitled thereto at his address as recorded in the
register of members, and neither the Company nor any transfer agent shall be
liable for any loss occasioned to the member owing to any such share certificate
so sent being lost in the mail or stolen.
2.2. If a share certificate
(a) is worn out or defaced, the Directors shall, upon production
to them of the said certificate and upon such other terms,
if any, as they may think fit, order the said certificate to
be cancelled and shall issue a new certificate in lieu
thereof;
(b) is lost, stolen or destroyed, then, upon proof thereof to
the satisfaction of the Directors and upon such indemnity,
if any, as the Directors deem adequate being given, a new
share certificate in lieu thereof shall be issued to the
person entitled to such lost, stolen or destroyed
certificate; or
(c) represents more than one share and the registered owner
thereof surrenders it to the Company with a written request
that the Company issue in his name two or more certificates
each representing a specified number of shares and in the
aggregate representing the same number of shares as the
certificate so surrendered, the Company shall cancel the
Certificate so surrendered and issue in lieu thereof
certificates in accordance with such request.
Such sum as the Directors may from time to time fix, but not greater than the
amount prescribed under the Company Act from time to time, shall be paid to the
Company for each certificate to be issued under this Article.
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2.3. Every share certificate shall be signed manually by at least one
officer or Director of the Company, or by or on behalf of a registrar, branch
registrar, transfer agent or branch transfer agent of the Company and any
additional signatures may be printed or otherwise mechanically reproduced and,
in such event, a certificate so signed is as valid as if signed manually,
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such
certificate to hold at the date of the issue of a share certificate.
2.4. Except as required by law, statute or these Articles, no person shall
be recognized by the Company as holding any share upon any trust, and the
Company shall not be bound by or compelled in any way to recognize (even when
having notice thereof) any equitable, contingent, future or partial interest in
any share or in any fractional part of a share or (except only as by law,
statute or these Articles provided or as ordered by a court of competent
jurisdiction) any other rights in respect of any share except an absolute right
to the entirety thereof in its registered holder.
PART 3
ISSUE OF SHARES
3.1. Subject to these Articles and the Memorandum and to any direction to
the contrary contained in a resolution passed at a general meeting authorizing
any increase or alteration of capital, the shares shall be under the control of
the Directors who may, subject to the rights of the holders of the shares of the
Company for the time being issued, issue, allot, sell or otherwise dispose of,
and/or grant options on or otherwise deal in, shares authorized but not
outstanding or which, having been previously issued, have been purchased or
redeemed by the Company and are available to be sold or reissued at such times,
to such persons (including Directors), in such manner, upon such terms and
conditions, and at such price or for such consideration, as they, in their
absolute discretion, may determine.
3.2. If the Company is, or becomes, a company which is not a reporting
company and the Directors are required by the Company Act before allotting any
shares to offer them pro rata to the members, the Directors shall, before
allotting any shares, comply with the applicable provisions of the Company Act.
3.3. Subject to the provisions of the Company Act, the Company, or the
Directors on behalf of the Company, may pay a commission or allow a discount to
any person in consideration of his subscribing or agreeing to subscribe, whether
absolutely or conditionally, for any shares in the Company, or procuring or
agreeing to procure subscriptions, whether absolutely or conditionally, for any
such shares, provided that, if the Company is not a specially limited company,
the rate of the commission and discount shall not in the aggregate exceed 25 per
centum of the amount of the subscription price of such shares.
3.4. No share may be issued until it is fully paid and the Company shall
have received the full consideration therefor in cash, property or past services
actually performed for the Company. The value of property or services for the
purpose of this
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Article shall be an amount set by resolution of the Directors that is, in all
circumstances of the transaction, no greater than fair market value.
PART 4
SHARE REGISTERS
4.1. The Company shall keep or cause to be kept a register of members, a
register of transfers and a register of allotments within British Columbia, all
as required by the Company Act, and may combine one or more of such registers.
If the Company's capital shall consist of more than one class or series of
shares, a separate register of members, register of transfers and register of
allotments may be kept in respect of each class or series of shares. The
Directors on behalf of the Company may appoint a trust company registered under
the Trust Company Act to keep the register of members, register of transfers and
register of allotments or, if there is more than one class or series of shares,
the Directors may appoint a trust company, which need not be the same trust
company, to keep the register of members, the register of transfers and the
register of allotments for each class or series of share. The Directors on
behalf of the Company may also appoint one or more trust companies, including
the trust company which keeps the said registers of its shares or of a class or
series thereof, as transfer agent for its shares or such class or series
thereof, as the case may be, and the same or another trust company or companies
as registrar for its shares or such class thereof, as the case may be. The
Directors may terminate the appointment of any such trust company at any time
and may appoint another trust company in its place.
4.2. Subject to the Company Act, the Company may keep or cause to be kept
one or more branch registers of members at such place or places, whether within
or outside the Province of British Columbia, as the Directors may from time to
time determine.
4.3. The Company shall not at any time close its register of members.
PART 5
TRANSFER AND TRANSMISSION OF SHARES
5.1. Subject to the provisions of the Memorandum and of these Articles that
may be applicable, any member may transfer any of his shares by instrument in
writing executed by or on behalf of such member. The instrument of transfer of
any share of the Company shall be in the form, if any, on the back of the
Company's share certificates or in such other form as the Directors may from
time to time approve. Except to the extent that the Company Act may otherwise
provide, the transferor shall be deemed to remain the holder of shares until the
name of the transferee is entered in the register of members or branch
register of members in respect thereof.
5.2. The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall constitute
a complete and
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sufficient authority to the Company, its directors, officers and agents to
register, in the name of the transferee as named in the instrument of transfer,
the number of shares specified therein or, if no number is specified, all the
shares of the registered owner represented by share certificates deposited with
the instrument of transfer. If no transferee is named in the instrument of
transfer, the instrument of transfer shall constitute a complete and sufficient
authority to the Company, its directors, officers and agents to register, in the
name of the person in whose behalf any certificate for the shares to be
transferred is deposited with the Company for the purpose of having the transfer
registered, the number of shares specified in the instrument of transfer or, if
no number is specified, all the shares represented by all share certificates
deposited with the instrument of transfer.
5.3. Neither the Company nor any Director, officer or agent thereof shall
be bound to inquire into the title of the person named in the form of
transfer as transferee, or, if no person is named therein as transferee, of
the person on whose behalf the certificate is deposited with the Company for
the purpose of having the transfer registered or be liable to any claim by
such registered owner or by any intermediate owner or holder of the
certificate or of any of the shares represented thereby or any interest
therein for registering the transfer, and the transfer, when registered,
shall confer upon the person in whose name the shares have been registered a
valid title to such shares.
5.4. Every instrument of transfer shall be executed by the transferor and
left at the registered office of the company or at the office of its transfer
agent or branch transfer agent or registrar for registration together with the
share certificate for the shares to be transferred and such other evidence if
any, as the Directors or the transfer agent or branch transfer agent or
registrar or branch registrar may require to prove the title of the transferor
or his right to transfer the shares and the right of the transferee to have the
transfer registered. All instruments of transfer where the transfer is
registered shall be retained by the Company or its transfer agent or branch
transfer agent of registrar or branch/registrar and any instrument of transfer,
where the transfer is not registered, shall be returned to the person depositing
the same together with the share certificate which accompanied the same when
tendered for registration.
5.5. There shall be paid to the Company in respect of the registration of
any transfer such sum, if any, as the Directors may from time to time determine.
5.6. In the case of the death of a member, the survivor or survivors
where the deceased was a joint registered holder, and the legal personal
representative of the deceased where he was the sole holder, shall be the
only persons recognized by the Company as having any title to his interest in
the shares. Before recognizing any legal personal representative the
Directors may require him to deliver to the Company the documents required by
the Company Act to be produced by a person applying to effect transmission of
shares and such other evidence as the Directors may require of the personal
representative's appointment, and of the payment or satisfaction of all
taxes, duties, fees and other similar assessments payable to any governmental
authority in any applicable jurisdiction with respect to the shares arising
out of the member's death.
5.7. A guardian, committee, trustee, curator, tutor, personal
representative or trustee in bankruptcy of a member, although not a member
himself, shall have the same rights, privileges and obligations that attach to
the shares held by the member if the
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documents required by the Company Act to be produced by a person applying to
effect transmission of shares shall have been deposited with the Company
together with such other evidence as the Directors may require of the person's
appointment. This Article does not apply on the death of a member with respect
to a share registered in his name and the name of another person in joint
tenancy.
PART 6
ALTERATION OF CAPITAL
6.1. The Company may by ordinary resolution filed with the Registrar alter
the Memorandum to increase the authorized capital of the Company by:
(a) creating shares with par value or shares without par value,
or both;
(b) increasing the number of shares with par value or shares
without par value, or both; or
(c) increasing the par value of a class of shares with par
value, if no shares of that class are issued.
6.2. The Company may by special resolution alter the Memorandum to
subdivide, consolidate, change from shares with par value to shares without par
value, or from shares without par value to shares with par value, or change the
designation of, all or any of its shares but only to such extent, in such manner
and with such consents of members holding a class or series of shares which is
the subject of or affected by such alteration, as the Company Act provides.
6.3. The Company may alter the Memorandum or these Articles
(a) by special resolution, to create, define and attach special
rights or restrictions to any shares, and
(b) by special resolution and by otherwise complying with any
applicable provision of its Memorandum or these Articles, to
vary or abrogate any special rights and restrictions
attached to any shares
and in each case by filing a certified copy of such resolution with the
Registrar but no right or special right attached to any issued shares shall be
prejudiced or interfered with unless all members holding shares of each class or
series whose right or special right is so prejudiced or interfered with consent
thereto in writing, or unless a resolution consenting thereto is passed at a
separate class or series meeting of the holders of the shares of each such class
or series by a majority of three-fourths of the votes cast, or such greater
majority as may be specified by the special rights attached to the class of
shares.
6.4. If the Company is or becomes a reporting company, no resolution to
create, vary or abrogate any special right of conversion or exchange attaching
to any class or
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series of shares shall be submitted to any meeting of members unless, if so
required by the Company Act, the Superintendent of Brokers appointed pursuant to
the Securities Act of British Columbia shall have consented to the resolution.
6.5. Subject to the Company Act and unless these Articles or the Memorandum
otherwise provide, the provisions of these Articles relating to general meetings
shall apply, with the necessary changes and so far as they are applicable, to a
class or series meeting of members holding a particular class or series of
shares but the quorum at a class or series meeting shall be one person holding
or representing by proxy one-third of the shares affected.
PART 7
PURCHASE AND REDEMPTION OF SHARES
7.1. Subject to the special rights and restrictions attached to any class
or series of shares, the Company may, by a resolution of the Directors and in
compliance with the Company Act, purchase any of its shares at the price and
upon the terms specified in such resolution or redeem any class or series of its
shares in accordance with the special rights and restrictions attaching thereto.
Unless the shares are to be purchased through a stock exchange or the Company is
purchasing the shares from dissenting members pursuant to the requirements of
the Company Act or from an employee or former employee of the Company or of an
affiliate of the Company or from his personal representatives, the Company shall
make its offer to purchase pro rata to every member who holds shares of the
class or series, as the case may be, to be purchased.
7.2. If the Company proposes at its option to redeem some but not all of
the shares of any class or series, the Directors may, subject to the special
rights and restrictions attached to such class or series of shares, decide the
manner in which the shares to be redeemed shall be selected.
7.3. Subject to the provisions of the Company Act, any shares purchased or
redeemed by the Company may be sold or if cancelled, reissued by it, but, while
such shares which have not been cancelled are held by the Company, it shall not
exercise any vote in respect of these shares and no dividend or/other
distribution shall be paid or made thereon.
PART 8
BORROWING POWERS
8.1. The Directors may from time to time on behalf of the Company
(a) borrow money in such manner and amount, on such security,
from such sources and upon such terms, and conditions as
they think fit, and may authorize the guaranteeing of any
obligations of any other person,
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(b) issue bonds, debentures, and other debt obligations either
outright or as security for any liability or obligation of
the Company or any other person, and
(c) mortgage, charge, whether by way of specific or floating
charge, or give other security on the undertaking, or on the
whole or any part of the property and assets, of the Company
(both present and future).
8.2. Any bonds, debentures or other debt obligations of the Company may be
issued at a discount, premium or otherwise, and with any special privileges as
to redemption, surrender, drawing, allotment of or conversion into or exchange
for shares or other securities, attending and voting at general meetings of the
Company, appointment or election of Directors or otherwise and may by their
terms be assignable free from any equities between the Company and the person to
whom they were issued or any subsequent holder thereof, all as the Directors may
determine.
8.3. The Company shall keep or cause to be kept within the Province of
British Columbia in accordance with the Company Act a register of its debentures
and a register of debentureholders, which registers may be combined, and,
subject to the provisions of the Company Act, may keep or cause to be kept one
or more branch registers of its debentureholders at such place or places as the
Directors may from time to time determine and the Directors may by resolution,
regulation or otherwise make such provisions as they think fit respecting the
keeping of such branch registers, provided that any such branch register kept
within British Columbia shall be kept by a Trust Company.
8.4. Every bond, debenture or other debt obligation of the Company shall
be signed manually by at least one Director or officer of the Company or by
or on behalf of a trustee, registrar, branch registrar, transfer agent or
branch transfer agents for the bond, debenture or other debt obligation
appointed by the Company or under any instrument under which the bond,
debenture or other debt obligation is issued or by or on behalf of a trustee
who certifies it in accordance with a trust indenture and any additional
signatures may be printed or otherwise mechanically reproduced thereon and,
in such event, a bond, debenture or other debt obligation so signed is as
valid as if signed manually notwithstanding that the person whose signature
is so printed or mechanically reproduced shall have ceased to hold the office
that he is stated on such bond, debenture or other debt obligation to hold at
the date of the issue thereof.
8.5. If the Company is or becomes, a company which is a reporting company,
the Company shall keep or cause to be kept a register of its indebtedness to
every Director or officer of the Company or an associate of any of them in
accordance with the provisions of and to the extent required by the Company Act.
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PART 9
GENERAL MEETINGS
9.1. Subject to any extensions of time permitted pursuant to the Company
Act, the first annual general meeting of the Company shall be held within
fifteen months from the date of incorporation, the date of amalgamation or the
effective date of a certificate of continuation, and thereafter an annual
general meeting shall be held once in every calendar year at such time (not
being more than thirteen months after the date that the last annual general
meeting was held or deemed to have been held) and place as may be determined by
the Directors.
9.2. If the Company is, or becomes, a company which is not a reporting
company and all the members entitled to attend and vote at an annual general
meeting consent in writing to all the business which is required or desired to
be transacted at the meeting, the meeting need not be held.
9.3. All general meetings other than annual general meetings are herein
referred to as and may be called extraordinary general meetings.
9.4. The Directors may, whenever they think fit, convene an extraordinary
general meeting. An extraordinary general meeting, if requisitioned in
accordance with the Company Act, shall be convened by the Directors or, if not
convened by the Directors, may be convened by the requisitionists as provided in
the Company Act.
9.5. If the Company is or becomes a reporting company, advance notice of
any general meeting at which any Director is to be elected shall be published in
the manner required by the Company Act.
9.6. A notice convening a general meeting specifying the place, the date,
and the hour of the meeting, and, in case of special business, the general
nature of that business, shall be given as provided in the Company Act and in
the manner hereinafter in these Articles mentioned, or in such other manner (if
any) as may be prescribed by ordinary resolution, whether previous notice
thereof has been given or not, to such persons as are entitled by law or under
these Articles to receive such notice from the Company. Accidental omission to
give notice of a meeting to, or the non-receipt of notice of a meeting, by any
member shall not invalidate the proceedings at that meeting.
9.7. All the members of the Company entitled to attend and vote at a
general meeting may, by unanimous consent in writing given before, during or
after the meeting, waive or reduce the period of notice of such meeting and an
entry in the minute book of such waiver or reduction shall be sufficient
evidence of the due convening of the meeting.
9.8. Except as otherwise provided by the Company Act, where any special
business at a general meeting includes considering, approving, ratifying,
adopting or authorizing any document or the execution thereof or the giving of
effect thereto, the notice convening the meeting shall, with respect to such
document, be sufficient if it states that a copy of the document or proposed
document is or will be available for inspection by members at the registered
office or records office of the Company or at some other place
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in British Columbia designated in the notice during usual business hours up to
the date of such general meeting.
PART 10
PROCEEDINGS AT GENERAL MEETINGS
10.1. All business shall be deemed special business which is transacted at
(a) an extraordinary general meeting other than the conduct of
and voting at, such meeting; and
(b) an annual general meeting, with the exception of the conduct
of, and voting at, such meeting, the consideration of the
financial statement and of the respective reports of the
Directors and Auditor, fixing or changing the number of
directors, the election of Directors, the appointment of the
Auditor, the fixing of the remuneration of the Auditor and
of the Directors and such other business as by these
Articles or the Company Act may be transacted at a general
meeting without prior notice thereof being given to the
members or any business which is brought under consideration
by the report of the Directors.
10.2. No business, other than election of the chairman or the adjournment of
the meeting, shall be transacted at any general meeting unless a quorum of
members, entitled to attend and vote, is present at the commencement of the
meeting, but the quorum need not be present throughout the meeting.
10.3. Save as herein otherwise provided, a quorum for the transaction of
business at a general meeting shall be two persons present and being, or
representing by proxy, members holding not less than one-twentieth of the issued
shares entitled to be voted at the meeting. If there is only one member the
quorum is one person present and being, or representing by proxy, such member.
The Directors, the Secretary or, in his absence, an Assistant Secretary, and the
solicitor of the Company shall be entitled to attend at any general meeting but
no such person shall be counted in the quorum or be entitled to vote at any
general meeting unless he shall be a member or proxyholder entitled to vote
thereat.
10.4. If within half an hour from the time appointed for a general meeting,
a quorum is not present, the meeting, if convened by requisition of the members,
shall be dissolved; but otherwise it shall stand adjourned to a place on a date
and at a time, to be fixed by the chairman of the meeting before the
adjournment, which shall be not more than two weeks following the date for which
the meeting was called, or failing such designation then to the same day in the
second week following the meeting at the same time and place, in either case
without giving further notice. If at such adjourned meeting, a quorum is not
present within half an hour from the time appointed, the person or persons
present and being, or representing by proxy, a member or members entitled to
attend and vote at the meeting, shall be a quorum.
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10.5. The Chairman of the Board, if any, or in his absence the President of
the Company or in his absence a Vice-President of the Company, if any, shall be
entitled to preside as chairman at every general meeting of the Company.
10.6. If at any general meeting neither the Chairman of the Board nor
President nor a Vice-President is present within fifteen minutes after the time
appointed for holding the meeting or is willing to act as chairman, the
Directors present shall choose some one of their number to be chairman or if all
the Directors present decline to take the chair or shall fail to so choose or if
no Director be present, the members present shall choose one of their number to
be chairman.
10.7. The chairman may and shall, if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a meeting is adjourned
for thirty days or more, notice, but not "advance notice", of the adjourned
meeting shall be given as in the case of an original meeting or if so determined
by the Directors, by an advertisement published at least once in a daily
newspaper in Vancouver, British Columbia, or in the city where the meeting
commenced. Save as aforesaid, it shall not be necessary to give any notice of an
adjourned meeting or of the business to be transacted at an adjourned meeting.
10.8. The chairman may propose or second a motion.
10.9. Subject to the provisions of the Company Act, at any meeting a
resolution put to the vote of the meeting shall be decided on a show of hands,
unless (before or on the declaration of the result of the show of hands) a poll
is directed by the chairman or demanded by at least one member entitled to vote
who is present in person or by proxy. The chairman shall declare to the meeting
the decision on every question in accordance with the result of the show of
hands or the poll, and such decision shall be entered in the book of proceedings
of the Company. A declaration by the chairman that a resolution has been
carried, or carried unanimously, or by a particular majority, or lost or not
carried by a particular majority and an entry to that effect in the book of the
proceedings of the Company shall be conclusive evidence of the fact, without
proof of the number or proportion of the votes recorded in favour of, or
against, that resolution.
10.10. In the case of an equality of votes, whether on a show of hands or on
a poll, the chairman of the meeting at which the show of hands takes place or at
which the poll is demanded shall not be entitled to a second or casting vote.
10.11. No poll may be demanded on the election of a chairman. A poll demanded
on a question of adjournment shall be taken forthwith. A poll demanded on any
other question shall be taken as soon as, in the opinion of the chairman, is
reasonably convenient, but in no event later than seven days after the meeting
and at such time and place and in such manner as the chairman of the meeting
directs. The result of the poll shall be deemed to be the resolution of and
passed at the meeting at which the poll was demanded. Any business other than
that upon which the poll has been demanded may be proceeded with pending the
taking of the poll. A demand for a poll may be withdrawn. In any dispute as to
the admission or rejection of a vote the decision of the chairman made in good
faith shall be final and conclusive.
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10.12. Every ballot cast upon a poll and every proxy appointing a proxyholder
who casts a ballot upon a poll shall be retained by the Secretary for such
period and be subject to such inspection as the Company Act may provide.
10.13. On a poll a person entitled to cast more than one vote need not, if he
votes, use all his votes or cast all the votes he uses in the same way.
10.14. Unless the Company Act, the Memorandum or these Articles otherwise
provide, any action to be taken by a resolution of the members may be taken by
an ordinary resolution.
PART 11
VOTES OF MEMBERS
11.1. Subject to any special voting rights or restrictions attached to any
class or series of shares and the restrictions on joint registered holders of
shares, on a show of hands every member who is present in person and entitled to
vote thereat shall have one vote and on a poll every member shall have one vote
for each share of which he is the registered holder and may exercise such vote
either in person or by proxyholder.
11.2. Any person who is not registered as a member but is entitled to vote
at any general meeting in respect of a share, may vote the share in the same
manner as if he were a member; but, unless the Directors have previously
admitted his right to vote at that meeting in respect of the share, he shall
satisfy the directors of his right to vote the share before the time for holding
the meeting, or adjourned meeting, as the case may be, at which he proposes to
vote.
11.3. Any corporation not being a subsidiary which is a member of the
Company may by resolution of its directors or other governing body authorize
such person as it thinks fit to act as its representative at any general meeting
or class meeting. The person so authorized shall be entitled to exercise in
respect of and at such meeting the same powers on behalf of the corporation
which he represents as that corporation could exercise if it were an individual
member of the Company personally present, including, without limitation, the
right, unless restricted by such resolution, to appoint a proxyholder to
represent such corporation, and shall, if present at the meeting, be counted for
the purpose of forming a quorum and be deemed to be a member present at the
meeting. Evidence of the appointment of any such representative may be sent to
the Company by written instrument, telegram, telex or any method of transmitting
legibly recorded messages. Notwithstanding the foregoing, a corporation being a
member may appoint a proxyholder.
11.4. If a share is registered in the name of two or more persons, the vote
of the senior who exercises a vote, whether in person or by proxyholder, shall
be accepted to the exclusion of the votes of the other joint registered holders;
and for this purpose seniority shall be determined by the order in which the
names stand in the register of members.
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Several legal personal representatives of a deceased member whose shares are
registered in his sole name shall for the purpose of this Article be deemed to
be two or more persons, as the case may be.
11.5. A member of unsound mind entitled to attend and vote, in respect of
whom an order has been made by any court having jurisdiction, may vote, whether
on a show of hands or on a poll, by his committee, curator bonus, or other
person in the nature of a committee or curator bonus appointed by that court,
and any such committee, curator bonus, or other person may appoint a
proxyholder.
11.6. Every member, including a member that is a corporation, entitled to
vote at a general meeting or a class meeting of the Company may, by proxy,
appoint a proxyholder as his nominee to attend and act at the meeting in the
manner, to the extent and with the power conferred by the proxy. A member may
also appoint one or more alternate proxyholders to act in the place and stead of
an absent proxyholder.
11.7. A form of proxy shall be in writing under the hand of the appointor or
of his attorney duly authorized in writing, or, if the appointor is a
corporation either under the seal of the corporation or under the hand of a duly
authorized officer or attorney. A proxyholder need not be a member of the
Company if
(a) the Company is at the time a reporting company, or
(b) the member appointing the proxyholder is a corporation, or
(c) the Company shall have at the time only one member, or
(d) the persons present in person or by proxy and entitled to
vote at the meeting by resolution permit the proxyholder to
attend and vote; for the purpose of such resolution the
proxyholder shall be counted in the quorum but shall not be
entitled to vote
and in all other cases a proxyholder must be a member.
11.8. Unless otherwise ordered by the Directors, a form of proxy and the
power of attorney or other authority, if any, under which it is
signed, or a notarially certified copy thereof, shall be deposited at
the registered office of the Company, or at such other place as is
specified for that purpose in the notice convening the meeting or in
the information circular relating thereto, not less than 48 hours
(excluding Saturdays, Sundays and holidays) before the time for
holding the meeting in respect of which the person named in the
instrument is appointed. In addition to any other method of depositing
proxies provided for in these Articles, the Directors may from time to
time by resolution make regulations relating to the depositing of
proxies at any place or places and fixing the time or times for
depositing the proxies not exceeding 48 hours (excluding Saturdays,
Sundays and holidays) preceding the meeting or adjourned meeting
specified in the notice calling a meeting of members or in the
information circular relating thereto and providing for particulars of
such proxies to be sent to the Company or any agent of the Company in
writing or by letter, telegram, telex or any method of transmitting
legibly recorded messages so as to arrive before the commencement of
the meeting or adjourned meeting at the office of the Company or of
any agent of the Company appointed for the purpose of
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receiving such particulars and providing that proxies so deposited may be acted
upon as though the proxies themselves were deposited as required by this Part
and votes given in accordance with such regulations shall be valid and shall be
counted.
11.9. Unless the Company Act or any other statute or law which is applicable
to the Company or to any class or series of its shares requires any other form
of proxy, a proxy, whether for a specified meeting or otherwise shall be in the
form following, but may also be in any other form that the Directors or the
chairman of the meeting shall approve:
(Name of Company)
The undersigned, being a member of the above named Company, hereby
appoints _________________ or failing him ____________________ as
proxyholder for the undersigned to attend, speak and vote for and on
behalf of the undersigned in respect of all (or ___________) shares
registered in the name of the undersigned at the general meeting of
the Company to be held on the day of _____________, 19__, and at any
adjournment thereof.
Signed this ___ day of _______________ 19__.
______________________________
(Signature of Member)
11.10. A vote given in accordance with the terms of a proxy is valid
notwithstanding the previous death or incapacity of the member giving the
proxy or the revocation of the proxy or of the authority under which the form
of proxy was executed or the transfer of the share in respect of which the
proxy is given, provided that no notification in writing of such death,
incapacity, revocation or transfer shall have been received at the registered
office of the Company or by the chairman of the meeting or adjourned meeting
for which the proxy was given before the vote is taken.
11.11. Every proxy may be revoked by an instrument in writing
(a) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a corporation,
by a duly authorized officer or attorney of the corporation;
and
(b) delivered either at the registered office of the Company at
any time up to and including the last business day preceding
the day of the meeting, or any adjournment thereof at which
the proxy is to be used, or to the chairman of the meeting
on the day of the meeting or any adjournment thereof before
any vote in respect of which the proxy is to be used shall
have been taken
or in any other manner provided by law. A proxy shall cease to be valid one year
from its date.
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PART 12
DIRECTORS
12.1. The subscribers to the Memorandum of the Company are the first
Directors. The Directors to succeed the first Directors may be appointed in
writing by a majority of the subscribers to the Memorandum or at a meeting of
the subscribers, or if not so appointed, they shall be elected by the members
entitled to vote on the election of Directors and the number of Directors shall
be the same as the number of Directors so appointed or elected. The number of
Directors, excluding additional Directors, may be fixed or changed from time to
time by ordinary resolution, whether previous notice thereof has been given or
not, but notwithstanding anything contained in these Articles the number of
Directors shall never be less than one or, if the Company is or becomes a
reporting company, less than three.
12.2. The remuneration of the Directors as such may from time to time be
determined by the Directors or, if the Directors shall so decide, by the
members. Such remuneration may be in addition to any salary or other
remuneration paid to any officer or employee of the Company as such who is also
a Director. The Directors shall be repaid such reasonable travelling, hotel and
other expenses as they incur in and about the business of the Company and if any
Director shall perform any professional or other services for the Company that
in the opinion of the Directors are outside the ordinary duties of a Director or
shall otherwise be specially occupied in or about the Company's business, he may
be paid a remuneration to be fixed by the Board, or, at the option of such
Director, by the Company in general meeting, and such remuneration may be either
in addition to, or in substitution for any other remuneration that he may be
entitled to receive. The Directors on behalf of the Company, unless otherwise
determined by ordinary resolution, may pay a gratuity or pension or allowance on
retirement to any Director who has held any salaried office or place of profit
with the Company or to his spouse or dependants and may make contributions to
any fund and pay premiums for the purchase or provision of any such gratuity,
pension or allowance.
12.3. A Director shall not be required to hold a share in the capital of the
Company as qualification for his office but shall be qualified as required by
the Company Act, to become or act as a Director.
PART 13
ELECTION AND REMOVAL OF DIRECTORS
13.1. At each annual general meeting of the Company all the Directors shall
retire and the members entitled to vote thereat shall elect a Board of Directors
consisting of the number of Directors for the time being fixed pursuant to these
Articles. If the Company is, or becomes, a company that is not a reporting
company and the business to be transacted at any annual general meeting is
consented to in writing by all the members who are entitled to attend and vote
thereat such annual general meeting shall be deemed for the purpose of this Part
to have been held on such written consent becoming effective.
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13.2. A retiring Director shall be eligible for re-election.
13.3. Where the Company fails to hold an annual general meeting in
accordance with the Company Act, the Directors then in office shall be deemed to
have been elected or appointed as Directors on the last day on which the annual
general meeting could have been held pursuant to these Articles and they may
hold office until other Directors are appointed or elected or until the day on
which the next annual general meeting is held.
13.4. If at any general meeting at which there should be an election of
Directors, the places of any of the retiring Directors are not filled by such
election, such of the retiring Directors who are not re-elected as may be
requested by the newly-elected Directors shall, if willing to do so, continue in
office to complete the number of Directors for the time being fixed pursuant to
these Articles until further new Directors are elected at a general meeting
convened for the purpose. If any such election or continuance of Directors does
not result in the election or continuance of the number of Directors for the
time being fixed pursuant to these Articles such number shall be fixed at the
number of Directors actually elected or continued in office.
13.5. Any casual vacancy occurring in the Board of Directors may be filled
by the remaining Directors or Director. A vacancy resulting from an increase by
the members in the number of Directors may be filled by the members by ordinary
resolution or by the Directors.
13.6. Between successive annual general meetings the Directors shall have
power to appoint one or more additional Directors but not more than one-third
of the number of Directors fixed pursuant to these Articles and in effect at
the last general meeting at which Directors were elected, and the number of
Directors shall be increased accordingly. Any Director so appointed shall
hold office only until the next following annual general meeting of the
Company, but shall be eligible for election at such meeting and so long as he
is an additional Director the number of Directors shall be increased
accordingly.
13.7. Any Director may by instrument in writing delivered to the Company
appoint any person to be his alternate to act in his place at meetings of the
Directors at which he is not present unless the Directors shall have reasonably
disapproved the appointment of such person as an alternate Director and shall
have given notice to that effect to the Director appointing the alternate
Director within a reasonable time after delivery of such instrument to the
Company. Every such alternate shall be entitled to notice of meetings of the
Directors and to attend and vote as a Director at a meeting at which the person
appointing him is not personally present. A person may be appointed as an
alternate Director by more than one Director, and an alternate Director shall be
counted separately in determining the quorum for, and having a separate vote on
behalf of, each Director he is representing, in addition to being so counted
and voting where he is himself a Director. Every alternate Director, if
authorized by the instrument appointing them, may sign in place of the Director
who appointed him resolutions submitted to the Directors to be consented to in
writing as referred to in Article 16.9. Every alternate Director shall be deemed
not to be the agent of a Director appointing him. An alternate Director shall be
deemed to be a Director for all purposes of these Articles in the performance of
any function authorized under this Article 13.7, but shall not otherwise be
deemed to be a
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Director or to have power to act as a Director. A Director may at any time by
instrument telegram, telex or any method of transmitting legibly recorded
messages delivered to the Company revoke the appointment of an alternate
appointed by him. An alternate Director may be repaid by the Company such
expenses as might properly be repaid to him if he were a Director and he shall
be entitled to receive from the Company such proportion, if any, of the
remuneration otherwise payable to the Director appointing him as such Director
may from time to time direct.
13.8. The office of Director shall be vacated if the Director:
(a) resigns his office by notice in writing delivered to the
registered office of the Company; or
(b) is convicted of an indictable offence and the other
Directors shall have resolved to remove him; or
(c) ceases to be qualified to act as a Director pursuant to the
Company Act.
13.9. The Company may by special resolution remove any Director before the
expiration of his period of office, and may by an ordinary resolution appoint
another person in his stead.
PART 14
POWERS AND DUTIES OF DIRECTORS
14.1. The Directors shall manage, or supervise the management of, the
affairs and business of the Company and shall have the authority to exercise all
such powers of the Company as are not, by the Company Act or by the Memorandum
or these Articles, required to be exercised by the company in general meeting.
14.2. The Directors may from time to time by power of attorney or other
instrument under the seal, appoint any person to be the attorney of the Company
for such purposes, and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles
and excepting the powers of the Directors relating to the constitution of the
Board and of any of its committees and the appointment or removal of officers
and the power to declare dividends) and for such period, with such remuneration
and subject to such conditions as the Directors may think fit, and any such
appointment may be made in favour of any of the Directors or any of the members
of the Company or in favour of any corporation, or of any of the members,
directors, nominees or managers of any corporation, firm or joint venture and
any such power of attorney may contain such provisions for the protection or
convenience of persons dealing with such attorney as the Directors think fit.
Any such attorney may be authorized by the Directors to sub-delegate all or any
of the powers, authorities and discretions for the time being vested in him.
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PART 15
DISCLOSURE OF INTEREST OF DIRECTORS
15.1. A Director who is, in any way, directly or indirectly interested in a
proposed contract or transaction with the Company or who holds any office or
possesses any property whereby, directly or indirectly, a duty or interest might
be created to conflict with his duty or interest as a Director shall declare the
nature and extent of his interest in such contract or transaction or of the
conflict or potential conflict with his duty and interest as a Director, as the
case may be, in accordance with the provisions of the Company Act.
15.2. A Director shall not vote in respect of any such contract or
transaction with the Company in which he is interested and if he shall do so his
vote shall not be counted, but he shall be counted in the quorum present at the
meeting at which such vote is taken. Subject to the provisions of the Company
Act, the foregoing prohibitions shall not apply to
(a) any such contract or transaction relating to a loan to the
Company, which a Director or a specified corporation or a
specified firm in which he has an interest has guaranteed or
joined in guaranteeing the
(b) any contract or transaction made or to be made with, or for
the benefit of an affiliated corporation of which a Director
is a director or officer;
(c) determining the remuneration of the Directors;
(d) purchasing and maintaining insurance to cover Directors
against liability incurred by them as Directors under
Section 152 of the Company Act; or
(e) the indemnification of any Director by the Company under
Section 152 of the Company Act.
These exceptions may from time to time be suspended or amended to any extent
approved by the Company in general meeting and permitted by the Company Act,
either generally or in respect of any particular contract or transaction or for
any particular period.
15.3. A Director may hold any office or place of profit with the Company
(other than the office of auditor of the Company) in conjunction with his office
of Director for such period and on such terms (as to remuneration or otherwise)
as the Directors may determine and no Director or intended Director shall be
disqualified by his office from contracting with the Company either with regard
to his tenure of any such other office or place of profit or as vendor,
purchaser or otherwise, and, subject to compliance with the provisions of the
Company Act, no contract or transaction entered into by or on behalf of the
Company in which a Director is in any way interested shall be liable to be
voided by reason thereof.
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15.4. Subject to compliance with the provisions of the Company Act, a
Director or his firm may act in a professional capacity for the Company (except
as auditor of the Company) and he or his firm shall be entitled to remuneration
for professional services as if he were not a Director.
15.5. A Director may be or become a director or other officer or employee
of, or otherwise interested in, any corporation or firm in which the Company may
be interested as a shareholder or otherwise, and, subject to compliance with the
provisions of the Company Act, such Director shall not be accountable to the
Company for any remuneration or other benefits received by him as director,
officer or employee of, or from his interest in, such other corporation or firm,
unless the Company in general meeting otherwise directs.
PART 16
PROCEEDINGS OF DIRECTORS
16.1. The Chairman of the Board, if any, or in his absence, the
Vice-Chairman or in his absence, the President shall preside as chairman at
every meeting of the Directors, or if neither the Chairman of the Board nor the
Vice-Chairman nor the President is present within fifteen minutes of the time
appointed for holding the meeting or is willing to act as chairman, or, if the
Chairman of the Board, the Vice-Chairman, and the President have advised the
secretary that they will not be present at the meeting, the Directors present
shall choose one of their number to be chairman of the meeting.
16.2. The Directors may meet together for the dispatch of business, adjourn
and otherwise regulate their meetings, as they think fit. Questions arising at
any meeting shall be decided by a majority of votes. In case of an equality of
votes the chairman shall not have a second or casting vote. Meetings of the
Board held at regular intervals may be held at such place, at such time and upon
such notice (if any) as the Board may by resolution from time to time determine.
16.3. A meeting of the Directors or of any committee of the Directors may
take place by means of conference telephones or other communications facilities
by which means all Directors participating in the meeting can hear each other
and provided that all such Directors agree to such meeting being held in such
manner. Directors participating in a meeting in accordance with this Article
shall be deemed to be present at the meeting and to have so agreed and shall be
counted in the quorum therefor and be entitled to speak and vote thereat.
16.4. A Director may, and the Secretary or an Assistant Secretary upon
request of a Director shall, call a meeting of the Board at any time. Reasonable
notice of such meeting specifying the place, day and hour of such meeting shall
be given by mail, postage pre-paid, addressed to each of the Directors and
alternate Directors at his address as it appears on the books of the Company or
by leaving it at his usual business or residential address or by telephone,
telegram, telex, or any method of transmitting legibly recorded messages. It
shall not be necessary to give notice of a meeting of Directors to any Director
or alternate Directors (a) who is at the time not in the Province of British
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Columbia or (b) if such meeting is to be held immediately following a general
meeting at which such Director shall have been elected or is the meeting of
Directors at which such Director is appointed. Accidental omission to give
notice of a meeting to or the nonreceipt of notice of a meeting by, any Director
or alternate Director shall not invalidate the proceedings at the meeting.
16.5. Any Director of the Company may file with the Secretary a document
executed by him waiving notice of any past, present or future meeting or
meetings of the Directors being, or required to have been, sent to him and may
at any time withdraw such waiver with respect to meetings held thereafter. After
filing such waiver with respect to future meetings and until such waiver
is withdrawn no notice need be given to such Director and, unless the Director
otherwise requires in writing to the Secretary, to his alternate Director of any
meeting of Directors and all meetings of the Directors so held shall be deemed
not to be improperly called or constituted by reason of notice not having been
given to such Director or alternate Director.
16.6. The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and if not so fixed shall be two
Directors or, if the number of Directors is fixed at one, shall be one Director.
16.7. The continuing Directors may act notwithstanding any vacancy in their
body, but, if and so long as their number is reduced below the number fixed
pursuant to these Articles as the necessary quorum of Directors, the continuing
Directors may act for the purpose of increasing the number of Directors to that
number, or of summoning a general meeting of the Company, but for no other
purpose.
16.8. Subject to the provisions of the Company Act, all acts done by any
meeting of the Directors or of a committee of Directors, or by any person acting
as a Director, shall, notwithstanding that it be afterwards discovered that
there was some defect in the qualification, election or appointment of any such
Directors or of the members of such committee or person acting as aforesaid, or
that they or any of them were disqualified, be as valid as if every such person
had been duly elected or appointed and was qualified to be a Director.
16.9. A resolution consented to in writing, whether by document, telegram,
telex or any method of transmitting legibly recorded messages or other means, by
all of the Directors shall be as valid and effectual as if it had been passed at
a meeting of the Directors duly called and held. Such resolution may be in two
or more counterparts which together shall be deemed to constitute one resolution
in writing. Such resolution shall be filed with the minutes of the proceedings
of the Directors and shall be effective on the date stated thereon or on the
latest date stated on any counterpart.
PART 17
EXECUTIVE AND OTHER COMMITTEES
17.1. The Directors may by resolution appoint an Executive Committee to
consist of such member or members of their body as they think fit, which
Committee shall have, and
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may exercise during the intervals between the meetings of the Board, all the
powers vested in the Board except the power to fill vacancies in the Board, the
power to change the membership of, or fill vacancies in, said Committee or any
other committee of the Board and such other powers, if any, as may be specified
in the resolution. The said Committee shall keep regular minutes of its
transactions and shall cause them to be recorded in books kept for that purpose,
and shall report the same to the Board of Directors at such times as the Board
of Directors may from time to time require. The Board shall have the power at
any time to revoke or override the authority given to or acts done by the
Executive Committee except as to acts done before such revocation or overriding
and to terminate the appointment or change the membership of such Committee and
to fill vacancies in it. The Executive Committee may make rules for the conduct
of its business and may appoint such assistants as it may deem necessary. A
majority of the members of said Committee shall constitute a quorum thereof.
17.2. The Directors may from time to time by resolution constitute, dissolve
or reconstitute standing committees and other committees consisting of such
persons as the Board may determine. Every committee constituted by the Board
shall have the powers, authorities and discretions delegated to it by the Board
(which shall not include the power to fill vacancies in the Board and the power
to change the membership of or fill vacancies in any committee constituted by
the Board or the power to appoint or remove officers appointed by the Board) and
shall conform to the regulations which may from time to time be imposed upon it
by the Board.
17.3. The Executive Committee and any other committee may meet and adjourn
as it thinks proper. Questions arising at any meeting shall be determined by a
majority of votes of the members of the committee present, and in case of an
equality of votes the chairman shall not have a second or casting vote. A
resolution approved in writing by all the members of the Executive Committee or
any other committee shall be as valid and effective as if it had been passed at
a meeting of such Committee duly called and constituted. Such resolution may be
in two or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of the
proceedings of the committee and shall be effective on the date stated thereon
or on the latest date stated in any counterpart.
PART 18
OFFICERS
18.1. The Directors shall, from time to time, appoint a President and a
Secretary and such other officers, if any as the directors shall determine and
the Directors may, at any time, terminate any such appointment. No officer shall
be appointed unless he is qualified in accordance with the provisions of the
Company Act.
18.2. One person may hold more than one of such offices except that the
offices of President and Secretary must be held by different persons unless the
Company has only one member. Any person appointed as the Chairman of the Board,
the President or the Managing Director shall be a Director. The other officers
need not be Directors. The remuneration of the officers of the Company as such
and the terms and conditions of their
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tenure of office or employment shall from time to time be determined by the
Directors; such remuneration may be by way of salary, fees, wages, commission or
participation in profits or any other means or all of these modes and an officer
may in addition to such remuneration be entitled to receive after he ceases to
hold such office or leaves the employment of the Company a pension or gratuity.
The Directors may decide what functions and duties each officer shall perform
and may entrust to and confer upon him any of the powers exercisable by them
upon such terms and conditions and with such restrictions as they think fit and
may from time to time revoke, withdraw, alter or vary all or any of such
functions, duties and powers. The Secretary shall, inter alia, perform the
functions of the Secretary specified in the Company Act.
18.3. Every officer of the Company who holds any office or possesses any
property whereby, whether directly or indirectly, duties or interests might be
created in conflict with his duties or interests as an officer of the Company
shall, in writing, disclose to the President the fact and the nature, character
and extent of the conflict.
PART 19
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES
19.1. Subject to the provisions of the Company Act, the Directors shall
cause the Company to indemnify a Director or former Director of the Company and
the Directors may cause the Company to indemnify a director or former director
of a corporation of which the Company is or was a shareholder and the heirs and
personal representatives of any such person against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him or them including an amount paid to
settle an action or satisfy a judgment in a civil, criminal or administrative
action or proceeding to which he is or they are made a party by reason of his
being or having been a Director of the Company or a director of such
corporation, including any action brought by the Company or any such
corporation. The Company shall apply to the court for all approvals of the court
which may be required to make any indemnity referred to in this Part effective
and enforceable. Each Director of the Company on being elected or appointed
shall be deemed to have contracted with the Company on the terms of the
foregoing indemnity.
19.2. Subject to the provisions of the Company Act, the Directors may cause
the Company to indemnify any officer, employee or agent of the Company or of a
corporation of which the Company is or was a shareholder (notwithstanding that
he is also a Director) and his heirs and personal representatives against all
costs, charges and expenses whatsoever incurred by him or them and resulting
from his acting as an officer, employee or agent of the Company or such
corporation. In addition the Company shall indemnify the Secretary or an
Assistant Secretary of the Company (if he shall not be a full time employee of
the Company and notwithstanding that he is also a Director) and his respective
heirs and legal representatives against all costs, charges and expenses
whatsoever incurred by him or then; and arising out of the functions assigned to
the Secretary by the Company Act or these Articles and each such Secretary and
Assistant Secretary shall on being appointed be deemed to have contracted with
the Company on the terms of the foregoing indemnity.
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19.3. The failure of a Director or officer of the Company to comply with the
provisions of the Company Act or of the Memorandum or these Articles shall not
invalidate any indemnity to which he is entitled under this Part.
19.4. The Directors may cause the Company to purchase and maintain insurance
for the benefit of any person who is or was serving as a Director, officer,
employee or agent of the Company or as a director, officer, employee or agent
of any corporation of which the Company is or was a shareholder and his heirs
or personal representatives against any liability incurred by him as such
Director, director, officer, employee or agent.
PART 20
DIVIDENDS AND RESERVE
20.1. The Directors may from time to time declare and authorize payment of
such dividends, if any, as they may deem advisable and need not give notice of
such declaration to any member. No dividend shall be paid otherwise than out of
funds and/or assets properly available for the payment of dividends and a
declaration by the Directors as to the amount of such funds or assets available
for dividends shall be conclusive. The Company may pay any such dividend wholly
or in part by the distribution of specific assets and in particular by paid up
shares, bonds, debentures or other securities of the Company or any other
corporation or in any one or more such ways as may be authorized by the Company
or the Directors and where any difficulty arises with regard to such a
distribution the Directors may settle the same as they think expedient, and in
particular may fix the value for distribution of such specific assets or any
part thereof, and may determine that cash payments in substitution for all or
any part of the specific assets to which any members are entitled shall be made
to any members on the basis of the value so fixed in order to adjust the rights
of all parties and may vest any such specific assets in trustees for the persons
entitled to the dividend as may seem expedient to the Directors.
20.2. Any dividend declared on shares of any class or series by the
Directors may be made payable on such date as is fixed by the Directors.
20.3. Subject to the rights of members (if any) holding shares with special
rights as to dividends, all dividends on shares of any class or series shall be
declared and paid according to the number of such shares held.
20.4. The Directors may, before declaring any dividend, set aside out of the
funds properly available for the payment of dividends such sums as they think
proper as a reserve or reserves, which shall, at the discretion of the
Directors, be applicable for meeting contingencies, or for equalizing dividends,
or for any other purpose to which such funds of the Company may be properly
applied, and pending such application may, at the like discretion, either be
employed in the business of the Company or be invested in such investments as
the Directors may from time to time think fit. The Directors may also, without
placing the same in reserve, carry forward such funds, which they think prudent
not to divide.
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20.5. If several persons are registered as joint holders of any share, any
one of them may given an effective receipt for any dividend, bonuses or other
moneys payable in respect of the share.
20.6. No dividend shall bear interest against the Company. Where the
dividend to which a member is entitled includes a fraction of a cent, such
fraction shall be disregarded in making payment thereof and such payment shall
be deemed to be payment in full.
20.7. Any dividend, bonuses or other moneys payable in cash in respect of
shares may be paid by cheque or warrant sent through the post directed to the
registered address of the holder, or in the case of joint holders, to the
registered address of that one of the joint holders who is first named on the
register, or to such person and to such address as the holder or joint holders
may direct in writing. Every such cheque or warrant shall be made payable to the
order of the person to whom it is sent. The mailing of such cheque or warrant
shall, to the extent of the sum represented thereby (plus the amount of any tax
required by law to be deducted) discharge all liability for the dividend, unless
such cheque or warrant shall not be paid on presentation or the amount of tax so
deducted shall not be paid to the appropriate taxing authority.
20.8. Notwithstanding anything contained in these Articles the Directors may
from time to time capitalize any undistributed surplus on hand of the Company
and may from time to time issue as fully paid and non-assessable any unissued
shares, or any bonds, debentures or debt obligations of the Company as a
dividend representing such undistributed surplus on hand or any part thereof.
PART 21
DOCUMENTS, RECORDS AND REPORTS
21.1. The Company shall keep at its records office at such other place as
the Company Act may permit, the documents, copies registers, minutes, and
records which the Company is required by the Company Act to keep at its records
office or such other place, as the case may be.
21.2. The Company shall cause to be kept proper books of account and
accounting records in respect of all financial and other transactions of the
Company in order properly to record the financial affairs and condition of the
Company and to comply with the Company Act.
21.3. Unless the Directors determine otherwise, or unless otherwise
determined by an ordinary resolution, no member of the Company shall be entitled
to inspect the accounting records of the Company.
21.4. The Directors shall from time to time at the expense of the Company
cause to be prepared and laid before the Company in general meeting such
financial statements and reports as are required by the Company Act.
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21.5. Every member shall be entitled to be furnished once gratis on demand
with a copy of the latest annual financial statement of the Company and, if so
required by the Company Act, a copy of each such annual financial statement and
interim financial statement shall be mailed to each member.
PART 22
NOTICES
22.1. A notice, statement or report may be given or delivered by the Company
to any member either by delivery to him personally or by sending it by mail to
him to his address as recorded in the register of members. Where a notice,
statement or report is sent by mail, service or delivery of the notice,
statement or report shall be deemed to be effected by properly addressing,
prepaying and mailing the notice, statement or report and to have been given on
the day, Saturdays, Sundays and holidays excepted, following the date of
mailing. A certificate signed by the Secretary or other officer of the Company
or of any other corporation acting in that behalf for the Company that the
letter, envelope or wrapper containing the notice, statement or report was so
addressed, prepaid and mailed shall be conclusive evidence thereof.
22.2. A notice, statement or report may be given or delivered by the Company
to the joint holders of a share by giving the notice to the joint holder first
named in the register of members in respect of the share.
22.3. A notice, statement or report may be given or delivered by the
Company to the persons entitled to a share in consequence of the death,
bankruptcy or incapacity of a member by sending it through the mail prepaid
addressed to them by name or by the title of representatives of the deceased or
incapacitated person or trusted of the bankrupt, or by any like description, at
the address (if any) supplied to the Company for the purpose by the persons
claiming to be so entitled, or (until such address has been so supplied) by
giving the notice in a manner in which the same might have been given if the
death, bankruptcy or incapacity had not occurred.
22.4. Notice of every general meeting or meeting of members holding a class
or series of shares shall be given in a manner hereinbefore authorized to every
member holding at the time of the issue of the notice or the date fixed for
determining the members entitled to such notice, whichever is the earlier,
shares which confer the right to notice of and to attend and vote at any such
meeting. No other person except the auditor of the Company and the Directors of
the Company shall be entitled to receive notices of any such meeting.
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PART 23
RECORD DATES
23.1. The Directors may fix in advance a date, which shall not be more than
the maximum number of days permitted by the Company Act preceding the date of
any meeting of members or any class or series thereof or of the payment of any
dividend or of the proposed taking of any other proper action requiring the
determination of members as the record date for the determination of the members
entitled to notice of, or to attend and vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend or for
any other proper purpose and, in such case, notwithstanding anything elsewhere
contained in these Articles, only members of record on the date so fixed shall
be deemed to be members for the purposes aforesaid.
23.2. Where no record date is so fixed for the determination of members as
provided in the preceding Article the date on which the notice is mailed or on
which the resolution declaring the dividend is adopted, as the case may be,
shall be the record date for such determination.
PART 24
SEAL
24.1. The Directors may provide a seal for the Company and, if they do so,
shall provide for the safe custody of the seal which shall not be affixed to any
instrument except in the presence of the following persons, namely,
(a) any two Directors, or
(b) one of the Chairman of the Board, the President, the
Managing Director, a Director and a Vice-President together
with one of the Secretary, the Treasurer, the
Secretary-Treasurer, an Assistant Secretary, an Assistant
Treasurer and an Assistant Secretary-Treasurer, or
(c) if the Company shall have only one member, the President or
the Secretary, or
(d) subject to Article 8.4., such person or persons as the
Directors may from time to time by resolution appoint
and the said Directors, officers, person or persons in whose presence the seal
is so affixed to an instrument shall sign such instrument. For the purpose of
certifying under seal true copies of any document or resolution the seal may be
affixed in the presence of any one of the foregoing persons.
24.2. To enable the seal of the Company to be affixed to any bonds,
debentures, share certificates, or other securities of the Company, whether in
definitive or interim
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form, on which facsimiles of any of the signatures of the Directors or officers
of the Company are, in accordance with the Company Act and/or these Articles,
printed or otherwise mechanically reproduced there may be delivered to the firm
or company employed to engrave, lithograph or print such definitive or interim
bonds, debentures, share certificates or other securities one or more unmounted
dies reproducing the Company's seal and the Chairman of the Board, the
President, the Managing Director or a Vice-President and the Secretary,
Treasurer, Secretary-Treasurer, an Assistant Secretary, an Assistant Treasurer
or an Assistant Secretary-Treasurer may by a document authorize such firm or
company to cause the Company's seal to be affixed to such definitive or interim
bonds, debentures, share certificates or other securities by the use of such
dies. Bonds, debentures, share certificates or other securities to which the
Company's seal has been so affixed shall for all be deemed to be under and to
bear the Company's seal lawfully affixed thereto.
24.3. The Company may have for use in any other province, state, territory
or country an official seal and all of the powers conferred by the Company Act
with respect thereto may be exercised by the Directors or by a duly authorized
agent of the Company.
PART 25
PROHIBITIONS
25.1. As long as the Company is a company which is not a reporting issuer
(as defined under the British Columbia Securities Act), no shares shall be
transferred without the previous consent of the Directors expressed by a
resolution of the Board and the Directors shall not be required to give any
reason for refusing to consent to any such proposed transfer.
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- --------------------------------------------------------------------------------
Full Name, Resident Address, and Occupation of Subscriber
- --------------------------------------------------------------------------------
/s/ James A. Speakman
- ----------------------------------
JAMES A. SPEAKMAN
#205 - 2772 Spruce Street
Vancouver, B.C.
V6H 2R2
---------------------------------
Solicitor
---------------------------------
- --------------------------------------------------------------------------------
DATED as of the 20th day of July, 1987
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Briant, Angus, McClellan & Rubenstein
<PAGE>
EXHIBIT 3.4
I HEREBY CERTIFY THAT THIS IS A COPY OF
A DOCUMENT FILED WITH THE REGISTRAR OF
COMPANIES ON SEP 11 1987 19
--------------- -----
/s/ illegible
------------------------------------
ASSISTANT DEPUTY REGISTRAR OF COMPANIES
FOR THE PROVINCE OF BRITISH COLUMBIA
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
Cert. of Incorp. 330743
SPECIAL RESOLUTION
The following special resolutions were passed by the undermentioned Company
on the date stated:
Name of Company: NO. 96 SAIL VIEW VENTURES LTD.
Date resolutions passed: September 9, 1987
Resolution:
"RESOLVED, as special resolutions, that:
1. The name of the Company be changed from "NO. 96 SAIL VIEW VENTURES LTD." to
"EAST COAST EXPLORATIONS LTD."
2. Item 1 of the Memorandum of the Company be changed to read:
The name of the Company is "EAST COAST EXPLORATIONS LTD."
3. The capital of the Company be altered by increasing the authorized capital
of the Company from 10,000 Common shares without par value to 20,000,000
Common shares without par value.
4. The Memorandum as altered by these resolutions be in the form attached
hereto and marked Schedule "A", so that the Memorandum as altered shall at
the time of filing comply with the Company Act."
CERTIFIED a true copy the 9th day of September, 1987.
/s/ illegible
-----------------------------
Solicitor
-----------------------------
<PAGE>
SCHEDULE "A"
MEMORANDUM
(As altered by special resolutions
dated the 9th day of September, 1987)
of
EAST COAST EXPLORATIONS LTD.
1. The name of the Company is "EAST COAST EXPLORATIONS LTD."
2. The authorized capital of the Company consists of Twenty Million
(20,000,000) Common shares without par value.
<PAGE>
EXHIBIT 3.5
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 330743
[Logo]
PROVINCE OF BRITISH COLUMBIA
Ministry of Finance and Corporate Relations
REGISTRAR OF COMPANIES
COMPANY ACT
CERTIFICATE
I HEREBY CERTIFY THAT
NO. 96 SAIL VIEW VENTURES LTD.
HAS THIS DAY CHANGED ITS NAME TO THE NAME
EAST COAST EXPLORATIONS LTD.
GIVEN UNDER MY HAND AND SEAL OF OFFICE
VICTORIA, BRITISH COLUMBIA
THIS 11TH DAY OF SEPTEMBER, 1987
B. BECKWITH
ASST. DEPUTY REGISTRAR OF COMPANIES
<PAGE>
EXHIBIT 3.6
I HEREBY CERTIFY THAT THIS IS A COPY
OF A DOCUMENT FILED WITH THE
REGISTRAR 0F COMPANIES
0CT 15 1993
------------------------------------
(illegible)
------------------------------------
FOR REGISTRAR OF COMPANIES
FOR THE PROVINCE OF BRITISH COLUMBIA
FORM 21
(SECTION 371)
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
Certificate of Incorporation No. 330743
SPECIAL RESOLUTI0N
--------------------------------
The following special resolutions were passed by the undermentioned Company
on the date stated:
Name of Company: EAST COAST EXPLORATIONS LTD.
Date resolutions passed: September 29, 1993
RESOLUTION:
"RESOLVED, AS A SPECIAL RESOLUTION THAT:
1. The name of the Company be changed from "EAST COAST EXPLORATIONS LTD." to
"SUMMO MINERALS CORPORATION".
2. Item 1 of the Memorandum of the Company be changed to read:
The name of the Company is "Summo Minerals Corporation".
3. The Memorandum as altered by these resolutions be in the form attached
hereto as Schedule "A", so that the Memorandum as altered shall at the time
of filing comply with the Company Act."
CERTIFIED a true copy this 4th day of October, 1993.
---------------------------
(signature)
<PAGE>
SCHEDULE "A"
MEMORANDUM
(As altered by special resolutions
dated the 29th day of September, 1993)
of
SUMMO MINERALS CORPORATION
1. The name of the Company is "SUMMO MINERALS CORPORATION".
2. The authorized capital of the Company consists of Twenty
Million (20,000,000) Common shares without par value.
<PAGE>
EXHIBIT 3.7
NUMBER: 330743
[Logo]
CERTIFICATE
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I HEREBY CERTIFY THAT
EAST COAST EXPLORATIONS LTD.
has this day changed its name to
SUMMO MINERALS CORPORATION
ISSUED UNDER MY HAND AT VICTORIA, BRITISH COLUMBIA
ON OCTOBER 15, 1993
/s/ John S. Powell
JOHN S. POWELL
REGISTRAR OF COMPANIES
<PAGE>
EXHIBIT 3.8
I HEREBY CERTIFY THAT THIS IS A COPY
OF A DOCUMENT FILED WITH THE
REGISTRAR OF COMPANIES ON
MAY 26 1995
- --------------------------------------
/s/ Illegible
- --------------------------------------
FOR THE REGISTRAR OF COMPANIES
FOR THE PROVINCE OF BRITISH COLUMBIA
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
Certificate of
Incorporation No. 330743
SPECIAL RESOLUTION
The following special resolutions were passed by the undermentioned Company
on the date stated:
Name of Company: SUMMO MINERALS CORPORATION
Date resolutions passed: April 24, 1995
RESOLUTION:
"RESOLVED, AS A SPECIAL RESOLUTION THAT the authorized capital of the
Company be altered by:
(a) increasing from 20,000,000 Common Shares without par value to 500,000,000
Common Shares without par value pursuant to Section 254(1)(b) of the
COMPANY ACT (British Columbia);
(b) by the creation of 100,000,000 Preferred Shares without par value
pursuant to Section 254(1)(a) of the Company Act (British Columbia); and
(c) by the creation, definition and attachment of special rights and
restrictions to the Preferred Shares in the form attached hereto as
Schedule "B" and the inclusion of such Special Rights and Restrictions in
the Articles of the Company,
so that the authorized capital of the Company is increased from 20,000,000
Common Shares without par value to 600,000,000 Shares divided into 500,000,000
Common Shares without par value and 100,000,000 Preferred Shares without par
value, having attached thereto the Special Rights and Restrictions as set forth
in the Articles of the Company. The Memorandum, as altered, is attached as
Schedule "A".
CERTIFIED a true copy this 27th day of April, 1995.
(signature)
<PAGE>
SCHEDULE A
MEMORANDUM
(As altered by special resolutions
dated: April 24, 1995)
of
SUMMO MINERALS CORPORATION
1. The name of the Company is SUMMO MINERALS CORPORATION.
2. The authorized capital of the Company consists of 600,000,000 shares
divided into:
500,000,000 Common shares without par value; and
100,000,000 Preferred Shares without par value
There be attached to the shares the special rights and restrictions set
forth in the Articles of the Company.
<PAGE>
SCHEDULE B
SUMMO MINERALS CORPORATION (the "Company")
PART 26
SPECIAL RIGHTS AND ACTIONS ATTACHING TO
PREFERRED SHARES
The preferred shares without par value of the Company (the "Preferred
Shares") shall have attached thereto the following special rights and
restrictions:
26.1 The directors of the Company may at any time and from time to time
issued the Preferred Shares in one or more Series, each Series to consist of
such number of shares as may before issuance of any thereof be determined by the
directors.
26.2 The directors of the Company shall, subject as hereinafter
provided, by resolution duly passed before the first issue of the Preferred
Shares of any Series, alter the Memorandum of the Company to fix the number of
Preferred Shares in, and to determine the designation of the Preferred Shares of
such Series and alter the Articles to create, define and attach the preferences,
privileges, rights, restrictions, conditions, and limitations to be attached to
the Preferred Shares of such Series.
26.3 The Preferred Shares of any Series may have attached thereto
preferences, privileges, rights, restrictions, conditions or limitations with
regard to dividends (which, in the case of fixed dividends, shall in all
cases be cumulative), whether in cash or otherwise, voting, the right to
convert such shares into common shares or otherwise including, without
limiting the generality of the foregoing, preferences, privileges, rights,
restrictions, conditions, or limitations with respect to (a) the redemption
or purchase of Preferred Shares by the Company; (b) retraction privileges;
(c) sinking funds or funds for the purchase or redemption of Preferred
Shares; (d) payment of dividends on any other shares of the Company; (e)
redemption, purchase or other retirement of any shares of the Company or of
any subsidiary of the Company; (f) the exercise by the Company of any right
to elect that any one or more dividends are to be paid out of one or more
special surplus accounts recognized for tax purposes; (g) subdivision,
consolidation or reclassification of any shares of the Company; (h) borrowing
by the Company or any subsidiary of the Company; (i) the creation or issue of
any debt or equity securities by the Company or any subsidiary of the Company
including the issue of any Preferred Shares in addition to the Preferred
Shares at any time outstanding; (j) reduction of capital by the Company or
any subsidiary of the Company; (k) retirement of notes, bonds or debentures
or other indebtedness of the Company or any subsidiary of the Company; (l)
conduct of the business of the Company or investment of its funds; (m)
meetings of holders of Preferred Shares; and (n) the right of holders of
Preferred Shares to convert or exchange such shares into shares of any class
of the Company or into or for any other securities of the Company or into or
for shares or securities of any other corporation.
26.4 The holders of Preferred Shares shall be entitled to (a) preference
with respect to payment of dividends over the common shares and over any other
shares ranking junior to the Preferred Shares with respect to payments of
dividends; (b) preference with respect to distribution of assets in the event of
liquidation, dissolution or winding-up of the Company, whether voluntary or
involuntary, or any other distribution of the assets of the Company among its
shareholders for the purpose of winding-up its affairs over the common shares
and over any other shares ranking junior to the Preferred Shares with respect to
the repayment of capital; and (c) with respect to each Series such other
preferences over the common shares and over any other shares ranking junior to
the Preferred Shares in any respect, as are not inconsistent with the provisions
of this Part 26 and as may be determined for that Series.
26.5 The Preferred Shares of each Series shall rank rateably with the
Preferred Shares of every other Series on the return of capital and in the
distribution of assets in the event of liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, or any other distribution of the
assets of the Company among its shareholders for the purpose of winding-up it
affairs. When fixed cumulative dividends that are due on any Series of Preferred
Shares are not paid in full, the shares of all Series of Preferred Shares
participate rateably in respect of accumulated dividends in accordance with the
amounts that would be payable on those shares if all the accumulated dividends
were paid in full.
26.6 Subject to such rights relating to the election of directors on a
default in payment of dividends as may be attached to any Series of the
Preferred Shares by the directors, holders of the Preferred Shares shall not be
entitled as such to receive notice of, or to attend or vote at, any general
meeting of members of the Company.
26.7 The Company shall not without, but may from time to time with, the
authorization of the holders of the Preferred Shares required by the Company
Act, increase the authorized number of Preferred Shares or create any class of
shares ranking in priority to or on a parity with the Preferred Shares.
<PAGE>
EXHIBIT 10.1
TERMINATION OF EXISTING MINERALS LEASE,
BILL OF SALE, AND NEW MINERALS LEASE
This Termination of Existing Minerals Lease, Bill of Sale and New
Minerals Lease made and entered into as of the 20th day of April, 1988, by
and between Lisbon Copper Ltd., a Utah limited partnership ("LESSOR"), whose
mailing address is c/o Raymond E. Kunkel, 33 Holiday Haven, Moab, Utah 84532;
Kelmine Corporation ("KELMINE"), also known as Kelmine Corp., a Colorado
corporation, whose mailing address is 11930 West 44th Avenue, Wheatridge,
Colorado 80033; and MLP Associates Ltd. ("LESSEE") a Colorado limited
partnership, whose address is 2801 Youngfield St., Suite 221, Golden,
Colorado 80401.
WITNESSETH:
I. TERMINATION OF MINERALS LEASE.
I.A. Recitals.
I.A.1. Raymond E. Kunkel ("RAY") and Paul B. Clemons
("CLEMONS"), as lessors, and KELMINE, as lessee, entered into a Minerals Lease
(the "KUNKEL-KELMINE LEASE") dated February 15, 1985, covering an interest in
the following:
I.A.1.a. The hereinafter named unpatented lode mining
claims situated in San Juan County, State of Utah, which are more particularly
described in the notice of location and amended notice of location for each
claim, a copy of which is recorded in the Recorder's office of San Juan County,
<PAGE>
State of Utah (the "RECORDER'S OFFICE"), and the Bureau of Land Management
Serial Number (the "BLM NO.") of which are as follows:
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
Camel 25 453
(amended) 231 261 129728
Cow 25 454
(amended) 231 262 129732
Cat 25 454
(amended) 231 262 129729
Colt 25 455
(amended) 231 263 129730
Cougar 25 455
(amended) 231 263 129731
Cub 25 456
(amended) 231 264 129734
Coyote 25 456
(amended) 231 264 129733
Sentinal 1 47 44
(amended) 231 256 129718
Sentinal 2 47 45
(amended) 231 257 129719
Sentinal 3 47 45
(amended) 231 257 129720
Sentinal 4 47 46
(amended) 231 258 129721
Sentinal 5 47 46
(amended) 231 258 129722
Sentinal 6 47 47
(amended) 231 259 129723
Sentinal 7 47 47
(amended) 231 259 129724
Sentinal 8 47 48
(amended) 231 260 129725
Sentinal 9 47 48
(amended) 231 260 129726
Sentinal 10 47 49
(amended) 231 261 129727
Security 3 377 402 140827
Security 5 377 403 140607
Security 7 377 404 140608
2
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
Security 9 377 405 140609
Security 11 377 406 140610
Security 14 377 407 140611
Security 15 377 408 140612
Security 16 377 409 140613
Security 18 377 410 140614
Security 19 377 411 140615
Security 20 377 412 140616
Security 25 377 413 140617
Security 26 377 414 140618
Security 27 377 415 140619
Security 28 377 416 140620
Security 29 377 417 140621
Security 30 377 418 140622
Security 31 377 419 140623
Security 32 377 420 140624
Security 33 377 421 140625
Security 34 377 422 140626
Security 35 377 423 140627
Security 36 377 424 140628
Security 37 377 425 140629
Security 38 377 426 140630
Security 39 377 427 140631
Security 40 377 428 140632
Security 41 377 429 140633
Security 42 377 430 140634
Security 43 377 431 140635
Security 44 377 432 140636
Security 45 377 433 140637
Security 46 377 434 140638
Security 47 377 435 140639
Security 48 377 436 140640
Security 49 378 341 140641
Security 50 378 342 140642
Security 51 378 343 140643
Security 52 378 344 140644
Security 53 378 345 140645
Security 54 378 346 140646
Security 55 378 347 140647
Security 56 378 348 140648
Climax No. 1 R-2 382
Climax No. 2 R-2 382
Alpha No. 1 63 96
3
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
(amended) 169 463
(amended) 270 83 129765
Alpha No. 2 63 96
(amended) 169 463
(amended 270 83 129766
Alpha No. 3 63 97
(amended) 169 464
(amended) 270 84 129767
Alpha No. 4 63 97
(amended) 169 464
(amended) 270 84 129768
Alpha No. 5 63 98
(amended) 169 465
(amended) 270 85 129769
Alpha No. 6 63 98
(amended) 169 465
(amended) 270 85 129770
Alpha No. 7 63 99
(amended) 169 466
(amended) 270 86 129771
Alpha No. 8 63 99
(amended) 169 466
(amended) 270 86 127992
CW 1 510 62 129811
CW 2 510 63 129812
CW 3 510 64 129813
CW 4 510 65 129814
CW 5 510 66 129815
CW 6 510 67 129816
CW 7 510 68 129817
CW 8 510 69 129818
CW 9 510 70 129819
CW 10 510 71 129820
CW 11 510 72 129821
CW 12 510 73 129822
CW 13 510 74 129823
CW 14 510 75 129824
CW 15 511 596 129825
CW 16 511 597 129826
CW 19 511 598
(amended) 521 8 129827
CW 22 511 599
(amended) 521 9 129828
4
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
KWR 1 487 130 129789
KWR 2 487 131 129790
KWR 3 487 132 129791
KWR 4 487 133 129792
KWR 5 487 134 129793
KWR 6 487 135 129794
KWR 7 487 136 129795
KWR 8 487 137 129796
KWR 9 Fraction 501 345 129797
KWR 10 501 346 129798
KWR Fraction 501 347 129799
KWR 11 Fraction 521 469 129802
KWR 12 Fraction 501 348 129800
KWR 13 Fraction 501 349 129801
CWG Fraction 517 275 129786
CWG Fraction #1 517 276 129787
CWG Fraction #2 517 277 129788
CD 1 509 508 129773
CD 2 Fraction 509 509 129778
CD 3 Fraction 509 510 129779
CD 4 Fraction 509 511 129780
CD 5 Fraction 509 512 129781
CD 6 Fraction 509 550 129737
Globe #1 486 16
(amended) 489 392 129782
Globe #2 486 17
(amended) 489 393 129783
Globe #9 486 24
(amended) 489 400 129784
Globe #10 486 25
(amended) 489 401 129785
I.A.1.b. The following described fee land (the "FEE LAND")
situated in San Juan County, State of Utah, to-wit:
PATTERSON RANCH
TOWNSHIP 31 SOUTH, RANGE 25 EAST, SLM
Section 1: Lots 1, 2, 3 and 4
5
<PAGE>
I.A.1.c. Water and water rights for use upon the property
covered by the KUNKEL-KELMINE LEASE.
I.A.1.d. The stockpile of mixed oxide-sulphide copper ore
(the "STOCKPILE") estimated to contain 35,000 to 40,000 tons containing
approximately 2% copper which is situated on the following described tract of
land situated in San Juan County, State of Utah, to-wit:
TOWNSHIP 30 SOUTH, RANGE 25 East, SLM
Section 36: SE 1/4
I.A.1.e. All mining claims and other property acquired by
the parties to the KUNKEL-KELMINE LEASE within one (1) mile of any part of the
property above described which is covered by the KUNKEL-KELMINE LEASE, except
State of Utah Metalliferous Lease Number 20569 (the "STATE LEASE"), covering the
following described tracts of land situated in San Juan County, State of Utah,
to-wit:
TOWNSHIP 30 SOUTH, RANGE 25 EAST, SLM
Section 36: NW 1/4, E 1/2
I.A.2. On the date of the KUNKEL-KELMINE LEASE, the interest of
the lessors in that lease and in the property covered by that lease, was divided
between the individual lessors as follows:
6
<PAGE>
Name of Lessor Undivided Interest Owned
-------------- ------------------------
RAY 95%
CLEMONS 5%
I.A.3. Since the date of the KUNKEL-KELMINE LEASE, the following
transfers affecting the interest of the lessors in that lease have occurred,
to-wit:
I.A.3.a. By Deed and Assignment dated December 17, 1985,
and recorded in the RECORDER'S OFFICE on December 18, 1985, in Book 673 at pages
479-484, RAY conveyed the undivided interest set opposite the names of the
persons hereinafter set forth in and to the property covered by the
KUNKEL-KELMINE LEASE and the interest of the lessors in that lease as follows:
Name of Grantee Undivided Interest Conveyed
--------------- ---------------------------
Albert S. Gilles ("GILLES") 5%
Burton F. Kunkel ("BURTON") 10%
A. E. Dearth ("DEARTH") 10%
I.A.3.b. By Deed and Assignment dated November 20, 1986,
and recorded in the RECORDER'S OFFICE on December 15, 1986, in Book 682 at pages
615-619, CLEMONS conveyed his interest in the KUNKEL-KELMINE LEASE and the
property covered by that lease to Nancy Brown ("BROWN").
I.A.4. By Deed and Assignment dated as of
7
<PAGE>
April 1, 1988, RAY, BROWN, GILLES, BURTON and DEARTH conveyed their interest in
the KUNKEL-KELMINE LEASE and the property covered thereby to LESSOR so that
LESSOR now owns the interest of the lessors in that lease and the property
covered thereby.
I.A.5. KELMINE continues to hold all of the interest of the
lessee in the KUNKEL-KELMINE LEASE and such interest is not encumbered in any
way.
I.A.6. LESSOR asserts that the KUNKEL-KELMINE LEASE has been
terminated for failure of KELMINE to pay the monthly minimum royalty of
$5,000.00 under Section II.G. of the KUNKEL-KELMINE LEASE and KELMINE denies
that the lease has terminated.
I.A.7. Since the execution of the KUNKEL-KELMINE LEASE, RAY has
delivered to KELMINE certain information relating to the property covered by the
lease. In addition, KELMINE, from its own operations, has accumulated data which
should be made available to LESSOR under Section II.R. of the KUNKEL-KELMINE
LEASE. The information and data provided by RAY to KELMINE and the information
and data accumulated by KELMINE with respect to which LESSOR is entitled to
access is hereinafter collectively referred to as the "DATA". The DATA is
presently located at the office (the "KELMINE OFFICE") of KELMINE in Moab, Utah.
8
<PAGE>
I.A.8. LESSOR and KELMINE desire to compromise and resolve their
differences and terminate the KUNKEL-KELMINE LEASE by agreement and provide for
the preservation and accessibility to LESSOR and LESSEE of the DATA.
I.B. AGREEMENT.
In consideration of the premises and particularly in
consideration of the acts and undertakings of the parties hereinafter set forth,
the execution of the BILL OF SALE and the execution of the NEW MINERALS LEASE,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by LESSOR and KELMINE, LESSOR and KELMINE hereby agree and do as
follows:
I.B.1. The KUNKEL-KELMINE LEASE is terminated effective as of
the date of this instrument and is of no further force and effect.
I.B.2. LESSOR and KELMINE release all claims against each other
under the KUNKEL-KELMINE LEASE and acknowledge that each has no claim against
the other with respect to that lease.
I.B.3. KELMINE agrees to maintain the DATA at the KELMINE OFFICE
and to deliver the same to LESSEE as soon as LESSEE is willing to take
possession of the same.
I.B.4. Irrespective of anything else set
9
<PAGE>
forth herein, the termination provided herein shall not operate to relieve
LESSOR and KELMINE from their obligation to pay their respective share of taxes
under the KUNKEL-KELMINE LEASE and the obligation of KELMINE to perform the
reclamation work under the KUNKEL-KELMINE LEASE.
II. BILL OF SALE
II.A. RECITALS.
II.A.1. Under the KUNKEL-KELMINE LEASE, KELMINE acquired
equipment and machinery (the "SX-EW") described as follows:
Four Solvent Extraction Tanks
Two 350 Kilowatt Rectifiers
Approximately Thirty Concrete Electro-Winning Cells
for the processing of the copper bearing ores produced from the property covered
by the KUNKEL-KELMINE LEASE. The SX-EW is presently stored near the entrance of
the Cub uranium mine which is also on the land with respect to which the copper
mining rights are subject to the KUNKEL-KELMINE LEASE.
II.A.2. Section II.Q. of the KUNKEL-KELMINE LEASE makes
provision that upon termination of that lease the SX-EW can become the property
of the LESSOR if it accepts the same.
II.A.3. LESSOR and KELMINE desire to implement the provisions of
the KUNKEL-KELMINE LEASE by providing that LESSOR shall acquire SX-EW from
KELMINE.
10
<PAGE>
II.B. BILL OF SALE
II.B.1. KELMINE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by KELMINE, and in
further consideration of the termination of the KUNKEL-KELMINE LEASE as above
set forth and the execution of the NEW MINERALS LEASE, hereby sells, conveys,
sets over and delivers to the LESSOR the SX-EW.
II.B.2. LESSOR hereby accepts the Bill of Sale set forth herein.
III. NEW MINERALS LEASE.
III.A. RECITALS.
III.A.1. RAY and CLEMONS are the Grantees in the following
described deeds (the "DEEDS"):
III.A.1.a. Quit-Claim Deed from G. M. Wallace & Co. dated
September 30, 1976, which was recorded in the RECORDER'S OFFICE on April 27,
1977, in Book 577 at pages 391-398.
III.A.1.b. Quit-Claim Deed from Wallace Resources Inc.
dated May 29, 1980, which was recorded in the RECORDER'S OFFICE on July 22,
1980, in Book 618 at page 891.
III.A.1.c. Deed (the "COSTANZA-KUNKEL DEED") from Joseph F.
Costanza and Joyce L. Costanza (collectively "COSTANZA") dated January 5, 1983,
which was
11
<PAGE>
recorded in the RECORDER'S OFFICE on July 17, 1984, in Book 661 at pages
294-296.
III.A.2. LESSOR believes, but does not warrant or represent,
that under the foregoing deeds it has the following rights, to-wit:
III.A.2.a. The right to mine and process the copper bearing
ores down to a depth of 500 feet from the hereinafter named unpatented
lode mining claims situated in San Juan County, State of Utah, which are more
particularly described in the notice of location and amended notice of location
for each claim, a copy of which is recorded in the RECORDER'S OFFICE and the BLM
NO. of which is as follows:
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
Camel 25 453
(amended) 231 261 129728
Cow 25 454
(amended) 231 262 129732
Cat 25 454
(amended) 231 262 129729
Colt 25 455
(amended) 231 263 129730
Cougar 25 455
(amended) 231 263 129731
Cub 25 456
(amended) 231 264 129734
Coyote 35 456
(amended) 231 264 129733
Sentinal 1 47 44
12
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
(amended) 231 256 129718
Sentinal 2 47 45
(amended) 231 257 129719
Sentinal 3 47 45
(amended) 231 257 129720
Sentinal 4 47 46
(amended) 231 258 129721
Sentinal 5 47 46
(amended) 231 258 129722
Sentinal 6 47 47
(amended) 231 259 129723
Sentinal 7 47 47
(amended) 231 259 129724
Sentinal 8 47 48
(amended) 231 260 129725
Sentinal 9 47 48
(amended) 231 260 129726
Sentinal 10 47 49
(amended) 231 261 129727
Gamma 1 71 490
(amended) 85 499
Gamma 2 71 490
(amended) 85 499
CD #6 Fraction 509 550
Security 3 377 402 140827
Security 5 377 403 140607
Security 7 377 404 140608
Security 9 377 405 140609
Security 11 377 406 140610
Security 14 377 407 140611
Security 15 377 408 140612
Security 16 377 409 140613
Security 18 377 410 140614
Security 19 377 411 140615
Security 20 377 412 140616
Security 25 377 413 140617
Security 26 377 414 140618
Security 27 377 415 140619
Security 28 377 416 140620
Security 29 377 417 140621
Security 30 377 418 140622
Security 31 377 419 140623
Security 32 377 420 140624
13
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
Security 33 377 421 140625
Security 34 377 422 140626
Security 35 377 423 140627
Security 36 377 424 140628
Security 37 377 425 140629
Security 38 377 426 140630
Security 39 377 427 140631
Security 40 377 428 140632
Security 41 377 429 140633
Security 42 377 430 140634
Security 43 377 431 140635
Security 44 377 432 140636
Security 45 377 433 140637
Security 46 377 434 140638
Security 47 377 435 140639
Security 48 377 436 140640
Security 49 378 341 140641
Security 50 378 342 140642
Security 51 378 343 140643
Security 52 378 344 140644
Security 53 378 345 140645
Security 54 378 346 140646
Security 55 378 347 140647
Security 56 378 348 140648
III.A.2.b. The right to mine and process the ores bearing
copper and some other minerals from the following:
III.A.2.b.(1) The hereinafter named unpatented lode
mining claims situated in San Juan County, state of Utah, which are more
particularly described in the notice of location and amended notice of location
for each claim which is recorded in the RECORDER'S OFFICE and the BLM NO. of
which is as follows:
14
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
Climax No. 1 R-2 382
(amended) 487 185 129763
Climax No. 2 R-2 382
(amended) 487 186 129764
Alpha No. 1 63 96
(amended) 169 463
(amended) 270 83 129765
Alpha No. 2 63 96
(amended) 169 463
(amended) 270 83 129766
Alpha No. 3 63 97
(amended) 169 464
(amended) 270 84 129767
Alpha No. 4 63 97
(amended) 169 464
(amended) 270 84 129768
Alpha No. 5 63 98
(amended) 169 465
(amended) 270 85 129769
Alpha No. 6 63 98
(amended) 169 465
(amended) 270 85 129770
Alpha No. 7 63 99
(amended) 169 466
(amended) 270 86 129771
Alpha No. 8 63 99
(amended) 169 466
(amended) 270 86 129772
G. M. Wallace Fraction
(amended) 487 129 129829
CW 1 510 62 129811
CW 2 510 63 129812
CW 3 510 64 129813
CW 4 510 65 129814
CW 5 510 66 129815
CW 6 510 67 129816
CW 7 510 68 129817
CW 8 510 69 129818
CW 9 510 70 129819
CW 10 510 71 129820
CW 11 510 72 129821
CW 12 510 73 129822
CW 13 510 74 129823
15
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
CW 14 510 75 129824
CW 15 511 596 129825
CW 16 511 597 129826
CW 19 511 598
(amended) 521 8 129827
CW 22 511 599
(amended) 521 9 129828
KWR 1 487 130 129789
KWR 2 487 131 129790
KWR 3 487 132 129791
KWR 4 487 133 129792
KWR 5 487 134 129793
KWR 6 487 135 129794
KWR 7 487 136 129795
KWR 8 487 137 129796
KWR 9 Fraction 501 345 129797
KWR 10 501 346 129798
KWR Fraction 501 347 129799
KWR 11 Fraction 521 469 129802
KWR 12 Fraction 501 348 129800
KWR 13 Fraction 501 349 129801
CWG Fraction 517 275 129786
CWG Fraction #1 517 276 129787
CWG Fraction #2 517 277 129788
CD 1 509 508 129773
CD 2 Fraction 509 509 129778
CD 3 Fraction 509 510 129779
CD 4 Fraction 509 511 129780
CD 5 Fraction 509 512 129781
CD 6 Fraction 509 550 129737
Globe #1 486 16
(amended) 489 392 129782
Globe #2 486 17
(amended) 489 393 129783
Globe #9 486 24
(amended) 489 400 129784
Globe #10 486 25
(amended) 489 401 129785
III.A.2.b.(2) The FEE LAND.
III.A.2.b.(3) The STOCKPILE.
16
<PAGE>
III.A.3. Such rights as LESSOR has in all the above described
unpatented lode mining claims are hereinafter referred to as the "MINING
CLAIMS."
III.A.4. Such right to water available for use in processing
copper bearing ores from the property above described as the LESSOR has is
hereinafter referred to as the "WATER RIGHT".
III.A.5. LESSOR has acquired the rights of KELMINE in the SX-EW
under the BILL OF SALE.
III.A.6. COSTANZAS hold the STATE LEASE. COSTANZAS, in the
COSTANZA-KUNKEL DEED, intended to convey to RAY and CLEMONS the right to mine
copper on the STATE LEASE to a depth of 500 feet. The State of Utah did not
accept that deed and required that COSTANZAS make a separate assignment to RAY
and CLEMONS. Such an assignment was made by COSTANZAS and approved by the State
of Utah. LESSOR believes that it can acquire the interest of RAY, CLEMONS,
BROWN, GILLES, BURTON and DEARTH in the STATE LEASE.
III.A.7. All of the right, title, interest and expectancy of the
LESSOR in the MINING CLAIMS, the FEE LAND, the WATER RIGHT, the SX-EW, the STATE
LEASE, the STOCKPILE and all mining claims and other property (the "OTHER
PROPERTY") acquired by LESSOR and/or LESSEE within one mile of any part of
17
<PAGE>
the MINING CLAIMS, the FEE LAND and the STATE LEASE are hereinafter collectively
referred to as the "LEASED PREMISES".
III.A.8. LESSOR desires to lease the LEASED PREMISES to LESSEE
and LESSEE desires to lease the LEASED PREMISES from LESSORS.
III.B. LEASE.
III.B.1. For and in consideration of the mutual covenants and
agreements hereinafter set forth, in further consideration of the termination of
the KUNKEL-KELMINE LEASE and the execution of the BILL OF SALE, and for other
good and valuable consideration received by LESSOR from LESSEE, LESSOR does
hereby lease, let and demise exclusively to LESSEE all of the right, title and
interest of the LESSOR in and to the LEASED PREMISES and LESSOR hereby grants
exclusively to LESSEE any and all rights of LESSOR to occupy, use, enjoy and
possess the LEASED PREMISES, including, but not limited to, the following:
III.B.1.a. To explore for minerals.
III.B.1.b. To mine or otherwise extract, to mill, treat or
otherwise process, and to store, stockpile, remove, market, sell or otherwise
dispose of ore and minerals.
III.B.1.c. To dispose of or deposit waste material and
tailings on the LEASED PREMISES.
18
<PAGE>
III.B.1.d. To construct, use, maintain, repair, replace and
relocate in or upon the LEASED PREMISES buildings, shops, plants, machinery,
mills, facilities, ore bins and structures of all kinds, roads, shafts,
inclines, tunnels, drifts, open pits, pipelines, telephone lines, electric
transmission lines and transportation facilities and other utilities.
III.B.1.e. To use any underground water now existing or
subsequently discovered or developed in or upon the LEASED PREMISES.
III.B.1.f. To exercise any and all other rights and
privileges which are incidental to or which may be useful, desirable or
convenient in LESSEE's exercise of any or all of the rights hereinabove
specified which are not in conflict with applicable state and federal laws and
regulations.
III.B.1.g. LESSEE may use and enjoy the LEASED PREMISES and
exercise any of the rights granted hereunder by any methods now or heretofore
known or hereafter developed.
III.B.2. This NEW MINERALS LEASE is conditioned upon:
III.B.2.a. LESSEE proceeding diligently and with all
reasonable dispatch to secure the necessary state and federal approval of mining
and operating plans.
19
<PAGE>
III.B.2.b. LESSEE diligently commencing and continuing to
work on a copper processing facility to process copper ores from the LEASED
PREMISES.
III.B.2.c. LESSEE commencing production from the LEASED
PREMISES in commercial quantities within five (5) years after such approval is
secured.
III.B.2.d. LESSOR using its best efforts to acquire all the
right, title and interest of RAY, CLEMONS, BROWN, GILLES, BURTON and/or DEARTH
in the STATE LEASE, including, but not limited to, the securing of the approval
of the state of Utah to the transfer to LESSOR.
III.B.3. Upon the execution of this NEW MINERALS LEASE by the
LESSOR, LESSEE shall immediately pay to LESSOR the sum of $1,500.00 which shall
not be recoverable by LESSEE out of the production royalty hereinafter provided.
III.B.4. LESSOR and LESSEE agrees to execute such additional
documents as are reasonably necessary to insure and confirm that the OTHER
PROPERTY is covered by this NEW MINERALS LEASE. Without limiting the foregoing,
LESSOR agrees that, promptly upon the request of LESSEE, LESSOR shall make,
execute, acknowledge and deliver to LESSEE, in recordable form, an amendment or
amendments to this MINERALS LEASE or any other documents which better describe
the LEASED PREMISES.
20
<PAGE>
III.B.5. The rights of LESSOR as to some of the LEASED PREMISES
are in the form of an ownership of the copper and some other minerals and in
other parts of the LEASED PREMISES the rights are in the form of leases and
subleases so that while this instrument is characterized as a "lease" it is a
lease as to some portions of the LEASED PREMISES and a sublease as to the
balance.
III.B.6. This NEW MINERALS LEASE shall commence on the date
first above set forth in this instrument, run thereafter for a primary term of
ten (10) years and continue thereafter as long as minerals are being produced
from the LEASED PREMISES in commercial quantities, unless sooner terminated or
surrendered as hereinafter set forth; provided, however, that in the event
production of minerals in commercial quantities occurred during the primary term
and thereafter ceases because it is no longer commercially feasible to continue
the production of minerals from the LEASED PREMISES, this NEW MINERALS LEASE
shall continue beyond the expiration of the primary term without the necessity
of production of minerals and/or metals in commercial quantities as long as it
is not commercially feasible to continue production and as long as LESSEE
performs all the covenants it is obligated to perform hereunder including, but
not limited to, the covenant to pay the monthly minimum advance royalty
hereinafter
21
<PAGE>
provided.
III.B.7. LESSEE shall pay LESSOR a royalty equal to the
percentage (hereinafter set forth) of the NET PROCEEDS (hereinafter defined)
received for all mineral, and/or metals, mined and removed from the LEASED
PREMISES and processed and sold in any chemical, mineral or metallic form,
hereinafter referred to as the "PRODUCT." The percent of the royalty shall be
determined by the amount of NET PROCEEDS per pound of PRODUCT sold during the
calendar month. If the NET PROCEEDS per pound of PRODUCT sold during the
calendar month is less than $1.00, the royalty percentage shall be five percent
(5%). If the NET PROCEEDS per pound of PRODUCT sold during the calendar month is
from $1.00 up to and including $1.20, the royalty percentage shall be five and
one-half percent (5 1/2%). If the NET PROCEEDS per pound of PRODUCT sold during
the calendar month is more than $1.20, the royalty percentage shall be six
percent (6%). The term "NET PROCEEDS" means the gross amount received by LESSEE,
after deducting freight and handling charges from the point of final treatment
to the point of final sale, from an arms-length bona fide sale of PRODUCT to a
purchaser which has no financial interest of any kind in the LESSEE or its
operations on the LEASED PREMISES or to a purchaser in which the LESSEE has no
financial interest of any kind. If the LESSEE makes a sale which
22
<PAGE>
is not arms-length and bona fide and/or to a purchaser which has a financial
interest in the LESSEE or its operations on the LEASED PREMISES Or to a
purchaser in which the LESSEE has a financial interest, the NET PROCEEDS shall
be based upon the MARKET VALUE of the contained metals and/or minerals in the
PRODUCT. The term MARKET VALUE of contained metals and/or minerals shall mean
the average of U.S. Producer or major Suppliers prices, as quoted in Metals Week
and as published in Engineering and Mining Journal (E&MJ) for the month in
which the metals and/or minerals are sold.
III.B.8. LESSEE shall pay all royalties previously reserved and
all royalties due and owing on the underlying leases and subleases with respect
to the LEASED PREMISES. LESSEE shall perform all other obligations which LESSOR
and RAY, BROWN, GILLES, BURTON and DEARTH, and/or any of them, are obligated to
perform in those leases and subleases. Without in any way limiting the
foregoing, LESSEE shall pay all royalty on the STOCKPILE which may be owing the
State of Utah or any other person or entity.
III.B.9. LESSEE shall be entitled to deduct the royalty which
it pays under Section III.B.8 (other than the royalty which it pays on the
STOCKPILE for which it shall not be entitled to any deduction) on a
particular PRODUCT from the
23
<PAGE>
royalty due LESSOR under Section III.B.7. on that same PRODUCT, provided that
the percentage of the royalty due LESSORS on that particular PRODUCT shall not,
in any event, be reduced to less than one and one-half percent (1 1/2%) so that
irrespective of the amount of the underlying royalty paid by LESSEE on a
particular PRODUCT, LESSOR shall always receive a royalty of at least one and
one-half percent (1 1/2%) on that PRODUCT. As an example and by way of
illustration, the percentage of the underlying royalty on the FEE LAND is six
percent (6%) and based on net smelter returns. If the NET PROCEEDS from PRODUCT
from the FEE LAND for a calendar month is such that the underlying royalty under
Section III.B.S. is more than the amount of royalty due LESSOR under Section
III.B.7., LESSEE would be obligated to pay LESSOR on that PRODUCT, in addition
to the underlying royalty to be paid to the persons or entities entitled
thereto, a royalty of one and one-half percent (1 1/2%) under Section III.B.7.
III.B.10. LESSEE shall prepare and maintain such records as are
reasonably necessary to calculate the royalty due LESSORS hereunder and the
royalty due on the underlying leases and subleases. LESSEE shall, on written
request of LESSORS, furnish copies of such records to LESSOR.
III.B.11. Commencing with the month of April, 1988, LESSEE shall
pay LESSOR a monthly minimum advance
24
<PAGE>
royalty, which shall be due and payable on the first day of each month, as
follows:
For the months commencing with the month of April, 1988, and continuing
through the month of March, 1989, the sum of $1,250.00 per month;
For the months commencing with the month of April, 1989, and continuing
through the month of March, 1990, the sum of $1,500.00 per month;
For the months commencing with the Month of April, 1990, and continuing
through the month of March, 1991, the sum of $2,000.00 per month;
For the months commencing with the month of April, 1991, and continuing
through the month of March 1992, the sum of $2,500.00 per month; and
For each and every month after March, 1992, and continuing as long as this
NEW MINERALS LEASE remains in effect, the sum of $3,000.00 per month.
LESSEE shall be entitled to credit this monthly minimum advance royalty against
the production royalty to which the LESSOR is entitled as set forth above.
LESSEE shall not be entitled to any credit for the minimum payments made by
KELMINE under the KUNKEL-KELMINE LEASE.
III.B.12. The following provisions shall be applicable to "WASTE
MATERIAL" which is defined as material mined or extracted from the LEASED
PREMISES which LESSEE in its sole discretion determines not to sell because of
its mineral content, and LESSEE'S determination shall be final and conclusive:
III.B.12.a. LESSOR agrees that WASTE MATERIAL may be mined
or otherwise extracted without obligation upon LESSEE to replace the same. At no
time during the term of
25
<PAGE>
this NEW MINERALS LEASE or at any time thereafter shall LESSEE be required to
remove any WASTE MATERIAL deposited by LESSEE on the LEASED PREMISES, except as
otherwise provided by applicable governmental laws, rules and regulations in
full force and effect on or before the termination of this NEW MINERALS LEASE.
III.B.12.b. All WASTE MATERIAL on the LEASED PREMISES prior
to surrender or termination of this MINERALS LEASE shall be the property of
LESSEE, and LESSOR shall have no right, title or interest whatsoever therein and
thereto until this NEW MINERALS LEASE is surrendered or terminated.
III.B.12.c. All WASTE MATERIAL on the LEASED PREMISES after
surrender or termination of this NEW MINERALS LEASE shall be the property of
LESSOR, and LESSEE shall have no right, title or interest whatsoever therein or
thereto after this MINING LEASE is surrendered or terminated.
III.B.13. With respect to taxes:
III.B.13.a. LESSEE agrees to pay all taxes levied and
assessed against the SX-EW, all equipment of LESSEE on the LEASED PREMISES, and
any improvements placed on the LEASED PREMISES by LESSEE.
III.B.13.b. The relationship (in terms of percentage) which
the total royalty which LESSOR receives hereunder during a given taxing period
bears to the total NET
26
<PAGE>
PROCEEDS for the same period shall be established by dividing the total royalty
received by LESSOR by the total NET PROCEEDS. LESSOR agrees to pay that
established percentage and LESSEE agrees to pay the balance of such taxes,
assessments, or other governmental levies which are assessed, levied or imposed:
III.B.13.b.(1) Against the LEASED PREMISES solely by
reason of LESSEE's operations on the LEASED PREMISES.
III.B.13.b.(2) Against the minerals in or on the
LEASED PREMISES in an unsevered state.
III.B.13.b.(3) Any occupation, severance, production
or net proceeds of mines taxes, if any, imposed for, resulting from or measured
by reference to the removal of ore and or minerals by the LESSEE.
III.B.13.c. LESSEE shall not be obligated to pay any taxes
levied, imposed or assessed against, or measured by reference to operations upon
the LEASED PREMISES which are not conducted by or on behalf of LESSEE under the
terms of this NEW MINERALS LEASE. In the event LESSOR fails to pay when due any
taxes, assessments or other governmental levy against the LEASED PREMISES (which
LESSOR is obligated to pay under this NEW MINERALS LEASE) LESSEE may, but shall
not be obligated to, pay such taxes, assessments or levies, together
27
<PAGE>
with any penalty that may be imposed for failure to pay such when due. LESSOR
agrees to reimburse LESSEE for any payments made for LESSOR hereunder, together
with interest at the rate of 10% per annum from the date such payment is made by
LESSEE, which reimbursement shall be made within ten (10) days after LESSEE has
given written notice to LESSOR that LESSEE has paid such taxes, assessments or
levies. LESSEE shall specify the amount of such taxes, assessments or levies in
its notice to LESSOR. If such reimbursement is not made as provided herein,
LESSEE shall have the right to withhold payment of and retain as its sole
property any and all royalty (including the monthly minimum advance royalty
provided above) thereafter due and payable to LESSOR until the amount of royalty
withheld equals the reimbursement due LESSEE.
III.B.14. LESSOR shall have the right to claim the depletion
allowance applicable to the royalty paid LESSORS hereunder.
III.B.15. With respect to liens, damages, liability and
insurance:
III.B.15.a. LESSEE agrees to indemnify LESSORS against, and
hold LESSOR harmless from any and all claims or liability for injury to or death
of persons or for damages to property other than the LEASED PREMISES, resulting
from LESSEE's
28
<PAGE>
ations hereunder. LESSEE further agrees to indemnify LESSOR
nst and hold LESSOR harmless from any and all claims or
ility for materials or labor resulting from LESSEE's
ations hereunder on the LEASED PREMISES. LESSEE's
gations hereunder shall not apply to any claim unless LESSOR
fy LESSEE of the existence of such claim as soon as it
mes known to LESSOR, and further notifies LESSEE of the
itution of any action, suit or legal proceeding on such claim
oon as the institution of such action, suit, or other
eedings become known to LESSOR and LESSEE is given the sole
t to defend and/or settle any such claim with attorneys of
own selection.
III.B.15.b. LESSEE further agrees to
tain workmen's compensation and tenant liability insurance
ed by a company or companies acceptable to LESSOR, covering
operations by LESSEE under this NEW MINERALS LEASE, showing
limits of the insurers liability to be not less than:
BODILY INJURY:
Each Person $500,000
Each Accident $1,000,000
Property Damage $500,000
Combined Limit $1,000,000
or to the commencement of any work upon the LEASED
PREMISES,
29
<PAGE>
LESSEE shall deliver to LESSOR certificates of all insurance required under this
insurance clause.
III.B.15.c. If LESSOR shall fail to pay any and all amounts
due hereunder, or duly to satisfy and discharge any mortgage or lien on the
LEASED PREMISES, or shall suffer or permit any lien or encumbrance to be imposed
upon the LEASED PREMISES, LESSEE may, at its own option, but shall not be
obligated to, pay any or all unpaid amounts due and payable under, or satisfy
and discharge any such mortgage, lien or encumbrance which is unpaid and payable
and LESSEE may reimburse itself for any such payment of any such amount so paid
or for payments and costs of paying, satisfying and discharging any such
mortgage, lien or encumbrance, by withholding and retaining as its sole property
from royalties (including the monthly minimum advance royalty) due and payable
hereunder the amounts paid by LESSEE. In case of payment, discharge or
satisfaction of a mortgage, lien or encumbrance LESSEE shall have all the rights
and remedies against LESSOR which the mortgagee or lienor or the holder of such
encumbrance had against the LESSOR immediately prior to the time of such
payment, satisfaction or discharge. Upon the request of LESSEE, LESSOR shall
promptly make, execute, acknowledge and deliver to LESSEE any and all
instruments which LESSEE in its sole judgment shall deem necessary or desirable
to
30
<PAGE>
effectuate fully the provisions of this Section.
III.B.16. LESSOR, or their representative, at their sole risk
and at their sole cost and expense, and subject to such reasonable safety
regulations as may be prescribed by LESSEE, may have access to the LEASED
PREMISES during regular business hours solely for the purpose of inspection of
LESSEE's operations on the LEASED PREMISES.
III.B.17. LESSEE will conduct its operations on the LEASED
PREMISES in accordance with applicable governmental laws, rules and regulations.
Without in any way limiting the foregoing, LESSEE will strictly comply with all
reclamation requirements and all MSHA requirements now in effect or which may
later become applicable and particularly those relating to safety training and
record keeping. LESSEE makes no express or implied warranty, covenant or
agreement relating to the exploration, development, mining or other operation of
or upon the LEASED PREMISES or the marketing of any ore or mineral therefrom.
The conduct of any such exploration, development, mining or other operations, or
marketing, and the nature, manner or extent thereof, shall be matters to be
determined within the sole discretion of LESSEE. LESSEE shall have no
obligation, liability or responsibility whatsoever to LESSOR for damages or
injury to the LEASED PREMISES arising out of, or caused by or in any way
31
<PAGE>
connected with the operations conducted by LESSEE upon, in and through the
LEASED PREMISES.
III.B.18. LESSEE may, at any time and from time to time during
the term of this Lease, execute and deliver to LESSORS, in accordance with the
notice provisions hereinafter set forth, or deliver for recording to the
RECORDER'S OFFICE a quitclaim deed, quitclaiming to LESSOR or its successors in
interest all or any part of the LEASED PREMISES and immediately upon such
delivery this NEW MINERALS LEASE shall terminate with respect to such part or
all, as the case may be, of the LEASED PREMISES, and LESSEE shall be relieved of
all obligations, liability or responsibility of every character whatsoever
thereafter accruing with respect to that part of all, as the case may be, of the
LEASED PREMISES. If such delivery is to the RECORDER'S OFFICE, LESSEE shall
deliver a copy of such quitclaim deed to LESSORS.
III.B.19. LESSOR shall have no right to terminate this NEW
MINERALS LEASE unless LESSEE shall fail to perform according to the terms of
this NEW MINERALS LEASE and LESSOR shall give written to LESSEE specifying the
nature of the default. If LESSEE shall not correct such default within thirty
(30) days after said notice is given, this NEW MINERALS LEASE shall terminate.
32
<PAGE>
III.B.20. Surrender or termination of this NEW MINERALS LEASE as
provided herein shall not relieve the LESSEE of its obligations hereunder which
remain unperformed at the time of the surrender or termination including, but
not limited to, the obligation to pay all accrued royalties (including the
monthly minimum advance royalty) , to pay its share of the taxes as above
provided and to perform the reclamation work as above provided.
III.B.21. LESSEE shall make every reasonable effort to care for
the SX-EW and particularly to protect the electrical parts. In the event LESSEE
does not use the SX-EW, or any part thereof, for the purpose for which it was
acquired, that is, to process leach solutions from the LEASED PREMISES, within
five years of the date of this NEW MINERALS LEASE, at the sole discretion of
LESSOR the unused part shall no longer be a part of the LEASED PREMISES and
LESSOR may, at its sole discretion, remove and dispose of the same upon written
notice to the LESSEE. Subject to the above, LESSEE shall have the right at any
time within sixty (60) days following the surrender or termination of this NEW
MINERALS LEASE, with respect to all or any parts of the LEASED PREMISES to
remove any and all buildings, structures, plants, shops, mills, machinery
equipment, lines and facilities.
III.B.22. LESSEE will maintain the DATA and
33
<PAGE>
make available for examination and copying by LESSOR, or its duly authorized
representatives, the DATA, all additional survey maps, drill hole data,
including drill hole chip boards, ore reserve calculations, mining plans,
reclamation plans and supporting data used to obtain state and/or federal
environmental and operating or mining permits, assay, metallurgical and
feasibility reports relating to the LEASED PREMISES and any maps or diagrams or
mine workings upon the LEASED PREMISES which LESSEE has in its possession
or-control.
III.B.23. Any notice or communication to the parties hereto, or
quitclaim deed shall be deemed to have been sufficiently given for all purposes
hereof if mailed by U. S. Registered or Certified mail, postage prepaid, return
receipt requested, addressed as follows, and the date on the U. S. Post office
receipt shall be deemed to be the date of mailing:
To LESSOR: To LESSEE:
Lisbon Copper Ltd. MLP Associates, Ltd.
c/o Raymond E. Kunkel 2801 Youngfield Street, Suite 221
33 Holiday Haven Golden, Colorado 80401
Moab, Utah 84532
III.B.24. LESSEE agrees that it will not assign, sublease or
transfer all or any of its rights under this lease without first obtaining the
written consent of LESSOR. LESSOR agrees that it will not unreasonably withhold
that
34
<PAGE>
consent.
III.B.25. LESSEE's failure to perform or comply with a
particular provision of this NEW MINERALS LEASE shall be excused if such failure
to perform or comply with that particular provision is caused by circumstances
or conditions beyond the reasonable control of LESSEE, including but not limited
to the following: severe weather, unusual mining casualty, civil or military
orders, regulations or authority, insurrections, riots, strikes, acts of God,
war or hostilities between any nations, embargoes, governmental orders or
regulations, fire accident, explosion, flood, lockouts, differences with
workman, delays of carriers, lack of transportation facilities, commandeering or
requisitioning by the government, inability to obtain raw materials or the
insurance required hereon, curtailment of or failure in obtaining sufficient
electrical power. Circumstances or conditions which prevent the performance of a
particular provision herein shall only excuse performance of the particular
provision, the performance of which is prevented by those circumstances or
conditions, and shall not excuse the performance of any of the other provisions
of this NEW MINERALS LEASE. No circumstances or conditions shall excuse LESSEE
from its obligation to pay the monthly minimum advance royalty under Section
III.B.11.
35
<PAGE>
III.B.26. LESSOR hereby grants to LESSEE an irrevocable
exclusive option to purchase the property comprising the LEASED PREMISES at the
time the option is exercised, without warranty or representation of any kind, at
any time while this NEW MINERALS LEASE is in full force and effect, all as set
forth in a separate instrument.
III.B.27. This NEW MINERALS LEASE shall be governed by and
construed and enforced in accordance with the laws of the State of Utah.
III.B.28. This NEW MINERALS LEASE contains the entire agreement
by and between LESSOR and LESSEE and no oral agreement, promise, statement or
representation which is not contained herein shall be binding on LESSOR or
LESSEE. No amendment or modification of this NEW MINERALS LEASE shall become
effective unless and until the same shall have been reduced to writing and duly
signed, executed and acknowledged by the parties hereto.
III.B.29. This NEW MINERALS LEASE may be executed in
counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Termination
of Existing Minerals Lease, Bill of Sale and New Minerals Lease as of the day
and year first above written.
36
<PAGE>
LESSOR
LISBON COPPER LTD.
By /s/ Raymond E. Kunkel
------------------------------------------
Raymond E. Kunkel, General Partner
By /s/ Burton F. Kunkel
------------------------------------------
Burton F. Kunkel, General Partner
KELMINE
KELMINE CORPORATION
By /s/ C. O. Keller
------------------------------------------
C. O. Keller, President
LESSEE
MLP ASSOCIATES, LTD.
By /s/ Charles E. Carlson
------------------------------------------
Charles E. Carlson, General Partner
STATE OF UTAH )
: ss.
County of San Juan )
On this 12th day of April, 1988, personally appeared before me Raymond
E. Kunkel, one of the signers of the foregoing instrument, who duly acknowledged
to me that he executed the same on behalf of Lisbon Copper Ltd., a
37
<PAGE>
limited partnership, as one of the general partners in said limited partnership.
/s/ illegible
---------------------------------------
Notary Public
Residing at Monticello, Utah
---------------------------
My Commission Expires:
March 26, 1989
- -----------------------
STATE OF UTAH )
: ss.
County of Box Elder )
----------
On this 14 day of April, 1988, personally appeared before me
Burton F. Kunkel, one of the signers of the foregoing instrument, who duly
acknowledged to me that he executed the same on behalf of Lisbon copper Ltd.,
a limited partnership, as one of the general partners in said limited
partnership.
/s/ illegible
---------------------------------------
Notary Public
Residing at illegible
---------------------------
My Commission Expires:
1 June 1991
- -----------------------
38
<PAGE>
STATE OF COLORADO )
: ss.
County of Jefferson )
----------
On this 20th day of April, 1988, personally appeared before me C. 0.
Keller, who being first duly sworn, deposes and says that he is the President of
Kelmine Corporation, a Colorado corporation, and that he executed the foregoing
instrument in behalf of said corporation by authority of a resolution of its
board of directors; and said C. 0. Keller duly acknowledged to me that said
corporation executed same.
/s/ illegible
---------------------------------------
Notary Public
Residing at 2801 Youngfield
---------------------------
Golden, CO 80401
My Commission Expires:
Aug. 16, 1998
- -----------------------
STATE OF COLORADO )
: ss.
County of Jefferson )
On this 20th day of April, 1988, personally appeared before me Charles
E. Carlson, one of the signers of the foregoing instrument, who duly
acknowledged to me that he executed the same in behalf of MLP Associates, Ltd.,
a
39
<PAGE>
Colorado limited partnership, as one of the general partners in said limited
partnership.
/s/ illegible
---------------------------------------
Notary Public
Residing at 2801 Youngfield
---------------------------
Golden, CO 80401
My Commission Expires:
Aug. 16, 1998
- -----------------------
TERM.RLK
40
<PAGE>
MLP ASSOCIATES LTD.
12936 NORTH 60TH STREET
PHOENIX AZ, 85254
602-443-0284
July 23, 1993
JULY, 1993
AMENDMENT TO NEW MINERAL LEASE
DATED APRIL 20, 1988
RECITALS:
The parties Desire to amend the NEW MINERAL LEASE dated April 20, 1988, by
and between Lisbon Copper, Ltd. (LESSOR) and MLP Associates, (LESSEE).
AMENDMENT:
Section 111.B.11 is hereby amended only as to the amount of monthly
minimum advanced royalty that shall be paid by LESSEE, which amount shall be
one thousand five hundred dollars ($1,500.00) per month for each of 12 months
beginning July 1, 1993 and running through June 1, 1994; then $2,500.00 per
month for 12 months beginning July 1, 1994 and running through June 1, 1995.
Commencing July 1,1995 and thereafter the monthly minimum advanced royalties
shall revert to $3,000.00 as provided for in the NEW MINERAL LEASE.
Except as provided for herein, all provisions of the NEW MINERAL LEASE dated
April 20, 1986, as amended, shall remain and are in full force and effect.
Agreed this 24th day of July, 1993, by:
LESSOR:
LISB0N COPPER, LTD.
By /s/ Raymond E. Kunkel
------------------------------------
Raymond E. Kunkel, General Partner
LESSEE:
MLP ASSOCIATES, LTD.
BY /s/ Charles E. Carlson
------------------------------------
Charles E. Carlson, General Manager
<PAGE>
EXHIBIT 10.2
OPTION AGREEMENT
This Option Agreement made and entered into this 20TH day of April
1988, by and between Lisbon Copper Ltd. ("OPTIONOR"), a Utah limited
partnership, whose mailing address is c/o Raymond E. Kunkel, 33 Holiday Haven,
Moab, Utah 84532, and MLP Associates Ltd. ("OPTIONEE"), a Colorado limited
partnership, whose address is 2801 Youngfield St., Suite 221, Golden, Colorado
80401.
WITNESSETH:
I. RECITALS.
I.A. OPTIONOR, as lessor, and OPTIONEE, as lessee, executed
an instrument entitled "NEW MINERALS LEASE" dated the 20th day of April 1988,
wherein OPTIONOR leased to OPTIONEE all of the right, title and interest and
expectancy of OPTIONOR in and to the following (the "LEASED PREMISES"), to-wit:
I.A.1. The right to mine and process the copper
bearing ores down to a depth of 500 feet from the hereinafter named
unpatented lode mining claims situated in San Juan County, State of Utah,
which are more particularly described in the notice of location and amended
notice of location for each claim, a copy of which is recorded in the
RECORDERS OFFICE and the BLM NO. of which is as follows:
Charles E. Carlson
2801 Youngfield #221
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- ------
- -Camel 25 453
(amended) 231 261 129728
- -Cow 25 454
(amended) 231 262 125732
- -Cat 25 454
(amended) 231 262 129729
- -Colt 25 455
(amended) 231 263 129730
- -Cougar 25 455
(amended) 231 263 129731
- -Cub 25 456
(amended) 231 264 129734
- -Coyote 35 456
(amended) 231 264 129733
- -Sentinel 1 47 44
(amended) 231 256 129718
- -Sentinel 2 47 45
(amended) 231 257 129719
- -Sentinel 3 47 45
(amended) 231 257 129720
- -Sentinel 4 47 46
(amended) 231 258 129721
- -Sentinel 5 47 46
(amended) 231 258 129722
- -Sentinel 6 47 47
(amended) 231 259 129723
- -Sentinel 7 47 47
(amended) 231 259 129724
- -Sentinel 8 47 48
(amended) 231 260 129725
- -Sentinel 9 47 48
(amended) 231 260 129726
- -Sentinel 10 47 49
(amended) 231 261 129727
- -Gamma 1 71 490
(amended) 85 499
- -Gamma 2 71 490
(amended) 85 499
- --CD #6 Fraction 509 550
- -Security 3 377 402 140827
- -Security 5 377 403 140607
- -Security 7 377 404 140608
- -Security 9 377 405 140609
2
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
- -Security 11 377 406 140610
- -Security 14 377 407 140611
- -Security 15 377 408 140612
- -Security 16 377 409 140613
- -Security 18 377 410 140614
- -Security 19 377 411 140615
- -Security 20 377 412 140616
- -Security 25 377 413 140617
- -Security 26 377 414 140618
- -Security 27 377 415 140619
- -Security 28 377 416 140620
- -Security 29 377 417 140621
- -Security 30 377 418 140622
- -Security 31 377 419 140623
- -Security 32 377 420 140624
- -Security 33 377 421 140625
- -Security 34 377 422 140626
- -Security 35 377 423 140627
- -Security 36 377 424 140628
- -Security 37 377 425 140629
- -Security 38 377 426 140630
- -Security 39 377 427 140631
- -Security 40 377 428 140632
- -Security 41 377 429 140633
- -Security 42 377 430 140634
- -Security 43 377 431 140635
- -Security 44 377 432 140636
- -Security 45 377 433 140637
- -Security 46 377 434 140638
- -Security 47 377 435 140639
- -Security 48 377 436 140640
- -Security 49 378 341 140641
- -Security 50 378 342 140642
- -Security 51 378 343 140643
- -Security 52 378 344 140644
- -Security 53 378 345 140645
- -Security 54 378 346 140646
- -Security 55 378 347 140647
- -Security 56 378 348 140648
I.A.2. The right to mine and process the ores
bearing copper and some other minerals from the following:
3
<PAGE>
The hereinafter named unpatented lode mining claims situated in San
Juan County, State of Utah, which are more particularly described in the notice
of location and amended notice of location for each claim which is recorded in
the RECORDER'S OFFICE and the BLM NO. of which is as follows:
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
- -Climax No. 1 R-2 382
(amended) 487 185 129763
- -Climax No. 2 R-2 382
(amended) 487 186 129764
- -Alpha No. 1 63 96
(amended) 169 463
(amended) 270 83 129765
- -Alpha No. 2 63 96
(amended) 169 463
(amended) 270 83 129766
- -Alpha No. 3 63 97
(amended) 169 464
(amended) 270 84 129767
- -Alpha No. 4 63 97
(amended) 169 464
(amended) 270 84 129768
- -Alpha No. 5 63 98
(amended) 169 465
(amended) 270 85 129769
- -Alpha No. 6 63 98
(amended) 169 465
(amended) 270 85 129770
- -Alpha No. 7 63 99
(amended) 169 466
(amended) 270 86 129771
- -Alpha No. 8 63 99
(amended) 169 466
(amended) 270 86 129772
- -G. M. Wallace Fraction
(amended) 487 129 129829
- -CW 1 510 62 129811
4
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
- -CW 2 510 63 129812
- -CW 3 510 64 129813
- -CW 4 510 65 129814
- -CW 5 510 66 129815
- -CW 6 510 67 129816
- -CW 7 510 68 129817
- -CW 8 510 69 129818
- -CW 9 510 70 129819
- -CW 10 510 71 129820
- -CW 11 510 72 129821
- -CW 12 510 73 129822
- -CW 13 510 74 129823
- -CW 14 510 75 129824
- -CW 15 511 596 129825
- -CW 16 511 597 129826
- -CW 19 511 598
(amended) 521 8 129827
- -CW 22 511 599
(amended) 521 9 129828
- -KWR 1 487 130 129789
- -KWR 2 487 131 129790
- -KWR 3 487 132 129791
- -KWR 4 487 133 129792
- -KWR 5 487 134 129793
- -KWR 6 487 135 129794
- -KWR 7 487 136 129795
- -KWR 8 487 137 129796
- -KWR 9 Fraction 501 345 129797
- -KWR 10 501 346 129798
- -KWR Fraction 501 347 129799
- -MIR 11 Fraction 521 469 129802
- -KWR 12 Fraction 501 348 129800
- -KWR 13 Fraction 501 349 129801
- -CWG Fraction 517 275 129786
- -CWG Fraction #1 517 276 129787
- -CWG Fraction #2 517 277 129788
- -CD 1 509 508 129773
- -CD 2 Fraction 509 509 129778
- -CD 3 Fraction 509 510 129779
- -CD 4 Fraction 509 511 129780
- -CD 5 Fraction 509 512 129781
- -CD 6 Fraction 509 550 129737
- -Globe #1 486 16
5
<PAGE>
BLM NO.
Name of Claim Book Page (UMC)
------------- ---- ---- -------
(amended) 489 392 129782
- -Globe #2 486 17
(amended) 489 393 129783
- -Globe #9 486 24
(amended) 489 400 129784
- -Globe #10 486 25
(amended) 489 401 129785
I.A.3. The leasehold rights to mine and process ores from
the following described tracts of land situated in San Juan County, State of
Utah, to-wit:
PATTERSON RANCH
TOWNSHIP 31 SOUTH, RANGE 25 EAST, SLM
Section 1: Lots 1, 2, 3 and 4
I.A.4. The stockpile of mixed oxide-sulphide copper ore
estimated to contain 35,000 to 40,000 tons containing approximately 2% copper
which is situated on the following described tract of land situated in San Juan
County, State of Utah, to-wit:
TOWNSHIP 30 SOUTH, RANGE 25 EAST, SLM
Section 36: SE 1/4
I.A.5. The right to mine copper down to a depth of
500 feet on State of Utah Metalliferous Lease Number 20569 covering the
following described tracts of land situated in San Juan County, State of Utah,
to-wit:
6
<PAGE>
TOWNSHIP 30 SOUTH, RANGE 25 EAST, SLM
Section 36: NW 1/4, E 1/2
as assigned by Joseph F. Costanza and Joyce L. Costanza to Raymond E. Kunkel and
Paul B. Clemons, which assignment has been approved the the State of Utah.
I.A.6. The equipment and machinery described as
follows:
Four Solvent Extraction Tanks
Two 350 kilowatt Rectifiers
Approximately Thirty Concrete Electro-Winning Cells
which are presently stored near the entrance of the Cub uranium mine.
I.A.7. All mining claims and other property acquired
by OPTIONOR and/or OPTIONEE within one mile of any part of the property above
described.
I.A.8. Water and water rights for use upon the above
property.
I.B. Section III.B.26. of the NEW MINERALS LEASE reads as
follows:
LESSOR hereby grants to LESSEE an irrevocable exclusive option to
purchase the property comprising the LEASED PREMISES at the time
the option is exercised, without warranty or representation of
any kind, at any time while this NEW MINERALS LEASE is in full
force and effect, all as set forth in a separate instrument.
7
<PAGE>
II. OPTION. In consideration of the execution of the NEW MINERALS LEASE by
OPTIONOR and OPTIONEE and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by OPTIONOR and
OPTIONEE, OPTIONOR hereby grants to OPTIONEE, without warranty or
representation of any kind, the irrevocable and exclusive option to purchase
the property comprising the LEASED PREMISES at the time the option is
exercised, at any time while the NEW MINERALS LEASE is in full force and
effect, on the following terms, to-wit:
II.A. The purchase price shall be determined as follows:
II.A.1. Five Hundred Thousand Dollars ($500,000.00) if the
option is exercised within one (1) year from the first sale of commercial
production from the LEASED PREMISES.
II.A.2. $50,000.00 shall be added to the purchase price
specified above for each and every year that elapses subsequent to one (1) year
from the first sale of commercial production from the LEASED PREMISES.
II.A.3. The purchase price shall not be reduced by the
bonus, the monthly minimum advance royalty or by the production royalty paid by
OPTIONEE to OPTIONOR under the NEW MINERALS LEASE.
II.B. The option shall be exercised by OPTIONEE
8
<PAGE>
paying to OPTIONOR the specified purchase price in cash or certified funds.
II.C. Simultaneous with the exercise of the option, OPTIONOR
shall execute and deliver to OPTIONEE such deeds, assignments and other
instruments, all without warranty or representation, as are necessary to convey
the LEASED PREMISES to OPTIONEE.
WITNESSETH the hands of OPTIONOR and OPTIONEE as of the day and year
first above set forth.
OPTIONOR
LISBON COPPER LTD.
By /s/ Raymond E. Kunkel
-------------------------------------
Raymond E. Kunkel, General Partner
By /s/ Burton F. Kunkel
-------------------------------------
Burton F. Kunkel, General Partner
OPTIONEE
MLP ASSOCIATES, LTD.
By /s/ Charles E. Carlson
-------------------------------------
Charles E. Carlson, General Partner
STATE OF UTAH )
: SS.
County of San Juan )
On this 12th day of April, 1988, personally appeared before me Raymond
E. Kunkel, one of the
9
<PAGE>
signers of the foregoing instrument, who duly acknowledged to me that he
executed the same on behalf of Lisbon Copper, Ltd., a limited partnership, as
one of the general partners in said limited partnership.
/s/ Doris G. Calvert
-----------------------------------
Notary Public
[SEAL] Residing at Monticello, Utah
-----------------------
My Commission Expires:
March 26, 1989
- ----------------------
STATE OF UTAH )
: SS.
County of Box Elder )
On this 14th day of April, 1988, personally appeared before me Burton
F. Kunkel, one of the signers of the foregoing instrument, who duly acknowledged
to me that he executed the same on behalf of Lisbon Copper Ltd., a limited
partnership, as one of the general partners in said limited partnership.
/s/ Lorin C. Facer
-----------------------------------
Notary Public
Residing at Willard, Utah
-----------------------
[SEAL]
My Commission Expires:
1 June 1991
- ---------------------
10
<PAGE>
STATE OF COLORADO )
: SS.
County of [Illegible] )
On this 20th day of April, 1988, personally appeared before me Charles
E. Carlson, one of the signers of the foregoing instrument, who duly
acknowledged to me that he executed the same in behalf of MLP Associates, Ltd.,
a Colorado limited partnership, as one of the general partners in said limited
partnership.
/s/ Patricia P. Ortiz
-----------------------------------
Notary Public
Residing at 2801 Youngfield
-----------------------
Golden, CO 80401
[SEAL]
My Commission Expires:
Aug. 16, 1988
- ---------------------
Lisbon.OPT
11
<PAGE>
EXHIBIT 10.3
Met. Min. - 1281d
Form Approved July 23, 1984
PROOF READ JG - EB MINERAL LEASE NO. 20569
--------- ------------
MINERAL LEASE APPLICATION NO. 20569 GRANT: SCH
-------
UTAH STATE LEASE FOR
METALLIFEROUS MINERALS
(Amendment)
THIS UTAH STATE MINERAL LEASE AND AGREEMENT entered into and executed in
duplicate as of the 28th day of May, 1963, by and between the STATE OF UTAH,
acting by and through the BOARD OF STATE LANDS & FORESTRY and DIVISION OF
STATE LANDS & FORESTRY, DEPARTMENT OF NATURAL RESOURCES, with the office
located at 3100 State Office Building, Salt Lake City, Utah 84114,
hereinafter called the "LESSOR," and
Atlas Corp
P. 0. Box 1207
Moab, UT 84532
(whether one or more individuals, corporation, or other entities) with business
office or address as shown above, hereinafter called the "LESSEE,"
WITNESSETH:
That the State of Utah as Lessor, for and in consideration of the fees,
rents, royalties, and any other financial consideration paid or required to be
paid by Lessee, and the terms and conditions to be performed by Lessee as
hereinafter set forth, does hereby GRANT AND LEASE to the Lessee the exclusive
right and privilege to explore for, drill for, mine, remove, and dispose of
the particular mineral or minerals described in Article I hereof, herinafter
called the "leased substances," situated within the boundaries of the
following-described tract of land (extending vertically downward from the
surface) in San Juan County, State of Utah, to-wit:
Township 30 South, Range 25 East, SLB&M
- ---------------------------------------
Section 36: NW 1/4, E 1/2
containing 480.00 acres, more or less.
------
This Mineral Lease is granted for and in consideration of and subject to
all of the terms, provisions, and conditions hereinafter set forth:
<PAGE>
Met Min. - 1281d
-2-
ARTICLE 1. MINERALS COVERED BY THIS LEASE
This Mineral Lease covers the following-described leased mineral
substances with the boundaries of the above-described lands, to-wit:
METALLIFEROUS MINERALS
"Metalliferous Minerals" are herein defined to include any ore containing
any of the following minerals: Aluminum, Antimony, Arsenic, Beryllium,
Bismuth, Cadmium, Chromium, Cecium, Columbium, Cobalt, Copper, Flourspar,
Gallium, Gold, Germanium, Hafium, Iron, Indium, Lead, Mercury, Manganese,
Molybdenum, Nickel, Platinum, Group Metals, Radium, Selenium, Scandium, Silver,
Rare Earth Metals, Rhenium, Tantalium, Tin, Thorium, Tungsten, Thallium,
Tellurium, Vanadium, Uranium, Zinc, together with other minerals which are found
in association with said specified minerals in such a manner that they cannot be
mined separately.
In the event Lessee, or the operator or any contractor for Lessee, shall
discover within said lands some mineral or minerals other than the mineral or
leased substances covered by this lease, Lessee shall promptly notify the Lessor
of the kind or nature of such mineral or minerals not included in this lease.
ARTICLE II. PRIMARY TERM AND POSSIBLE EXTENSION OF TERM OF LEASE
This lease is granted for a primary term of TEN (10) years commencing on
the first day of January next succeeding the date hereinabove first written and
as long thereafter as the leased substances shall be produced in commercial
quantities from the above-described lands, on condition that Lessee shall
perform the terms and provisions required to be performed by Lessee including
payment of rents and royalties within the times required herein; provided
however, that it is expressly agreed that at the end of each period of ten (10)
years following the effective date of this lease, the State of Utah as Lessor
shall have the right to readjust the terms and conditions of this lease as may
then be determined to be in the best interest of the State of Utah as trustee-
owner of the mineral estate. In the event of failure or refusal of the Lessee to
accept and agree to the readjustment of the terms and conditions submitted by
Lessor at the end of such ten (10)-year period, such failure or refusal to
accept such readjustment of terms, conditions, or royalty shall operate to
forfeit any right to extension of the term of this Mineral Lease and terminate
this lease except for the rights of the State of Utah to recover any royalties
then owing the State and/or any damages for which Lessee may be liable. This
lease will not be extended beyond the end of the thirtieth year-except by the
production of the leased substances in commercial quantities from the leased
lands. If Lessee ceases production of leased substances in commercial quantities
this lease will terminate one (1) year from the date of last commercial
production, unless Lessee commences commercial production at least three (3)
months prior to the end of such year and such commercial production then
continues for at least six (6) months.
ARTICLE III. APPLICABLE LAWS AND REGULATIONS
This lease is issued pursuant to the provisions of Title 65, Utah Code
Annotated, 1953, as amended, and subject to all valid Rules and Regulations and
requirements adopted by the Board of State Lands & Forestry, and of the Board of
Oil, Gas, and
<PAGE>
Met Min. - 1281d
-3-
Mining, applicable to the subject matter of this lease, together with all
requirements of the Utah Mined Land Reclamation Act, all requirements of the
State Antiquities Act, Title 63, Chapter 18, and all valid rules and
regulations relating to safety, sanitation, and health whether under the
jurisdiction of the Division of Oil, Gas, and Mining with respect to operations
under this lease or under the jurisdiction of some other State agency.
ARTICLE IV. RIGHTS TO THE SURFACE ESTATE
If the surface estate of all or sane portion of the hereinabove-described
lands is owned by the Lessor, Lessee shall be entitled to use reasonably and
prudently such portions of the surface estate owned by Lessor as shall be
reasonably necessary to explore and prospect for, mine, drill, remove, and
dispose of the leased mineral substances, including permission to establish and
maintain in, a safe condition on the surface estate owned by Lessor, access
roads, communication lines, tanks, pipelines, reservoirs, mills, processing
plants, reduction works, dumps, and other essential structures, facilities,
machinery, and equipment, reasonably necessary and expedient for the
economic operation of the leasehold and in furtherance of production, treatment,
and disposition of the leased substances under this lease. Such surface uses
shall be exercised subject to the rights reserved to the State of Utah as
provided in Article V hereof, and without unreasonable interference with the
rights of any prior or subsequent lessee of the State of Utah under the program
of multiple use.
If the surface estate of any portion of the described lands is not owned by
the State of Utah, except for a reserved right of entry to the mineral estate or
mineral estates, the Lessee may exercise such right of entry to the mineral
estate covered by this lease, at the sole cost and expense of Lessee herein and
without cost to the State of Utah. If any damage is caused directly or
indirectly to the surface estate by the Lessee or by the contractor or operator
for Lessee, Lessee shall make proper restitution and indemnify the surface
owner or owners. Lessee also shall make proper rehabilitation as required by
the Utah Mined Land Reclamation Act and as required by all lawful rules and
regulations adopted thereunder.
Lessor will require a bond to be posted or other security given to the
State to be filed with Lessor or any other State agency or officer in a
principal amount determined by Lessor to be adequate to assure appropriate
reclamation and restitution for and damage to the surface estate.
ARTICLE V. EXCEPTIONS AND EXCLUSIONS FROM LEASE
Lessor hereby excepts and reserves from the operation of this lease the
following rights and privileges:
First: The right to establish rights of way and easements on, through or
over the land above described, for utility corridors and for joint or Joint and
several uses as may be necessary and appropriate for the management of the
above-described lands and other lands of Lessor or lands administered by Lessor,
and for the working of other deposits within said lands under mineral leases
granted to others under the program on multiple use.
<PAGE>
Met Min. - 1281d
-4-
SECOND: The right to issue mineral Leases to other lessees covering
minerals not included in this lease, under such terms and conditions which will
not unreasonably interfere with operations under this lease in accordance with
the principle of multiple use provided by Law.
THIRD: In the event Lessor owns the surface estate in said lands or portion
of said lands above described, Lessor retains the right to use, lease, sell, or
otherwise dispose of the surface estate in said lands or any part thereof, under
existing State laws or laws subsequently enacted, insofar as such surface is not
essential for the Lessee herein in exploration, prospecting for, mining,
drilling, removal, or disposal of the leased substances covered by this lease,
to the extent that such use, lease, or sale of the surface estate does not
unreasonably interfere with the rights granted to the Lessee herein. Lessor
shall notify Lessee herein of any such sale, lease, use, or other disposition of
the surface estate.
ARTICLE VI. PAYMENT OF RENTALS AND ROYALTIES
For and in consideration of the leasehold rights granted to the Lessee, in
addition to all other terms and conditions required to be performed by the
Lessee, the Lessee hereby covenants and agrees with Lessor to pay rentals and
royalties as follows:
FIRST: Lessee agrees to pay Lessor as rental for the Land covered by this
lease the sum of One Dollar ($1.00) per acre and for each fractional part of an
acre, each year in advance on or before January lst of each year except the
rental for the first year which has been paid with the application for this
lease. All rentals paid shall be credited against actual Production Royalties
for the lease year in which they shall accrue, but such rentals shall not be
credited against the Minimum Royalties under subparagraph "Fourth" of this
ARTICLE VI.
SECOND: "Lessee shall pay lessor a production royalty on the basis of 8% in
tax case of fissionable Metalliferous Minerals and 4% in the case of
non-fissionable Metalliferous Minerals of the market price, including all
bonuses and allowance received by Lessee, f.o.b. the nearest point of sale of
the first marketable product or products produced from the leased substances and
sold under a bonafide contract of sale, whether or not such product or products
are produced through chemical or mechanical treating or processing of the leased
substances raw material. It is expressly understood and agreed that none of
Lessee's mining or product cost, including but not limited, to material costs,
labor costs, overhead costs, distribution costs, or general and administrative
costs may be deducted from market price f.o.b. the point of sale in computing
Lessor's royalty. All such costs shall entirely be borne by Lessee and
anticipated by the rate of royalty assigned in his agreement."
THIRD: Payment of Production Royalty shall be made by Lessee to Lessor, as
herein required, on or before the last day of the month next succeeding the
month during which the minerals or leased substances shall have been shipped or
sold or used. In connection with such payment of Production Royalty, the Lessee
shall submit a certified statement of the production of all leased substances
mined or extracted from the hereinabove-described lands, according to the
foregoing royalty schedule together with such information required by the Board
of State Lands & Forestry to verify production and disposition of mineral
substances produced and disposed of from the leased premises.
<PAGE>
Met Min. - 1281d
-5-
FOURTH: Lessee may maintain this lease in force beyond the primary term of
ten (10) years from the effective date of the original lease by paying Lessor,
in addition to rentals and production royalties as hereinabove required, an
annual minimum royalty of three (3) times the annual rental, providing the
lessee is engaged in diligent operations, exploration, research, or development
activity which is reasonably calculated to advance development or production of
the mineral covered by the lease from the leased premises or lands pooled or
unitized with or constituting an approved mining or drilling unit in respect to
the leased premises.
Said annual minimum royalty shall be paid each year in advance, commencing
with the eleventh year of the lease, along with the regular annual rental
required to be paid under the terms of this lease. Said rental per acre and said
Minimum Royalty shall be paid on each and every acre in this lease to extend the
term of this lease and to keep this lease in force and effect.
Rentals and Minimum Royalties paid annually shall be credited against
actual Production Royalties for the year in which they accrue during the
original term, or any extension thereof; but annual rentals shall not be
credited against Minimum Royalties.
ARTICLE VII. MINERAL TITLE OF LESSOR
Lessor claims title to the mineral estate covered by this lease. Lessor
does not warrant title nor represent that no one will dispute the title asserted
by Lessor. It is expressly agreed that Lessor shall not be liable to Lessee for
any alleged deficiency in title to the mineral estate, nor shall Lessee or any
assigns of the Lessee become entitled to any refund for any rentals, bonuses, or
royalties paid under this lease.
ARTICLE VIII. WATER RIGHTS
In the event Lessee shall initiate any water rights on the leased premises,
such right shall become an appurtenance to the leased premises; and upon
surrender, cancellation, or termination of this lease, Lessee or assigns of
Lessee shall assign and convey such water rights and any application for
appropriation of water to beneficial use relating to the land or the mineral
estate covered by this lease to Lessor.
If the Lessee shall purchase or otherwise acquire any water rights on
some other land and file with the State Engineer appropriate application for
change of use onto the premises covered by this lease, the Lessor herein
shall have an option for 45 days after the expiration, surrender, or
termination of this lease to purchase said otherwise acquired water rights at
the acquisition costs of the Lessee. Such option shall begin to run from the
date of termination, surrender or expiration of this lease or from the date
when Lessee shall specify in writing the acquisition costs of such other
water rights, whichever date is the later date. Unless Lessor accepts such
written offer to convey such rights at the actual acquisition costs within
said period of 45 days, Lessor shall be deemed to have rejected the offer.
Upon payment of the said acquisition costs by the Lessor, Lessee herein shall
assign and transfer such acquired water rights to the Lessor.
ARTICLE IX. WRITTEN CONSENT REQUIRED FOR ASSIGNMENT OR SUBLEASE
Lessee shall not assign this lease nor any portion thereof, nor any rights
or privileges herein granted, without the prior written consent of Lessor. Nor
shall the
<PAGE>
Met Min.- 1281d
-6-
Lessee issue any sublease without the prior written consent of Lessor. Any
assignment of lease and any sublease issued without prior written consent of
Lessor shall be void ab initio.
In the event Lessor shall approve an assignment of this lease or of any
part hereof, such assignment shall be subject to all of the terms, conditions,
and obligations of the Lessee herein set forth. All of the terms, covenants,
conditions, and obligations of the Lessee shall be binding upon the heirs,
executors, administrators, successors, and assigns of the Lessee. This provision
also shall apply to any sublease issued by Lessee and approved by Lessor.
ARTICLE X. OVERRIDING ROYALTY LIMITATION
Neither the Lessee nor the assignee of Lessee shall create or grant any
overriding royalty except as permitted by law and by the Rules and Regulations
of the Board of State Lands & Forestry. Overriding royalty assignments shall not
become effective, even if otherwise valid, until filed with the Lessor.
ARTICLE XI. SURRENDER OR RELINQUISHMENT OF LEASE
Lessee may surrender this lease for cancellation by Lessor as to all or any
part of the leased lands, but not for less than a quarter-quarter section or
surveyed lot, upon payment of all rentals, royalties, and other amounts then due
and owing to the Lessor, by filing with Lessor a written relinquishment. As to
rental, such relinquishment shall be effective on the date of filing, but
otherwise on the date of cancellation by the Lessor.
ARTICLE XII. NOTICE OF COMMENCEMENT OF OPERATIONS, PLANS, PLATS, BOND
Not less than sixty (60) days before commencement of exploration,
drilling, or mining operations, Lessee shall give written notice hereof to the
Division of State Lands & Forestry and the Division of Oil, Gas, and Mining,
together with a plan of operation and a topographic map showing every proposed
shaft, tunnel, open pit, drill site, and access road to be used. Lessor shall
make an assessment of such plan of operation and either endorse or stipulate
changes in Lessee's plan of operation, or request additional information within
the sixty (60) day notification period. Lessee shall not proceed with the
execution of any such plan of operation without first receiving the written
approval of Lessor. Lessee shall maintain at the mine office clear, accurate,,
and detailed maps of all actual and planned operations on a scale of not more
than 50 feet to the inch, with points coordinated with public land surveys
showing distance to the nearest public survey monument or reestablished survey
corner. Such maps and plats shall be on tracing cloth or other material which is
substantially permanent and of which clear and distinct photo copies or blue
prints can be readily made without unreasonable delay. Such maps or plats shall
show the workings from time to time, as the same are extended. In the event that
the operations on the above-described leasehold are intended to be conducted in
conjunction with adjacent lands, whether Federal, State, or privately-owned
lands, the map and plats shall clearly show how the operations are to be
coordinated. All surveys shall be conducted by a licensed surveyor or engineer
qualified to practice in Utah. All such maps or plats shall be certified by the
surveyor or engineer
<PAGE>
Met Min. - 1281d
-7-
preparing the same. The State or any agency of the State of Utah, including the
Division of Oil, Gas, and Mining, shall be entitled to a true and correct copy
thereof, together with the proposed plans of operation.
After Lessor receives notice of intent to commence mining operations,
upon request of the Lessor, the Lessee shall furnish a bond with an approved
corporate surety company authorized to transact business in the State of
Utah, or such other security acceptable to the Lessor, in an amount to be
determined by Lessor, after taking into account the value of the land and the
amount of potential damage which likely will result from such proposed mining
operations, and which bond or other security shall be conditioned upon
payment of all rentals and royalties from the leasehold and other sums which
may become payable to the Lessor, and to assure full compliance with the
terms and conditions of this lease and compliance with all Rules and
Regulations of the Board of State Lands & Forestry and all Rules and
Regulations of any other State agency having jurisdiction over mining
operations, and also conditioned upon payment of all damages to the surface
and improvements thereon if this lease covers surface estate or some portion
of the surface estate which has been sold or otherwise leased, and any damage
caused by Lessee to any other lessee of the State of Utah with respect to
said land. Such bond or other security furnished prior to commencement of
development of the leasehold may be increased in such reasonable amounts as
the Lessor may require after discovery of any of the leased substances.
If the plan of mining development or mining operations includes
core-drilling, the plan of operations shall disclose the locations of
core-drilling operations.
ARTICLE XIII. ALL OPERATIONS TO BE CONDUCTED IN A LAWFUL, PRUDENT MANNER
Lessee shall conduct all operations under this lease in a lawful, prudent,
and good workmanlike manner for the effective and safe production of the mineral
substances covered by this lease, and to avoid unnecessary damage and injury
to the leasehold estate, and also to avoid damage and wastage of other natural
resources not covered by this lease. All operations of Lessee, whether conducted
directly by Lessee or by operators or contractors, shall be at the sole cost
and expense of Lessee.
It is expressly covenanted and agreed that Lessor does not grant Lessee or
any person dealing with Lessee any right to subject the property hereinabove
described, nor any leased substances, to any lien-rights for labor or
mechanic's liens, nor to any materialmen's liens, nor to any other lien for any
act, omission, neglect, or performance of Lessee or its agents, employees,
and contractors. In the event any one shall file any notice or claim of lien
against said property or any estate in said property, Lessee shall take all
necessary steps expeditiously to have such notice or claim released of record.
Lessee shall save Lessor harmless from any and all lien notices and claims
against said land arising from any act or neglect of Lessee and any contractor
or operator of Lessee in any operations on or relating to the hereinabove
described lands.
Lessee shall not fence off or otherwise make inaccessible to livestock
lawfully on the surface of said premises any watering place without the written
consent of Lessor; provided, that Lessee shall not permit any livestock to come
upon any portion of the leasehold to pollute any surface or subsurface water
available or capable of being made available for domestic use or irrigation. In
the operations of Lessee, Lessee shall comply with all laws and regulations for
control of water which might be
<PAGE>
Met Min. - 1281d
-8-
encountered or which might seep into any formation, to avoid pollution of
surface and underground waters as required by Chapter 14, Title 73, Utah Code
Annotated, 1953, as amended. Lessee shall comply with all valid laws and
regulations relating to prevention and suppression of fires, make all necessary
provisions for sanitary disposal of wastes, and in all operations connected with
said leasehold take appropriate measures for protection of human life and
prevention of injuries and disease.
ARTICLE XIV. RIGHTS OF LESSOR FOR INSPECTIONS OF LEASEHOLD AND RECORDS
Lessor, its officers, and agents have the right at all reasonable times
to enter upon the leased lands and premises to inspect the conditions of the
leasehold, the work done under the terms of this lease, and the production
obtained from the leasehold, such entry and inspections to be done in such a
manner as shall not unreasonably interfere with the lawful operations by the
Lessee in performance of the terms and conditions of this lease.
Lessor also shall have the right to examine all books and records
pertaining to operations under this lease whether such books and records are
located within a building on the leased premises or located in an office
elsewhere and to make copies and abstracts of such records if desired by Lessor.
Lessor, its officers, and agents shall have the right to post upon or within the
leasehold such notices deemed proper or expedient by Lessor.
If Lessee maintains an office in another state or in a foreign country,
Lessee nevertheless shall maintain within the State of Utah proper and adequate
records relating to operations on this leasehold and also relating to production
of leased substances and payment of rentals and royalties. Lessee also shall
have a resident agent in the State of Utah to whom any and all notices may be
sent by Lessor and on whom process may be served. In the event of any change in
the address of Lessee's office in the State of Utah, Lessee shall promptly
furnish Lessor with written notice of such change of address within the State
of Utah. Examinations of records of Lessee by the Lessor shall be conducted at
reasonable times.
In the event Lessee conducts core-drilling operations within the leasehold,
or by directional drilling from adjacent land, Lessor shall have a right of
inspection of core samples and any analysis made thereof and any assay;
provided, that any report obtained by Lessor of any core-drilling operations may
be declared confidential information by Lessee, in which event Lessor shall keep
such information in a separate confidential information file. Such Information
shall not be disclosed to any competitor nor to any one except to a
representative of the Attorney General of the State of Utah until Lessee waives
confidentiality or upon surrender, expiration, or termination of this lease.
After completion of any core drilling, Lessee shall notify Lessor; and
Lessee shall cause all core holes to be plugged or sealed as expeditiously as
possible after the need for keeping such core holes unplugged ceases, in
accordance with regulations and requirements of the Division of Oil, Gas, and
Mining.
ARTICLE XV. OPERATIONS IN CONJUNCTION WITH MINING ON OTHER LANDS
In the event Lessee, in the interest of economy in mining operations,
desires to conduct mining operations on or within the above-described lands in
conjunction with mining operations on or within any adjacent Federal, State, or
privately-owned land by
<PAGE>
Met Min. - 1281d
-9-
utilization of shafts, inclines, or tunnels within either the above-described
lands, or within adjacent lands, Lessee shall make application in writing to the
Board of State Lands & Forestry and submit with such application a detailed plan
of operations illustrating how leased substances mined from the above-
described lands can and will be mined, segregated, and separately accounted for
from leased substances mined from some adjacent land. No such operations shall
be conducted without written approval of the Board. Any approval granted by the
Board shall be conditioned upon proper segregation and proper accounting and
record keeping of leased substances mined from each property. Separate records
shall be required for accounting for leased substances mined from the above-
described lands.
In the event Lessee desires to process or mill leased substances from the
above-described land in conjunction with processing or milling of leased
substances from adjacent or some other lands, whether such processing or
milling is intended to be performed on the above-described land or on some
other land, Lessee shall submit to the Board a written application detailing
how the leased substances mined from the above-described lands shall be
segregated and separately accounted for in computation of royalty payments
from leased substances mined from other lands. Any Board approval for any
such arrangements shall be conditioned upon segregation of leased substances
produced from the above described lands from mineral substances produced from
other lands with adequate safeguards to assure proper accounting for
determination of royalty.
If application is granted for either type of operation or for both, all
procedures for either production or milling of minerals shall be subjected to
examination by the Division of State Lands & Forestry and by the Division of
Oil, Gas, and Mining to determine whether either type of arrangement functions
satisfactorily without detriment to the State of Utah. If such inspection
results in an adverse report with recommendations for modification or
discontinuance of such operations, a copy of the report with recommendations
shall be submitted as expeditiously as possible to the Lessee. If any
objectionable condition is not promptly remedied to safeguard the rights of the
State as Lessor, the Board of State Lands & Forestry shall have the right to
order discontinuance of such arrangement; and failure to comply with such order
of the Board shall constitute a breach of this Lease Agreement.
ARTICLE XVI. SPECIAL REQUIREMENTS IN EVENT OF STRIP-MINING
In the event Lessee desires to conduct any strip-mining or open-pit mining
or operations which will materially disturb the surface of the above-described
lands or some portion thereof, at least sixty (60) days before commencing such
type of mining activities, Lessee shall submit to the Division of State Lands &
Forestry the proposed plan of operations together with a proposed plan of
surface rehabilitation in compliance with the Rules and Regulations adopted
thereunder. A copy of such proposed plan of operations and proposed plan of
surface rehabilitation also shall be submitted to the Division of Oil, Gas, and
Mining. No such operations shall be commenced until the Division of Oil, Gas,
and Mining approves the plan of operations and approves a program of
rehabilitation. Security may be required of Lessee to assure appropriate
rehabilitation in accordance with the said statute and rules and regulations
adopted thereunder.
<PAGE>
Met Min. - 1281d
-10-
ARTICLE XVII. EQUIPMENT OR FACILITIES TO REMAIN WITH THE LAND
Upon surrender, forfeiture, expiration, or termination of this lease, any
and all underground timbering supports, shaft linings, rails, and other
installations necessary for the support of underground tunnels, shafts,
inclines, or other underground mine supports, together with all rails or head
frames and all other underground construction and safety equipment annexed to
the ground (excluding detachable motor-driven machinery) which cannot be
removed without creating a danger to any shaft, tunnel, incline, or other
underground improvement annexed to the mine, and including equipment
installed underground to provide for ventilation of the mine or some portion
thereof, shall be left within said land above described by the Lessee,
operator, and contractor of Lessee and shall remain a part of the realty.
Lessor shall acquire all rights thereto without indemnification of Lessee or
operator or contractor for Lessee. Except as herein specifically excepted,
all personal property of Lessee, including removable machinery, equipment,
tools, and stockpiles of leased substances for which royalty has been paid
shall remain the property of Lessee or operator or contractor for Lessee and
Lessee or operator or contractor for Lessee may remove the same at the sole
expense of Lessee or operator or contractor within two (2) months following
expiration, forfeiture, surrender, or termination of this lease, except that
the Board of State Lands & Forestry for good cause shown shall have the right
to grant a reasonable extension of time beyond the period of two (2) months
for removal of any and all equipment which may be removed by Lessee or
operator or contractor as herein provided. At the end of such period, Lessor
may consider abandoned and lay claim to any or all equipment or stockpiles
remaining on the premises.
Upon expiration, surrender, forfeiture, or termination of this lease or
abandonment of the leasehold by Lessee, the Lessee shall cause to be sealed or
properly shut off all or parts of the mine openings including shafts and tunnels
in the manner and method required by the Director of the Division of Oil, Gas,
and Mining, and to abate any hazardous condition which may have been left by
Lessee, such abatement of hazardous condition to be performed in accordance with
reasonable requirements of the Director of the Division of Oil, Gas, and Mining.
ARTICLE XVIII. CONSENT TO SUIT IN STATE DISTRICT COURT
It is agreed that if there arises any controversy between lessor and Lessee
or any successor in interest of Lessee which needs to be litigated, Lessee or
any one claiming by or under the Lessee shall bring such action in the District
Court of Salt Lake County, State of Utah, after compliance with the requirements
of State statutes for bringing suit, including compliance with the requirements
of the State Governmental Immunity Act, Title 63, Chapter 30, Utah Code
Annotated, 1953, as amended. Neither Lessee nor any assignee of lessee nor any
one claiming under, by, or through the Lessee shall bring any suit against the
State of Utah or against any State agency in the United States District Court
for the District of Utah, nor in any other United States District Court in some
other state, nor in the District 'of Columbia.
ARTICLE XIX. REMEDIES FOR DEFAULT BY LESSEE OR ASSIGNS
This Mineral Lease and the terms and conditions of this lease agreement
issued by the State of Utah are made with the Lessee herein on condition that
Lessee and any lawful successor in interest to Lessee shall perform all
covenants and terms and conditions herein set forth to be performed by Lessee or
its lawful assigns including
<PAGE>
Met Min. - 1281d
-11-
payment of rentals and royalties as herein provided; and if at any time there
shall be default on the part of lessee or breach of any of the terms or
conditions hereof on the part of Lessee or by the successor in interest to the
Lessee; and if such default or breach shall continue for a period of thirty (30)
days after written notice from Lessor of such default or breach given to Lessee
or successor in interest addressed to Lessee or successor in interest at the
last address furnished by Lessee or successor in interest by United States
mail, then at the expiration of said period of thirty (30) days immediately
following such notice if the default or breach has not been remedied, then at
the expiration of said period of thirty (30) days, at the option of the Lessor,
Lessor may issue written notice of termination and cancellation of this lease
and forfeiture declaring that the leased premises and each and every part
thereof have thereby reverted to the Lessor, including any and all fixtures and
improvements required to be left with the property upon expiration, termination,
or cancellation of this lease.
In the event that the leasehold estate shall have been damaged or injured
by the acts or neglect of the Lessee or operator, contractor, or assigns of
Lessee, Lessor also shall have a right of action for damages and for restitution
for any failure or refusal to comply with the terms and conditions of any
statute of this State relating to reclamation or rehabilitation, or for
abatement of pollution, together with rights for injunctive relief. Lessor also
shall have the right to recover on any bond or other security deposited with
the State of Utah in accordance with the terms or conditions hereinabove set
forth for indemnification.
ARTICLE XX. DISPOSITION OF ROCK TAILINGS
Rock, tailings, and waste materials resulting from the operation of the
Lessee on this land which contain the metalliferous minerals enumerated in
Article I hereof are covered by this mineral lease, unless and until such time
as Lessee renounces in writing the leasehold interest in such materials. In the
event Lessee sells or otherwise disposes of any such rock, tailing, or waste
materials, Lessee agrees to pay Lessor a Production Royalty on the materials
consistent with the prevailing State of Utah royalty for materials or minerals
of like kind.
<PAGE>
Met Min. - 1281d
-12-
ARTICLE XXI CLARIFICATION OF LEASE AMENDMENT
This mineral lease in the above form is an amendment of the original lease
which was issued on the date hereinabove first written. The effective date of
this present lease amendment is January 1, 1985. All fees, rentals, and
royalties paid heretofore shall remain in effect as payments required
theretofore. Readjusted payment rates required under this present lease
amendment shall not be retroactive, but shall commence with the effective date
of this lease amendment.
IN WITNESS WHEREOF, the parties have executed this lease as of the date
hereinabove first written.
THE STATE OF UTAH, acting by and through the
BOARD OF STATE LANDS & FORESTRY and DIVISION OF
STATE LANDS & FORESTRY
By /s/ Ralph A. Miles
-----------------------------------------------
Director, Div. Of State Lands & Forestry - LESSOR
-----------------------------------------------
/s/ Richard R. Weaver
-----------------------------------------------
Richard R. Weaver, President LESSEE
Atlas Minerals Division of Atlas Corporation
<PAGE>
Met Min. - 1281d
-13-
STATE OF UTAH )
COUNTY OF SALT LAKE )
On the _____ day of ___________, 19__, personally appeared before me RALPH
MILES, who being by me duly sworn did say that he is the Director of the
Division of Lands of the State of Utah; and said instrument was signed in behalf
of the State of Utah authority of a resolution of the Board of State Lands; and
said RALPH A. MILES acknowledged to me that the State of Utah executed the same.
Given under my hand and seal this 20th day of November, 1984.
/s/ JoAnn Garcia
--------------------------------------
NOTARY PUBLIC, residing at: SLC, UT
My Commission Expires: 5-31-88
STATE OF UTAH )
COUNTY OF )
On the ____ day of ____________, 19__, personally appeared before me
______________________________, signer of the above instrument, who duly
acknowledged to me that _________________________ executed the same.
Given under my hand and seal this ______ day of _____________, 19__.
--------------------------------------
NOTARY PUBLIC, residing at:
My Commission Expires:
STATE OF COLORADO )
COUNTY OF MESA )
On the 12th day of September, 1984, personally appeared before me Richard
R. Weaver, who being duly sworn did say that he is President of Atlas
Minerals Div. of Atlas Corp. and that said instrument was signed in behalf of
said corporation by resolution of its Board of Directors, and said Richard R.
Weaver acknowledged to me that said corporation executed the same.
Given under my hand and seal this 12th day of September, 1984.
/s/ Jane B. Nichols
--------------------------------------
NOTARY PUBLIC, residing at:
My Commission Expires: 9-23-85 3453 1/2 G Road
Clifton, CO 81520
<PAGE>
INSTRUCTIONS: ASSIGNMENT MUST BE SUBMITTED IN DUPLICATE. TOTAL ASSIGNMENT-$30,
INTEREST, OPERATING RIGHTS, AND OVERRIDING ROYALTY ASSIGNMENTS-$30, AND PARTIAL
ASSIGNMENT-$50.
INDIVIDUAL'S ACCEPTANCE OF ASSIGNMENT (ASSIGNEE)
AFFIDAVIT OF CITIZENSHIP OF ASSIGNEE
I, (we) _______________________ on oath, do solemnly swear that I am (we are)
at the present time (a)*____________________ Citizen(s) of the United States
of America and of legal age, and I (we) hereby assume and agree to perform
all of the covenants and obligations of said lease on the part of lessee(s)
to be kept and performed, and accept the foregoing instrument.
BY:
---------------------------------
Subscribed and sworn to before me this ____ day of ___________, 19__.
My Commission Expires:
----------- ---------------------------
NOTARY PUBLIC, residing at:
ACCEPTANCE OF ASSIGNMENT-CORPORATE (ASSIGNEE)
Comes now Summo USA Corporation, a corporation of Colorado and hereby accepts
the assignment from Lisbon Copper Ltd., of Utah ML No. 20569, which
assignment is dated May 23, 1995, subject to all of the covenants and
obligations of said Lessee.
IN WITNESS WHEREOF, Gregory A. Hahn has executed this acceptance this 13th day
of June, 1995.
BY: /s/ Gregory A. Hahn
----------------------------------
(Assignee) Summo USA Corporation
----------------------------------
(Officer, Agent, Attorney-in-Fact)
ASSIGNEES ACKNOWLEDGEMENT (CORPORATE)
STATE OF COLORADO )
:ss
COUNTY OF DENVER )
On the 13th day of June, 1995, personally appeared before me Gregory A.
Hahn, who being by me duly sworn did say, each for himself, that (he, she, or
they) is an officer, agent or Attorney-in-Fact for the assignee and is
authorized to accept this assignment and has executed the same and the seal
affixed is the seal of said corporation.
JAMES C. ROBERTSON
NOTARY
PUBLIC
STATE OF COLORADO
My Commission Expires: Feb 14, 1997 /s/ James C. Robertson
-----------------------------
NOTARY PUBLIC, residing at:
1776 Lincoln St. #1100
Denver, CO 80203
NOTE: A* INSERT HERE WHETHER NATIVE BORN OR NATURALIZED. IF NATURALIZED, IT
WILL BE NECESSARY TO FILE WITH THIS OFFICE PROOF OF CITIZENSHIP OR DECLARATION
OF INTENTION TO BECOME A CITIZEN IN THE FORM OF A LETTER OF CERTIFICATE OF
VERIFICATION FROM COURT OF ISSUANCE, AND REGISTRATION FEE OF $1.00.
<PAGE>
AMENDMENT TO LEASE AGREEMENT
ML 20569
WHEREAS, the State Land Board, acting in behalf of the State of Utah,
Lessor, and Joseph F. Costanza, Lessee, entered into that certain Metalliferous
Minerals Lease dated May 28, 1963, as amended by that certain agreement dated
November 5, 1984 ("ML 20569"); and
WHEREAS, the School and Institutional Trust Lands Administration
(hereinafter referred to as "Lessee') is the successor in interest to the State
Land Board; and
WHEREAS Summo USA Corporation (hereinafter referred to as "Lessee") is now
the Lessee of record and the record title owner as to ML 20569; and
WHEREAS, Lessor and Lessee desire to supplement certain terms, conditions
and obligations under ML 20596.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, Lessor and Lessee do hereby agree as follows:
1. Lessor will extend the term of ML 20596 for ten (10) years from
January 1, 1995, and for so long thereafter as leased substances are being
produced in commercial quantities.
2. To maintain ML 20596 in force during such ten (10) year extension,
Lessee shall pay to Lessor an annual rental of one dollar ($1.00) per acre,
and for each fractional part of an acre, on or before January 1 of each year.
Rental payments may be credited against actual production royalties only for
the year in which they accrue.
3. In furtherance of Lessee's obligation for diligent operations or
development activity under the terms of ML 20596, and to maintain ML 20596 in
force during such ten (10) year extension, Lessee shall also tender to Lessor an
additional payment of Seven Thousand Eight Hundred Seventy-five and No/100
dollars ($7,875.00), due annually on or before January 1 of each year beginning
January 1, 1996. Such payment shall be considered evidence of Lessee's
commitment to diligent operations for the next ensuing year. Diligence payments
may be credited against actual production royalties only for the year in which
they accrue.
<PAGE>
4. Lessee shall pay Lessor a royalty of eight percent (8.0%) for
fissionable metalliferous minerals and four percent (4.0%) for non-fissionable
metalliferous minerals. The royalty shall be based on the gross value of the
ores produced from the leased lands and sold by the lessee under an arms-length
contract, except that if there is not an arms-length contract for the ore the
royalty shall be based on the gross value received by the lessee under an arms-
length contract for the processed product(s) produced from the leased lands less
actual processing and refining costs. Processing and refining deductions will
not include mining, transportation, administrative, or depreciation costs, or
deductions for property taxes. Should the processed products be sold under a
non-arms-length contract the royalty shall be based on the amount received under
the non-arms-length or the fair market value of the products whichever is
greater, less the allowable deductions as set forth above.
5. Lessor shall have the right to readjust any provision, term or
condition of ML 20596 at any time after January 1, 2005.
6. All terms, conditions and rights as to ML 20596 shall be subject to
current and all future State Statutes, Regulations and Rules governing the
management and use of school and institutional trust lands, and rules
promulgated by other governmental agencies, as appropriate.
7. This Amendment Agreement is supplemental to ML 20596 and does not
amend or supersede nor is it intended as an abrogation or waiver of any rights
Lessor may have under ML 20596, except those terms and conditions specifically
listed above.
IN WITNESS WHEREOF, this Agreement is made and entered into this 15 day of
August, 1995.
SCHOOL AND INSTITUTIONAL TRUST LANDS ADMINISTRATION
/s/ Scott Hirschi
- ------------------------------
Scott Hirschi
Director
APPROVED AS TO FORM:
JAN GRAHAM
ATTORNEY GENERAL
SUMMO USA CORPORATION By /s/ Steven F. Alder
-------------------------
By:/s/ Gregory A. Hahn
---------------------------
Title: VICE PRESIDENT
Page 2
<PAGE>
State of Utah
County of Salt Lake
On this 15th day of AUGUST, A.D. 1995, personally appeared Scott Hirschi who
being by me duly sworn, did say that he is the Director of the School and
Institutional Trust Lands Administration of the State of Utah and the signer of
the above instrument, who duly acknowledged that he executed same.
Witness my hand and seal this 15th day of AUGUST, A.D. 1995.
My Commission expires 5-5-99 /s/ Teresa Wilhelmsen
-------- --------------------------
Notary Public
NOTARY PUBLIC
TERESA WILHELMSEN
355 W. NORTH TEMPLE #400
SALT LAKE CITY, UTAH 84180
MY COMMISSION EXPIRES
MAY 5, 1999
STATE OF UTAH
State of COLORADO )
---------------
County of DENVER )
---------------
On this 8th day of May, A.D. 1995, personally appeared before me Gregory A.
Hahn, who, being duly sworn, did say that (s)he is an officer of Summo USA
Corporation and that said instrument was signed in behalf of said corporation by
resolution of its Board of Directors, and said ______________ acknowledged to me
that said corporate executed the same.
Witness my hand and seal this 8th day of May, A.D. 1995.
My Commission expires 2/14/97 /s/ James C. Robertson
---------- ----------------------
Notary Public
JAMES C. ROBERTSON
NOTARY
PUBLIC
STATE OF COLORADO
<PAGE>
EXHIBIT 10.4
Met. Min. - 1282d
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ARTICLE I. MINERALS COVERED BY THIS LEASE
This Mineral Lease covers the following-described leased mineral substances
with the boundaries of the above-described lands, to-wit:
METALLIFEROUS MINERALS
"Metalliferous Minerals" are herein defined to include any ore containing
any of the following minerals: Aluminum, Antimony, Arsenic, Beryllium, Bismuth,
Cadmium, Chromium, Cecium, Columbium, Cobalt, Copper, Flourspar, Gallium, Gold,
Germanium, Hafium, Iron, Indium, Lead, Mercury, Manganese, Molybdenum, Nickel,
Platinum, Group Metals, Radium, Selenium, Scandium, Silver, Rare Earth Metals,
Rhenium, Tantalium, Tin, Thorium, Tungsten, Thallium, Tellurium, Vanadium,
Uranium, Zinc, together with other minerals which are found in association with
said specified minerals in such a manner that they cannot be mined separately.
In the event Lessee, or the operator or any contractor for Lessee, shall
discover within said lands some mineral or minerals other than the mineral or
leased substances covered by this lease, Lessee shall promptly notify the Lessor
of the kind or nature of such mineral or minerals not included in this lease.
ARTICLE II. PRIMARY TERM AND POSSIBLE EXTENSION OF TERM OF LEASE
This lease is granted for a primary term of TEN (10) years commencing on
the first day of January next succeeding the date hereinabove first written and
as long thereafter as the leased substances shall be produced in commercial
quantities from the above-described lands, on condition that Lessee shall
perform the terms and provisions required to be performed by Lessee including
payment of rents and royalties within the times required herein; provided
however, that it is expressly agreed that at the end of each period of ten (10)
years following the effective date of this lease, the State of Utah as Lessor
shall have the right to readjust the terms and conditions of this lease as may
then be determined to be in the best interest of the State of Utah as trustee-
owner of the mineral estate. In the event of failure or refusal of the Lessee to
accept and agree to the readjustment of the terms and conditions submitted by
Lessor at the end of such ten (10)-year period, such failure or refusal to
accept such readjustment of terms, conditions, or royalty shall operate to
forfeit any right to extension of the term of this Mineral Lease and terminate
this lease except for the rights of the State of Utah to recover any royalties
then owing the State and/or any damages for which Lessee may be liable. This
lease will not be extended beyond the end of the fortieth year except by the
production of the leased substances in commercial quantities from the leased
lands. If Lessee ceases production of leased substances in commercial quantities
this lease will terminate one (1) year from the date of last commercial
production, unless Lessee commences commercial production at least three (3)
months prior to the end of such year and such commercial production then
continues for at least six (6) months.
ARTICLE III. APPLICABLE LAWS AND REGULATIONS
This lease is issued pursuant to the provisions of Title 65, Utah Code
Annotated, 1953, as amended, and subject to all valid Rules and Regulations and
requirements adopted by the Board of State Lands & Forestry, and of the Board of
Oil, Gas, and
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Met. Min. 1282d
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Mining, applicable to the subject matter of this lease, together with all
requirements of the Utah Mined Land Reclamation Act, all requirements of the
State Antiquities Act, Title 63, Chapter 18, and all valid rules and
regulations relating to safety, sanitation, and health whether under the
jurisdiction of the Division of Oil, Gas, and Mining with respect to operations
under this lease or under the jurisdiction of some other State agency.
ARTICLE IV. RIGHTS TO THE SURFACE ESTATE
If the surface estate of all or some portion of the
hereinabove-described lands is owned by the Lessor, Lessee shall be entitled
to use reasonably and prudently such portions of the surface estate owned by
Lessor as shall be reasonably necessary to explore and prospect for, mine,
drill, remove, and dispose of the leased mineral substances, including
permission to establish and maintain in a safe condition on the surface
estate owned by Lessor, access roads, communication lines, tanks, pipelines,
reservoirs, mills, processing plants, reduction works, dumps, and other
essential structures, facilities, machinery, and equipment, reasonably
necessary and expedient for the economic operation of the leasehold and in
furtherance of production, treatment, and disposition of the leased
substances under this lease. Such surface uses shall be exercised subject to
the rights reserved to the State of Utah as provided in Article V hereof, and
without unreasonable interference with the rights of any prior or subsequent
lessee of the State of Utah under the program of multiple use.
If the surface estate of any portion of the described lands is not owned
by the State of Utah, except for a reserved right of entry to the mineral
estate or mineral estates, the Lessee may exercise such right of entry to the
mineral estate covered by this lease, at the sole cost and expense of Lessee
herein and without cost to the State of Utah. If any damage is caused
directly or indirectly to the surface estate by the Lessee or by the
contractor or operator for Lessee, Lessee shall make proper restitution and
indemnify the surface owner or owners. Lessee also shall make proper
rehabilitation as required by the Utah Mined Land Reclamation Act and as
required by all lawful rules and regulations adopted thereunder.
Lessor will require a bond to be posted or other security given to the
State to be filed with Lessor or any other State agency or officer in a
principal amount determined by Lessor to be adequate to assure appropriate
reclamation and restitution for any damage to the surface estate.
ARTICLE V. EXCEPTIONS AND EXCLUSIONS FROM LEASE
Lessor hereby excepts and reserves from the operation of this lease the
following rights and privileges:
FIRST: The right to establish rights of way and easements on, through,
or over the land above described, for utility corridors and for joint or
joint and several uses, as may be necessary and appropriate for the
management of the above-described lands and other lands of Lessor or lands
administered by Lessor, and for the working of other deposits within said
lands under mineral leases granted to others under the program of multiple
use.
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Met. Min. - 1282d
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SECOND: The right to issue mineral leases to other lessees covering
minerals not included in this lease, under such terms and conditions which
will not unreasonably interfere with operations under this lease in
accordance with the principle of multiple use provided by law.
THIRD: In the event Lessor owns the surface estate in said lands or
portions of said lands above described, Lessor retains the right to use, lease,
sell, or otherwise dispose of the surface estate in said lands or any part
thereof, under existing State laws or laws subsequently enacted, insofar as such
surface is not essential for the Lessee herein in exploration, prospecting for,
mining, drilling, removal, or disposal of the leased substances covered by this
lease, to the extent that such use, lease, or sale of the surface estate does
not unreasonably interfere with the rights granted to the Lessee herein. Lessor
shall notify Lessee herein of any such sale, lease, use, or other disposition of
the surface estate.
ARTICLE VI. PAYING OF RENTALS AND ROYALTIES
For and in consideration of the leasehold rights granted to the Lessee,
in addition to all other terms and conditions required to be performed by the
Lessee, the Lessee hereby covenants and agrees with Lessor to pay rentals and
royalties as follows:
FIRST: Lessee agrees to pay Lessor as rental for the land covered by
this lease the sum of One Dollar ($1.00) per acre and for each fractional
part of an acre, each year in advance on or before January 1st of each year
except the rental for the first year which has been paid with the application
for this lease. All rentals paid shall be credited against actual Production
Royalties for the lease year in which they shall accrue, but such rentals
shall not be credited against the Minimum Royalties under subparagraph
"Fourth" of this ARTICLE VI.
SECOND: "Lessee shall pay lessor a production royalty on the basis of 8% in
the case of fissionable Metalliferous Minerals and 4% in the case of
non-fissionable Metalliferous Minerals of the market price, including all
bonuses and allowances received by Lessee, f.o.b. the nearest point of sale of
the first marketable product or products produced from the leased substances and
sold under a bonafide contract of sale, whether or not such product or products
are produced through chemical or mechanical treating or processing of the leased
substances raw material. It is expressly understood and agreed that none of
Lessee's mining or product cost, including but not limited, to material costs,
labor costs, overhead costs, distribution costs, or general and administrative
costs may be deducted from marketprice f.o.b. the point of sale in computing
Lessor's royalty. All such costs shall be entirely borne by Lessee and are
anticipated by the rate of royalty assigned in his agreement."
THIRD: Payment of Production Royalty shall be made by Lessee to Lessor,
as herein required, on or before the last day of the month next succeeding
the month during which the minerals or leased substances shall have been
shipped or sold or used. In connection with such payment of Production
Royalty, the Lessee shall submit a certified statement of the production of
all leased substances mined or extracted from the hereinabove-described
lands, according to the foregoing royalty schedule together with such
information required by the Board of State Lands & Forestry to verify
production and disposition of mineral substances produced and disposed of
from the leased premises.
<PAGE>
Met. Min. - 1282d
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FOURTH: Lessee may maintain this lease in force beyond the primary term
of ten (10) years from the effective date of the original lease by paying
Lessor, in addition to rentals and production royalties as hereinabove
required, an annual minimum royalty of three (3) times the annual rental,
providing the lessee is engaged in diligent operations, exploration,
research, or development activity which is reasonably calculated to advance
development or production of the mineral covered by the lease from the leased
premises or lands pooled or unitized with or constituting an approved mining
or drilling unit in respect to the leased premises.
Said annual minimum royalty shall be paid each year in advance, commencing
with the eleventh year of the lease, along with the regular annual rental
required to be paid under the terms of this lease. Said rental per acre and said
Minimum Royalty shall be paid on each and every acre in this lease to extend
the term of this lease and to keep this lease in force and effect.
Rentals and Minimum Royalties paid annually shall be credited against
actual Production Royalties for the year in which they accrue during the
original term, or any extension thereof; but annual rentals shall not be
credited against Minimum Royalties.
ARTICLE VII. MINERAL TITLE OF LESSOR
Lessor claims title to the mineral estate covered by this lease. Lessor
does not warrant title nor represent that no one will dispute the title
asserted by Lessor. It is expressly agreed that Lessor shall not be liable to
Lessee for any alleged deficiency in title to the mineral estate, nor shall
Lessee or any assigns of the Lessee become entitled to any refund for any
rentals, bonuses, or royalties paid under this lease.
ARTICLE VIII. WATER RIGHTS
In the event Lessee shall initiate any water rights on the leased premises,
such right shall become an appurtenance to the leased premises; and upon
surrender, cancellation, or termination of this lease, Lessee or assigns of
Lessee shall assign and convey such water rights and any application for
appropriation of water to beneficial use relating to the land or the mineral
estate covered by this lease to Lessor.
If the Lessee shall purchase or otherwise acquire any water rights on
some other land and file with the State Engineer appropriate application for
change of use onto the premises covered by this lease, the Lessor herein
shall have an option for 45 days after the expiration, surrender, or
termination of this lease to purchase said otherwise acquired water rights at
the acquisition costs of the Lessee. Such option shall begin to run from the
date of termination, surrender, or expiration of this lease or from the date
when Lessee shall specify in writing the acquisition costs of such other
water rights, whichever date is the later date. Unless Lessor accepts such
written offer to convey such rights at the actual acquisition costs within
said period of 45 days, Lessor shall be deemed to have rejected the offer.
Upon payment of the said acquisition costs by the Lessor, Lessee herein shall
assign and transfer such acquired water rights to the Lessor.
ARTICLE IX. WRITTEN CONSENT REQUIRED FOR ASSIGNMENT OR SUBLEASE
Lessee shall not assign this lease nor any portion thereof, nor any rights
or privileges herein granted, without the prior written consent of Lessor. Nor
shall the
<PAGE>
Met. Min. - 1282d
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Lessee issue any sublease without the prior written consent of Lessor. Any
assignment of lease and any sublease issued without prior written consent of
Lessor shall be void ab initio.
In the event Lessor shall approve an assignment of this lease or of any
part hereof, such assignment shall be subject to all of the terms, conditions,
and obligations of the Lessee herein set forth. All of the terms, covenants,
conditions, and obligations of the Lessee shall be binding upon the heirs,
executors, administrators, successors, and assigns of the Lessee. This provision
also shall apply to any sublease issued by Lessee and approved by Lessor.
ARTICLE X. OVERRIDING ROYALTY LIMITATION
Neither the Lessee nor the assignee of Lessee shall create or grant any
overriding royalty except as permitted by law and by the Rules and Regulations
of the Board of State Lands & Forestry. Overriding royalty assignments shall not
become effective, even if otherwise valid, until filed with the Lessor.
ARTICLE XI. SURRENDER OR RELINQUISHMENT OF LEASE
Lessee may surrender this lease for cancellation by Lessor as to all or
any part of the leased lands, but not for less than a quarter-quarter section or
surveyed lot, upon payment of all rentals, royalties, and other amounts then
due and owing to the Lessor, by filing with Lessor a written relinquishment. As
to rental, such relinquishment shall be effective on the date of filing, but
otherwise on the date of cancellation by the Lessor.
ARTICLE XII. NOTICE OF COMMENCEMENT OF OPERATIONS, PLANS, PLATS, BOND
Not less than sixty (60) days before commencement of exploration, drilling,
or mining operations, Lessee shall give written notice hereof to the Division
of State Lands & Forestry and the Division of Oil, Gas, and Mining, together
with a plan of operation and a topographic map showing every proposed shaft,
tunnel, open pit, drill site, and access road to be used. Lessor shall make an
assessment of such plan of operation and either endorse or stipulate changes in
Lessee's plan of operation, or request additional information within the sixty
(60) day notification period. Lessee shall not proceed with the execution of
any such plan of operation without first receiving the written approval of
Lessor. Lessee shall maintain at the mine office clear, accurate, and detailed
maps of all actual and planned operations on a scale of not more than 50 feet to
the inch, with points coordinated with public land surveys showing distance to
the nearest public survey monument or reestablished survey corner. Such maps and
plats shall be on tracing cloth or other material which is substantially
permanent and of which clear and distinct photo copies or blueprints can be
readily made without unreasonable delay. Such maps or plats shall show the
workings from time to time, as the same are extended. In the event that the
operations on the above-described leasehold are intended to be conducted in
conjunction with adjacent lands, whether Federal, State, or privately-owned
lands, the map and plats shall clearly show how the operations are to be
coordinated. All surveys shall be conducted by a licensed surveyor or engineer
qualified to practice in Utah. All such maps or plats shall be certified by the
surveyor or engineer
<PAGE>
Met. Min. 1282d
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preparing the same. The State or any agency of the State of Utah, including the
Division of Oil, Gas, and Mining, shall be entitled to a true and correct copy
thereof, together with the proposed plans of operation.
After Lessor receives notice of intent to commence mining operations,
upon request of the Lessor, the Lessee shall furnish a bond with an approved
corporate surety company authorized to transact business in the State of
Utah, or such other security acceptable to the Lessor, in an amount to be
determined by Lessor, after taking into account the value of the land and the
amount of potential damage which likely will result from such proposed mining
operations, and which bond or other security shall be conditioned upon
payment of all rentals and royalties from the leasehold and other sums which
may become payable to the Lessor, and to assure full compliance with the
terms and conditions of this lease and compliance with all Rules and
Regulations of the Board of State Lands & Forestry and all Rules and
Regulations of any other State agency having jurisdiction over mining
operations, and also conditioned upon payment of all damages to the surface
and improvements thereon if this lease covers surface estate or some portion
of the surface estate which has been sold or otherwise leased, and any damage
caused by Lessee to any other lessee of the State of Utah with respect to
said land. Such bond or other security furnished prior to commencement of
development of the leasehold may be increased in such reasonable amounts as
the Lessor may require after discovery of any of the leased substances.
If the plan of mining development or mining operations includes
core-drilling, the plan of operations shall disclose the locations of
core-drilling operations.
ARTICLE XIII. ALL OPERATIONS TO BE CONDUCTED IN A LAWFUL, PRUDENT MANNER
Lessee shall conduct all operations under this lease in a lawful,
prudent, and good workmanlike manner for the effective and safe production of
the mineral substances covered by this lease, and to avoid unnecessary damage
and injury to the leasehold estate, and also to avoid damage and wastage of
other natural resources not covered by this lease. All operations of Lessee,
whether conducted directly by Lessee or by operators or contractors, shall be
at the sale cost and expense of Lessee.
It is expressly covenanted and agreed that Lessor does not grant Lessee or
any person dealing with Lessee any right to subject the property hereinabove
described, nor any leased substances, to any lien-rights for labor or mechanic's
liens, nor to any materialmen's liens, nor to any other lien for any act,
omission, neglect, or performance of Lessee or its agents, employees, and
contractors. In the event any one shall file any notice or claim of lien against
said property or any estate in said property, Lessee shall take all necessary
steps expeditiously to have such notice or claim released of record. Lessee
shall save Lessor harmless from any and all lien notices and claims against said
land arising from any act or neglect of Lessee and any contractor or operator of
Lessee in any operations on or relating to the hereinabove described lands.
Lessee shall not fence off or otherwise make inaccessible to livestock
lawfully on the surface of said premises any watering place without the
written consent of Lessor; provided, that Lessee shall not permit any
livestock to come upon any portion of the leasehold to pollute any surface or
subsurface water available or capable of being made available for domestic
use or irrigation. In the operations of Lessee, Lessee shall comply with all
laws and regulations for control of water which might be
<PAGE>
Met. Min. - 1282d
-8-
encountered or which might seep into any formation, to avoid pollution of
surface and underground waters as required by Chapter 14, Title 73, Utah Code
Annotated, 1953, as amended. Lessee shall comply with all valid laws and
regulations relating to prevention and suppression of fires, make all necessary
provisions for sanitary disposal of wastes, and in all operations connected with
said leasehold take appropriate measures for protection of human life and
prevention of injuries and disease.
ARTICLE XIV. RIGHTS OF LESSOR FOR INSPECTIONS OF LEASEHOLD AND RECORDS
Lessor, its officers, and agents have the right at all reasonable times to
enter upon the leased lands and premises to inspect the conditions of the
leasehold, the work done under the terms of this lease, and the production
obtained from the leasehold, such entry and inspections to be done in such a
manner as shall not unreasonably interfere with the lawful operations by the
Lessee in performance of the terms and conditions of this lease.
Lessor also shall have the right to examine all books and records
pertaining to operations under this lease whether such books and records are
located within a building on the leased premises or located in an office
elsewhere and to make copies and abstracts of such records if desired by Lessor.
Lessor, its officers, and agents shall have the right to post upon or within the
leasehold such notices deemed proper or expedient by Lessor.
If Lessee maintains an office in another State or in a foreign country,
Lessee nevertheless shall maintain within the State of Utah proper and adequate
records relating to operations on this leasehold and also relating to production
of leased substances and payment of rentals and royalties. Lessee also shall
have a resident agent in the State of Utah to whom any and all notices may be
sent by Lessor and on whom process may be served. In the event of any change in
the address of Lessee's office in the State of Utah, Lessee shall promptly
furnish Lessor with written notice of such change of address within the State of
Utah. Examinations of records of Lessee by the Lessor shall be conducted at
reasonable times.
In the event Lessee conducts core-drilling operations within the leasehold,
or by directional drilling from adjacent land, Lessor shall have a right of
inspection of core samples and any analysis made thereof and any assay;
provided, that any report obtained by Lessor of any core-drilling operations
may be declared confidential information by Lessee, in which event Lessor shall
keep such information in a separate confidential information file. Such
information shall not be disclosed to any competitor nor to any one except to a
representative of the Attorney General of the State of Utah until Lessee
waives confidentiality or upon surrender, expiration, or termination of this
lease.
After completion of any core drilling, Lessee shall notify Lessor; and
Lessee shall cause all core holes to be plugged or sealed as expeditiously as
possible after the need for keeping such core holes unplugged ceases, in
accordance with regulations and requirements of the Division of Oil, Gas, and
Mining.
ARTICLE XV. OPERATIONS IN CONJUNCTION WITH MINING ON OTHER LANDS
In the event Lessee, in the interest of economy in mining operations,
desires to conduct mining operations on or within the above-described lands in
conjunction with mining operations on or within any adjacent Federal, State, or
privately-owned land by
<PAGE>
Met. Min. 1282d
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utilization of shafts, inclines, or tunnels within either the above-described
lands or within adjacent lands, Lessee shall make application in writing to the
Board of State Lands & Forestry and submit with such application a detailed
plan of operations illustrating how leased substances mined from the above-
described lands can and will be mined, segregated, and separately accounted
for from leased substances mined from some adjacent land. No such operations
shall be conducted without written approval of the Board. Any approval
granted by the Board shall be conditioned upon proper segregation and proper
accounting and record keeping of leased substances mined from each property.
Separate records shall be required for accounting for leased substances mined
from the above-described lands.
In the event Lessee desires to process or mill leased substances from the
above-described land in conjunction with processing or milling of leased
substances from adjacent or some other lands, whether such processing or milling
is intended to be performed on the above-described land or on some other land,
Lessee shall submit to the Board a written application detailing how the leased
substances mined from the above-described lands shall be segregated and
separately accounted for in computation of royalty payments from leased
substances mined from other lands. Any Board approval for any such arrangements
shall be conditioned upon segregation of leased substances produced from the
above-described lands from mineral substances produced from other lands with
adequate safeguards to assure proper accounting for determination of royalty.
If application is granted for either type of operation or for both, all
procedures for either production or milling of minerals shall be subjected to
examination by the Division of State Lands & Forestry and by the Division of
Oil, Gas, and Mining to determine whether either type of arrangement
functions satisfactorily without detriment to the State of Utah. If such
inspection results in an adverse report with recommendations for modification
or discontinuance of such operations, a copy of the report with
recommendations shall be submitted as expeditiously as possible to the
Lessee. If any objectionable condition is not promptly remedied to safeguard
the rights of the State as Lessor, the Board of State Lands & Forestry shall
have the right to order discontinuance of such arrangement; and failure to
comply with such order of the Board shall constitute a breach of this Lease
Agreement.
ARTICLE XVI. SPECIAL REQUIREMENTS IN EVENT OF STRIP-MINING
In the event Lessee desires to conduct any strip-mining or open-pit
mining or operations which will materially disturb the surface of the
above-described lands or some portion thereof, at least sixty (60) days
before commencing such type of mining activities, Lessee shall submit to the
Division of State Lands & Forestry the proposed plan of operations together
with a proposed plan of surface rehabilitation in compliance with the Utah
Mined Land Reclamation Act and in compliance with the Rules and Regulations
adopted hereunder. A copy of such proposed plan of operations and proposed
plan of surface rehabilitation also shall be submitted to the Division of
Oil, Gas, and Mining. No such operations shall be commenced until the
Division of Oil, Gas, and Mining approves the plan of operations and approves
a program of rehabilitation. Security may be required of Lessee to assure
appropriate rehabilitation in accordance with the said statute and rules and
regulations adopted thereunder.
<PAGE>
Met. Min. - 1282d
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ARTICLE XVII. EQUIPMENT OR FACILITIES TO REMAIN WITH THE LAND
Upon surrender, forfeiture, expiration, or termination of this lease,
any and all underground timbering supports, shaft linings, rails, and other
installations necessary for the support of underground tunnels, shafts,
inclines, or other underground mine supports, together with all rails or head
frames and all other underground construction and safety equipment annexed to
the ground (excluding detachable motor-driven machinery) which cannot be
removed without creating a danger to any shaft, tunnel, incline, or other
underground improvements annexed to the mine, and including equipment
installed underground to provide for ventilation of the mine or some portion
thereof, shall be left within said land above described by the Lessee,
operator, and contractor of Lessee and shall remain a part of the realty.
Lessor shall acquire all rights thereto without indemnification of Lessee or
operator or contractor for Lessee. Except as herein specifically excepted,
all personal property of Lessee, including removable machinery, equipment,
tools, and stockpiles of leased substances for which royalty has been paid
shall remain the property of Lessee or operator or contractor for Lessee and
Lessee or operator or contractor for Lessee may remove the same at the sole
expense of Lessee or operator or contractor within two (2) months following
expiration, forfeiture, surrender, or termination of this lease, except that
the Board of State Lands & Forestry for good cause shown shall have the right
to grant a reasonable extension of time beyond the period of two (2) months
for removal of any and all equipment which may be removed by Lessee or
operator or contractor as herein provided. At the end of such period, Lessor
may consider abandoned and lay claim to any or all equipment or stockpiles
remaining on the premises.
Upon expiration, surrender, forfeiture, or termination of this
lease or abandonment of the leasehold by Lessee, the Lessee shall cause to be
sealed or properly shut off all or parts of the mine openings including shafts
and tunnels in the manner and method required by the Director of the Division of
Oil, Gas, and Mining, and to abate any hazardous condition which may have been
left by Lessee, such abatement of hazardous condition to be performed in
accordance with reasonable requirements of the Director of the Division of Oil,
Gas, and Mining.
ARTICLE XVIII. CONSENT TO SUIT IN STATE DISTRICT COURT
It is agreed that if there arises any controversy between lessor and
Lessee or any successor in interest of Lessee which needs to be litigated,
Lessee or any one claiming by or under the Lessee shall bring such action in
the District Court of Salt Lake County, State of Utah, after compliance with
the requirements of State statutes for bringing suit, including compliance
with the requirements of the State Governmental Immunity Act, Title 63,
Chapter 30, Utah Code Annotated, 1953, as amended. Neither Lessee nor any
assignee of lessee nor any one claiming under, by, or through the Lessee
shall bring any suit against the State of Utah or against any State agency in
the United States District Court for the District of Utah, nor in any other
United States District Court in some other state, nor in the District of
Columbia.
ARTICLE XIX. REMEDIES FOR DEFAULT BY LESSEE OR ASSIGNS
This Mineral Lease and the terms and conditions of this lease agreement
issued by the State of Utah are made with the Lessee herein on condition that
Lessee and any lawful successor in interest to Lessee shall perform all
covenants and terms and conditions herein set forth to be performed by Lessee
or its lawful assigns including
<PAGE>
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Met. Min. - 1282d
payment of rentals and royalties as herein provided; and if at any time there
shall be default on the part of lessee or breach of any of the terms or
conditions hereof on the part of Lessee or by the successor in interest to
the Lessee; and if such default or breach shall continue for a period of
thirty (30) days after written notice from Lessor of such default or breach
given to Lessee or successor in interest addressed to Lessee or successor in
interest at the last address furnished by Lessee or successor in interest by
United States mail, then at the expiration of said period of thirty (30) days
immediately following such notice if the default or breach has not been
remedied, then at the expiration of said period of thirty (30) days, at the
option of the Lessor, Lessor may issue written notice of termination and
cancellation of this lease and forfeiture declaring that the leased premises
and each and every part thereof have thereby reverted to the Lessor,
including any and all fixtures and improvements required to be left with the
property upon expiration, termination, or cancellation of this Lease.
In the event that the leasehold estate shall have been damaged or
injured by the acts or neglect of the Lessee or operator, contractor, or
assigns of Lessee, Lessor also shall have a right of action for damages and
for restitution for any failure or refusal to comply with the terms and
conditions of any statute of this State relating to reclamation or
rehabilitation, or for abatement of pollution, together with rights for
injunctive relief. Lessor also shall have the right to recover on any bond or
other security deposited with the State of Utah in accordance with the terms
or conditions hereinabove set forth for indemnification.
ARTICLE XX. DISPOSITION OF ROCK TAILINGS
Rock, tailings, and waste materials resulting from the operation of the
Lessee on this land which contain the metalliferous minerals enumerated in
Article I herein are covered by this mineral lease, unless and until such time
as Lessee renounces in writing the leasehold interest in such materials. In the
event Lessee sells or otherwise disposes of any such rock, tailing, or waste
materials, Lessee agrees to pay Lessor a Production Royalty on the materials
consistent with the prevailing State of Utah royalty for materials or minerals
of like kind.
<PAGE>
Met Min. - I281d
-12-
ARTICLE XXI. CLARIFICATION OF LEASE AMENDMENT
This mineral lease in the above form is an amendment of the original lease
which was issued on the date hereinabove first written. The effective date of
this present lease amendment is January 1, 1985. All fees, rentals, and
royalties paid theretofore shall remain in effect as payments required
theretofore. Readjusted payment rates required under this present lease
amendment shall not be retroactive, but shall commence with the effective
date of this lease amendment.
IN WITNESS WHEREOF, the parties have executed this lease as of the date
hereinabove first written.
THE STATE OF UTAH, acting by and through the
BOARD OF STATE LANDS & FORESTRY and DIVISION OF
STATE LANDS & FORESTRY
By /s/ Ralph A. Miles
-------------------------------------------------
Director, Div. of State Lands & Forestry -- LESSOR
-------------------------------------------------
/s/ Richard R. Weaver
-------------------------------------------------
Richard R. Weaver, President LESSEE
Atlas Minerals Division of Atlas Corporation
<PAGE>
Met Min. - 1281c
-13-
STATE OF UTAH )
COUNTY OF SALT LAKE )
On the 20th day of November, 1984, personally appeared before me RAI MILES,
who being by me duly sworn did say that he is the Director of the Division of
Lands of the State of Utah; and said instrument was signed in behalf of the
State of U authority of a resolution, of the Board of State Lands; and said
RALPH A. MILES acknowledged to me that the State of Utah executed the same.
Given under my hand and seal this 20th day of November, 1984.
/s/ JoAnn Garcia
---------------------------------------
NOTARY PUBLIC, residing at:
My Commission Expires: 5-31-88
STATE OF UTAH )
COUNTY OF )
On the _______ day of ____________, 19___, personally appeared before me
_________________________, signer of the above instrument, who duly
acknowledge to me that _____________________________ executed the same.
Given under my hand and seal this______ day of ___________________, 19___.
----------------------------------------
NOTARY PUBLIC, residing at:
My Commission Expires:
STATE OF COLORADO )
COUNTY OF MESA )
On the 12th day of September, 1984, personally appeared before Richard
R. Weaver, who being duly sworn did say that he is Pres of Atlas Minerals
Div. of Atlas Corp. and that said instrument was signed in behalf said
corporation by resolution of its Board of Directors, and said Richard R.
Weaver acknowledged to me that said corporation executed the same.
Given under my hand and seal this 12th day of September, 1984.
/s/ [illegible]
------------------------------------
NOTARY PUBLIC, residing at:
3453 1/2 G Road
My Commission Expires: 9-23-85 Clifton, Co 81520
<PAGE>
State of Utah
School & Institutional Trust Lands Administration
MINERAL LEASE ASSIGNMENT FORM
MINERAL LEASE NO. 17661 RECORD TITLE ASSIGNMENTS:
/X/ TOTAL
INTEREST
PARTIAL
OVERRIDING ROYALTY
OPERATING RIGHTS ASSN.
The undersigned, as owner of interest as hereinafter specified in and to
ML 17661 as designated, for good and valuable consideration and $10.00
DOLLARS does hereby apply for approval of this assignment and hereby assigns
to Summo USA Corporation ADDRESS: 1776 Lincoln Street, Suite 1100, Denver, CO
80203 the rights, title, and interest in rights and privileges as lessee in
such lands, to the extent indicated subject to the reservation of overriding
royalties as herein noted:
1. Land affected by this assignment in County of San Juan, State of
Utah, as described herein:
Township 30 South, Range 25 East, SLB&M
---------------------------------------
Section 36: SW 1/4
160 ACRES
2. Interest of assignor in such lands (Note % of 100%) 100%
3. Extent of such interest conveyed to Assignee (Note % of 100%)
100%
4. Extent of interest retained by Assignor after assignment (Note %
of 100%) 0%
5. Overriding royalty reserved herein to Assignor (Note percentage
only) 0%
6. Overriding royalty previously reserved (Note percentage only)
It is hereby certified that the statements made herein are true, complete,
and correct to the best of the undersigned's knowledge and belief and are
made in good faith. Approval of this application and assignment should be
considered approval only under such rights, interests, and title as held by
assignor.
Executed this 7th day of June, 1995. URANIUM KING CORPORATION
/s/ Karl F. Meyers
-------------------------
by Karl(Lessee-Assignor)F. Meyers,
President
LESSEE-ASSIGNOR'S ACKNOWLEDGEMENT
STATE OF NEVADA )
:ss
COUNTY OF CLARK )
On the 7th day of June personally appeared before me Karl F. Meyers,
Pres., Uranium King Corp., signer(s) of the above instrument duly
acknowledged to me that _______ executed the same.
[SEAL]
Given under my hand and seal this 7th day of June, 1995.
/s/ [illegible]
My Commission Expires: 4/13/97 --------------------------
NOTARY PUBLIC, residing at
JEANNIE C. WILLARSON
[SEAL] Notary Public - Nevada
Clark County
My appt. exp. Apr. 13,1997
* THIS DOCUMENT MAY BE DUPLICATED
<PAGE>
INSTRUCTIONS. ASSIGNMENT MUST BE SUBMITTED IN DUPLICATE. TOTAL
ASSIGNMENT-$30, INTEREST, OPERATING RIGHTS, AND OVERRIDING ROYALTY
ASSIGNMENTS-$30, AND PARTIAL ASSIGNMENT-$50.
INDIVIDUAL'S ACCEPTANCE OF ASSIGNMENT (ASSIGNEE)
AFFIDAVIT OF CITIZENSHIP OF ASSIGNEE
I, (we) __________________________________________ on oath, do solemnly swear
that I am (we are) at the present time (a) * _______________ Citizen(s) of
the United States of America and of legal age, and I (we) hereby assume and
agree to perform all of the covenants and obligations of said lease on the
part of lessee(s) to be kept and performed, and accept the foregoing
instrument.
BY:
-------------------------------------
Subscribed and sworn to before me this ________________ day of _____________,
19___.
My Commission Expires: ________ _______________________________
NOTARY PUBLIC, residing at:
ACCEPTANCE OF ASSIGNMENT-CORPORATE (Assignee)
Comes now Summo USA Corporation a corporation of Colorado and hereby accepts the
assignment from Uranium King Corporation of New Mexico ML No.17661 which
assignment is dated June 7, 1995, subject to all of covenants and obligations of
said Lessee.
IN WITNESS WHEREOF, Gregory A. Hahn has executed this acceptance this 13th day
of June, 1995.
BY: /s/ [illegible]
----------------------------------------
(Assignee) SUMMO USA CORPORATION
-----------------------------------
(Officer, Agent, Attorney-in-Fact)
ASSIGNEES ACKNOWLEDGMENT (Corporate)
STATE OF COLORADO )
:ss
COUNTY OF DENVER )
On the 13th day of June, 1995, personally appeared before me Gregory A. Hahn who
being by me duly sworn did say, each for himself, that (he, she, or they) is an
officer, agent or Attomey-in-Fact for the assignee and is authorized to accept
this assignment and has executed the same and the seal affixed is the seal of
said corporation.
My Commission Expires: Feb. 14, 1997 /s/ [illegible]
-----------------------------
NOTARY PUBLIC, residing at:
1776 Lincoln St. #1100
Denver, CO 80203
NOTE: A* INSERT HERE WHETHER NATIVE BORN OR NATURALIZED. IF NATURALIZED, IT
WILL BE NECESSARY TO FILE WITH THIS OFFICE PROOF OF CITIZENSHIP OR DECLARATION
OF INTENTION TO BECOME A CITIZEN IN THE FORM OF A LETTER OF CERTIFICATE OF
VERIFICATION FROM COURT OF ISSUANCE, AND REGISTRATION FEE OF $1.00.
<PAGE>
AMENDMENT TO LEASE AGREEMENT
ML 17661
WHEREAS, the State Land Board, acting in behalf of the State of Utah,
Lessor, and Maxwell Bentley, Lessee, entered into that certain metalliferous
Mineral Lease dated February 20, 1959, as amended by those certain agreements
dated October 28, 1970, October 22, 1979 and November 5, 1984, ("ML 17661");
and
WHEREAS, the School and Institutional Trust Lands Administration
(hereinafter referred to as "Lessor") is the successor in interest to the State
Land Board; and
WHEREAS Summo USA Corporation (hereinafter referred to as "Lessee") is now
the Lessee of record and the record title owner as to ML 17661; and
WHEREAS, Lessor and Lessee desire to supplement certain terms, conditions
and obligations under ML 17661.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, Lessor and Lessee do hereby agree as follows:
1. Lessor will extend the term of ML 17661 for ten (10) years from January
1, 1995, and for so long thereafter as leased substances are being produced in
commercial quantities.
2. To maintain ML 17661 in force during such ten (10) year extension,
Lessee shall pay to Lessor an annual rental of one dollar ($1.00) per acre, and
for each fractional part of an acre, on or before January 1 of each year. Rental
payments may be credited against actual production royalties only for the year
in which they accrue.
3. In furtherance of Lessee's obligation for diligent operations or
development activity under the terms of ML 17661, and to maintain ML 17661 in
force during such ten (10) year extension, Lessee shall also tender to Lessor
an additional payment of Two Thousand Six Hundred Twenty-five and No/100
dollars ($2,625.00). due annually on or before January 1 of each year
beginning Jan. 1, 1994. Such payment shall be considered evidence of Lessee's
commitment to diligent operations for the next ensuing year. Diligence
payments may be credited against actual production royalties only for the
year in which they accrue.
<PAGE>
4. Lessee shall pay Lessor a royalty of eight percent (8.0%) for
fissionable metalliferous minerals and four percent (4.0%) for
non-fissionable metalliferous minerals. The royalty shall be based on the
gross value of the ores produced from the leased lands and sold by the lessee
under an arms-length contract, except that if there is not an arms-length
contract for the ore the royalty shall be based on the gross value received
by the lessee under an arms-length contract for the processed product(s)
produced from the leased lands less actual processing and refining costs.
Processing and refining deductions will not include mining, transportation,
administrative, or depreciation costs, or deductions for property taxes.
Should the processed products be sold under a non-arms length contract the
royalty shall be based on the amount received under the non-arms-length or
the fair market value of the products whichever is greater, less the
allowable deductions as set forth above.
5. Lessor shall have the right to readjust any provision, term or condition
of ML 17661 at any time after January 1, 2005.
6. All terms, conditions and rights as to ML 17661 shall be subject to
current and all State Statutes, Regulations and Rules governing the management
and use of school and institutional trust lands, and rules promulgated by other
governmental agencies, as appropriate.
7. This Amendment Agreement is supplemental to ML 17661 and does not amend
or supersede nor is it intended as an abrogation or waiver of any rights Lessor
may have under ML 17661, except those terms and conditions specifically listed
above.
IN WITNESS WHEREOF, this Agreement is made and entered into this 15 day of
August, 1995.
SCHOOL AND INSTITUTIONAL TRUST LANDS ADMINISTRATION
/s/ Scott Hirschi
- -----------------------------------
Scott Hirschi
Director
APPROVED AS TO FORM:
JAN GRAHAM
ATTORNEY GENERAL
SUMMO USA CORPORATION By /s/ [illegible]
---------------------------
By: /s/ [illegible]
--------------------------------
Title: Vice President
-----------------------------
Page 2
<PAGE>
State of Utah )
County of Salt Lake )
On this 15th day of August, A.D. 1995, personally appeared Scott Hirschi
who being by me duly sworn, did say that he is the Director of the School and
Institutional Trust Lands Administration of the State of Utah and the signer of
the above instrument, who duly acknowledged that he executed same.
Witness my hand and seal this 15th day of August, A.D. 1995.
My Commission expires 5-5-99 /s/ [illegible]
--------- ------------------------------
Notary Public
[SEAL]
State of Colorado )
County of Denver )
On this 8th day of May, A.D. 1995, personally appeared before me Gregory
Hahn, who, being duly sworn, did say that (s)he is an officer of Summo USA
Corporation and that said instrument was signed in behalf of said corporation
by resolution of its Board of Directors, and said________________
acknowledged to me that said corporation executed the same.
Witness my hand and seal this 8th day of May, A.D. 1995.
My Commission expires 2/14/97 /s/ [illegible]
--------- ------------------------------
Notary Public
[SEAL]
Page 3
<PAGE>
EXHIBIT 10.5
MINERAL LEASE
This Mineral Lease, entered into as of the of 26th day of October, 1992, by
and between Steve Kosanke and Mary Lou Kosanke ("LESSOR"), whose mailing address
is P.O. Box 193, La Sal, Utah, 84530, and MLP Associates, A Colorado Limited
Partnership ("LESSEE"), whose mailing address is 12836 N. 60th Street,
Scottsdale, Arizona 85254.
MINERAL LEASE
The "LEASED PREMISES are described in APPENDIX A
hereto, and a part hereof.
1. For and in consideration of the mutual covenants and
agreements hereinafter set forth, in further consideration of good and valuable
consideration received by LESSOR from LESSEE, LESSOR does hereby lease to LESSEE
all of the right, title and interest of LESSOR in and to the LEASED PREMISES and
LESSOR hereby grants exclusively to LESSEE all rights of LESSOR to occupy, use,
and enjoy the LEASED PREMISES, including, but not limited to, the following:
1.a. To explore for minerals.
1.b. To mine or otherwise extract, to mill, treat or otherwise
process, and to store, stockpile, remove, market, sell or otherwise dispose of
ore and minerals.
1.c. To dispose of or deposit waste material and or tailings on
the LEASED PREMISES but only if mining is being done on the LEASED PREMISES.
Reasonable industry accepted precautions shall be taken to determine that no
such waste material or tailings are place on unmined ore.
1.d. To construct, use, maintain, repair, replace and relocate
in or upon the LEASED PREMISES buildings, shops, plants, machinery, mills,
facilities, ore bins and structure of all kinds, roads, shafts, inclines,
tunnels, drifts, open pits, pipelines, telephone lines, electric transmission
lines and transportation facilities and other utilities.
1.e. To exercise any and all other rights and privileges which
are incidental to or which may be useful, desirable or convenient in LESSEE'S
exercise of any or all of the rights hereinabove specified which are not in
conflict with applicable state and federal laws and regulations.
1.f. LESSEE may use and enjoy the LEASED PREMISES and exercise
any of the rights granted hereunder by any methods now or heretofore known or
hereafter developed which are not in conflict with applicable state and federal
laws and regulations.
1.g. LESSEE may freely bargain, assign and transfer its rights
titles and interest hereunder, provided however that Asignee complies with all
covenants and agreements of this Lease.
1
<PAGE>
2. This MINERALS LEASE is conditioned upon LESSEE proceeding
diligently and with all reasonable dispatch to explore and develop minerals on
the LEASED PREMISES, and to seek to place the subject property in production.
with a minimum requirement that LESSEE cause to be drilled no less than 300 feet
of core hole or reverse circulation hole within the first 18 months of this
Mineral Lease.
3. LESSOR and LESSEE agrees to execute such additional
documents as are reasonable and necessary in recordable form, and amendment or
amendments to this MINERALS LEASE or any other documents which better describe
the LEASED PREMISES.
4. This MINERALS LEASE shall commence on the date first
above set forth in this instrument, run thereafter for a primary term of six
(6) years and continue thereafter as long as production royalties are being
paid provided, however, that in the event production of minerals in
commercial quantities occurred during the primary term and thereafter ceases
because it is no longer commercially feasible to continue the production of
minerals from the LEASED PREMISES, this MINERAL LEASE shall continue beyond
the expiration of the primary term without the necessity of production of
minerals and/or metals in commercial quantities as long as it is not
commercially feasible to continue production and as long as LESSEE performs
all the covenants it is obligated to perform hereunder including, but not
limited to, the covenant to pay the minimum advance royalty hereinafter
provided.
5. LESSEE shall pay LESSOR a royalty equal to the percentage
(hereinafter set forth) of the NET PROCEEDS (hereinafter defined) received for
all ores, mineral, and/or metals, mined and removed from the LEASED PREMISES and
processed and sold in any chemical, mineral or metallic form, hereinafter
referred to as the "PRODUCT." The percent of the royalty shall be determined by
the amount of NET PROCEEDS per pound of PRODUCT sold during the calendar month.
The royalty percentage shall be two and one half percent (2.5%). The term "NET
PROCEEDS" means the gross amount received by LESSEE, after deducting freight and
handling charges from the point of final treatment to the point of final sale.
The term MARKET VALUE of contained metals and/or minerals shall mean the average
of U.S. Producer or major Suppliers prices, as quoted in Metals Week and as
published in Engineering and Mining Journal (E&MJ) for the month in which the
metals and/or minerals are sold.
6. LESSEE shall prepare and maintain such records as are
reasonable necessary to calculate the royalty due LESSOR hereunder and LESSEE
shall, on written request of LESSOR, furnish copies of such records to LESSOR.
7. Commencing with the date of this Mineral Lease, and on
each anniversary thereafter, LESSEE shall pay LESSOR an annual minimum
advance royalty. The amount of said royalty shall be seven hundred dollars
($700.00) upon execution and $700.00 upon the first anniversary thereof, then
$1400.00 on the 2nd anniversary, $2100.00 on the 3rd anniversary, and
$2800.00 on the 4th and subsequent anniversaries so long as this lease shall
remain in effect. LESSEE shall be entitled to
2
<PAGE>
credit this minimum advance royalty against the production royalty to which the
LESSOR is entitled as set forth above.
8. The following provisions shall be applicable to "WASTE
MATERIAL" which is defined as material mined or extracted from the LEASED
PREMISES which LESSEE in its sole discretion determines not to sell because of
its mineral content, and LESSEE'S determination shall be final and conclusive:
8.a. LESSOR agrees that WASTE MATERIAL may be mined or
otherwise extracted without obligation upon LESSEE to return same to the place
from which extracted. At no time during the term of this MINERAL LEASE or at
any time thereafter shall LESSEE be required to remove any WASTE MATERIAL
deposited by LESSEE on the LEASED PREMISES, except as otherwise provided by
applicable governmental laws, rules and regulations, including those governing
toxic or hazardous waste, in full force and effect on or before the termination
of this MINERAL LEASE.
8.b. All WASTE MATERIAL on the LEASED PREMISES prior to
surrender or termination of this MINERALS LEASE shall be the property of LESSEE,
and LESSOR shall have no right, title or interest whatsoever therein and thereto
until this MINERAL LEASE is surrendered or terminated.
9. With respect to taxes on the LEASED PREMISES:
9.a. LESSEE agrees to pay all taxes levied and assessed against
any improvements placed on the LEASED PREMISES by LESSEE.
9.b. The relationship (in terms of percentage) which the total
royalty which LESSOR receives hereunder during a given taxing period bears to
the total NET PROCEEDS for the same period shall be established by dividing the
total royalty received by LESSOR by the total NET PROCEEDS. LESSOR agrees to pay
that established percentage and LESSEE agrees to pay the balance of such taxes,
assessments, or other governmental levies which are assessed, levied or imposed
on sales or production, as per paragraph 5. LESSEE shall not be obligated to pay
any taxes levied, imposed or assessed against, or measured by reference to
operations upon the LEASED PREMISES which are not conducted by or on behalf of
LESSEE under the terms of this MINERALS LEASE. In the event LESSOR fails to pay
when due any taxes, assessments or other governmental levy against the LEASED
PREMISES (which LESSOR is obligated to pay under this MINERALS LEASE) LESSEE
may, but shall not be obligated to, pay such taxes, assessments or levies,
together with any penalty that may be imposed for failure to pay such when due.
LESSOR agrees to reimburse LESSEE for any payments made for LESSOR hereunder,
together with interest at the rate of 10% per annum from the date such payment
is made by LESSEE, which reimbursement shall be made within ten (10) days after
LESSEE has given written notice to LESSOR that LESSEE has paid such taxes,
assessments or levies. LESSEE shall specify the amount of such taxes,
assessments or levies in its notice to LESSOR. IF
3
<PAGE>
SUCH REIMBURSEMENT IS NOT MADE AS PROVIDED HEREIN, lessee SHALL HAVE THE
RIGHT TO WITHHOLD PAYMENT OF AND RETAIN AS ITS SOLE PROPERTY ANY AND ALL
ROYALTY (including the minimum advance royalty provided above) thereafter due
and payable to LESSOR until the amount of royalty withheld equals the
reimbursement due LESSEE.
10. LESSOR shall have the right to claim the depletion
allowance applicable to the royalty paid LESSOR hereunder.
11. With respect to liens, damages, liability and insurance:
11.a. LESSEE agrees to indemnify LESSOR against, and hold
LESSOR harmless from any and all claims or liability for injury to or death
of persons or for damages to property resulting from LESSEE'S operations
hereunder. LESSEE further agrees to indemnify LESSOR against and hold LESSOR
harmless from any and all claims or liability for materials or labor
resulting from LESSEE'S operations hereunder on the LEASED PREMISES. LESSOR
agrees to notify LESSEE of the existence of such claim as soon as it becomes
known to LESSOR, and further to notifies LESSEE of the institution of any
action, suit or legal proceeding on such claim as soon as the institution of
such action, suit, or other proceedings become known to LESSOR and LESSEE is
given the sole right to defend and/or settle any such claim with attorneys of
its own selection.
11.b. LESSEE further agrees to maintain workman's compensation
as required by Utah State law.
11.c. If LESSOR shall fail to pay any and all amounts due
hereunder, or duly to satisfy and discharge any mortgage or lien on the LEASED
PREMISES, or shall suffer or permit any lien or encumbrance to be imposed upon
the LEASED PREMISES, LESSEE may, at its own option, but shall not be obligated
to, pay any or all unpaid amounts due and payable under, or satisfy and
discharge any such amount so paid or for payments and costs of paying,
satisfying and discharging any such mortgage, lien or encumbrance, by
withholding and retaining as its sole property from royalties (including the
monthly minimum advance royalty) due and payable hereunder the amounts paid by
LESSEE. In case of payment, discharge or satisfaction of a mortgage, lien or
encumbrance LESSEE shall have all the rights and remedies against LESSOR which
the mortgage or lien or the holder of such encumbrance had against the LESSOR
immediately prior to the time of such payment, satisfaction or discharge.
12. LESSOR, or their representative, at their sole risk and at
their sole cost and expense, and subject to such reasonable safety regulations
as may be prescribed by LESSEE, may have access to the LEASED PREMISES during
regular business hours solely for the purpose of inspection of LESSEE'S
operations on the LEASED PREMISES.
13. LESSEE will conduct its operations on the LEASED
PREMISES in accordance with applicable governmental laws, rules and
regulations LESSEE makes no express or implied warranty, covenant or
agreement relating to the exploration, development, mining or other
4
<PAGE>
operation of or upon the LEASED PREMISES or the marketing of any ore or mineral
therefrom. The conduct of any such exploration, development, mining or other
operations, or marketing, and the nature, manner or extent thereof, shall be
matters to be determined within the sole discretion of LESSEE.
14. LESSEE may, at any time and from time to time during the
term of this Lease terminate with respect the LEASED PREMISES, and LESSEE shall
be relieved of all obligations, liability or responsibility of every character
whatsoever thereafter accruing with respect to the LEASED PREMISES by providing
thirty days written notice to LESSOR.
15. LESSOR shall have no right to terminate this MINERALS
LEASE unless LESSEE shall fail to perform according to the terms of this MINERAL
LEASE and LESSOR shall give written notice to LESSEE specifying the nature of
the default. If LESSEE shall not correct such default within thirty (30) days
after said notice is given, this MINERAL LEASE shall terminate. In the event
this lease is terminated, LESSEE shall provide recordable notice of termination
to LESSOR
16. Surrender or termination of this MINERALS LEASE as
provided herein shall not relieve the LESSEE of its obligations hereunder
which remain unperformed at the time of the surrender or termination
including, but not limited to, the obligation to pay all accrued royalties
(including the minimum advance royalty), to pay its share of the taxes as
above provided and to perform the reclamation work as above provided.
17. LESSEE shall have the right at any time within sixty (60)
days following the surrender or termination of this MINERALS LEASE, with respect
to all or any parts of the LEASED PREMISES to remove any and all buildings,
structures, plants, shops, mills, machinery equipment, lines and facilities.
18. LESSEE will maintain the DATA and supply for
examination and copying to LESSOR, or its duly authorized representatives,
the DATA, all additional survey maps, drill hole data, including drill hole
chip boards, ore reserve calculations, mining plans, reclamation plans and
supporting data used to obtain state and/or federal environmental and
operating or mining permits, assay, metallurgical and feasibility reports
relating to the LEASED PREMISES and any maps or diagrams or mine workings
upon the LEASED PREMISES which LESSEE has in its possession or control.
19. Any notice or communication to the parties hereto, or
quitclaim deed shall be deemed to have been sufficiently given for all purposes
hereof if mailed by U.S. Registered or Certified mail, postage prepaid, return
receipt requested, addressed as follows, and the date on the U.S. Post Office
receipt shall be deemed to be the date of mailing:
To LESSOR:
Steve Kosanke and
5
<PAGE>
Mary Lou Kosanke
P.O. Box 193 La Sal Utah 84530
To LESSEE:
MLP /Associates
% Charles E. Carlson
12836 N. 60th Street
Scottsdale, AZ 85254
20. LESSEE'S failure to perform or comply with a particular provision
of this MINERAL LEASE shall be excused if such failure to perform or comply with
that particular provision is caused by circumstances or conditions beyond the
reasonable control of LESSEE, including but not limited to the following: severe
weather, unusual mining casualty, civil or military orders, regulations or
authority, insurrections, riots, strikes, acts of God, war or hostilities
between any nations, governmental orders or regulations, fire accident,
explosion, flood, lockouts, differences with workman, delays of carriers,
commandeering or requisitioning by the government. Circumstances or conditions
which prevent the performance of a particular provision herein shall only
excuse performance of the particular provision, the performance of
which is prevented by those circumstances or conditions, and shall not excuse
the performance of any of the other provisions of this MINERALS LEASE. No
circumstances or conditions shall excuse LESSEE from its obligation to pay
minimum advance royalty under Section 9.
21. LESSOR ("OPTIONOR") hereby grants to LESSEE ("OPTIONEE")
an irrevocable exclusive option to purchase all of the OPTIONOR'S rights, titles
and interest in and to the property comprising the LEASED PREMISES:
21.a. The option is exercised at any time while this MINERALS
LEASE is in full force and effect, for the sum of one hundred thousand dollars
($100,000.00) in cash or certified funds.
21.b. Simultaneous with the exercise of the option, OPTIONOR
shall execute and deliver to OPTIONEE such deeds, assignments and other
instruments, as are necessary to convey the LEASED PREMISES to OPTIONEE.
21.c. The purchase price shall be reduced by sum of all
royalties paid under section (5.) of this lease.
22. This MINERALS LEASE shall be governed by and construed and
enforced in accordance with the laws of the State of Utah.
23. LESSEE shall comply and conform with all requirements of
federal, local and state government relating to annual assessment work and fees
in effect as of the date of this lease. Additionally, LESSEE agrees to perform
the Sept. 1, 1992-1993 assessment work and Federal Fees of $100.00 per claim for
the Sept. 1, 1992-1293, year, and LESSEE will perform said assessments and pay
said $100.00 per claim fees for each subsequent year in which the lease
continues in effect.
6
<PAGE>
24. This MINERAL LEASE contains the entire agreement by and
between LESSOR and LESSEE and no oral agreement, promise, statement or
representation which is not contained herein shall be binding on LESSOR or
LESSEE. No amendment or modification of this MINERALS LEASE shall become
effective unless and until the same shall have been reduced to writing and duly
signed, executed and acknowledged by the parties hereto.
25. This MINERAL LEASE may be executed in counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Minerals
Lease as of the day and year first above written.
LESSOR
Steve Kosanke and Mary Lou Kosanke
/s/ Steve Kosanke
-------------------------------------
/s/ Mary Lou Kosanke
-------------------------------------
LESSEE
MLP ASSOCIATES, LTD.
By /s/ Charles E. Carlson
-----------------------------------
Charles E. Carlson, General Partner
STATE OF UTAH )
: ss.
County of San Juan )
On this 28th day of October, 1992, personally appeared before me
Steve Kosanke and Mary Lou Kosanke, signer of the foregoing instrument.
/s/ Jacque Bane
[SEAL] -------------------------------------
Notary Public
Residing at La Sal, Utah
-------------------------
My Commission Expires:
March 4, 1996
- ----------------
7
<PAGE>
STATE OF ARIZONA )
: ss.
County of Maracopa )
On this 2 day of November, 1992, personally appeared before me
Charles E. Carlson, one of the signers of the foregoing instrument, who duly
acknowledged to me that he executed the same on behalf of MLP Associates, A
Colorado Limited Partnership.
/s/ Melanie Konski
--------------------------------------
Notary Public
Residing at Phoenix, AZ
--------------------------
My Commission Expires:
[SEAL]
7-27-95
- -------
8
<PAGE>
MINERAL LEASE APPENDIX A
Leased Premises
The following unpatented mining claims are located in San Juan County Utah, and
duly recorded on the books of the County Recorder, San Juan County, Utah
Claim name Book Page UMC#
Oxide I 707 734 330928
Oxide 2 707 735 330929
Oxide 3 705 119 327778
Oxide 4 705 120 327779
Oxide 5 705 121 327780
Oxide 6 705 122 327781
Oxide Fraction 708 345 331632
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<PAGE>
EXHIBIT 10.6
MINERAL LEASE
RECITALS
WHEREAS J. F. Costanza and Joyce L. Costanza are holder of valid unpatented
mineral claims known as the "Security" claims, located in San Juan County, Utah,
and
Costanzas are LESSEES under Utah State Metalliferous Lease ML 20569, and
Costanzas did, on the 5th day of January, 1983 grant, bargain and quit
claim unto Raymond E. Kunkel and Paul B. Clemons, the right to mine copper on
and under the parts of said claims within 500 feet of surface, said quit claim
being recorded on book 661, page 294-295, and
Costanzas and MLP Associates now desire to enter into a lease for the
remaining rights to mine copper and other metals, excluding vanadium and Uranium
on said Security Claims, and additionally to grant MLP Associates a option to
purchase the remaining vanadium and uranium rights retained by Costanzas, and
additionally to assign all of Costanza's rights under the Utah State
Metalliferous Lease ML 20569 unto MLP Associates,
THEREFORE:
This Mineral Lease is entered into as of the 3ed days of
August, 1992, by and between J. F. Costanza and Joyce L. Costanza ("LESSOR"),
whose mailing address is P.O. Box 813, Mazatalon, Sinoloa, Mexico, and
MLP Associates, A Colorado Limited Partnership ("LESSEE"), whose mailing address
is 12836 N. 60th Street, Scottsdale, Arizona 85254.
1. The "LEASED PREMISES shall include of the rights,
titles, interests and expectancy of the LESSOR, in and to the "SECURITY" CLAIMS
located in San Juan County, Utah, as described in APPENDIX "A" hereto and a part
hereof, as defined and Limited herein,
l.a. For and in consideration of the mutual covenants and
agreements hereinafter set forth, in further consideration of good and valuable
consideration received by LESSOR from LESSEE,
1
<PAGE>
LESSOR does hereby lease, let and demise exclusively to LESSEE all of the
right, title and interest of the LESSOR in and to the LEASED PREMISES, except
the right, titles and interest in and to vanadium and uranium contained therein,
and LESSOR hereby grants exclusively to LESSEE said rights titles and interests
of LESSOR, to occupy, use, enjoy and possess the LEASED PREMISES, including, but
not limited to, the following:
1.b. To explore for, mine or otherwise extract, to mill,
treat or otherwise process, and to store, stockpile, remove, market, sell or
otherwise dispose of ore and minerals, except vanadium and uranium.
1.c. To dispose of or deposit waste material and tailings
on the LEASED PREMISES.
1.d. To construct, use, maintain, repair, replace and
relocate in or upon the LEASED PREMISES buildings, shops, plants, machinery,
mills, facilities, ore bins and structure of all kinds, roads, shafts, inclines,
tunnels, drifts, open pits, pipelines, telephone lines, electric transmission
lines and transportation facilities and other utilities.
1.e. To use any underground water now existing or
subsequently discovered or developed in or upon the LEASED PREMISES.
1.f. To exercise any and all other rights and privileges
which are incidental to or which may be useful, desirable or convenient in
LESSEE'S exercise of any or all of the rights hereinabove specified which are
not in conflict with applicable state and federal laws and regulations.
1.g. LESSEE may use and enjoy the LEASED PREMISES and
exercise any of the rights granted hereunder by any methods now or heretofore
known or hereafter developed.
1.h. Notwithstanding the above, LESSEE SHALL CONDUCT ALL
EXPLORATION AND MINING ACTIVITIES IN SUCH A MANNER AS NOT TO INTERFERE WITH ANY
VANADIUM OR URANIUM MINING, EXPLORATION OR PROCESSING FACILITY EXISTING OR
TECHNICALLY PLANNED FOR AT THE TIME OF said activities is commenced,
2
<PAGE>
3. LESSOR and LESSEE agree to execute such additional
documents as are reasonable and necessary to insure and confirm that the OTHER
PROPERTY is covered by this MINERALS LEASE. Without limiting the foregoing,
LESSOR agrees that, promptly upon the request of LESSEE, LESSOR shall make,
execute, acknowledge and deliver to LESSEE, in recordable form, and amendment or
amendments to this MINERALS LEASE or any other documents which better describe
the LEASED PREMISES.
4. This MINERALS LEASE shall commence on the date first
above set forth in this instrument, run thereafter for a primary term of six (6)
years and continue thereafter as long as minerals are being produced from the
LEASED PREMISES in commercial quantities, unless sooner terminated or
surrendered as hereinafter set forth; provided, however, that in the event
production of minerals in commercial quantities occurred during the primary term
and thereafter ceases because it is no longer commercially feasible to continue
the production of minerals from the LEASED PREMISES, this MINERAL LEASE shall
continue beyond the expiration of the primary term without the necessity of
production of minerals and/or metals in commercial quantities as long as it is
not commercially feasible to continue production and as long as LESSEE performs
all the covenants it is obligated to perform hereunder including, but not
limited to, the covenant to pay the monthly minimum advance royalty hereinafter
provided.
5. LESSEE shall pay LESSOR a royalty equal to the
percentage (hereinafter set forth) of the NET PROCEEDS (hereinafter defined)
received for all mineral, and/or metals, mined and removed from the LEASED
PREMISES and processed and sold in any chemical, mineral or metallic form,
hereinafter referred to as the "PRODUCT." The percent of the royalty shall be
determined by the amount of NET PROCEEDS per pound of PRODUCT sold during
the calendar month. The royalty percentage shall be two percent (2%). The
term "NET PROCEEDS" means the gross amount received by LESSEE, after
deducting freight and handling charges from the point of final treatment to
the point of final sale, from an arms-length bona fide sale of PRODUCT to a
purchaser. The term MARKET VALUE of contained metals and/or minerals shall
mean the average of U.S. Producer or major Suppliers prices, as quoted in
Metals Week and as published in Engineering and Mining Journal (E&MJ) for the
month in which the metals and/or minerals are sold.
3
<PAGE>
6. LESSEE shall pay all royalties previously reserved and
all royalties due and owing on the underlying leases and subleases with respect
to the LEASED PREMISES.
7. LESSEE shall prepare and maintain such records as are
reasonably necessary to calculate the royalty due LESSOR hereunder and the
royalty due on the underlying leases and subleases. LESSEE shall, on written
request of LESSOR, furnish copies of such records to LESSOR.
8. The following provisions shall be applicable to "WASTE
MATERIAL" which is defined as material mined or extracted from the LEASED
PREMISES which LESSEE in its sole discretion determines not to sell because of
its mineral content, and LESSEE'S determination shall be final and conclusive:
8.a. LESSOR agrees that WASTE MATERIAL may be mined or
otherwise extracted without obligation upon LESSEE to replace the same. At no
time during the term of this MINERALS LEASE or at any time thereafter shall
LESSEE be required to remove any WASTE MATERIAL deposited by LESSEE on the
LEASED PREMISES, except as otherwise provided by applicable governmental laws,
rules and regulations in full force and effect on or before the termination of
this MINERALS LEASE.
8.b. All WASTE MATERIAL on the LEASED PREMISES prior to
surrender or termination of this MINERALS LEASE shall be the property of LESSEE,
and LESSOR shall have no right, title or interest whatsoever therein and thereto
until this MINERALS LEASE is surrendered or terminated.
8.c. All WASTE MATERIAL on the LEASED PREMISES after
surrender or termination of this MINERALS LEASE shall be the property of
LESSOR, and LESSEE shall have no right, title or interest whatsoever therein
or thereto after this MINING LEASE is surrendered or terminated.
9. With respect to taxes and fees and assessments:
4
<PAGE>
9.a. LESSEE agrees to pay all taxes levied and assessed
against LESSEE on the LEASED PREMISES, and any improvements placed on the LEASED
PREMISES by LESSEE.
9.b. The relationship (in terms of percentage) which the
total royalty which LESSOR receives hereunder during a given taxing period bears
to the total NET PROCEEDS for the same period shall be established by dividing
the total royalty received by LESSOR by the total NET PROCEEDS. LESSOR agrees to
pay that established percentage and LESSEE agrees to pay the balance of such
taxes, assessments, or other governmental levies which are assessed, levied or
imposed:
9.b.(l) Against the LEASED PREMISES solely by reason of
LESSEE'S operations on the LEASED PREMISES.
9.b.(2) Against the minerals in or on the LEASED PREMISES
in all unsevered state.
9.b.(3) Any occupation, severance, production or net
proceeds of mines taxes, if any, imposed for, resulting from or measured by
reference to the removal of ore and or minerals by the LESSEE.
9.c. LESSEE shall not be obligated to pay any taxes
levied, imposed or assessed against, or measured by reference to operations
upon the LEASED PREMISES which are not conducted by or on behalf of LESSEE
under the terms of this MINERALS LEASE. In the event LESSOR fails to pay when
due any taxes, assessments or other governmental levy against the LEASED
PREMISES (which LESSOR is obligated to pay under this MINERALS LEASE) LESSEE
may, but shall not be obligated to, pay such taxes, assessments or levies,
together with any penalty that may be imposed for failure to pay such when
due. LESSOR agrees to reimburse LESSEE for any payments made for LESSOR
hereunder, together with interest at the rate of 10% per annum from the date
such payment is made by LESSEE, which reimbursement shall be made within ten
(10) days after LESSEE has given written notice to LESSOR that LESSEE has
paid such taxes, assessments or levies. LESSEE shall specify the amount of
such taxes, assessments or levies in its notice to LESSOR. IF SUCH
REIMBURSEMENT IS NOT MADE AS PROVIDED HEREIN, lessee SHALL HAVE THE RIGHT TO
WITHHOLD PAYMENT OF AND RETAIN AS ITS SOLE
5
<PAGE>
PROPERTY ANY AND ALL ROYALTY (including the monthly minimum advance royalty
provided above) thereafter due and payable to LESSOR until the amount of royalty
withheld equals the reimbursement due LESSEE.
10. LESSOR shall have the right to claim the depletion
allowance applicable to the royalty paid LESSOR hereunder.
11. With respect to liens, damages, liability and
insurance:
11.a. LESSEE agrees to indemnify LESSOR against, and hold
LESSOR harmless from any and all claims or liability for injury to or death of
persons or for damages to property other than the LEASED PREMISES, resulting
from LESSEE'S operations hereunder. LESSEE further agrees to indemnify LESSOR
against and hold LESSOR harmless from any and all claims or liability for
materials or labor resulting from LESSEE'S operations hereunder on the LEASED
PREMISES. LESSEE'S obligations hereunder shall not apply to any claim unless
LESSOR notify LESSEE of the existence of such claim as soon as it becomes known
to LESSOR, and further notifies LESSEE of the institution of any action, suit or
legal proceeding on such claim as soon as the institution of such action, suit,
or other proceedings become known to LESSOR and LESSEE is given the sole right
to defend and/or settle any such claim with attorneys of its own selection.
11.b. LESSEE further agrees to maintain workman's
compensation as required by Utah State law.
11.c. If LESSOR shall fail to pay any and all amounts due
hereunder, or duly to satisfy and discharge any mortgage or lien on the
LEASED PREMISES, or shall suffer or permit any lien or encumbrance to be
imposed upon the LEASED PREMISES, LESSEE may, at its own option, but shall
not be obligated to, pay any or all unpaid amounts due and payable under, or
satisfy and discharge any such amount so paid or for payments and costs of
paying, satisfying and discharging any such mortgage, lien or encumbrance, by
withholding and retaining as its sole property from royalties (including the
monthly minimum advance royalty) due and payable hereunder the amounts paid
by LESSEE. In case of payment, discharge or satisfaction of a mortgage, lien
or encumbrance LESSEE shall have all the rights and remedies against LESSOR
which the
6
<PAGE>
mortgage or lien or the holder of such encumbrance had against the LESSOR
immediately prior to the time of such payment, satisfaction or discharge. Upon
the request of LESSEE, LESSOR shall promptly make, execute, acknowledge and
deliver to LESSEE any and all instruments which LESSEE in its sole judgment
shall deem necessary or desirable to effectuate fully the provisions of this
Section.
12. LESSOR, or their representative, at their sole risk
and at their sole cost and expense and subject to such reasonable safety
regulations as may be prescribed by LESSEE, may have access to the LEASED
PREMISES during regular business hours solely for the purpose of inspection of
LESSEE'S operations on the LEASED PREMISES.
13. LESSEE will conduct its operations on the LEASED
PREMISES in accordance with applicable governmental laws, rules and regulations.
LESSEE makes no express or implied warranty, covenant or agreement relating to
the exploration, development, mining or other operation of or upon the LEASED
PREMISES or the marketing of any ore or mineral therefrom. The conduct of any
such exploration, development, mining or other operations, or marketing, and the
nature, manner or extent thereof, shall be matters to be determined within the
sole discretion of LESSEE. LESSEE shall have no obligation, liability or
responsibility whatsoever to LESSOR for damages or injury to the LEASED PREMISES
arising out of, or caused by, or in any way connected with the operations
conducted by LESSEE upon, in and through the LEASED PREMISES.
14. LESSEE may, at any time and from time to time during
the term of this Lease, execute and deliver to LESSOR, in accordance with the
notice provisions hereinafter set forth, or deliver for recording to the
RECORDER'S OFFICE a quitclaim deed, quitclaiming to LESSOR or its successors in
interest all or any part of the LEASED PREMISES and immediately upon such
delivery this MINERAL LEASE shall terminate with respect to such part or all, as
the case may be, of the LEASED PREMISES, and LESSEE shall be relieved of all
obligations, liability or responsibility of every character whatsoever
thereafter accruing with respect to that part of all, as the case may be, of the
LEASED PREMISES. If such delivery is to the RECORDER'S OFFICE, LESSEE shall
deliver a copy of such quitclaim deed to LESSOR.
15. LESSOR shall have no right to terminate this
7
<PAGE>
MINERALS LEASE unless LESSEE shall fail to perform according to the terms of
this MINERALS LEASE and LESSOR shall give written to LESSEE specifying the
nature of the default. If LESSEE shall not correct such default within thirty
(30) days after said notice is given, this NEW MINERAL LEASE shall terminate.
16. Surrender or termination of this MINERALS LEASE as
provided herein shall not relieve the LESSEE of its obligations hereunder which
remain unperformed at the time of the surrender or termination including, but
not limited to, the obligation to pay all accrued royalties (including the
monthly minimum advance royalty), to pay its share of the taxes as above
provided, to perform assessment work, pay fees and to perform the reclamation
work as above provided.
17. LESSEE shall have the right at any time within sixty
(60) days following the surrender or termination of this MINERALS LEASE, with
respect to all or any parts of the LEASED PREMISES to remove any and all
buildings, structures, plants, shops, mills, machinery equipment, lines and
facilities.
18. LESSEE will maintain the DATA and make available for
examination and copying by LESSOR, or its duly authorized representatives, the
DATA, all additional survey maps, drill hole data, including drill hole chip
boards, ore reserve calculations, mining plans, reclamation plans and supporting
data used to obtain state and/or federal environmental and operating or mining
permits, assay, metallurgical and feasibility reports relating to the LEASED
PREMISES and any maps or diagrams or mine workings upon the LEASED PREMISES
which LESSEE has in its possession or control.
19. Any notice or communication to the parties hereto, or
quitclaim deed shall be deemed to have been sufficiently given for all purposes
hereof if mailed by U.S. Registered or Certified mail, postage prepaid, return
receipt requested, addressed as follows, and the date on the U.S. Post Office
receipt shall be deemed to be the date of mailing:
8
<PAGE>
To LESSOR:
J. F. Costanza and Joyce L. Costanza
484 Sundial
Moab, Utah 84532
TO LESSEE:
MLP /Associates
% Charles E. Carlson
12836 N. 60th Street
Scottsdale, AZ 85254
20. LESSEE'S failure to perform or comply with a
particular provision of this MINERAL LEASE shall be excused if such failure to
perform or comply with that particular provision is caused by circumstances or
conditions beyond the reasonable control of LESSEE, including but not limited to
the following: severe weather, unusual mining casualty, civil or military
orders, regulations or authority, insurrections, riots, strikes, acts of God,
war or hostilities between any nations, embargoes, governmental orders or
regulations, fire accident, explosion, flood, lockouts, differences with
workman, delays of carriers, lack of transportation facilities, commandeering or
requisitioning by the government, inability to obtain raw materials or the
insurance required hereon, curtailment of or failure in obtaining sufficient
electrical power. Circumstances or conditions which prevent the performance of a
particular provision herein shall only excuse performance of the particular
provision, the performance of which is prevented by those circumstances or
conditions, and shall not excuse the performance of any of the other provisions
of this MINERALS LEASE.
21. LESSOR ("OPTIONOR") hereby grants to LESSEE
("OPTIONEE") an irrevocable exclusive option to purchase all of the OPTIONOR'S
rights, titles and interest in and to the property comprising the LEASED
PREMISES, including but not limited to, all rights to vanadium and uranium,
under the following terms:
21.a. The option is exercised at any time while this
9
<PAGE>
MINERALS LEASE is in full force and effect, for the sum of two million dollars
($2,000,000.00) in cash or certified funds.
21.b. Simultaneous with the exercise of the option, OPTIONOR
shall execute and deliver to OPTIONEE such deeds, assignments and other
instruments, as are necessary to convey the LEASED PREMISES to OPTIONEE.
21.c. The purchase price shall be reduced by the sum of all
royalties paid under section 5. of this lease.
22. This MINERALS LEASE shall be governed by and construed
and enforced in accordance with the laws of the State of Utah.
23. As further consideration for this lease LESSOR agree
to assign all their right, titles and interest in and to UTAH STATE
METALLIFEROUS LEASE ML 20569 unto MLP Associates, and to execute such documents
as are required to carry our such assignment.
24. This MINERALS LEASE contains the entire agreement by
and between LESSOR and LESSEE and no oral agreement, promise, statement or
representation which is not contained herein shall be binding on LESSOR or
LESSEE. No amendment or modification of this MINERALS LEASE shall become
effective unless and until the same shall have been reduced to writing and duly
signed, executed and acknowledged by the parties hereto.
25. This MINERALS LEASE may be executed in counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Termination of Existing Minerals Lease, Bill of Sale and New Minerals as of
the day and year first above written.
LESSOR
J. F. Costanza and Joyce L Costanza
/s/ J. F. Costanza /s/ Joyce L. Costanza
- ----------------------------------- ----------------------------------------
10
<PAGE>
LESSEE
MLP ASSOCIATES, LTD.
By
------------------------------------
Charles E. Carlson, General Partner
STATE OF UTAH )
: ss.
County of Grand )
On this 25 day of August, 1992, personally appeared before me
J. F. Costanza an Joyce L Costanza signer of the foregoing instrument.
/s/ J. L. McDorman
----------------------------------------
Notary Public
Residing at Moab
My Commission Expires: 6-20-96
STATE OF AZ )
: ss.
County of Maracopa)
On this 3 day of August, 1992 personally appeared before me
Charles E. Carlson, one of the signers of the foregoing instrument, who duly
acknowledged to me that he executed the same on behalf of MLP Associates, A
Colorado Limited Partnership.
/s/ Melanie Konski
----------------------------------------
Notary Public
Residing at Phoenix, AZ
My Commission Expires: 7-27-95
11
<PAGE>
MINERAL LEASE APPENDIX A
"SECURITY" CLAIMS
LISBON VALLEY PROSPECT
SAN JUAN COUNTY, UTAH
TOWNSHIP 30 SOUTH, RANGE 26 EAST, S.L.M.
SECTION 31
TOWNSHIP 31 SOUTH, RANGE 26 EAST, S.L.M.
SECTIONS 5, 6
Date Recorded Date BLM
Claim Name Located in County Book/Page Filing BLM UMC No.
- ---------- ------- --------- --------- ------ -----------
Security #3 12/22/65 1/18/66 377/402 10/15/79 UMC 140827
Security #5 12/22/65 1/18/66 377/403 10/15/79 UMC 140607
Security #7 12/22/65 1/18/66 377/404 10/15/79 UMC 140608
Security #9 12/22/65 1/18/66 377/405 10/15/79 UMC 140609
Security #11 12/22/65 1/18/66 377/406 10/15/79 UMC 140610
Security #14 12/22/65 1/18/66 377/407 10/15/79 UMC 140611
Security #15 12/22/65 1/18/66 377/408 10/15/79 UMC 140612
Security #16 12/22/65 1/18/66 377/409 10/15/79 UMC 140613
Security #18 12/22/65 1/18/66 377/410 10/15/79 UMC 140614
Security #19 12/22/65 1/18/66 377/411 10/15/79 UMC 140615
Security #20 12/22/65 1/18/66 377/412 10/15/79 UMC 140616
Security #25 12/22/65 1/18/66 377/413 10/15/79 UMC 140617
Security #26 12/22/65 1/18/66 377/414 10/15/79 UMC 140618
Security #27 12/22/65 1/18/66 377/415 10/15/79 UMC 140619
Security #28 12/22/65 1/18/66 377/416 10/15/79 UMC 140620
Security #29 12/22/65 1/18/66 377/417 10/15/79 UMC 140621
Security #30 12/22/65 1/18/66 377/418 10/15/79 UMC 140622
Security #31 12/22/65 1/18/66 377/419 10/15/79 UMC 140623
Security #32 12/22/65 1/18/66 377/420 10/15/79 UMC 140624
Security #33 12/22/65 1/18/66 377/421 10/15/79 UMC 140625
Security #34 12/22/65 1/18/66 377/422 10/15/79 UMC 140626
Security #35 12/22/65 1/18/66 377/423 10/15/79 UMC 140627
Security #36 12/22/65 1/18/66 377/424 10/15/79 UMC 140628
Security #37 12/22/65 1/18/66 377/425 10/15/79 UMC 140629
Security #38 12/22/65 1/18/66 377/426 10/15/79 UMC 140630
Security #39 12/22/65 1/18/66 377/427 10/15/79 UMC 140631
Security #40 12/22/65 1/18/66 377/428 10/15/79 UMC 140632
Security #41 12/22/65 1/18/66 377/429 10/15/79 UMC 140633
Security #42 12/22/65 1/18/66 377/430 10/15/79 UMC 140634
Security #43 12/22/65 1/18/66 377/431 10/15/79 UMC 140635
Security #44 12/22/65 1/18/66 377/432 10/15/79 UMC 140636
Security #45 12/22/65 1/18/66 377/433 10/15/79 UMC 140637
Security #46 12/22/65 1/18/66 377/434 10/15/79 UMC 140638
Security #47 12/22/65 1/18/66 377/435 10/15/79 UMC 140639
Security #48 12/22/65 1/18/66 377/436 10/15/79 UMC 140640
Security #49 1/28/66 2/24/66 378/341 10/15/79 UMC 140641
Security #50 1/28/66 2/24/66 378/342 10/15/79 UMC 140642
Security #51 1/28/66 2/24/66 378/343 10/15/79 UMC 140643
Security #52 1/28/66 2/24/66 378/344 10/15/79 UMC 140644
Security #53 1/28/66 2/24/66 378/345 10/15/79 UMC 140645
Security #54 1/28/66 2/24/66 378/346 10/15/79 UMC 140646
Security #55 1/28/66 2/24/66 378/347 10/15/79 UMC 140647
Security #56 1/28/66 2/24/66 378/348 10/15/79 UMC 140648
<PAGE>
EXHIBIT 10.7
Form Approved 8/16/85
SPECIAL USE LEASE AGREEMENT NO. 707
Fund: School
The STATE OF UTAH, acting by and through the DIVISION OF STATE LANDS &
FORESTRY, LESSOR, hereby leases to Kelmine Corporation, LESSEE, P.O. Box 1383,
Moab, UT 84532, the following described tract of State land in San Juan County,
Utah, to-wit:
T30S, R25E SLB&M San Juan
----------------
Sec. 36: NW4 (portions within,
NE4SW4 (portions within)
Containing 55.25 acres
TO HAVE AND TO HOLD for a term of Sixteen (16) years, beginning as of
August 1, 1986, subject to any and all existing valid rights in said land and
subject also to the following terms and conditions. LESSOR and LESSEE enter into
this Special Use Lease Agreement for the purpose that LESSEE develop the land in
the manner hereinafter described and consistent with the principles and
objectives of land development expressed and implicit in the Enabling Act of
Utah (Act of July 16, 1894, Ch. 138, 28 Stat. 107) and Article X of the
Constitution of the State of Utah.
1. The subject tract shall be used by LESSEE for the purpose of a copper
ore processing plant. All improvements constructed on the subject tract shall
comply with the applicable provisions of the Uniform Building Code, Current
Edition, International Conference of Building Officials.
2. LESSEE shall pay, to the LESSOR as rental, for the subject tract the
sum of $1000.00 per annum for the first year period of this lease. LESSOR
acknowledges the receipt of $1000.00 which is payment of this rental for the
year August 1, 1986 through July 31, 1987, plus the $50.00 application fee.
Failure to pay the rental for a period of one month from the date such rent
is due, and upon expiration of a written notice from LESSOR to LESSEE
requiring performance within thirty (30) days, shall work a forfeiture of
this lease.
<PAGE>
SULA 707
Page No. 2
3. LESSEE agrees that LESSOR shall have the right to adjust the annual
rentals as provided for in PARAGRAPH 2 at the end of each one (1) year period as
LESSOR shall deem to be reasonably necessary in the best interest of the State.
LESSEE also agrees that at the end of five (5) years from the date of this
lease, and, if necessary, for each two (2) year period thereafter, LESSEE has
not developed the land as proposed in Paragraph (1), LESSEE shall then be
required to appear before the Board of State Lands and show that it has
exercised due diligence toward development of the land. If LESSEE fails to show
due diligence, then LESSEE agrees that LESSOR may at its option, terminate this
lease agreement as to any or all the land leased hereunder. In the event LESSOR
so terminates, LESSEE's interest in the land shall revert to the State.
4. LESSEE, in exercising the privileges granted by this lease, shall
comply with the provisions of all valid Federal, State, County, and Municipal
laws, ordinances, and regulations which are applicable to the subject tract and
operations covered by this lease.
5. The acquisition or assumption by another party under an agreement with
the LESSEE of any right or obligation of the LESSEE under this lease shall be
ineffective as to the LESSOR unless and until LESSOR shall have been notified of
such agreement and shall have recognized and approved the same in writing, and
in no case shall such recognition or approval: (i) operate to relieve the LESSEE
of the responsibilities or liabilities assumed to LESSOR as hereunder; or (ii)
be given unless such other party is acceptable to LESSOR as a lessee, and
assumes in writing all of the obligations of the LESSEE under the terms of this
lease as to the balance of the term thereof, or acquires the rights in trust as
security and subject to such conditions as be necessary for protection of the
public interests.
6. LESSEE shall be bound by all of the provisions, conditions, and
prohibitions of Chapter 14 of Title 73, Utah Code Annotated (1953) as amended.
No waste or by-products shall be discharged which contain any substance in
concentrations which will result in substantial harm to fish and wildlife, or to
human water supplies. Storage facilities for materials capable of causing water
pollution, if accidentally discharged, shall be located so as to prevent any
spillage into waters, or channels leading into water, that would result in
substantial harm to fish and wildlife or to human water supplies.
7. LESSEE shall take reasonable precautions to protect, in place, all
public land survey monuments and private property corners.
<PAGE>
SULA NO. 707
Page No. 3
8. LESSEE agrees to permit LESSOR free and unrestricted access to and
upon the subject tract at all reasonable times for all lawful and proper
purposes not inconsistent with the intent of this lease or with the reasonable
exercise and enjoyment by the LESSEE of the rights and privileges granted
herein.
9. It is hereby understood and agreed that all treasure-trove and all
articles of antiquity in or upon the subject lands are and shall remain the
property of the of Utah. LESSEE shall report any discovery of a "site" or
"specimen" to the Division of State History in compliance with the provisions of
Section 63-18-27, Utah Code Annotated (1953), as amended.
10. This lease may be terminatee by LESSOR upon breach of any conditions
hereof. If LESSOR determines that the LESSOR, its assigns or successors in
interest have breached any conditions of this lease, LESSOR shall notify the
breaching party (parties) in writing by certified mail, return receipt
requested, specifying the particular breach. The breaching party (parties) shall
have thirty, (30) days from the date of such notice, or such longer period as
may be required under the circumstances as approved by the Division to correct
such breach. If breaching party (parties) fails (fail) to correct such breach
within such period, LESSOR may terminate this lease upon thirty (30) days
notice; provided, however, such termination shall not release breaching party
(parties) from liability for damage prior to such termination.
11. This lease is made pursuant to the provisions of all applicable laws
and subject to the rules and regulations of the departments and agencies of the
State of Utah presently in effect and to such laws, rules and regulations as may
be hereafter promulgated by the State.
12. LESSEE agrees at the time of commencement of construction to furnish a
bond with an approved corporate surety company authorized to transact business
in the State of Utah, or such other surety as may be acceptable to the LESSOR,
in the penal sum of not more than Five Thousand Dollars ($5,000.00) conditioned
upon full compliance with all terms and conditions of this lease and the Rules
and Regulations relating hereto.
13. LESSEE shall permit any authorized representative cf the LESSOR
to examine all books and records pertaining to its operations and royalties
payable to LESSOR under the lease at their regular place of business with
reasonable notice, and to make copies of and extracts from such books and
records if desired.
<PAGE>
SULA 707
Page No. 4
14. LESSEE shall neither commit nor permit any waste on the said leased
lands. LESSEE shall maintain said lands in good condition and at its own
expense, free from any nuisance. Surface areas will be cleaned of all trash
and debris to the satisfaction of the LESSOR. LESSEE shall maintain the leased
premises to standards of repair, orderliness, neatness, sanitation, and safety
as required by law and applicable regulations.
15. LESSEE shall have the right to remove any improvements and any
personal property placed on the lands by LESSEE, provided that the same shall be
removed within sixty (60) days after the expiration of the term of this lease,
provided that the LESSEE shall properly restore any damage caused thereby to the
subject tract or any improvements remaining thereof; provided further, that
LESSOR shall also have the right to retain without compensation to LESSEE, but
with costs of removal and disposal chargeable to LESSEE, those improvements and
items of personal property left upon the leased premises beyond sixty (60) days
after the expiration of this lease.
16. LESSEE assumes liability for and agrees to indemnify LESSOR for and
against any and all liability, including attorney's fees, of any nature imposed
upon, incurred by, or asserted against LESSOR which in any way relates to or
arises out of the activity or presence upon the premises of LESSEE, its
servants, employees, agents, sublessees, assignees or invitees.
17. LESSEE shall not assign this lease, in whole or in part, nor sublease
the leased premises, nor allow unauthorized or commercial use of the premises
without obtaining the prior written consent of LESSOR.
18. LESSEE expressly reserves the right to lease said lands to third
parties for mineral exploration and/or development purposes together with the
right to grant the mineral lessee reasonable access by ingress and egress to and
from the mineral estate through the surface estate in connection with mineral
exploration and/or develonment, but without damage to improvements made by
LESSEE.
19. LESSOR claims titlia in fee simple, but does not warrant to LESSEE the
validity of title to the leased premises. LESSEE shall have no claim from
damages or refund against the LESSOR for any claimed failure or deficiency of
LESSOR's title to said lands or for interference by any third party.
20. If LESSEE shall initiate or establish any water rights on the leased
premises, such right shall become an appurtenance of the leased premises. LESSEE
agrees that any existing application to appropriate water on said State land
shall be transferred to the Division of State Lands after the application has
been completed,
<PAGE>
SULA NO. 707
Page No. 5
without any cost to the State. It is expressly understood and agreed that this
lease does not confer any rights upon LESSEE to use any water presently
developed on the subject lands.
21. LESSEE shall at all times observe reasonable precautions to prevent
fire on the leased premises and shall comply with all applicable laws and
regulations of any governmental agency having jurisdiction. In the event of a
fire on the leased premises proximately caused by LESSEE, its servants,
employees, agents, sublessees, assignees or licensees which necessitates
suppression action by the State Forester, LESSEE agrees to reimburse LESSOR
for the cost of such fire suppression action.
22. LESSEE shall comply with any and all valid sanitation and pollution
regulations prescribed by any governmental agency having jurisdiction; and the
LESSEE agrees to indemnify LESSOR for any damage which LESSOR may suffer which
arises out of the improper or unlawful disposal of refuse associated with said
land.
23. LESSEE may fence the leased premises at his own expense, but if there
is no fence erected, LESSEE shall have no right of action against any other
State grazing permittee by reason of a trespass upon the leased premises.
24. In the event of any breach of this agreement, the party at fault shall
pay all costs of enforcing the same, including reasonable attorney's fees.
25. Any notice contemplated herein to be served upon LESSEE shall be in
writing and shall be deemed sufficient if deposited in the United State mail,
postage prepaid and certified or registered, and addressed as follows:
Kelmine Corporation
P.O. Box 1383
Moab, UT 84532
or at any such other address as LESSEE may from time to time designate by
written notice to LESSOR.
26. The provisions hereof shall inure to and be binding upon the
successors and assigns of LESSEE.
<PAGE>
SULA NO. 707
Page No. 6
27. IN WITNESS WHEREOF, the Director of the Utah Division of State Lands
and Forestry has executed this instrument as of the 15th day of December, 1986,
by authority of a resolution of the Board of State Lands, dated January 20,
1982.
LESSOR: STATE OF UTAH
DIVISION OF STATE LANDS AND
FORESTRY
355 West North Temple
3 Triad Center, Suite 400
Salt Lake City, UT 84180
By: /s/ Ralph A. Miles
------------------------
LESSEE: Kelmine Corporation
P.O. Box 1383
Moab, UT 84532
By: /s/ [Illegible]
------------------------
STATE OF UTAH )
: SS.
)
COUNTY OF SALE LAKE
On the 15th day of December, 1986, personally appeared before me Ralph A.
Miles, who being by me duly sworn did say that he is the Director of the
Division of State Lands and Forestry of the State of Utah, and that said
instrument was signed in behalf of said Board by resolution of the Board, and
said Ralph A. Miles acknowledged to me that said Board executed the same in
behalf of the State of Utah.
Given under my hand and seal this 15th of December, 1986.
/s/ Cherrie Clay
----------------------------------
Notary Public, residing at: [Illegible]
My Commission Expires: 6/26/88
APPROVED AS TO FORM:
UTAH ATTORNEY GENERAL
DAVID L. WILKINSON
BY: /S/ David S. Christensen
-------------------------------
<PAGE>
SULA NO. 707
Page No. 7
28.
STATE OF UTAH )
: SS
COUNTY OF )
On the 5th day of December, 1986, personally appeared before me Charles 0.
Keller who being duly sworn did say that he is the President of Kelmine
Corporation, and said Charles 0. Keller acknowledge to me that said company
executed the same.
Given under my hand and seal this 5th day of December, 1986.
/s/ [Illegible]
-------------------------------
Notary Public, residing at:
My Commission Expires:
<PAGE>
EXHIBIT 10.8
MINING LEASE
THIS MINING LEASE made and entered into this 15th day of October, 1973, by
and between TINTIC URANIUM COMPANY, a Utah corporation, having its principal
office at 1112 Walker Bank Building, Salt Lake City, Utah (hereinafter
referred to as "Lessor") and CENTENNIAL DEVELOPMENT COMPANY, a Utah
corporation, whose principal office and place of business is located at 34
Century Park-Way, Salt Lake City, Utah (hereinafter referred to as "Lessee"),
W I T N E S S E T H :
1. LEASED PREMISES AND TERM. Lessor, in consideration of the royalties
hereinafter reserved and the performance of the duties and agreements
hereinafter expressed, does hereby lease to Lessee the mineral rights, exclusive
of oil and gas, and such surface rights as Lessor owns, to the following
described lands located in San Juan County, State of Utah, to wit:
Lots One, Two, Three and Four of Section 1, in Township 31 South, of
Range 25 East, of the Salt Lake Meridian.
which mineral rights and such surface rights are hereinafter referred to as the
"Leased Premises". It is the responsibility of the Lessee to obtain from the
surface owners, permission for surface use not clearly granted to Lessor.
Documents establishing Lessor's rights in the Leased Premises are attached
hereto and by reference are made a part hereof, to wit:
1. Conveyance and Agreement dated April 3, 1954, between G. 0.
Patterson and Edna L. Patterson, and T-U Uranium Company.
2. Agreement dated April 3, 1954, between G. 0. Patterson and
Edna L. Patterson and T-U Uranium Company.
3. Conveyance, dated January 10, 1955, by T-U Uranium Company
to Tintic Uranium Company.
4. Letter of opinion, dated October 28, 1959, by Ray, Rawlings,
Jones & Henderson to Tintic Uranium Company.
TO HAVE AND TO HOLD the Leased Premises unto the Lessee for mining
purposes, including prospecting, development, mining, extraction, benefication,
milling, processing, removal and sale of ores, metals and other materials of
commercial value, except oil and gas, and for all uses reasonably incidental
thereto, for a term commencing on the date hereof for a period of ten (10)
years, with the right of renewal for like TERMS THEREAFTER, upon written
<PAGE>
-2-
notice to Lessor 90 days before the lease expiration date, as long as minimum
work requirements or better or minimum royalties or better, as specified below
are satisfied.
2. WORK REQUIREMENTS AND MINIMUM ROYALTIES. Lessee shall have two (2)
years from the date hereof to enter upon the Leased Premises to explore, drill,
conduct geological, geophysical and geochemical surveys, and otherwise
investigate the property, with the requirement that at least $12,000.00 be
expended on such work during the two-year period.
Thereafter, Lessee shall continue diligently to explore, develop and mine
the Leased Premises, with an annual minimum expenditure of $3,000.00.
Expenditures to be credited against minimum work requirements shall include all
expenditures made by Lessee in connection with any and all investigations,
exploration, development, mining, extraction, benefication, milling, processing,
removal and sale of ores, metals-minerals and other materials within and from
the Leased Premises, except royalties paid to Lessor, income and franchise
taxes, home office expenses and supervisory salaries not directly related to
operations on the Leased Premises, the acquisition costs of depreciable items
and allowance for depletion.
Beginning with the third year of the lease, Lessee shall pay a minimum
royalty of $250.00 per month. At the option of the Lessee, the minimum royalty
may be paid in an annual sum at the end of said lease year. Minimum royalties
paid shall be applied as a credit against actual royalties becoming due and
payable under this lease.
3. ROYALTIES. Lessor reserves to itself a royalty of six percent (6%) of
net smelter returns for all minerals, exclusive of uranium ores, thorium ores
and other ores containing fissionable materials, in recoverable amounts of 0.01%
or more.
For the purposes of computation of the royalty hereunder, "net smelter
returns" shall mean all sums received by Lessee for ores or other products from
the Leased Premises, less all transportation and treatment charges not deducted
by the purchaser. In the event that the mill or smelter to which such ores or
products are delivered is owned, operated or controlled by Lessee or its
assigns, the charges of such mill or smelter shall not be greater than those of
comparable mills or smelters for milling or smelting similar materials. Haulage
from the mine to the mill site is to be part of the mining cost and not part of
the transportation cost.
The term "net smelter return per ton", as used in this lease, shall mean,
as to any shipment, the net smelter return for that shipment divided by the
number of dry tons of ore in the shipment or the number of tons of ore
yielding the concentrate in that shipment.
On uranium ores, thorium ores, and ores containing fissionable materials,
Lessee shall pay a twenty-five percent (25%) royalty or a twenty-five percent
(25%)
<PAGE>
-3-
net profit, as the case may be, from such ores sold or marketed, to the Grantors
or their assigns of the Conveyance and Agreement dated April 3, 1954, and the
Agreement dated April 3, 1954, copies of both of which are attached hereto and
by reference made a part hereof. A six percent (6%) royalty shall be paid to
Lessor on the proceeds from the sale of uranium ore, thorium ore, and ores
containing fissionable materials, containing a recoverable 0.01% or more of U3O8
or other fissionable materials, free of all development, mining and operating
costs.
4. ORES FROM THE LEASED PREMISES. Ores from the Leased Premises shall not
be co-mingled with ores from other operations without permission of Lessor.
Engineering, sampling and assaying procedures used in the determination of
grades and tonnages shall be established by agreement between Lessor and Lessee.
5. PAYMENT OF AND REPORTS RELATING TO ROYALTIES. Before the end of each
month following a month in which any net smelter returns or other proceeds have
been received, or as soon thereafter as possible, Lessee shall pay the royalties
due hereunder and furnish to Lessor a report of the net smelter returns or other
proceeds received, which report shall be accompanied by copies of the mill or
smelter settlement sheets.
6. REPORTS TO LESSOR. Lessee shall furnish to Lessor within thirty (30)
days after the end of each calendar quarter, while this lease is in force:
a. A report describing Lessee's operations or activities on the
Leased Premises for the quarterly period.
b. Copies of the results of geological, geophysical and
geochemical surveys including maps, drill logs, and assays pertaining
thereto.
c. Copies of mine maps showing the current status of mine
workings on the Leased Premises.
d. In all drilling and sampling on the Leased Premises, the
Lessee shall check for the presence and content of uranium, vanadium,
thorium, and other fissionable materials, regardless of whether or not
such material is mined and sold. Assay and sampling data on these
materials shall be included in the quarterly reports.
7. INSPECTION BY LESSOR. Lessee shall permit duly authorized
representatives of Lessor at all reasonable times to enter into the workings in
the Leased Premises for the purpose of examining, inspecting, surveying or
taking such samples as such representatives may desire and for the purpose of
ascertaining whether the terms and conditions of this lease are being performed
by Lessee. Lessee's agent may accompany such representative of Lessor, but such
representative shall enter upon the premises
<PAGE>
-4-
at his own risk. Lessor or its representatives authorized in writing, shall at
all reasonable times have access to all records as will show compliance on the
part of Lessee with the provisions of this Lease.
8. LESSEE - INDEPENDENT OPERATOR. The Lessee hereunder is an independent
operator and all partners and employees of the Lessee, whether on a wage or
profit sharing basis, shall be selected, controlled and paid by the Lessee and
Lessee shall, at Lessee's expense, carry workmen's compensation insurance and
occupational disease compensation insurance covering all of Lessee's employees,
and Lessee shall pay any taxes required and/or make any deductions required
under the Federal Social Security Act and/or the Utah Employment Security Act
for which Lessee may become obligated and shall comply with all Utah laws, rules
and regulations or any governmental authority affecting Lessee's operations on
the Leased Premises and shall furnish to Lessor evidence of such compliance.
9. INSURANCE. Lessee will maintain public liability and property damage
insurance, with an endorsement in favor of Lessor, covering the working of the
said premises with limits of not less than $100,000 as to any claim of any one
person, not less than $300,000 for total claims for any one occurrence and not
less than $25,000 for property damage.
10. POSTING ON LEASED PREMISES. The Lessee shall forthwith post and
thereafter keep posted in conspicuous places on the Leased Premises as many
written notices as may be necessary to adequately notify all persons who may
come within or upon the Leased Premises that the same are held by Lessee under
lease from Lessor and that Lessee, and not Lessor, is liable for the payment of
all labor performed and supplies and/or materials furnished to or used by Lessee
in and upon the Leased Premises, and that Lessee, and not Lessor, shall be
responsible for all debts and expenses incurred in mining operations in or upon
the Leased Premises.
11. INDEMNITY. The Lessee shall hold Lessor harmless and fully indemnify
Lessor against all claims and demands of every kind and nature which may be made
upon Lessor or against the above described premises for or on account of any
debts or expenses contracted or incurred by the Lessee, as well as from and
against all acts, transactions or omissions by Lessee, his agents and servants,
including claims, demands, causes of action, costs and expenses arising during
the continuance of the agreement from or on account of injury to any person,
whether occasioned by any unsafe or dangerous condition of any part of the above
described premises or any workings thereon or therein by Lessee, or otherwise,
and to defend Lessor at Lessee's own cost and expense from any such liability or
asserted liability.
12. LEASE NOT TO BE ASSIGNED OR SUBLET. The Lessee shall not assign or
sublet this lease or any interest therein, or the premises affected thereby, or
any portion
<PAGE>
-5-
thereof, without the written consent of the Lessor, which consent shall not
unreasonably be withheld, nor allow any person not in privity with the parties
hereto to take or hold said premises, or any part thereof, under any pretense
whatsoever.
13. PROPER OPERATIONS REQUIRED. Lessee shall conduct all operations and
work on the Leased Premises in good miner-like fashion and in such a manner as
to develop the premises for the realization of the maximum economical return
therefrom and shall comply with all of the applicable mining laws and
regulations of federal, state and local authorities.
14. TAX PAYMENTS.
a. Lessor's Taxes. Lessor shall pay all Federal, state and county
taxes of any kind assessed against it on account of the receipt of
royalties paid to it by Lessee hereunder.
b. Personal Property Tax. Lessee shall pay all state and county
taxes assessed to it or to Lessor upon any improvements, machinery,
equipment, tools, supplies and other property placed in or upon the Leased
Premises by Lessee.
c. Property Tax. Lessee shall pay all state and county property tax
assessments upon the Leased Premises, except as provided in Paragraph 13e
hereof.
d. Severence Tax. "Severence" or "Production" taxes, if any, shall
be prorated among and shall be paid by Lessee and Lessor in proportion to
their respective participation in the proceeds thereof. The words
"severence" or "production" taxes, as used herein, shall not be construed
as including the tax referred to in Paragraph 13e or any tax resulting from
a valuation based upon "net annual proceeds", nor the "mining occupation
tax" referred to in Paragraph 13f.
e. Net Proceeds Tax. Taxes resulting from assessed valuation of the
Leased Premises based upon "net annual proceeds", as provided in Section
59-5-57, U.C.A. 1953, as amended, or any valuation method which may be
substituted therefor, shall, except as otherwise provided in this
paragraph, be prorated among and be paid by Lessee and Lessor in proportion
to their respective participation in such "net annual proceeds".
If for any calendar year after the termination of this lease (including
the calendar year during which the lease is terminated) the assessed
valuation of the Leased Premises based upon "net annual proceeds", shall
exceed the assessed valuation which would otherwise have resulted
<PAGE>
-6-
but for "net annual proceeds" from Lessee's operations conducted upon this
lease, then notwithstanding the termination of this lease, any additional
taxes which result from such difference (increase) in assessed valuation
shall be prorated among and shall be paid by Lessee and Lessor in
proportion to their respective participation in such "net annual proceeds"
which resulted in such increased valuation.
f. Mining Occupation Tax. Lessee shall be solely responsible for and
agrees to pay any operations conducted under this lease.
15. TERMINATION BY LESSOR FOR CAUSE. If there shall be a violation by
Lessee of any covenant or agreement herein contained, and Lessor shall send
by registered mail to Lessee written notice specifying such violation and
demanding possession of the premises covered by the Lease, and if at the
expiration of 90 days after the date of mailing said notice of demand, the
violation still continues, the term of this lease shall then at the option of
Lessor terminate and expire and the leasehold rights of Lessee in the Leased
Premises shall become forfeited, and this agreement shall be terminated in
its entirety; and without further demand or notice, Lessor, by its agents or
attorneys, may enter upon and into the Leased Premises and dispossess all
persons occupying the same, with or without force, and with or without
process of law, or at Lessor's option, Lessee and all persons found in
occupation of such leased premises may be proceeded against as guilty of
unlawful detainer. Failure of Lessor to exercise for any length of time any
right of forfeiture for such cause shall in no event operate as a waiver of
such right of forfeiture for such cause still continuing, or for any
reoccurrence thereof or for any different cause.
16. SURRENDER OF PREMISES ON TERMINATION. Lessee will deliver to Lessor
the premises leased herein, with the appurtenances and improvements, in good
order and condition, reasonable wear and tear and damage by natural causes and
the mining operations herein authorized except, without demand or further
notice, on the last day of the term hereof, or of any extended term, or at any
time previous upon termination hereof, provided however:
a. BROKEN ORES. That all broken ores on or in the leased premises
not shipped prior to such expiration or earlier termination may be removed
by Lessee within 90 days after termination and accounted for as herein
provided as if shipped and sold prior to termination, but if not so removed
within said 90-day period such ores shall become the property of Lessor.
b. TRACK, PIPE, ETC. All tracks, pipe and ventilating tubing on or
in the leased premises shall remain in place at the termination of the
lease and become the property of Lessor.
<PAGE>
-7-
c. REMOVAL OF EQUIPMENT. Upon termination of this lease and
agreement, Lessee shall have the right, within 120 days from the date of
such termination, to remove from the Leased Premises and sell sufficient
fixtures and equipment (other than track, pipe and ventilating tubing)
constructed or installed by it either on the surface or underground and not
necessary for access to shafts, main levels and adits and main haulageways
as will fully reimburse it for any undepreciated portion of the cost of
such fixtures and equipment, provided that Lessor shall have the option to
purchase, at as favorable a price and upon as favorable terms as can be
obtained by Lessee from any other person, by giving Lessee written notice
of its election to purchase such fixtures or equipment within 30 days after
the date of such termination. All such fixtures and equipment not required
to be disposed of to so reimburse Lessee and any such equipment remaining
on the Leased Premises 120 days after the date of termination of the lease
shall become the property of Lessor.
17. DELAY DUE TO CAUSES BEYOND CONTROL OF LESSEE. If Lessee shall be
delayed, or interrupted in, or prevented from, performing its obligations as
herein provided, by acts of God, fires, floods, strikes, insurrection or mob
violence, injunction, regulations or orders or requirements of government,
then and in all such cases Lessee shall for the time being, and without
liability, be excused from performance of its obligations as herein provided,
for the period of such prevention, delay or interruption; and all provisions
of this lease and agreement shall again come into full force and effect
immediately upon the termination of the period of prevention, delay or
disability resulting from any of the causes aforesaid.
18. TERMINATION BY LESSEE. Notwithstanding anything herein to the
contrary, continuance of this lease and agreement shall be optional with Lessee,
and no penalty shall accrue or be asserted against Lessee by reason of
termination by Lessee or for failure thereafter to perform any of the
conditions, terms and agreements hereof; and Lessee may terminate this lease and
agreement at any time upon giving to Lessor 60 days written notice of intention
to terminate. Thereupon any liability of Lessee hereunder shall immediately
cease and terminate, except liability on account of any obligation arising out
of its operations in the Leased Premises incurred and owing at the time of such
termination.
19. MANNER OF GIVING NOTICE. Any written notice or other writing
contemplated herein shall be sufficiently served when the same has been
deposited in the United States Mail, postage prepaid, registered and addressed
as follows:
To Lessor: Tintic Uranium Company
1112 Walker Bank Building
Salt Lake City, Utah 84111
<PAGE>
-8-
To Lessee: Centennial Development Company
34 Century Park-Way
Salt Lake City, Utah
or to such other addresses as Lessee and Lessor or either of them may from time
to time designate in writing.
This lease and agreement shall inure to the benefit of and be binding upon
the heirs, executors, administrators, legal representatives, successors and
assigns of the respective parties.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed by their respective corporate officers thereunto duly authorized and
their corporate seals to be hereunto affixed, duly attested, all as of the
day and year first hereinabove written.
TINTIC URANIUM COMPANY
ATTEST:
[SEAL]
By ILLEGIBLE
ILLEGIBLE --------------------------------
- ------------------------------ Its President
Secretary
LESSOR
CENTENNIAL DEVELOPMENT COMPANY
ATTEST
[SEAL]
By ILLEGIBLE
ILLEGIBLE --------------------------------
- ------------------------------ Its Chairman
Secretary
LESSEE
<PAGE>
-9-
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On the 15th day of October, 1973, personally appeared before me H. E.
Raddatz who being by me duly sworn did say that he is the president of Tintic
Uranium Company, and that said instrument was signed in behalf of said
corporation by authority of a resolution of its Board of Directors, and said H.
E. Raddatz duly acknowledged to me that said corporation executed the same.
/s/ [ILLEGIBLE]
---------------------------------
NOTARY PUBLIC
Residing at Salt Lake City, Utah
[SEAL]
My Commission Expires:
/s/ [ILLEGIBLE]
- ------------------------------
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On the 15th day of October, 1973, personally appeared before me J.
C. Bennett who being by me duly sworn did say that he is the Chairman of
Centennial Development Company, and that said instrument was signed in behalf
of said corporation by authority of a resolution of its Board of Directors,
and said J. C. Bennett duly acknowledged to me that said corporation executed
the same.
Portia Williams
---------------------------------
NOTARY PUBLIC
Residing at Salt Lake City, Utah
My Commission Expires:
January 19, 1976
- ------------------------------
<PAGE>
RATIFICATION AND AMENDMENT
This Ratification and Amendment is made effective this 5 day of January 1993
by and between Tintic Uranium Company, a Utah corporation (hereinafter
referred to as "Lessor") and MLP Associates, a Colorado limited partnership
(hereinafter referred to as "MLP").
RECITALS
Lessor and Centennial Development Company, a Utah corporation, entered into a
mining lease, (hereafter referred to as "Lease") dated effective the 15th day
of October 1973 covering lands located in Township 31 South, Range 25 East, SLM
and described as Lots 1, 2, 3 and 4 of Section 1 (hereinafter referred to as the
"Premises") which Lease is of record in Book 515, Page 220-228 in the records of
San Juan County, Utah.
The Lease and all rights and privileges thereunder are currently held under an
option agreement between Lisbon Copper Ltd and MLP which agreement is dated
April 20, 1988 and recorded in Book 701, Page 720 in the records of San Juan
County, Utah.
Lessor and MLP desire to adopt, ratify and confirm the Lease and to further
amend the terms as set forth in this Ratification and Amendment.
Lessor hereby ratifies the Lease, any and all amendments, assignments, subleases
or any other transfer of interest of any nature whatsoever occurring between
October 15, 1973 and the date of this agreement (of record or not of record) and
confirms that all requirements of the Lease, including but not limited to,
payments, royalties, work requirements and approvals have been complied with and
satisfied as of the date of this Ratification and Amendment.
In consideration of the payments, obligations and mutual agreements set forth
herein, Lessor and MLP agree as follows:
1. The annual minimum royalty referenced in Section 2, as amended by letter
dated June 10, 1982 shall be increased from $300.00 per year to $1,000.00
per year which payment shall be due on the anniversary of the effective date
of the Lease. MLP further agrees to pay Lessor the royalty increase of
$700.00 retroactive to the October 15, 1992 anniversary date.
2. The annual work requirement of $3,000.00 referenced in Section 2 is hereby
deleted in its entirety.
3. The net smelter return royalty of 6% for all minerals exclusive of
uranium ores, thorium ores and other ores containing fissionable
materials referenced in Section
<PAGE>
3 shall be reduced to 3%. The royalty applicable to fissionable ores will
remain unchanged.
Except to the extent specifically amended in this Ratification and Amendment,
the Lease is and shall remain in full force and effect in accordance with its
terms.
LESSOR TINTIC URANIUM CO. MLP
/s/ Thomas A. Henry ILLEGIBLE
- ------------------------------ ------------------------------
BY: Thomas A. Henry, JR. BY:
President
STATE OF CALIFORNIA )
:SS.
County of SAN DIEGO )
On this 7 day of December, 1992, personally appeared before me Thomas
A. Henry JR., signer of the foregoing instrument who acknowledges to me he has
executed same in behalf of the Tintic Uranium Company.
/s/ Alison D. Marquardt
[SEAL] ------------------------------
Notary Public
Residing at San Diego, CA
My Commission Expires: 9/23/94
----------
STATE OF ARIZONA )
: SS.
County of Maracopa )
On this 5th day of January, 1993 personally appeared before me
Charles E. Carlson, one of the signers of the foregoing instrument, who duly
acknowledged to me that he executed the same on behalf of MLP Associates, A
Colorado Limited Partnership.
/s/ Sara J. Briggs
[SEAL] ------------------------------
Notary Public
Residing at 12221 N. Tatum
Phoenix, AZ 85032
My Commission Expires: Nov. 23, 1994
-------------
<PAGE>
EXHIBIT 10.9
LESSEE'S PARTICULAR ATTENTION IS
CALLED TO ARTICLE VII OF THIS LEASE
Form Approved August 14, 1992
PROOF READ TDW BP MINERAL LEASE NO. 46431
----------------- -----------
MINERAL LEASE APPLICATION NO. 46431 GRANT: SCH
----------
UTAH STATE LEASE FOR
METALLIFEROUS MINERALS
THIS UTAH STATE MINERAL LEASE AND AGREEMENT entered into and executed in
duplicate as of the 22nd day of February, 1994, by and between the STATE OF
UTAH, acting by and through the BOARD OF STATE LANDS & FORESTRY and DIVISION OF
STATE LANDS & FORESTRY, DEPARTMENT OF NATURAL RESOURCES, with the office located
at 355 West North Temple, 3 Triad Center, Suite 400, Salt Lake City, Utah
84180-1204, hereinafter called the "LESSOR," and
Summo USA Corporation
c/o St. Mary Minerals Inc.
1776 Lincoln Street, Suite 1100
Denver, CO 80203
(whether one or more individuals, corporation, or other entities) with business
office or address as shown above, hereinafter called the "LESSEE,"
WITNESSETH:
That the State of Utah as Lessor, for and in consideration of the fees,
rents, royalties, and any other financial consideration paid or required to
be paid by Lessee, and the terms and conditions to be performed by Lessee as
hereinafter set forth, does hereby GRANT AND LEASE to the Lessee the
exclusive right and privilege to explore for, drill for, mine, remove, and
dispose of the particular mineral or minerals described in Article I hereof,
hereinafter called the "leased substances," situated within the boundaries of
the following-described tract of land (extending vertically downward from the
surface) in San Juan County, State of Utah, to-wit:
TOWNSHIP 30 SOUTH, RANGE 26 EAST, SLB&M.
Section 32: W 1/2
containing 320,00 acres, more or less.
This Mineral Lease is granted for and in consideration of and subject to
all of the terms, provisions, and conditions hereinafter set forth:
<PAGE>
-2-
ARTICLE I. MINERALS COVERED BY THIS LEASE
This Mineral Lease covers the following-described leased mineral substances
with the boundaries of the above-described lands, to-wit:
METALLIFEROUS MINERALS
"Metalliferous Minerals" are herein defined to include any ore containing
any of the following minerals: Aluminum, Antimony, Arsenic, Beryllium, Bismuth,
Cadmium, Chromium, Cecium, Columbium, Cobalt, Copper, Flourspar, Gallium, Gold,
Germanium, Hafium, Iron, Indium, Lead, Mercury, Manganese, Molybdenum, Nickel,
Platinum, Group Metals, Radium, Selenium, Scandium, Silver, Rare Earth Metals,
Rhenium, Tantalium, Tin, Thorium, Tungsten, Thallium, Tellurium, Vanadium,
Uranium, Zinc, together with other minerals which are found in association with
said specified minerals in such a manner that they cannot be mined separately.
In the event Lessee, or the operator or any contractor for Lessee, shall
discover within said lands some mineral or minerals other than the mineral or
leased substances covered by this lease, Lessee shall promptly notify the Lessor
of the kind or nature of such mineral or minerals not included in this lease.
ARTICLE II. PRIMARY TERM AND POSSIBLE EXTENSION OF TERM OF LEASE
This lease is granted for a primary term of TEN (10) years commencing on
the first day of the month following the date hereinabove first written and as
long thereafter as the leased substances shall be produced in commercial
quantities from the abovedescribed lands, on condition that Lessee shall perform
the terms and provisions required to be performed by Lessee including payment of
rents and royalties within the times required herein; provided however, that it
is expressly agreed that at the end of each period of ten (10) years following
the effective date of this lease, the State of Utah as Lessor shall have the
right to readjust the terms and conditions of this lease as may then be
determined to be in the best interest of the State of Utah as trustee-owner of
the mineral estate. In the event of failure or refusal of the Lessee to accept
and agree to the readjustment of the terms and conditions submitted by Lessor at
the end of such ten (10)-year period, such failure or refusal to accept such
readjustment of terms, conditions, or royalty shall operate to forfeit any right
to extension of the term of this Mineral Lease and terminate this lease except
for the rights of the State of Utah to recover any royalties then owing the
State and/or any damages for which Lessee may be liable. This lease will not be
extended beyond the end of the twentieth year except by the production of the
leased substances in commercial quantities from the leased lands. If Lessee
ceases production of leased substances in commercial quantities this lease will
terminate one (1) year from the date of last commercial production, unless
Lessee commences commercial production at least three (3) months prior to the
end of such year and such commercial production then continues for at least six
(6) months.
<PAGE>
-3-
ARTICLE III. APPLICABLE LAWS AND REGULATIONS
This lease is issued pursuant to the provisions of Title 65, Utah Code
Annotated, 1953, as amended, and subject to all valid Rules and Regulations and
requirements adopted by the Board of State Lands & Forestry, and of the Board of
Oil, Gas, and Mining, applicable to the subject matter of this lease, together
with all requirements of the Utah Mined Land Reclamation Act, all requirements
of the State Antiquities Act, Title 63, Chapter 18, and all valid rules and
regulations relating to safety, sanitation, and health whether under the
jurisdiction of the Division of Oil, Gas, and Mining with respect to operations
under this lease or under the jurisdiction of some other State agency.
ARTICLE IV. RIGHTS TO THE SURFACE ESTATE
If the surface estate of all or some portion of the hereinabove-described
lands is owned by the Lessor, Lessee shall be entitled to use reasonably and
prudently such portions of the surface estate owned by Lessor as shall be
reasonably necessary to explore and prospect for, mine, drill, remove, and
dispose of the leased mineral substances, including permission to establish and
maintain in a safe condition on the surface estate owned by Lessor, access
roads, communication lines, tanks, pipelines, reservoirs, mills, processing
plants, reduction works, dumps, and other essential structures, facilities,
machinery, and equipment, reasonably necessary and expedient for the economic
operation of the leasehold and in furtherance of production, treatment, and
disposition of the leased substances under this lease. Such surface uses shall
be exercised subject to the rights reserved to the State of Utah as provided in
Article V hereof, and without unreasonable interference with the rights of any
prior or subsequent lessee of the State of Utah under the program of multiple
use.
If the surface estate of any portion of the described lands is not owned by
the State of Utah, except for a reserved right of entry to the mineral estate or
mineral estates, the Lessee may exercise such right of entry to the mineral
estate covered by this lease, at the sole cost and expense of Lessee herein and
without cost to the State of Utah. If any damage is caused directly or
indirectly to the surface estate by the Lessee or by the contractor or operator
for Lessee, Lessee shall make proper restitution and indemnify the surface owner
or owners. Lessee also shall make proper rehabilitation as required by the Utah
Mined Land Reclamation Act and as required by all lawful rules and regulations
adopted thereunder.
Lessor will require a bond to be posted or other security given to the
State to be filed with Lessor or any other State agency or officer in a
principal amount determined by Lessor to be adequate to assure appropriate
reclamation and restitution for any damage to the surface estate.
<PAGE>
-4-
ARTICLE V. EXCEPTIONS AND EXCLUSIONS FROM LEASE
Lessor hereby excepts and reserves from the operation of this lease the
following rights and privileges:
FIRST: The right to establish rights of way and easements on, through, or
over the land above described, for utility corridors and for joint or joint and
several uses, as may be necessary and appropriate for the management of the
above-described lands and other lands of Lessor or lands administered by Lessor,
and for the working of other deposits within said lands under mineral leases
granted to others under the program of multiple use.
SECOND: The right to issue mineral leases to other lessees covering
minerals not included in this lease, under such terms and conditions which will
not unreasonably interfere with operations under this lease in accordance with
the principle of multiple use provided by law.
THIRD: In the event Lessor owns the surface estate in said lands or
portions of said lands above described, Lessor retains the right to use, lease,
sell, or otherwise dispose of the surface estate in said lands or any part
thereof, under existing State laws or laws subsequently enacted, insofar as such
surface is not essential for the Lessee herein in exploration, prospecting for,
mining, drilling, removal, or disposal of the leased substances covered by this
lease, to the extent that such use, lease, or sale of the surface estate does
not unreasonably interfere with the rights granted to the Lessee herein. Lessor
shall notify Lessee herein of any such sale, lease, use, or other disposition of
the surface estate.
ARTICLE VI. PAYMENT OF RENTALS AND ROYALTIES
For and in consideration of the leasehold rights granted to the Lessee, in
addition to all other terms and conditions required to be performed by the
Lessee, the Lessee hereby covenants and agrees with Lessor to pay rentals and
royalties as follows:
FIRST: Lessee agrees to pay Lessor as rental for the land covered by this
lease the sum of One Dollar ($1.00) per acre and for each fractional part of an
acre, each year in advance on or before the first day of the month following the
anniversary date of this lease, except the rental for the first year which has
been paid with the application for this lease. All rentals paid shall be
credited against actual Production Royalties for the lease year in which they
shall accrue, but such rentals shall not be credited against the Minimum
Royalties under subparagraph "Fourth" of this ARTICLE VI.
SECOND: Lessee shall pay lessor a royalty of eight percent for fissionable
metalliferous minerals and four percent for non-fissionable metalliferous
minerals. The royalty shall be based on the gross value of the ores produced
from the leased lands and sold by the lessee under an arms-length contract,
except that if there is not an arms-length contract for the ore the royalty
shall be based on the gross value received by the lessee under an arms-length
contract for the processed product(s) produced from the leased lands less actual
processing and refining costs. Processing and refining deductions will not
include mining, administrative, or depreciation costs, or deductions for
property taxes. Should the processed products be sold under a non-arms-length
contract the royalty shall be based on the amount received under the
non-arms-length contract or the fair market value of the products whichever is
greater, less the allowable deductions as set forth above.
<PAGE>
-5-
THIRD: Payment of Production Royalty shall be made by Lessee to Lessor, as
herein required, on or before the last day of the month next succeeding the
month during which the minerals or leased substances shall have been shipped or
sold or used. In connection with such payment of Production Royalty, the Lessee
shall submit a certified statement of the production of all leased substances
mined or extracted from the hereinabove-described lands, according to the
foregoing royalty schedule together with such information required by the Board
of State Lands & Forestry to verify production and disposition of mineral
substances produced and disposed of from the leased premises.
FOURTH: Lessee may maintain this lease in force beyond the primary term of
ten (10) years from the effective date of the lease by paying Lessor, in
addition to rentals and production royalties as hereinabove required, an annual
minimum royalty of three (3) times the annual rental, providing the lessee is
engaged in diligent operations, exploration, research, or development activity
which is reasonably calculated to advance development or production of the
mineral covered by the lease from the leased premises or lands pooled or
unitized with or constituting an approved mining or drilling unit in respect to
the leased premises.
Said annual minimum royalty shall be paid each year in advance, commencing
with the eleventh year of the lease, along with the regular annual rental
required to be paid under the terms of this lease. Said rental per acre and
said Minimum Royalty shall be paid on each and every acre in this lease to
extend the term of this lease and to keep this lease in force and effect.
Rentals and Minimum Royalties paid annually shall be credited against
actual Production Royalties for the year in which they accrue during the
original term, or any extension thereof, but annual rentals shall not be
credited against Minimum Royalties.
ARTICLE VII. MINERAL TITLE OF LESSOR
Lessor claims title to the mineral estate covered by this lease. Lessor
does not warrant title nor represent that no one will dispute the title asserted
by Lessor. It is expressly agreed that Lessor shall not be liable to Lessee for
any alleged deficiency in title to the mineral estate, nor shall Lessee or any
assigns of the Lessee become entitled to any refund for any rentals, bonuses, or
royalties paid under this lease.
ARTICLE VIII. WATER RIGHTS
In the event Lessee shall initiate any water rights on the leased premises,
such right shall become an appurtenance to the leased premises; and upon
surrender, cancellation, or termination of this lease, Lessee or assigns of
Lessee shall assign and convey such water rights and any application for
appropriation of water to beneficial use relating to the land or the mineral
estate covered by this lease to Lessor.
<PAGE>
-6-
If the Lessee shall purchase or otherwise acquire any water rights on some
other land and file with the State Engineer appropriate application for change
of use onto the premises covered by this lease, the Lessor herein shall have an
option for 45 days after the expiration, surrender, or termination of this lease
to purchase said otherwise acquired water rights at the acquisition costs of the
Lessee. Such option shall begin to run from the date of termination, surrender,
or expiration of this lease or from the date when Lessee shall specify in
writing the acquisition costs of such other water rights, whichever date is the
later date. Unless Lessor accepts such written offer to convey such rights at
the actual acquisition costs within said period of 45 days, Lessor shall be
deemed to have rejected the offer. Upon payment of the said acquisition costs by
the Lessor, Lessee herein shall assign and transfer such acquired water rights
to the Lessor.
ARTICLE IX. WRITTEN CONSENT REQUIRED FOR ASSIGNMENT OR SUBLEASE
Lessee shall not assign this lease nor any portion thereof, nor any rights
or privileges herein granted, without the prior written consent of Lessor. Nor
shall the Lessee issue any sublease without the prior written consent of Lessor.
Any assignment of lease and any sublease issued without prior written
consent of Lessor shall be void ab initio.
In the event Lessor shall approve an assignment of this lease or of any
part hereof, such assignment shall be subject to all of the terms,
conditions, and obligations of the Lessee herein set forth. All of the terms,
covenants, conditions, and obligations of the Lessee shall be binding upon
the heirs, executors, administrators, successors, and assigns of the Lessee.
This provision also shall apply to any sublease issued by Lessee and approved
by Lessor.
ARTICLE X. OVERRIDING ROYALTY LOCATION
Neither the Lessee nor the assignee of Lessee shall create or grant any
overriding royalty except as permitted by law and by the Rules and Regulations
of the Board of State Lands & Forestry. Overriding royalty assignments shall not
become effective, even if otherwise valid, until filed with the Lessor.
ARTICLE XI. SURRENDER OR RELINQUISHMENT OF LEASE
Lessee may surrender this lease for cancellation by Lessor as to all or any
part of the leased lands, but not for less than a quarter-quarter section or
surveyed lot, upon payment of all rentals, royalties, and other amounts then due
and owing to the Lessor, by filing with Lessor a written relinquishment. As to
rental, such relinquishment shall be effective on the date of filing, but
otherwise on the date of cancellation by the Lessor.
<PAGE>
-7-
ARTICLE XII. NOTICE OF COMMENCEMENT OF OPERATIONS, PLANS, PLATS, BOND
Not less than sixty (60) days before commencement of exploration,
drilling, or mining operations, Lessee shall give written notice hereof to the
Division of State Lands & Forestry and the Division of Oil, Gas, and Mining,
together with a plan of operation and a topographic map showing every
proposed shaft, tunnel, open pit, drill site, and access road to be used.
Lessor shall make an assessment of such plan of operation and either endorse
or stipulate changes in Lessee's plan of operation, or request additional
information within the sixty (60) day notification period. Lessee shall not
proceed with the execution of any such plan of operation without first
receiving the written approval of Lessor. Lessee shall maintain at the mine
office clear, accurate, and detailed maps of all actual and planned
operations on a scale of not more than 50 feet to the inch, with points
coordinated with public land surveys showing distance to the nearest public
survey monument or reestablished survey corner. Such maps and plats shall be
on tracing cloth or other material which is substantially permanent and of
which clear and distinct photo copies or blueprints can be readily made
without unreasonable delay. Such maps or plats shall show the workings from
time to time, as the same are extended. In the event that the operations on
the above-described leasehold are intended to be conducted in conjunction
with adjacent lands, whether Federal, State, or privately-owned lands, the
map and plats shall clearly show how the operations are to be coordinated. All
surveys shall be conducted by a licensed surveyor or engineer qualified to
practice in Utah. All such maps or plats shall be certified by the surveyor
or engineer preparing the same. The State or any agency of the State of Utah,
including the Division of Oil, Gas, and Mining, shall be entitled to a true
and correct copy thereof, together with the proposed plans of operation.
After Lessor receives notice of intent to commence mining operations,
upon request of the Lessor, the Lessee shall furnish a bond with an
approved corporate surety company authorized to transact business in the
State of Utah, or such other security acceptable to the Lessor, in an amount
to be determined by Lessor, after taking into account the value of the land
and the amount of potential damage which likely will result from such
proposed mining operations, and which bond or other security shall be
conditioned upon payment of all rentals and royalties from the leasehold and
other sums which may become payable to the Lessor, and to assure full
compliance with the terms and conditions of this lease and compliance with
all Rules and Regulations of the Board of State Lands & Forestry and all
Rules and Regulations of any other State agency having jurisdiction over
mining operations, and also conditioned upon payment of all damages to the
surface and improvements thereon if this lease covers surface estate or some
portion of the surface estate which has been sold or otherwise leased, and
any damage caused by Lessee to any other lessee of the State of Utah with
respect to said land. Such bond or other security furnished prior to
commencement of development of the leasehold may be increased in such
reasonable amounts as the Lessor may require after discovery of any of the
leased substances.
If the plan of mining development or mining operations includes
core-drilling, the plan of operations shall disclose the locations of
core-drilling operations.
<PAGE>
-8-
ARTICLE XIII. ALL OPERATIONS TO BE CONDUCTED IN A LAWFUL, PRUDENT MANNER
Lessee shall conduct all operations under this lease in a lawful, prudent,
and good workmanlike manner for the effective and safe production of the mineral
substances covered by this lease, and to avoid unnecessary damage and injury to
the leasehold estate, and also to avoid damage and wastage of other natural
resources not covered by this lease. All operations of Lessee, whether conducted
directly by Lessee or by operators or contractors, shall be at the sole cost and
expense of Lessee.
It is expressly covenanted and agreed that Lessor does not grant Lessee or
any person dealing with Lessee any right to subject the property hereinabove
described, nor any leased substances, to any lien-rights for labor or mechanic's
liens, nor to any materialmen's liens, nor to any other lien for any act,
omission, neglect, or performance of Lessee or its agents, employees, and
contractors. In the event any one shall file any notice or claim of lien against
said property or any estate in said property, Lessee shall take all necessary
steps expeditiously to have such notice or claim released of record. Lessee
shall save Lessor harmless from any and all lien notices and claims against said
land arising from any act or neglect of Lessee and any contractor or operator of
Lessee in any operations on or relating to the hereinabove described lands.
Lessee shall not fence off or otherwise make inaccessible to livestock
lawfully on the surface of said premises any watering place without the written
consent of Lessor; provided, that Lessee shall not permit any livestock to come
upon any portion of the leasehold to pollute any surface or subsurface water
available or capable of being made available for domestic use or irrigation. In
the operations of Lessee, Lessee shall comply with all laws and regulations for
control of water which might be encountered or which might seep into any
formation, to avoid pollution of surface and underground waters as required by
Chapter 14, Title 73, Utah Code Annotated, 1953, as amended. Lessee shall comply
with all valid laws and regulations relating to prevention and suppression of
fires, make all necessary provisions for sanitary disposal of wastes, and in all
operations connected with said leasehold take appropriate measures for
protection of human life and prevention of injuries and disease.
ARTICLE XIV. RIGHTS OF LESSOR FOR INSPECTIONS OF LEASEHOLD AND RECORDS
Lessor, its officers, and agents have the right at all reasonable times to
enter upon the leased lands and premises to inspect the conditions of the
leasehold, the work done under the terms of this lease, and the production
obtained from the leasehold, such entry and inspections to be done in such a
manner as shall not unreasonably interfere with the lawful operations by the
Lessee in performance of the terms and conditions of this lease.
Lessor also shall have the right to examine all books and records
pertaining to operations under this lease whether such books and records are
located within a building on the leased premises or located in an office
elsewhere and to make copies and abstracts of such records if desired by Lessor.
Lessor, its officers, and agents shall have the right to post upon or within the
leasehold such notices deemed proper or expedient by Lessor.
<PAGE>
-9-
If Lessee maintains an office in another State or in a foreign country,
Lessee nevertheless shall maintain within the State of Utah proper and adequate
records relating to operations on this leasehold and also relating to production
of leased substances and payment of rentals and royalties. Lessee also shall
have a resident agent in the State of Utah to whom any and all notices may be
sent by Lessor and on whom process may be served. In the event of any change in
the address of Lessee's office in the State of Utah, Lessee shall promptly
furnish Lessor with written notice of such change of address within the State of
Utah. Examinations of records of Lessee by the Lessor shall be conducted at
reasonable times.
In the event Lessee conducts core-drilling operations within the leasehold,
or by directional drilling from adjacent land, Lessor shall have a right of
inspection of core samples and any analysis made thereof and any assay;
provided, that any report obtained by Lessor of any core-drilling operations may
be declared confidential information by Lessee, in which event Lessor shall keep
such information in a separate confidential information file. Such information
shall not be disclosed to any competitor nor to any one except to a
representative of the Attorney General of the State of Utah until Lessee waives
confidentiality or upon surrender, expiration, or termination of this lease.
After completion of any core drilling, Lessee shall notify Lessor; and
Lessee shall cause all core holes to be plugged or sealed as expeditiously as
possible after the need for keeping such core holes unplugged ceases, in
accordance with regulations and requirements of the Division of Oil, Gas, and
Mining.
ARTICLE XV. OPERATIONS IN CONJUNCTION WITH MINING ON OTHER LANDS
In the event Lessee, in the interest of economy in mining operations,
desires to conduct mining operations on or within the above-described lands in
conjunction with mining operations on or within any adjacent Federal, State, or
privately-owned land by utilization of shafts, inclines, or tunnels within
either the above-described lands or within adjacent lands, Lessee shall make
application in writing to the Board of State Lands & Forestry and submit with
such application a detailed plan of operations illustrating how leased
substances mined from the above-described lands can and will be mined,
segregated, and separately accounted for from leased substances mined from some
adjacent land. No such operations shall be conducted without written approval of
the Board. Any approval granted by the Board shall be conditioned upon proper
segregation and proper accounting and record keeping of leased substances mined
from each property. Separate records shall be required for accounting for leased
substances mined from the above-described lands.
In the event Lessee desires to process or mill leased substances from the
abovedescribed land in conjunction with processing or milling of leased
substances from adjacent or some other lands, whether such processing or milling
is intended to be performed on the above-described land or on some other land,
Lessee shall submit to the Board a written application detailing how the leased
substances mined from the above-described lands shall be segregated and
separately accounted for in computation of royalty payments from leased
substances mined from other lands. Any Board approval for any such arrangements
shall be conditioned upon segregation of leased substances produced from the
above-described lands from mineral substances produced from other lands with
adequate safeguards to assure proper accounting for determination of royalty.
<PAGE>
-10-
If application is granted for either type of operation or for both, all
procedures for either production or milling of minerals shall be subjected to
examination by the Division of State Lands & Forestry and by the Division of
Oil, Gas, and Mining to determine whether either type of arrangement functions
satisfactorily without detriment to the State of Utah. If such inspection
results in an adverse report with recommendations for modification or
discontinuance of such operations, a copy of the report with recommendations
shall be submitted as expeditiously as possible to the Lessee. If any
objectionable condition is not promptly remedied to safeguard the rights of the
State as Lessor, the Board of State Lands & Forestry shall have the right to
order discontinuance of such arrangement; and failure to comply with such order
of the Board shall constitute a breach of this Lease Agreement.
ARTICLE XVI. SPECIAL REQUIREMENTS IN EVENT OF STRIP-MINING
In the event Lessee desires to conduct any strip-mining or open-pit mining
or operations which will materially disturb the surface of the above-described
lands or some portion thereof, at least sixty (60) days before commencing such
type of mining activities, Lessee shall submit to the Division of State Lands &
Forestry the proposed plan of operations together with a proposed plan of
surface rehabilitation in compliance with the Utah Mined Land Reclamation Act
and in compliance with the Rules and Regulations adopted thereunder. A copy of
such proposed plan of operations and proposed plan of surface rehabilitation
also shall be submitted to the Division of Oil, Gas, and Mining. No such
operations shall be commenced until the Division of Oil, Gas, and Mining
approves the plan of operations and approves a program of rehabilitation.
Security may be required of Lessee to assure appropriate rehabilitation in
accordance with the said statute and rules and regulations adopted thereunder.
ARTICLE XVII. EQUIPMENT OR FACILITIES TO REMAIN WITH THE LAND
Upon surrender, forfeiture, expiration, or termination of this lease,
any and all underground timbering supports, shaft linings, rails, and other
installations necessary for the support of underground tunnels, shafts,
inclines, or other underground mine supports, together with all rails or head
frames and all other underground construction and safety equipment annexed to
the ground (excluding detachable motor-driven machinery) which cannot be
removed without creating a danger to any shaft, tunnel, incline, or other
underground improvements annexed to the mine, and including equipment
installed underground to provide for ventilation of the mine or some portion
thereof, shall be left within said land above described by the Lessee,
operator, and contractor of Lessee and shall remain a part of the realty.
Lessor shall acquire all rights thereto without indemnification of Lessee or
operator or contractor for Lessee. Except as herein specifically excepted,
all personal property of Lessee, including removable machinery, equipment,
tools, and stockpiles of leased substances for which royalty has been paid
shall remain the property of Lessee or operator or contractor for Lessee and
Lessee or operator or contractor for Lessee may remove the same at the sole
expense of Lessee or operator or contractor within two (2) months following
expiration, forfeiture, surrender, or termination of this lease, except that
the Board
<PAGE>
-11-
of State Lands & Forestry for good cause shown shall have the right to grant a
reasonable extension of time beyond the period of two (2) months for removal of
any and all equipment which may be removed by Lessee or operator or contractor
as herein provided. At the end of such period, Lessor may consider abandoned and
lay claim to any or all equipment or stockpiles remaining on the premises.
Upon expiration, surrender, forfeiture, or termination of this lease or
abandonment of the leasehold by Lessee, the Lessee shall cause to be sealed or
properly shut off all or parts of the mine openings including shafts and tunnels
in the manner and method required by the Director of the Division of Oil, Gas,
and Mining, and to abate any hazardous condition which may have been left by
Lessee, such abatement of hazardous condition to be performed in accordance with
reasonable requirements of the Director of the Division of Oil, Gas, and Mining.
ARTICLE XVIII. CONSENT TO SUIT IN STATE DISTRICT COURT
It is agreed that if there arises any controversy between lessor and Lessee
or any successor in interest of Lessee which needs to be litigated, Lessee or
any one claiming by or under the Lessee shall bring such action in the District
Court of Salt Lake County, State of Utah, after compliance with the requirements
of State statutes for bringing suit, including compliance with the requirements
of the State Governmental Immunity Act, Title 63, Chapter 30, Utah Code
Annotated, 1953, as amended. Neither Lessee nor any assignee of lessee nor
against the State of Utah or against any State agency in the United States
District Court for the District of Utah, nor in any other United States District
Court in some other state, nor in the District of Columbia.
ARTICLE XIX. REMEDIES FOR DEFAULT BY LESSEE OR ASSIGNS
This Mineral Lease and the terms and conditions of this lease agreement
issued by the State of Utah are made with the Lessee herein on condition that
Lessee and any lawful successor in interest to Lessee shall perform all
covenants and terms and conditions herein set forth to be performed by Lessee or
its lawful assigns including payment of rentals and royalties as herein
provided; and if at any time there shall be default on the part of lessee or
breach of any of the terms or conditions hereof on the part of Lessee or by the
successor in interest to the Lessee; and if such default or breach shall
continue for a period of thirty (30) days after written notice from Lessor of
such default or breach given to Lessee or successor in interest addressed to
Lessee or successor in interest at the last address furnished by Lessee or
successor in interest by United States mail, then at the expiration of said
period of thirty (30) days immediately following such notice if the default or
breach has not been remedied, then at the expiration of said period of thirty
(30) days, at the option of the Lessor, Lessor may issue written notice of
termination and cancellation of this lease and forfeiture declaring that the
leased premises and each and every part thereof have thereby reverted to the
Lessor, including any and all fixtures and improvements required to be left with
the property upon expiration, termination, or cancellation of this lease.
<PAGE>
-12-
In the event that the leasehold estate shall have been damaged or injured
by the acts or neglect of the Lessee or operator, contractor, or assigns of
Lessee, Lessor also shall have a right of action for damages and for restitution
for any failure or refusal to comply with the terms and conditions of any
statute of this State relating to reclamation or rehabilitation, or for
abatement of pollution, together with rights for injunctive relief. Lessor also
shall have the right to recover on any bond or other security deposited with the
State of Utah in accordance with the terms or conditions hereinabove set forth
for indemnification.
ARTICLE XX. DISPOSITION OF ROCK TAILINGS
Rock, tailings, and waste materials resulting from the operation of the
Lessee on this land which contain the metalliferous minerals enumerated in
Article I hereof are covered by this mineral lease, unless and until such time
as Lessee renounces in writing the leasehold interest in such materials. In the
event Lessee sells or otherwise disposes of any such rock, tailing, or waste
materials, Lessee agrees to pay Lessor a Production Royalty on the materials
consistent with the prevailing State of Utah royalty for materials or minerals
of like kind.
IN WITNESS WHEREOF, the parties have executed this lease as of the date
hereinabove first written.
THE STATE OF UTAH, acting by and through the
BOARD OF STATE LANDS & FORESTRY and DIVISION
OF STATE LANDS & FORESTRY
APPROVED AS TO FORM:
JAN GRAHAM SCOTT HIRSCHI, DIRECTOR
ATTORNEY GENERAL
By /s/ Steven F. Alder By /s/ Edward W. Bonner
----------------------- ------------------------------------------
STEVEN F. ALDER EDWARD W. BONNER, MINERALS SECTION MANAGER
Division of State Lands & Forestry-LESSOR
MAY 14, 1993
SUMMO USA CORPORATION, c/o St. Mary minerals
Inc.
---------------------------------------------
By /s/ Gregory A. Hahn
-------------------------------------------
Gregory A. Hahn, Executive Vice
Pres. LESSEE
<PAGE>
-13-
STATE OF UTAH )
COUNTY OF SALT LAKE )
On the 6th day of April, 1994, personally appeared before me EDWARD W.
BONNER, who being by me duly sworn did say that he is the Minerals Section
Manager of the Division of State Lands & Forestry of the State of Utah and the
signer of the above instrument, who duly acknowledged that he executed the same.
Given under my hand and seal this 6th day of April, 1994.
/s/ Teresa [Illegible]
----------------------------------
NOTARY PUBLIC, residing at:
My Commission Expires:
5-5-95 NOTARY PUBLIC SEAL
STATE OF COLORADO )
COUNTY OF DENVER )
On the 23rd day of March, 1994, personally appeared before me Gregory A.
Hahn, signer of the above instrument, who duly acknowledged to me that he
executed the same.
Given under my hand and seal this 23rd day of March, 1994.
/s/ James C. [Illegible]
----------------------------------
NOTARY PUBLIC, residing at:
1776 Lincoln #1100
Denver, CO 80203
My Commission Expires: February 14, 1997
STATE OF UTAH )
COUNTY OF )
On the _____ day of _______________, 19_____, personally appeared before
me who being duly sworn did say that he is an officer of and that said
instrument was signed in behalf of said corporation by resolution of its Board
of Directors, and said acknowledged to me that said corporation executed the
same.
Given under my hand and seal this _____ day of _______________, 19_____.
----------------------------------
NOTARY PUBLIC, residing at:
My Commission Expires:
<PAGE>
December 20, 1996
KENNECOTT UTAH COPPER CORPORATION
P.O. BOX 11248
SALT LAKE CITY, UTAH 84147
KENNECOTT UTAH COPPER CORPORATION (Seller) hereby agrees to sell and deliver,
and SUMMO USA CORPORATION, San Juan County, UT (Buyer) agrees to purchase and
receive the products on terms and subject to conditions specified below and on
the reverse side of this Agreement.
KC# 3732
Product: Approximately 93% Sulfuric Acid, no specifications
Quantity: Nominal 50,000 short tons per year, 100% basis
H(2)SO(4)
Price: For the first 24 months of deliveries, $35.00/st. 100%
basis, f.o.b. Destination, delivered via truck. Price
will be adjusted at the beginning of the 25th month of
deliveries and annually thereafter, for one year of
escalation or de-escalation, by the most recent
Consumer Price Index that is available at that time.
Delivery Period: 60 months beginning with start up of BUYER's Lisbon
Valley Mine. Start up is estimated to be in January
1998.
Delivery Schedule: Pursuant to Summo Corporation's requirements, subject
to Kennecott Utah Copper Corporation's approval.
Deliver Destination: Summo USA Corporation, Lisbon Valley Mine in San Juan
County, Utah.
Unloading Period: For truck shipments, a maximum two-hour unloading
period is allowed after arrival at destination, on a
24-hour basis, 7 days per week.
Payment terms: 30 days from date of shipment.
Payment In U.S. Dollars by check to:
Kennecott Utah Copper Corporation
P.O. Box 224
Magna, UT 84044-0224
BUYER ACKNOWLEDGES THAT IT HAS READ THE TERMS AND CONDITIONS ON THE STANDARD
KENNECOTT CONTRACT ON THE REVERSE SIDE OF THIS AGREEMENT AND BY SIGNING BELOW
AGREES TO BE BOUND BY THESE TERMS AND CONDITIONS.
ACCEPTED December 30 1996
----------------------
SUMMO USA CORPORATION KENNECOTT UTAH COPPER CORPORATION
BY Robert A. Prescott BY David A. Litum
----------------------------- ------------------------------
OFFICER OF CORPORATION DIRECTOR-BYPRODUCT SALES
<PAGE>
The SELLER and BUYER agree that the following terms and conditions govern the
sale of the Product:
1. TAXES: All Federal, State or local taxes (except income taxes) now or
hereafter imposed in respect to this order, or any transaction involved herein
and/or the Production sale, use consumption, delivery, transportation of the
Product shall be for account of the BUYER, and if paid or required to be paid by
the SELLER, the amount thereof shall be added to and become a part of the price
payable to the BUYER hereunder.
2. FINANCIAL RESPONSIBILITY: If, in the reasonable opinion of SELLER, the
credit or financial responsibility of BUYER is, or becomes, impaired or
unsatisfactory, SELLER reserves the right to demand cash or satisfactory
security before making shipment. If BUYER fails to provide cash or satisfactory
security to fully satisfy SELLER's demands, such failure shall constitute a
breach of the Agreement, and SELLER shall have the right to withhold further
shipments and/or to cancel this Agreement or any part of this Agreement at the
option of SELLER, without any liability or obligations on the SELLER. Such
withholding of shipments and/or cancellation, however, shall not affect the
BUYER's liability for damages, including the costs associated with reshipment of
tank railcars or tank trucks due to BUYER's failure to meet its financial
responsibilities. Additionally, SELLER reserves the right to possession of the
Product and the right to stop Product in transit. The acceptance by SELLER of
any payment less than the full amount due shall not be a waiver of any rights of
SELLER.
3. PAYMENT: Payment of the price shall be made in lawful money of the United
States, as per the Payment Terms specified on the front of this document. If
payment is not made when due, or in the manner herein provided, SELLER may at
its option, without notice, cancel this Agreement as to all or any part of the
unfilled quantity. Sales and use taxes paid or required to be paid by the
SELLER, which are part of the price pursuant to Paragraph 1, shall be included
in the billing for the Product delivery. All other taxes which become part of
the price pursuant to Paragraph 1, the amount of which cannot be determined on
the invoice date, will be billed when they become known and will be payable
within thirty (30) days of billing date.
4. TITLE: Unless otherwise specified, title to and risk of loss of any
shipment of Product shall pass from SELLER to BUYER FOB railroad tank car or
tank truck at the destination point unless BUYER supplies the equipment to
transport the Product, in which case title and risk of loss shall pass FOB
railroad tank car or tank truck at loading point.
5. LIABILITY: SELLER assumes no responsibility for the condition of trucks,
tank cars and related equipment supplied by BUYER. SELLER is not responsible
for, and BUYER agrees to indemnify, defend, and save harmless the SELLER against
any, and all liabilities, claims, investigations, suits, causes of action,
judgments, losses, penalties, costs or expenses (including, without limitation,
reasonable attorneys fees) (collectively, "Liabilities"), arising out of or in
consequence of, or alleged to have arisen out of or in consequence of, in whole
or in part 1) any breach or default by the BUYER of the terms or conditions of
this Agreement, 2) any and all negligent acts by the BUYER, 3) any and all civil
or criminal breaches or violations or statutes, regulations, ordinances, or
otherwise by the BUYER, 4) any and all Liabilities predicated on theories of
strict liability, whether imposed or arising under a statute, ordinance,
regulation, or at common law or otherwise by the BUYER, 5) any and all improper
acts of loading, transporting, storage, handling, or application of the Product
by the BUYER, or, 5) any subsequent resale of the Product or other disposal by
the BUYER, including, but not limited to, any and all representations or
warranties that the BUYER makes to a third party in the course of the resale or
other disposal of the Product, or 7) any and all other acts or omissions of
BUYER, whether arising under this contract or otherwise, which result in
Liabilities to the SELLER. BUYER hereby assumes liability for, and shall
reimburse SELLER for, all damage to, and all loss or description of, any private
tank car or tank truck (including the fittings and appurtenances thereto)
occurring while said tank car or tank truck is in the possession of BUYER,
except when such damage, loss or destruction does not result from the negligence
or default of BUYER. BUYER's reimbursement of SELLER hereunder shall be limited
to the lessor of: (a) the actual cost to SELLER of repairing, reconditioning or
replacing said tank car or tank truck, or (b) the actual depreciated cash value
of said tank car or tank truck at the time of such damage, loss or destruction.
BUYER shall report promptly to SELLER all damage to, or loss or destruction of,
any such tank car or tank truck, howsoever arising, occurring while such tank
car or tank truck is in the possession or under the control of BUYER.
6. WARRANTY: Attached to this Agreement is a Composite Analysis, for the
dates indicated, of the Product. SELLER OR PRODUCER MAKE NO EXPRESS OR IMPLIED
WARRANTIES OF ANY KIND, INCLUDING WHETHER THE PRODUCT CONFORMS TO THE ATTACHED
COMPOSITE ANALYSIS. NO WARRANTY BY SELLER OR PRODUCER (OTHER THAN WARRANTY OF
TITLE AS PROVIDED IN THE UNIFORM COMMERCIAL CODE) SHALL BE IMPLIED OR OTHERWISE
CREATED UNDER THE UNIFORM COMMERCIAL CODE INCLUDING, BUT NOT LIMITED TO,
WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
7. NOTICE: The BUYER shall give written notice of any claim for any cause
whatsoever within ten (10) days after arrival of any shipment at destination,
and failure to do so shall constitute a waiver by the BUYER of all claims with
respect to such shipment. For any defect of quality established, SELLER's
liability shall be limited to replacing any defective acid delivered hereunder
and in no event shall SELLER incur liability for defects or damage to Products
in which acid delivered hereunder is used or for any other kind of
consequential, nominal, or incidental damages.
8. INVOICE: SELLER shall invoice BUYER for each delivery on the basis of price
provided herein, and each such delivery shall constitute a separate and
independent sale. SELLER's weights and analyses shall govern unless proven to
be in error.
9. MUTUALLY AGREED PRODUCER: BUYER agrees that SELLER may meet its commitments
under this Agreement by having a mutually agreed producer deliver Product on
behalf of SELLER, so long as the agreed producer otherwise agrees to meet the
terms and conditions of this Agreement.
10. FORCE MAJEURE: This Agreement is subject to the following conditions of
force majeure. Any strike, lockout, difference with workmen, accident, fire,
explosion, flood, earthquake, storm, unavoidable accident, mechanical breakdown
(including shutdowns for maintenance and inventorying) mobilization, war
(whether declared or undeclared), riot, rebellion, revolution, requirement,
regulation, restriction, or other act of any government, whether legal or
otherwise, the elements, inability to secure or delay in securing fuel, or other
supplies or materials, or power, necessary for the operation of the mines and
plants where the Product sold hereunder is produced or consumed, economic
shutdown of SELLER's or BUYER's mine or plant facilities, delays or interruption
to, or destruction of mines or plants of SELLER or BUYER, or any other acts
beyond the control of the parties, whether or not of the nature or character
hereinabove specifically enumerated which delays or interferes with the
performance of this Agreement shall be considered sufficient justification for
delay in making shipments, delivery or performance hereunder, in whole or in
part, until such cause ceases to exist; and this Agreement shall be deemed
suspended as long as such cause prevents or delays its execution. Neither party
shall be responsible for or liable to the other for damages or expenses incurred
or sustained because of any delay or failure to perform because of a condition
of force majeure. If under any of the conditions set forth in this Paragraph,
supplies of sulfuric acid available to SELLER are insufficient to complete
delivery of orders accepted by SELLER prior to the occurrence of the condition
or to SELLER's nominated long term regular contract customers. SELLER shall
allocate available supplies pro rata to such long term customers until such
customers' contractual requirements are met by SELLER, and then SELLER may, at
its option, allocate available supplies (having first satisfied the long term
customers' contractual requirements) in a manner it deems suitable, without
liability for any damages sustained by BUYER. A nominated long term regular
contract customer is a minimum annual tonnage commitment of 50,000 sl or more
and five (5) years or longer in original contract duration. BUYER shall
allocate purchased supplies pro rata to such long term suppliers until such
suppliers' contractual requirements are met by BUYER, and then BUYER may at its
option allocate purchases (having first satisfied the long term suppliers
contractual requirements) in a manner it deems suitable without liability for
damages sustained by supplier. If deliveries are interrupted or delayed for any
condition of force majeure, the amount of Product which is not delivered at the
regular order rate during the period of any such suspension or reduction shall,
at the option of SELLER, be deducted from the full amount which otherwise would
have been delivered under this order in which event SELLER shall not be
obligated to make up such omitted deliveries either during the order period or
after termination thereof. It is understood and agreed that SELLER shall be
under no obligation to operate its copper smelters nor will it be under any
obligation to operate its sulfuric acid plants except as, and to the extent
that, it shall have available for that purpose sulfurous cases of commercial
grade, produced in the course of operating its smelter and lack of such gases
shall be deemed a cause beyond SELLER's control and subject to the Force Majeure
provision and, notwithstanding paragraph 9 of this Agreement, SELLER is not
obligated to find another producer to meet its obligations under a condition of
force majeure.
11. HAZARDS: BUYER acknowledges that there are hazards associated with the use
of the Product. BUYER agrees to make its personnel concerned with the Product
aware of the hazards and assumes all responsibility for the warning of its
employees and independent contractors of all hazards to persons and property in
any way connected with Product. BUYER also assumes all responsibility for the
risks of using Product in combination with other articles or substances and in
any manufacturing process. The SELLER shall not be liable to the BUYER for any
consequential, nominal, or incidental damages, including lost profits, arising
out of the use, handling, storage, or any application or activity related to the
Product. The SELLER shall not be liable to the BUYER for compensation,
reimbursement or damages on account of loss of prospective profits or
anticipated sales or on account of expenditures, investments or commitments in
connection with the business or good will of the BUYER caused by failure of
Product to conform to the specifications herein set forth.
12. CLAIMS: The BUYER will promptly notify the SELLER in writing of any
claims, demands, suit, action, or proceeding with respect to the Product.
13. GOVERNING LAW: This Agreement shall be deemed to be made under and shall be
governed by the laws of the Sale of Utah in all respects, including matters of
construction, validity, and performance.
14. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement between
the parties as to the subject matter hereof and may not be changed or modified
except by signed writing by the SELLER and BUYER.
15. AFFILIATES: This Agreement inures to the benefit of affiliates,
subsidiaries, or parents of the parties.
16. SURVIVAL: The provisions of paragraphs 2, 3, 5 and 11 above survive
termination of this Agreement.
17. PRICE PROTECTION: If, after the interval designated in the contract, BUYER
is offered material of equal quality by a responsible domestic manufacturer for
delivery to the same destination on like terms and conditions as herein provided
in quantities adequate to fulfill the entire commitment to deliver product
during the entire remaining term (time left) of this contract at a lower
delivered cost to BUYER than the delivered cost hereunder. SELLER, within
thirty days of receipt of written evidence of same, shall either meet such lower
delivered cost or release BUYER from their obligation to purchase by cancelling
this contract. The written evidence shall be in the form of a signed proposal
to sell sulfuric acid to BUYER on the corporate stationery of the manufacturer
or distributor. It must contain the price for sulfuric acid delivered to
BUYER's facilities, the provision for changing the price, the volume offered,
the term (dates the supply is to commence and end), and the product
specifications.
<PAGE>
STATE OF NORTH CAROLINA )
)ss.
COUNTY OF )
On this 17th day of April, 1996 before me the undersigned, a notary public,
personally appeared Carolyn Moretz Jennings known to me to be the person whose
name is subscribed to the within instrument, and acknowledged that she executed
the same.
/s/ Lisa A. Watkins
----------------------------------------
Notary Public
My Commission Expires:
8/26/98
- ---------
[SEAL]
STATE OF NORTH CAROLINA )
)ss.
COUNTY OF CALDWELL )
On this 18th day of April, 1996 before me the undersigned, a notary public,
personally appeared Helen Moretz Sides known to me to be the person whose name
is subscribed to the within instrument, and acknowledged that she executed the
same.
/s/ Joan E. Magee
----------------------------------------
Notary Public
My Commission Expires:
4-29-96
- ---------
[SEAL]
<PAGE>
AMENDMENT TO OPTION AGREEMENT
This Amendment to Option Agreement is made and entered into as of March
_____, 1996 by and between George Alfred Moretz, Carolyn Moretz Jennings, Helen
Moretz Sides, Nancy Moretz Burnside, whose address is c/o of George Moretz, 1296
9th Street NW, Hickory, North Carolina 28601, and Christine Abernethy, whose
address is 806 S. College Avenue, Newton, North Carolina 28658 ("Owners"), and
SUMMO USA CORPORATION, a Colorado corporation and successor in interest to St.
Mary Minerals Inc. ("St. Mary"), whose address is 1776 Lincoln Street, Suite
1100, Denver, Colorado 80203.
WHEREAS, Owners and St. Mary entered into an Option Agreement dated
September 1, 1993 pertaining to certain lands in Township 47 North, Range 19
West, in Montrose County, Colorado.
WHEREAS, by Assignment and Assumption Agreement dated November 2, 1993, St.
Mary assigned its interest in the option Agreement to Summo.
WHEREAS, Owners and Summo now desire to amend the option Agreement and to
ratify and confirm the Option Agreement as so modified.
NOW, THEREFORE, in consideration of the following covenants, the Owners and
Summo agree as follows:
1. Subparagraph (b) of Article 7 is deleted in its entirety and replaced
with the following:
(b) Summo shall pay to Owners further option payments on the dates
and in the amounts as follows:
11-12-93 $ 10,000
March 1, 1994 20,000 (paid 2-7-94)
September 1, 1994 20,000 (paid 8-15-94)
September 1, 1995 50,000 (paid 8-16-95)
September 1, 1996 50,000
September 1, 1997 50,000
September 1, 1998 50,000
September 1, 1999 50,000
September 1, 2000 70,000
---------
$ 370,000
THIS Amendment shall be effective as of March 29, 1996.
EXCEPT as herein amended, the Option Agreement is hereby ratified and
confirmed by Owners and Summo as executed and as being in full force and effect.
<PAGE>
STATE OF TENNESSEE )
)ss.
COUNTY OF HAMILTON )
On this 4th day of April, 1996 before me the undersigned, a notary public,
personally appeared Nancy Moretz Burnside known to me to be the person whose
name is subscribed to the within instrument, and acknowledged that she executed
the same.
/s/ Brian H. Sewell
---------------------------------------
Notary Public
My Commission Expires:
My Commission Expires APRIL 21, 1999
- ------------------------------------
[SEAL]
STATE OF NORTH CAROLINA )
)ss.
COUNTY OF CATAWBA )
On this 27th day of April, 1996 before me the undersigned, a notary public,
personally appeared Christine Abernethy known to me to be the person whose name
is subscribed to the within instrument, and acknowledged that she executed the
same.
/s/ Linda L. Griggs
----------------------------------------
Notary Public
My Commission Expires:
4-21-97
- ---------
[SEAL]
<PAGE>
THIS Amendment will inure to the benefit of and will be binding upon the
respective successors, representatives and assigns of the Owners and Summo.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
/s/ George Alfred Moretz /s/ Carolyn Moretz Jennings
- ----------------------------------- -----------------------------------
George Alfred Moretz Carolyn Moretz Jennings
/s/ Helen Moretz Sides /s/ Nancy Moretz Burnside
- ----------------------------------- -----------------------------------
Helen Moretz Sides Nancy Moretz Burnside
/s/ Christine Abernethy
---------------------------------
Christine Abernethy
SUMMO USA CORPORATION
By: /s/ [illegible]
----------------------------------
STATE OF NORTH CAROLINA )
)ss.
COUNTY OF CALDWELL )
On this 18th day of April, 1996 before me the undersigned, a notary public,
personally appeared George Alfred Moretz known to me to be the person whose name
is subscribed to the within instrument, and acknowledged that he executed the
same.
/s/ Joan C. Magee
----------------------------------
Notary Public
My Commission Expires:
4-29-96
- ---------
[SEAL]
<PAGE>
STATE OF COLORADO )
CITY AND )ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 27th day of March,
1996, by Gregory A. Hahn, the president of Summo USA Corporation, on behalf of
the corporation.
/s/ Michelle Hebert
----------------------------------
Notary Public
My Commission Expires:
3-18-99
- ---------
[SEAL]
<PAGE>
EXHIBIT 10.10
PURCHASE OPTION AGREEMENT
dated
May 1, 1995
-----
<PAGE>
TABLE OF CONTENTS
PREAMBLE.................................................................... 1
1. OPTION.................................................................. 2
2. ESCROW.................................................................. 2
3. EXCLUSIVE POSSESSION AND SURFACE RIGHTS PRIORITY ....................... 3
4. TITLE................................................................... 4
5. UNDIVIDED INTEREST...................................................... 6
6. OPTION EXERCISE, TERM OF OPTION AND PAYMENT OF PURCHASE PRICE........... 6
(a) OPTION EXERCISE..................................................... 6
(b) TERM OF OPTION...................................................... 6
(c) PAYMENT OF PURCHASE PRICE........................................... 6
7. OPERATIONS ............................................................. 7
(a) SCOPE .............................................................. 7
(b) STANDARDS OF OPERATIONS ............................................ 7
(c) COMPLIANCE WITH LAW; RECLAMATION ................................... 7
8. NO IMPLIED COVENANTS ................................................... 8
9. PROTECTION FROM LIENS AND DAMAGES....................................... 8
10. TAXES................................................................... 8
11. INSURANCE............................................................... 9
12. INSPECTION.............................................................. 9
13. DATA.................................................................... 9
14. CONFIDENTIALITY........................................................ 10
15. TERMINATION AND SURRENDER.............................................. 10
16. REMOVAL OF PROPERTY.................................................... 11
17. ACCESS................................................................. 11
<PAGE>
18. EASEMENTS.............................................................. 11
19. NOTICES................................................................ 12
20. ASSIGNMENT............................................................. 12
21. NO TRANSFER OR ENCUMBRANCE ............................................ 14
22. FORCE MAJEURE ......................................................... 14
23. SHORT FORM ............................................................ 15
24. INUREMENT.............................................................. 15
25. MODIFICATION........................................................... 15
26. WAIVER................................................................. 15
27. ENTIRE AGREEMENT....................................................... 16
28. CONSTRUCTION........................................................... 16
29. GOVERNING LAW.......................................................... 16
30. TIME OF ESSENCE........................................................ 16
31. TIME COMPUTATIONS...................................................... 16
32. INVALIDITY............................................................. 16
33. COUNTERPARTS........................................................... 17
34. ADDITIONAL DOCUMENTS................................................... 17
EXHIBIT LIST
No. Description
--- -----------
A. Names and Addresses of Owners
B. Description of the Properties
C. Form of General Warranty Deeds
D. Form of Quit Claim Deed
E. Petrotech Oil and Gas Lease
F. Form of Short Form of Agreement
ii
<PAGE>
PURCHASE OPTION AGREEMENT
THIS PURCHASE OPTION AGREEMENT made effective as of the 1st day
of May, 1995 (the "Effective Date"), by and between those persons whose names
and addresses are shown on EXHIBIT A attached hereto and incorporated herein
(individually an "Owner" and collectively the "Owners") and SUMMO USA
CORPORATION, a Colorado corporation, whose address is 1776 Lincoln Street,
Denver, Colorado 80203, ("Summo").
PREAMBLE
1. Owners are the owners of two parcels of real property. One of the
parcels contains approximately 320 acres; the other contains approximately 80
acres. The 320 acre parcel is hereafter referred to as the "Plant Parcel" and
the 80 acre parcel is hereafter referred to as the "Exploration Parcel." Both
parcels are hereafter collectively called the "Properties." They are located in
San Juan County, Utah, and are more particularly described on EXHIBIT B attached
hereto and incorporated herein.
2. Subject to the Petrotech oil and gas lease hereafter discussed in
Section 4(e) (the "Petrotech Matter"), Summo desires to carry out certain
mineral exploration work on the Properties and certain survey and site
evaluation work on the Plant Parcel. Summo also wishes to acquire the option to
purchase the Properties.
3. Owners desire to make the Properties available for the conduct by
Summo of such exploration and survey-site evaluation work thereon and to grant
Summo the option to purchase the Properties.
NOW THEREFORE, in consideration of Twenty Thousand Dollars
($20,000.00) in hand paid to Owners (the "Signing Bonus"), the receipt and
sufficiency of which is hereby acknowledged, and further in consideration of the
mutual covenants, agreements, and promises herein contained, the parties agree
as follows:
<PAGE>
1. OPTION.
(a) Owners grant to Summo during the term of this Agreement the sole
and exclusive option (the "Option") to purchase the Properties, together
with all appurtenances, all minerals and mineral rights except as hereafter
expressly excluded, all water and water rights incident thereto and all
improvements and personal property thereon, free and clear of all liens and
encumbrances, for a total purchase price of Two Hundred Forty Thousand
Dollars ($240,000.00) (the "Purchase Price). Summo shall be entitled to a
credit against the purchase price for all costs and expenses incurred by
Summo under the provisions of Section 4 hereof. If either of the Properties
are placed into commercial production at any time during the term of the
Option (the "Term") as hereafter defined, Summo shall exercise the option
by providing written notice of exercise to Owners within ten (10) days of
the date of first shipment for sale of ores, concentrates, metals and other
mineral products. Within thirty (30) days after such notice Summo shall pay
the Purchase Price to Owners in the manner provided in Section 6(c)
hereof. "Commercial production" shall mean the processing and sale of ores,
concentrates, metals and other mineral products which have been mined on
either of the Properties but which shall not include processing for the
purpose of testing or milling by a pilot plant. Whether or not either of
the Properties are placed into commercial production during the Term of the
Option, Summo shall also have the right to exercise the Option as hereafter
provided.
(b) The Option shall NOT include any rights in and to any oil, gas
distillate, other hydrocarbons or sulfur appurtenant to the Properties (the
"Oil and Gas Rights"), which shall remain the property of the Owners.
2. ESCROW.
(a) Contemporaneously with the execution of this Agreement, Owners
shall execute, acknowledge, and deliver to the Escrow Agent as hereafter
defined one or more general warranty deeds (the "Deeds") conveying the
Properties to Summo in the form (without legal descriptions) of EXHIBIT C
attached hereto and incorporated
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<PAGE>
herein but reserving to the Owners (i) the Oil and Gas Rights and (ii) a
royalty of one percent (1%) of the net returns from all ores, minerals,
concentrates or other products mined and removed from the Exploration
Parcel and sold or processed by Summo.
(b) Contemporaneously with the execution of this Agreement, Summo
shall (i) execute, acknowledge and deliver to Escrow Agent a quit claim deed
conveying the Properties back to Owners and terminating the Surface Rights
Priority (the "Quit Claim Deed") in the event Summo fails to exercise the
Option during the Term thereof (The form of the Quit Claim Deed (without
legal descriptions) is attached hereto as EXHIBIT D and incorporated
herein), and (ii) deliver to Escrow Agent a check for $20,000 for the
balance of the signing bonus ("Signing Bonus Balance") to be held by Escrow
Agent in accordance with the provisions of Section 4(e)(iv) hereof.
(c) Owners and Summo hereby appoint CB&S Nominee, Inc., 1800 One
Norwest Center Building, 1700 Lincoln Street, Denver, Colorado 80203 as
their Escrow Agent (i) to receive and distribute the $20,000 Signing Bonus
Balance to the party entitled to receive same, (ii) to receive and
distribute payment of the Purchase Price; (iii) to hold the Deeds and
deliver them to the party entitled to receive the same under the escrow
instructions executed contemporaneously herewith by the Owners, Summo and
the Escrow Agent (the "Escrow Instructions"); and (iv) to hold the Quit
Claim Deed for delivery to the party entitled to receive the same under the
Escrow Instructions. The parties hereto agree that the Escrow Agent shall
act only pursuant to the Escrow Instructions.
3. EXCLUSIVE POSSESSION AND SURFACE RIGHTS PRIORITY.
(a) Subject to the Petrotech Matter, Summo shall have the exclusive
possession of and surface rights priority in and to the Properties during
the Term of the Option and thereafter if the Option is exercised.
(b) In the event during the Term of the Option that the Owners shall
enter into any oil or gas leases or any other agreements regarding the
Properties all or any
3
<PAGE>
portion of the Properties, the surface rights to the Properties of any
lessees or third parties thereunder shall at all times be subordinate to
the surface rights to the Properties herein granted to Summo (the "Surface
Rights Priority"), which shall be specifically designated in the Short Form
of Agreement to be executed by Owners and Summo pursuant to Section 23
hereof.
4. TITLE.
(a) Lisbon Land & Livestock Company ("Lisbon L&L"), a Colorado general
partnership, is record owner of the Properties. The Owners warrant that
Warren J. Wood, Wilbur L. Wood, Wesley 0. Wood, Wm. H. Wood and Willard G.
Wood constitute all of the general partners of Lisbon L&L. Except for the
Petrotech Matter, Owners warrant that they are in sole possession of the
Properties, that they have the right to enter into this Agreement, that
they know of no other person claiming any interest in the Properties or the
ground covered thereby, and that the Properties are free from all liens,
encumbrances leases, claims of leasehold interests, restrictions, easements
and any other limitations on the rights granted Summo hereunder, except
liens for property taxes not yet due and payable. Subject to the Petrotech
Matter, Owners further warrant to Summo the quiet enjoyment of the
Properties and the right to explore, develop and mine the same in accordance
with the rights herein granted to Summo.
(b) Owners warrant and will defend title of the Properties against all
persons whomsoever except for the Petrotech Matter.
(c) At Summo's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any
defect in their title to the Properties or the ground covered thereby,
including the Petro-Tech Oil & Gas Lease as hereafter defined and obtaining
the Petro-Tech Sign-Off as hereafter defined. If Owners fail or refuse to
take any such action, Summo may take any such action in Owners' names and
at Owners' expense. In the event Owners are unable to obtain the requisite
Petro-Tech Sign-Off within the time frame required under Section 4(e)(iv),
then any expenses or costs thereafter so incurred by Summo, including any
4
<PAGE>
cost incurred by Summo to obtain the Petro-Tech Sign-off, shall be credited
against the Purchase Price. Owners agree to cooperate with Summo in any
such action.
(d) Summo shall not be estopped to deny the validity of Owners'
title.
(e) (i) On or about January 4, 1993, Owners leased the Plant Parcel
to Petrotech Corp. ("Petrotech") pursuant to a certain Oil and Gas Lease
that was recorded in the Recorder's Office of San Juan County, Utah as
Entry No. 005355 (the "Petrotech Oil-Gas Lease"), a true, correct and
complete copy of which is attached hereto and made a part hereof as EXHIBIT
E.
(ii) To the best of Owners' actual knowledge, Petrotech has not
conducted any testing, prospecting or drilling activities on the Plant
Parcel nor has Petrotech installed or constructed any pipelines, tanks,
roads, buildings or other structures thereon.
(iii) Owners acknowledge that during the term of the Option,
Summo intends to conduct exploratory investigations, mineral prospecting,
soil testing, survey and geophysical surveys, core drilling and other
studies on the Plant Parcel to determine, among other things, the
feasibility of constructing a plant facillity thereon for use in
conjunction with Summo's copper exploration and mining activities in the
Lisbon Valley and that extensive acreage is required for such a facility.
Owners further acknowledge that conflicts might arise between Summo and
Petrotech regarding the use of the surface of the Plant Parcel during the
Term of the Option and thereafter if the Option is exercised by Summo.
(iv) Owners accordingly agree to use their best efforts to
obtain at their sole expense on or before July 31, 1995 a recordable
document executed by Petrotech or its successors and assigns (the
"Petro-Tech Sign-off") which either wholly terminates the Petrotech Oil-Gas
Lease or which subordinates the rights of Petrotech or its successors and
assigns to utilize the surface of the Plant Parcel to the rights of Summo
as herein granted as well as the rights of Summo as owner of the Plant
Parcel if the Option is exercised. The terms of such subordination must be
satisfactory to Summo as evidenced by a written approval executed by Summo.
If the Petro-Tech Sign-off approved by Summo is received by Escrow Agent
by August 7,
5
<PAGE>
1995, promptly upon receipt thereof Escrow Agent shall distribute the
$20,000 Signing Bonus Balance to Owners. If the Petro-Tech Sign-off is not
received by Escrow Agent by August 7, 1995, (i) Escrow Agent shall return
the $20,000 Signing Bonus Balance to Summo and (ii) this Agreement/Option
shall continue in full force and effect in accordance with its terms and
conditions unless terminated by Summo as hereafter provided.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any
portion of the Properties is less than one hundred percent, the interest
claimed by such Owner is set forth in EXHIBIT A. Any representation or
warranty of title made by any Owner shall apply only to the interest set
forth in EXHIBIT A.
6. OPTION EXERCISE, TERM OF OPTION AND PAYMENT OF PURCHASE PRICE.
(a) OPTION EXERCISE. Subject to the provisions of Section 1(a), the
Option may be exercised by Summo at any time during the term of the Option
by providing written notice of Option exercise to Owners.
(b) TERM OF OPTION. The Term of the Option shall be for the period
commencing with the Effective Date hereof and ending September 30, 1995.
(c) PAYMENT OF PURCHASE PRICE. Within thirty (30) days after notice
of Option exercise is given, Summo shall pay the Purchase Price by check
which shall be made payable to and shall be transmitted to the Escrow
Agent. The amount of Purchase Price shall be reduced by the amount of any
credit to which Summo is entitled under Section 1(a) and 4(c) hereof. The
Escrow Instructions will instruct the Escrow Agent how the payment shall
be disbursed. Upon making such payment to the Escrow Agent, Summo shall be
deemed to have paid the Purchase Price to Owners, their heirs,
representatives, successors, and assigns, and thereupon Summo shall be
discharged to the extent thereof as if the payment had been made directly
to Owners, or to any person, firm or corporation entitled thereto, and
Summo shall not be liable for the ultimate distribution or receipt of any
payment or payments.
6
<PAGE>
7. OPERATIONS.
(a) SCOPE. During the Term of the Option, Summo shall have free and
unrestricted access to the Properties including the surface rights thereof
shall have the right and privilege of conducting exploratory investigations
and prospecting for mineral deposits on the Properties and the right and
privilege of performing survey and other site evaluation work on the Plant
Parcel. Such prospecting on the Properties shall include, but not be
limited to, soil testing, geophysical surveys, core drilling, shaft
sinking, tunnel and mine building and the removal of ore for testing
purposes but not removal of ore for sale but subject, nevertheless, to the
provisions of Section 1(a). Summo shall also have the right to erect and
maintain upon each of the Properties any improvements, structures, or
facilities including mines, shafts, tunnels and buildings as may be
necessary or convenient for the conduct of its operations.
(b) STANDARDS OF OPERATIONS. Summo shall conduct all operations on
title Properties in a good and workmanlike manner and in accordance with
accepted mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION. Summo shall endeavor in good
faith to comply with applicable provisions of federal, state and local laws
and regulations, as required by the operation permits issued to Summo by
these agencies under which Summo shall conduct its operations. If this
Agreement is terminated or if the Option is not exercised during its Term,
Summo shall (i) reclaim only those portions of the Properties disturbed by
its operations and in compliance with all applicable govermnental laws,
regulations and orders ("Govermnentally Required Condition"), and (ii)
Summo shall have the right, without payment of any additional consideration
to Owners, to enter upon the Properties subsequent to termination of this
Agreement or the expiration of the Term of the Option for purposes of
performing such reclamation work. Any such reclamation work shall be
pursued to a final and Governmentally Required Condition on a forthwith
basis without unnecessary delay upon termination of this Agreement.
7
<PAGE>
8. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Properties
or the timing thereof other than those expressly provided in this
Agreement, shall be implied. After commencing any exploration or related
operations on or in connection with the Properties and so long as this
Agreement has not been terminated before the expiration of its Term, Summo
may in its sole discretion curtail or cease such operations.
9. PROTECTION FROM LIENS AND DAMAGES. Summo shall keep the Properties
free of liens for labor performed or materials or merchandise furnished for
use on the Properties under this Agreement, and shall hold Owners harmless
from all costs, loss or damage which may result from any work or operations
of Summo or its occupancy of the Properties.
10. TAXES. Owners shall pay all taxes levied against the Properties prior
to the Effective Date of this Agreement. Summo shall pay or reimburse
Owners for all taxes levied against the Properties during the Term of the
Option. In the case of taxes for the calendar year in which the Term of the
Option commences and for the calendar year in which the Term ends, there
shall be an apportionment between the parties, Summo to bear the proportion
of taxes upon the Properties applicable to that part of the calendar year
included during the Term hereof and Owners to bear the balance of the
taxes. Summo shall also pay all taxes levied during the Term of the Option
against all buildings, structures, machinery, equipment, personal property,
fixtures and improvements placed upon the Properties by Summo, and all
taxes levied against Summo as an employer of labor. All taxes shall be paid
when due and before delinquent, but Summo shall be under no obligation to
pay any tax so long as the tax is being contested in good faith by
appropriate legal proceedings and the nonpayment thereof does not adversely
affect any right, title or interest of Owners in or to the Properties.
8
<PAGE>
11. INSURANCE. Summo shall carry at all times during the term of the
Option worker's compensation and other insurance required by state laws and
mining regulations, or Summo may self-insure as to such matters if it
qualifies as a self-insurer under the appropriate laws and regulations.
Summo will hold Owners harmless from any and all liability for any claim of
loss or damage arising out of the operations of Summo, its agents,
representatives, employees and assignees hereunder.
12. INSPECTION.
(a) Owners or their authorized representative may enter on the
Properties at any reasonable time for the purpose of inspection, but shall
enter at their own risk and so as not to hinder unreasonably the operations
of Summo. Owners shall indemnify and hold Summo harmless from any damage,
claim or demand by reason of injury to or the presence of Owners, their
agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance by Summo with the provisions of this Agreement.
13. DATA. (a) Upon the execution of this Agreement, Owners shall deliver
to Summo any and all drill core, all geological, geophysical, engineering
data and maps, logs of drill holes, results of assaying and sampling and
similar data concerning the Properties (or copies thereof) which are in
Owners' possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and full payment of the Purchase Price as
provided in Section 1(a) and Section 6(c) hereof), Summo shall, within
sixty days after termination, (i) return to Owners all drill core and
original data delivered by Owners to Summo which are then in Summo's
possession or control, and (ii) make available for inspection by Owners all
factual geological and geophysical data and maps (not including
interpretive data), logs of drill holes, drill core or cuttings and results
of assaying and sampling pertaining to the Properties which Summo has
obtained as a
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<PAGE>
result of its exploration work under this Agreement and which are then in
Summo's possession or control or any assignee of Summo or in the possession
or control of any third party equity owner in Summo or an assignee of such
third party equity owner. Upon Owners' request made within ninety (90) days
after termination of this Agreement, Summo shall at Owners' expense provide
Owners with the drill core or cuttings designated by Owners and with copies
of any portion of the factual geological and geophysical data and maps (not
including interpretive data), logs of drill holes and results of assaying
and sampling designated by Owners. Summo makes no representation or
warranty as to the accuracy or completeness of any such data or information
and shall not be liable on account of any use by Owners or any other person
of any such data or information. Summo shall not be liable for the loss or
destruction of any drill core or cuttings.
14. CONFIDENTIALITY. During the Term of the Option, all information
obtained by Owners or their authorized representatives from Summo or
arising out of Summo's activities on the Properties pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of Summo.
15. TERMINATION AND SURRENDER.
(a) A failure by Summo to pay the Purchase Price within 30 days after
exercise of the Option as provided in Section 1(a) and in Section 6(c)
hereof shall constitute a termination of this Agreement effective upon the
expiration of such 30 day period. Upon the effective date of such
termination, all rights of Summo under this Agreement, except as provided
in Sections 16 and 17 hereof, shall terminate and all liabilities and
obligations of Summo hereunder (including the obligation of paying the
purchase price under Section 6(c) hereof) shall likewise thereupon
terminate except as provided in Sections 7(c) and 13(b) hereof.
(b) Summo may also at any time terminate this Agreement and the
Option by delivering to Owners or by filing for record in the appropriate
office (with a copy
10
<PAGE>
to Owners) a good and sufficient Surrender of this Agreement. Upon mailing
the Surrender to Owners or to the appropriate office, all rights of Summo
under this Agreement shall terminate, except as provided in Sections 16 and
17 hereof, and all liabilities and obligations of Summo under this Agreement
shall likewise terminate except as provided in Section 7(c) and 13(b)
hereof and except liability for payment of the purchase price under Section
1 hereof if such became due more than 30 days prior to the date of such
termination.
16. REMOVAL OF PROPERTY. For a period of six (6) months after the
termination of this Agreement Summo shall have the right (but not the
obligation except to the extent set forth in Section 7(c) hereof) to remove
from the Properties all buildings, structures, machinery, equipment,
personal property, fixtures, and improvements owned by Summo or erected or
placed on or in the Properties by Summo, except mine timbers in place.
Summo may keep one or more watchmen on the Properties during the six-month
period.
17. ACCESS. Subject to the provisions of Section 7(c) of this Agreement,
for as long as necessary after termination of this Agreement or Summo's
failure to exercise the Option during the Term thereof, Summo shall have the
right of access to and across the Properties for reclamation purposes.
18. EASEMENTS. If requested by Summo during the term of this Agreement or
following the exercise of the Option, Owners shall execute one or more
instruments granting to Summo without cost to Summo easements upon, over or
through the Properties or upon, over or through other property owned by
Owners, for the construction, maintenance, use, and removal of pipe lines,
telephone lines, electrical power or transmission lines, roads, railroads,
tramways, flumes, ditches, shafts, drifts, tunnels and other facilities
necessary or convenient for Summo's operations on the Properties or on
other property.
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<PAGE>
19. NOTICES. All notices and other communications to any party shall be in
writing and shall be sufficiently given if delivered in person or sent by
certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Notices given by mail shall be deemed delivered as
of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
Lisbon Land & Livestock Company
9220 W. Kerry Lane
Peoria, Arizona 85382
Warren J. Wood - c/o Lisbon Land & Livestock Company
Elsie Wood - c/o Lisbon Land & Livestock Company
Wilbur L. Wood - c/o Lisbon Land & Livestock Company
Ethel Wood - c/o Lisbon Land & Livestock Company
Wesley 0. Wood - c/o Lisbon Land & Livestock Company
Donna Wood - c/o Lisbon Land & Livestock Company
Wm. H. Wood - c/o Lisbon Land & Livestock Company
Louise M. Wood - c/o Lisbon Land & Livestock Company
Willard G. Wood - c/o Lisbon Land & Livestock Company
Betty Wood - c/o Lisbon Land & Livestock Company
and all notices to Summo shall be addressed:
Summo USA Corporation
1776 Lincoln Street
Denver, Colorado 80203
Attn: Gregory A. Hahn
20. ASSIGNMENT.
(a) The rights of any party hereunder may be assigned in whole or in
part without the consent of the other parties hereto, subject to the
following provisions:
(b) No change or division in the ownership of the Properties or the
payment provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights or obligations of Summo hereunder.
Owners covenant that any
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change in their ownership shall be accomplished in such a manner that Summo
shall be required to make payment and to give notices to but one person,
firm or corporation, and upon breach of this covenant, Summo may retain all
monies otherwise due to Owners until the breach has been cured. No change
or division in ownership shall be binding on Summo until 30 days after
Owners have given Summo a certified copy of the recorded instrument
evidencing the change or division.
(c) No assignment by Summo of the whole or an undivided interest in
this Agreement or the Option shall relieve Summo of liability for any
subsequent breach by the assignee of any of Summo's obligations hereunder.
If this Agreement/Option is assigned as to a segregated portion of the
Properties, default by the holder hereunder of that portion shall not
affect the rights of holders hereunder of any other portion.
(d) If Owners or any of them receive and propose to accept a bona
fide written offer from an unrelated third party to purchase, subject to
the terms of this Agreement, and purpose to accept all or any part of
Owners' interest in the Properties or in this Agreement, such Owners
shall first offer the interest to Summo stating the interest proposed to
be sold or otherwise disposed of, the offering price from such third
party and the other terms and conditions of sale. Summo may accept the
offer on the same terms and conditions as such third party offer by
notice to Owners given within 60 days following the date of Owners'
offer. If Summo does not accept Owners' offer, Owners may sell or
otherwise dispose of the interest offered to Summo at a price and upon
terms and conditions equal to or less favorable to the third party than
those offered to Summo provided that the sale or other disposition is
effectuated within 120 days from the effective date of Owners' offer.
Any sale or other disposition shall be subject to the terms of this
Agreement, including this subsection (d), all of which shall survive the
closing of any such sale in full force and effect. If Owners do not sell
or otherwise dispose of the interest offered within such 120 day period,
the provisions of this subsection (d) shall apply to any subsequent
offer received by Owners.
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21. NO TRANSFER OR ENCUMBRANCE. Without Summo's prior written
consent, neither Owners nor any Owner during Term of this
Agreement/Option shall (a) sell, transfer, assign or convey any interest
in the Properties without Summo's prior written consent or otherwise in
accordance with the provisions of Section 20(d) hereof; (b) do or fail
to do any act or thing which would cause or permit any part of the
Properties to be pledged, collateralized or stand as security for any
matter whatsoever; (c) enter into any leases or other agreements
concerning the Properties or any part thereof except in connection with
the Oil and Gas Rights; or (d) enter into any leases, contracts or other
agreements concerning the Oil and Gas Rights in contravention of the
Surface Rights Priority herein granted to Summo.
22. FORCE MAJEURE.
(a) If Summo shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of the
Purchase Price), the failure of performance shall be excused and the period
for performance and the Term of the Option and this Agreement shall be
extended for an additional period equal to the duration of the Force
Majeure. Upon the occurrence and upon the termination of any Force Majeure,
Summo shall promptly notify Owners. Summo shall use reasonable diligence to
remedy a Force Majeure but shall not be required against its better
judgment to settle any labor dispute or contest the validity of any law or
regulation or any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond Summo's reasonable
control, including law or regulation, action or inaction of civil or
military authority, inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Properties in connection with this Agreement; unusually
severe weather, mining casualty, fire, explosion, flood, insurrection,
riot, labor dispute, inability after diligent effort to obtain workmen or
material, delays in transportation and acts of God; unavailability of a
suitable market for the ores, minerals, concentrates or other products from
the Properties; and excessive costs of mining, milling, processing or
marketing, or insufficient prices
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<PAGE>
available for the ores, minerals, concentrates or other products produced
from the Properties which render Summo's operations uneconomic.
23. SHORT FORM. Contemporaneously herewith, Summo and Owners have executed
and delivered a Short Form of Agreement. Summo may record the Short Form or
this Agreement, or both, as it may elect. The form of such Short Form of
Agreement is attached hereto and incorporated herein as EXHIBIT F.
24. INUREMENT. All covenants, conditions, limitations and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors and assigns.
25. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation or
amendment is in writing and is signed by Owners and Summo.
26. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
27. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warranties or
understandings, written or oral.
28. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
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29. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
30. TIME OF ESSENCE. Except as set forth in Section 22, hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
31. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday, Sunday, or legal holiday. Any
performance or payment which must be taken or made under this Agreement
must be taken or made prior to 5:00 p.m. (Denver, Colorado time) of the
last day of the applicable period provided hereunder for such action,
unless another time is expressly specified. All references to time shall be
Denver, Colorado time. If a date for performance or payment falls on a
holiday or weekend, the time for performance or payment shall be extended
to the next business day, and if performance or payment has occurred on
such weekend or holiday it shall be deemed to have occurred on the next
business day.
32. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those Owners executing it.
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<PAGE>
34. ADDITIONAL DOCUMENTS. Owners will provide Summo with such additional
documents as may be necessary to carry out the purposes of this Agreement.
If conditions change by reason of conveyances, assignments or other matters
relating to the title to or description of the Properties, Owners and Summo
shall execute amendments of this Agreement, the Short Form of Option
Agreement and any other documents which may be necessary to reflect such
changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LISBON LAND & LIVESTOCK
COMPANY, a Colorado general partnership
By:/s/Warren J. Wood
-------------------------------------
Warren J. Wood, general partner
By:/s/Wilbur L. Wood
-------------------------------------
Wilbur L. Wood, general partner
By:/s/Wesley O. Wood
-------------------------------------
Wesley O. Wood, general partner
By:/s/William H. Wood
-------------------------------------
Wm. H. Wood, general partner
By:/s/Willard G. Wood
-------------------------------------
Willard G. Wood, general partner
/s/Warren J. Wood /s/Elsie Wood
- ----------------------------- ------------------------------------
Warren J. Wood, Individually Elsie Wood, Individually
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/s/Wilbur L. Wood /s/Ethel Wood
- ------------------------------- ---------------------------------
Wilbur L. Wood, Individually Ethel Wood, Individually
/s/Wesley O. Wood /s/Donna Wood
- ------------------------------- ---------------------------------
Wesley 0. Wood, Individually Donna Wood, Individually
/s/William H. Wood /s/Louise M. Wood
- ------------------------------- ---------------------------------
Wm. H. Wood, Individually Louise M. Wood, Individually
/s/Willard G. Wood /s/Betty Wood
- ------------------------------- ---------------------------------
Willard G. Wood, Individually Betty Wood, Individually
SUMMO USA CORPORATI0N, a
Colorado corporation
By:/s/Gregory A. Hahn
-------------------------------
Gregory A. Hahn, Vice President
STATE OF COLORADO )
)ss.
COUNTY OF MESA )
On this 26th day of April, 1995 before me the undersigned, a notary
public, personally appeared Warren J. Wood, Wilbur L. Wood, Wesley 0. Wood,
Wm. H. Wood and Willard G. Wood as all of the general partners of Lisbon Land
& Livestock Company, a Colorado general partnership, known to me (or proved
to me on the oath of Wesley 0. Wood (to be the persons whose names are
subscribed to the within instrument and acknowledged that they each executed
the same for and on behalf of said partnership.
My Commission Expires: 2/6/99 [ILLEGIBLE]
--------- --------------------------------
Notary Public
18
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss
COUNTY OF SANTA BARBARA )
On this 19th day of April, 1995, before me, Belinda Poindexter, a notary
public in and for the State of California, personally appeared WILLIARD G. WOOD
AND BETTY WOOD, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument, and acknowledged to me that they executed the same in their
individual capacities, and that by their signature on the instrument, the
persons executed the instrument.
WITNESS my hand and official seal.
[SEAL]
Belinda Poindexter
Comm. #1020189
NOTARY PUBLIC CALIFORNIA
SANTA BARRARA COUNTY
Comm Expires March 17, 1998
Signature /s/ Belinda Poindexter
------------------------
<PAGE>
STATE OF OREGON )
)ss.
COUNTY OF MARION )
On this 18th day of April, 1995 before me the undersigned, a notary
public, personally appeared Warren J. Wood and his wife Elsie Wood known to
me (or proved to me on the oath of ______________ (to be the persons whose
names are subscribed to the within instrument, and acknowledged that they
each executed the same.
My Commission Expires: 11-8-96 /s/T. Nichols
----------------- -----------------------
Notary Public
[OFFICIAL SEAL]
T. NICHOLS
NOTARY PUBLIC - OREGON
COMMISSION NO-019514
MY COMMISSION EXPIRES NOV 08, 1996
STATE OF OREGON )
)ss.
COUNTY OF MARION )
On this 18th day of April 1995 before me the undersigned, a notary
public, personally appeared Wilbur L. Wood and his wife Ethel Wood known to
me (or proved to me on the oath of __________________________ (to be the
persons _____________ whose names are subscribed to the within instrument,
and acknowledged that they each executed the same.
My Commission Expires: 11-8-96 /s/T. Nichols
----------------- -----------------------
Notary Public
[OFFICIAL SEAL]
T. NICHOLS
NOTARY PUBLIC - OREGON
COMMISSION NO-019514
MY COMMISSION EXPIRES NOV 08, 1996
STATE OF COLORADO )
)ss.
COUNTY OF MESA )
On this 14th day of April, 1995 before me the undersigned, a notary
public, personally appeared Wesley 0. Wood and his wife Donna Wood known to
me (or proved to me on the oath of _______________ (to be the persons whose
names are subscribed to the within instrument, and acknowledged that they
each executed the same.
My Commission Expires: 2/6/99 /s/ [ILLEGIBLE]
-------------------- --------------------------
Notary Public
19
<PAGE>
STATE OF _________ )
)ss.
COUNTY OF ________ )
On this _______ day of ______________________, 19__ before me the
undersigned, a notary public, personally appeared Willard G. Wood and his
wife Betty Wood known to me (or proved to me on the oath of
___________________ (to be the persons whose names are subscribed to the
within instrument, and acknowledged that they each executed the same.
My Commission Expires: ___________________ __________________________
Notary Public
STATE OF ARIZONA )
)ss.
COUNTY OF MARICOPA )
On this 21 day of April, 1995 before me the undersigned, a notary
public, personally appeared Wm. H. Wood and his wife Louise Wood known to me
(or proved to me on the oath of _____________________ (to be the persons
whose names are subscribed to the within instrument, and acknowledged that
they each executed the same.
My Commission Expires: [ILLEGIBLE] /s/Connie L. Sanchez
----------------------- ----------------------
Notary Public
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 10th day of
April, 1995, by Gregory A. Hahn, the Vice President of Summo USA Corporation, a
Colorado corporation, on behalf of the corporation.
Commission Expires: Feb. 14, 1997 James C. Robertson
----------------------- -------------------------
Notary Public
[OFFICIAL SEAL]
JAMES C. ROBERTSON
NOTARY PUBLIC
STATE OF COLORADO
20
<PAGE>
EXHIBIT A
OWNERS
Name and Address % Interest
- ----------------- ----------
Lisbon Land & Livestock Company 100%
9220 W. Kerry Lane
Peoria, AZ 85382
Warren J. Wood and Elsie Wood, Undivided 20% Partnership Interest
husband and wife*
Wilbur L. Wood and Ethel Wood, Undivided 20% Partnership Interest
husband and wife*
Wesley 0. Wood and Donna Wood, Undivided 20% Partnership Interest
husband and wife*
Wm H. Wood and Louise M. Wood, Undivided 20% Partnership Interest
husband and wife*
Willard G. Wood and Betty Wood, Undivided 20% Partnership Interest
husband and wife*
*All care of: Lisbon Land & Livestock Company at the above address
<PAGE>
EXHIBIT B
The following parcels of real property located in San Juan County, Utah:
Plant Parcel:
- -------------
T 30 S, R 25 E, Sec. 26 - SW/4, W2 SE/4
T 30 S, R 25 E, Sec. 35 - NE/4 NW/4, NW/4 NE/4
Exploration Parcel:
- ------------------
T 31 S, R 26 E, Sec. 6 - SW/4 NW/4, NW/4 SW/4
<PAGE>
EXHIBIT C
[form of individual deed]
Recorded at the request of __________________ at___________ a.m./p.m. Fee paid
___________________________________Dollars _______________________
Recorder, by ________________________, DEP Book ________________, Page _______
Mail Tax Notice to __________________________________________________________
Address _____________________________________________________________________
WARRANTY DEED
THIS DEED, made this _________ day of _________________, 1995, by
______________________ and ____________________, husband and wife, whose
address is c/o Lisbon Land & Livestock Company, 9220 West Kerry Lane, Peoria,
Arizona 85382, collectively the Grantor, and Summo USA Corporation, a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203,
Grantee:
W I T N E S S E T H:
That the Grantor, for and in consideration of the sum of $48,000, the
receipt and sufficiency of which is hereby acknowledged, has granted,
bargained, sold and conveyed, and by these presents does grant, bargain, sell,
convey and confirm unto the Grantee, its successors and assigns forever, an
undivided twenty percent (20%) interest in and to all the real properties
together, with improvements, if any, situate, lying and being in the County of
San Juan, State of Utah, as described on EXHIBIT A attached hereto and
incorporated herein (the "Properties").
TOGETHER with all and singular the hereditaments and appurtenances
thereto belonging, or in anywise appertaining, and the reversions, remainder,
rents, issues and profits thereof, and all the estate, right, title, interest,
claim and demand whatsoever of the Grantor, either in law or equity, of, in
and to the Properties, with the hereditaments and appurtances,
BUT FOREVER RESERVING UNTO GRANTOR the following:
<PAGE>
(a) An undivided twenty percent (20%) interest in and to all rights
in and to any oil, gas distillate, other hydrocarbons or sulphur appurtenant to
the Properties, which shall remain the property of Grantor; and
(b) A royalty of one-fifth of one percent (1%) of the Net Returns
from all ores, minerals, concentrates or other products mined and removed from
the Exploration parcel described on EXHIBIT A hereto and sold or processed by
Grantee. For purposes hereof, the phrase "Net Returns" means:
The amount received by Grantee or its successors and assigns from the
purchaser of the ores, minerals, concentrates or other products less
the following items to the extent borne by Grantee or its successors
and assigns: sales, severance and other similar taxes, purchaser's
treatment charges or costs, and charges for and taxes on
transportation from the mine to the place of sale;
TO HAVE AND TO HOLD the Properties above-bargained and described with
the appurtenances, unto the Grantee, its successors and assigns forever. And the
Grantor, for itself and its successors and assigns, does covenant, grant,
bargain and agree to and with the Grantee, its successors and assigns, that at
the time of the ensealing and delivery of these presents, Grantor is well
seized of its above interest in the Properties above conveyed, has sure,
perfect, absolute and indefeasible fee simple title to such interest and has
good right, full power and authority to grant, bargain, sell and convey the same
in the manner and form as aforesaid, and that the same are free and clear from
all former and other grants, bargains, sales, liens, taxes, assessments,
encumbrances and restrictions of whatever kind or nature whatsoever, except
liens for real property taxes not yet due and payable.
2
<PAGE>
THE GRANTOR SHALL AND WILL WARRANT AND FOREVER DEFEND its interest in
the Properties in the quiet and peaceable possession of the Grantee, its
successors and assigns, against all and every person or persons lawfully
claiming the whole or any part thereof.
IN WITNESS WHEREOF, the Grantor has executed this Deed on the date
set forth above.
____________________________________
and
____________________________________
husband and wife
STATE OF __________ )
)ss.
COUNTY OF _________ )
On this ____ day of _________, 1995, before me, the undersigned, a
notary public, personally appeared __________________ and ________________,
husband and wife known to me or proved to me on the oath of _________________,
to be the persons whose names are subscribed to the within instrument and that
they each executed the same in their individual capacities.
WITTNESS my hand and official seal.
My commission expires:
---------------------------------
---------------------------------
Notary Public
3
<PAGE>
EXHIBIT C
[FORM OF PARTNERSHIP DEED]
Recorded at the request of ____________________ at________ a.m./p.m. Fee paid
_____________________________ Dollars _____________________________
Recorder, by ___________________, DEP Book ____________________, Page _________
Mail Tax Notice to __________________________________________________
Address _____________________________________________________________
WARRANTY DEED
THIS DEED, made this ______________ day of ________________, 1995, by
Lisbon Land & Livestock Company, a Colorado general partnership, whose legal
address is 9220 West Kerry Lane, Peoria, Arizona 85382, Grantor, and Summo USA
Corporation, a Colorado corporation, whose address is 1776 Lincoln Street,
Denver, Colorado 80203,
Grantee:
WITNESSETH:
That the Grantor, for and in consideration of the sum of $240,000, the
receipt and sufficiency of which is hereby acknowledged, has granted,
bargained, sold and conveyed, and by these presents does grant, bargain, sell,
convey and confirm unto the Grantee, its successors and assigns forever, all
the real properties together with improvements, if any, situate, lying and
being in the County of San Juan, State of Utah, as described on Exhibit A
attached hereto and incorporated herein (the "Properties").
TOGETHER with all and singular the hereditaments and appurtenances
thereto belonging, or in anywise appertaining, and the reversions, remainder,
rents, issues and profits thereof, and all the estate, right, title, interest,
claim and demand whatsoever of the Grantor, either in law or equity, of, in and
to the Properties, with the hereditaments and appurtances,
<PAGE>
BUT FOREVER RESERVING UNTO GRANTOR the following:
(a) All rights in and to any oil, gas distillate, other hydrocarbons
or sulphur appurtenant to the Properties, which shall remain the property of
Grantor; and
(b) A royalty of one percent (1%) of the Net Returns from all ores,
minerals, concentrates or other products mined and removed from the Exploration
Parcel described on EXHIBIT A hereto and sold or processed by Grantee. For
purposes hereof, the phrase "Net Returns" means:
The amount received by Grantee or its successors and assigns from the
purchaser of the ores, minerals, concentrates or other products less
the following items to the extent borne by Grantee or its successors
and assigns: sales, severance and other similar taxes, purchaser's
treatment charges or costs, and charges for and taxes on
transportation from the mine to the place of sale;
TO HAVE AND TO HOLD the Properties above-bargained and described with
the appurtenances, unto the Grantee, its successors and assigns forever. And the
Grantor, for itself and its successors and assigns, does covenant, grant,
bargain and agree to and with the Grantee, its successors and assigns, that at
the time of the ensealing and delivery of these presents, Grantor is well
seized of the Properties above conveyed, has sure, perfect, absolute and
indefeasible fee simple title and has good right, full power and authority to
grant, bargain, sell and convey the same in the manner and form as aforesaid,
and that the same are free and clear from all former and other grants, bargains,
sales, liens, taxes, assessments, encumbrances and restrictions of whatever kind
or nature whatsoever, except liens for real property taxes not yet due and
payable.
THE GRANTOR SHALL AND WILL WARRANT AND FOREVER DEFEND the Properties
in the quiet and peaceable posession of the Grantee, its
2
<PAGE>
successors and assigns, against all and every person or persons lawfully
claiming the whole or any part thereof.
IN WITNESS WHEREOF, the Grantor has executed this Deed on the date
set forth above.
LISBON LAND & LIVESTOCK COMPANY,
a Colorado general partnership, by all of its
general partners as follows:
---------------------------------------------
Warren J. Wood, General Partner
---------------------------------------------
Wilbur L. Wood, General Partner
---------------------------------------------
Wesley 0. Wood, General Partner
---------------------------------------------
William H. Wood, General Partner
---------------------------------------------
Willard G. Wood, General Partner
STATE OF __________ )
)ss.
COUNTY OF _________ )
On this _____ day of ______________, 1995, before me, the
undersigned, a notary public, personally appeared Warren J. Wood, Wilbur L.
Wood, Wesley 0. Wood, William H. Wood and Willard G. Wood, as all of the
general partners of Lisbon Land & Livestock Company, a Colorado general
partnership, known to me or proved to me on the oath of _____________________
________________________, to be the persons whose names are subscribed to the
within instrument and that they each executed the same for and on behalf of
said partnership.
WITNESS my hand and official seal.
My commission expires:
---------------------------------------------
----------------------------------------
Notary Public
3
<PAGE>
EXHIBIT D
Recorded at the request of ____________________ at _______ a.m./p.m. Fee paid
____________________________ Dollars _______________________
Recorder, by _________________, DEP Book _____________, Page ____________
Mail Tax Notice to ________________________________________________
Address __________________________________________________________________
QUITCLAIM DEED
THIS DEED, made this _____ day of ___________________, 1995, by Summo
USA Corporation, a Colorado corporation whose address is 1776 Lincoln Street,
Denver, Colorado 80203, Grantor, hereby quitclaims to Lisbon Land & Livestock
Company, a Colorado general partnership, Grantee, for and in consideration of
ten and no/100th's ($10.00) and other good and valuable consideration, those
real properties located in San Juan County, State of Utah, as described on
Exhibit A attached hereto and incorporated herein (the "Properties").
RESERVING UNTO GRANTOR:
(a) For a period of six months from the date hereof to remove from
the Properties all buildings, structures, machinery, equipment, personal
property, fixtures and improvements owned by Grantor erected or placed on
or in the Properties by Grantor, except mine timbers in place.
(b) The right to perform reclamation work on those portions of the
Properties which have been disturbed by prior operations of Grantor.
(c) Grantor shall have the right of access to and across the
Properties for the above purposes.
IN WITNESS WHEREOF, the Grantor has executed this deed on the date
set forth above.
SUMMO USA CORPORATION,
a Colorado corporation
By:
-------------------------------------
Gregory A. Hahn, Vice President
STATE OF COLORADO )
)ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this ___ day of
_______________, 1995, by Gregory A. Hahn, the Vice President of Summo USA
Corporation, a Colorado corporation, on behalf of the corporation.
My Commission Expires:
------------------ -----------------------------------
Notary Public
<PAGE>
EXHIBIT F
SHORT FORM OF OPTION AGREEMENT
This short Form of Option Agreement is between those persons whose names
and addresses are shown on EXHIBIT A attached hereto and made a part hereof
(individually an "Owner" and collectively the "Owners") and Summo USA
Corporation, a Colorado corporation, whose address is 1776 Lincoln Street,
Denver, Colorado 80203 (hereinafter referred to as "Summo").
RECITALS
Effective _________________, 1995 (the "Effective Date"), the Owners and
Summo entered into a Purchase Option Agreement ("Option Agreement") by which
Summo has been granted an exclusive option (the "Option") to purchase certain
real properties located in San Juan County, Utah (the "Properties") more
particularly described on EXHIBIT B attached hereto and made a part hereof.
The Option does not include any rights in and to any oil, gas distillate,
other hydrocarbons or sulphur appurtenant to the Properties (the "Oil and Gas
Rights"), which shall remain the property of Owners. The parties hereby
execute this Short Form of Option Agreement (the "Short Form") to summarize
for recording purposes certain features of the Option as follows:
1. TERM AND PAYMENT. The term of the Option is from the Effective
Date through September 30, 1995 within which Summo has the right to exercise
the Option and then to pay the purchase price for the Properties within thirty
days after such exercise of the Option.
2. OPERATIONS. During the term of the Option, Summo has the right to
conduct exploratory investigations, mineral prospecting, soil testing, survey
and geological
<PAGE>
surveys, core drilling, shaft sinking, tunnel and mine buildings, the removal of
ore for testing purposes, the right to erect and maintain on the Properties any
improvements, structures or facilities including mines and buildings, for
example, that may be necessary or convenient to Summo.
3. EXCLUSIVE POSSESSION. Subject to the rights granted under a certain
Oil & Gas Lease dated on or about January 4, 1993 that was recorded in the
Recorder's Office of San Juan County, Utah as Entry No. 005355, Summo shall
have exclusive possession of and surface rights priority in and to the
Properties during the term of the Option.
4. CONFIDENTIALITY. During the term of the Option all information
obtained by Owners or their representatives from Summo or rising out of Summo's
activities on the Properties shall be kept strictly confidential by Owners.
5. TERMINATION. Summo has the right at any time to terminate the
Option.
6. RIGHT OF FIRST REFUSAL. If Owners receive a bona fide written offer
from an unrelated third party to purchase all or any part of Owners' interest in
the Properties or in the Option, Owners shall first offer the interest to Summo
on the same terms and conditions. Summo has 60 days to accept such offer. If
Summo does not accept such offer, the Owners may dispose of the interest
offered to Summo at a price and upon such terms and conditions equal to or less
favorable to the third party than those offered to Summo provided that the sale
or other disposition must be effected within 120 days from the date of the
offer to Summo. Any sale or other disposition shall be subject to the terms of
the Option, including the right of first refusal, all of which shall survive the
closing of any such sale in full force and effect. If Owners do not sell or
otherwise dispose of the interest
2
<PAGE>
offered to Summo within such 120-day period, the right of first refusal
continues to apply to any subsequent third party offer or offers received by
Owners.
7. NO TRANSFER OR ENCUMBRANCE. Without Summo's prior written consent,
neither the Owners nor any Owner during the term of the Option shall:
(a) sell, transfer, assign or convey any interest in the
Properties without Summo's prior written consent or otherwise in accordance
with the right of first refusal provisions contained in the Option;
(b) do or fail to do any act or thing which would cause or permit
any part of the Properties to be pledged, collateralized or stand as security
for any matter whatsoever; or
(c) enter into any leases or other agreements concerning the
Properties or any part thereof except in connection with the Oil & Gas Rights.
In the event, however, that any leases or other agreements are entered into
with respect to the Oil & Gas Interests in the Properties, the surface rights
to the Properties or any part thereof granted in connection with any such
leases or agreements shall be subordinate in all respects to the Surface Rights
Priority granted to Summo under the Option.
8. SUMMO RIGHTS UPON TERMINATION OR EXPIRATION OF OPTION.
Notwithstanding the expiration of the Option or Summo's failure to exercise the
Option, Summo shall have the right of access to and across the Properties
following the expiration or termination of the Option as follows:
(1) for a period of six months thereafter to enable Summo to
remove from the Properties all buildings, structures, machinery, equipment,
personal
3
<PAGE>
property, fixtures and improvements owned by Summo or erected or placed on or
in the Properties by Summo except mine timbers in place;
(2) for as long as is necessary after termination or failure to
exercise the Option Summo shall have the right of access to and across the
Properties for reclamation purposes.
9. COUNTERPARTS. This Short Form may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
10. ADDITIONAL TERMS. Additional terms and conditions of the Option
are contained in the Option Agreement between the parties. This Short Form of
Option Agreement shall not limit, decrease, increase or in any manner affect
any of the terms and conditions of the Option or any rights, interests or
obligations of the parties thereunder. This Short Form is being recorded for
the purpose, INTER ALIA of serving notice of the interests held by Summo in the
Properties.
IN WITNESS WHEREOF, the parties have executed this Short Form of Option
Agreement as of the day of 1995.
----- --------------
LISBON LAND & LIVESTOCK
COMPANY, a Colorado general partnership
By:
-------------------------------------
Warren J. Wood, general partner
By:
-------------------------------------
Wilbur L Wood, general partner
By:
-------------------------------------
Wesley 0. Wood, general partner
4
<PAGE>
By:
-------------------------------------
Wm. H. Wood, general partner
By:
-------------------------------------
Willard G. Wood, general partner
- ----------------------------------- -----------------------------------
Warren J. Wood, Individually Elsie Wood, Individually
- ----------------------------------- -----------------------------------
Wilbur L. Wood, Individually Ethel Wood, Individually
- ----------------------------------- -----------------------------------
Wesley 0. Wood, Individually Donna Wood, Individually
- ----------------------------------- -----------------------------------
Wm. H. Wood, Individually Louise M. Wood, Individually
- ----------------------------------- -----------------------------------
Willard G. Wood, Individually Betty Wood, Individually.
SUMMO USA CORPORATION, a
Colorado corporation
By:
--------------------------------
Gregory A. Hahn, Vice President
5
<PAGE>
STATE OF __________ )
) ss.
COUNTY OF _________ )
On this ___________ day of______________________, 19___ before me the
undersigned, a notary public, personally appeared Warren J. Wood, Wilbur L.
Wood, Wesley 0. Wood, Wm. H. Wood and Willard G. Wood as all of the general
partners of Lisbon Land & Livestock Company, a Colorado general partnership,
known to me (or proved to me on the oath of _____________________________) to be
the persons whose names are subscribed to the within instrument and acknowledged
that they each executed the same for and on behalf of said partnership.
My Commission Expires:
------------------ -----------------------------------
Notary Public
STATE OF __________ )
) ss.
COUNTY OF _________ )
On this ________ day of _______________________, 19____ before me
the undersigned, a notary public, personally appeared Warren J. Wood and his
wife Elsie Wood known to me (or proved to me on the oath of
_________________________) to be the persons whose names are subscribed to
the within instrument, and acknowledged that they each executed the same.
My Commission Expires:
------------------ -----------------------------------
Notary Public
STATE OF __________ )
) ss.
COUNTY OF _________ )
On this ________ day of ___________________, 19___ before me the
undersigned, a notary public, personally appeared Wilbur L. Wood and his wife
Ethel Wood known to me (or proved to me on the oath of
______________________) to be the persons whose names are subscribed to the
within instrument, and acknowledged that they each executed the same.
My Commission Expires:
------------------ -----------------------------------
Notary Public
6
<PAGE>
STATE OF __________ )
)ss.
COUNTY OF _________ )
On this _______ day of __________________, 19___ before me the
undersigned, a notary public, personally appeared Wesley 0. Wood and his wife
Donna Wood known to me (or proved to me on the oath of ______________________
(to be the persons whose names are subscribed to the within instrument, and
acknowledged that they each executed the same.
My Commission Expires:
------------------ -----------------------------------
Notary Public
STATE OF __________ )
)ss.
COUNTY OF _________ )
On this _______ day of __________________,19____ before me the
undersigned, a notary public, personally appeared Wm. H. Wood and his wife
Louise M. Wood known to me (or proved to. me on the oath of ____________________
(to be the persons whose names are subscribed to the within instrument, and
acknowledged that they each executed the same.
My Commission Expires:
------------------ -----------------------------------
Notary Public
STATE OF __________ )
)ss.
COUNTY OF _________ )
On this _______ day of __________________, 19___ before me the
undersigned, a notary public, personally appeared Willard G. Wood and his wife
Betty Wood known to me (or proved to me on the oath of ______________________
(to be the persons whose names are subscribed to the within instrument, and
acknowledged that they each executed the same.
My Commission Expires:
------------------ -----------------------------------
Notary Public
7
<PAGE>
STATE OF ________________ )
)ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this ________ day
of ____________________, 19___, by Gregory A. Hahn, the Vice President of Summo
USA Corporation, a Colorado corporation, on behalf of the corporation.
My Commission Expires:
------------------ -----------------------------------
Notary Public
8
<PAGE>
EXHIBIT A
OWNERS
Name and Address % Interest
- ---------------- ----------
Lisbon Land & Livestock Company 100%
9220 W. Kerry Lane
Peoria, AZ 85382
Warren J. Wood and Elsie Wood, Undivided 20% Partnership Interest
husband and wife*
Wilbur L. Wood and Ethel Wood, Undivided 20% Partnership Interest
husband and wife*
Wesley 0. Wood and Donna Wood, Undivided 20% Partnership Interest
husband and wife*
Wm. H. Wood and Louise M. Wood, Undivided 20% Partnership Interest
husband and wife*
Willard G. Wood and Betty Wood, Undivided 20% Partnership Interest
husband and wife*
*All care of: Lisbon Land & Livestock Company at the above address
<PAGE>
EXHIBIT B
The following parcels of real property located in San Juan County, Utah:
Plant Parcel:
- ------------
T 30 S, R 25 E, Sec. 26 - SW/4, W2 SE/4
T 30 S, R 25 E, Sec. 35 - NE/4 NW/4, NW/4 NE/4
Exploration Parcel:
- ------------------
T 31 S, R 26 E, Sec. 6 - SW/4 NW/4, NW/4 SW /4
<PAGE>
ESCROW AGREEMENT
This Escrow Agreement is made and entered into effective as of the
1st day of May, 1995, between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners"), Summo USA Corporation, a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203
("Summo") and CB&S Nominee, Inc., 1800 One Norwest Center Building, 1700
Lincoln Street, Denver, Colorado 80203 ("Escrow Agent").
PREAMBLE
1. Owners and Summo have entered into a Purchase Option Agreement
with an effective date of May 1, 1995 by which the Owners have granted Summo
an exclusive option (the "Option") to purchase certain real properties (the
"Properties") located in San Juan County, Utah (the "Option Agreement"), a
copy of which is attached hereto and incorporated herein as EXHIBIT B. The
Properties are described on EXHIBIT C attached hereto and incorporated herein.
2. The Option Agreement requires the appointment of an Escrow
Agent to (a) hold the Deeds executed by the Owners conveying the Properties
to Summo; (b) receive certain funds from Summo in payment of the purchase
price and disburse same to the Owners; (c) receive certain other funds from
Summo and disburse them to Owners or Summo as hereafter provided; (d) receive
a Quit Claim Deed from Summo conveying the Properties back to Owners in the
event of the non-exercise of the Option or the non-payment of the purchase
price by Summo; (e) deliver the Deeds to Summo upon payment of the purchase
price; and (f) redeliver the Deeds to the Owners in the event of the
non-exercise of the Option or the nonpayment of the purchase price by Summo.
3. Terms used herein shall have the same meaning as contained in the
Option Agreement unless expressly provided to the contrary herein.
<PAGE>
NOW THEREFORE, Owners and Summo hereby nominate, constitute and
appoint CB&S Nominee, Inc. as their Escrow Agent for the purposes and on the
terms and conditions set forth below and CB&S NOMINEE, INC. accepts such
appointment and agrees to so act.
1. OWNERS' DEPOSITS. The Owners have executed and herewith deposit
with Escrow Agent six separate general warranty deeds conveying the
Properties to Summo as follows:
(i) Lisbon Land & Livestock Company
("LL&L:") conveying 100% of the
Properties;
(ii) Warren J. Wood and his wife, Elsie
Wood ("Warren & Elsie"), individually
conveying an undivided 20% interest in
the Properties;
(iii) Wilbur L. Wood and his wife Ethel
Wood ("Wilbur & Ethel"), individually
conveying an undivided 20% interest
in the Properties;
(iv) Wesley O. Wood and his wife Donna
Wood ("Wesley & Donna"), individually
conveying an undivided 20% interest in
the Properties;
(v) Wm. H. Wood and his wife Louise M.
Wood ("Wm. & Louise"), individually
conveying an undivided 20% interest in
the Properties;
(vi) Willard G. Wood and his wife Betty
Wood ("Willard & Betty"), individually
conveying an undivided 20% interest in
the Properties;
(hereafter collectively called the "Deeds," copies of which are attached hereto
and incorporated herein as EXHIBIT C.)
2
<PAGE>
2. SUMMO DEPOSITS. Summo herewith deposits with Escrow Agent the
following:
(a) Twenty Thousand Dollar Summo check payable to Escrow Agent
(the "Signing Bonus Balance");
(b) Quit Claim Deed executed by Summo conveying the Properties
back to Owners and terminating the Surface Rights Priority previously granted
to Summo (the "Quit Claim Deed");
3. DISTRIBUTION OF SIGNING BONUS BALANCE.
(a) If the Petro-Tech Sign-off approved in writing by Summo is
received by Escrow Agent by August 7, 1995, upon receipt thereof Escrow Agent
shall promptly distribute the Signing Bonus Balance to LL&L.
(b) If the Petro-Tech Sign-off approved in writing by Summo is not
received by Escrow Agent by August 7, 1995, Escrow Agent shall (i) so notify
Owners and Summo and; (ii) return the Signing Bonus Balance to Summo, in which
event this Escrow Agreement shall continue in full force and effect in
accordance with its terms and conditions.
4. RECEIPT AND DISTRIBUTION OF PURCHASE PRICE; DELIVERY OF DEEDS.
(a) Owners hereby authorize the Escrow Agent to hold the Deeds
until such time as Escrow Agent has received a Summo check in the amount of
$240,000 pursuant to Section 6(c) of the Option Agreement, but subject to
reduction for any credit claimed by Summo under Sections 1(a) and 4(c) of the
Option Agreement (the "Purchase Price"), at which time Escrow Agent shall
promptly deliver the Deeds to Summo and distribute such funds to LL&L.
(b) If Escrow Agent shall not have received payment of the
Purchase Price from Summo by October 31, 1995, Escrow Agent shall (i) give
prompt notice thereof to Summo and the Owners; and (iii) return the Deeds to
the Owners.
5. FEES OF ESCROW AGENT. Escrow Agent's fees for acting hereunder
shall be paid by Summo.
3
<PAGE>
6. INDEMNIFICATION OF ESCROW AGENT. Owners and Summo hereby, jointly
and severally, agree to indemnify Escrow Agent from and against any and all
claims, causes of action, costs and expenses, including reasonable attorneys'
fees and costs, that Escrow Agent may suffer as a result of acting as Escrow
Agent hereunder. If Escrow Agent shall receive written instructions from
either Summo or Owners which Escrow Agent believes to be in conflict with the
obligations of Escrow Agent under the provisions hereof, Escrow Agent shall
promptly notify Summo and the Owners of any such apparent conflict ("Conflict
Notice"). If such matter is not fully resolved to Escrow Agent's satisfaction
by a joint written instruction to Escrow Agent from Summo and Owners within
thirty days of Escrow Agent's Conflict Notice, Escrow Agent shall promptly
commence an interpleader action in the District Court of the City and County
of Denver and deposit with such court all the deposits then held by Escrow
Agent hereunder. Summo and Owners also agree that such court shall have
jurisdiction and venue for all purposes under this Escrow Agreement. In such
event, Escrow Agent shall not take any further action hereunder unless it
receives joint written direction so do to from Summo and Owners or until it
is so directed by the final order of a court of competent jurisdiction.
7. STRICT ADHERENCE TO AGREEMENT. Escrow Agent agrees to act in strict
accordance with the terms and conditions hereof.
8. MODIFICATION. This Agreement may not be modified except by written
agreement therefor signed by the Owners, Summo and Escrow Agent. Escrow Agent
shall have the right to assume that any such document furnished to it which
appears to Escrow Agent to have been signed by the other parties hereto was in
fact duly signed by such parties and Escrow Agent need not inquire into such
matter.
9. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be served by prepaid, registered or certified mail, or by
personal delivery, addressed to the parties at the addresses set forth on page 1
for Summo and on EXHIBIT A for Owners or at such other address or addresses as
may be furnished to the other parties by a party hereto. Any such notice shall
be deemed to be given and effective three days
4
<PAGE>
after such notice has been deposited in the United States mail, first class,
postage prepaid, addressed as above, or when personally delivered to and
received by the specified parties.
10. OWNERS - SUMMO LITIGATION. In the event of any litigation between
Owners and Summo with respect to the construction or enforcement of this
Agreement, the prevailing party in any such litigation, including any
interpleader action pursuant to Section 4 hereof, shall be entitled to recover
reasonable attorneys' fees and costs from the non-prevailing party as a court
may determine to be proper under the circumstances.
11. TERM. This Agreement shall continue until such time as all of the
deposits under sections 1 and 2 hereof have been disposed of in accordance with
the provisions or any modifications hereof, the joint written direction of Summo
and the Owners or the final order of a court of competent jurisdiction.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
EXECUTED the day and year first above written.
LISBON LAND & LIVESTOCK
COMPANY, a Colorado general partnership
By: /s/ Warren J. Wood
------------------------------------
Warren J. Wood, general partner
By: /s/ Wilbur L. Wood
------------------------------------
Wilbur L. Wood, general partner
By: /s/ Wesley O. Wood
------------------------------------
Wesley O. Wood, general partner
5
<PAGE>
By: /s/ William H. Wood
------------------------------------
Wm. H. Wood, general partner
By: /s/ Willard G. Wood
------------------------------------
Willard G. Wood, general partner
/s/ Warren J. Wood /s/ Elsie Wood
- ------------------------------- ----------------------------------
Warren J. Wood, Individually Elsie Wood, Individually
/s/ Wilbur L. Wood /s/ Ethel Wood
- ------------------------------- ----------------------------------
Wilbur L. Wood, Individually Ethel Wood, Individually
/s/ Wesley O. Wood /s/ Donna Wood
- ------------------------------- ----------------------------------
Wesley O. Wood, Individually Donna Wood, Individually
/s/ William H. Wood /s/ Louise M. Wood
- ------------------------------- ----------------------------------
Wm. H. Wood, Individually Louise M. Wood, Individually
/s/ Williard G. Wood /s/ Betty Wood
- ------------------------------- ----------------------------------
Willard G. Wood, Individually Betty Wood, Individually
SUMMO USA CORPORATION, a
Colorado corporation
By: /s/ Gregory A. Hahn
---------------------------------
Gregory A. Hahn, Vice President
CB&S NOMINEE, INC., a Colorado
corporation
By: ILLEGIBLE
---------------------------------
6
<PAGE>
EXHIBIT A
OWNERS
Name and Address % Interest
- ---------------- ----------
Lisbon Land & Livestock Company 100%
9220 W. Kerry Lane
Peoria, AZ 85382
Warren J. Wood and Elsie Wood, Undivided 20% Partnership Interest
husband and wife*
Wilbur L. Wood and Ethel Wood, Undivided 20% Partnership Interest
husband and wife*
Wesley 0. Wood and Donna Wood, Undivided 20% Partnership Interest
husband and wife*
Wm. H. Wood and Louise M. Wood, Undivided 20% Partnership Interest
husband and wife*
Willard G. Wood and Betty Wood, Undivided 20% Partnership Interest
husband and wife*
*All care of: Lisbon Land & Livestock Company at the above address
<PAGE>
EXHIBIT C
The following parcels of real property located in San Juan County, Utah:
PLANT PARCEL:
T 30 S, R 25 E, Sec. 26 - SW/4, W2 SE/4
T 30 S, R 25 E, Sec. 35 - NE/4 NW/4, NW/4 NE/4
EXPLORATION PARCEL:
T 31 S, R 26 E, Sec. 6 - SW/4 NW/4, NW/4 SW/4
<PAGE>
EXHIBIT 10.11
EXPLORATION AND PURCHASE OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made effective as of the 1st day
of September, 1993, by and between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners') and ST. MARY MINERALS INC., a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203
(hereinafter referenced to as "St. Mary");
WHEREAS, Owners are the owners of certain patented mining claims and
millsites situate in Montrose County, Colorado, herein referred to as "the
Property," and more particularly described on EXHIBIT B attached hereto and made
a part hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to acquire
an option to purchase the Property,
WHEREAS, Owners desire to make the Property available for the conduct
by St. Mary of certain mineral exploration work thereon and to grant St. Mary
the option to purchase the Property,
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
to Owners, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement
the sole and exclusive option (the "Option") to purchase the Property,
together with all appurtenances and water rights incident thereto and all
improvements and personal property thereon, free and clear of all liens and
encumbrances, for a total purchase price of Three Hundred Fifty Thousand
Dollars ($350,000.00). St. Mary shall be entitled to a credit against the
purchase price for all amounts paid under the provisions of Section 7. The
balance will
<PAGE>
be payable within thirty (30) days after St. Mary gives notice that it
elects to exercise the Option.
2. OPTION EXERCISE. St. Mary's option to purchase the Property shall be
exercisable by delivery to Owners of notice of its option exercise. Within
thirty (30) days of such notice, Owners shall deliver one or more general
warranty deeds conveying the Property to St. Mary, and St. Mary shall pay
to Owners the unpaid balance of the purchase price. The deeds shall be in
the form of Exhibit C attached hereto. Owners agree to execute such other
documents and perform such other acts as St. Mary may reasonably require to
affect the transfer of complete title of the Property to St. Mary. All
recording fees shall be paid by St. Mary.
3. SPECIFIC PERFORMANCE. In addition to the standard remedies
available by law to any party in the event of a breach of this agreement,
Owners and St. Mary hereby agree that St. Mary shall be entitled to the
remedy of specific performance with respect to its option exercise rights.
The availability of the remedy of specific performance is expressly
provided in lieu of escrow provisions, originally proposed by St. Mary but
deleted at the request of Owners, pursuant to which Owners would have
executed and delivered general warranty deeds to an escrow agent at the
time this agreement was made.
4. EXCLUSIVE POSSESSION. St. Mary shall have the exclusive possession of
the Property during the term of this Agreement.
5. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no
other person claiming any interest in the Property or the ground covered
thereby, and that the Property is free from all liens and encumbrances,
except liens for property taxes not yet due and payable.
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<PAGE>
Owners further warrant to St. Mary the quiet enjoyment of the Property and
the right to explore, develop, and mine the same.
(b) Owners warrant and will defend title of the property against all
persons whomsoever.
(c) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any title
defect to the Property. (Note: Owners shall have no obligation to St. Mary
to cure surface disturbances resulting from prior mining activities.) If
Owners fail or refuse to take any such action, St. Mary may take any such
action in Owners' name. Owners agree to cooperate with St. Mary in any
such action taken. If the United States or any third person attacks the
validity of any of the patented mining claims included in the Property for
any reason, St. Mary shall have no obligation to defend the validity of the
claim.
(d) St. Mary shall not be estopped to deny the validity of Owners'
title.
6. UNDIVIDED INTEREST. The interest in the Property claimed by each
Owner is set forth in Exhibit A. Any representation or warranty of title
made by any Owner shall apply only to the interest set forth in Exhibit A.
7. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St.
Mary has made an option payment to Owners in the amount of $ 10,000,
receipt of which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further option payments on or before
the dates and in the amounts as follows:
March 1, 1994 20,000
September 1, 1994 20,000
September 1, 1995 50,000
September 1, 1996 100,000
September 1, 1997 150,000
--------
$340,000
3
<PAGE>
8. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable
to Owners in the percentage shares set forth in Exhibit A and mailed to the
respective addresses shown in Exhibit A.
9. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have
free and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and that prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for
sale. St. Mary shall have the right to erect and maintain upon the
Property any improvements, structures or facilities including mines, shafts
and tunnels as may be necessary or convenient for the conduct of its
operations.
(b) STANDARDS OF OPERATION. St. Mary shall conduct all operations on
the Property in a good and workmanlike manner and in accordance with
accepted mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION: St. Mary shall endeavor in good
faith to comply with applicable provisions of federal, state and local laws
and regulations, as required by the operating permits issued to St. Mary by
these agencies under which St. Mary shall conduct its operations. If this
Agreement is terminated, St. Mary shall reclaim only those portions of the
Property disturbed by its operations, and in compliance with all applicable
governmental laws, regulations and orders. St. Mary shall have the right,
without payment of any additional consideration to Owners, to enter upon
the Property subsequent to termination of this Agreement for purposes of
performing such reclamation work. Owners shall be notified prior to St.
Mary re-entering the Property for reclamation purposes.
4
<PAGE>
10. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations
on or in connection with the Property and so long as this Agreement has not
been terminated before the expiration of its term, St. Mary may in its sole
discretion curtail or cease such operations so long as it continues to make
any payments due Owners under this Agreement subject to the provisions of
Section 17 hereof.
11. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property
free of liens for labor performed or materials or merchandise furnished for
use on the Property under this Agreement, and shall hold Owners harmless
from all costs, loss, or damage which may result from any work or
operations of St. Mary or its occupancy of the Property.
12. TAXES. Owners shall pay all taxes levied against the Property prior
to the date of this Agreement. St. Mary shall pay or reimburse Owners for
all taxes levied against the Property during the term of this Agreement.
In the case of taxes for the calendar year in which this Agreement
commences, and for the calendar year in which this Agreement ends, there
shall be an apportionment between the parties, St. Mary to bear the
proportion of taxes upon the Property applicable to the part of the
calendar year included hereunder, and Owners to bear the balance of the
taxes. St. Mary shall pay all taxes levied during the term of this
Agreement against all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements placed upon the Property by St. Mary,
and all taxes levied against St. Mary as an employer of labor. All taxes
shall be paid when due and before delinquent, but St. Mary shall be under
no obligation to pay any tax so long as the tax is being contested in good
faith and by appropriate legal proceedings and the nonpayment thereof does
not adversely affect any right, title, or interest of Owners in or to the
Property.
5
<PAGE>
13. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations.
14. INSPECTION.
(a) Owners or their authorized representative may enter on the
Property at any reasonable time for the purpose of inspection, but shall
enter at Owners' own risk and so as not to hinder unreasonably the
operations of St. Mary. Owners shall indemnify and hold St. Mary harmless
from any damage, claim, or demand by reason of injury to or the presence of
Owners, their agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance of St. Mary with the provisions of this Agreement.
15. DATA.
(a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying and sampling, and similar
data concerning the Property (or copies thereof) which are in Owners'
possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof), St. Mary shall, within sixty days after
termination, (i) return to Owners all drill core and original data
delivered by Owners to St. Mary which are then in St. Mary's possession or
control, and (ii) make available for inspection by Owners all factual
geological and geophysical data and maps (not including interpretive data),
logs of drill holes, drill core or cuttings and results of assaying and
sampling pertaining to the Property which St. Mary has obtained as a result
of its exploration work under this Agreement and which are then in St.
Mary's possession or control. Upon Owners' request made within ninety (90)
days after termination of this Agreement, St. Mary shall at Owners' expense
provide Owners with the drill core or cuttings designated by Owners
6
<PAGE>
and with copies of any portion of the factual geological and geophysical
data and maps (not including interpretive data), logs of drill holes, and
results of assaying and sampling, designated by Owners. St. Mary makes no
representation or warranty as to the accuracy or completeness of any such
data or information, and shall not be liable on account of any use by
Owners or any other person of any such data or information. St. Mary shall
not be liable for the loss or destruction of any drill core or cuttings.
16. CONFIDENTIALITY. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of St.
Mary.
17. TERM, TERMINATION AND SURRENDER.
(a) The term of this Agreement shall be for a period of four (4) years
from the date hereof unless sooner surrendered or otherwise terminated, or
until the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 30 days of the due date therefor as provided in Section 7(b)
hereof shall also constitute a termination of this Agreement effective upon
the expiration of such 30 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement except as provided
in Sections 18 and 19 hereof shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 7(b) hereof) shall likewise thereupon
terminate except as provided in Sections 9(c) and 15(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all
or any part of the Property by delivering to Owners or by filing for record
in the appropriate office (with a copy to Owners) a good and sufficient
Surrender of this Agreement. Upon mailing, the Surrender to Owners or to
the appropriate office, all rights of St. Mary under this Agreement shall
terminate except as provided in Sections 18 and 19 hereof, and all
7
<PAGE>
liabilities and obligations of St. Mary under this Agreement shall likewise
terminate except as provided in Sections 9(c) and 15(b) hereof and except
liability for payments under Section 7(b) hereof that became due prior to
the date of such termination.
18. REMOVAL OF PROPERTY. For a period of six months after the termination
of this Agreement St. Mary shall have the right (but not the obligation
except to the extent set forth in Section 9(c) hereof) to remove from the
Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or erected or placed
on or in the Property by St. Mary, except mine timbers in place. St. Mary
may keep one or more watchmen on the Property during the six- month period.
19. ACCESS. For as long as necessary after termination of this Agreement,
St. Mary shall have the right of access to and across the Property for
reclamation purposes.
20. NOTICES. All notices and other communications to either party shall
be in writing and shall be sufficiently given if delivered in person or
sent by certified or registered mail, return receipt requested, addressed
as hereinafter set forth. Notices given by mail shall be deemed delivered
as of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
c/o George Alfred Moretz
1296 9th Street N.W.
Hickory, North Carolina 28601
and all notices to St. Mary shall be addressed:
St. Mary Minerals Inc.
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Attn: Gregory A. Hahn
8
<PAGE>
21. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or
in part without the consent of the other party hereto, subject to the
provisions hereinafter set forth. However, no such assignment shall be
effective unless and until the assigning party delivers to the
non-assigning party a written assumption by assignee of all of the
assignor's duties under this Agreement.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall be accomplished in such a manner
that St. Mary shall be required to make payments and to give notices to but
one person, firm, or corporation, and upon breach of this covenant, St.
Mary may retain all monies otherwise due to Owners until the breach has
been cured. No change or division in ownership shall be binding on St.
Mary until thirty days after Owners have given St. Mary a certified copy of
the recorded instrument evidencing the change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other
portion.
(d) If Owners receive a bona fide written offer from an unrelated
third party to purchase all or any part of Owners' interest in the Property
or in this Agreement, Owners shall first offer the interest to St. Mary
stating the interest proposed to be sold or otherwise disposed of, the
offering price from such third party and other terms and conditions of
sale. St. Mary may accept the offer on the same terms and conditions as
such third party offer by notice to Owners given within sixty days
following the effective date Owners' offer. If St. Mary does not accept
Owners' offer, Owners may sell or otherwise dispose of the interest offered
to St. Mary at a price and upon terms and conditions equal to or less
favorable to the third party than those offered to St. Mary
9
<PAGE>
provided that the sale or other disposition is effectuated within 120 days
from the effective date of Owners' offer. Any sale or other disposition
shall be subject to the terms of this Agreement, including this subsection
(d), all of which shall survive the closing, of any such sale in full force
and effect. If Owners do not sell or otherwise dispose of the interest
offered within 120 days, the provisions of this subsection (d) shall apply
to any subsequent third party offer received by Owners.
22. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither the Owners nor any Owner during term of this Agreement shall (a)
sell, transfer, assign or convey any interest in the Property except in
accordance with the provisions of Section 21 (d) hereof; (b) do or fail to
do any act or thing which would cause or permit any part of the Property to
be pledged, collateralized or stand as security for any matter whatsoever;
or (c) enter into any leases or other agreements concerning the Property or
any part thereof.
23. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of
money to Owners), the failure of performance shall be excused and the
period for performance and the term of this Agreement shall be extended for
an additional period equal to the duration of the Force Majeure. Upon the
occurrence and upon the termination of any Force Majeure, St. Mary shall
promptly notify Owners. St. Mary shall use reasonable diligence to remedy
a Force Majeure, but shall not be required against its better judgment to
settle any labor dispute or contest the validity of any law or regulation
or any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond St. Mary's reasonable
control, including law or regulation; action or inaction of civil or
military authority; inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Property; unusually severe weather, mining casualty;
fire; explosion; flood; insurrection; riot; labor dispute; inability after
diligent
10
<PAGE>
effort to obtain workmen or material; delay in transportation; acts of God;
unavailability of a suitable market for the ores, minerals, concentrates,
or other products from the Property; and excessive costs of mining,
milling, processing or marketing, or insufficient prices available for the
ores, minerals, concentrates, or other products produced from the Property,
which render St. Mary's operations uneconomic.
24. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have
executed and delivered a Short Form of Agreement. St. Mary may record the
Short Form or this Agreement, or both, as it may elect.
25. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors, and assigns.
26. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation, or
amendment is in writing and is signed by Owners and St. Mary.
27. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
28. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warranties, or
understandings, written or oral.
29. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
11
<PAGE>
30. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
31. TIME OF ESSENCE. Except as set forth in Section 23 hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
32. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday, Sunday, or legal holiday.
Any performance or payment which must be taken or made under this Agreement
must be taken or made prior to 5:00 p.m. (Denver, Colorado time) of the
last day of the applicable period provided hereunder for such action,
unless another time is expressly specified. All references to time shall be
Denver, Colorado time. If a date for performance or payment falls on a
holiday or weekend, the time for performance or payment shall be extended
to the next business day, and if performance or payment has occurred on
such weekend or holiday, it shall be deemed to have occurred on the next
business day.
33. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
35. ADDITIONAL DOCUMENTS. Owners will provide St. Mary with such
additional documents as may be necessary to carry out the purposes of this
Agreement. If conditions change by reason of conveyances, assignments, or
other matters relating to
12
<PAGE>
the title to or description of the Property, Owners and St. Mary shall
execute amendments of this Agreement and the Short Form of Agreement, and
any other documents which may be necessary to reflect such changed
conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ George Alfred Moretz /s/ Carolyn Moretz Jennings
- ----------------------------------- -----------------------------------
George Alfred Moretz Carolyn Moretz Jennings
/s/ Helen Moretz Jennings /s/ Nancy Moretz Burnside
- ----------------------------------- -----------------------------------
Helen Moretz Sides Nancy Moretz Burnside
/s/ Christine Abernethy
-----------------------------------
Christine Abernethy
ST. MARY MINERALS INC.
By: /s/ Hugh J. Matheson
--------------------------------
Hugh J. Matheson, President
13
<PAGE>
STATE OF North Carolina )
)SS.
COUNTY OF Caldwell )
On this 12 day of November, 1993 before me the undersigned, a notary
public, personally appeared George Alfred Moretz known to me (or proved to me on
the oath of ______________________ (to be the person whose name is subscribed to
the within instrument, and acknowledged that he executed the same.
My Commission Expires:
4-29-96 /s/ Joan C. Magee
- ------------------------------ ------------------------------
Notary Public
STATE OF North Carolina )
)SS.
COUNTY OF Catawber )
On this 12th day of November, 1993 before me the undersigned, a notary
public, personally appeared Carolyn Moretz Jennings known to me (or proved to me
on the oath of ________________________ (to be the person whose name is
subscribed to the within instrument, and acknowledged that she executed the
same.
My Commission Expires:
8-26-98 /s/ Lise A. Watkins
- ------------------------------ ------------------------------
Notary Public
14
<PAGE>
STATE OF North Carolina )
)SS.
COUNTY OF Caldwell )
On this 12 day of November, 1993 before me the undersigned, a notary
public, personally appeared Helen Moretz Sides known to me (or proved to me on
the oath of ___________________________ (to be the person whose name is
subscribed to the within instrument, and acknowledged that she executed the
same.
My Commission Expires:
4-29-96 /s/ Joan C. Magee
- ------------------------------ ------------------------------
Notary Public
STATE OF North Carolina )
)SS.
COUNTY OF Caldwell )
On this 12 day of November, 1993 before me the undersigned, a notary
public, personally appeared Nancy Moretz Burnside known to me (or proved to me
on the oath of ___________________________ (to be the person whose name is
subscribed to the within instrument, and acknowledged that she executed the
same.
My Commission Expires:
4-29-96 /s/ Joan C. Magee
- ------------------------------ ------------------------------
Notary Public
15
<PAGE>
STATE OF )
)SS.
COUNTY OF )
On this 12th day of November, 1993 before me the undersigned, a notary
public, personally appeared Christine Abernethy, a widow, known to me (or proved
to me on the oath of _______________________ (to be the person whose name is
subscribed to the within instrument, and acknowledged that she executed the
same.
My Commission Expires:
4-21-97 /s/ Linda L. Griggs
- ------------------------------ ------------------------------
Notary Public
STATE OF Colorado )
City and )SS.
COUNTY OF Denver )
The foregoing instrument was acknowledged before me this 11th day of
November, 1993, by Hugh J. Matheson the President of St. Mary Minerals Inc., a
Colorado corporation, on behalf of the corporation.
My Commission Expires:
Feb. 14, 1997 /s/ James C. Robertson
- ------------------------------ ------------------------------
Notary Public James C. Robertson
16
<PAGE>
EXHIBIT A
OWNERS
------
Name and Address % Interest in Property
- ---------------- ----------------------
George Alfred Moretz 12.50%
1296 9th Street NW
Hickory, North Carolina 28601
Carolyn Moretz Jennings 12.50%
1413 6th Street NW
Hickory, North Carolina 28601
Helen Moretz Sides 12.50%
7071 Watersedge Drive
Sherrills Ford, North Carolina 28673
Nancy Moretz Burnside 12.50%
5707 Shady Branch Drive
Chattanooga, Tennessee 37415
Christine Abernethy (a widow) 50.00%
806 S. College Avenue
Newton, North Carolina 28658
<PAGE>
EXHIBIT B
PROPERTIES
100% interest in and to the following patented mining claims and millsites
located in Montrose County, Colorado:
Red Chief Lode, Mineral Survey No. 13029A
Cashin, Maude and Titon Lodes,
Mineral Survey No. 13030A
Humboldt, Angell and Bennie Lodes,
Mineral Survey No. 13031A
Red Rock, Red Bird, Michigan and Horseshoe Lodes,
Mineral Survey No. 19163
Malachite Lode, Mineral Survey No. 19164
Red Chief Millsite, Survey No. 13029B
Titon Millsite, Survey No. 13030B
Maude Millsite, Survey No. 13031B
<PAGE>
EXHIBIT 10.12
OPTION AGREEMENT
THIS OPTION AGREEMENT made as of this 27 day of September, 1993, by
and between those persons whose names and addresses are shown on EXHIBIT A
attached hereto and made a part hereof (individually an "Owner" and
collectively the "Owners") and ST. MARY MINERALS INC., a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203,
(hereinafter referred to as "St. Mary");
WHEREAS, Owners are the owners of certain patented and unpatented
mining claims situate in Montrose County, Colorado, herein referred to as
"the Property," and more particularly described on EXHIBIT B attached hereto
and made a part hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to
acquire the Option to Purchase the Property,
WHEREAS, Owners desire to make the Property available for the
conduct by St. Mary of certain mineral exploration work thereon and to grant
St. Mary the option to purchase the Property,
NOW THEREFORE, in consideration of Ten Dollars ($ 10.00) in hand
paid to Owners, the receipt and sufficiency of which are hereby acknowledged,
and further in consideration of the mutual covenants, agreements, and
promises herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement the
sole and exclusive option (the "Option") to purchase the Property, together
with all appurtenances and water rights incident thereto and all improvements
and personal property thereon, free and clear of all liens and encumbrances,
for a total purchase price of Five Hundred Fifty Thousand Dollars
($550,000.00). St. Mary shall be entitled to a credit against the purchase
<PAGE>
price for all amounts paid under the provisions of Section 7 hereof and for
all costs and expenses incurred under the provisions of Section 5 hereof and
the balance of the purchase price will be payable within thirty (30) days
after St. Mary gives notice that it elects to exercise the Option.
2. ESCROW. Contemporaneously with the execution of this Agreement, Owners
shall execute, acknowledge, and deliver to the Escrow Agent one or more
special warranty deeds conveying the Property to St. Mary in the form
(without legal descriptions) of Exhibit C attached hereto and incorporated
herein.
Owners and St. Mary hereby appoint ____________________________ as their
Escrow Agent to receive and distribute all payments and to hold the deed and
deliver it to the party entitled hereunder to receive the same. The parties
hereto agree. that the Escrow Agent shall act pursuant to Escrow Instructions
executed contemporaneously herewith.
3. EXCLUSIVE POSSESSION. St. Mary shall have the exclusive possession of
the Property during the term of this Agreement.
4. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no other
person claiming any interest in the Property or the ground covered thereby,
and that the Property is free from all liens and encumbrances, except liens
for property taxes not yet due and payable. Owners further warrant to St.
Mary the quiet enjoyment of the Property and the right to explore, develop
and mine the same.
(b) Owners warrant that the unpatented mining claims included in the
Property have been properly located, and that for each assessment year
assessment work has been performed (or other steps taken in accordance with
the law) for the benefit of the claims. Owners warrant and shall defend title
to the Property against all persons whomsoever.
2
<PAGE>
(c) Owners shall provide St. Mary with recording data with respect to
location notices and certificates, affidavits of annual labor, deeds,
easements or other documents which bear upon Owners' title to the Property,
and shall provide St. Mary with copies of all such documents and all title
reports and abstracts in Owners' possession or control. Owners shall, upon
St. Mary's request, record any such document in Owners' possession or control
which has not been recorded.
(d) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any defect
in their title to the Property or the ground covered thereby. If Owners fail
or refuse to take any such action, St. Mary may take any such action in
Owners' names. Owners agree to cooperate with St. Mary in any such action
taken. St. Mary may recover from Owners or from any payments thereafter to
become due to Owners hereunder all costs and expenses (including attorneys'
fees) incurred by St. Mary in any such action. If the United States or any
third person attacks the validity of any of the patented mining claims
included in the Property for any reason, St. Mary shall have no obligation to
defend the validity of the claim.
(e) St. Mary shall not be estopped to deny the validity of Owners'
title.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any portion
of the Property is less than one hundred percent (100%), the interest claimed
by such Owner is set forth in exhibit A. Any representation or warranty of
title made by any Owner shall apply only to the interest set forth in Exhibit
A.
6. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St. Mary
has made an option payment to Owners in the amount of $10,000, receipt of
which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further option payments on the dates
and in the amounts as follows:
3
<PAGE>
March 1, 1994 20,000
September 1, 1994 20,000
September 1, 1995 50,000
September 1, 1996 100,000
September 1, 1997 150,000
September 1, 1998 200,000
--------
$540,000
7. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable to
and shall be transmitted to the Escrow Agent. The Escrow Instructions to be
executed contemporaneously herewith will instruct the Escrow Agent how the
payments shall be disbursed. Upon making the payments to the Escrow Agent,
St. Mary shall be deemed to have made the payments to Owners, their heirs,
representatives, successors, and assigns, and thereupon St. Mary shall be
discharged to the extent thereof as if the payments had been made directly to
Owners, or to any person, firm or corporation entitled thereto, and St. Mary
shall not be liable for the ultimate distribution or receipt of any payment
or payments.
8. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have free
and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and such prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for sale.
St. Mary shall have the right to erect and maintain upon the Property any
improvements, structures, or facilities including mines, shafts and tunnels
as may be necessary or convenient for the conduct of its operations.
4
<PAGE>
(b) STANDARDS OF OPERATIONS. St. Mary shall conduct all operations on
the Property in a good and workmanlike manner and in accordance with accepted
mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION: St. Mary shall endeavor in good
faith to comply with applicable provisions of federal, state and local laws
and regulations, as required by the operating permits issued to St. Mary by
these agencies under which St. Mary shall conduct its operations. If this
Agreement is terminated, St. Mary shall reclaim only those portions of the
Property actually disturbed by its operations and only to the extent of St.
Mary's disturbance thereof whether or not such reclamation then complies with
applicable governmental laws, regulations and orders. St. Mary shall have the
right, without payment of any additional consideration to Owners, to enter
upon the Property subsequent to termination of this Agreement for purposes of
performing such reclamation work. Owners shall be notified prior to St. Mary
re-entering the Property for reclamation purposes.
(d) ANNUAL REPORTS: During the term of this Agreement, St. Mary shall
furnish to Owners annual summaries of work performed on or for the benefit of
the Property. Such summaries may include, raw data relating to the Property,
but shall not include any interpretative data with respect thereto.
9. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations on
or in connection with the Property and so long as this Agreement has not been
terminated before the expiration of its term, St. Mary may in its sole
discretion curtail or cease such operations so long as it continues to make
any payments due Owners under this Agreement, subject to the provisions of
Section 16 hereof.
10. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property free
of liens for labor performed or materials or merchandise furnished for use on
the Property under
5
<PAGE>
this Agreement, and shall hold Owners harmless from all costs, loss or damage
which may result from any work or operations of St. Mary or its occupancy of
the Property.
11. TAXES. Owners shall pay all taxes levied against the Property prior to
the date of this Agreement. St. Mary shall pay or reimburse Owners for all
taxes levied against the Property during the term of this Agreement. In the
case of taxes for the calendar year in which this Agreement commences, and
for the calendar year in which this Agreement ends, there shall be an
apportionment between the parties, St. Mary to bear the proportion of taxes
upon the Property applicable to the part of the calendar year included
hereunder and Owners to bear the balance of the taxes. St. Mary shall pay all
taxes levied during the term of this Agreement against all buildings,
structures, machinery, equipment, personal property, fixtures and
improvements placed upon the Property by St. Mary, and all taxes levied
against St. Mary as an employer of labor. All taxes shall be paid when due
and before delinquent, but St. Mary shall be under no obligation to pay any
tax so long as the tax is being contested in good faith and by appropriate
legal proceedings and the nonpayment thereof does not adversely affect any
rights, title or interest of Owners in or to the Property.
12. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations, or St. Mary may self-insure as to such matters if it
qualifies as a self-insurer under the appropriate laws and regulations.
13. INSPECTION.
(a) Owners or their authorized representative may enter on the Property
at any reasonable time, and with reasonable notice to St. Mary, for the
purpose of inspection, but shall enter at Owners' own risk and so as not to
hinder unreasonably the operations of St. Mary. Owners shall indemnify and
hold St. Mary harmless from any damage, claim or demand by reason of injury
to or the presence of Owners, their agents or representatives on the Property.
6
<PAGE>
(b) Owners or their authorized representative may, at any reasonable
time, and with reasonable notice to St. Mary, inspect any records pertinent
and necessary for substantiating the compliance of St. Mary with the
provisions of this Agreement.
14. DATA. (a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical and engineering data and maps,
logs of drill holes, results of assaying and sampling, and similar data
concerning the Property (or copies thereof) which are in Owners' possession or
control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof, St. Mary shall, within 60 days after
termination, (i) return to Owners all drill core and original data delivered
by Owners to St. Mary which are then in St. Mary's possession or control, and
(ii) make available for inspection by Owners all factual geological and
geophysical data and maps (not including interpretive data), logs of drill
holes, drill core or cuttings and results of assaying and sampling pertaining
to the Property which St. Mary has obtained as a result of its exploration
work under this Agreement and which are then in St. Mary's possession or
control. Upon Owners' request made within ninety (90) days after termination
of this Agreement, St. Mary shall at Owners' expense, provide Owners with the
drill core or cuttings designated by Owners and with copies of any portion of
the factual geological and geophysical data and maps (not including
interpretive data), logs of drill holes, and results of assaying and sampling
designated by Owners. St. Mary makes no representation or warranty as to the
accuracy or completeness of, any such data or information, and shall not be
liable on account of any use by Owners or any other person of any such data
or information. St. Mary shall not be liable for the loss or destruction of
any drill core or cutting.
15. CONFIDENTIALITY. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by
7
<PAGE>
Owners and shall not be released to any third party except upon the prior
written consent of St. Mary.
16. TERMINATION AND SURRENDER.
(a) The term of this Agreement shall be for a period of five years from
the date hereof unless sooner surrendered or otherwise terminated, or until
the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 60 days of the due date, therefor as provided in Section 6(b)
hereof shall constitute also a termination of this Agreement effective upon
the expiration of such 60 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement, except as provided
in Sections 17 and 18 hereof, shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 6(b) hereof) shall likewise thereupon
terminate except as provided in Sections 8(c) and 14(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all or
any part of the Property by delivering to Owners or by filing for record in
the appropriate office (with a copy to Owners) a good and sufficient
Surrender of this Agreement. Upon mailing the Surrender to Owners or to the
appropriate office, all rights of St. Mary under this Agreement shall
terminate, except as provided in Sections 17 and 18 hereof, and all
liabilities and obligations of St. Mary under this agreement shall likewise
terminate except as provided in Section 8(c) and 14(b) hereof and except
liability for payments under Section 6(b) hereof that became due more than 60
days prior to the date of such termination.
17. REMOVAL OF PROPERTY. For a period of six (6) months after the
termination of this Agreement St. Mary shall have the right (but not the
obligation except to the extent set forth in Section 8(c) hereof) to remove
from the Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or
8
<PAGE>
erected or placed on or in the Property by St. Mary, except mine timbers in
place. St. Mary may keep one or more watchmen on the Property during the
six-month period.
18. ACCESS. For as long as necessary after termination of this Agreement or
following, the exercise of the Option, St. Mary shall have the right of
access to and across the Property for reclamation purposes.
19. EASEMENTS. If requested by St. Mary during the term of this Agreement or
following, the exercise of the Option, Owners shall execute one or more
instruments granting to St. Mary without cost to St. Mary easements upon,
over or through the Property or upon, over or through other property owned by
Owners, for the construction, maintenance, use, and removal of pipe lines,
telephone lines, electrical power or transmission lines, roads, railroads,
tramways, flumes, ditches, shafts, drifts, tunnels and other facilities
necessary or convenient for St. Mary's operations on the Property or on other
property.
20. AMENDMENTS, RELOCATIONS AND PATENTS. During the term of this Agreement,
St. Mary shall have the right (but not the obligation), in the name of
Owners, to amend or relocate any or all of the unpatented mining claims
included in the Property, to locate placer claims on ground theretofore
covered by lode claims and vice versa, and to locate any millsites on ground
theretofore covered by mining claims and vice versa, and to locate any
fractions resulting from the location, amendment or relocations of mining
claims or millsites. At the request of St. Mary, Owners shall apply for a
patent for any or all of the unpatented mining claims and millsites. For
purposes of implementing the provisions of this Section, Owners do hereby
nominate, constitute and appoint St. Mary as their true and lawful
attorney-in-fact to execute, deliver and record on behalf of the Owners and
in their name, place and stead all such documents as St. Mary may deem
necessary or appropriate for such purposes. All expenses authorized by St.
Mary in connection with locating, amending, or relocating mining claims or
millsites or prosecuting patent proceedings shall be borne by St. Mary. The
rights
9
<PAGE>
of St. Mary under this Agreement shall extend to all such locations, amended
locations, relocations and patented mining claims and millsites.
21. COMPLIANCE WITH FEDERAL LAND POLICY AND MANAGEMENT ACT.
(a) Owners warrant that the location notices or location certificates
for the unpatented mining claims included in the Property have been properly
filed in the proper office of the Bureau of Land Management pursuant to 43
U.S.C. Section 1744 (b).
(b) Owners warrant that evidence of assessment work or notices of
intention to hold have been properly recorded in the proper county (or
recording district) office and filed in the proper office of the Bureau of
Land Management pursuant to 43 U.S.C. Section 1744(a), as required, for each
assessment year to and including the assessment year ending September 1, 1992.
22. Assessment Work.
(a) Owners warrant that the annual assessment work required to hold the
Property has been performed for each assessment year to and including the
assessment year sending September 1, 1992. For every assessment year
thereafter in which St. Mary continues this Agreement beyond the 1st day of
August of any year, St. Mary shall perform assessment work or pay any rental
fee required by the Department of the Interior. If any court or governmental
agency decides that the work performed by St. Mary does not constitute the
kind of work required by federal or state law, St. Mary shall nevertheless be
deemed to have complied with the terms of this Agreement if the work done by
St. Mary is the kind generally accepted in the mining industry as assessment
work under existing law.
(b) St. Mary shall be relieved of its obligation to perform assessment
work for any period in which assessment work is not required or is suspended,
and St. Mary shall have the benefit of subsequent laws enacted which relate
to assessment work, including any laws extending the time within which to
perform assessment work. For each year in which St. Mary performs assessment
work, it will record in the office where the location notice or location
certificate is recorded, and in any other proper office in the county (or
recording
10
<PAGE>
district) in which the claims are located, and in the proper office of the
Bureau of Land Management, an affidavit of assessment work or other documents
complying with the requirements of state law and the Federal land Policy and
Management Act of 1976 and the regulations implementing and supplementing the
Act.
(c) Owners represent that the Property is one contiguous group of mining
claims, and agree that work on any one or more of the claims will be for the
benefit of all of the claims.
(d) Owners represent that no report of geological, geophysical, and
geochemical work (30 U.S.C. Sections 28-1 and 28-2) on the Property has been
filed for assessment years commencing September 1, 1990 and thereafter.
23. NOTICES. All notices and other communications to either party shall be in
writing and shall be sufficiently given if delivered in person or sent by
certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Notices given by mail shall be deemed delivered as of
the date of mailing. Until a change of address is communicated as indicated
above, all notices to Owners shall be addressed:
c/o Wanda H. Ahlstrom
1628 Mulberry Way
Sandy, Utah 84093
and all notices to St. Mary shall be addressed,
St. Mary Minerals Inc.
1776 Lincoln Street
Denver, Colorado 80203
Attn: Gregory A. Hahn
24. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or in
part without the consent of the other party hereto, subject to the provisions
hereinafter set forth.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall be
11
<PAGE>
accomplished in such a manner that St. Mary shall be required to make payments
and to give notices to but one person, firm or corporation, and upon breach of
this covenant, St. Mary may retain all monies otherwise due to Owners until
the breach has been cured. No change or division in ownership shall be
binding on St. Mary until 30 days after Owners have given St. Mary a
certified copy of the recorded instrument evidencing the change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other portion.
(d) If Owners receive and propose to accept a bona fide written offer
from an unrelated third party to purchase, subject to the terms of this
Agreement, and purpose to accept all or any part of Owners' interest in the
Property or in this Agreement, Owners shall first offer the interest to St.
Mary stating the interest proposed to be sold or otherwise disposed of, the
offering price from such third party and other terms and conditions of sale.
St. Mary may accept the offer on the same terms and conditions as such third
party offer by notice to Owners given within 60 days following the date of
Owners' offer. If St. Mary does not accept Owners' offer, Owners may sell or
otherwise dispose of the interest offered to St. Mary at a price and upon
terms and conditions equal to or less favorable to the third party than those
offered to St. Mary provided that the sale or other disposition is
effectuated within 120 days from the effective date of Owners' offer. Any
sale or other disposition shall be subject to the terms of this Agreement,
including this subsection (d), all of which shall survive the closing of any
such sale in full force and effect. If Owners do not sell or otherwise
dispose of the interest offered within 120 days, the provisions of this
subsection
(d) shall apply to any subsequent offer received by Owners.
25. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither Owners nor any Owner during term of this Agreement shall (a) sell,
transfer, assign or convey any interest in the Property without St. Mary's
prior written consent or otherwise in
12
<PAGE>
accordance with the provisions of Section 25(d) hereof; (b) do or fail to do
any act or thing which would cause or permit any part of the Property to be
pledged, collateralized or stand as security for any matter whatsoever; or
(c) enter into any leases or other agreements concerning the Property or any
part thereof.
26. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of money
to Owners), the failure of performance shall be excused and the period for
performance and the term of this Agreement shall be extended for an
additional period equal to the duration of the Force Majeure. Upon the
occurrence and upon the termination of any Force Majeure, St. Mary shall
promptly notify Owners. St. Mary shall use reasonable diligence to remedy a
Force Majeure, but shall not be required against its better judgment to
settle any labor dispute or contest the validity of any law or regulation or
any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond St. Mary's reasonable
control, including law or regulation, action or inaction of civil or military
authority, inability to obtain any license, permit, or other authorization
that may be required to conduct operations on or in connection with the
Property, unusually severe weather, mining casualty, fire, explosion,
insurrection, riot, labor dispute, inability after diligent effort to obtain
workmen or material, delay in transportation and acts of God.
27. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have executed
and delivered a Short Form of Agreement. St. Mary may record the Short Form
or this Agreement, or both, as it may elect.
28. INUREMENT. All covenants, conditions, limitations and provisions herein
contained apply to and are binding upon the parties hereto, their heirs,
representatives, successors and assigns.
13
<PAGE>
29. MODIFICATION. No modification, variation, or amendment of this Agreement
shall be effective unless the modification, variation or amendment is in
writing and is signed by Owners and St. Mary.
30. WAIVER. No waiver of any breach or default under this Agreement shall be
effective unless the waiver is in writing and signed by the party against
whom the waiver is claimed. No waiver of any breach or default shall be
deemed to be a waiver of any other or subsequent breach or default.
31. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties and, except as herein expressly provided, supersedes all previous and
contemporaneous agreements, representations, warranties or understandings,
written or oral.
32. CONSTRUCTION. The paragraph headings are for convenience only, and shall
not be used in the construction of this Agreement.
33. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
34. TIME OF ESSENCE. Except as set forth in Section 26 hereof, time is of the
essence in the performance of each and every term, condition, and covenant of
this Agreement.
35. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be excluded
and the last day shall be included. If the last day of any such period is a
Saturday, Sunday or legal holiday, the period shall extend to include the
next day which is not a Saturday, Sunday, or legal holiday. Any performance
or payment which must be taken or made under this Agreement must be taken or
made prior to 5:00 p.m. (Denver, Colorado time) of the last day of the
applicable period provided hereunder for such action, unless another time is
expressly specified. All
14
<PAGE>
references to time shall be Denver, Colorado time. If a date for performance
or payment falls on a holiday or weekend, the time for performance or payment
shall be extended to the next business day, and if performance or payment has
occurred on such weekend or holiday, it shall be deemed to have occurred on
the next business day.
36. INVALIDITY. The invalidity of any provision, of this Agreement shall not
affect the enforceability of any other provision of this Agreement.
37. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
38. ADDITIONAL DOCUMENTS. Owners will provide St. Mary with such additional
documents as may be necessary to carry out the purposes of this Agreement. If
conditions change by reason of conveyances, assignments or other matters
relating to the title to or description of the Property, Owners and St. Mary
shall execute amendments of this Agreement, the Short Form of Option
Agreement and any other documents which may be necessary to reflect such
changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
/s/ Wanda H. Ahlstrom /s/ Clive L. Ahlstrom
- -------------------------- --------------------------
Wanda H. Ahlstrom Clive L. Ahlstrom
/s/ Max J. Peacock /s/ Florene Peacock
- -------------------------- --------------------------
Max J. Peacock Florene Peacock
15
<PAGE>
ST. MARY MINERALS INC.
By: /s/ ILLEGIBLE
------------------------------
Executive Vice President
STATE OF )
) ss.
COUNTY OF )
On this 27 day of September, 1993 before me the undersigned, a notary
---- ---------- --
public, personally appeared Wanda H. Ahlstrom known to me (or proved to me
on the oath of _________________________________(to be the person whose name
is subscribed to the within instrument, and acknowledged that she executed
the same.
My Commission Expires:
[DAVID A. SHAIA SEAL] /s/David Shaia
- ------------------------------ ------------------------------
Notary Public
STATE OF )
) ss.
COUNTY OF )
On this 27 day of September, 1993 before me the undersigned, a notary
---- ---------- --
public, personally appeared CLive L. Ahlstrom known to me (or proved to me
on the oath of _________________________________(to be the person whose name
is subscribed to the within instrument, and acknowledged that he executed
the same.
My Commission Expires:
[DAVID A. SHAIA SEAL] /s/David Shaia
- ------------------------------ ------------------------------
Notary Public
16
<PAGE>
STATE OF )
) ss.
COUNTY OF )
On this 27 day of Sept. , 1993 before me the undersigned, a notary
---- ---------- --
public, personally appeared Max J. Peacock known to me (or proved to me
on the oath of _________________________________(to be the person whose name
is subscribed to the within instrument, and acknowledged that he executed
the same.
My Commission Expires:
[DAVID A. SHAIA SEAL] /s/David Shaia
- ------------------------------ ------------------------------
Notary Public
STATE OF )
) ss.
COUNTY OF )
On this 27 day of Sept. , 1993 before me the undersigned, a notary
---- ---------- --
public, personally appeared Florene N. Peacock known to me (or proved to me
on the oath of _________________________________(to be the person whose name
is subscribed to the within instrument, and acknowledged that she executed
the same.
My Commission Expires:
[DAVID A. SHAIA SEAL] /s/David Shaia
- ------------------------------ ------------------------------
Notary Public
17
<PAGE>
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 22nd day of
----
September, 1993, by Gregory A. Hahn, the Exec. Vice Pres. of St. Mary
- --------- -- --------------- ----------------
Minerals Inc., a Colorado corporation, on behalf of the corporation.
My Commission Expires:
Feb. 14, 1997 /s/ James C. Robertson
- ------------------------------ --------------------------------
Notary Public James C. Robertson
<PAGE>
EXHIBIT A
OWNERS
NAME AND ADDRESS % INTEREST IN PROPERTY
Wanda H. Ahlstrom and Undivided 50% Interest
Clive L. Ahlstrom husband and wife
1628 Mulberry Way
Sandy, Utah 84093
Max J. Peacock and Undivided 50% Interest
Florene N. Peacock, husband and wife
5889 So. 20 East
Murray, Utah 84107
<PAGE>
EXHIBIT B
PATENTED CLAIMS
An undivided two-thirds interest in and to the following patented mining
claims located in Montrose County, Colorado:
Cliff Dweller Lode, Mineral Survey No. 17486
Rainbow Lode, Mineral Survey No. 17487
UNPATENTED CLAIMS
100% interest in and to the unpatented mining claims located in Montrose
County, Colorado that are listed on Exhibit B-1 attached hereto and
incorporated herein.
<PAGE>
EXHIBIT B-1
Claim Name Twn/Ran/Sec Book/Page Blm Ser. No.
- ---------- ----------- --------- ------------
Azurite #1 47N/19W/22 782/439 234431
Azurite #2 47N/19W/15 782/440 234432
Azurite #3 47N/19W/15 782/441 234433
Azurite #4 47N/19W/15 782/442 234434
Azurite #5 47N/19W/15 782/443 234435
Azurite #6 47N/19W/15 782/444 234436
Azurite #7 47N/19W/15 782/445 234437
Azurite #8 47N/19W/15 782/446 234438
Azurite.#9 47N/19W/15 782/447 234439
Azurite #10 47N/19W/15 782/448 234440
Azurite #11 47N/19W/15 782/449 234441
Azurite #12 47N/19W/22 782/450 234442
Azurite #13 47N/19W/15 782/451 234443
Azurite #14 47N/19W/15 782/452 234444
Azurite #15 47N/19W/15 782/453 234445
Azurite #16 47N/19W/15 782/454 234446
Azurite #17 47N/19W/15 782/455 234447
Azurite #18 47N/19W/22 782/456 234448
Azurite #19 47N/19W/22 782/457 234449
Azurite #20 47N/19W/15 782/491 236292
Azurite #21 47N/19W/22 782/492 236293
Azurite #22 47N/19W/22 782/493 236294
Azurite #23 47N/19W/22 782/494 236295
Azurite #24 47N/19W/22 782/495 236296
Azurite #25 47N/19W/22 782/496 236297
Azurite #26 47N/19W/22 782/497 236298
Azurite #27 47N/19W/22 782/498 236299
Azurite #28 47N/19W/22 782/499 236300
Azurite #29 47N/19W/22 782/500 236301
Azurite #30 47N/19W/22 782/501 236302
Azurite #31 47N/19W/27 782/502 236303
Azurite #32 47N/19W/14 782/503 236304
Azurite #33 47N/19W/14 782/504 236305
Azurite #34 47N/19W/22 782/505 236306
Azurite #35 47N/19W/22 782/506 236307
Azurite #36 47N/19W/22 782/507 236308
Azurite #37 47N/19W/22 782/508 236309
Azurite #38 47N/19W/22 782/509 236310
Azurite #39 47N/19W/22 782/510 236311
Azurite #40 47N/19W/22,23 782/511 236312
Azurite #41 47N/19W/22,23 782/512 236313
Azurite #42 47N/19W/22,23,26,27 782/513 236314
Azurite #43 47N/19W/26,27 782/514 236315
Azurite #44 47N/19W/23 782/515 236316
Azurite #45 47N/19W/23 782/516 236317
Azurite #46 47N/19W/23 782/517 236318
Azurite #47 47N/19W/23 782/518 236319
Azurite #48 47N/19W/23 782/519 236320
Azurite #49 47N/19W/23 782/520 236321
<PAGE>
Claim Name Twn/Ran/Sec Book/Page Blm Ser. No.
- ---------- ----------- --------- ------------
Azurite #50 47N/19W/14 782/521 236322
Azurite #51 47N/19W/14 782/522 236323
Azurite #52 47N/19W/14,23 782/523 236324
Azurite #53 47N/19W/23 782/524 236325
Claude #1 47N/19W/22 782/430 234423
Claude #2 47N/19W/22 782/431 234424
Claude #3 47N/19W/22,28 782/432 234425
Claude #4 47N/19W/6,22,28 782/433 234426
Claude #5 47N/19W/22 782/434 234427
Claude #6 47N/19W/22 782/435 234428
Claude #7 47N/19W/22,28 782/436 234429
Claude #8 47N/19W/22,28 782/437 234430
Claude #9 47N/19W/27 782/526 236326
Claude #10 47N/19W/27 782/527 236327
Claude #11 47N/19W/27 782/528 236328
Claude #12 47N/19W/27 782/529 236329
Claude #13 47N/19W/22 782/574 237204
Claude #14 47N/19W/22 782/575 237205
<PAGE>
Recorded at _____________________ O'clock ____________M ________________
Reception No. __________________ _____________________________Recorder
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SPECIAL WARRANTY DEED
Wanda H. Ahlstrom & Clive L. Ahlstrom
husband and wife
whose address is 1628 Mulberry Way, Sandy Utah 84093
xxxxxxxx
xxxxxxxxxxxxx , for the consideration
of Two Hundred Seventy-Five Thousand & 00/100 dollars,
($275,000.00)
in hand paid, hereby sell(s) and convey(s) to St. Mary Minerals Inc., a
Colorado corporation
whose legal address is 1776 Lincoln Street
City and County of Denver , and State of Colorado
the following real property in the County of Montrose
and State of Colorado, to wit:
An undivided fifty percent (50%) interest
in the property described in Exhibit A
attached hereto and incorporated herein
also known as street and number NA
and water rights
with all its appurtenances and warrant(s) the title against all persons
claiming under (me)(us).
Signed and delivered this day of 1993.
/s/ Wanda H. Ahlstrom /s/ Clive L. Ahlstrom
- ----------------------------- ------------------------------
Wanda H. Ahlstrom Clive L. Ahlstrom
_____________________________ ______________________________
_____________________________ ______________________________
STATE OF COLORADO )
) ss.
County of )
The foregoing instrument was acknowledged before me this 27 day of Sept
1993, by Clive L. Ahlstrom and Wanda H. Ahlstrom, husband and wife
My commission expires 6/3 , 1995. Witness my hand and official seal
[DAVID A. SHAIA SEAL]
/s/ David A. Shaia
If in Denver, insert "City and" -------------------------------
Notary Public
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
Recorded at _____________________ O'clock ____________M ________________
Reception No. __________________ _____________________________Recorder
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SPECIAL WARRANTY DEED
Florene H. Peacock and Max J. Peacock
husband and wife
whose address is 5889 So. 20 East, Murray, Utah 84107
xxxxxxxx
xxxxxxxxxxxxx , for the consideration
of Two Hundred Seventy-Five Thousand & 00/100 dollars,
($275,000.00)
in hand paid, hereby sell(s) and convey(s) to St. Mary Minerals Inc., a
Colorado corporation
whose legal address is 1776 Lincoln Street
City and County of Denver , and State of Colorado
the following real property in the County of Montrose
and State of Colorado, to wit:
An undivided fifty percent (50%) interest in
the property described in Exhibit A attached
hereto and incorporated herein
also known as street and number NA
and water rights
with all its appurtenances and warrant(s) the title against all persons
claiming under (me)(us).
Signed and delivered this day of 1993.
/s/ Florene H. Peacock /s/ Max J. Peacock
- ----------------------------- ------------------------------
Florene H. Peacock Max J. Peacock
_____________________________ ______________________________
_____________________________ ______________________________
STATE OF COLORADO )
) ss.
County of )
The foregoing instrument was acknowledged before me this 27 day of Sept
1993, by Max J. Peacock and Florene N. Peacock, husband and wife.
My commission expires 6/3 , 1995. Witness my hand and official seal
[DAVID A. SHAIA SEAL]
/s/ David A. Shaia
If in Denver, insert "City and" -------------------------------
Notary Public
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
AMENDMENT #2 TO OPTION AGREEMENT
This Amendment #2 to Option Agreement is made and entered into as of
March __, 1996 by and between Wanda H. Ahlstrom and Clive L. Ahlstrom,
husband and wife, and Max J. Peacock and Florene N. Peacock, husband and wife
("Owners"), whose address is P. 0. Box 31, Eden, Utah 84310 and SUMMO USA
CORPORATION, a Colorado corporation and successor in interest to St. Mary
Minerals Inc. ("St. Mary"), whose address is 1776 Lincoln Street, Suite 1100,
Denver, Colorado 80203.
WHEREAS, Owners and St. Mary entered into an Option Agreement dated
September 27, 1993 pertaining to certain lands in Township 47 North, Range 19
West, in Montrose County, Colorado.
WHEREAS, Owners and Summo amended the Option Agreement effective
December 28, 1994 in order to revise the property description.
WHEREAS, Owners and Summo now desire to amend the Option Agreement and
to ratify and confirm the Option Agreement as so modified.
NOW, THEREFORE, in consideration of the following covenants, the Owners
and Summo agree as follows:
1. Subparagraph (b) of Article 6 is deleted in its entirety and replaced
with the following:
(b) Summo shall pay to Owners further option payments on the dates and
in the amounts as follows:
March 1, 1994 $ 20,000 (paid 2-7-94)
September 1, 1994 20,000 (paid 8-19-94)
September 1, 1995 50,000 (paid 8-15-95)
September 1, 1996 50,000
September 1, 1997 50,000
September 1, 1998 50,000
September 1, 1999 50,000
September 1, 2000 50,000
September 1, 2001 $200,000
--------
$540,000
THIS Amendment shall be effective as of March 29, 1996.
EXCEPT as herein amended, the Option Agreement is hereby ratified and
confirmed by Owners and Summo as executed and as being in full force and
effect.
<PAGE>
THIS Amendment will inure to the benefit of and will be binding upon the
respective successors, representatives and assigns of the Owners and Summo.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
/s/ Wanda H. Ahlstrom /s/ Clive L. Ahlstrom
- ----------------------------- ------------------------------
Wanda H. Ahlstrom Clive L. Ahlstrom
/s/ Max J.Peacock /s/ Florene N. Peacock
- ----------------------------- ------------------------------
Max J.Peacock Florene N. Peacock
SUMMO USA CORPORATION
By: /s/ [ILLEGIBLE]
---------------------------
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On this 24 day of June, 1996 before me the undersigned, a notary public,
-- ----
personally appeared Wanda H. Ahlstrom, owner of said claims.
/s/ Angela Spencer
------------------------------
Notary Public
My Commission Expires:
July 7, 1998
- -----------------------------
[SEAL]
[NOTARY PUBLIC ANGELA SPENCER SEAL]
-2-
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On this __ day of _____, 1996 before me the undersigned, a notary public,
personally appeared Clive L. Ahlstrom, owner of said claims.
______________________________
Notary Public
My Commission Expires:
_____________________________
[SEAL]
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On this 21 day of June, 1996 before me the undersigned, a notary public,
-- ----
personally appeared Max J. Peacock, owner of said claims.
/s/ Yvonne M. Hill
------------------------------
Notary Public
My Commission Expires:
2/21/98
- -----------------------------
[SEAL]
[NOTARY PUBLIC YVONNE M. HILL SEAL]
-3-
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On this 21 day of June, 1996 before me the undersigned, a notary public,
-- ----
personally appeared Florene N. Peacock, owner of said claims.
/s/ Yvonne M. Hill
------------------------------
Notary Public
My Commission Expires:
2/21/98
- -----------------------------
[SEAL]
[NOTARY PUBLIC YVONNE M. HILL SEAL]
-4-
<PAGE>
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
On this 27 day of March 1996 before me the undersigned, a notary public,
-- -----
personally appeared Gregory A. Hahn, the President of Summo USA Corporation,
on behalf of the corporation.
/s/ Michelle Herbert
------------------------------
Notary Public
My Commission Expires:
3-18-99
- -----------------------------
[SEAL]
-5-
<PAGE>
EXHIBIT 10.13
EXPLORATION AND PURCHASE OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made effective as of the lst day of
August, 1994, by and between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners") and ST. MARY MINERALS INC., a
Colorado corporation, whose address is 1776 Lincoln Street, Denver, Colorado
80203 (hereinafter referred to as "St. Mary");
WHEREAS, Owners are the owners of certain patented mining claims and
millsites situate in Taos County, New Mexico, herein referred to as "the
Property," and more particularly described on EXHIBIT B attached hereto and
made a part hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to acquire an
option to purchase the Property,
WHEREAS, Owners desire to make the Property available for the conduct by
St. Mary of certain mineral exploration work thereon and to grant St. Mary
the option to purchase the Property,
NOW THEREEFORE, in consideration of Ten Dollars ($10.00) in hand paid to
Owners, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement the
sole and exclusive option (the "Option") to purchase the Property,
together with all appurtenances and water rights incident thereto and all
improvements and personal property thereon, free and clear of all liens
and encumbrances, for a total purchase price of Five Hundred Thousand
Dollars ($500,000.00). St. Mary shall be entitled to a credit against the
purchase price for all amounts paid under the provisions of Section 6.
hereof and for all costs and expenses incurred under the provisions of
Section 4 hereof. If the Property is
<PAGE>
placed in commercial production at any time during the term of this
Agreement, St. Mary shall exercise the option by providing written notice
of exercise to Owners. Within three (3) years after such notice, but no
later than August 1, 2015, St. Mary shall deliver the balance of the
purchase price to Owners. "Commercial production" shall mean the
processing and sale of ores, concentrates, metals and other mineral
products which have been mined on the Property but which shall not include
processing for the purpose of testing or milling by a pilot plant.
2. ESCROW. Contemporaneously with the execution of this Agreement, Owners
shall execute, acknowledge, and deliver to the Escrow Agent one or more
general warranty deeds conveying the Property to St. Mary in the form
(without legal descriptions) of Exhibit C attached hereto and incorporated
herein.
Owners and St. Mary hereby appoint CB&S Nominee Corporation, 1800
One Norwest Center Building, 1700 Lincoln Street, Denver, Colorado 80203
as their Escrow Agent to receive and distribute all payments and to hold
the deed and deliver it to the party entitled hereunder to receive the
same. The parties hereto agree that the Escrow Agent shall act pursuant to
Escrow Instructions executed contemporaneously herewith.
3. EXCLUSIVE POSSESSION. St. Mary shall have the exclusive possession of
the Property during the term of this Agreement.
4. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no
other person claiming any interest in the Property or the ground covered
thereby, and that the Property is free from all liens and encumbrances,
except liens for property taxes not yet due and payable. Owners further
warrant to St. Mary the quiet enjoyment of the Property and the right to
explore, develop, and mine the same.
(b) Owners warrant and will defend title of the property against all
persons whomsoever.
2
<PAGE>
(c) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any
defect in their title to the Property or the ground covered thereby. If
Owners fail or refuse to take any such action, St. Mary may take any such
action in Owners' name. Owners agree to cooperate with St. Mary in any
such action taken. If the United States or any third person attacks the
validity of any of the patented mining claims included in the Property for
any reason, St. Mary shall have no obligation to defend the validity of the
claim.
(d) St. Mary shall not be stopped to deny the validity of Owners'
title.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any
portion of the Property is less than one, hundred percent, the interest
claimed by such Owner is set forth in Exhibit A. Any representation or
warranty of title made by any Owner shall apply only to the interest set
forth in Exhibit A.
6. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St.
Mary has made an option payment to Owners in the amount of $5,000, receipt
of which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further annual option payments on or
before the dates and in the amounts as follows:
August 1, 1995 $ 5,000
August 1, 1996 10,000
August 1, 1997 10,000
August 1, 1998 10,000
August 1, 1999 10,000
August 1, 2000 15,000
August 1, 2001 15,000
August 1, 2002 15,000
August 1, 2003 15,000
August 1, 2004 15,000
August 1, 2005 20,000
August 1, 2006 20,000
August 1, 2007 20,000
August 1, 2008 20,000
3
<PAGE>
August 1 ,2009 20,000
August 1, 2010 20,000
August 1, 2011 20,000
August 1, 2012 20,000
August 1, 2013 20,000
August 1, 2014 20,000
August 1, 2015 175,000
--------
$500,000
7. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable
to and shall be made payable to and shall be transmitted to the Escrow
Agent. The Escrow Instructions to be executed contemporaneously herewith
will instruct the Escrow Agent how the payments shall be disbursed. Upon
making the payments to the Escrow Agent, St. Mary shall be deemed to have
made the payments to Owners, their heirs, representatives, successors, and
assigns, and thereupon St. Mary shall be discharged to the extent thereof
as if the payments had been made directly to Owners, or to any person, firm
or corporation entitled thereto, and St. Mary shall not be liable for the
ultimate distribution or receipt of any payment or payments.
8. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have free
and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and that prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for
sale. St. Mary shall have the right to erect and maintain upon the
Property any improvements, structures or facilities including mines, shafts
and tunnels as may be necessary or convenient for the conduct of its
operations.
4
<PAGE>
(b) STANDARDS OF OPERATION. St. Mary shall conduct all operations on
the Property in a good and workmanlike manner and in accordance with
accepted mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION: St. Mary shall endeavor in good
faith to comply with applicable provisions of federal, state and local laws
and regulations, as required by the operating permits issued to St. Mary by
these agencies under which St. Mary shall conduct its operations. If this
Agreement is terminated, St. Mary shall reclaim only those portions of the
Property disturbed by its operations, and in compliance with all applicable
governmental laws, regulations and orders. St. Mary shall have the right,
without payment of any additional consideration to Owners, to enter upon
the Property subsequent to termination of this Agreement for purposes of
performing such reclamation work.
9. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations on
or in connection with the Property and so long as this Agreement has not
been terminated before the expiration of its term, St. Mary may in its
sole discretion curtail or cease such operations so long as it continues to
make any payments due Owners under this Agreement subject to the provisions
of Section 16 hereof.
10. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property
free of liens for labor performed or materials or merchandise furnished for
use on the Property under this Agreement, and shall hold Owners harmless
from all costs, loss, or damage which may result from any work or
operations of St. Mary or its occupancy of the Property.
5
<PAGE>
11. TAXES. Owners shall pay all taxes levied against the Property prior to
the date of this Agreement. St. Mary shall pay or reimburse Owners for all
taxes levied against the Property during the term of this Agreement. In
the case of taxes for the calendar year in which this Agreement commences,
and for the calendar year in which this Agreement ends, there shall be an
apportionment between the parties, St. Mary to bear the proportion of taxes
upon the Property applicable to the part of the calendar year included
hereunder, and Owners to bear the balance of the taxes. St. Mary shall pay
all taxes levied during the term of this Agreement against all buildings,
structures, machinery, equipment, personal property, fixtures, and
improvements placed upon the Property by St. Mary, and all taxes levied
against St. Mary as an employer of labor. All taxes shall be paid when due
and before delinquent, but St. Mary shall be under no obligation to pay any
tax so long as the tax is being contested in good faith and by appropriate
legal proceedings and the nonpayment thereof does not adversely affect any
right, title, or interest of Owners in or to the Property.
12. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations, or St. Mary may self-insure as to such matters if it
qualifies as a self-insurer under the appropriate laws and regulations.
13. INSPECTION.
(a) Owners or their authorized representative may enter on the
Property at any reasonable time for the purpose of inspection, but shall
enter at Owners' own risk and so as not to hinder unreasonably the
operations of St. Mary. Owners shall indemnify and hold St. Mary harmless
from any damage, claim, or demand by reason of injury to or the presence of
Owners, their agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance of St. Mary with the provisions of this Agreement.
6
<PAGE>
14. DATA.
(a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying and sampling, and similar
data concerning the Property (or copies thereof) which are in Owners'
possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof), St. Mary shall, within sixty days after
termination, (i) return to Owners all drill core and original data
delivered by Owners to St. Mary which are then in St. Mary's possession or
control, and (ii) make available for inspection by Owners all factual
geological and geophysical data and maps (not including interpretive data),
logs of drill holes, drill core or cuttings and results of assaying and
sampling pertaining to the Property which St. Mary has obtained as a
result of its exploration work under this Agreement and which are then in
St. Mary's possession or control. Upon Owners' request made within ninety
(90) days after termination of this Agreement, St. Mary shall at Owners'
expense provide Owners with the drill core or cuttings designated by Owners
and with copies of any Portion of the factual geological and geophysical
data and maps (not including interpretive data), logs of drill holes, and
results of assaying and sampling designated by Owners. St. Mary makes no
representation or warranty as to the accuracy or completeness of any such
data or information, and shall not be liable on account of any use by
Owners or any other person of any such data or information. St. Mary shall
not be liable for the loss or destruction of any drill core or cuttings.
15. CONFIDENTIAL. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of St.
Mary.
16. TERM, TERMINATION AND SURRENDER.
7
<PAGE>
(a) The term of this Agreement shall be for a period of twenty-one
(21) years from the date hereof unless sooner surrendered or otherwise
terminated, or until the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 60 days of the due date therefor as provided in Section 6(b)
hereof shall constitute also a termination of this Agreement effective upon
the expiration of such 60 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement except as provided
in Sections 17 and 18 hereof shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 6(b) hereof) shall likewise thereupon
terminate except as provided in Sections 8(c) and 14(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all
or any part of the Property by delivering to Owners or by filing for record
in the appropriate office (with a copy to Owners) a good and sufficient
Surrender of this Agreement. Upon mailing the Surrender to Owners or to the
appropriate office, all rights of St. Mary under this Agreement shall
terminate except as provided in Sections 17 and 18 hereof, and all
liabilities and obligations of St. Mary under this Agreement shall likewise
terminate except as provided in Sections 8(c) and 14(b) hereof and except
liability for payments under Section 6(b) hereof that became due prior to
the date of such termination.
17. REMOVAL OF PROPERTY. For a period of six months after the termination
of this Agreement St. Mary shall have the right (but not the obligation
except to the extent set forth in Section 8(c) hereof) to remove from the
Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or erected or placed
on or in the Property by St. Mary, except mine timbers in place. St. Mary
may keep one or more watchmen on the Property during the six-month
period.
18. ACCESS. For as long as necessary after termination of this Agreement,
St. Mary shall have the right of access to and across the Property for
reclamation purposes.
8
<PAGE>
19. EASEMENTS. If requested by St. Mary during the term of this Agreement
or following the exercise of the Option, Owners shall execute one or more
instruments granting to St. Mary without cost to St. Mary easements upon,
over, or through the Property or upon, over, or through other property
owned by Owners, for the construction, maintenance, use, and removal of
pipe lines, telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels, and other
facilities necessary or convenient for St. Mary's operations on the
Property or on other property.
20. NOTICES. All notices and other communications to either party shall be
in writing and shall be sufficiently given if delivered in person or sent
by certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Notices given by mail shall be deemed delivered as
of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
Mr. Boyce Cook
9845 West 11th Avenue
Lakewood, Colorado 80215
and all notices to St. Mary shall be addressed:
St. Mary Minerals Inc.
l776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Attn: Gregory A. Hahn
21. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or
in part without the consent of the other party hereto, subject to the
provisions hereinafter set forth.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall
9
<PAGE>
be accomplished in such a manner that St. Mary shall be required to make
payments and to give notices to but one person, firm, or corporation, and
upon breach of this covenant, St. Mary may retain all monies otherwise due
to Owners until the breach has been cured. No change or division in
ownership shall be binding on St. Mary until thirty days after Owners have
given. St. Mary a certified copy of the recorded instrument evidencing the
change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other
portion.
(d) If Owners receive a bona fide written offer from an unrelated
third party to purchase all or any part of Owners' interest in the
Property or in this Agreement, Owners shall first offer the interest to St.
Mary stating the interest proposed to be sold or otherwise disposed of, the
offering price from such third party and other terms and conditions of
sale. St. Mary may accept the offer on the same terms and conditions as
such third party offer by notice to Owners given within sixty days
following the effective date Owners' offer. If St. Mary does not accept
Owners' offer, Owners may sell or otherwise dispose of the interest offered
to St. Mary at a price and upon terms and conditions equal to or less
favorable to the third party than those offered to St. Mary provided that
the sale or other disposition is effectuated within 120 days from the
effective date of Owners' offer. Any sale or other disposition shall be
subject to the terms of this Agreement, including this subsection (d), all
of which shall survive the closing of any such sale in full force and
effect. If Owners do not sell or otherwise dispose of the interest offered
within 120 days, the provisions of this subsection (d) shall apply to any
subsequent third party offer received by Owners.
22. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither the Owners nor any Owner during term of this Agreement shall (a)
sell, transfer, assign
10
<PAGE>
or convey any interest in the Property without St. Mary's prior written
consent or otherwise in accordance with the provisions of Section 21(d)
hereof; (b) do or fail to do any act or thing which would cause or permit
any part of the Property to be pledged, collateralized or stand as security
for any matter whatsoever; or (c) enter into any leases or other agreements
concerning the Property or any part thereof.
23. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of
money to Owners), the failure of performance shall be excused and the
period for performance and the term of this Agreement shall be extended for
an additional period equal to the duration of the Force Majeure. Upon the
occurrence and upon the termination of any Force Majeure, St. Mary shall
promptly notify Owners. St. Mary shall use reasonable diligence to remedy a
Force Majeure, but shall not be required against its better judgment to
settle any labor dispute or contest the validity of any law or regulation
or any action or inaction of civil or military authority.
(b) "Force Majure" means any cause beyond St. Mary's reasonable
control, including law or regulation; action or inaction of civil or
military authority; inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Property; unusually severe weather; mining casualty;
fire; explosion; flood; insurrection; riot; labor dispute; inability after
diligent effort to obtain workmen or material; delay in transportation;
acts of God; unavailability of a suitable market for the ores, minerals,
concentrates, or other products from the Property; and excessive costs of
mining, milling, processing or marketing, or insufficient prices available
for the ores, minerals, concentrates, or other products produced from the
Property, which render St. Mary's operations uneconomic.
24. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have
executed and delivered a Short Form of Agreement. St. Mary may record the
Short Form or this Agreement, or both, as it may elect.
11
<PAGE>
25. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors, and assigns.
26. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation, or
amendment is in writing and is signed by Owners and St. Mary.
27. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
28. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warranties, or
understandings, written or oral.
29. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
30. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
31. TIME OF ESSENCE. Except as set forth in Section 23 hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
32. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday,
12
<PAGE>
Sunday, or legal holiday. Any performance or payment which must be taken or
made under this Agreement must be taken or made prior to 5:00 p.m.
(Denver, Colorado time) of the last day of the applicable period provided
hereunder for such action, unless another time is expressly specified. All
references to time shall be Denver, Colorado time. If a date for
performance or payment falls on a holiday or weekend, the time for
performance or payment shall be extended to the next business day, and if
performance or payment has occurred on such weekend or holiday, it shall be
deemed to have occurred on the next business day.
33. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
35. ADDITIONAL DOCUMENTS. Owners will provide St. Mary with such
additional documents as may be necessary to carry out the purposes of this
Agreement. If conditions change by reason of conveyances, assignments, or
other matters relating to the title to or description of the Property,
Owners and St. Mary shall execute amendments of this Agreement and the
Short Form of Agreement, and any other documents which may be necessary to
reflect such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
/s/ Josephine Hill 8-4-94
- ---------------------------
Josephine Hill
and
13
<PAGE>
/s/ Donald Charles Giaccarni
- ---------------------------
Donald Charles Giaccarni ADL 6450909
/s/ Ruby E. Neill
- ---------------------------
Ruby E. Neill
and
/s/ Bruce E. Neill
- ---------------------------
Bruce Neill, Joint Tenants
/s/ Vivian L. Rutherford
- ---------------------------
Vivian I. Rutheford
ST. MARY MINERALS INC
BY: /s/ Gregory A. Hahn
-----------------------------
Gregory A. Hahn, Vice President
14
<PAGE>
STATE OF CALIFORNIA )
)SS.
COUNTY OF SAN FRANCISCO )
On this 4TH day of AUGUST, 1994 before me the undersigned, a notary
public, personally appeared Josephine Hill (or proved to me on
the oath of JOSEPHINE HILL (to be the persons whose names are subscribed to the
within instrument, and acknowledged that she executed the same.
My Commission Expires:
July 17th, 1995 /s/ Hans R. Hansson
- ------------------------------ --------------------------------
Notary Public Hans R. Hansson
Hans R. Hansson
COMM. #930735
STATE OF ALASKA ) Notary Public - California
)SS. SAN FRANCISCO COUNTY
COUNTY OF KENAI PENINSULA ) My Comm. Expires JUL 17, 1996
BOROUGH
On this 29TH day of AUGUST, 1995 before me the undersigned, a notary
public, personally appeared Donald Charles Giaccarni known to me (or proved
to me on the oath of DONALD CHARLES GIACCARNI (to be the persons whose names
are subscribed to the within instrument, and acknowledged that he executed the
same.
My Commission Expires:
2/17/98 /s/ Diana Brumley
- ------------------------------ --------------------------------
Notary Public
State of Alaska
STATE OF New Mexico ) NOTARY PUBLIC
)SS. Diana Brumley
COUNTY OF Rio Aruba ) My Commission Expires Feb 17, 1998
On this 2ND day of AUGUST, 1994 before me the undersigned, a notary
public, personally appeared Ruby E. Neill known to me (or proved to me on the
oath of RUBY E. NEILL (to be the person whose name is subscribed to the
within instrument, and acknowledged that she executed the same.
My Commission Expires:
January 25,1997 /s/ Gloria June Kelly
- ------------------------------ --------------------------------
Notary Public
15
<PAGE>
STATE OF TEXAS )
)ss.
COUNTY OF BRAZORIA )
On this 8th day of August, 1994 before me the undersigned, a notary
public, personally appeared Bruce E. Neill known to me (or proved to me on
the oath of Bruce E. Neill (to be the person whose name is subscribed to the
within instrument, and acknowledged that she executed the same.
My Commission Expires:
12-4-97 /s/ Eileen Chennault
- ------------------------------ --------------------------------
Notary Public
EILEEN CHENNAULT
Notary Public, State of Texas
Commission Expires 12-4-97
STATE OF )
)ss.
COUNTY OF )
On this 2nd day of August, 1994 before me the undersigned, a notary
public, personally appeared Vivian I. Rutherford known to me (or proved to me
on the oath of _____________________ (to be the person whose name is
subscribed to the within instrument, and acknowledged that she executed the
same.
My Commission Expires:
March 9, 1996 /s/ Catherine F. Guy
- ------------------------------ --------------------------------
Notary Public
STATE OF COLORADO )
CITY AND )ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 25th day of
July, 1994, by Gregory A. Hahn, the Vice President of St. Mary Minerals Inc.,
a Colorado corporation, on behalf of the corporation.
My Commission Expires:
February 14, 1997 /s/ James C. Robertson
- ------------------------------ --------------------------------
Notary Public James C. Robertson
16
<PAGE>
EXHIBIT A
---------
OWNERS
------
Name and Address % Interest in Property
- ---------------- ----------------------
Josephine Hill and 16.667% each
Donald Charles Giaccarni
20 Hidalgo Terrace
San Francisco, CA 94103
Ruby E. Neill and 33.333%
Bruce Neill, Joint Tenants
724 E. Pueblo
Espanola, New Mexico 87532
Vivian I. Rutherford 33.333%
P.O. Box 8467
Albuquerque, New Mexico 87198
<PAGE>
EXHIBIT B
PROPERTIES
100% interest in and to the following patented mining claims and
millsites located in the Picuris and Copper Mounitain Mining District, Taos
County, New Mexico:
Jumbo Lode, Mineral Survey No. 1049, BLM Book A-50, Pages 338-340
Aztec Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Sunset Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Oxide King Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Champion Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Aztec Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Sunset Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Oxide King Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Champion Millsite Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
<PAGE>
Schedule "D" to the
[LETTERHEAD] Acquisition Agreement
dated for reference
November 16, 1994
May 20, 1994
Mr. Greg Hahn, VP, Minerals Exploration
St. Mary Minerals, Inc.
1776 Lincoln Street, Suite 110
Denver, CO 80203-5400
Dear Greg:
As per our recent phone call, I am herein describing terms of an Agreement,
which if affirmed by your signature, will result in our passing onto you and
your company information on an interesting "copper-oxide" prospect
(prospect), located on claimed land in New Mexico.
The prospect was encountered during a comprehensive review of leachable
copper reserves in the Southwestern U.S. The prospect was explored during the
porphyry copper era by a couple of majors, however, was not in itself big
enough for their further interest. We estimate that there may be upward to
20-25 million tons of low-grade exotic copper with a possible core area of
0.5% or better. According to a call made to the owner last year, the
prospect was open for option negotiations.
Agreement to the following terms would make this prospect and our in-house
data available to you.
1. St. Mary Minerals, Inc. (St. Mary) would have 60 days from date of
disclosure of prospect data to accept or reject the prospect. If rejected,
St. Mary shall submit in writing this rejection and agrees that it and any of
its officers, employees, agents, representatives or consultants for a period
of three (3) years from the date of rejection letter, shall not acquire or
attempt to acquire any interest in the prospect or any property within a mile
limit outside the boundaries of the prospect (Area to be defined on map with
data). Furthermore, St. Mary shall keep all data on the prospect strictly
confidential for the 3-year period.
2. If the prospect is accepted, St. Mary agrees to pay Applied Geologic
Studies, Inc. (AGS) a discovery bonus amounting to $100,000. The bonus shall
be paid as follows:
a. $5,000 at time of land acquisition in prospect area, or in any area
within a mile limit outside the prospect's boundaries.
<PAGE>
b. Five percent (5%) of total direct exploration expenditures made for
benefit of the prospect, exclusive of land costs. Expenditures would include
geologic work, geochemistry, geophysics, assay, drilling and costs related to
mine feasibility studies or mine development. These payments would be made
annually.
c. Any balance (not to exceed $100,000), shall be paid at time of
decision to put the prospect into mine production.
3. In the event that St. Mary conveys its interest in the prospect to another
party, it will require such party to expressly assume in writing St. Mary's
obligation to make the above payments; whereupon, St. Mary's further
obligations under this Agreement shall cease. If St. Mary surrenders its
interest in the prospect, or if St. Mary's rights in the property expire or
terminate in any other way, it's obligations to make further payments under
this Agreement shall immediately cease.
If you are in agreement with the terms set forth above, please indicate by
executing both copies of the Agreement and returning one signed copy to me.
Sincerely,
William A. Rehrig
Dr. William A. Rehrig
Pres. AGS INC.
- -------------------------------------------------------------------------------
Accepted by me this the 23rd day of MAY 1994
ILLEGIBLE
- --------------------------------------
Signature of Company Representative
<PAGE>
SCHEDULE "E"
TO THAT CERTAIN AGREEMENT (THE "AGREEMENT")
MADE AS OF THE 16TH DAY OF NOVEMBER, 1994 BETWEEN
SUMMO MINERALS CORPORATION OF THE FIRST PART
AND SUMMO USA CORPORATION OF THE SECOND PART
(COLLECTIVELY, THE "PAYOR") AND ST. MARY
MINERALS INC. OF THE THIRD PART (THE "PAYEE")
NET SMELTER RETURNS ROYALTY
1. In this Agreement, the term "Net Smelter Returns" shall mean the
gross revenue from the sale by the Payor of all ore, concentrate and metal
produced from the Property, after deduction of the following:
(a) all smelting, and refining costs (excluding the cost of SX-EW
processing), treatment charges and penalties including but not
limited to metal losses, penalties for impurities and charges for
refining, selling and handling by the smelter, refinery or other
purchaser;
(b) costs of marketing, handling, transporting and insuring such ore,
concentrate or metal from the Property or from a concentrator,
whether situated on or off the Property, to a smelter, refinery or
other place of treatment or to the purchaser thereof.
2. Payments of Net Smelter Returns shall be made within 30 days after
the end of each fiscal quarter in which Net Smelter Returns, as determined on
the basis of final adjusted invoices, are received by the Payor. All such
payments shall be made in U.S. dollars.
3. For the purposes of determining Net Smelter Returns, all receipts
and disbursements in currency other that U.S. dollars shall be converted into
U.S. currency on the day of receipt or disbursement, as the case may be.
4. Each payment of Net Smelter Returns shall be accompanied by a
statement indicating the calculation of Net Smelter Returns paid. The Payee
shall be entitled to audit, during normal business hours, such books and
records as are necessary to determine the correctness of the payments,
provided however, that such audit shall be made only on an annual basis and
within 12 months of the end of the fiscal period in respect of which such
audit is made.
5. Payment of Net Smelter Returns shall be made to the Payee at such
place or places in the United States as they shall advise the Payor from
time to time.
6. The determination of the Net Smelter Returns hereunder is based on
the premise that production will be developed solely on the Property. If
other properties are incorporated with the Property in a single mining
project and ores pertaining to each cannot be readily
<PAGE>
segregated on a practical or equitable basis, the Payor shall have the right
to commingle with ore from the Property ore produced from other properties
owned or controlled by the Payor provided that the Payor will adopt and
employ generally accepted practices and procedures for weighing, sampling and
assaying in order to determine the amount of metals or concentrate derived
from the Property. The Payee, or the representative of the Payee authorized
in writing, will be permitted to examine at all reasonable times the Payor's
records pertaining to commingling of ores.
7. If metal, concentrates or ore shipped from the Property are lost or
destroyed under circumstances in which the Payor receives payment under an
insurance policy, such payments will be be deemed Net Smelter Returns.
8. The Payor shall not sell, assign, transfer or in any other manner
deal with the Property or any interest therein without the purchaser,
transferee or assignee acquiring the Property or such interest therein first
agreeing with the Payor in writing to be bound by the terms of this
agreement. The Payor's covenant to pay a 1.5% Net Smelter Return Royalty to
the Payee hereunder shall be a covenant running with the Property.
9. No error in accounting or in interpretation of this Agreement shall
be the basis for a claim of breach of fiduciary duty, or the like, or give
rise to a claim for exemplary or punitive damages or for termination or
rescission of the Agreement or the estate and rights acquired and held by the
Payor under the terms of the Agreement.
<PAGE>
EXHIBIT 10.14
EXPLORATION AND PURCHASE OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made effective as of the lst day
of August, 1994, by and between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners") and ST. MARY MINERALS INC., a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203
(hereinafter referred to as "St. Mary");
WHEREAS, Owners are the owners of certain unpatented mining claims
situate in Taos County, New Mexico, herein referred to as "the Property," and
more particularly described on EXHIBIT B attached hereto and made a part
hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to acquire
an option to purchase the Property,
WHEREAS, Owners desire to make the Property available for the conduct
by St. Mary of certain mineral exploration work thereon and to grant St. Mary
the option to purchase the Property,
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
to Owners, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement
the sole and exclusive option (the "Option") to purchase the Property,
together with all appurtenances and water rights incident thereto and all
improvements and personal property thereon, free and clear of all liens and
encumbrances, for a total purchase price of Five Hundred Thousand Dollars
($500,000.00). St. Mary shall be entitled to a credit against the purchase
price for all amounts paid under the provisions of Section 6. hereof and
for all costs and expenses incurred under the provisions of Section 4
hereof. If the Property is
<PAGE>
placed in commercial production at any time during the term of this
Agreement, St. Mary shall exercise, the option by providing written notice
of exercise to Owners. Within three (3) years after such notice, but no
later than August 1, 2015, St. Mary shall deliver the balance of the
purchase price to Owners. "Commercial production" shall mean the
processing and sale of ores, concentrates, metals and other mineral
products which have been mined on the Property but which shall not include
processing for the purpose of testing or milling by a pilot plant.
2. ESCROW. Contemporaneously with the execution of this Agreement,
Owners shall execute, acknowledge, and deliver to the Escrow Agent one or
more general warranty deeds conveying the property to St. Mary in the form
(without legal descriptions) of Exhibit C attached hereto and incorporated
herein.
Owners and St. Mary hereby appoint CB&S Nominee Corporation, 1800 One
Norwest Center Building, 1700 Lincoln Street, Denver, Colorado 80203 as
their Escrow Agent to receive and distribute all payments and to hold the
deed and deliver it to the party entitled hereunder to receive the same.
The parties hereto agree that the Escrow Agent shall act pursuant to
Escrow Instructions executed contemporaneously herewith.
3. EXCLUSIVE POSSESSION. St. Mary shall have the exclusive possession
of the Property during the term of this Agreement.
4. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no
other person claiming any interest in the Property or the ground covered
thereby, and that the Property is free from all liens and encumbrances,
except liens for property taxes not yet due and payable. Owners further
warrant to St. Mary the quiet enjoyment of the Property and the right to
explore, develop, and mine the same.
(b) Owners warrant and will defend title of the property against all
persons whomsoever.
2
<PAGE>
(c) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any
defect in their title to the Property or the ground covered thereby. If
Owners fail or refuse to take any such action, St. Mary may take, any such
action in Owners' name. Owners agree to cooperate with St. Mary in any
such action taken. If the United States or any third person attacks the
validity of any of the unpatented mining claims included in the Property
for any reason, St. Mary shall have no obligation to defend the validity of
the claim.
(d) St. Mary shall not be estopped to deny the
validity of Owners' title.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any
portion of the Property is less than one hundred percent, the interest
claimed by such Owner is set forth in Exhibit A. Any representation or
warranty of title made by any Owner shall apply only to the interest set
forth in Exhibit A.
6. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St.
Mary has made an option payment to Owners in the amount of $5,000, receipt
of which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further annual option payments on or
before the dates and in the amounts as follows:
August 1, 1995 $ 5,000
August 1, 1996 10,000
August 1, 1997 10,000
August 1, 1998 10,000
August 1, 1999 10,000
August 1, 2000 15,000
August 1, 2001 15,000
August 1, 2002 15,000
August 1, 2003 15,000
August 1, 2004 15,000
August 1, 2005 20,000
August 1, 2006 20,000
August 1, 2007 20,000
August 1, 2008 20,000
3
<PAGE>
August l, 2009 20,000
August 1, 2010 20,000
August 1, 2011 20,000
August 1, 2012 20,000
August 1, 2013 20,000
August 1, 2014 20,000
August 1, 2015 175,000
--------
$500,000
7. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable
to and shall be made payable to and shall be transmitted to the Escrow
Agent. The Escrow Instructions to be executed contemporaneously herewith
will instruct the Escrow Agent how the payments shall be disbursed. Upon
making the payments to the Escrow Agent, St. Mary shall be deemed to have
made the payments to Owners, their heirs, representatives, successors, and
assigns, and thereupon St. Mary shall be discharged to the extent thereof
as if the payments had been made directly to Owners, or to any person, firm
or corporation entitled thereto, and St. Mary shall not be liable for the
ultimate distribution or receipt of any payment or payments.
8. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have
free and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and that prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for
sale. St. Mary shall have the right to erect and maintain upon the
Property any improvements, structures or facilities including mines, shafts
and tunnels as may be necessary or convenient for the conduct of its
operations.
4
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(b) STANDARDS OF OPERATION. St. Mary shall conduct all operations on
the Property in a good and workmanlike manner and in accordance with
accepted mining practice.
(c) COMPLIANCE WITH LAW: RECLAMATION: St. Mary shall endeavor in good
faith to comply with applicable provisions of federal, state and local laws
and regulations, as required by the operating permits issued to St. Mary by
these agencies under which St. Mary shall conduct its operations. If this
Agreement is terminated, St. Mary shall reclaim only those portions of the
Property disturbed by its operations, and in compliance with all applicable
governmental laws, regulations and orders. St. Mary shall have the right,
without payment of any additional consideration to Owners, to enter upon
the Property subsequent to termination of this Agreement for purposes of
performing such reclamation work.
9. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations
on or in connection with the Property and so long as this Agreement has not
been terminated before the expiration of its term, St. Mary may in its sole
discretion curtail or cease such operations so long as it continues to make
any payments due Owners under this Agreement subject to the provisions of
Section 16 hereof.
10. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property
free of liens for labor performed or materials or merchandise furnished for
use on the Property under this Agreement, and shall hold Owners harmless
from all costs, loss, or damage which may result from any work or
operations of St. Mary or its occupancy of the Property.
5
<PAGE>
11. TAXES. Owners shall pay all taxes levied against the Property prior
to the date of this Agreement. St. Mary shall pay or reimburse Owners for
all taxes levied against the Property during the term of this Agreement.
In the case of taxes for the calendar year in which this Agreement
commences, and for the calendar year in which this Agreement ends, there
shall be an apportionment between the parties, St. Mary to bear the
proportion of taxes upon the Property applicable to the part of the
calendar year included hereunder, and Owners to bear the balance of the
taxes. St. Mary shall pay all taxes levied during the term of this
Agreement against all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements placed upon the Property by St. Mary,
and all taxes levied against St. Mary as an employer of labor. All taxes
shall be paid when due and before delinquent, but St. Mary shall be under
no obligation to pay any tax so long as the tax is being contested in good
faith and by appropriate legal proceedings and the nonpayment thereof does
not adversely affect any right, title, or interest of Owners in or to the
Property.
12. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations, or St. Mary may self-insure as to such matters if
it qualifies as a self-insurer under the appropriate laws and regulations.
13. INSPECTION.
(a) Owners or their authorized representative may enter on the
Property at any reasonable time for the purpose of inspection, but shall
enter at Owners' own risk and so as not to hinder unreasonably the
operations of St. Mary. Owners shall indemnify and hold St. Mary harmless
from any damage, claim, or demand by reason of injury to or the presence of
Owners, their agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance of St. Mary with the provisions of this Agreement.
6
<PAGE>
14. DATA.
(a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying and sampling, and similar
data concerning the Property (or copies thereof) which are in Owners'
possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof), St. Mary shall, within sixty days after
termination, (i) return to Owners all drill core and original data
delivered by Owners to St. Mary which are then in St. Mary's possession or
control, and (ii) make available for inspection by Owners all factual
geological and geophysical data and maps (not including interpretive data),
logs of drill holes, drill core or cuttings and results of assaying and
sampling pertaining to the Property which St. Mary has obtained as a result
of its exploration work under this Agreement and which are then in St.
Mary's possession or control. Upon Owners' request made within ninety (90)
days after termination of this Agreement, St. Mary shall at Owners'
expense, provide Owners with the drill core or cuttings designated by
Owners and with copies of any portion of the factual geological and
geophysical data and maps (not including interpretive data), logs of drill
holes, and results of assaying and sampling designated by Owners. St. Mary
makes no representation or warranty as to the accuracy or completeness of
any such data or information, and shall not be liable on account of any use
by Owners or any other person of any such data or information. St. Mary
shall not be liable for the loss or destruction of any drill core or
cuttings.
15. CONFIDENTIALITY. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of St.
Mary.
16. TERM, TERMINATION AND SURRENDER.
7
<PAGE>
(a) The term of this Agreement shall be for a period of twenty-one
(21) years from the date hereof unless sooner surrendered or otherwise
terminated, or until the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 60 days of the due date therefor as provided in Section 6(b)
hereof shall constitute also a termination of this Agreement effective upon
the expiration of such 60 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement except as provided
in Sections 17 and 18 hereof shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 6(b) hereof shall likewise thereupon
terminate except as provided in Sections 8(c) and 14(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all
or any part of the Property by delivering to Owners or by filing for record
in the appropriate office (with a copy to Owners) a good and sufficient
Surrender of this Agreement. Upon mailing the Surrender to Owners or to
the appropriate office, all rights of St. Mary under this Agreement shall
terminate except as provided in Sections 17 and 18 hereof, and all
liabilities and obligations of St. Mary under this Agreement shall likewise
terminate except as provided in Sections 8(c) and 14(b) hereof and except
liability for payments under Section 6(b) hereof that became due prior to
the date of such termination.
17. REMOVAL OF PROPERTY. For a period of six months after the
termination of this Agreement St. Mary shall have the right (but not the
obligation except to the extent set forth in Section 8(c) hereof) to remove
from the Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or erected or placed
on or in the Property by St. Mary, except mine timbers in place. St. Mary
may keep one or more watchmen on the Property during the six-month period.
18. ACCESS. For as long as necessary after termination of this Agreement,
St. Mary shall have the right of access to and across the Property for
reclamation purposes.
8
<PAGE>
19. EASEMENTS. If requested by St. Mary during the term of this Agreement
or following the exercise of the Option, Owners shall execute one or more
instruments granting to St. Mary without cost to St. Mary easements upon,
over, or through the Property or upon, over, or through other property
owned by Owners, for the construction, maintenance, use, and removal of
pipe lines, telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels, and other
facilities necessary or convenient for St. Mary's operations on the
Property or on other property.
20. AMENDMENT RELOCATIONS AND PATENTS. During the term of this Agreement,
St. Mary shall have the right (but not the obligation), in the name of
Owners, to amend or relocate any or all of the unpatented mining claims
included in the Property, to locate placer claims on ground theretofore
covered by lode claims and vice versa, and to locate any millsites on
ground theretofore covered by mining claims and vice versa, and to locate
any fractions resulting from the location, amendment or relocations of
mining claims or millsites. At the request of St. Mary, Owners shall apply
for a patent for any or all of the unpatented mining claims and millsites.
For purposes of implementing the provisions of the Section, Owners do
hereby nominate, constitute and appoint St. Mary as their true and lawful
attorney-in-fact to execute, deliver and record on behalf of the Owners and
in their name, place, and stead all such documents as St. Mary may deem
necessary or appropriate for such purposes. All expenses authorized by St.
Mary in connection with locating, amending, or relocating mining claims or
millsites or prosecuting patent proceedings shall be borne by St. Mary. The
rights of St. Mary under this Agreement shall extend to all such locations,
amended locations, relocations and patented mining claims and millsites.
21. COMPLIANCE WITH FEDERAL LAND POLICY AND MANAGEMENT ACT.
(a) Owners warrant that the location notices or location certificates
for the unpatented mining claims included in the Property have been
properly filed in the proper office of the Bureau of Land Management
pursuant to 43 U.S.C. Section 1744 (b).
9
<PAGE>
(b) Owners warrant that evidence of assessment work or notices of
intention to hold have been properly recorded in the proper county (or
recording district) office and filed in the proper office of the Bureau of
Land Management pursuant to 43 U.S.C. Section 1744 (a), as required, for
each assessment year to and including the assessment year ending September
1, 1992.
22. ASSESSMENT WORK.
(a) Owners warrant that the annual assessment work required to hold
the Property has been performed for each assessment year to and including
the assessment year ending September 1, 1992, and that the rental fee
required by the Department of the Interior was paid for the assessment year
ending September 1, 1993. For every assessment year thereafter in which
St. Mary continues this Agreement beyond the 1st day of August of any year,
St. Mary shall perform assessment work or pay any rental fee required by
the Department of the Interior. If any court or governmental agency
decides that the work performed by St. Mary does not constitute the kind of
work required by federal or state law, St. Mary shall nevertheless be
deemed to have complied with the terms of this Agreement if the work done
by St. Mary is the kind generally accepted in the mining industry as
assessment work under existing law.
(b) St. Mary shall be relieved of its obligation to perform
assessment work for any period in which assessment work is not required or
is suspended, and St. Mary shall have the benefit of subsequent laws
enacted which relate to assessment work, including any laws extending the
time within which to perform assessment work. For each year in which St.
Mary performs assessment work, it will record in the office where the
location notice or location certificate is recorded, and in any other
proper office in the county (or recording district) in which the claims are
located, and in the proper office of the Bureau of Land Management, an
affidavit of assessment work or other documents complying with the
requirements of state law and the Federal land Policy and Management Act of
1976 and the regulations implementing and supplementing the Act.
10
<PAGE>
(c) Owners represent that the Property is one contiguous group of
mining claims, and agree that work on any one or more of the claims will be
for the benefit of all of the claims.
(d) Owners represent that no report of geological, geophysical, and
geochemical work (30 U.S.C. Sections 28-1 and 28-2) on the Property has
been applied as labor for more than two consecutive years or for more than
a total of five years on any one mining claim.
23. NOTICES. All notices and other communications to either party shall
be in writing and shall be sufficiently given if delivered in person or
sent by certified or registered mail, return receipt requested, addressed
as hereinafter set forth. Notices given by mail shall be deemed delivered
as of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
Mr. Boyce Cook
9845 West 11th Avenue
Lakewood, Colorado 80215
and all notices to St. Mary shall be addressed:
St. Mary Minerals Inc.
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Attn: Gregory A. Hahn
24. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or
in part without the consent of the other party hereto, subject to the
provisions hereinafter set forth.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall be accomplished in such a manner
that St. Mary shall be required to make payments and to give notices to but
one person, firm, or corporation, and upon breach of this covenant,
11
<PAGE>
St. Mary may retain all monies otherwise due to Owners until the breach has
been cured. No change or division in ownership shall be binding on St.
Mary until thirty days after Owners have given St. Mary a certified copy of
the recorded instrument evidencing the change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other
portion.
(d) If Owners receive a bona fide written offer from an unrelated
third party to purchase all or any part of Owners' interest in the Property
or in this Agreement, Owners shall first offer the interest to St. Mary
stating the interest proposed to be sold or otherwise disposed of, the
offering price from such third party and other terms and conditions of
sale. St. Mary may accept the offer on the same terms and conditions as
such third party offer by notice to Owners given within sixty days
following the effective date Owners' offer. If St. Mary does not accept
Owners' offer, Owners may sell or otherwise dispose of the interest offered
to St. Mary at a price and upon terms and conditions equal to or less
favorable to the third party than those offered to St. Mary provided that
the sale or other disposition is effectuated within 120 days from the
effective date of Owners' offer. Any sale or other disposition shall be
subject to the terms of this Agreement, including this subsection (d), all
of which shall survive the closing of any such sale in full force and
effect. If Owners do not sell or otherwise dispose of the interest offered
within 120 days, the provisions of this subsection (d) shall apply to any
subsequent third party offer received by Owners.
25. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither the Owners nor any Owner during term of this Agreement shall (a)
sell, transfer, assign or convey any interest in the Property without St.
Mary's prior written consent or otherwise in accordance with the provisions
of Section 21(d) hereof; (b) do or fail to do
12
<PAGE>
any act or thing which would cause or permit any part of the Property to be
pledged, collateralized or stand as security for any matter whatsoever; or
(c) enter into any leases or other agreements concerning the Property or
any part thereof.
26. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of
money to Owners), the failure of performance shall be excused and the
period for performance and the term of this Agreement shall be extended for
an additional period equal to the duration of the Force Majeure. Upon the
occurrence and upon the termination of any Force Majeure, St. Mary shall
promptly notify Owners. St. Mary shall use reasonable diligence to remedy
a Force Majeure, but shall not be required against its better judgment to
settle any labor dispute or contest the validity of any law or regulation
or any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond St. Mary's reasonable
control, including law or regulation; action or inaction of civil or
military authority; inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Property; unusually severe weather; mining casualty;
fire; explosion; flood; insurrection; riot; labor dispute; inability after
diligent effort to obtain workmen or material; delay in transportation;
acts of God; unavailability of a suitable market for the ores, minerals,
concentrates, or other products from the Property; and excessive costs of
mining, milling, processing or marketing, or insufficient prices available
for the ores, minerals, concentrates, or other products produced from the
Property, which render St. Mary's operations uneconomic.
27. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have
executed and delivered a Short Form of Agreement. St. Mary may record the
Short Form or this Agreement, or both, as it may elect.
13
<PAGE>
28. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors, and assigns.
29. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation, or
amendment is in writing and is signed by Owners and St. Mary.
30. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
31. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warranties, or
understandings, written or oral.
32. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
33. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
34. TIME OF ESSENCE. Except as set forth in Section 23 hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
35. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday,
14
<PAGE>
Sunday, or legal holiday. Any performance or payment which must be taken
or made under this Agreement must be taken or made prior to 5:00 p.m.
(Denver, Colorado time) of the last day of the applicable period provided
hereunder for such action, unless another time is expressly specified. All
references to time shall be Denver, Colorado time. If a date for
performance or payment falls on a holiday or weekend, the time for
performance or payment shall be extended to the next business day, and if
performance or payment has occurred on such weekend or holiday, it shall be
deemed to have occurred on the next business day.
36. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
37. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
38. ADDITIONAL DOCUMENTS. Owner's will provide St. Mary with such
additional documents as may be necessary to carry out the purposes of this
Agreement. If conditions change by reason of conveyances, assignments, or
other matters relating to the title to or description of the Property ,
Owners and St. Mary shall execute amendments of this Agreement and the
Short Form of Agreement, and any other documents which may be necessary to
reflect such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Boyce Cook
- -----------------------------------
Boyce Cook
and
15
<PAGE>
/s/ Margaret Cook
- -----------------------------------
Margaret Cook
/s/ Josephine Hill - 8-4-94
- -----------------------------------
Josephine Hill
and
/s/ Donald Charles Giaccarni
- -----------------------------------
Donald Charles Giaccarni
ST. MARY MINERALS INC.
By: /s/ Gregory A. Hahn
-------------------------------------
Gregory A. Hahn, Vice President
16
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF JEFFERSON )
On this 27th day of July, 1994 before me the undersigned, a notary
public, personally appeared Boyce Cook known to me (or proved to me on the oath
of Boyce Cook (to be the person whose name is subscribed to the within
instrument, and acknowledged that he executed the same.
My Commission Expires:
My Commission Expires: 4/6/1996
10403 West Colfax Avenue
Lakewood, CO 30215 /s/ Mariann K. Svec
- ----------------------------------- -----------------------------------
Notary Public
STATE OF COLORADO )
) ss.
COUNTY 0F JEFFERSON )
On this 27th day of July, 1994 before me the undersigned, a notary
public, personally appeared Margaret Cook known to me (or proved to me on the
oath of Margaret Cook (to be the person whose name is subscribed to the within
instrument, and acknowledged that she executed the same.
My Commission Expires:
My Commission Expires: 4/6/1996
10403 West Colfax Avenue
Lakewood, CO 30215 /s/ Mariann K. Svec
- ----------------------------------- -----------------------------------
Notary Public
STATE OF CALIFORNIA )
) ss.
COUNTY 0F SAN FRANCISCO )
On this 4th day of August, 1994 before me the undersigned, a notary
public, personally appeared Josephine Hill (or proved to me on the
oath of Josephine Hill (to be the persons whose names are subscribed to the
within instrument, and acknowledged that she executed the same.
My Commission Expires:
July 17th, 1995 /s/ Hans R. Hansson
- ----------------------------------- -----------------------------------
Notary Public HANS R. HANSSON
[SEAL]
17
<PAGE>
STATE OF ALASKA )
) ss.
COUNTY 0F KENAI PENINSULA )
On this 8th day of August, 1994 before me the undersigned, a notary
public, personally appeared Donald Charles Giaccarni known to me (or proved
to me on the oath of Donald Charles Giaccarni (to be the persons whose names
are subscribed to the within instrument, and acknowledged that she executed
the same.
My Commission Expires:
October 14, 1997 /s/ [illegible]
- ----------------------------------- -----------------------------------
Notary Public
STATE OF COLORADO )
CITY AND ) ss.
COUNTY of DENVER )
The foregoing instrument was acknowledged before me this 25th day of
July, 1994, by Gregory A. Hahn, the Vice President of St. Mary Minerals Inc., a
Colorado corporation, on behalf of the corporation.
My Commission Expires:
February 14, 1997 /s/ James C. Robertson
- ----------------------------------- -----------------------------------
Notary Public JAMES C. ROBERTSON
18
<PAGE>
EXHIBIT A
OWNERS
Name and Address % Interest in Property
- ---------------- ----------------------
Boyce Cook and 66.666%
Margaret Cook, Husband and Wife
9845 W. 11th Avenue
Lakewood, Colorado 80215
Josephine Hill and 16.667% each
Donald Charles Giaccarni
20 Hidalgo Terrace
San Francisco, CA 94103
<PAGE>
EXHIBIT B
PROPERTIES
100% interest in and to the following unpatented mining claims located in
the Picuris and Copper Mountain Mining District, Taos County, New Mexico:
Recorded Amended BLM
Claim Name Book Page Book Page NMMC Number
- ---------- ---------- --------- -----------
Blue Jay S 30 46 S 37 439 68901
Chipmunk S 30 47 S 37 443 68902
Mustang S 30 498 S 37 444 68903
Shiner S 30 499 S 37 448 68904
Lizzie S 37 4 S 37 441 68905
Magpie S 37 5-6 S 37 442 68906
M 95 109
Daisy S 37 3 S 37 440 68907
<PAGE>
EXHIBIT 10.15
CHAMPION PROPERTY, NEW MEXICO
ACQUISITION AGREEMENT
THIS AGREEMENT is made as of the 16th day of November, 1994
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under the laws
of British Columbia and having a head office at 860 - 625 Howe Street,
Vancouver, British Columbia, V6C 2T6
(hereinafter referred to as "SUMMO CANADA")
OF THE FIRST PART,
AND:
SUMMO USA CORPORATION, a company incorporated under the laws of the
State of Colorado and having a head office at Suite 1100, 1776 Lincoln
Street, Denver, Colorado, 80203
(hereinafter referred to as "SUMMO USA")
OF THE SECOND PART,
AND:
ST. MARY MINERALS INC., a company incorporated under the laws of the
State of Colorado and having a head office at Suite 1100, 1776 Lincoln
Street, Denver, Colorado, 80203
(hereinafter referred to as "ST. MARY")
OF THE THIRD PART.
RECITALS
A. WHEREAS St. Mary holds interests in a mining property known as the
Champion copper property in Taos County, New Mexico;
B. AND WHEREAS St. Mary's entire right and title and interest in and to
the unpatented and patented mining claims and millsites located in the Picuris
and Copper Mountain Mining District, Taos County, New Mexico and known as the
Champion copper property all as described more particularly in Schedule "A"
attached hereto and is referred to collectively herein as the "PROPERTY";
C. AND WHEREAS St. Mary wishes to sell and Summo USA wishes to acquire
<PAGE>
all of St. Mary's interest in the Property.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and agreements herein contained and subject to the terms and
conditions hereinafter set out, the parties hereto agree as follows:
1. PURCHASE AND SALE
1.01 St. Mary hereby sells, assigns and transfers to Summo USA its entire
right, title and interest in and to the Property except for a royalty interest
of 1.5% of Net Smelter Returns as defined below, in consideration of the
following:
(a) the issuance of 80,000 common shares in the capital of Summo Canada to
be issued to St. Mary upon receipt of shareholder and regulatory
approval;
(b) the right to retain the royalty interest and to receive the "Royalty"
(as hereinafter defined); and
(c) the assumption of all of St. Mary's duties, obligations and
liabilities contained in the following underlying agreements:
(i) Exploration and Purchase Option Agreement dated for
reference August 1, 1994 with Boyce Cook, Margaret Cook,
Josephine Hill and Donald Charles Giaccarni, a copy of which
is attached hereto as Schedule "B" and referred to herein as
the "COOK AGREEMENT";
(ii) Exploration and Purchase Option Agreement dated for
reference August 1, 1994 with Josephine Hill, Donald Charles
Giaccarni, Ruby E. Neill, Bruce Neill and Vivian Rutherford,
a copy of which is attached hereto as Schedule "C" and
referred to herein as the "RUTHERFORD AGREEMENT"; and
(iii) Finder's Fee Agreement dated for reference May 20, 1994 with
Applied Geologic Studies, Inc., a copy of which is attached
hereto as Schedule "D" and referred to herein as the
"FINDER'S FEE AGREEMENT".
2. REPRESENTATIONS AND WARRANTIES OF ST. MARY
2.01 St. Mary represents to each of Summo USA and Summo Canada that:
(a) the interests assigned to Summo USA hereunder comprise St. Mary's
entire right, title and interest in and to the Property and,
notwithstanding the generality of the foregoing, St. Mary's entire
right, title and interest in and to the Cook Agreement, the Rutherford
Agreement and the Finder's Fee Agreement (referred to collectively
herein as the "UNDERLYING AGREEMENTS";
<PAGE>
(b) as of November 16, 1994 the Underlying Agreements were in good
standing and no party was in default thereunder;
(c) it has full right, power and authority to transfer and assign to Summo
USA its entire right, title and interest in and to the Underlying
Agreements in accordance with this agreement;
(d) the entering into this agreement does not conflict with any applicable
law or with its charter documents nor does it conflict with, or result
in a breach of, or accelerate the performance required by any contract
or other commitment to which it is a party or by which it is bound;
(e) it has advised Summo USA of all of the material information relating
to the mineral potential of the Property of which St. Mary has
knowledge.
2.02 The representations and warranties hereinbefore set out are conditions
upon which each of Summo Canada and Summo USA has relied on entering into this
agreement and St. Mary hereby forever indemnifies and saves each of Summo Canada
and Summo USA harmless from all loss, damage, costs actions and suits arising
out of or in connection with any breach of any representation or warranty made
by it and contained in this agreement.
3. REPRESENTATIONS AND WARRANTIES OF SUMMO
3.01 Each of Summo Canada and Summo USA severally and not jointly
represents and warrants to St. Mary that:
(a) it has full corporate power and authority to enter into this
agreement, subject only to the requirement that it obtain shareholder
approval to the issuance of 80,000 Common shares to St. Mary; and
(b) the entering into this agreement does not conflict with any applicable
laws or with its charter documents not does it conflict with, or
result in a breach of, or accelerate the performance required by any
contract or other commitment to which it is a party or by which it is
bound.
3.02 The representations and warranties hereinbefore set out are conditions
upon which St. Mary has relied on entering into this agreement and each of Summo
Canada and Summo USA hereby forever indemnifies and saves St. Mary harmless from
all loss, damage, costs actions and suits arising out of or in connection with
any breach of any representation or warranty made by it and contained in this
agreement.
4. COVENANTS OF SUMMO
4.01 Summo Canada and Summo USA hereby covenants with and to St. Mary that:
(a) Summo Canada will issue 80,000 common shares in its capital to St.
Mary, upon
<PAGE>
receipt of shareholder and regulatory approval;
(b) Summo USA shall maintain in good standing the Underlying Agreements;
(c) Summo USA shall use its best efforts to conduct all its operations on
the Property in compliance with all applicable laws, regulations and
policies; and
(d) they will allow St. Mary access at all times to all maps, reports,
assay results and other technical data prepared or obtained by them in
connection with their operations on the Property.
5. RIGHT OF ENTRY
5.01 During the currency of this agreement Summo USA, its servants, agents
and workmen and any persons duly authorized by Summo USA shall have the
exclusive right to enter upon and take possession of and prospect, explore and
develop the Property in such manner as Summo USA in its sole discretion may
deem advisable.
6. ROYALTY
6.01 In this agreement, the "ROYALTY" means the obligation of Summo USA and
any successor to its interest to pay to St. Mary 1.5% of Net Smelter Returns as
defined, calculated and paid pursuant to Schedule "E" herein. This royalty
interest ownership of St. Mary shall run with the land and shall be binding upon
Summo USA, its successors and assigns.
7. TERMINATION
7.01 If Summo Canada has not issued to St. Mary the 80,000 Common shares in
the capital of Summo Canada referred to in paragraph 1.01(a), by July 1, 1995,
Summo USA shall reconvey to St. Mary all of its interest in the Property, but
shall remain liable for the performance of any duties, obligations and
liabilities, including payments under the agreements set forth in 1.01(c)(i),
(ii) and (iii) that have accrued to the date of termination, and shall indemnify
and hold St. Mary harmless therefrom.
8. INDEPENDENT ACTIVITIES
8.01 Except as expressly provided herein, each party shall have the free
and unrestricted right to independently engage in and receive the full benefit
of any and all business endeavours of any sort whatsoever, whether or not
competitive with the endeavours contemplated herein without consulting the other
or inviting or allowing the other to participate therein. No party shall be
under any fiduciary or other duty to the other which will prevent it from
engaging in or enjoying the benefits of competing endeavours within the general
scope of the endeavours contemplated herein. The legal doctrines of "corporate
opportunity" sometimes applied to persons engaged in a joint venture or having
fiduciary status shall not apply in the case of any party. In particular,
without limiting the foregoing, no party shall have an obligation to any other
party as to:
<PAGE>
(a) any opportunity to acquire, explore and develop any mining property,
interest or right presently owned by it or offered to it outside of
the Property at any time; and
(b) the erection of any mining plant, mill, smelter or refinery, whether
or not such mining plant, mill, smelter or refinery treats ore or
concentrates from the Property.
9. UNAVOIDABLE DELAYS
9.01 If any party should be delayed in or prevented from performing any of
the terms, covenants or conditions of this agreement by reason of a cause
beyond the control of such party, including fires, floods, earthquakes,
subsidence, ground collapse or landslides, interruptions or delays in
transportation or power supplies, strikes, lockouts, wars, acts of God,
government regulation or interference, including but without restricting the
generality of the foregoing, forest or highway closures or any other cause
beyond such party's control, then any such failure on the part of such party
to so perform shall not be deemed to be a breach of this agreement and the
time within which such party is obliged to comply with any such term,
covenant or condition of this agreement shall be extended by the total period
of all such delays. In order that the provisions of this article may become
operating, such party shall given notice in writing to the other party,
forthwith and for each new cause of delay or prevention and shall set out in
such notice particulars of the cause thereof and the day upon which the same
arose, and shall give like notice forthwith following the date that such
cause ceased to subsist.
10. ARBITRATION
10.01 If there is any disagreement, dispute or controversy (hereinafter
collectively called a "DISPUTE") between the parties with respect to any matter
arising under this agreement or the construction hereof, then the Dispute shall
be determined by arbitration in accordance with the rules of the American
Arbitration Association using a panel of three arbitrators.
11. NOTICES
11.01 Any notice, election, consent or other writing required or permitted
to be given hereunder shall be deemed to be sufficiently given if delivered or
if mailed by registered air mail or by telegram or fax, addressed as follows:
In the case of St. Mary:
St. Mary Minerals Inc.
Suite 1100 - 1776 Lincoln Street
Denver, Colorado
80203
Attention: Gregory Hahn
- --------- ------------
<PAGE>
with a copy to:
Cohen, Brame & Smith
Attorneys at Law
One Norwest Centre, Suite 1800
1700 Lincoln Street
Denver, Colorado
80203
Attention: Roger Cohen
- --------- -----------
In the case of Summo USA:
Summo USA Corporation
Suite 1100 - 1776 Lincoln Street
Denver, Colorado
80203
Attention: Gregory Hahn
- --------- ------------
with a copy to:
Cohen, Brame & Smith
Attorneys at Law
One Norwest Centre, Suite 1800
1700 Lincoln Street
Denver, Colorado
80203
Attention: Roger Cohen
- --------- -----------
In the case of Summo Canada:
Summo Minerals Corporation
Suite 860 - 625 Howe Street
Vancouver, B.C.
V6C 2T6
Attention: the Corporate Secretary
- --------- -----------------------
with a copy to:
SCOTT, BISSETT
Barristers & Solicitors
1040 - 999 West Hastings Street
Vancouver, B.C.
V6C 2W2
Attention: Graham H. Scott
- --------- ---------------
<PAGE>
and any such notice given as aforesaid shall be deemed to have been given to
the parties hereto if delivered, when delivered, or if mailed, on the tenth
business day following the date of mailing, or, if telegraphed or faxed, on the
next succeeding day following the telegraphing or faxing thereof
PROVIDED HOWEVER that during the period of any postal interruption in either the
country of mailing or the country of delivery, any notice given hereunder by
mail shall be deemed to have been given only as of the date of actual delivery
of the same. Any party may from time to time by notice in writing change its
address for the purpose of this paragraph.
12. APPROVALS
12.01 The parties acknowledge and agree that this agreement is subject to
the acceptance of the securities regulatory bodies having jurisdiction and the
shareholders of Summo Canada, and the parties hereby agree to use their
respective best efforts to do all things reasonable and necessary in order to
obtain such acceptance and approvals.
13. GENERAL TERMS AND CONDITIONS
13.01 The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out the
intent of this agreement.
13.02 This agreement shall represent the entire understanding between the
parties with respect to the Property, and supersedes and replaces the letter
agreement dated November 16, 1994. No representations or inducements have been
made save as herein set forth. No changes, alterations, or modifications of
this agreement shall be binding upon either party until and unless a memorandum
in writing to such effect shall have been signed by all parties hereto.
13.03 The titles to the articles to this agreement shall not be deemed to
form part of this agreement but shall be regarded as having been used for
convenience of reference only.
13.04 The schedules to this agreement shall be construed with and as an
integral part of this agreement to the same extent as if they were set forth
verbatim herein.
13.05 All references to dollar amounts contained in this agreement are
references in United States funds.
13.06 This agreement shall be governed by and interpreted in accordance with
the laws of the State of Colorado.
13.07 This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
13.08 Time shall be of the essence of this agreement.
IN WITNESS WHEREOF this agreement has been executed by the parties
<PAGE>
hereto as of the day and year first above written.
SUMMO MINERALS CORPORATION
Per:
/s/ [ILLEGIBLE]
- -------------------------
Authorized Signature
Per:
/S/ [ILLEGIBLE]
- -------------------------
Authorized Signature
ST. MARY MINERALS INC.
By:/S/ [ILLEGIBLE]
---------------------
[Name:] [ILLEGIBLE]
----------------
[Title:] PRESIDENT
---------------
SUMMO USA CORPORATION
By: /s/ Gregory P. Hahn
---------------------
[Name:] Gregory P. Hahn
----------------
[Title:] Vice President
---------------
<PAGE>
SCHEDULE "A"
TO THAT CERTAIN AGREEMENT (THE "AGREEMENT")
MADE AS OF THE 16TH DAY OF NOVEMBER, 1994 BETWEEN
SUMMO MINERALS CORPORATION OF THE FIRST PART
AND SUMMO USA CORPORATION OF THE SECOND PART AND
ST. MARY MINERALS INC. OF THE THIRD PART
THE "PROPERTY"
In this Schedule "A", all defined terms shall have the same meaning as set out
in the Agreement. The "Property" means St. Mary's entire right, title and
interest, except for the royalty interest of 1.5% of Net Smelter Returns, in the
following:
1. COOK AGREEMENT
The following unpatented mining claims located in the Picuris and Copper
Mountain Mining District, Taos County, New Mexico:
Recorded Amended BLM
Claim Name Book Page Book Page NMMC Number
---------- ---- ---- ---- ---- -----------
Blue Jay S30 46 S37 439 68901
Chipmunk S30 47 S37 443 68902
Mustang S30 498 S37 444 68903
Shiner S30 499 S37 448 68904
Lizzie S37 4 S37 441 68905
Magpie S37 5-6 S37 442 68906
M95 109
Daisy S37 3 S37 440 68907
2. RUTHERFORD AGREEMENT
The following patented mining claims and millsites located in the Picuris
and Copper Mountain Mining District, Taos County, New Mexico:
Jumbo Lode, Mineral Survey No. 1049, BLM Book A-50, Pages 338-340
Aztec Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Sunset Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Oxide King Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Champion Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Aztec Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Sunset Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Oxide King Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Champion Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
A-1
<PAGE>
SCHEDULE "A" (Continued)
3. Unpatented mining claims located in Township 23 North, Range 11 East, Taos
County, New Mexico:
Recorded Amended BLM Serial
Claim Name Book Page Book Page No. - NMMC
---------- --------- --------- ----------
CH 1 M172 280 163015
CH 2 M172 283 163016
CH 3 M172 284 163017
CH 4 M172 285 163018
CH 5 M172 286 163019
CH 6 M172 287 163020
CH 7 M172 288 163021
CH 8 M172 289 163022
CH 9 M172 290 163023
CH 10 M172 291 160024
CH 11 M172 292 163025
CH 12 M172 293 163026
CH 13 M172 294 163027
CH 14 M172 295 163028
CH 15 M172 296 163029
CH 16 MI72 297 163030
CH 17 M172 298 163031
CH 18 M172 299 163032
CH 19 M172 300 163033
CH 20 M172 301 163034
CH 21 M173 300 163152
CH 22 M173 303 163153
CH 23 M173 304 163154
CH 24 M173 305 163155
CH 25 M173 306 163156
CH 26 M173 307 163157
CH 27 M173 308 163158
CH 28 M173 309 163159
CH 29 M173 310 163160
CH 30 M173 311 163161
CH 31 M173 312 163162
CH 32 M173 313 163163
CH 33 M173 314 163164
CH 34 M173 315 163165
CH 35 M173 316 163166
CH 36 M173 352 163167
CH 37 M173 353 163168
CH 38 M173 354 163169
CH 39 M173 355 163170
CH 40 M173 356 163171
CH 41 M173 357 163172
CH 42 M173 358 163173
CH 43 M173 359 163174
CH 44 M173 360 163175
A-2
<PAGE>
SCHEDULE "A" (Continued)
CH 45 M173 361 163176
CH 46 M173 362 163177
CH 47 M173 363 163178
CH 48 M173 364 163179
CH 49 M173 370 163180
CH 50 M173 371 163181
CH 51 M173 372 163182
CH 52 M173 373 163183
CH 53 M173 374 163184
CH 54 M173 375 163185
CH 55 M173 376 163186
CH 56 M173 377 163187
CH 57 M173 378 163188
CH 58 M173 379 163189
CH 59 M173 380 163190
CH 60 M173 381 163191
CH 61 M173 382 163192
CH 62 M173 383 163193
CH 63 M173 384 163194
CH 64 M173 385 163195
A-3
<PAGE>
Schedule "B" to the Acquisition Agreement dated for reference November 16,
1994.
EXPLORATION AND PURCHASE OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made effective as of the lst day
of August, 1994, by and between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners") and ST. MARY MINERALS INC., a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203
(hereinafter referred to as "St. Mary");
WHEREAS, Owners are the owners of certain unpatented mining claims
situate in Taos County, New Mexico, herein referred to as "the Property," and
more particularly described on EXHIBIT B attached hereto and made a part
hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to acquire
an option to purchase the Property,
WHEREAS, Owners desire to make the Property available for the conduct
by St. Mary of certain mineral exploration work thereon and to grant St. Mary
the option to purchase the Property,
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
to Owners, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement the
sole and exclusive option (the "Option") to purchase the Property, together
with all appurtenances and water rights incident thereto and all
improvements and personal property thereon, free and clear of all liens and
encumbrances, for a total purchase price of Five Hundred Thousand Dollars
($500,000.00). St. Mary shall be entitled to a credit against the purchase
price for all amounts paid under the provisions of Section 6. hereof and
for all costs and expenses incurred under the provisions of Section 4
hereof. If the Property is
<PAGE>
placed in commercial production at any time during the term of this
Agreement, St. Mary shall exercise the option by providing written notice
of exercise to Owners. Within three (3) years after such notice, but no
later than August 1, 2015, St. Mary shall deliver the balance of the
purchase price to Owners. "Commercial production" shall mean the processing
and sale of ores, concentrates, metals and other mineral products which
have been mined on the Property but which shall not include processing for
the purpose of testing or milling by a pilot plant.
2. ESCROW. Contemporaneously with the execution of this Agreement, Owners
shall execute, acknowledge, and deliver to the Escrow Agent one or more
general warranty deeds conveying the Property to St. Mary in the form
(without legal descriptions) of Exhibit C attached hereto and incorporated
herein.
Owners and St. Mary hereby appoint CB&S Nominee Corporation, 1800 One
Norwest Center Building, 1700 Lincoln Street, Denver, Colorado 80203 as
their Escrow Agent to receive and distribute all payments and to hold the
deed and deliver it to the party entitled hereunder to receive the same.
The parties hereto agree that the Escrow Agent shall act pursuant to Escrow
Instructions executed contemporaneously herewith.
3. EXCLUSIVE POSSESSION. St. Mary shall have the exclusive possession of
the Property during the term of this Agreement.
4. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no
other person claiming any interest in the Property or the ground covered
thereby, and that the Property is free from all liens and encumbrances,
except liens for property taxes not yet due and payable. Owners further
warrant to St. Mary the quiet enjoyment of the Property and the right to
explore, develop, and mine the same.
(b) Owners warrant and will defend title of the property against all
persons whomsoever.
2
<PAGE>
(c) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any
defect in their title to the Property or the ground covered thereby. If
Owners fail or refuse to take any such action, St. Mary may take any such
action in Owners' name. Owners agree to cooperate with St. Mary in any
such action taken. If the United States or any third person attacks the
validity of any of the unpatented mining claims included in the Property
for any reason, St. Mary shall have no obligation to defend the validity of
the claim.
(d) St. Mary shall not be estopped to deny the validity of Owners'
title.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any
portion of the Property is less than one hundred percent, the interest
claimed by such Owner is set forth in Exhibit A. Any representation or
warranty of title made by any Owner shall apply only to the interest set
forth in Exhibit A.
6. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St.
Mary has made an option payment to Owners in the amount of $5,000, receipt
of which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further annual option payments on or
before the dates and in the amounts as follows:
August 1, 1995 $ 5,000
August 1, 1996 10,000
August 1, 1997 10,000
August 1, 1998 10,000
August 1, 1999 10,000
August 1, 2000 15,000
August 1, 2001 15,000
August 1, 2002 15,000
August 1, 2003 15,000
August 1, 2004 15,000
August 1, 2005 20,000
August 1, 2006 20,000
August 1, 2007 20,000
August 1, 2008 20,000
3
<PAGE>
August 1, 2009 20,000
August 1, 2010 20,000
August 1, 2011 20,000
August 1, 2012 20,000
August 1, 2013 20,000
August 1, 2014 20,000
August 1, 2015 175,000
--------
$500,000
7. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable
to and shall be made payable to and shall be transmitted to the Escrow
Agent. The Escrow Instructions to be executed contemporaneously herewith
will instruct the Escrow Agent how the payments shall be disbursed. Upon
making the payments to the Escrow Agent, St. Mary shall be deemed to have
made the payments to Owners, their heirs, representatives, successors, and
assigns, and thereupon St. Mary shall be discharged to the extent thereof
as if the payments has been made directly to Owners, or to any person, firm
or corporation entitled thereto, and St. Mary shall not be liable for the
ultimate distribution or receipt of any payment or payments.
8. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have
free and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and that prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for
sale. St. Mary shall have the right to erect and maintain upon the
Property any improvements, structures or facilities including mines, shafts
and tunnels as may be necessary or convenient for the conduct of its
operations.
4
<PAGE>
(b) STANDARDS OF OPERATIONS. St. Mary shall conduct all operations on
the Property in a good and workmanlike manner and in accordance with
accepted mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION: St. Mary shall endeavor in good
faith to comply with applicable provisions of federal, state and local laws
and regulations, as required by the operating permits issued to St. Mary by
these agencies under which St. Mary shall conduct its operations. If this
Agreement is terminated, St. Mary shall reclaim only those portions of the
Property disturbed by its operations, and in compliance with all
applicable governmental laws, regulations and orders. St. Mary shall have
the right, without payment of any additional consideration to Owners, to
enter upon the Property subsequent to termination of this Agreement for
purposes of performing such reclamation work.
9. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations
on or in connection with the Property and so long as this Agreement has not
been terminated before the expiration of its term, St. Mary may in its sole
discretion curtail or cease such operations so long as it continues to make
any payments due Owners under this Agreement subject to the provisions of
Section 16 hereof.
10. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property
free of liens for labor performed or materials or merchandise furnished for
use on the Property under this Agreement, and shall hold Owners harmless
from all costs, loss, or damage which may result from any work or
operations of St. Mary or its occupancy of the Property.
5
<PAGE>
11. TAXES. Owners shall pay all taxes levied against the Property prior
to the date of this Agreement. St. Mary shall pay or reimburse Owners for
all taxes levied against the Property during, the term of this Agreement.
In the case of taxes for the calendar year in which this Agreement
commences, and for the calendar year in which this Agreement ends, there
still be an apportionment between the parties, St. Mary to bear the
proportion of taxes upon the Property applicable to the part of the calendar
year included hereunder, and Owners to bear the balance of the taxes. St.
Mary shall pay all taxes levied during the term of this Agreement
against all buildings, structures, machinery, equipment, personal property,
fixtures, and improvements placed upon the Property by St. Mary, and all
taxes levied against St. Mary as an employer of labor. All taxes shall be
paid when due and before delinquent, but St. Mary shall be under no
obligation to pay any tax so long as the tax is being contested in good
faith and by appropriate legal proceedings and the nonpayment thereof does
not adversely affect any right, title, or interest of Owners in or to the
Property.
12. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations, or St. Mary may self-insure as to such matters if
it qualifies as a self-insurer under the appropriate laws and regulations.
13. INSPECTION.
(a) Owners or their authorized representative may enter on the
Property at any reasonable time for the purpose of inspection, but shall
enter at Owners' own risk and so as not to hinder unreasonably the
operations of St. Mary. Owners shall indemnify and hold St. Mary harmless
from any damage, claim, or demand by reason of injury to or the presence
of Owners, their agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance of St. Mary with the provisions of this Agreement.
6
<PAGE>
14. DATA.
(a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying and sampling, and similar
data conceding the Property (or copies thereof) which are in Owners'
possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof), St. Mary shall, within sixty days after
termination, (i) return to Owners all drill core and original data
delivered by Owners to St. Mary which are then in St. Mary's possession or
control, and (ii) make available for inspection by Owners all factual
geological and geophysical data and maps (not including interpretive data),
logs of drill holes, drill core or cuttings and results of assaying and
sampling pertaining to the Property which St. Mary has obtained as a result
of its exploration work under this Agreement and which are then in St.
Mary's possession or control. Upon Owners' request made within ninety (90)
days after termination of this Agreement, St. Mary shall at Owners' expense
provide Owners with the drill core or cuttings designated by Owners and
with copies of any portion of the factual geological and geophysical data
and maps (not including interpretive data), logs of drill holes, and
results of assaying and sampling designated by Owners. St. Mary makes no
representation or warranty as to the accuracy or completeness of any such
data or information, and shall not be liable on account of any use by
Owners or any other person of any such data or information. St. Mary shall
not be liable for the loss or destruction of any drill core or cuttings.
15. CONFIDENTIALITY. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of St.
Mary.
16. TERM, TERMINATION AND SURRENDER.
7
<PAGE>
(a) The term of this Agreement shall be for a period of twenty-one
(21) years from the date hereof unless sooner surrendered or otherwise
terminated, or until the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 60 days of the due date therefor as provided in Section 6(b)
hereof shall constitute also a termination of this Agreement effective upon
the expiration of such 60 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement except as provided
in Sections 17 and 18 hereof shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 6(b) hereof) shall likewise thereupon
terminate except as provided in Sections 8(c) and 14(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all
or any part of the Property by delivering to Owners or by filing for record
in the appropriate office (with a copy to owners) a good and sufficient
Surrender of this Agreement. Upon mailing the Surrender to Owners or to
the appropriate office, all rights of St. Mary under this Agreement shall
terminate except as provided in Sections 17 and 18 hereof, and all
liabilities and obligations of St. Mary under this Agreement shall likewise
terminate except as provided in Sections 8(c) and 14(b) hereof and except
liability for payments under Section 6(b) hereof that became due prior to
the date of such termination.
17. REMOVAL OF PROPERTY. For a period of six months after the termination
of this Agreement St. Mary shall have the right (but not the obligation
except to the extent set forth in Section 8(c) hereof) to remove from the
Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or erected or
placed on or in the Property by St. Mary, except mine timbers in place.
St. Mary may keep one or more watchmen on the Property during the six-month
period.
18. ACCESS. For as long as necessary after termination of this Agreement,
St. Mary shall have the right of access to and across the Property for
reclamation purposes.
8
<PAGE>
19. EASEMENTS. If requested by St. Mary during the term of this Agreement
or following the exercise of the Option, Owners shall execute one or more
instruments granting to St. Mary without cost to St. Mary easements upon,
over, or through the Property or upon, over, or through other property
owned by Owners, for the construction, maintenance, use, and removal of
pipe lines, telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels, and other
facilities necessary or convenient for St. Mary's operations on the
Property or on other property.
20. AMENDMENTS, RELOCATIONS AND PATENTS. During the term of this
Agreement, St. Mary shall have the right (but not the obligation), in
the name of Owners, to amend or relocate any or all of the unpatented
mining claims included in the Property, to locate placer claims on
ground theretofore covered by lode claims and vice versa, and to locate
any millsites on ground theretofore covered by mining claims and vice
versa, and to locate any fractions resulting from the location,
amendment or relocations of mining claims or millsites. At the request
of St. Mary, Owners shall apply for a patent for any or all of the
unpatented mining claims and millsites. For purposes of implementing
the provisions of the Section, Owners do hereby nominate, constitute and
appoint St. Mary as their true and lawful attorney-in-fact to execute,
deliver and record on behalf of the Owners and in their name, place and
stead all such documents as St. Mary may deem necessary or appropriate
for such purposes. All expenses authorized by St. Mary in connection
with locating, amending, or relocating mining claims or millsites or
prosecuting patent proceedings shall be borne by St. Mary. The rights of
St. Mary under this Agreement shall extend to all such locations,
amended locations, relocations and patented mining claims and millsites.
21. COMPLIANCE WITH FEDERAL LAND POLICY AND MANAGEMENT ACT.
(a) Owners warrant that the location notices or location certificates
for the unpatented mining claims included in the Property have been
properly filed in the proper office of the Bureau of Land Management
pursuant to 43 U.S.C. Section 1744 (b).
9
<PAGE>
(b) Owners warrant that evidence of assessment work or notices of
intention to hold have been properly recorded in the proper county (or
recording district) office and filed in the proper office of the Bureau of
Land Management pursuant to 43 U.S.C. Section 1744 (a), as required, for
each assessment year to and including the assessment year ending
September 1, 1992.
22. ASSESSMENT WORK.
(a) Owners warrant that the annual assessment work required to hold
the Property has been performed for each assessment year to and including
the assessment year ending September 1, 1992, and that the rental fee
required by the Department of the Interior was paid for the assessment year
ending September 1, 1993. For every assessment year thereafter in which
St. Mary continues this Agreement beyond the 1st day of August of any
year, St. Mary shall perform assessment work or pay any rental fee required
by the Department of the Interior. If any court or governmental agency
decides that the work performed by St. Mary does not constitute the kind of
work required by federal or state law, St. Mary shall nevertheless be
deemed to have complied with the terms of this Agreement if the work done
by St. Mary is the kind generally accepted in the mining industry as
assessment work under existing law.
(b) St. Mary shall be relieved of its obligation to perform assessment
work for any period in which assessment work is not required or is
suspended, and St. Mary shall have the benefit of subsequent laws enacted
which relate to assessment work, including any laws extending the time
within which to perform assessment work. For each year in which St. Mary
performs assessment work, it will record in the office where the location
notice or location certificate is recorded, and in any other proper office
in the county (or recording district) in which the claims are located, and
in the proper office of the Bureau of Land Management, an affidavit of
assessment work or other documents complying with the requirements of state
law and the Federal Land Policy and Management Act of 1976 and the
regulations implementing and supplementing the Act.
10
<PAGE>
(c) Owners represent that the Property is one contiguous group of
mining claims, and agree that work on any one or more of the claims will be
for the benefit of all of the claims.
(d) Owners represent that no report of geological, geophysical, and
geochemical work (30 U.S.C. Section 28-l and 28-2) on the Property has
been applied as labor for more than two consecutive years or for more than
a total of five years on any one mining claim.
23. NOTICES. All notices and other communications to either party shall be
in writing and shall be sufficiently given if delivered in person or sent
by certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Notices given by mail shall be deemed delivered as
of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
Mr. Boyce Cook
9845 West llth Avenue
Lakewood, Colorado 80215
and all notices to St. Mary shall be addressed:
St. Mary Minerals Inc.
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Attn: Gregory A. Hahn
24. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or
in part without the consent of the other party hereto, subject to the
provisions hereinafter set forth.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall be accomplished in such a manner
that St. Mary shall be required to make payments and to give notices to but
one person, firm, or corporation, and upon breach of this covenant,
11
<PAGE>
St. Mary may retain all monies otherwise due to Owners until the breach has
been cured. No change or division in ownership shall be binding on St.
Mary until thirty days after Owners have given St. Mary a certified copy of
the recorded instrument evidencing the change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other
portion.
(d) If 0wners receive a bona fide written offer from an unrelated
third party to purchase all or any part of Owners' interest in the Property
or in this Agreement, Owners shall first offer the interest to St. Mary
stating the interest proposed to be sold or otherwise disposed of, the
offering price from such third party and other terms and conditions of
sale. St. Mary may accept the offer on the same terms and conditions as
such third party offer by notice to Owners given within sixty days
following the effective date Owners' offer. If St. Mary does not accept
Owners' offer, Owners may sell or otherwise dispose of the interest
offered to St. Mary at a price and upon terms and conditions equal to or
less favorable to the third party than those offered to St. Mary provided
that the sale or other disposition is effectuated within 120 days from the
effective date of Owners' offer. Any sale or other disposition shall be
subject to the terms of this Agreement, including this subsection (d), all
of which shall survive the closing of any such sale in full force and
effect. If Owners do not sell or otherwise dispose of the interest offered
within 120 days, the provisions of this subsection (d) shall apply to any
subsequent third party offer received by Owners.
25. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither the Owners nor any Owner during term of this Agreement shall (a)
sell, transfer, assign or convey any interest in the Property without St.
Mary's prior written consent or otherwise in accordance with the provisions
of Section 21(d) hereof; (b) do or fail to do
12
<PAGE>
any act or thing which would cause or permit any part of the Property to
be pledged, collateralized or stand as security for any matter whatsoever;
or (c) enter into any leases or other agreements concerning the Property or
any part thereof.
26. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of
money to Owners), the failure of performance shall be excused and the
period for performance and the term of this Agreement shall be extended
for an additional period equal to the duration of the Force Majeure. Upon
the occurrence and upon the termination of any Force Majeure, St. Mary
shall promptly notify Owners. St. Mary shall use reasonable diligence to
remedy a Force Majeure, but shall not be required against its better
judgment to settle any labor dispute or contest the validity of any law or
regulation or any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond St. Mary's reasonable
control, including law or regulation; action or inaction of civil or
military authority; inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Property; unusually severe weather; mining casualty;
fire; explosion; flood; insurrection; riot; labor dispute; inability after
diligent effort to obtain workmen or material; delay in transportation;
acts of God; unavailability of a suitable market for the ores, minerals,
concentrates, or other products from the Property; and excessive costs of
mining, milling, processing or marketing, or insufficient prices available
for the ores, minerals, concentrates, or other products produced from the
Property, which render St. Mary's operations uneconomic.
27. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have
executed and delivered a Short Form of Agreement. St. Mary may record the
Short Form or this Agreement, or both, as it may elect.
13
<PAGE>
28. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors, and assigns.
29. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation, or
amendment is in writing and is signed by Owners and St. Mary.
30. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
31. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warranties, or
understandings, written or oral.
32. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
33. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
34. TIME OF ESSENCE. Except as set forth in Section 23 hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
35. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday,
14
<PAGE>
Sunday, or legal holiday. Any performance or payment which must be taken
or made under this Agreement must be taken or made prior to 5:00 p.m.
(Denver, Colorado time) of the last day of the applicable period provided
hereunder for such action, unless another time is expressly specified. All
references to time shall be Denver, Colorado time. If a date for
performance, or payment falls on a holiday or weekend, the time for
performance or payment shall be extended to the next business day, and if
performance or payment has occurred on such weekend or holiday, it shall be
deemed to have occurred on the next business day.
36. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
37. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
38. ADDITIONAL DOCUMENTS. Owners will provide St. Mary with such
additional documents as may be necessary to carry out the purposes of this
Agreement. If conditions change by reason of conveyances, assignments, or
other matters relating to the title to or description of the Property,
Owners and St. Mary shall execute amendments of this Agreement and the
Short Form of Agreement, and any other documents which may be necessary
to reflect such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ Boyce Cook
- ------------------------------
Boyce Cook
and
15
<PAGE>
/s/ Margaret Cook
- ------------------------------
Margaret Cook
- ------------------------------
Josephine Hill
and
- ------------------------------
Donald Charles Giaccarni
ST. MARY MINERALS INC.
By: /s/ Gregory A. Hahn
--------------------------------
Gregory A. Hahn, Vice President
16
<PAGE>
STATE OF COLORADO )
)ss.
COUNTY OF JEFFERSON )
On this 27th day of July, 1994 before me the undersigned, a notary
public, personally appeared Boyce Cook known to me (or proved to me on the oath
Boyce Cook (to be the person whose name is subscribed to the within
instrument, and acknowledged that he executed the same.
My Commission Expires:
4/6/1996
10403 West Colfax Avenue
Lakewood, CO 80215 /S/ [Illegible]
- ------------------------------ ---------------------------------
Notary Public
STATE OF COLORADO )
)ss.
COUNTY OF JEFFERSON )
On this 27th day of July, 1994 before me the undersigned, a notary
public, personally appeared Margaret Cook known to me (or proved to me on the
oath Margaret Cook (to be the person whose name is subscribed to the within
instrument, and acknowledged that she executed the same.
My Commission Expires:
4/6/1996
10403 West Colfax Avenue
Lakewood, CO 80215 /S/ [Illegible]
- ------------------------------ ---------------------------------
Notary Public
STATE OF )
)ss.
COUNTY OF )
On this ____ day of ____________, 19___ before me the undersigned, a
notary public, personally appeared Boyce Cook known to me (or proved to me on
the oath of _______________________ (to be the persons whose names are
subscribed to the within instrument, and acknowledged that she executed
the same.
My Commission Expires:
- ------------------------------ ---------------------------------
Notary Public
17
<PAGE>
STATE OF )
)ss.
COUNTY OF )
On this ____ day of ____________, 19___ before me the undersigned, a
notary public, personally appeared Donald Charles Giaccarni known to me (or
proved to me on the oath of _______________________ (to be the persons whose
names are subscribed to the within instrument, and acknowledged that he executed
the same.
My Commission Expires:
- ------------------------------ ---------------------------------
Notary Public
STATE OF COLORADO )
CITY AND ) ss.
COUNTY 0F DENVER )
The foregoing instrument was acknowledged before me this 25th day of
July, 1994, by Gregory A. Hahn, the Vice President of St. Mary Minerals Inc., a
Colorado corporation, on behalf of the corporation.
My Commission Expires:
February 14, 1997 /s/ James C. Robertson
- ------------------------- ---------------------------------
Notary Public JAMES C. ROBERTSON
18
<PAGE>
EXHIBIT A
OWNERS
Name and Address % Interest in Property
- ---------------- ---------------------
Boyce Cook and 66.666%
Margaret Cook, Husband and Wife
9845 W. 11th Avenue
Lakewood, Colorado 80215
Josephine Hill and 16.667% each
Donald Charles Giaccarni
20 Hidalgo Terrace
San Francisco, CA 94103
<PAGE>
EXHIBIT B
PROPERTIES
100% interest in and to the following unpatented mining claims located in
the Picuris and Copper Mountain Mining District, Taos County, New Mexico:
Recorded Amended BLM
Claim Name Book Page Book Page NMMC Number
---------- ----------- ----------- -----------
Blue Jay S 30 46 S 37 439 68901
Chipmunk S 30 47 S 37 443 68902
Mustang S 30 498 S 37 444 68903
Shiner S 30 499 S 37 448 68904
Lizzie S 37 4 S 37 441 68905
Magpie S 37 5-6 S 37 442 68906
M 95 109
Daisy S 37 3 S 37 440 68907
<PAGE>
Schedule "C" to the Acquisition Agreement dated for reference
November 16, 1994
EXPLORATION AND PURCHASE OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") made effective as of the 1st day
of August, 1994, by and between those persons whose names and addresses are
shown on EXHIBIT A attached hereto and made a part hereof (individually an
"Owner" and collectively the "Owners") and ST. MARY MINERALS INC., a Colorado
corporation, whose address is 1776 Lincoln Street, Denver, Colorado 80203
(hereinafter referred to as "St. Mary");
WHEREAS, Owners are the owners of certain patented mining claims and
millsites situate in Taos County, New Mexico, herein referred to as "the
Property," and more particularly described on EXHIBIT B attached hereto and made
a part hereof; and
WHEREAS, St. Mary desires to carry out exploration work and to acquire
an option to purchase the Property,
WHEREAS, Owners desire to make the Property available for the conduct
by St. Mary of certain mineral exploration work thereon and to grant St. Mary
the option to purchase the Property,
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
to Owners, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties agree as follows:
1. OPTION. Owners grant to St. Mary during the term of this Agreement the
sole and exclusive option (the "Option") to purchase the Property, together
with all appurtenances and water rights incident thereto and all
improvements and personal property thereon, free and clear of all
liens and encumbrances, for a total purchase price of Five Hundred
Thousand Dollars ($500,000.00). St. Mary shall be entitled to a credit
against the purchase price for all amounts paid under the provisions of
Section 6. hereof and for all costs and expenses incurred under the
provisions of Section 4 hereof. If the Property is
<PAGE>
placed in commercial production at any time during the term of this
Agreement, St. Mary shall exercise the option by providing written notice
of exercise to Owners. Within three (3) years after such notice, but no
later than August 1, 2015, St. Mary shall deliver the balance of the
purchase price to Owners. "Commercial production" shall mean the
processing and sale of ores, concentrates, metals and other mineral
products which have been mined on the Property but which shall not include
processing for the purpose of testing or milling by a pilot plant.
2. ESCROW. Contemporaneously with the execution of this Agreement,
Owners shall execute, acknowledge, and deliver to the Escrow Agent one or
more general warranty deeds conveying the Property to St. Mary in the form
(without legal descriptions) of Exhibit C attached hereto and
incorporated herein.
Owners and St. Mary hereby appoint CB&S Nominee Corporation, 1800 One
Norwest Center Building, 1700 Lincoln Street, Denver, Colorado 80203 as
their Escrow Agent to receive and distribute all payments and to hold the
deed and deliver it to the party entitled hereunder to receive the same.
The parties hereto agree that the Escrow Agent shall act pursuant to Escrow
Instructions executed contemporaneously herewith.
3. EXCLUSIVE POSSESION. St. Mary shall have the exclusive possession of
the Property during the term of this Agreement.
4. TITLE.
(a) Owners warrant that they are in possession of the Property, that
they have the right to enter into this Agreement, that they know of no
other person claiming any interest in the Property or the ground covered
thereby, and that the Property is free from all liens and encumbrances,
except liens for property taxes not yet due and payable. Owners further
warrant to St. Mary the quiet enjoyment of the Property and the right to
explore, develop, and mine the same.
(b) Owners warrant and will defend title of the property against all
persons whomsoever.
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<PAGE>
(c) At St. Mary's request, Owners shall take all action necessary
(including judicial proceedings) to remove any cloud from or cure any
defect in their title to the Property or the ground covered thereby. If
Owners fail or refuse to take any such action, St. Mary may take any such
action in Owners' name. Owners agree to cooperate with St. Mary in
any such action taken. If the United States or any third person attacks
the validity of any of the patented mining claims included in the Property
for any reason, St. Mary shall have no obligation to defend the validity of
the claim.
(d) St. Mary shall not be estopped to deny the validity of Owners'
title.
5. UNDIVIDED INTEREST. If the interest claimed by any Owner in any
portion of the Property is less than one hundred percent, the interest
claimed by such Owner is set forth in Exhibit A. Any representation or
warranty of title made by any Owner shall apply only to the interest set
forth in Exhibit A.
6. OPTION PAYMENTS.
(a) Concurrent with the execution of this Agreement by Owners, St.
Mary has made an option payment to Owners in the amount of $5,000, receipt
of which is hereby acknowledged by Owners.
(b) St. Mary shall pay to Owners further annual option payments on or
before the dates and the amounts as follows:
August 1, 1995 $ 5,000
August 1, 1996 10,000
August 1, 1997 10,000
August 1, 1998 10,000
August 1, 1999 10,000
August 1, 2000 15,000
August 1, 2001 15,000
August 1, 2002 15,000
August 1, 2003 15,000
August 1, 2004 15,000
August 1, 2005 20,000
August 1, 2006 20,000
August 1, 2007 20,000
August 1, 2008 20,000
3
<PAGE>
August 1, 2009 20,000
August 1, 2010 20,000
August 1, 2011 20,000
August 1, 2012 20,000
August 1, 2013 20,000
August 1, 2014 20,000
August 1, 2015 175,000
--------
$500,000
7. MANNER OF FURTHER OPTION PAYMENTS. St. Mary shall make all further
option payments due Owners hereunder by check which shall be made payable
to and shall be made payable to and shall be transmitted to the Escrow
Agent. The Escrow Instructions to be executed contemporaneously herewith
will instruct the Escrow Agent how the payments shall be disbursed. Upon
making the payments to the Escrow Agent, St. Mary shall be deemed to have
made the payments to Owners, their heirs, representatives, successors, and
assigns, and thereupon St. Mary shall be discharged to the extent thereof
as if the payments had been made directly to Owners, or to any person, firm
or corporation entitled thereto, and St. Mary shall not be liable for the
ultimate distribution or receipt of any payment or payments.
8. OPERATIONS.
(a) SCOPE. During the term of this Agreement, St. Mary shall have
free and unrestricted access to the Property, and shall have the right and
privilege of conducting exploratory investigations and prospecting for
mineral deposits on the Property, effective during the life of the Option,
and that prospecting shall include, but not be limited to, soil testing,
geophysical surveys, core drilling, shaft sinking, tunnel and mine building
and the removal of ore for testing purposes but not removal of ore for
sale. St. Mary shall have the right to erect and maintain upon the
Property any improvements, structures or facilities including mines, shafts
and tunnels as may be necessary or convenient for the conduct of its
operations.
4
<PAGE>
(b) STANDARDS OF OPERATION. St. Mary shall conduct all
operations on the Property in a good and workmanlike manner and in
accordance with accepted mining practice.
(c) COMPLIANCE WITH LAW; RECLAMATION: St. Mary shall
endeavor in good faith to comply with applicable provisions of federal,
state and local laws and regulations, as required by the operating
permits issued to St. Mary by these agencies under which St. Mary shall
conduct its operations. If this Agreement is terminated, St. Mary shall
reclaim only those portions of the Property disturbed by its operations,
and in compliance with all applicable governmental laws, regulations and
orders. St. Mary shall have the right, without payment of any additional
consideration to Owners, to enter upon the Property subsequent to
termination of this Agreement for purposes of performing such
reclamation work.
9. NO IMPLIED COVENANTS. No covenants or conditions relating to the
exploration or related operations on or in connection with the Property, or
the timing thereof, other than those expressly provided in this Agreement,
shall be implied. After commencing any exploration or related operations
on or in connection with the Property and so long as this Agreement has not
been terminated before the expiration of its term, St. Mary may in its sole
discretion curtail or cease such operations so long as it continues to make
any payments due Owners under this Agreement subject to the provisions of
Section 16 hereof.
10. PROTECTION FROM LIENS AND DAMAGES. St. Mary shall keep the Property
free of liens for labor performed or materials or merchandise furnished for
use on the Property under this Agreement, and shall hold Owners harmless
from all costs, loss, or damage which may result from any work or
operations of St. Mary or its occupancy of the Property.
5
<PAGE>
11. TAXES. Owners shall pay all taxes levied against the Property prior
to the date of this Agreement. St. Mary shall pay or reimburse Owners for
all taxes levied against the Property during the term of this Agreement.
In the case of taxes for the calendar year in which this Agreement
commences, and for the calendar year in which this Agreement ends, there
shall be an apportionment between the parties, St. Mary to bear the
proportion of taxes upon the Property applicable to the part of the
calendar year included hereunder, and Owners to bear the balance of the
taxes. St. Mary shall pay all taxes levied during the term of this
Agreement against all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements placed upon the Property by St. Mary,
and all taxes levied against St. Mary as an employer of labor. All taxes
shall be paid when due and before delinquent, but St. Mary shall be under
no obligation to pay any tax so long as the tax is being contested in good
faith and by appropriate legal proceedings and the nonpayment thereof does
not adversely affect any right, title, or interest of Owners in or to the
Property.
12. INSURANCE. St. Mary shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by state laws
and mining regulations, or St. Mary may self-insure as to such matters if
it qualifies as a self-insurer under the appropriate laws and regulations.
13. INSPECTION.
(a) Owners or their authorized representative may enter on the
Property at any reasonable time for the purpose of inspection, but shall
enter at Owners' own risk and so as not to hinder unreasonably the
operations of St. Mary. Owners shall indemnify and hold St. Mary harmless
from any damage, claim, or demand by reason of injury to or the presence of
Owners, their agents or representatives on the Property.
(b) Owners or their authorized representative may, at any reasonable
time, inspect any records pertinent and necessary for substantiating the
compliance of St. Mary with the provisions of this Agreement.
6
<PAGE>
14. DATA.
(a) Upon the execution of this Agreement, Owners shall deliver to St.
Mary all drill core, all geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying, and sampling, and similar
data concerning the Property (or copies thereof) which are in Owners'
possession or control.
(b) Upon the surrender or other termination of this Agreement (except
upon exercise of the Option and payment of the full purchase price as
provided in Section 6 hereof), St. Mary shall, within sixty days after
termination, (i) return to Owners all drill core and original data
delivered by Owners to St. Mary which are then in St. Mary's possession or
control, and (ii) make available for inspection by Owners all factual
geological and geophysical data and maps (not including interpretive data),
logs of drill holes, drill core or cuttings and results of assaying and
sampling pertaining to the Property which St. Mary has obtained as a result
of its exploration work under this Agreement and which are then in St.
Mary's possession or control. Upon Owners' request made within ninety (90)
days after termination of this Agreement, St. Mary shall at Owners' expense
provide Owners with the drill core or cuttings designated by Owners and
with copies of any portion of the factual geological and geophysical data
and maps (not including interpretive data), logs of drill holes, and
results of assaying and sampling designated by Owners. St. Mary makes no
representation or warranty as to the accuracy or completeness of any such
data or information, and shall not be liable on account of any use by
Owners or any other person of any such data or information. St. Mary shall
not be liable for the loss or destruction of any drill core or cuttings.
15. CONFIDENTIALITY. During the term of this Agreement all information
obtained by Owners or their authorized representatives from St. Mary or
arising out of St. Mary's activities on the Property pursuant to this
Agreement shall be kept strictly confidential by Owners and shall not be
released to any third party except with the prior written consent of St.
Mary.
16. TERM, TERMINATION AND SURRENDER.
7
<PAGE>
(a) The term of this Agreement shall be for a period of twenty-one
(21) years from the date hereof unless sooner surrendered or otherwise
terminated, or until the earlier exercise of the Option.
(b) It is also agreed that a failure by St. Mary to make an option
payment within 60 days of the due date therefor as provided in Section 6(b)
hereof shall constitute a termination of this Agreement effective upon the
expiration of such 60 day period. Upon the effective date of such
termination, all rights of St. Mary under this Agreement except as provided
in Sections 17 and 18 hereof shall terminate and all liabilities and
obligations of St. Mary hereunder (including the obligation of making any
further payments under Section 6(b) hereof) shall likewise thereupon
terminate except as provided in Sections 8(c) and 14(b) hereof.
(c) St. Mary may also at any time terminate this Agreement as to all
or any part of the Property by delivering to Owners or by filing for record
in the appropriate office (with a copy to Owners) a good and sufficient
Surrender of this Agreement. Upon mailing the Surrender to Owners or to
the appropriate office, all rights of St. Mary under this Agreement shall
terminate except as provided in Sections 17 and 18 hereof, and all
liabilities and obligations of St. Mary under this Agreement shall likewise
terminate except as provided in Sections 8(c) and 14(b) hereof and except
liability for payments under Section 6(b) hereof that became due prior to
the date of such termination.
17. REMOVAL OF PROPERTY. For a period of six months after the termination
of this Agreement St. Mary shall have the right (but not the obligation
except to the extent set forth in Section 8(c) hereof) to remove from the
Property all buildings, structures, machinery, equipment, personal
property, fixtures, and improvements owned by St. Mary or erected or placed
on or in the Property by St. Mary, except mine timbers in place. St. Mary
may keep one or more watchmen on the Property during the six-month period.
18. ACCESS. For as long as necessary after termination of this Agreement,
St. Mary shall have the right of access to and across the Property for
reclamation purposes.
8
<PAGE>
19. EASEMENTS. If requested by St. Mary during the term of this Agreement
or following the exercise of the Option, Owners shall execute one or more
instruments granting to St. Mary without cost to St. Mary easements upon,
over, or through the Property or upon, over, or through other property
owned by Owners, for the construction, maintenance, use, and removal of
pipe lines, telephone lines, electrical power or transmission lines, roads,
railroads, tramways, flumes, ditches, shafts, drifts, tunnels, and other
facilities necessary or convenient for St. Mary's operations on the
Property or on other property.
20. NOTICES. All notices and other communications to either party shall
be in writing and shall be sufficiently given if delivered in person or
sent by certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Notices given by mail shall be deemed delivered as
of the date of mailing. Until a change of address is communicated as
indicated above, all notices to Owners shall be addressed:
Mr. Boyce Cook
9845 West llth Avenue
Lakewood, Colorado 80215
and all notices to St. Mary shall be addressed:
St. Mary Minerals Inc.
1776 Lincoln Street, Suite 1100
Denver, Colorado 80203
Attn: Gregory A. Hahn
21. ASSIGNMENT.
(a) The rights of either party hereunder may be assigned in whole or
in part without the consent of the other party hereto, subject to the
provisions hereinafter set forth.
(b) No change or division in the ownership of the Property or the
payments provided for herein, however accomplished, shall enlarge the
obligations or diminish the rights of St. Mary hereunder. Owners covenant
that any change in their ownership shall
9
<PAGE>
be accomplished in such a manner that St. Mary shall be required to
make payments and to give notices to but one person, firm, or corporation,
and upon breach of this covenant, St. Mary may retain all monies otherwise
due to Owners until the breach has been cured. No change or division in
ownership shall be binding on St. Mary until thirty days after Owners have
given St. Mary a certified copy of the recorded instrument evidencing the
change or division.
(c) If St. Mary assigns the whole of or an undivided interest in this
Agreement, liability, for breach of any obligation hereunder shall rest
exclusively upon the holder of the Agreement or of an undivided interest
herein who commits the breach. If this Agreement is assigned as to a
segregated portion of the Property, default by the holder hereunder of that
portion shall not affect the rights of holders hereunder of any other
portion.
(d) If Owners receive a bona fide written offer from an unrelated
third party to purchase all or any part of Owners' interest in the
Property or in this Agreement, Owners shall first offer the interest to
St. Mary stating the interest proposed to be sold or otherwise disposed
of, the offering price from such third party and other terms and
conditions of sale. St. Mary may accept the offer on the same terms and
conditions as such third party offer by notice to Owners given within
sixty days following the effective date Owners' offer. If St. Mary does
not accept Owners' offer, Owners may sell or otherwise dispose of the
interest offered to St. Mary at a price and upon terms and conditions
equal to or less favorable to the third party than those offered to St.
Mary provided that the sale or other disposition is effectuated within
120 days from the effective date of Owners' offer. Any sale or other
disposition shall be subject to the terms of this Agreement, including
this subsection (d), all of which shall survive the closing of any such
sale in full force and effect. If Owners do not sell or otherwise
dispose of the interest offered within 120 days, the provisions of this
subsection (d) shall apply to any subsequent third party offer received
by Owners.
22. NO TRANSFER OR ENCUMBRANCE. Without St. Mary's prior written consent,
neither the Owners nor any Owner during term of this Agreement shall
(a) sell, transfer, assign
10
<PAGE>
or convey any interest in the Property without St. Mary's prior
written consent or otherwise in accordance with the provisions of Section
21(d) hereof; (b) do or fail to do any act or thing which would cause or
permit any part of the Property to be pledged, collateralized or stand as
security for any matter whatsoever; or (c) enter into any leases or other
agreements concerning the Property or any part thereof.
23. FORCE MAJEURE.
(a) If St. Mary shall be prevented by Force Majeure from timely
performance of any of its obligations hereunder (except the payment of
money to Owners), the failure of performance shall be excused and the
period for performance and the term of this Agreement shall be extended for
an additional period equal to the duration of the Force Majeure. Upon the
occurrence and upon the termination of any Force Majeure, St. Mary shall
promptly notify Owners. St. Mary shall use reasonable diligence to remedy
a Force Majeure, but shall not be required against its better judgment to
settle any labor dispute or contest the validity of any law or regulation
or any action or inaction of civil or military authority.
(b) "Force Majeure" means any cause beyond St. Mary's reasonable
control, including law or regulation; action or inaction of civil or
military authority; inability to obtain any license, permit, or other
authorization that may be required to conduct operations on or in
connection with the Property; unusually severe weather; mining casualty;
fire; explosion; flood; insurrection; riot; labor dispute; inability after
diligent effort to obtain workmen or material; delay in transportation;
acts of God; unavailability of a suitable market for the ores, minerals,
concentrates, or other products from the Property; and excessive costs of
mining, milling, processing or marketing, or insufficient prices available
for the ores, minerals, concentrates, or other products produced from the
Property, which render St. Mary's operations uneconomic.
24. SHORT FORM. Contemporaneously herewith, St. Mary and Owners have
executed and delivered a Short Form of Agreement. St. Mary may record the
Short Form or this Agreement, or both, as it may elect.
11
<PAGE>
25. INUREMENT. All covenants, conditions, limitations, and provisions
herein contained apply to and are binding upon the parties hereto, their
heirs, representatives, successors, and assigns.
26. MODIFICATION. No modification, variation, or amendment of this
Agreement shall be effective unless the modification, variation, or
amendment is in writing and is signed by Owners and St. Mary.
27. WAIVER. No waiver of any breach or default under this Agreement shall
be effective unless the waiver is in writing and signed by the party
against whom the waiver is claimed. No waiver of any breach or default
shall be deemed to be a waiver of any other or subsequent breach or
default.
28. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and, except as herein expressly provided, supersedes all
previous and contemporaneous agreements, representations, warrantees, or
understandings, written or oral.
29. CONSTRUCTION. The paragraph headings are for convenience only, and
shall not be used in the construction of this Agreement.
30. GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Colorado.
31. TIME OF ESSENCE. Except as set forth in Section 23 hereof, time is of
the essence in the performance of each and every term, condition, and
covenant of this Agreement.
32. TIME COMPUTATIONS. In computing the time permitted or required for
performance or payment as provided hereunder, the first day shall be
excluded and the last day shall be included. If the last day of any such
period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday,
12
<PAGE>
Sunday, or legal holiday. Any performance or payment which must be
taken or made under this Agreement must be taken or made prior to 5:00 p.m.
(Denver, Colorado time) of the last day of the applicable period provided
hereunder for such action, unless another time is expressly specified. All
references to time shall be Denver, Colorado time. If a date for
performance or payment falls on a holiday or weekend, the time for
performance or payment shall be extended to the next business day, and if
performance or payment has occurred on such weekend or holiday, it shall be
deemed to have occurred on the next business day.
33. INVALIDITY. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this Agreement.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. If any person
named as one of the Owners does not execute this Agreement, it nevertheless
shall be binding upon those persons executing it.
35. ADDITIONAL DOCUMENTS. Owners will provide St. Mary with such
additional documents as may be necessary to carry out the purposes of this
Agreement. If conditions change by reason of conveyances, assignments, or
other matters relating to the title or description of the Property, Owners
and St. Mary shall execute amendments of this Agreement and the Short Form
of Agreement, and any other documents which may be necessary to reflect
such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
- -----------------------------------
Josephine Hill
and
13
<PAGE>
- -----------------------------------
Donald Charles Giaccarni
- -----------------------------------
Ruby E. Neill
and
- -----------------------------------
Bruce Neill, Joint Tenants
/s/ Vivian I. Rutherford
- -----------------------------------
Vivian I. Rutherford
ST. MARY MINERALS INC.
By: /s/ Gregory A. Hahn
-------------------------------------
Gregory A. Hahn, Vice President
14
<PAGE>
STATE OF )
)SS.
COUNTY OF )
On this day of ____ day of ________________, 19___ before me the
undersigned, a notary public, personally appeared Josephine Hill known to me (or
proved to me on the oath of ______________________________ (to be the persons
whose names are subscribed to the within instrument, and acknowledged that she
executed the same.
My Commission Expires:
- --------------------------------- ----------------------------------------
Notary Public
STATE OF )
)SS.
COUNTY OF )
On this _______ day of ______________, 19___ before me the
undersigned, a notary public, personally appeared Donald Charles Giaccarni known
to me (or proved to me on the oath of ______________________ (to be the persons
whose names are subscribed to the within instrument, and acknowledged that he
executed the same.
My Commission Expires:
- --------------------------------- ----------------------------------------
Notary Public
STATE OF )
)SS.
COUNTY OF )
On this ______ day of _____________________, 19____ before me the
undersigned, a notary public, personally appeared Ruby E. Neill known to me (or
proved to me on the oath of _____________________________ (to be the person
whose name is subscribed to the within instrument, and acknowledged that
she executed the same.
My Commission Expires
- --------------------------------- ----------------------------------------
Notary Public
15
<PAGE>
STATE OF )
)SS.
COUNTY OF )
On this ______ day of _____________________, 19____ before me the
undersigned, a notary public, personally appeared Bruce Neill known to me (or
proved to me on the oath of _____________________________ (to be the person
whose name is subscribed to the within instrument, and acknowledged that
she executed the same.
My Commission Expires
- --------------------------------- ----------------------------------------
Notary Public
STATE OF )
)SS.
COUNTY OF )
On this 2nd day of August, 1994 before me the undersigned, a notary
public, personally appeared Vivian I. Rutherford known to me (or proved to me on
the oath of _____________________________ (to be the person whose name is
subscribed to the within instrument, and acknowledged that she executed the
same.
My Commission Expires
March 9, 1996 /s/ Catherine S. Guy
- --------------------------------- ----------------------------------------
Notary Public
STATE OF COLORADO )
CITY AND )SS.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 25th day of
July, 1994, by Gregory A. Hahn, the Vice President of St. Mary Minerals Inc.,
Colorado corporation, on behalf of the corporation.
My Commission Expires:
February 14, 1997 /s/ James C. Robertson
- ----------------------------------- -----------------------------------
Notary Public James C. Robertson
16
<PAGE>
EXHIBIT A
OWNERS
Name and Address % Interest in Property
- ---------------- ----------------------
Josephine Hill and 16.667% each
Donald Charles Giaccarni
20 Hidalgo Terrace
San Francisco, CA 94103
Ruby E. Neill and 33.333%
Bruce Neill, Joint Tenants
724 E. Pueblo
Espanola, New Mexico 87532
Vivian I. Rutherford 33.333%
P.O. Box 8467
Albuquerque, New Mexico 87198
<PAGE>
EXHIBIT B
PROPERTIES
100% interest in and to the following patented mining claims and millsites
located in the Picuris and Copper Mountain Mining District, Taos County, New
Mexico:
Jumbo Lode, Mineral Survey No. 1049, BLM Book A-50, Pages 338-340
Aztec Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Sunset Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Oxide King Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Champion Lode, Mineral Survey No. 1049A, BLM Book A-50, Pages 338-340
Aztec Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Sunset Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Oxide King Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
Champion Millsite, Mineral Survey No. 1049B, BLM Book A-50, Pages 338-340
<PAGE>
APPLIED GEOLOGIC STUDIES, INC.
2875 West Oxford
Suite #3
Englewood, Colorado 80110
(303) 761-5624
(303) 761-5625 (Fax)
Schedule "D" to the
Acquisition Agreement
dated for reference
November 16, 1994
May 20, 1994
Mr. Greg Hahn, VP, Minerals Exploration
St. Mary Minerals, Inc.
1776 Lincoln Street, Suite 110
Denver, CO 80203-5400
Dear Greg:
As per our recent phone call, I am herein describing terms of an Agreement,
which if affirmed by your signature, will result in our passing onto you and
your company information on an interesting "copper-oxide" prospect (prospect),
located on claimed land in New Mexico.
The prospect was encountered during a comprehensive review of leachable
copper reserves in the Southwestern U.S. The prospect was explored during
the porphyry copper era by a couple of majors, however, was not in itself big
enough for their further interest. We estimate that there may be upward to
20-25 million tons of low-grade exotic copper with a possible core area of
0.5% or better. According to a call made to the owner last year, the
prospect was open for option negotiations.
Agreement to the following terms would make this prospect and our in-house
date available to you.
l. St. Mary Minerals, Inc. (St. Mary) would have 60 days from date of
disclosure of prospect data to accept or reject the prospect. If rejected, St.
Mary shall submit in writing this rejection and agrees that it and any of its
officers, employees, agents, representatives or consultants for a period of
three (3) years from the date of rejection letter, shall not acquire or attempt
to acquire any interest in the prospect or any property within a mile limit
outside the boundaries of the prospect (Area to be defined on map with data).
Furthermore, St. Mary shall keep all data on the prospect strictly confidential
for the 3-year period.
2. If the prospect is accepted, St Mary agrees to pay Applied Geologic Studies,
Inc. (AGS) a discovery bonus amounting to $100,000. The bonus shall be paid as
follows:
a. $5,000 at time of land acquisition in prospect area, or in any area
within a mile limit outside the prospect's boundaries.
<PAGE>
b. Five percent (5%) of total direct exploration expenditures made for
benefit of the prospect, exclusive of land costs. Expenditures would include
geologic work, geochemistry, geophysics, assay, drilling and costs related to
mine feasibility studies or mine development. These payments would be made
annually.
c. Any balance (not to exceed $100,000), shall be paid at time of
decision to put the prospect into mine production.
3. In the event that St. Mary conveys its interest in the prospect to another
party, it will require such party to expressly assume in writing St. Mary's
obligation to make the above payments; whereupon, St. Mary's further obligations
under this Agreement shall cease. If St. Mary surrenders its interest in the
prospect, or if St. Mary's rights in the property expire or terminate in any
other way, it's obligations to make further payments under this Agreement shall
immediately cease.
If you are in agreement with the terms set forth above, please indicate by
executing both copies of the Agreement and returning one signed copy to me.
Sincerely,
/s/ William A. Rehrig
- ---------------------
Dr. William A. Rehrig
President, AGS Inc.
- -------------------------------------------------------------------------
Accepted by me this the 23rd day of May, 1994
/s/ Gregory A. Hahn
- -------------------------------------------------------
Signature of Company Representative
<PAGE>
SCHEDULE "E"
TO THAT CERTAIN AGREEMENT (THE "AGREEMENT")
MADE AS OF THE 16TH DAY OF NOVEMBER, 1994 BETWEEN
SUMMO MINERALS CORPORATION OF THE FIRST PART
AND SUMMO USA CORPORATION OF THE SECOND PART
(COLLECTIVELY, THE "PAYOR") AND ST. MARY
MINERALS INC. OF THE THIRD PART (THE "PAYEE")
NET SMELTER RETURNS ROYALTY
1. In this Agreement, the term "NET SMELTER RETURNS" shall mean the gross
revenue from the sale by the Payor of all ore, concentrate and metal produced
from the Property, after deduction of the following:
(a) all smelting and refining costs (excluding the cost of SX-EW
processing), treatment charges and penalties including but not limited
to metal losses, penalties for impurities and charges for refining,
selling and handling by the smelter, refinery or other purchaser;
(b) costs of marketing, handling, transporting and insuring such ore,
concentrate or metal from the Property or from a concentrator, whether
situated on or off the Property, to a smelter, refinery or other place
of treatment or to the purchaser thereof.
2. Payments of Net Smelter Returns shall be made within 30 days after
the end of each fiscal quarter in which Net Smelter Returns, as determined on
the basis of final adjusted invoices, are received by the Payor. All such
payments shall be made in U.S. dollars.
3. For the purposes of determining Net Smelter Returns, all receipts and
disbursements in currency other that U.S. dollars shall be converted into U.S.
currency on the day of receipt or disbursement, as the case may be.
4. Each payment of Net Smelter Returns shall be accompanied by a
statement indicating the calculation of Net Smelter Returns paid. The Payee
shall be entitled to audit, during normal business hours, such books and records
as are necessary to determine the correctness of the payments, provided however,
that such audit shall be made only on an annual basis and within 12 months of
the end of the fiscal period in respect of which such audit is made.
5. Payment of Net Smelter Returns shall be made to the Payee at such
place or places in the United States as they shall advise the Payor from time to
time.
6. The determination of the Net Smelter Returns hereunder is based on the
premise that production will be developed solely on the Property. If other
properties are incorporated with the Property in a single mining project and
ores pertaining to each cannot be readily
<PAGE>
segregated on a practical or equitable basis, the Payor shall have the right
to commingle with ore from the Property ore produced from other properties
owned or controlled by the Payor provided that the Payor will adopt and
employ generally accepted practices and procedures for weighing, sampling and
assaying in order to determine the amount of metals or concentrate derived
from the Property. The Payee, or the representative of the Payee authorized
in writing, will be permitted to examine at all reasonable times the Payor's
records pertaining to commingling of ores.
7. If metal, concentrates or ore shipped from the Property are lost or
destroyed under circumstances in which the Payor receives payment under an
insurance policy, such payments will be deemed Net Smelter Returns.
8. The Payor shall not sell, assign, transfer or in any other manner deal
with the Property or any interest therein without the purchaser, transferee or
assignee acquiring the Property or such interest therein first agreeing with the
Payor in writing to be bound by the terms of this agreement. The Payor's
covenant to pay a 1.5% Net Smelter Return Royalty to the Payee hereunder shall
be a covenant running with the Property.
9. No error in accounting or in interpretation of this Agreement shall be
the basis for a claim of breach of fiduciary duty, or the like, or give rise to
a claim for exemplary or punitive damages or for termination or rescission of
the Agreement or the estate and rights acquired and held by the Payor under the
terms of the Agreement.
<PAGE>
ASSIGNMENT AND QUITCLAIM DEED
This Assignment and Quitclaim Deed, made effective November 16, 1994, is
between ST. MARY MINERALS INC., a Colorado corporation, ("Assignor"), whose
address is 1776 Lincoln St., Suite 1100, Denver, CO 80203, and SUMMO USA
CORPORATION, a Colorado corporation ("Assignee"), whose address is 1776 Lincoln
St., Suite 1100, Denver, CO 80203.
IN CONSIDERATION of Ten Dollars ($10.00) and other valuable consideration
in hand paid by Assignee, the receipt and sufficiency of which are hereby
acknowledged, and further in consideration of the mutual covenants and
conditions contained in this Assignment, the parties agree as follows:
1. ASSIGNMENT. Assignor assigns to Assignee, its successors and assigns,
those certain agreements more particularly described in Exhibit A attached
hereto and incorporated by reference herein (the "Agreements").
2. QUITCLAIM. Assignor quitclaims to Assignee, its successors and assigns,
all those certain patented and unpatented mining claims and mill sites in Taos
County, New Mexico, more particularly described in Exhibits A and B attached
hereto and incorporated by reference herein (the "Claims"), the Agreements and
the Claims being herein referred to as the "Property".
3. RESERVATION OF ROYALTY. Assignor reserves, and Assignee Agrees to pay to
Assignor, a royalty equal to One and One-Half Percent (1 1/2%) of Net Smelter
Returns of all ore, concentrates, and metal produced from the Property as
provided in Exhibit C attached hereto and incorporated by reference herein.
4. ADDITIONAL TERMS. Additional terms and conditions are contained in an
Acquisition Agreement dated Nov. 16, 1994 among St. Mary Minerals Inc., Summo
Minerals Corporation, and Summo USA Corporation. This Assignment and Quit
Claim Deed shall not merge, limit, decrease, increase, or in any manner affect
any of the terms of the Acquisition Agreement or any rights, interests, or
oblilgations of the parties thereunder.
IN WITNESS WHEREOF, Assignor has executed this Assignment and Quitclaim
Deed effective the date first above written.
ST. MARY MINERALS INC.
By: /s/ H.J. Matheson
--------------------------------
[Name:] HUGH J. MATHESON
----------------------------
[Title:] PRESIDENT
---------------------------
-1-
<PAGE>
SUMMO USA CORPORATION
By: /s/ Gregory A. Hahn
--------------------------------
[Name:] GREGORY A. HAHN
----------------------------
[Title:] VICE PRESIDENT
---------------------------
-2-
<PAGE>
STATE OF COLORADO )
) ss:
City and County of Denver)
The foregoing instrument was acknowledged before me this 28th day of April,
1995, by Hugh J. Matheson, as the President of St. Mary Minerals Inc., a
Colorado corporation, the corporation named in and that executed the foregoing
instrument, on behalf of the corporation.
/s/ James C Robertson
---------------------
Notary Public
[SEAL]
STATE OF COLORADO )
) ss:
City and County of Denver)
The foregoing instrument was acknowledged before me this 28th day of April,
1995, by Gregory A. Hahn, as the Vice President of Summo USA Corporation, a
Colorado corporation, the corporation named in and that executed the foregoing
instrument, on behalf of the corporation.
/s/ James C. Robertson
---------------------
Notary Public
[SEAL]
-3-
<PAGE>
EXHIBIT A
1. Exploration and Purchase Option Agreement dated for reference August 1,
1994, recorded October 17, 1994 in the Taos County records at Book M-170, Pages
821-830, between Boyce Cook, Margaret Cook, Josephine Hill, and Donald Charles
Giaccarni, as Owners, and St. Mary Minerals Inc., covering the following
unpatented mining claims located in the Picuris and Copper Mountain Mining
District, Taos County, New Mexico:
Recorded Amended BLM Serial
Claim Name Book Page Book Page No. - NMMC
---------- --------- --------- ----------
Blue Jay S30 46 S37 439 68901
Chipmunk S30 47 S37 443 68902
Mustang S30 498 S37 444 68903
Shiner S30 499 S37 448 68904
Lizzie S37 4 S37 441 68905
Magpie S37 5-6 S37 442 68906
M95 109
Daisy S37 3 S37 440 68907
2. Exploration and Purchase Option Agreement dated for reference August 1,
1994, recorded October 17, 1994 in the Taos County records at Book M-170, Pages
831-841, between Josephine Hill, Donald Charles Giaccarni, Ruby E. Neill, Bruce
Neill, and Vivid Rutherford, as Owners, and St. Mary Minerals Inc., covering the
following patented mining claims located in the Picuris and Coppar Mountain
Mining District, Taos County, New Mexico:
Claim Name M.S. No. Recorded
----------- -------- ---------
Jumbo Lode 1049 BLM Book A-50, Pages 338-340
Aztec Lode 1049A BLM Book A-50, Pages 338-340
Sunset Lode 1049A BLM Book A-50, Pages 338-340
Oxide Lode 1049A BLM Book A-50, Pages 338-340
Champion Lode 1049A BLM Book A-50, Pages 338-340
Aztec Millsite 1049B BLM Book A-50, Pages 338-340
Sunset Millsite 1049B BLM Book A-50, Pages 338-340
Oxide Millsite 1049B BLM Book A-50, Pages 338-340
Champion Millsite 1049B BLM Book A-50, Pages 338-340
A-1
<PAGE>
EXHIBIT B
Unpatented mining claims located in Township 23 North, Range 11 East, Taos
County, New Mexico:
Recorded Amended BLM Serial
Claim Name Book Page Book Page No. - NMMC
---------- --------- --------- -----------
CH 1 M172 280 163015
CH 2 M172 283 163016
CH 3 M172 284 163017
CH 4 M172 285 163018
CH 5 M172 286 163019
CH 6 M172 287 163020
CH 7 M172 288 163021
CH 8 M172 289 163022
CH 9 M172 290 163023
CH 10 M172 291 163024
CH 11 M172 292 163025
CH 12 M172 293 163026
CH 13 M172 294 163027
CH 14 M172 295 163028
CH 15 M172 296 163029
CH 16 M172 297 163030
CH 17 M172 298 163031
CH 18 M172 299 163032
CH 19 M172 300 163033
CH 20 M172 301 163034
CH 21 M173 300 163152
CH 22 M173 303 163153
CH 23 M173 304 163154
CH 24 M173 305 163155
CH 25 M173 306 163156
CH 26 M173 307 163157
CH 27 M173 308 163158
CH 28 M173 309 163159
CH 29 M173 310 163160
CH 30 M173 311 163161
CH 31 M173 312 163162
CH 32 M173 313 163163
CH 33 M173 314 163164
CH 34 M173 315 163165
CH 35 M173 316 163166
CH 36 M173 352 163167
CH 37 M173 353 163168
CH 38 M173 354 163169
CH 39 M173 355 163170
CH 40 M173 356 163171
CH 41 M173 357 163172
CH 42 M173 358 163173
CH 43 M173 359 163174
CH 44 M173 360 163175
B-1
<PAGE>
CH 45 M173 361 163176
CH 46 M173 362 163177
CH 47 M173 363 163178
CH 48 M173 364 163179
CH 49 M173 370 163180
CH 50 M173 371 163181
CH 51 M173 372 163182
CH 52 M173 373 163183
CH 53 M173 374 163184
CH 54 M173 375 163185
CH 55 M173 376 163186
CH 56 M173 377 163187
CH 57 M173 378 163188
CH 58 M173 379 163189
CH 59 M173 380 163190
CH 60 M173 381 163191
CH 61 M173 382 163192
CH 62 M173 383 163193
CH 63 M173 384 163194
CH 64 M173 385 163195
B-2
<PAGE>
EXHIBIT C
NET SMELTER RETURNS ROYALTY
1. The term "Net Smelter Returns" means the gross revenue from the sale
by Assignee, its successors and assigns (hereinafter, "Payor") , of all ore,
concentrate, and metal produced from the property, after deduction of the
following:
(a) all smelting and refining costs (excluding the cost of SX-EW
processing), treatment charges and penalties including but not limited to
metal losses, penalties for impurities and charges for refining, selling,
and handling by the smelter, refinery, or other purchaser, and
(b) costs of marketing, handling, transporting, and insuring such
ore, concentrate, or metal from the Property or from a concentrator,
whether situated on or off the Property, to a smelter, refinery, or other
place of treatment or to the purchaser thereof.
2. Payments of Net Smelter Returns shall be made within thirty (30) days
after the end of each fiscal quarter in which Net Smelter Returns, as
determined on the basis of final adjusted invoices, are received by Payor. All
such payments shall be made in U.S. dollars.
3. For the purposes of determining Net Smelter Returns, all receipts and
disbursements in currency other than U.S. dollars shall be converted into U.S.
currency on the day of receipt or disbursement, as the case may be.
4. Each payment of Net Smelter Returns shall be accompanied by a
statement indicating the calculation of Net Smelter Returns paid. The payee
shall be entitled to audit, during normal business hours, such books and
records as are necessary to determine the correctness of the payments, provided
however, that such audit shall be made only on an annual basis and within twelve
(12) months of the end of the fiscal period in respect of which such audit is
made.
5. Payment of Net Smelter Returns shall be made to the payee at such
place or places in the United States as payee shall advise Payor from time to
time.
6. The determination of the Net Smelter Returns hereunder is based on the
premise that production will be developed solely on the Property. If other
properties are incorporated with the Property in a single mining project and
ores pertaining to each cannot be readily segregated on a practical or
equitable basis, the Payor shall have the right to commingle with ore from the
C-1
<PAGE>
Property ore produced from other properties owned or controlled by the Payor
provided that the Payor will adopt and employ generally accepted practices and
procedures for weighing, sampling, and assaying in order to determine the amount
of metals or concentrate derived from the Property. The payee, or the
representative of the payee authorized in writing, will be permitted to
examine at all reasonable times the Payor's records pertaining to commingling
of ores.
7. If metal, concentrates, or ore shipped from the Property are lost or
destroyed under circumstances in which Payor receives payment under an insurance
policy, such payments will be deemed Net Smelter Returns.
8. The Payor shall not sell, assign, transfer, or in any other manner
deal with the Property or any interest therein without the purchaser,
transferee, or assignee acquiring the Property or such interest therein first
agreeing with the Payor in writing to be bound by the terms hereof. The
Payor's covenant to pay a One and One-Half Percent (1 1/2%) Net Smelter
Return Royalty hereunder shall be a covenant running with the Property.
9. No error in accounting or in interpretation hereof shall be the basis
for a claim of breach of fiduciary duty, or the like, or give rise to a
claim for exemplary or punitive damages or for termination or rescission
hereof or the estate and rights acquired and held by the Payor under the terms
hereof.
C-2
<PAGE>
EXHIBIT 10.16
APPLIED GEOLOGIC STUDIES, INC.
2875 West Oxford
Suite #3
Englewood, Colorado 80110
(303) 761-5624
(303) 761-5625 (Fax)
May 20, 1994
Mr. Greg Kahn, VP, Minerals Exploration
St. Mary Minerals, Inc.
1776 Lincoln Street, Suite 110
Denver, CO 80203-5400
Dear Greg:
As per our recent phone call, I am herein describing terms of an Agreement,
which if affirmed by your signature, will result in our passing onto you and
your company information on an interesting "copper-oxide" prospect
(prospect), located on claimed land in New Mexico.
The prospect was encountered during a comprehensive review of leachable
copper reserves in the Southwestern U.S. The prospect was explored (luring
the porphyry copper era by a couple of majors, however, was not in itself big
enough for their further interest. We estimate that there may be upward to
20-25 million tons of low-grade exotic copper with a possible core area of
0.5% or better. According to a call made to the owner last year, the prospect
was open for option negotiations.
Agreement to the following terms would make this prospect and our in-house
data available to you.
1. St. Mary Minerals, Inc. (St. Mary) would have 60 days from date of
disclosure of prospect data to accept or reject the prospect. If rejected,
St. Mary shall submit in writing this rejection and agrees that it and any of
its officers, employees, agents, representatives or consultants for a period
of three (3) years from the date of rejection letter, shall not acquire or
attempt to acquire any interest in the prospect or any property within a mile
limit outside the boundaries of the prospect (Area to be defined on map with
data). Furthermore, St. Mary shall keep all data on the prospect strictly
confidential for the 3-year period.
2. If the prospect is accepted, St. Mary agrees to pay Applied Geologic
Studies, Inc (AGS) a discovery bonus amounting to $100,000. The bonus shall
be paid as follows:
a. $5,000 at time of land acquisition in prospect area, or in any area
within a mile limit outside the prospect's boundaries.
<PAGE>
b. Five percent (5%) of total direct exploration expenditures made for
benefit of the prospect, exclusive of land costs. Expenditures would include
geologic work, geochemistry, geophysics, assay, drilling and costs related to
mine feasibility studies or mine development. These payments would be made
annually.
c. Any balance (not to exceed $100,000), shall be paid at time of
decision to put the prospect into mine production.
3. In the event that St. Mary conveys its interest in the prospect to
another party, it will require such party to expressly assume in writing St.
Mary's obligation to make the above payments; whereupon, St. Mary's further
obligations under this Agreement shall cease. If St. Mary surrenders its
interest in the prospect, or if St. Mary's rights in the property expire or
terminates in any other way, it's obligations to make further payments under
this Agreement shall immediately cease.
If you are in agreement with the terms set forth above,
please indicate by executing both copies of the Agreement and
returning one signed copy to me.
Sincerely,
/s/ William A. Rehrig
- ------------------------------------
Dr. William A. Rehrig
Pres. AGS Inc.
Accepted by me this the 23rd day of May, 1994
/s/ [ILLEGIBLE]
- ------------------------------------
Signature of Company Representative
<PAGE>
EXHIBIT 10.17
STOCK OPTION AGREEMENT
(INSIDER)
MEMORANDUM OF AGREEMENT made as of the 23rd day of February, 1995.
BETWEEN:
SUMMO MINERALS CORPORATION, a body corporate, duly
incorporated under the laws of British Columbia,
and having its head office at 860 - 625 Howe
Street, Vancouver, British Columbia, V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
JOHN IVANY, of 9180 Kalamalka Rd.
RR 1, Site 26, Comp 2
Vernon, British Columbia, V1T 6L4
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS the 0ptionee is a director of the Company.
AND WHEREAS the Company wishes to maintain the continued services of and
to provide incentive to the Optionee and to this end is desirous of granting to
the Optionee an option to purchase shares in the capital of the Company
subject to the terms and conditions hereinafter contained.
NOW THEREFORE THIS AGREEMENT WITNESSETH:
DEFINITION
1. In this Agreement the term "share" or "shares" means, as the case may be,
one or more common shares without par value in the capital stock of the
Company as constituted at the date of this Agreement.
GRANTING OF OPTION
2. The Company hereby irrevocably grants to the Optionee, being a director of
the
<PAGE>
Company, a non-assignable, non-transferable option to purchase 250,000
shares in the capital stock of the Company (hereinafter called the "Option")
at a price of $1.20 per share (the "Option Price") on the terms and
conditions hereinafter set forth.
EXERCISE OF OPTION
3. The Option, may be exercised by the Optionee over a period of five years,
from time to time, on or before February 23, 2000 by notice in writing to
the Company to that effect. Any such notice given to the Company (an
"Exercise Notice") shall specify the number of shares with respect to which
the Option is being exercised and shall be accompanied by a cheque drawn on
a Canadian chartered bank in favour of the Company in full payment of the
Option Price for the number of shares then being purchased.
DELIVER OF SHARE CERTIFICATE
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing the
number of shares with respect to which the Option is exercised and issued as
of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if delivered, on
the date of delivery, or if mailed, on the date of mailing. A mailed
Exercise Notice shall be sent by prepaid registered mail addressed to the
Company at its Vancouver address.
OPTION ONLY
6. Nothing herein contained or done pursuant hereto shall obligate the
Optionee to purchase and/or pay for any shares of the Company, except those
shares in respect of which the Optionee shall have exercised all or any part
of the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in respect
to any of the shares optioned hereunder other than in respect of optioned
shares upon which the Optionee shall have exercised all or any part of the
Option granted hereunder and which shall have been taken up and paid for in
full.
APPROVAL
8. The Option granted hereunder is subject to approval by ordinary
resolution of the members of the Company entitled to vote at a general
meeting of the Company, passed prior to the exercise of the Option or any
part thereof.
FILING WITH REGULATORY AUTHORITIES
9. This Agreement may be required to be filed with some or all of the
Superintendent of Brokers for the Province of British Columbia and the
Vancouver Stock Exchange ("VSE") (collectively the "Regulatory Authorities")
and the Optionee hereby agrees to be bound by any modification of the terms
and conditions of the Option as may be
<PAGE>
required by the said Regulatory Authorities.
10. A Declaration of Stock Option Position as attached hereto as "Schedule A"
to this Agreement, is required by the VSE and the Optionee hereby agrees to
be bound by any modification of the terms and conditions of the Option as
may be required by the said Regulatory Authorities.
CAPITAL REORGANIZATION
11. In the event the authorized capital of the Company as presently
constituted is consolidated into a lessor number of shares or subdivided
into a greater number of shares, the number of shares in respect of which
the Option remains unexercised shall be decreased or increased
proportionately as the case may be, and the then prevailing purchase price
to be paid by the Optionee for each such share shall be correspondingly
decreased or increased as applicable. In the event the Company shall
determine to amalgamate or merge with any other company or companies (and
the right to do so is hereby expressly reserved) whether by way of
statutory amalgamation, sale of its assets and undertaking, or otherwise
howsoever, then and in each such event the number of shares in the
corporation resulting from such amalgamation or merger in respect of
which the Option remains unexercised shall be such number of shares in
that corporation as would have been acquired by the Optionee pursuant to
the amalgamation or merger had the Option been fully exercised
immediately prior to the date of such amalgamation or merger and the then
prevailing purchase price of the shares to be paid by the Optionee shall
be correspondingly decreased or increased as applicable.
TERMINATION 0F OPTION
12. The Option is not assignable or transferable and shall terminate on the
30th day following the date upon which the Optionee ceases to be a director
of the Company; provided, however, that if such cessation is due to the
death of the Optionee, the personal representative of the Optionee shall
have the right to exercise any unexercised part of the Option for a period
of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
13. Any amendment to the Option is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of the
Company.
TIME OF THE ESSENCE
14. Time shall be of the essence of this Agreement.
<PAGE>
SUCCESSORS
15. This Agreement shall enure to the benefit of and be binding upon the
heirs, executors and administrators of the Optionee and the successors of
the Company.
IN WITNESS WHEREOF the parties hereto have caused these presents to be
executed as at the day and year first above written.
The Corporate Seal of SUMMO )
MINERALS CORPORATION was )
hereunto affixed in the )
presence of: )
) C/S
)
)
)
)
)
/s/ [ILLEGIBLE] )
- ---------------------------- )
Authorized Signatory )
)
)
/s/ N. Hewett )
- ---------------------------- )
Authorized Signatory )
SIGNED, SEALED AND DELIVERED )
by the Optionee in the presence of: )
)
)
Name: /s/ Gail Sharp ) /s/ John Ivany
---------------------- ) --------------------
) JOHN IVANY
Address: [ILLEGIBLE] )
------------------- )
[ILLEGIBLE] )
- ---------------------------- )
Occupation: Secretary )
----------------- )
<PAGE>
SCHEDULE "A"
FORM VSE 1-16
DECLARATION OF STOCK OPTION POSITION
THIS FORM FOR COMPLETION BY OPTIONEE
RE: _________________________________________________________
(Name of Company)
RE: _____________________ incentive stock options in _____________________
(No. of options) (Company)
I,__________________________, HEREBY CERTIFY that the aforesaid
non-transferable options have been granted to me in compliance with the
requirements of the V.S.E. Listings Policy Statement No. 1: and more
particularly that at the time of grant, I was not aware of any change in the
affairs of the Company which might have affected the trading price and had
not been disclosed to the public. If the company is classified as a Venture
Company as of the date of this declaration, I confirm that I have not been
granted a stock option in the said Company within 2 years of the date of
grant of the above-stated options.
I HEREBY FURTHER CERTIFY (complete either Part I or Part II as applicable):
PART I
THAT I have not been granted any director or employee incentive share options
by any other listed companies.
DATED the ____ day of _______________, 19___. SIGNATURE: __________________
PART II
THAT I hold as of the date of this Declaration existing incentive share
options which have been granted to me by the above named company or other
listed companies as follows:
Outstanding
Name of No. of Date of Balance as
Listed Shares Exercise at Date of
Co. Optioned Grant Certificate
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Complete on separate sheet if insufficient space)
DATED the ____ day of _______________, 19___. SIGNATURE: __________________
<PAGE>
EXHIBIT 10.18
STOCK OPTION AGREEMENT
(INSIDER)
MEMORANDUM OF AGREEMENT made as of the 24th day of April, 1995
BETWEEN:
SUMMO MINERALS CORPORATION, a body corporate, duly
incorporated under the laws of British Columbia,
and having its head office at 860 - 625 Howe
Street, Vancouver, British Columbia, V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
J. DOUGLAS LITTLE, of 4810 Puget Dr.
Vancouver, B.C. V6L 2W3
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS the Optionee is an Insider of the Company.
AND WHEREAS the Company wishes to maintain the continued services of and
to provide incentive to the Optionee and to this end is desirous of granting to
the Optionee an option to purchase shares in the capital of the Company
subject to the terms and conditions hereinafter contained.
NOW THEREFORE THIS AGREEMENT WITNESSETH:
DEFINITION
1. In this Agreement the term "share" or "shares" means, as the case may be,
one or more common shares without par value in the capital stock of the
Company as constituted at the date of this Agreement.
GRANTING OF OPTION
2. The Company hereby irrevocably grants to the Optionee, being an Insider of
the Company, a non-assignable, non-transferable option to purchase 40,000
shares in the
<PAGE>
capital stock of the Company (hereinafter called the "Option") at $1.20
per share (the "Option Price") on the terms and conditions hereinafter set
forth.
EXERCISE OF OPTION
3. The Option, may be exercised by the Optionee over a period of five (5) years
until April 24, 2000, by notice in writing to the Company to that effect.
Any such notice given to the Company (an "Exercise Notice") shall specify
the number of shares with respect to which the Option is being exercised
and shall be accompanied by a cheque drawn on a Canadian chartered bank in
favour of the Company in full payment of the Option Price for the number of
shares then being purchased.
DELIVER OF SHARE CERTIFICATE
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing
the number of shares with respect to which the Option is exercised and
issued as of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if delivered, on
the date of delivery or if mailed, on the date of mailing. A mailed
Exercise Notice shall be sent by prepaid registered mail addressed to the
Company at its Vancouver address.
OPTION ONLY
6. Nothing herein contained or done pursuant hereto shall obligate the
Optionee to purchase and/or pay for any shares of the Company, except
those shares in respect of which the Optionee shall have exercised all or
any part of the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in respect to
any of the shares optioned hereunder other than in respect of optioned
shares upon which the Optionee shall have exercised all or any part of the
Option granted hereunder and which shall have been taken up and paid for
in full.
APPROVAL
8. The Option granted hereunder is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company, passed prior to the exercise of the Option or any part thereof.
FILING WITH REGULATORY AUTHORITIES
9. This Agreement may be required to be filed with some or all of the
Superintendent of Brokers for the Province of British Columbia and the
Vancouver Stock Exchange ("VSE") (collectively the "Regulatory
Authorities") and the Optionee hereby agrees to
<PAGE>
be bound by any modification of the terms and conditions of the Option as
may be required by the said Regulatory Authorities.
10. A Declaration of Stock Option Position as attached hereto as "Schedule A"
to this Agreement, is required by the VSE and the Option hereby agrees to
be bound by any modification of the terms and conditions of the Option as
may be required by the said Regulatory Authorities.
CAPITAL REORGANIZATION
11. In the event the authorized capital of the Company as presently constituted
is consolidated into a lessor number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the
Option remains unexercised shall be decreased or increased
proportionately as the case may be, and the then prevailing purchase
price to be paid by the Optionee for each such share shall be
correspondingly decreased or increased as applicable. In the event the
Company shall determine to amalgamate or merge with any other company or
companies (and the right to do so is hereby expressly reserved) whether
by way of statutory amalgamation, sale of its assets and undertaking, or
otherwise howsoever, then and in each such event the number of shares in
the corporation resulting from such amalgamation or merger in respect of
which the Option remains unexercised shall be such number of shares in
that corporation as would have been acquired by the Optionee pursuant to
the amalgamation or merger had the Option been fully exercised immediately
prior to the date of such amalgamation or merger and the then prevailing
purchase price of the shares to be paid by the Optionee shall be
correspondingly decreased or increased as applicable.
TERMINATION OF OPTION
12. The Option is not assignable or transferable and shall terminate on the
30th day following the date upon which the Optionee ceases to be an
Insider of the Company; provided, however, that if such cessation is due
to the death of the Optionee, the personal representative of the Optionee
shall have the right to exercise any unexercised part of the Option for a
period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
13. Any amendment to the Option is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company.
TIME OF THE ESSENCE
14. Time shall be of the essence of this Agreement.
<PAGE>
SUCCESSORS
15. This Agreement shall enure to the benefit of and be binding upon the
heirs, executors and administrators of the Optionee and the successors of
the Company.
IN WITNESS WHEREOF the parties hereto have caused these presents to be
executed as at the day and year first above written.
The Corporate Seal of SUMMO )
MINERALS CORPORATION was )
hereunto affixed in the )
presence of: )
)
) C/S
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
)
)
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
SIGNED, SEALED AND DELIVERED )
by the Optionee in the presence of: )
)
Name: /s/ Gail Sharp ) /s/ J. Douglas Little
----------------------------- ) ----------------------------
) J. DOUGLAS LITTLE
Address: 1002-1460 Barclay )
-------------------------- )
Vancouver B.C. )
-------------------------- )
)
Occupation: Secretary )
----------------------- )
<PAGE>
SCHEDULE "A"
DECLARATION OF STOCK OPTION POSITION
THIS FORM FOR COMPLETION BY OPTIONEE
RE:
--------------------------------------------------
(Name of Company)
RE: incentive stock options in
------------------- ----------------------
(No. of options) (Company)
I, _____________________, HEREBY CERTIFY that the aforesaid non-transferable
options have been granted to me in compliance with the requirements of the
V.S.E. Policy 23: and more particularly that at the time of grant, I was not
aware of any change in the affairs of the Company which might have affected
the trading price and had not been disclosed to the public. If the company is
classified as a Venture Company as of the date of this declaration, I confirm
that I have not been granted a stock option in the said Company within 2
years of the date of grant of the above-stated options.
I HEREBY FURTHER CERTIFY (complete either Part I or Part II as applicable):
PART I
THAT I have not be granted any director or employee incentive share options
by any other listed companies.
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
PART II
THAT I hold as of the date of this Declaration existing incentive share
options which have been granted to me by the above named company or other
listed companies as follows:
Outstanding
Name of No. of Date of Balance as
Listed Shares Exercise at Date of
Co. Optioned Grant Certificate
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
(Complete on separate sheet if insufficient space)
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
<PAGE>
STOCK OPTION AGREEMENT
(INSIDER)
MEMORANDUM OF AGREEMENT made as of the 24th day of April, 1995
BETWEEN:
SUMMO MINERALS CORPORATION, a body corporate, duly
incorporated under the laws of British Columbia,
and having its head office at 860 - 625 Howe
Street, Vancouver, British Columbia, V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
ROBERT A. PRESCOTT, of 1100 - 1776 Lincoln St.
Denver, Colorado, 80203, USA
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS the Option is an Insider of the Company.
AND WHEREAS the Company wishes to maintain the continued services of and to
provide incentive to the Optionee and to this end is desirous of granting to
the Optionee an option to purchase shares in the capital of the Company
subject to the terms and conditions hereinafter contained.
NOW THEREFORE THIS AGREEMENT WITNESSETH:
DEFINITION
1. In this Agreement the term "share" or "shares" means, as the case may be,
one or more communion shares without par value in the capital stock of
the Company as constituted at the date of this Agreement.
GRANTING OF OPTION
2. The Company hereby irrevocably grants to the Optionee, being an Insider
of the Company, a non-assignable, non-transferable option to purchase
100,000 shares in the
<PAGE>
capital stock of the Company (hereinafter called the "Option") at $1.20
per share (the "Option Price") on the terms and conditions hereinafter
set forth.
EXERCISE OF OPTION
3. The Option, may be exercised by the Optionee over a period of five (5) years
until April 24, 2000, by notice in writing to the Company to that
effect. Any such notice given to the Company (an "Exercise Notice") shall
specify the number of shares with respect to which the Option is being
exercised and shall be accompanied by a cheque drawn on a Canadian
chartered bank in favor of the Company in full payment of the Option
Price for the number of shares then being purchased.
DELIVER OF SHARE CERTIFICATE
4. The Company shall, within five business days after receipt of the Exercise
Notice deliver to the Optionee: a share certificate representing the number
of shares with respect to which the Option is exercised and issued as of
the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if delivered, on the
date of delivery, or if mailed, on the date of mailing. A mailed Exercise
Notice shall be sent by prepaid registered mail addressed to the Company
at its Vancouver address.
OPTION ONLY
6. Nothing herein contained or done pursuant hereto shall obligate the
Optionee to purchase and/or pay for any shares of the Company, except
those shares in respect of which the Optionee shall have exercised all or
any part of the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in respect to
any of the shares optioned hereunder other than in respect of optioned
shares upon which the Optionee shall Lave exercised all or any part of the
Option granted hereunder and which shall have been taken up and paid for
in full.
APPROVAL
8. The Option granted hereunder is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company, passed prior to the exercise of the Option or any part
thereof.
FILING WITH REGULATORY AUTHORITIES
9. This Agreement may be required to be filed with some or all of the
Superintendent of Brokers for the Province of British Columbia and the
Vancouver Stock Exchange ("VSE") (collectively the "Regulatory
Authorities") and the Option hereby agrees to be bound by any
modification of the terms and conditions of the Option as may required by
the said Regulatory Authorities.
<PAGE>
10. A Declaration of Stock Option Position as attached hereto as "Schedule A"
to this Agreement, is required by the VSE and the Optionee hereby agrees to
be bound by any modification of the terms and conditions of the Option as
may be required by the said Regulatory Authorities.
CAPITAL REORGANIZATION
11. In the event the authorized capital of the Company as presently constituted
is consolidated into a lessor number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the
Option remains unexercised shall be decreased or increased
proportionately as the case may be, and the then prevailing purchase
price to be paid by the Optionee for each such share shall be
correspondingly decreased or increased as applicable. In the event the
Company shall determine to amalgamate or merge with any other company or
companies (and the right to do so is hereby expressly reserved) whether
by way of statutory amalgamation, sale of its assets and undertaking, or
otherwise howsoever, then and in each such event the number of shares in
the corporation resulting from such amalgamation or merger in respect of
which the Option remains unexercised shall be such number of shares in
that corporation as would have been acquired by the Optionee pursuant to
the amalgamation or merger had the Option been fully exercised immediately
prior to the date of such amalgamation or merger and the then prevailing
purchase price of the shares to be paid by the Optionee shall be
correspondingly decreased or increased as applicable.
TERMINATION OF OPTION
12. The Option is not assignable or transferable and shall terminate on the
30th day following the date upon which the Optionee ceases to be an
Insider of the Company; provided, however, that if such cessation is due
to the death of the Optionee, the personal representative of the Optionee
shall have the right to exercise any unexercised part of the Option for a
period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
13. Any amendment to the Option is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company.
TIME OF THE ESSENCE
14. Time shall be of the essence of this Agreement.
<PAGE>
SUCCESSORS
15. This Agreement shall enure to the benefit of and be binding upon the
heirs, executors and administrators of the Optionee and the successors
of the Company.
IN WITNESS WHEREOF the parties hereto have caused these presents to be
executed as at the day and year first above written.
The Corporate Seal of SUMMO )
MINERALS CORPORATION was )
hereunto affixed in )
presence of: )
)
) C/S
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
)
)
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
SIGNED, SEALED AND DELIVERED )
by the Optionee in the presence of: )
)
Name: /s/ Judith L. Prescott ) /s/ Robert A. Prescott
----------------------------- ) ----------------------------
) ROBERT A. PRESCOTT
Address: 1587 Bermuda Dunes )
-------------------------- )
Boulder City, Nevada )
-------------------------- )
)
Occupation: Housewife )
----------------------- )
<PAGE>
SCHEDULE"A"
DECLARATION OF STOCK OPTION POSITION
THIS FORM FOR COMPLETION BY OPTIONEE
RE:
--------------------------------------------------
(Name of Company)
RE: incentive stock options in
------------------- ----------------------
(No. of options) (Company)
I, ___________________, HEREBY CERTIFY that the aforesaid non-transferable
options have been granted to me in compliance with the requirements of the
V.S.E. Policy 23: and more particularly that at the time of grant, I was not
aware of any change in the affairs of the Company which might have affected
the trading price and had not been disclosed to the public. If the company
is classified as a Venture Company as of the date of this declaration, I
confirm that I have not been granted a stock option in the said Company
within 2 years of the date of grant of the above-stated options.
I HEREBY FURTHER CERTIFY (complete either Part I or Part II as applicable):
PART I
THAT I have not been granted any director or employee incentive share options
by any other listed companies.
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
PART II
THAT I hold as of the date of this Declaration existing incentive share
options which have been granted to me by the above named company or other
listed companies as follows:
Outstanding
Name of No. of Date of Balance as
Listed Shares Exercise at Date of
Co. Optioned Grant Certificate
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
(Complete on separate sheet if insufficient space)
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
<PAGE>
EXHIBIT 10.19
SUMMO USA CORPORATION
1100 DENVER CENTER BUILDING
1776 LINCOLN STREET, DENVER, COLORADO 80203
TELEPHONE: 303/861-5400 FAX: 303/861-0934
April 5, 1995
Mr. Robert A. Prescott
1587 Bermuda Dunes Drive
Boulder City, Nevada 89005
Dear Bob:
This letter confirms your engagement as Vice President and General
Manager of Summo USA Corporation, a wholly-owned subsidiary of Summo Minerals
Corporation.
Your annual salary will be $ 100,000.00 and we will provide a standard
benefits package. We anticipate introducing a cash bonus scheme which you
will both help design and participate in once the scheme is adopted. You will
receive options to purchase 100,000 shares of Summo Minerals Corporation. The
options will have a 5 year term and be priced in accordance with the
requirements of the Vancouver Stock Exchange where Summo Minerals Corporation
is currently listed.
Your engagement will commence on April 24, 1995. We recognize that the
development of the Lisbon Valley Project is critical to the ongoing success
of the Corporation. We have agreed that should this project not proceed
and your services no longer be required as a consequence, we will pay you one
year's salary as a severance in these circumstances.
Very truly yours,
SUMMO USA CORPORATION
/s/ HUGH J. MATHESON
Hugh J. Matheson
President
<PAGE>
EMPLOYMENT AGREEMENT
This Agreement is entered into this 31st day of December, 1995 between
Summo Minerals Corporation ("Summo"), a British Columbia corporation, and
Gregory A. Hahn ("Hahn"). This Agreement shall become effective upon the
earlier of the employment termination of Hahn by St. Mary Minerals Inc. or
the date of this Agreement (the "Effective Date").
1. EMPLOYMENT. On the terms and conditions set forth herein, Summo
hereby agrees to employ Hahn as President and Chief Executive Officer of
Summo Minerals Corporation and Summo USA Corporation, and Hahn hereby agrees
to be so employed and located in Denver, Colorado, for a minimum of one year
from the Effective Date of this Agreement. Hahn shall utilize his full-time
good faith efforts to perform such duties and discharge such responsibilities
as are customarily undertaken by such an officer of a corporation, together
with such other appropriate duties as may be assigned to him by the Board of
Directors of Summo.
2. COMPENSATION. Summo shall compensate Hahn for his services
hereunder at an initial rate of $120,000 per annum payable in semi-monthly
installments. Such compensation shall be subject to review and increase, as
approved by the Board of Directors of Summo, in July of each year beginning
with July, 1996. Hahn shall participate in the fringe benefits and benefit
plans of Summo in the same manner and to the same comparable extent as other
senior executives of Summo, including three weeks of vacation, retirement
benefits, life insurance, disability benefits and insurance and health and
hospitalization benefits and insurance. Hahn shall also be entitled to
additional bonus or incentive compensation, as determined by the Board of
Directors of Summo, pursuant to any plans or programs established therefore,
to an extent comparable with other senior executives of Summo and dependent
upon the nature of the accomplishment of his employment duties and
responsibilities including those described in paragraph 1 above.
3. TERM.
(1) The term of employment of Hahn by Summo shall commence as of
the above-mentioned Effective Date. This Agreement shall continue in effect
for at least one year and then until terminated by Hahn or Summo upon not
less than thirty days prior written notice to the other. Upon any
termination of this Agreement by Summo for any reason other than the
occurrence of an event described in subparagraph (2) below, Summo shall
continue the compensation of Hahn at its rate at the time of such termination
for a period of one year thereafter, together with a continuation of the
insurance benefits in effect for him at the time of such termination.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
SUMMO MINERALS CORPORATION
By: /s/ FRED G. HEWETT By: /s/ JOHN E. ROBINS
-------------------------------- -------------------------------
Fred G. Hewett John E. Robins
By: /s/ MATTHEW MASON By: /s/ JOHN IVANY
-------------------------------- -------------------------------
Matthew Mason John Ivany
By: /s/ DOUGLAS LITTLE By: /s/ MARK A. HELLERSTEIN
-------------------------------- -------------------------------
Douglas Little Mark A. Hellerstein
ACKNOWLEDGED AND AGREED TO this 31st day of December, 1995, in Denver,
Colorado.
By: /s/ GREGORY A. HAHN
-------------------------------
Gregory A. Hahn
<PAGE>
EMPLOYEE INCENTIVE STOCK OPTION PLAN
THIS AGREEMENT is made as of the 30th day of April, 1996,
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under the laws
of the Province of British Columbia, having its registered office at
860-625 Howe Street, Vancouver, B.C., V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
MATTHEW J. MASON, of 860-625 Howe St.
---------------- -------------------------------------------------
Vancouver, BC V6C 2T6
----------------------------------------------------------------------
(RESIDENTIAL ADDRESS, INCLUDING POSTAL (ZIP) CODE)
(hereinafter called the "Optionee")
OF THE SECOND PART.
WHEREAS:
A. the Optionee is a director of the Company and requires as a condition of
holding such position that the parties enter into this Incentive Stock Option
Agreement on the terms and conditions hereinafter set forth;
B. this incentive stock option is granted by the Company in reliance on the
exemptions from registration and prospectus requirements contained in Sections
31(2)(10) and 55(2)(9) of the SECURITIES ACT (British Columbia) and Sections
35(1)(19) and 72(1)(n) of the SECURITIES ACT (Ontario);
C. the Company has been classified as a "Resource" company by the Vancouver
Stock Exchange and as a "Non-Exempt" resource company by The Toronto Stock
Exchange;
D. the directors of the Company passed a resolution at their board meeting held
January 15, 1996 implementing an Incentive Stock Option Plan (the "PLAN"),
subject to shareholder ratification, a copy of which is attached hereto as
"Schedule "A";
E. the option herein granted is subject to the terms and conditions of the
Plan;
<PAGE>
3
8. This agreement may be executed in several parts in the same form and such
parts as so executed will together constitute one original agreement, and such
parts, if more than one, will be read together as if all the signing parties
hereto had executed one copy of this agreement.
9. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors.
10. Wherever the plural or masculine are used throughout this agreement, the
same shall be construed as meaning singular or feminine or neuter or the body
politic where the context of the parties thereto require.
11. The Optionee hereby acknowledges and confirms that he has obtained
independent legal advice with respect to this agreement and understands and
is aware that the securities of the Company have not been registered under
the Securities Act of 1933, as amended. The Optionee covenants with and to
the Company that he will exercise the option herein granted, and dispose of
the shares thereby acquired, only in accordance with all applicable laws.
12. In this agreement, all references to money are references to Canadian
dollars.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
The COMMON SEAL of )
SUMMO MINERALS )
CORPORATION )
in the presence of: )
)
[illegible] )
- ----------------------------- ) c/s
Authorized signatory )
SIGNED, SEALED AND DELIVERED )
by MATTHEW J. MASON )
in the presence of: )
[illegible] ) /s/ Matthew J. Mason
- ----------------------------- ) ------------------------------------
Witness Matthew J. Mason
This is page 3 to that certain Incentive Stock Option Agreement between SUMMO
MINERALS CORPORATION and MATTHEW J. MASON dated as of the 30th day of April,
1996.
<PAGE>
Schedule "A"
- --------------------------------------------------------------------------------
SUMMO MINERALS CORPORATION
EMPLOYEE INCENTIVE STOCK OPTION PLAN
1. PURPOSE
The purpose of the Employee Incentive Stock Option Plan (the "Plan") is
to promote the profitability and growth of SUMMO MINERALS CORPORATION
("Summo") by facilitating the efforts of Summo and its subsidiaries to obtain
and retain key individuals. The Plan provides an incentive for and encourages
ownership of Summo's shares by its key individual so that they may increase
their stake in Summo and benefit from increases in the value of Summo's
shares.
2. ADMINISTRATION
The Plan will be administered by a committee (the "Committee") of Summo's
Board of Directors (the "Board"), which will consist of two or more members.
All members of the Committee shall be non-employee directors who a
"Disinterested Persons" with regard to Plan administration, within the
meaning of Rule 16b-3 as promulgated and amended from time to time by the
United States Securities and Exchange Commission.
The Committee will be authorized, subject to the provisions of the Plan,
to adopt such rules and regulations which it deems consistent with the Plan's
provisions and, in its sole discretion, to designate options ("Options") to
purchase shares of Summo pursuant to the Plan. The Committee may authorize
one or more individuals of Summo to execute, deliver and receive documents on
behalf of the Committee.
3. ELIGIBILITY
All directors and officers and employees of Summo and its subsidiaries
will be eligible to receive Options. The term "subsidiaries" for the purpose
of the Plan will include Summo U.S.A. Corporation, which definition may be
varied by the Committee to conform with the changing interests of Summo.
Nothing in the Plan or in any option shall confer any right on any
individual to continue in the employ of or association with Summo or its
subsidiaries or will interfere in any way with the right of Summo or
subsidiaries to terminate at any time the employment of a person who is an
optionee ("Optionee") under an Option.
4. SHARES SUBJECT TO OPTION
The shares to be optioned under the Plan will be authorized but unissued
Common Shares without par value ("Shares") of Summo.
At no time will more than 2,000,000 Shares be under option either
pursuant to the Plan or pursuant to other incentive stock options issued by
Summo. The number of Shares under option at any specific time to any one
Optionee shall not exceed 5% of the issued and outstanding common share
capital of Summo, subject to adjustment under Section 12 below.
Shares subject to and not delivered under an Option which expires or
terminates shall again be available for option under the Plan. The maximum
number of Shares which may be issued pursuant to
<PAGE>
2
the Plan shall not however exceed 2,000,000 Shares.
5. GRANTING OF OPTIONS
The Committee may from time to time at its discretion, subject to the
provisions of the Plan, determine those eligible individuals to whom Options
will be granted, the number of Shares subject to such Options, the dates on
which such Options are to be granted and the expiration of such Options.
The Committee may, at its discretion, with respect to any Option, impose
additional terms and conditions which are more restrictive on the optionee
than those provided for in the Plan.
Each Option will be evidenced by a written agreement between, and
executed by, Summo and the individual containing such terms and conditions
established by the Committee with respect to such Option and will be
consistent with the provisions of the Plan.
Options shall be granted to directors only according to the following
formula:
(i) Each director who was a member of the Board of Directors prior to
January 1, 1996, shall upon adoption of this Plan be issued
Options for that number of Shares necessary to bring the aggregate
number of Shares underlying incentive options issued to such
director to 150,000 Shares. The exercise price of such Options
shall be determined as provided in Section 6 hereof.
(ii) Each director who becomes a member of the Board of Directors after
January 1, 1996, shall be granted Options for 50,000 Shares upon
his or her election or appointment to the Board. The exercise
price shall be determined as provided in Section 6 hereof.
(iii) Upon the expiration date of any Options issued to a director
(regardless of whether such Options were exercised on or prior to
the expiration date), such director shall be issued Options for an
additional 50,000 Shares. The exercise price shall be determined
as provided in Section 6 hereof. The provisions of this paragraph
(iii) shall also apply upon the expiration date of any other
incentive stock options issued to a director if at the time of
such expiration date, the director holds incentive options,
including Options, for fewer than an aggregate of 50,000 Shares
underlying such options, in which case the director shall be
issued that number of Options necessary to bring the aggregate
number of Shares underlying incentive options issued to such
director at such time to 50,000 Shares. The calculation of
incentive options held by any director shall not include any
warrants to purchase Summo shares held by a director provided such
warrants were issued by Summo in connection with securities
offered by Summo.
(iv) The foregoing formulas shall not be amended more than once every
six months other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder.
(v) Additional options may be granted to directors at the discretion
of the Committee,
<PAGE>
3
provided that no director may receive additional options while
serving on the Committee if the receipt of such options would
cause him to cease to be a Disinterested Person.
6. OPTION PRICE
The price per Share at which Shares may be purchased upon the exercise of
an Option (the "Option Price") will not be lower that the "market price" of
the Shares on The Toronto Stock Exchange (the "TSE") at the time of grant. In
the context of the Plan, "market price" means the closing price of Summo's
shares on the TSE at the close of trading which immediately preceded the time
that the option was granted. If the shares of Summo do not trade on such day,
the "market price" shall be the average of the bid and ask prices on the
previous trading day.
7. TERM OF OPTION
The maximum term of any Option will be 10 years.
The Option Price will be paid in full at the time of exercise of the
Option and no Shares will be delivered until full payment is made.
An Optionee will not be deemed the holder of the Shares subject to his
Option until the Shares are delivered to him.
8. TRANSFERABILITY OF OPTIONS
An Option may not be assigned. During the lifetime of an Optionee, the
Option may be exercised only by the Optionee.
9. TERMINATION OF EMPLOYMENT
Upon termination of employment for any reason except death or retirement or
failure of re-election as a director or failure to be re-appointed an
officer of Summo, an Optionee may, at any time within 30 days after the date
of termination but not later than the date of expiration of the Option,
exercise the Option to the extent the Optionee was entitled to do so on the
date of termination. Any option or portions of Options of terminated
individuals not so exercised will terminate and again be available for future
Options under the Plan. A change of employment will not be considered a
termination so long as the Optionee continues to be employed by Summo or its
subsidiaries.
10. DEATH
Notwithstanding any other provision of this Plan other than the maximum
of 10 years provided for in Section 7, if any Optionee shall die holding an
Option which has not been fully exercised, his personal representative, heirs
or legatees may, at any time within 60 days of grant of probate of the will
or letters of administration of the estate of the decedent or within one year
after the date of such death, whichever is the lesser time, exercise the
Option with respect to the unexercised balance of the Shares subject to the
Option.
<PAGE>
4
11. RETIREMENT
Notwithstanding any other provision of this Plan, if any Optionee shall
retire or terminate his employment with the consent of the Board under
circumstances equating retirement, while holding an Option which has not been
fully exercised, such Optionee may exercise the Option at any time during the
unexpired term of the Option.
12. CHANGE IN SHARES
In the event the authorized common share capital of Summo as presently
constituted is consolidated into a lesser number of Shares or subdivided into
a greater number of Shares, the number of Shares for which Options are
outstanding will be decreased or increased proportionately as the case may be
and the Option Price will be adjusted accordingly and the Optionee will have
the benefit of any stock dividend declared during the period within which the
said Optionee held his Option. Should Summo amalgamate or merge with any
other Company or companies (the right to do so being expressly reserved)
whether by way of arrangement, sale of assets and undertakings or otherwise,
then and in each such case the number of shares of the resulting corporation
to which an Option relates will be determined as if the Option has been fully
exercised prior to the effective date of the amalgamation or merger and the
Option Price will be correspondingly increased or decreased, as applicable.
13. CANCELLATION AND RE-GRANTING OF OPTIONS
The Committee may, with the consent of the Optionee, cancel any existing
Option, and re-grant the Option at an Option Price determined in the same
manner as provided in Section 6 hereof, subject to the prior approval of the
TSE.
14. AMENDMENT OR DISCONTINUANCE
The Board may alter, suspend or discontinue the Plan, but may not,
without the approval of the shareholders of Summo and the TSE, may any
alteration which would (a) increase the aggregate number of Shares subject to
Option under the Plan except as provided in Section 12 or (b) decrease the
Option Price except as provided in Section 12. Notwithstanding the foregoing,
the terms of an existing Option may not be altered, suspended or discontinued
without the consent in writing of the Optionee.
15. INTERPRETATION
The Plan will be construed according to the laws of the Province of
British Columbia,
16. LIABILITY
No member of the Committee or any director, officer or employee of Summo
will be personally liable for any act taken or omitted in good faith in
connection with the Plan.
<PAGE>
================================================================================
ESCROW AGREEMENT
THIS AGREEMENT made this 18th day of January, 1996
AMONG:
ST. MARY MINERALS INC., AND GREGORY A. HAHN, each
of Suite 1100, 1776 Lincoln Street, Denver, Colorado U.S.A.
80203 and MATTHEW J. MASON, JOHN E. ROBINS and
FREDERIC G. HEWETT, each of Suite 860, 625 Howe Street,
Vancouver, B.C. V6C 2T6, JOHN W. IVANY of King City,
Ontario
(hereinafter jointly and severally called the "SECURITY HOLDERS")
OF THE FIRST PART
AND
PACIFIC CORPORATE TRUST COMPANY, of Suite 830,
625 Howe Street, Vancouver, British Columbia V6C 3B8
(hereinafter called the "TRUSTEE")
OF THE SECOND PART
AND
SUMMO MINERALS CORPORATION, of Suite 860, 625
Howe Street, Vancouver, British Columbia V6C 2T6
(hereinafter called the "ISSUER")
OF THE THIRD PART
AND
THE TORONTO STOCK EXCHANGE, of The Exchange
Tower, 2 First Canadian Place, Toronto, Ontario M5X 1J2
(hereinafter called the "EXCHANGE")
OF THE FOURTH PART
<PAGE>
2
WHEREAS the Security Holders presently own or are about to receive
securities of the Issuer;
AND WHEREAS in furtherance of complying with the requirements of the
Exchange, the security holders are desirous of depositing in escrow certain
securities of the Issuer owned or to be received by them;
AND WHEREAS the Trustee has agreed to undertake and perform its duties
according to the terms and conditions hereof;
NOW THEREFORE this Agreement witnesseth that in consideration of the
aforesaid agreements, and of the sum of one dollar ($1.00) now paid by the
parties hereto, each to the other (receipt of which sum the parties do hereby
respectively acknowledge each to the other) the Security Holders jointly and
severally covenant and agree with the Issuer and with the Trustee and the
Issuer and the Trustee covenant and agree each with the other and with the
Security Holders jointly and severally as follows:
1. Each of the Security Holders hereby places and deposits in escrow those
of its securities of the Issuer which are represented by the certificates
described or referred to in Schedule "A" hereto with the Trustee and,
inasmuch as he is legally able to do so, in respect of existing restrictions
on the delivery of such certificates (such as R.R.S.P. restrictions) hereby
undertakes and agrees forthwith to deliver those certificates (including any
replacement securities or certificates if and when such are issued or
allotted) to the Trustee for deposit in escrow.
2. The parties hereby agree that the securities and the beneficial
ownership of or any interest in them and the certificates representing them
(including any replacement certificates) shall not be sold, assigned,
hypothecated, alienated, released from escrow, transferred within escrow, or
otherwise in any manner dealt with, without the express consent, order or
direction in writing of the Exchange being first had and obtained or except
as may be required by reason of the death or bankruptcy of any Security Holder,
in which cases the Trustee shall hold the said certificates subject to this
agreement, for whatever person, firm or corporation shall be legally entitled
to be or become the registered owner thereof. It is understood that the
Exchange has consented to a release from escrow of the securities on a PRO
RATA basis as follows:
(a) one-third on the first anniversary of the date of listing of the
Issuer's common shares on the Exchange;
(b) an additional one-third on the second anniversary of the date of
listing of the Issuer's common shares on the Exchange; and
(c) the remaining one-third on the third anniversary of the date of
listing of the Issuer's common shares on the Exchange.
<PAGE>
3
3. The Security Holders hereby direct the Trustee to retain their
respective securities and the certificates (including any replacement
securities or certificates) representing the same and not to do or cause
anything to be done to release the same from escrow or to allow any transfer,
hypothecation or alienation thereof except with and as directed by the
written consent, order or direction of the Exchange. The Trustee hereby
accepts the responsibilities placed on it hereby and agrees to perform the
same in accordance with the terms hereof and the written consents, orders or
directions of the Exchange.
4. If during the period in which any of the said securities are retained in
escrow pursuant hereto, any dividend is received by the Trustee in respect of
the escrowed securities, any such dividend shall be forthwith paid or
transferred to the respective Security Holders entitled thereto.
5. All voting rights attached to the escrowed securities shall at all times
be exercised by the respective registered owners thereof.
6. The Security Holders hereby jointly and severally agree to and do hereby
release and indemnify and save harmless the Trustee from and against all
claims, suits, demands, costs, damages and expenses which may be occasioned
by reason of the Trustee's compliance in good faith with the terms hereof.
7. The Issuer hereby acknowledges the terms and conditions of this
agreement and agrees to take all reasonable steps to facilitate its
performance.
8. If the Trustee should wish to resign, it shall give at least six months
notice to the Issuer, which may, with the written consent of the Exchange, by
writing appoint another Trustee in its place and such appointment shall be
binding on the Security Holders and the new Trustee shall assume and be bound
by the obligations of the Trustee hereunder.
9. The written consent, order or direction of the Exchange as to a release
from escrow of all or part of the said securities shall terminate this
agreement only in respect to those securities so released. For greater
certainty, this clause does not apply to securities transferred within escrow.
10. If the Issuer is delisted by the Exchange, thereafter any consent, order
or direction of the Exchange herein required will, instead, require the
consent, order or direction of the Ontario Securities Commission.
11. This agreement may be executed in several parts in the same form and
such parts as so executed shall together form one original agreement, and
such parts if more than one shall be read together and construed as if all
the signing parties hereto had executed one copy of this agreement.
12. Wherever the singular or masculine are used throughout this agreement,
the same shall be construed as being the plural or feminine or neuter where
the context so requires.
<PAGE>
4
13. This agreement shall inure to the benefit and be binding upon the
parties hereto, their and each of their heirs, executors, administrators,
successors and assigns.
IN WITNESS whereof the parties hereto have executed these presents the
day and year first above written.
The COMMON SEAL of ST. MARY )
MINERALS INC. was hereunto affixed )
in the presence of: )
)
)
/s/ [ILLEGIBLE] ) c/s
- ---------------------------- )
)
)
/s/ JAMES C. ROBERTSON )
- ----------------------------- )
SIGNED, SEALED and DELIVERED by )
GREGORY A. HAHN in the presence of: )
)
/s/ JENNIFER M. JAMES )
- ----------------------------- ) /s/ GREGORY A. HAHN
Name ) -----------------------
) GREGORY A. HAHN
15570 Wintergreen Pl. )
- ----------------------------- )
Address )
)
Clerical Assistant )
- ----------------------------- )
Occupation )
SIGNED, SEALED and DELIVERED by )
MATTHEW J. MASON in the )
presence of: )
)
/s/ [ILLEGIBLE] )
- ----------------------------- ) /s/ MATTHEW J. MASON
Name ) -----------------------
) MATTHEW J. MASON
[ILLEGIBLE] )
- ----------------------------- )
Address )
)
[ILLEGIBLE] )
- ----------------------------- )
Occupation )
<PAGE>
5
SIGNED, SEALED and DELIVERED by )
JOHN E. ROBINS in the presence of: )
)
/s/ JENNIFER M. JAMES )
- ----------------------------- ) /s/ JOHN E. ROBINS
Name ) -----------------------
) JOHN E. ROBINS
15570 Wintergreen Pl. )
- ----------------------------- )
Address )
)
Clerical Assistant )
- ----------------------------- )
Occupation )
SIGNED, SEALED and DELIVERED by )
FREDERIC G. HEWETT in the )
presence of: )
)
/s/ JENNIFER M. JAMES )
- ----------------------------- ) /s/ FREDERIC G. HEWETT
Name ) -----------------------
) FREDERIC G. HEWETT
15570 Wintergreen Pl. )
- ----------------------------- )
Address )
)
Clerical Assistant )
- ----------------------------- )
Occupation )
SIGNED, SEALED and DELIVERED by )
JOHN W. IVANY in the presence of: )
)
)
- ----------------------------- ) /s/ JOHN W. IVANY
Name ) -----------------------
) JOHN W. IVANY
)
- ----------------------------- )
Address )
)
)
- ----------------------------- )
Occupation )
<PAGE>
6
The COMMON SEAL of PACIFIC )
CORPORATE TRUST COMPANY was )
hereunto affixed in the )
presence of: )
)
/s/ [ILLEGIBLE] ) c/s
- ---------------------------- )
/s/ [ILLEGIBLE] )
- ---------------------------- )
The COMMON SEAL of SUMMO )
MINERALS CORPORATION was )
hereunto affixed in the )
presence of: )
)
/s/ GREGORY A. HAHN ) c/s
- ---------------------------- )
)
/s/ [ILLEGIBLE] )
- ---------------------------- )
THE TORONTO STOCK EXCHANGE
Per:
/s/ [ILLEGIBLE]
- ----------------------------
Authorized Signatory
This is page 6 to that certain Escrow Agreement between ST. MARY MINERALS
INC., GREGORY A. HAHN, MATTHEW J. MASON, JOHN E. ROBINS, FREDERIC G. HEWETT,
JOHN W. IVANY, PACIFIC CORPORATE TRUST COMPANY, SUMMO MINERALS CORPORATION
and THE TORONTO STOCK EXCHANGE dated as of the 18th day of January, 1996.
<PAGE>
7
SCHEDULE "A"
==============================================================================
NAME OF BENEFICIAL NUMBER OF CERTIFICATE
SECURITY HOLDER OWNER SECURITIES NUMBER
--------------- ---------- ---------- -----------
ST. MARY MINERALS INC. St. Mary Minerals Inc. 6,771,002
1100-1776 Lincoln Street
Denver, Colorado
U.S.A. 80203
MATTHEW J. MASON Matthew J. Mason 1,084,568
1930 Nelson Avenue
West Vancouver, B.C.
V7V 2P4
JOHN E. ROBINS John E. Robins 517,423
860, 625 Howe Street
Vancouver, B.C.
V6C 2T6
FREDERIC G. HEWETT Frederic G. Hewett 70,307
860, 625 Howe Street
Vancouver, B.C.
V6C 2T6
JOHN IVANY John Ivany 64,687
King City, Ontario
GREGORY A. HAHN Gregory A. Hahn 12,000
1100-1776 Lincoln Street
Denver, Colorado
U.S.A. 80203
---------
TOTAL 8,519,987
==============================================================================
<PAGE>
EXHIBIT 10.23
STOCK OPTION AGREEMENT
(INSIDER)
MEMORANDUM OF AGREEMENT made as of the 24th day of April, 1995
BETWEEN:
SUMMO MINERALS CORPORATION, a body corporate, duly
incorporated under the laws of British Columbia,
and having its head office at 860 - 625 Howe
Street, Vancouver, British Columbia, V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
J. DOUGLAS LITTLE, of 4810 Puget Dr.
Vancouver, B.C. V6L 2W3
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS the Optionee is an Insider of the Company.
AND WHEREAS the Company wishes to maintain the continued services of and
to provide incentive to the Optionee and to this end is desirous of granting to
the Optionee an option to purchase shares in the capital of the Company
subject to the terms and conditions hereinafter contained.
NOW THEREFORE THIS AGREEMENT WITNESSETH:
DEFINITION
1. In this Agreement the term "share" or "shares" means, as the case may be,
one or more common shares without par value in the capital stock of the
Company as constituted at the date of this Agreement.
GRANTING OF OPTION
2. The Company hereby irrevocably grants to the Optionee, being an Insider of
the Company, a non-assignable, non-transferable option to purchase 40,000
shares in the
<PAGE>
capital stock of the Company (hereinafter called the "Option") at $1.20
per share (the "Option Price") on the terms and conditions hereinafter set
forth.
EXERCISE OF OPTION
3. The Option, may be exercised by the Optionee over a period of five (5) years
until April 24, 2000, by notice in writing to the Company to that effect.
Any such notice given to the Company (an "Exercise Notice") shall specify
the number of shares with respect to which the Option is being exercised
and shall be accompanied by a cheque drawn on a Canadian chartered bank in
favour of the Company in full payment of the Option Price for the number of
shares then being purchased.
DELIVER OF SHARE CERTIFICATE
4. The Company shall, within five business days after receipt of the
Exercise Notice deliver to the Optionee a share certificate representing
the number of shares with respect to which the Option is exercised and
issued as of the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if delivered, on
the date of delivery or if mailed, on the date of mailing. A mailed
Exercise Notice shall be sent by prepaid registered mail addressed to the
Company at its Vancouver address.
OPTION ONLY
6. Nothing herein contained or done pursuant hereto shall obligate the
Optionee to purchase and/or pay for any shares of the Company, except
those shares in respect of which the Optionee shall have exercised all or
any part of the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in respect to
any of the shares optioned hereunder other than in respect of optioned
shares upon which the Optionee shall have exercised all or any part of the
Option granted hereunder and which shall have been taken up and paid for
in full.
APPROVAL
8. The Option granted hereunder is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company, passed prior to the exercise of the Option or any part thereof.
FILING WITH REGULATORY AUTHORITIES
9. This Agreement may be required to be filed with some or all of the
Superintendent of Brokers for the Province of British Columbia and the
Vancouver Stock Exchange ("VSE") (collectively the "Regulatory
Authorities") and the Optionee hereby agrees to
<PAGE>
be bound by any modification of the terms and conditions of the Option as
may be required by the said Regulatory Authorities.
10. A Declaration of Stock Option Position as attached hereto as "Schedule A"
to this Agreement, is required by the VSE and the Option hereby agrees to
be bound by any modification of the terms and conditions of the Option as
may be required by the said Regulatory Authorities.
CAPITAL REORGANIZATION
11. In the event the authorized capital of the Company as presently constituted
is consolidated into a lessor number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the
Option remains unexercised shall be decreased or increased
proportionately as the case may be, and the then prevailing purchase
price to be paid by the Optionee for each such share shall be
correspondingly decreased or increased as applicable. In the event the
Company shall determine to amalgamate or merge with any other company or
companies (and the right to do so is hereby expressly reserved) whether
by way of statutory amalgamation, sale of its assets and undertaking, or
otherwise howsoever, then and in each such event the number of shares in
the corporation resulting from such amalgamation or merger in respect of
which the Option remains unexercised shall be such number of shares in
that corporation as would have been acquired by the Optionee pursuant to
the amalgamation or merger had the Option been fully exercised immediately
prior to the date of such amalgamation or merger and the then prevailing
purchase price of the shares to be paid by the Optionee shall be
correspondingly decreased or increased as applicable.
TERMINATION OF OPTION
12. The Option is not assignable or transferable and shall terminate on the
30th day following the date upon which the Optionee ceases to be an
Insider of the Company; provided, however, that if such cessation is due
to the death of the Optionee, the personal representative of the Optionee
shall have the right to exercise any unexercised part of the Option for a
period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
13. Any amendment to the Option is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company.
TIME OF THE ESSENCE
14. Time shall be of the essence of this Agreement.
<PAGE>
SUCCESSORS
15. This Agreement shall enure to the benefit of and be binding upon the
heirs, executors and administrators of the Optionee and the successors of
the Company.
IN WITNESS WHEREOF the parties hereto have caused these presents to be
executed as at the day and year first above written.
The Corporate Seal of SUMMO )
MINERALS CORPORATION was )
hereunto affixed in the )
presence of: )
)
) C/S
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
)
)
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
SIGNED, SEALED AND DELIVERED )
by the Optionee in the presence of: )
)
Name: /s/ Gail Sharp ) /s/ J. Douglas Little
----------------------------- ) ----------------------------
) J. DOUGLAS LITTLE
Address: 1002-1460 Barclay )
-------------------------- )
Vancouver B.C. )
-------------------------- )
)
Occupation: Secretary )
----------------------- )
<PAGE>
SCHEDULE "A"
DECLARATION OF STOCK OPTION POSITION
THIS FORM FOR COMPLETION BY OPTIONEE
RE:
--------------------------------------------------
(Name of Company)
RE: incentive stock options in
------------------- ----------------------
(No. of options) (Company)
I, _____________________, HEREBY CERTIFY that the aforesaid non-transferable
options have been granted to me in compliance with the requirements of the
V.S.E. Policy 23: and more particularly that at the time of grant, I was not
aware of any change in the affairs of the Company which might have affected
the trading price and had not been disclosed to the public. If the company is
classified as a Venture Company as of the date of this declaration, I confirm
that I have not been granted a stock option in the said Company within 2
years of the date of grant of the above-stated options.
I HEREBY FURTHER CERTIFY (complete either Part I or Part II as applicable):
PART I
THAT I have not be granted any director or employee incentive share options
by any other listed companies.
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
PART II
THAT I hold as of the date of this Declaration existing incentive share
options which have been granted to me by the above named company or other
listed companies as follows:
Outstanding
Name of No. of Date of Balance as
Listed Shares Exercise at Date of
Co. Optioned Grant Certificate
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
(Complete on separate sheet if insufficient space)
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
<PAGE>
STOCK OPTION AGREEMENT
(INSIDER)
MEMORANDUM OF AGREEMENT made as of the 24th day of April, 1995
BETWEEN:
SUMMO MINERALS CORPORATION, a body corporate, duly
incorporated under the laws of British Columbia,
and having its head office at 860 - 625 Howe
Street, Vancouver, British Columbia, V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
ROBERT A. PRESCOTT, of 1100 - 1776 Lincoln St.
Denver, Colorado, 80203, USA
(hereinafter called the "Optionee")
OF THE SECOND PART
WHEREAS the Option is an Insider of the Company.
AND WHEREAS the Company wishes to maintain the continued services of and to
provide incentive to the Optionee and to this end is desirous of granting to
the Optionee an option to purchase shares in the capital of the Company
subject to the terms and conditions hereinafter contained.
NOW THEREFORE THIS AGREEMENT WITNESSETH:
DEFINITION
1. In this Agreement the term "share" or "shares" means, as the case may be,
one or more communion shares without par value in the capital stock of
the Company as constituted at the date of this Agreement.
GRANTING OF OPTION
2. The Company hereby irrevocably grants to the Optionee, being an Insider
of the Company, a non-assignable, non-transferable option to purchase
100,000 shares in the
<PAGE>
capital stock of the Company (hereinafter called the "Option") at $1.20
per share (the "Option Price") on the terms and conditions hereinafter
set forth.
EXERCISE OF OPTION
3. The Option, may be exercised by the Optionee over a period of five (5) years
until April 24, 2000, by notice in writing to the Company to that
effect. Any such notice given to the Company (an "Exercise Notice") shall
specify the number of shares with respect to which the Option is being
exercised and shall be accompanied by a cheque drawn on a Canadian
chartered bank in favor of the Company in full payment of the Option
Price for the number of shares then being purchased.
DELIVER OF SHARE CERTIFICATE
4. The Company shall, within five business days after receipt of the Exercise
Notice deliver to the Optionee: a share certificate representing the number
of shares with respect to which the Option is exercised and issued as of
the date of the Exercise Notice.
5. An Exercise Notice shall be deemed to have been given, if delivered, on the
date of delivery, or if mailed, on the date of mailing. A mailed Exercise
Notice shall be sent by prepaid registered mail addressed to the Company
at its Vancouver address.
OPTION ONLY
6. Nothing herein contained or done pursuant hereto shall obligate the
Optionee to purchase and/or pay for any shares of the Company, except
those shares in respect of which the Optionee shall have exercised all or
any part of the Option granted hereunder.
7. The Optionee shall have no rights whatsoever as a shareholder in respect to
any of the shares optioned hereunder other than in respect of optioned
shares upon which the Optionee shall Lave exercised all or any part of the
Option granted hereunder and which shall have been taken up and paid for
in full.
APPROVAL
8. The Option granted hereunder is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company, passed prior to the exercise of the Option or any part
thereof.
FILING WITH REGULATORY AUTHORITIES
9. This Agreement may be required to be filed with some or all of the
Superintendent of Brokers for the Province of British Columbia and the
Vancouver Stock Exchange ("VSE") (collectively the "Regulatory
Authorities") and the Option hereby agrees to be bound by any
modification of the terms and conditions of the Option as may required by
the said Regulatory Authorities.
<PAGE>
10. A Declaration of Stock Option Position as attached hereto as "Schedule A"
to this Agreement, is required by the VSE and the Optionee hereby agrees to
be bound by any modification of the terms and conditions of the Option as
may be required by the said Regulatory Authorities.
CAPITAL REORGANIZATION
11. In the event the authorized capital of the Company as presently constituted
is consolidated into a lessor number of shares or subdivided into a
greater number of shares, the number of shares in respect of which the
Option remains unexercised shall be decreased or increased
proportionately as the case may be, and the then prevailing purchase
price to be paid by the Optionee for each such share shall be
correspondingly decreased or increased as applicable. In the event the
Company shall determine to amalgamate or merge with any other company or
companies (and the right to do so is hereby expressly reserved) whether
by way of statutory amalgamation, sale of its assets and undertaking, or
otherwise howsoever, then and in each such event the number of shares in
the corporation resulting from such amalgamation or merger in respect of
which the Option remains unexercised shall be such number of shares in
that corporation as would have been acquired by the Optionee pursuant to
the amalgamation or merger had the Option been fully exercised immediately
prior to the date of such amalgamation or merger and the then prevailing
purchase price of the shares to be paid by the Optionee shall be
correspondingly decreased or increased as applicable.
TERMINATION OF OPTION
12. The Option is not assignable or transferable and shall terminate on the
30th day following the date upon which the Optionee ceases to be an
Insider of the Company; provided, however, that if such cessation is due
to the death of the Optionee, the personal representative of the Optionee
shall have the right to exercise any unexercised part of the Option for a
period of one year following the date of death of the Optionee.
AMENDMENT OF MATERIAL TERMS
13. Any amendment to the Option is subject to approval by ordinary resolution
of the members of the Company entitled to vote at a general meeting of
the Company.
TIME OF THE ESSENCE
14. Time shall be of the essence of this Agreement.
<PAGE>
SUCCESSORS
15. This Agreement shall enure to the benefit of and be binding upon the
heirs, executors and administrators of the Optionee and the successors
of the Company.
IN WITNESS WHEREOF the parties hereto have caused these presents to be
executed as at the day and year first above written.
The Corporate Seal of SUMMO )
MINERALS CORPORATION was )
hereunto affixed in )
presence of: )
)
) C/S
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
)
)
/s/ [Illegible] )
- ---------------------------- )
Authorized Signatory )
SIGNED, SEALED AND DELIVERED )
by the Optionee in the presence of: )
)
Name: /s/ Judith L. Prescott ) /s/ Robert A. Prescott
----------------------------- ) ----------------------------
) ROBERT A. PRESCOTT
Address: 1587 Bermuda Dunes )
-------------------------- )
Boulder City, Nevada )
-------------------------- )
)
Occupation: Housewife )
----------------------- )
<PAGE>
SCHEDULE"A"
DECLARATION OF STOCK OPTION POSITION
THIS FORM FOR COMPLETION BY OPTIONEE
RE:
--------------------------------------------------
(Name of Company)
RE: incentive stock options in
------------------- ----------------------
(No. of options) (Company)
I, ___________________, HEREBY CERTIFY that the aforesaid non-transferable
options have been granted to me in compliance with the requirements of the
V.S.E. Policy 23: and more particularly that at the time of grant, I was not
aware of any change in the affairs of the Company which might have affected
the trading price and had not been disclosed to the public. If the company
is classified as a Venture Company as of the date of this declaration, I
confirm that I have not been granted a stock option in the said Company
within 2 years of the date of grant of the above-stated options.
I HEREBY FURTHER CERTIFY (complete either Part I or Part II as applicable):
PART I
THAT I have not been granted any director or employee incentive share options
by any other listed companies.
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
PART II
THAT I hold as of the date of this Declaration existing incentive share
options which have been granted to me by the above named company or other
listed companies as follows:
Outstanding
Name of No. of Date of Balance as
Listed Shares Exercise at Date of
Co. Optioned Grant Certificate
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
(Complete on separate sheet if insufficient space)
DATED the day of , 19 . SIGNATURE:
----- -------------- -- -------------------
<PAGE>
[LETTERHEAD ILLEGIBLE]
January 29, 1996
James D. Frank
7773 S. Oneida Court
Englewood, CO 80112
FAX: (303) 290-9165
Dear Jim:
This letter confirms our offer to you for employment as Vice President -
Finance and Chief Financial Officer for Summo Minerals Corporation and Summo
USA Corporation, a wholly-owned subsidiary, beginning February 1, 1996.
Your initial annual salary will be US$110,000.00. Summo offers a standard
health benefits package and a 401(k) plan for its employees, which you would
be eligible to participate in. You will be awarded a stock option by the
Board of Directors to purchase 100,000 shares of Summo Minerals Corporation
common stock. The option price will be set by the market price at the date
the option is issued. The option will have a 5-year term. You will be
vested in 25% of the option immediately, with additional vesting accruing at
25% increments annually; you will be fully vested after 3 years.
The Compensation Committee of the Board will be establishing a bonus plan for
Executive Management to reward executives for outstanding performance in
accomplishing key milestones which bear significantly on the Corporation's
future. Milestones for 1996 include obtaining the requisite operating
permits for Lisbon Valley and securing project financing. Anticipated
milestones for 1997 include completion of construction on time and within
budget and successful start-up and operation at Lisbon Valley. You can
expect to participate in this bonus plan as one of the key executives in the
Corporation. The bonus package will likely take the form of additional stock
options, and/or cash.
We recognize that the permitting and financing of the Lisbon Valley project
is critical to the ongoing success of the Corporation. We have agreed that
should this project not proceed and your services are no longer required as a
consequence, or in the event of a change of control of the company whereby
you are asked to resign or to perform in a reduced capacity to the position
being offered, Summo will continue your salary and benefits for one year as a
severance.
<PAGE>
If these terms are acceptable to you, please accept by signing below. I trust
you find the opportunity to join Summo and contribute to building a solid
mining company exciting. I believe together we would constitute a solid core
management team that can fulfill the vision of becoming a multiple-mine
operator within the next 5-10 years, with a targeted mine output of 100
million pounds of cathode copper by the end of this period. I look forward
to working with you and having your input on the financial and business
issues the Company will address as it grows.
Sincerely,
/s/ GREGORY A. HAHN
---------------------------------------
Gregory A. Hahn
President & CEO
Accepted this day January 30, 1996
/s/ JAMES D. FRANK
---------------------
James D. Frank
<PAGE>
EXHIBIT 10.25
MASTER ELECTRIC SERVICE AGREEMENT
between
PACIFICORP
and
SUMMO USA CORPORATION
This Master ELECTRIC SERVICE AGREEMENT ("Agreement"), entered into on
this 31st day of October, l996, is by and between PacifiCorp, an Oregon
Corporation that provides retail electric service, and SUMMO USA CORPORATION,
hereinafter referred to as SUMMO, a Colorado corporation conducting business
through facilities located at Lisbon Valley in San Juan County, Utah.
WHEREAS, PacifiCorp is a provider of retail electric energy and power,
hereinafter referred to as "Firm Power and Energy," and
WHEREAS, SUMMO desires to purchase Firm Power and Energy requirements
for its copper mining facilities, hereinafter referred to as "Facilities,"
under this Agreement, and
WHEREAS, PacifiCorp desires to provide Firm Power and Energy to the
Facilities as described above.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1: DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
1.1 AGREEMENT: This Electric Service Agreement and any extensions or
renewals thereof.
1.2 BILLING DEMAND: The Demand in kilowatts used to determine the Demand
(power) charges in accordance with the provisions of Electric Service
Schedule 9.
1.3 BILLING PERIOD: The period of approximately thirty (30) days
intervening between regular successive meter readings.
1.4 COMMISSION: The Public Service Commission of the State of Utah.
1.5 CONTRACT DEMAND: The maximum amount of power that PacifiCorp is
obligated to provide under this Agreement.
1.6 DEMAND: The rate in kilowatts at which PacifiCorp delivers electric
energy to SUMMO either at a given instant or averaged over any designated
period of time.
1
<PAGE>
1.7 ELECTRIC SERVICE REGULATIONS: PacifiCorp's effective electric
service regulations on file with and approved by the Commission.
1.8 ELECTRIC SERVICE SCHEDULE: PacifiCorp's effective electric service
schedule on file with and approved by the Commission.
1.9 FIRM POWER AND ENERGY: Electric power expressed in kilowatts and
associated energy expressed in kilowatt-hours intended to have assured
availability to SUMMO to meet all or any agreed-upon portion of SUMMO's load
requirements.
1.10 MEASURED DEMAND: The Demand in kilowatts as shown by or computed
from the readings of PacifiCorp's power Demand) meter for the 15-minute
period of SUMMO's greatest use during the Billing Period, adjusted for Power
Factor as specified in Electric Service Schedule 9.
1.11 POWER FACTOR: The percentage determined by dividing SUMMO's average
power use in kilowatts (real power) by the average kilovolt-ampere power load
(apparent power) SUMMO imposes upon PacifiCorp.
SECTION 2: TERM AND TERMINATION; EARLY TERMINATION CHARGE
2.1 TERM: This Agreement shall remain in full force and effect for a
period of ten (10) years from its effective date and shall automatically be
renewed from year to year subject to the same terms and conditions unless
either party submits written termination notice to the other party not less
than thirty (30) nor more than sixty (60) days prior to expiration of initial
term or any renewal term.
2.2 EARLY TERMINATION CHARGE :If SUMMO terminates service or defaults
during the first ten years of this Agreement, SUMMO shall pay a termination
charge equal to the unamortized extension allowance as computed by
PacifiCorp in accord with Electric Service Schedule No.9 and Electric Service
Regulation No.12.
SECTION 3: DELIVERY OF AND CHARGES FOR FIRM POWER AND ENERGY
3.1 SCOPE OF DELIVERIES: The Contract Demand for deliveries under this
Agreement is 7,500 kW. PacifiCorp shall deliver such amounts of Firm Power
and Energy SUMMO requires to meet its load requirements up to, but not in
excess of, such Contract Demand; PROVIDED, that if the Measured Demand
exceeds the Contract Demand as a result of SUMMO's operations, the Measured
Demand shall establish a new Contract Demand if PacifiCorp has capacity
available adequate to supply such Demand on a firm basis. PacifiCorp shall
notify SUMMO within sixty (60) days of the billing covering the period in
which Measured Demand exceeded the Contract Demand whether such capacity is
available. In such event, the new Contract Demand shall continue in effect
until either (1) the new Demand is in turn exceeded by a Contract Demand, or
(2) the eleventh billing
2
<PAGE>
month following the billing month in which such Demand was established;
PROVIDED, in the latter event the Contract Demand shall then become the maximum
actual Measured Demand established in any of the preceding eleven (11) billing
months.
3.2 REQUEST FOR ADDITIONAL CONTRACT DEMAND: Upon PacifiCorp's receipt of
SUMMO's written request for additional power and energy, PacifiCorp shall
attempt to supply such additional power and energy under terms and conditions
acceptable to both parties. Within 15 days of the request PacifiCorp shall
advise SUMMO in writing whether the additional power and energy is or can be
made available. If PacifiCorp does provide SUMMO with Firm Power and Energy
in excess of the Contract Demand commitments, such deliveries shall trigger a
Contract Demand superseding the Contract Demand set forth in section 3.1.
3.3 PAYMENT FOR AND COMMENCEMENT OF CONSTRUCTION: Within one (l) year of
the date of this Agreement SUMMO expects to obtain all necessary permits and
financing for its copper mining facilities in Lisbon Valley, Utah. Summo
shall notify PacifiCorp when it obtains such permits and financing. If SUMMO
provides such notice after December 24, 1996, PacifiCorp may recalculate the
cost of the line extension and adjust the line extension payment and
guaranteed minimum payments in a manner to compensate PacifiCorp fully for
any decreased value of the dollar from the date of this Agreement to the date
PacifiCorp receives such notice. Until it gives notice to PacifiCorp,
SUMMO shall owe no financial obligation to PacifiCorp except the payment
of $35,000 required upon execution of this Agreement pursuant to section 4.4.
SUMMO shall make the first payment required under section 4.4 when it
notifies PacifiCorp that it has obtained the necessary permits and financing.
PacifiCorp shall complete construction of the facilities necessary to provide
service to SUMMO in accordance with the terms of this agreement within eight
(8) months of its receipt of such notice.
3.4 POINT OF DELIVERY: The Point of Delivery for all Firm Power and
Energy delivered to SUMMO shall be at the terminus of PacifiCorp's 69 kV
power line at SUMMO's copper mine.
3.5 DELIVERY VOLTAGE: PacifiCorp shall deliver Firm Power and Energy at
the Point of Delivery in the form of alternating current at a nominal
frequency of 60 Hertz, and at a nominal voltage of 69,000 volts.
3.6 REACTIVE REQUIREMENTS:
3.6.1 SUMMO'S OBLIGATIONS: SUMMO shall control and limit the flow
of reactive power between PacifiCorp's and SUMMO's system so as to
maintain a Power Factor of between ninety five percent (95%) lagging and
ninety percent (90%) leading at all times. If SUMMO's Power Factor
adversely affects operation of PacifiCorp's facilities or adversely
affects PacifiCorp's other customers, SUMMO shall install at SUMMO's
expense switched capacitors, synchronous condensers, or such other
devices and
3
<PAGE>
equipment as PacifiCorp may reasonably require to eliminate that portion
of unscheduled reactive power flow which causes the Power Factor to
exceed the limits established herein. Should SUMMO fail to take
corrective action requested by PacifiCorp within six (6) months after
written notice from PacifiCorp, PacifiCorp may perform such services or
supply and install such equipment as it deems necessary to provide
corrective action, whereupon SUMMO shall compensate PacifiCorp for all
sums expended and all services contracted or performed, including
PacifiCorp's standard overhead costs, plus ten percent (10%) of all
expenditures. SUMMO shall pay such sums within thirty (30) days after
PacifiCorp has mailed to SUMMO an itemized statement of its charges
therefor.
3.6.2 ADJUSTMENT TO BILLING DEMAND: In the event SUMMO's Power
Factor drops below either 95% lagging or 90% leading, PacifiCorp's
Billing Demands shall be increased as specified for Power Factor that
drops below 90% lagging in Electric Service Schedule 9.
3.6.3 HARMONICS: SUMMO shall operate its facilities on harmonic
distortion within the guideline of the Agreement.
3.6.3. 1 The total harmonic voltage distortion (THD)
shall be less than five percent (5%), and the maximum individual
frequency voltage harmonic shall be less than three percent (3%) of
the fundamental. The voltage notch depth shall be less than twenty
percent (20%) and the notch area shall be less than 22,800
microseconds-volts.
3.6.3.2 The total demand distortion (TDD) or harmonic current
distortion shall be less than eight percent (8%) of the maximum
demand load current. Individual odd current harmonics shall be less
than the following percentage of the fundamental (60 hertz) current.
3rd through 9th 7.0%
11th through 15th 3.5%
17th through 21st 2.5%
23rd through 35th 1.5%
35th and higher 0.5%
Individual even harmonics shall be limited to twenty-five percent
(25%) of the odd harmonic limits specified above.
4
<PAGE>
SECTION 4: PAYMENT FOR POWER AND ENERGY
4.1 STATEMENTS: All billing statements shall show the amount due for
Firm Power and Energy purchased.
4.2 PAYMENT FOR POWER AND ENERGY: PacifiCorp shall serve SUMMO under
Electric Service Schedule No.9. All bills shall be paid by the due date of
the bill.
4.3 GUARANTEED MINIMUM PAYMENT: In consideration of the special
investment by PacifiCorp to supply service hereunder, SUMMO shall make
minimum annual total payments for service of $281,664 in each year for a
period of five years, beginning six months from the commencement of
deliveries. The guaranteed minimum payments shall be in the amount of $23,472
per month for sixty (60) consecutive months. PacifiCorp shall calculate and
bill the guaranteed minimum at intervals of every twelve (12) months
beginning one year from commencements of deliveries. Where the actual billed
service is less than $281,664, PacifiCorp shall bill SUMMO for the difference
between actual billed service and the required stated minimum. In the event
actual use as determined by meter readings exceeds the monthly minimum
guaranteed payment, SUMMO shall pay the higher amount.
4.4 SUMMO LINE EXTENSION PAYMENT: SUMMO shall pay $735,000 pursuant to
Electric Service Regulation No.12 in partial compensation for PacifiCorp's
cost of construction of the facilities necessary to provide service to SUMMO's
copper mining facilities. PacifiCorp acknowledges receipt of $35,000
delivered by SUMMO contemporaneously with the execution of this Agreement.
SUMMO shall pay the remaining balance of $700,000 in quarterly installments
of $100,000 each beginning with the payment which SUMMO is required to
provide simultaneously with the notice specified in section 3.3.
4.5 REFUND OF SUMMO EXTENSION PAYMENT: For the five years commencing on
the sixth (6th) through the end of the tenth (10th contract years PacifiCorp
shall make available to SUMMO a credit on its bill for Firm Power and Energy
in an amount up to $147,000 per contract year, which credit shall be allowed
on a dollar-for-dollar basis for all actual billed service in each year in
excess of $281,664.
SECTION 5: METERING
5.1 METERING EQUIPMENT: PacifiCorp shall provide, maintain, and test
meters and metering equipment required for billing purposes. The parties
shall specify the locations for PacifiCorp's installation of metering
equipment in SUMMO's premises, and SUMMO shall allow PacifiCorp access to
such locations without charge during reasonable business hours.
5
<PAGE>
5.2 TELECOMMUNICATIONS FACILITIES: Upon PacifiCorp's request, SUMMO
shall install a dedicated telephone line for meter reading purposes without
charge to PacifiCorp.
5.3 SECONDARY METERING: PacifiCorp may install its meter on the
secondary side of SUMMO's transformers.
5.4 TRANSFORMER LOSS CURVES: If secondary metering is used, transformer
and other losses occurring between the Point of Delivery and the meter shall
be computed and added to the meter readings to determine the monthly demand
and energy consumption. SUMMO shall, prior to commencement of service,
provide PacifiCorp with transformer loss curves and test data to allow
PacifiCorp to calculate transformer losses for billing purposes.
SECTION 6: INTEGRATION
This Agreement replaces and supersedes in their entirety all prior
agreements between the parties related to the same subject matter except that
certain Customer Requested Work Agreement dated August 1, 1995, and covering
PacifiCorp's design of the electrical facilities and providing assistance to
SUMMO to obtain permission to construct a 69 kV power line from PacifiCorp's
Pinto-Hatch 69 kV line to SUMMO's copper mine.
SECTION 7: EXCLUSIVE SUPPLIER & RESALE OF POWER
The Firm Power and Energy that PacifiCorp delivers to SUMMO pursuant to
this Agreement may not be resold directly or indirectly by SUMMO to any of
SUMMO's subcontractors or to any other party. PacifiCorp shall be the
exclusive provider of Firm Power and Energy throughout the term of this
Agreement unless the Agreement is terminated and SUMMO pays the appropriate
early termination charge under sections 2.2, 4.3 and 4.4 hereof.
SECTION 8: JURISDICTION OF REGULATORY AUTHORITIES
PacifiCorp's currently applicable, effective Electric Service Schedule
No.9 and Electric Service Regulations are attached hereto, incorporated
herein and by reference made a part hereof. SUMMO shall abide by them and all
amendments and changes thereto so approved by the Commission. In the event
that the Commission or any other state, federal, or municipal authority
issues any rules, regulations, or orders which require PacifiCorp to alter or
amend any of the provisions of this Agreement or to terminate or curtail the
delivery of Firm Power and Energy to SUMMO, PacifiCorp shall not be liable to
SUMMO for damages or losses of any kind whatsoever which SUMMO may sustain as
a result of such rule, regulation, or order, including consequential damages.
In the event that the Utah Commission or federal body promulgates rules,
regulations or statutes allowing SUMMO to obtain power or energy from a
source other than PacifiCorp, including the use of PacifiCorp's facilities,
nothing in the Agreement shall be construed to
6
<PAGE>
prevent such alternative power supply; PROVIDED, that SUMMO shall not be
relieved of its obligations under sections 2.2, 3.6.1, 3.6.2, 4.3 and 4.4
hereunder.
SECTION 9: FORCE MAJEURE
Neither Party shall be subject to any liability or damages for inability
to provide or receive service to the extent that such failure shall be due to
causes beyond the control of either PacifiCorp or SUMMO, including, but not
limited to, the following: (a) the operation and effect of any rules,
regulations and orders promulgated by any commission, municipality, or
governmental agency of the United States, or subdivision thereof; (b)
restraining order, injunction or similar decree of any court; (c) war; (d)
flood; (e) earthquake; (f) act of God; (g) sabotage; or (h) strikes or
boycotts. Should any of the foregoing occur, the minimum billing demands
that would otherwise be applicable under this Schedule shall be waived and
SUMMO shall have no liability for service until SUMMO is able to resume
service; provided, the party claiming Force Majeure shall make every
reasonable attempt to remedy the cause thereof as diligently and
expeditiously as possible.
SECTION 10: NOTICE
Any notice required to be given hereunder shall be deemed to have been
given when it is sent, with postage prepaid, by registered or certified mail,
return receipt requested, to the parties hereto at their respective addresses
as follows:
If to SUMMO:
SUMMO USA, CORP.
Attn: James D. Frank, Vice President and Chief Financial Officer
900 Denver Center Building
1776 Lincoln Street
Denver, CO 80203
If to PacifiCorp:
PacifiCorp
Lee M. Kimball, Strategic Account Manager
P.O. Box 728
51 East Main
American Fork, UT 84003
SECTION 11: ASSIGNMENT
Neither party shall assign this Agreement without the written consent of
the other party, which consent shall not be unreasonably withheld.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by persons duly authorized as of the date first above written.
PACIFICORP
By: /s/ [illegible]
--------------------------------
SUMMO USA CORPORATION
By: /s/ [illegible]
--------------------------------
8
<PAGE>
[LOGO]
P.S.C.U. NO. 41 ORIGINAL SHEET NO. 9.1
- -----------------------------------------------------------------------------
UTAH POWER & LIGHT COMPANY
ELECTRIC SERVICE SCHEDULE NO. 9
STATE OF UTAH
----------
GENERAL SERVICE - HIGH VOLTAGE
----------
AVAILABILITY: At any point on the Company's interconnected system where
there are facilities of adequate capacity.
APPLICATION: This Schedule is for alternating current, three-phase
electric service supplied at approximately 46,000 volts or 69,000 volts or
greater, through a single point of delivery. Seasonal service will be
available only under other appropriate schedules.
MONTHLY BILL: (Computer Codes 9, 115, 116)
CUSTOMER SERVICE CHARGE:
$100.00 per service connection
POWER CHARGE:
$5.87 per kW all kW
ENERGY CHARGE:
2.4227 CENTS per kWh all kWh
MINIMUM: The monthly customer charge plus appropriate power and
energy charges.
POWER FACTOR: This rate is based on the Customer maintaining at all
times a Power factor of 90% lagging, or higher, as determined by measurement.
If the average Power factor is found to be less than 90% lagging the Power as
recorded by the Company's meter will be increased by 3/4 of 1% for every 1%
that the Power factor is less than 90%.
CONTRACT PERIOD: One year or longer.
CONTRACT DEED: This provision does not apply to any General Service
Customers who contracted prior to July 29, 1982, for service except for those
Customer's whose Electric Service Agreements already contain this
specification. However, in the event that Customer makes any material changes
or increases in his installation which amount to at least 25% of Customer's
greatest historical actual demand, Company, under the provisions of Paragraph
6, Electric Service Regulation No. 5, will require a new Contract containing
this provision. "Contract Demand" as used herein shall mean the maximum Power
contracted for by Customer and in excess of which the Company is under no
obligation to supply, as set forth in the Electric Service Agreement executed
by
<PAGE>
[LOGO]
P.S.C.U. No. 41 ORIGINAL SHEET NO. 9.3
- -----------------------------------------------------------------------------
ELECTRIC SERVICE SCHEDULE NO. 9 - CONTINUED
and action of Customer but are not the result of Customer's usual and
ordinary operations, shall be excluded from determination of new
Contract Demands. Upon prior arrangement with Company, Customer may
test, repair or start-up equipment at mutually acceptable and scheduled
off-peak periods and any demands in excess of the Contract Demand
established during such test, repair or start-up shall be excluded from
determination of new Contract Demands.
FORCE MAJEURE: Neither Company or Customer shall be subject to any
liability or damages for inability to provide or receive service to the
extent that such failure shall be due to causes beyond the control of
either Company or Customer, including, but not limited to the following:
(a) the operation and effect of any rules, regulations and orders
promulgated by any Commission, municipality, or governmental agency of
the United States, or subdivision thereof; (b) restraining order,
injunction or similar decree of any court; (c) war; (d) flood; (e)
earthquake; (f) act of God; (g) sabotage; or (h) strikes or boycotts.
Should any of the foregoing occur, the minimum billing demands that
would otherwise be applicable under this Schedule shall be waived and
Customer will have no liability for service until such time as Customer
is able to resume service.
The party claiming Force Majeure under this provision shall make
every reasonable attempt to remedy the cause thereof as diligently and
expeditiously as possible.
Should Customer find it necessary to shut down operations because
of market or economic conditions for a period of at least thirty (30)
days, the 65% minimum billing demands that would otherwise be
applicable under this Schedule shall be waived; provided, however, that
in this event, 65% minimum billing demands shall not be waived for more
than two (2) billing months in any contract year.
TERMINATION: This provision does not apply to any Customers who
contracted prior to July 29, 1982, for service except for those
Customers whose Electric Service Agreements contain Contract Demand
provisions with 65% minimum demand payment obligations. Termination of
electric service by the Customer prior to the expiration date of the
Electric Service Agreement (or any extension thereof) will not relieve
the Customer of his obligations under this Rate Schedule and the
Electric Service Agreement, including all 65% minimum payment
obligations. In the event of termination, the 65% minimum payment
amounts as stated herein, shall remain in full force and effect for the
remaining unexpired term of the Electric Service Agreement; provided,
however, that Company upon written request of Customer, shall attempt to
sell Customer's Contract Demand obligations, or any portion thereof, to
other parties and, upon such sale, Customer shall be relieved of the
equivalent 65% minimum Contract Demand payment obligation. Company shall
determine the priority of Customer's request to sell any Portion of its
Contract Demand obligations by the date upon which Company receives
Customer's written request. A sale is deemed to have occurred on the
date Company executes an Electric Service Agreement for service with
another party, and Customer, in order of priority, shall be relieved of
its equivalent 65% minimum Contract Demand payment obligation as of that
date.
Termination prior to the expiration date of the Electric Service
Agreement (or any extensions thereof) shall not relieve Customer of any
non-contract demand minimum payment obligations incurred as a result of
Company investments in special facilities
<PAGE>
December 20, 1996
KENNECOTT UTAH COPPER CORPORATION
P.O. BOX 11248
SALT LAKE CITY, UTAH 84147
KENNECOTT UTAH COPPER CORPORATION (Seller) hereby agrees to sell and deliver,
and SUMMO USA CORPORATION, San Juan County, UT (Buyer) agrees to purchase and
receive the products on terms and subject to conditions specified below and on
the reverse side of this Agreement.
KC# 3732
Product: Approximately 93% Sulfuric Acid, no specifications
Quantity: Nominal 50,000 short tons per year, 100% basis
H(2)SO(4)
Price: For the first 24 months of deliveries, $35.00/st. 100%
basis, f.o.b. Destination, delivered via truck. Price
will be adjusted at the beginning of the 25th month of
deliveries and annually thereafter, for one year of
escalation or de-escalation, by the most recent
Consumer Price Index that is available at that time.
Delivery Period: 60 months beginning with start up of BUYER's Lisbon
Valley Mine. Start up is estimated to be in January
1998.
Delivery Schedule: Pursuant to Summo Corporation's requirements, subject
to Kennecott Utah Copper Corporation's approval.
Deliver Destination: Summo USA Corporation, Lisbon Valley Mine in San Juan
County, Utah.
Unloading Period: For truck shipments, a maximum two-hour unloading
period is allowed after arrival at destination, on a
24-hour basis, 7 days per week.
Payment terms: 30 days from date of shipment.
Payment In U.S. Dollars by check to:
Kennecott Utah Copper Corporation
P.O. Box 224
Magna, UT 84044-0224
BUYER ACKNOWLEDGES THAT IT HAS READ THE TERMS AND CONDITIONS ON THE STANDARD
KENNECOTT CONTRACT ON THE REVERSE SIDE OF THIS AGREEMENT AND BY SIGNING BELOW
AGREES TO BE BOUND BY THESE TERMS AND CONDITIONS.
ACCEPTED December 30 1996
----------------------
SUMMO USA CORPORATION KENNECOTT UTAH COPPER CORPORATION
BY Robert A. Prescott BY David A. Litum
----------------------------- ------------------------------
OFFICER OF CORPORATION DIRECTOR-BYPRODUCT SALES
<PAGE>
The SELLER and BUYER agree that the following terms and conditions govern the
sale of the Product:
1. TAXES: All Federal, State or local taxes (except income taxes) now or
hereafter imposed in respect to this order, or any transaction involved herein
and/or the Production sale, use consumption, delivery, transportation of the
Product shall be for account of the BUYER, and if paid or required to be paid by
the SELLER, the amount thereof shall be added to and become a part of the price
payable to the BUYER hereunder.
2. FINANCIAL RESPONSIBILITY: If, in the reasonable opinion of SELLER, the
credit or financial responsibility of BUYER is, or becomes, impaired or
unsatisfactory, SELLER reserves the right to demand cash or satisfactory
security before making shipment. If BUYER fails to provide cash or satisfactory
security to fully satisfy SELLER's demands, such failure shall constitute a
breach of the Agreement, and SELLER shall have the right to withhold further
shipments and/or to cancel this Agreement or any part of this Agreement at the
option of SELLER, without any liability or obligations on the SELLER. Such
withholding of shipments and/or cancellation, however, shall not affect the
BUYER's liability for damages, including the costs associated with reshipment of
tank railcars or tank trucks due to BUYER's failure to meet its financial
responsibilities. Additionally, SELLER reserves the right to possession of the
Product and the right to stop Product in transit. The acceptance by SELLER of
any payment less than the full amount due shall not be a waiver of any rights of
SELLER.
3. PAYMENT: Payment of the price shall be made in lawful money of the United
States, as per the Payment Terms specified on the front of this document. If
payment is not made when due, or in the manner herein provided, SELLER may at
its option, without notice, cancel this Agreement as to all or any part of the
unfilled quantity. Sales and use taxes paid or required to be paid by the
SELLER, which are part of the price pursuant to Paragraph 1, shall be included
in the billing for the Product delivery. All other taxes which become part of
the price pursuant to Paragraph 1, the amount of which cannot be determined on
the invoice date, will be billed when they become known and will be payable
within thirty (30) days of billing date.
4. TITLE: Unless otherwise specified, title to and risk of loss of any
shipment of Product shall pass from SELLER to BUYER FOB railroad tank car or
tank truck at the destination point unless BUYER supplies the equipment to
transport the Product, in which case title and risk of loss shall pass FOB
railroad tank car or tank truck at loading point.
5. LIABILITY: SELLER assumes no responsibility for the condition of trucks,
tank cars and related equipment supplied by BUYER. SELLER is not responsible
for, and BUYER agrees to indemnify, defend, and save harmless the SELLER against
any, and all liabilities, claims, investigations, suits, causes of action,
judgments, losses, penalties, costs or expenses (including, without limitation,
reasonable attorneys fees) (collectively, "Liabilities"), arising out of or in
consequence of, or alleged to have arisen out of or in consequence of, in whole
or in part 1) any breach or default by the BUYER of the terms or conditions of
this Agreement, 2) any and all negligent acts by the BUYER, 3) any and all civil
or criminal breaches or violations or statutes, regulations, ordinances, or
otherwise by the BUYER, 4) any and all Liabilities predicated on theories of
strict liability, whether imposed or arising under a statute, ordinance,
regulation, or at common law or otherwise by the BUYER, 5) any and all improper
acts of loading, transporting, storage, handling, or application of the Product
by the BUYER, or, 5) any subsequent resale of the Product or other disposal by
the BUYER, including, but not limited to, any and all representations or
warranties that the BUYER makes to a third party in the course of the resale or
other disposal of the Product, or 7) any and all other acts or omissions of
BUYER, whether arising under this contract or otherwise, which result in
Liabilities to the SELLER. BUYER hereby assumes liability for, and shall
reimburse SELLER for, all damage to, and all loss or description of, any private
tank car or tank truck (including the fittings and appurtenances thereto)
occurring while said tank car or tank truck is in the possession of BUYER,
except when such damage, loss or destruction does not result from the negligence
or default of BUYER. BUYER's reimbursement of SELLER hereunder shall be limited
to the lessor of: (a) the actual cost to SELLER of repairing, reconditioning or
replacing said tank car or tank truck, or (b) the actual depreciated cash value
of said tank car or tank truck at the time of such damage, loss or destruction.
BUYER shall report promptly to SELLER all damage to, or loss or destruction of,
any such tank car or tank truck, howsoever arising, occurring while such tank
car or tank truck is in the possession or under the control of BUYER.
6. WARRANTY: Attached to this Agreement is a Composite Analysis, for the
dates indicated, of the Product. SELLER OR PRODUCER MAKE NO EXPRESS OR IMPLIED
WARRANTIES OF ANY KIND, INCLUDING WHETHER THE PRODUCT CONFORMS TO THE ATTACHED
COMPOSITE ANALYSIS. NO WARRANTY BY SELLER OR PRODUCER (OTHER THAN WARRANTY OF
TITLE AS PROVIDED IN THE UNIFORM COMMERCIAL CODE) SHALL BE IMPLIED OR OTHERWISE
CREATED UNDER THE UNIFORM COMMERCIAL CODE INCLUDING, BUT NOT LIMITED TO,
WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
7. NOTICE: The BUYER shall give written notice of any claim for any cause
whatsoever within ten (10) days after arrival of any shipment at destination,
and failure to do so shall constitute a waiver by the BUYER of all claims with
respect to such shipment. For any defect of quality established, SELLER's
liability shall be limited to replacing any defective acid delivered hereunder
and in no event shall SELLER incur liability for defects or damage to Products
in which acid delivered hereunder is used or for any other kind of
consequential, nominal, or incidental damages.
8. INVOICE: SELLER shall invoice BUYER for each delivery on the basis of price
provided herein, and each such delivery shall constitute a separate and
independent sale. SELLER's weights and analyses shall govern unless proven to
be in error.
9. MUTUALLY AGREED PRODUCER: BUYER agrees that SELLER may meet its commitments
under this Agreement by having a mutually agreed producer deliver Product on
behalf of SELLER, so long as the agreed producer otherwise agrees to meet the
terms and conditions of this Agreement.
10. FORCE MAJEURE: This Agreement is subject to the following conditions of
force majeure. Any strike, lockout, difference with workmen, accident, fire,
explosion, flood, earthquake, storm, unavoidable accident, mechanical breakdown
(including shutdowns for maintenance and inventorying) mobilization, war
(whether declared or undeclared), riot, rebellion, revolution, requirement,
regulation, restriction, or other act of any government, whether legal or
otherwise, the elements, inability to secure or delay in securing fuel, or other
supplies or materials, or power, necessary for the operation of the mines and
plants where the Product sold hereunder is produced or consumed, economic
shutdown of SELLER's or BUYER's mine or plant facilities, delays or interruption
to, or destruction of mines or plants of SELLER or BUYER, or any other acts
beyond the control of the parties, whether or not of the nature or character
hereinabove specifically enumerated which delays or interferes with the
performance of this Agreement shall be considered sufficient justification for
delay in making shipments, delivery or performance hereunder, in whole or in
part, until such cause ceases to exist; and this Agreement shall be deemed
suspended as long as such cause prevents or delays its execution. Neither party
shall be responsible for or liable to the other for damages or expenses incurred
or sustained because of any delay or failure to perform because of a condition
of force majeure. If under any of the conditions set forth in this Paragraph,
supplies of sulfuric acid available to SELLER are insufficient to complete
delivery of orders accepted by SELLER prior to the occurrence of the condition
or to SELLER's nominated long term regular contract customers. SELLER shall
allocate available supplies pro rata to such long term customers until such
customers' contractual requirements are met by SELLER, and then SELLER may, at
its option, allocate available supplies (having first satisfied the long term
customers' contractual requirements) in a manner it deems suitable, without
liability for any damages sustained by BUYER. A nominated long term regular
contract customer is a minimum annual tonnage commitment of 50,000 sl or more
and five (5) years or longer in original contract duration. BUYER shall
allocate purchased supplies pro rata to such long term suppliers until such
suppliers' contractual requirements are met by BUYER, and then BUYER may at its
option allocate purchases (having first satisfied the long term suppliers
contractual requirements) in a manner it deems suitable without liability for
damages sustained by supplier. If deliveries are interrupted or delayed for any
condition of force majeure, the amount of Product which is not delivered at the
regular order rate during the period of any such suspension or reduction shall,
at the option of SELLER, be deducted from the full amount which otherwise would
have been delivered under this order in which event SELLER shall not be
obligated to make up such omitted deliveries either during the order period or
after termination thereof. It is understood and agreed that SELLER shall be
under no obligation to operate its copper smelters nor will it be under any
obligation to operate its sulfuric acid plants except as, and to the extent
that, it shall have available for that purpose sulfurous cases of commercial
grade, produced in the course of operating its smelter and lack of such gases
shall be deemed a cause beyond SELLER's control and subject to the Force Majeure
provision and, notwithstanding paragraph 9 of this Agreement, SELLER is not
obligated to find another producer to meet its obligations under a condition of
force majeure.
11. HAZARDS: BUYER acknowledges that there are hazards associated with the use
of the Product. BUYER agrees to make its personnel concerned with the Product
aware of the hazards and assumes all responsibility for the warning of its
employees and independent contractors of all hazards to persons and property in
any way connected with Product. BUYER also assumes all responsibility for the
risks of using Product in combination with other articles or substances and in
any manufacturing process. The SELLER shall not be liable to the BUYER for any
consequential, nominal, or incidental damages, including lost profits, arising
out of the use, handling, storage, or any application or activity related to the
Product. The SELLER shall not be liable to the BUYER for compensation,
reimbursement or damages on account of loss of prospective profits or
anticipated sales or on account of expenditures, investments or commitments in
connection with the business or good will of the BUYER caused by failure of
Product to conform to the specifications herein set forth.
12. CLAIMS: The BUYER will promptly notify the SELLER in writing of any
claims, demands, suit, action, or proceeding with respect to the Product.
13. GOVERNING LAW: This Agreement shall be deemed to be made under and shall be
governed by the laws of the Sale of Utah in all respects, including matters of
construction, validity, and performance.
14. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement between
the parties as to the subject matter hereof and may not be changed or modified
except by signed writing by the SELLER and BUYER.
15. AFFILIATES: This Agreement inures to the benefit of affiliates,
subsidiaries, or parents of the parties.
16. SURVIVAL: The provisions of paragraphs 2, 3, 5 and 11 above survive
termination of this Agreement.
17. PRICE PROTECTION: If, after the interval designated in the contract, BUYER
is offered material of equal quality by a responsible domestic manufacturer for
delivery to the same destination on like terms and conditions as herein provided
in quantities adequate to fulfill the entire commitment to deliver product
during the entire remaining term (time left) of this contract at a lower
delivered cost to BUYER than the delivered cost hereunder. SELLER, within
thirty days of receipt of written evidence of same, shall either meet such lower
delivered cost or release BUYER from their obligation to purchase by cancelling
this contract. The written evidence shall be in the form of a signed proposal
to sell sulfuric acid to BUYER on the corporate stationery of the manufacturer
or distributor. It must contain the price for sulfuric acid delivered to
BUYER's facilities, the provision for changing the price, the volume offered,
the term (dates the supply is to commence and end), and the product
specifications.
<PAGE>
PURCHASE AGREEMENT
This Agreement, effective as of the 29th day of February, 1996, is
between MICHAEL L. WILCOX ("Seller"), whose address is P.O. Box 202, La Sal,
UT 84530, and SUMMO USA CORPORATION, a Colorado corporation ("Purchaser"),
whose address is 1776 Lincoln St., Suite 1100, Denver, CO 80203.
RECITALS
Seller represents that he is the owner of and is in possession of certain
lands in San Juan County, Utah more particularly described as follows:
Township 31 South, Range 25 East', SLB&M
San Juan County, Utah
--------------------------------------------------------------
Section 1: Lots 1, 2, 3, and 4 (also known as N 1/2 N 1/2)
Township 31 South, Range 26 East, SLB&M
San Juan County, Utah
--------------------------------------------------------------
Section 6: NW 1/4 NW 1/4
said lands together all appurtenances and water rights incident thereto, and
all improvements and personal property thereon, subject to mineral
reservations of record, being herein referred to as the "Property".
Seller is willing sell and Purchaser desires to purchase Property.
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid to
Seller, the receipt and sufficiency of which are hereby acknowledged, and
further in consideration of the mutual covenants, agreements, and promises
herein contained, the parties hereto agree as follows:
PURCHASE. Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase, all of Seller's right, title, and interest in the Property upon the
terms and conditions set forth in this Agreement, for the amount of Fifty
Thousand Dollars ($50,000.00) (the "Purchase Price").
CLOSING. (a) Unless the parties agree that the closing shall take place
at some other time and place, the closing shall take place at the office of
South Eastern Utah Title Company, whose address is 117 S. Main, Room 118,
Monticello, Utah, at 10:00 o'clock a.m. on the 14th day of March, 1996.
(b) At the closing, Seller shall deliver to Purchaser (i) a
-1-
<PAGE>
general warranty deed in the form of Exhibit B attached hereto, and (ii) a
1970 ALTA Form B owner's policy of title insurance showing title to be
marketable and to be vested in Purchaser at the closing.
(c) At the closing, Purchase shall pay the Purchase Price to Seller by
certified or cashier's check or by wire transfer to Seller's account.
(d) Purchaser shall pay all recording fees and documentary transfer
taxes. Real property taxes shall be prorated as of the date of the exercise
of the option.
TITLE. Seller warrants that he is in possession of the Property, that he
has the right to enter into this Agreement, that he knows of no other person
claiming any interest in the Property, and that the Property is free from all
liens and encumbrances, except liens for property taxes not yet due and
payable. Seller warrants and will defend title to the Property against all
persons whomsoever.
GRAZING RIGHTS. Seller agrees that from time to time, upon Purchaser's
request made within two (2) years after the date of this Purchase Agreement,
Seller shall take all steps necessary to relinquish or cause to be
relinquished all grazing rights, Federal, State, or private, held by Seller
or by Wilcox Ranches, a partnership, on the Property and on the additional
lands more particularly shown on the map set out in Exhibit A attached hereto
and incorporated by reference herein.
STOCK POND. Purchaser acknowledges the existence of a stock pond
constructed by Seller in Section 36, Township 30 South, Range 25 East, SLB&M.
When earth-moving equipment becomes available to Purchaser (which Purchaser
estimates shall occur within ____ months from the date of this Purchase
Agreement), Purchaser shall, at no cost to Seller, assist Seller in the
construction of a replacement stock pond of similar size and character on
other land owned or controlled by Seller.
INUREMENT. All covenants, conditions, limitations, and provisions herein
contained apply to and are binding upon the parties hereto, their heirs,
representatives, successors, and assigns.
MODIFICATION. No modification, variation, or amendment of this Agreement
shall be effective unless the modification, variation, or amendment is in
writing and is signed by Seller and Purchaser.
WAIVER. No waiver of any breach or default under this
-2-
<PAGE>
Agreement shall be effective unless the waiver is in writing and signed by
the party against whom the waiver is claimed. No waiver of any breach or
default shall be deemed to be a waiver of any other or subsequent breach or
default.
ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties and, except as herein expressly provided, supersedes all previous and
contemporaneous agreements, representations, warranties, or understandings,
written or oral.
CONSTRUCTION. The paragraph headings are for convenience only, and shall
not be used in the construction of this Agreement.
GOVERNING LAW. The formation, interpretation, and performance of this
Agreement shall be governed by the law of the state of Utah.
ADDITIONAL DOCUMENTS. Seller will provide Purchaser with such additional
documents as may be necessary to carry out the purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER:
/s/ Michael L. Wilcox
-----------------------------------
Michael L. Wilcox
PURCHASER:
SUMMO USA CORPORATION
By: /s/ Gregory A. Hahn
-------------------------------
Gregory A. Hahn
President
-3-
<PAGE>
STATE OF Utah )
---------------
) ss:
County of San Juan )
---------------
The foregoing instrument was acknowledged before me this 14th day of
March, 1996, by Michael L. Wilcox, the person named in and who executed the
foregoing instrument.
/s/ Jean L. Pehrson
------------------------------------
Notary Public
[STAMP]
Residing at
Monticello, Utah
------------------------------------
84535
------------------------------------
My Commission Expires:
4-20-97
- ----------------------
[SEAL]
STATE OF Colorado )
----------------
County of Jefferson ) ss:
----------------)
The foregoing instrument was acknowledged before me this 20 day of
February, 1996, by Gregory A. Hahn as President of Summo USA Corporation, a
Colorado corporation, the corporation named in and that executed the
foregoing instrument, on behalf of the corporation.
/s/ Michelle Hebert
------------------------------------
Notary Public
Residing at
Lakewood CO
------------------------------------
80227
------------------------------------
My Commission Expires:
3-18-99
- ----------------------
[SEAL]
-4-
<PAGE>
EXHIBIT B
WARRANTY DEED
MICHAEL L. WILCOX and JOAN I. WILCOX ("Grantors"), whose address is P.O.
Box 202, La Sal, UT 84530, for the consideration of Ten Dollars ($10.00) and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, convey and warrants to SUMMO USA CORPORATION, a Colorado
corporation ("Grantee"), whose address is 1776 Lincoln St., Suite 1100,
Denver, CO 80203, the real property more particularly described as follows:
Township 31 South, Range 25 East, SLB&M
San Juan County, Utah
--------------------------------------------------------------
Section 1: Lots 1, 2, 3, and 4 (also known as N 1/2 N 1/2)
Township 31 South, Range 26 East, SLB&M
San Juan County, Utah
--------------------------------------------------------------
Section 6: NW 1/4 NW 1/4
together with all appurtenances and water rights incident thereto, and all
improvements and personal property thereon, subject to mineral reservations
of record (the "Property"1).
TO HAVE AND TO HOLD the Property to Grantee, its successors and assigns.
IN WITNESS WHEREOF, Grantors have executed this Warranty Deed this _____
day of February, 1996.
/s/ Michael L. Wilcox
------------------------------------
Michael L. Wilcox
/s/ Joan I. Wilcox
------------------------------------
Joan I. Wilcox
B-1
<PAGE>
STATE OF _______________ )
) ss:
County of ______________ )
The foregoing instrument was acknowledged before me this _____ day of
February, 1996, by Michael L. Wilcox and Joan I. Wilcox, the persons named in
and who executed the foregoing instrument.
------------------------------------
Notary public
Residing at
------------------------------------
------------------------------------
My Commission Expires:
- ----------------------
[SEAL]
B-2
<PAGE>
TO: Karen Melfi
From: Jean, South Eastern Utah Title Company
RE: Mike & Joan Wilcox
Here's the settlement statement and our escrow agreement. Please look
them over to make sure everything to Okay! Any questions or if I need to
change anything please give me a call -
801-587-2588
Thanks,
Jean
P.S. No deed from Wilcox Ranch
yet! Hopefully next week!
<PAGE>
Exhibit 10.28
SURFACE AGREEMENT
This Agreement, effective as of the 10th day of June, 1996, is between Joe
Henry Pacheco and Susie Pacheco, husband and wife: James Pacheco and Libbie
Pacheco, husband and wife; Rodolfo Rodriguez and Gladys Rodriguez, husband and
wife; Jerry Sanchez and Mary Sanchez, husband and wife; Henry Atencio and
Virginia Atencio, son and mother; Nelson Pacheco and Vickie Pacheco, husband
and wife; Johnny Gurule; Gilbert Pacheco and Kathy Pacheco, husband and wife
("Surface Owner", whether one or more), whose address is c/o Nelson Pacheco,
9833 4th St. N.W. #B, Albuquerque, New Mexico 87114 and SUMMO USA CORPORATION
("SUMMO"), whose address is 1776 Lincoln St., Suite 900, Denver, Colorado 80203.
RECITALS
Surface Owner represents that he is the owner of and is in possession of
the surface estate in certain lands in Taos County, New Mexico (the
"Property"), more particularly described in Exhibit A attached hereto and
incorporated by reference herein.
SUMMO is the owner of certain unpatented mining claims (the "Claims")
located on the reserved mineral estate underlying the Property.
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid to
Surface Owner, the receipt and sufficiency of which are hereby acknowledged,
and further in consideration of the mutual covenant, agreements, and promises
herein contained, the parties hereto agree as follows:
RIGHT TO USE SURFACE: Surface Owner grants to SUMMO the sole and
exclusive right to use the Property for the purpose of exploring,
developing, and mining the Claims.
TERM: The term of this Agreement shall be for twenty (20) years from the
date hereof and so long thereafter as SUMMO holds any interest in the
Claims, unless SUMMO sooner surrenders this Agreement.
OPERATIONS: (a) During the term of this Agreement, SUMO shall have
unrestricted access to the Property, and shall have the right (i) to
explore, develop, and mine from the Claims by means of operations on the
Property, (ii) to deposit ores, water, waste, and materials from the
Claims or from other mining properties within a two-mile perimeter of the
Property, and to use any part of the Property for waste dumps and tailings
disposal areas, (iii) to conduct on the Property general mining,
1
<PAGE>
milling, processing, and related operations respecting the Claims and other
mining properties, and to use any part of the Property for any purposes
incident to such operation, and (iv) to erect, construct, use, and maintain
on the Property such roads, buildings, structures, machinery, equipment,
personal property, fixtures, and improvements as may be necessary or
convenient for the conduct of SUMMO's operations.
(b) SUMMO shall conduct all operations on the Property in a good and
workmanlike manner and in accordance with accepted mining practice.
(c) SUMMO may use any mining method, whether or not the method is in
general use at the time of the execution of this Agreement, including,
without limitation, underground mining (including methods, such as block
caving, which result in the disturbance or subsidence of the surface),
surface mining (including strip mining, open pit mining, and dredging),
and in situ mining (including solution mining, leaching, gasification, and
liquification). Surface Owner shall be notified within ten (10) days if
SUMMO decides to use solution mining, leaching, gasification, and
liquification methods.
(d) SUMMO shall comply with all laws and regulations governing its
operations on the property. If this Agreement is inconsistent with or
contrary to any law or regulation, the law or regulation shall control and
this Agreement shall be deemed to be modified accordingly.
(e) SUMMO may use existing roads, if any, on the Property, and may
construct and maintain at its own expense any additional roads reasonably
necessary or convenient for the conduct of SUMMO's operations on the
Claims or on other mining properties. SUMMO will endeavor to construct
any such additional roads on the Property at a location agreeable to
Surface owner and SUMMO. All additional roads shall be constructed and
maintained in such manner to bear the traffic necessary to SUMMO's
operations. Surface Owner may use any additional road so long as his use
does not interfere with SUMMO's use. Upon notice to SUMMO given within
thirty (30) days after the termination of this Agreement, Surface Owner
may require that all or any part of any additional road be reclaimed.
(f) If SUMMO finds it necessary to cut any fence on the Property for the
purpose of passage, SUMMO shall, prior to cutting the fence, install and
brace heavy "corner-type" posts at each end of the opening to be made, to
which the fence wire shall be securely fastened in such manner as to
prevent sagging. Summo shall install a gate of a quality acceptable to
Surface Owner in each opening. If SUMMO desires that opening provide
uninterrupted ingress and egress, it may in the alternative install
2
<PAGE>
cattle guards of sufficient size and substance to bear the type of traffic
necessary for its operations and capable of turning all domestic livestock.
(g) SUMMO shall conduct no surface operations within three hundred (300)
feet of the main dwelling house, if any, now located on the Property
without first obtaining the written consent of Surface Owner.
(h) Neither SUMMO nor its agents, employees, contractors, or
subcontractors, nor their agents or employees, shall hunt or fish on the
Property, nor shall any of them carry onto the property firearms or other
equipment designed or adapted for such purposes.
(i) SUMMO shall advise Surface Owner prior to final mailing facility site
selections in order that Surface Owner may clear timber from the area
before construction commences.
COMPENSATION: SUMMO shall pay compensation to Surface Owner on the dates
and in the amounts as follows:
Signing bonus: $8,000.00, payable at signing.
Rentals:
Amount Date
------ ----
$5,600.00 Upon signing
$5,600.00 December 30, 1996.
$5,600.00 December 30, 1997.
$7,200.00 December 30, 1998 and 1999.
$8,400.00 December 30, 2000
Permanent Impact Compensation: At such time that SUMMO commences the
permitting for the construction of a milling project, a one-time
payment of $625.00/acre (or $325,000.00) will be made. If SUMMO has
not diligently begun this permitting phase by December 30, 2001, this
Agreement shall terminate. At the point when the one time payment is
made, rentals shall increase as follows:
Amount Date
------ ----
$12,000.00 December 30, 2001, 2002, and 2003
$13,600.00 December 30, 2004 and 2005.
$22,000.00 December 30, 2006
$26,800.00 December 30, 2007, 2008, 2009, 2010 and 2011
3
<PAGE>
$32,000.00 December 30, 2012, 2013, 2014, 2015 and 2016
$44,445.00 December 30, 2017, and each year thereafter.
DAMAGES: (a) SUMMO shall pay to Surface Owner, as compensation for any
crops or grasses damaged or destroyed, One Hundred Fifty Dollars ($150.00)
for each exploration drill hole drilled on the Property. Drill hole
compensation shall be paid within 30 days of the end of the month in which
the holes are drilled.
(b) Prior to the payment of the December 30, 2001 lump sum payment, SUMMO
shall pay compensation for the use or damage to the Property, not already
remunerated by the drill hole compensation, the amount of $500.00 for each
acre damaged.
(c) In addition to the compensation provided for in subparagraphs (a) and
(b), above, SUMMO shall pay Surface Owner reasonable compensation for any
damage to livestock or to fences, buildings, or other tangible improvements
on the Property resulting from SUMMO's operations.
PROTECTION FROM LIENS AND DAMAGES: SUMMO shall keep the Property free of
liens for labor performed or materials or merchandise furnished for use on
the Property under this Agreement, and shall hold Surface owner harmless from
all costs, loss, or damage which may result from any work or operations of
SUMMO or its occupancy of the property.
AFTER-ACQUIRED INTEREST IN LOT 7: If during the term of this Agreement,
Surface Owner acquires an interest in all or any part of the following
described Property:
TOWNSHIP 23 NORTH, RANGE 11 EAST, N.M.P.M.
TAOS COUNTY, NEW MEXICO
Section 17: Lot 7
the interest shall, at SUMMO's option, be deemed a part of the Property for
the purposes of this Agreement, and the Compensation described above
increased proportionately. Summo's option shall be exercised, if at all,
within 20 years after the date of execution of this Agreement by all parties.
ENVIRONMENTAL INDEMNITY: SUMMO shall indemnify, defend, and hold Surface
Owner harmless for all claims, costs, loss, or damage resulting from (i) the
presence of hazardous materials on the Property or the release of hazardous
materials from the Property after the date of this Agreement and (ii) any
violation after the date of this Agreement of any federal, state, or local
law, rule, regulation, order, or ordinance regarding the protection of the
environment or the remediation or reclamation of any
4
<PAGE>
portion of the property.
TERMINATION AND SURRENDER: (a) If SUMMO fails to comply with any of the
provisions of this Agreement, and if SUMMO does not initiate and diligently
pursue steps to correct the default within thirty (30) days after the notice
has been given to it by Surface Owner specifying with particularity the
nature of the default, then upon the expiration of the thirty-day period, all
rights of SUMMO under this Agreement (except as provided in the paragraphs
entitled "Removal of property" and "Access") shall terminate, and all
liabilities and obligations of SUMMO (except liabilities existing on the date
of termination) shall terminate. If SUMMO by notice to Surface Owner disputes
the existence of a default, then this Agreement shall not terminate unless
SUMMO does not initiate and diligently pursue steps to correct the default
within thirty (30) days after the existence, of a default has been determined
by decision of a court or arbitrators, or otherwise.
(b) Subject to the right of Surface Owner to terminate this Agreement as
provided in the foregoing subparagraph (a), controversy between the parties
hereto shall not interrupt performance of this Agreement or the continuation
of operations hereunder. In the event of any controversy, SUMMO may continue
operations hereunder and shall make the payments provided for herein
notwithstanding the existence of the controversy. Upon the resolution of the
controversy, such payments or restitutions shall be made as required by the
terms of the decision of the court or arbitrators, or otherwise.
(c) SUMMO may at any time terminate this Agreement as to all or any part of
the property by delivering to Surface owner or by filing for record in the
appropriate office (with a copy to Surface Owner) a good and sufficient
Surrender of this Agreement or a Partial Surrender describing that portion of
the Property as to which this Agreement is surrendered. Upon mailing the
Surrender or Partial Surrender to Surface owner or to the appropriate office,
all rights of SUMMO under this Agreement with respect to the portion of the
Property as to which this Agreement is terminated (except as provided in the
paragraphs entitled "Removal of Property" and "Access") shall terminate and
all liabilities and obligations of SUMMO with respect to the portion of the
property as to which this Agreement is terminated (except liabilities
existing on the date of termination) shall terminate.
REMOVAL OF PROPERTY: For a period of six (6) months after the termination of
this Agreement, SUMMO shall have the right to remove from the Property all
buildings, structures, machinery, equipment, personal property, fixtures, and
improvements owned by SUMMO or erected or placed on or in the Property by
SUMMO. Any broken or stockpiled ore, minerals, concentrates, or other
products, dumps, tailings, and residue remaining on the Property shall be
left in as neat, safe, and sightly a condition as possible. Upon termination
of this Agreement, SUMMO shall dispose
5
<PAGE>
of all rubbish, junk, and unused materials, and shall leave the Property, and
all buildings, structures, machinery, equipment, personal property, fixtures,
and improvements remaining on the Property, in a neat and safe condition.
SUMMO may keep one or more watchmen on the Property during the six-month
period. An equitable rental, consistent with then current rental rates, shall
be agreed on and paid to Surface Owner during the time in which one or more
watchmen occupy the Property.
ACCESS: For as long as necessary after termination of this Agreement, SUMMO
shall have the right of access to and across the Property for reclamation
purposes, and rent shall be paid at the rate that is foregoing at that time.
NOTICES: All notices and other communications to either party shall be in
writing and shall be sufficiently given if delivered in person or sent by
certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Any notice given by or to Nelson Pacheco, with a copy
to Gilbert Pacheco, shall be notice by or to all Surface Owners. Notices
given by mail shall be deemed delivered as of the date of mailing. Until a
change of address is communicated as indicated above, all notices to Surface
Owner shall be addressed:
Nelson Pacheco
9833 4th St. N.W. #B
Albuquerque, New Mexico 87114
with a copy to:
Gilbert Pacheco
2610 Westchester Dr.
Denver, Colorado 80221
and all notices to SUMMO shall be addressed:
Greg Hahn, President
SUMMO USA CORPORATION
1776 Lincoln Street, Suite 900
Denver, Colorado 80203
ASSIGNMENT: The rights of either party hereunder may be assigned in whole or
in part by providing written notice of the assignment to the non-assigning
party. A fully executed memorandum of assignment in recordable form shall be
delivered to the non-assigning party by the assigning party within ten (10)
days after the assignment takes effect.
6
<PAGE>
INDEMNIFICATION: SUMMO shall hold Surface Owner free from all costs, loss, or
damage which may result from any work or operations of SUMMO or its occupancy
of the Property.
INSURANCE: SUMMO shall carry at all times during the term of this Agreement
worker's compensation and other insurance required by state laws and mining
regulations, or SUMMO may self-insure as to such matters if it qualifies as
a self-insurer under the appropriate laws and regulations. Copies of
insurance certificates will be provided to Surface Owner by SUMMO.
PERFORMANCE: SUMMO agrees that whenever possible it shall use its best
efforts to obtain labor from the local area.
BANKRUPTCY: In the event that SUMMO enters into bankruptcy proceedings, it
shall provide Surface Owner with written notification by of such within five
days.
DISPUTE RESOLUTION: All disputes arising under or in connection with this
Agreement which cannot be resolved by agreement between the parties shall be
resolved in accordance with applicable law.
INUREMENT: All covenants, conditions, limitations, and provisions herein
contained apply to and are binding upon the parties hereto, their heirs,
representatives, successors, and assigns.
MODIFICATION: No modification, variation, or amendment of this Agreement
shall be effective unless the modification, variation, or amendment is in
writing and is signed by Surface Owner and SUMMO.
WAIVER: No waiver of any breach or default under this Agreement shall be
effective unless the waiver is in writing and signed by the party against
whom the waiver is claimed. No waiver of any breach or default shall be deemed
to be a waiver of any other or subsequent breach or default.
ENTIRE AGREEMENT: This Agreement sets forth the entire agreement of the
parties and, except as herein expressly provided, supersedes all previous and
contemporaneous agreements, representations, warranties, or understandings,
written or oral.
CONSTRUCTION: The paragraph headings are for convenience only, and shall not
be used in the construction of this Agreement. The term "Surface Owner" shall
be deemed to be singular or plural, and shall be deemed to be masculine or
feminine, or both, or neuter, whenever the construction of the Agreement so
requires.
GOVERNING LAW: The formation, interpretation, and performance of this
Agreement shall be governed by the law of the State of New Mexico.
7
<PAGE>
INVALIDITY: The invalidity of any provision of this Agreement shall not
affect the enforceability of any other provision of this Agreement.
COUNTERPARTS: This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original. If any
person named as one of the Surface owners does not execute this
Agreement, it nevertheless shall be binding upon those persons executing
it.
ADDITIONAL DOCUMENTS: Surface Owner will provide SUMMO with such
additional documents as may be necessary to carry out the purposes of
this Agreement. If conditions change by reason of conveyances,
assignments, or other matters relating to the title to or description of
the Property, Surface Owner and SUMMO shall execute amendments of this
Agreement and the Short Form of Agreement, and any other documents which
may be necessary to reflect such changed conditions. The Short Form of
Agreement shall not supersede the long form of Surface Agreement.
OTHER: Surface Owner will have the opportunity to buy or bid on
buildings and other equipment or machinery upon termination of the
Agreement.
SUMMO shall hold regular briefings with Surface Owner, or
representatives, prior to site selections to discuss site plans and
other items pertinent to the Agreement. Upon consent of SUMMO, Surface
Owner shall have the right to construct or make improvements to the
Property as long as such improvements do not interfere with SUMMO'S
operations.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
- ---------------------------------- -----------------------------------
JOE HENRY PACHECO SUSIE PACHECO
- ---------------------------------- -----------------------------------
JAMES PACHECO LIBBIE PACHECO
- ---------------------------------- -----------------------------------
RODOLFO RODRIGUEZ GLADYS RODRIGUEZ
- ---------------------------------- -----------------------------------
JERRY SANCHEZ MARY SANCHEZ
8
<PAGE>
ADDITIONAL DOCUMENTS: Surface Owner will provide SMO with such additional
documents as may be necessary to carry out the purposes of this Agreement.
If conditions change by reason of conveyances, assignments, or other
matters relating to the title to or description of the Property, Surface
Owner and SUMMO shall execute amendments of this Agreement and the Short
Form of Agreement, and any other documents which may be necessary to
reflect such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
/s/ Joe Henry Pacheco /s/ Susie Pacheco
- ---------------------------------- -----------------------------------
JOE HENRY PACHECO SUSIE PACHECO
/s/ James Pacheco /s/ Libbie Pacheco
- ---------------------------------- -----------------------------------
JAMES PACHECO LIBBIE PACHECO
/s/ Rodolfo Rodriguez /s/ Gladys Rodriguez
- ---------------------------------- -----------------------------------
RODOLFO RODRIGUEZ GLADYS RODRIGUEZ
/s/ Jerry Sanchez /s/ Mary Sanchez
- ---------------------------------- -----------------------------------
JERRY SANCHEZ MARY SANCHEZ
/s/ Henry Atencio /s/ Virginia Atencio
- ---------------------------------- -----------------------------------
HENRY ATENCIO VIRGINIA ATENCIO
/s/ Nelson Pacheco /s/ Vickie Pacheco
- ---------------------------------- -----------------------------------
NELSON PACHECO VICKIE PACHECO
/s/ Gilbert Pacheco /s/ Kathy Pacheco
- ---------------------------------- -----------------------------------
GILBERT PACHECO KATHY PACHECO
/s/ Johnny Gurule
- ----------------------------------
JOHNNY GURULE
8
<PAGE>
SUMMO USA CORPORATION
By: /s/ Gregory A. Hahn
--------------------------------
Gregory A Hahn, President
9
<PAGE>
STATE OF NEW MEXICO )
) ss:
County of Bernalillo)
The foregoing instrument was acknowledged before me this 26 day of
September, 1996, by JOE HENRY and SUSIE PACHECO, the persons named in and who
executed the foregoing instrument.
/s/ Sylvia Garcia
-----------------------------------
Notary Public
My Commission Expires: 1/31/97
---------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by JAMES PACHECO and LIBBIE PACHECO, the persons named in
and who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by RODOLFO RODRIGUEZ and GLADYS RODRIGUEZ, the persons named
in and who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
10
<PAGE>
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by JERRY SANCHEZ and MARY SANCHEZ, the persons named in and
who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by HENRY ATENCIO and VIRGINIA ATENCIO, the persons named in
and who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF NEW MEXICO )
) ss:
County of Bernalillo)
The foregoing instrument was acknowledged before me this 30 day of
September, 1996, by NELSON PACHECO and VICKIE PACHECO, the persons named in
and who executed the foregoing instrument.
/s/ Sylvia Garcia
-----------------------------------
Notary Public
My Commission Expires: 1/31/97
---------------------------------
11
<PAGE>
STATE OF COLORADO )
) ss:
County of Adams )
The foregoing instrument was acknowledged before me this 3rd day of
October, 1996, by GILBERT PACHECO and KATHY PACHECO, the persons named in and
who executed the foregoing instrument
/s/ Susan K. Novak
-----------------------------------
Notary Public
7401 Federal Bldg
Westminster, CO
[NOTARY SEAL]
My Commission Expires: 3/13/99
--------------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by JOHNNY GURULE, the person named in and who executed the
foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF COLORADO)
) ss:
County of Denver )
The foregoing instrument was acknowledged before me this 4 day of
October, 1996, by GREGORY A. HAHN, the President of SUMMO USA CORPORATION, on
behalf of the corporation.
/s/ Michelle Hebert
----------------------------------
Notary Public
My Commission Expires: 3/18/99
---------------------------------
12
<PAGE>
EXHIBIT A
PROPERTIES
100% interest in and to the following surface estate in Township 23
North, Range 11 East, Section 17, Taos County, New Mexico:
PROPERTY OWNER ACREAGE
-------- ----- -------
Lot 1 Joe Henry Pacheco and Susie Pacheco 65
Lot 2 James Pacheco and Libbie Pacheco 65
Lot 3 Gladys Rodriguez and Rodolfo Rodriguez 65
Lot 4 Mary Sanchez and Jerry Sanchez 65
Lot 5 Virginia Atencio and Henry Atencio 65
Lot 6 Nelson Pacheco and Vickie Pacheco 65
Lot 8 Johnny Gurule 65
Lot 9 Gilbert Pacheco and Kathy Pacheco 65
<PAGE>
2
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained the parties
hereto covenant and agree as follows:
1. From the date hereof, and for so long as the Optionee shall be an
employee of the Company, the Optionee shall have and be entitled to and the
Company hereby grants to the Optionee an option to purchase all or any
portion of SIXTY-SEVEN THOUSAND, FIVE HUNDRED (67,500) fully paid and
non-assessable common shares (the "SHARES") of the Company from the treasury
on or before APRIL 30, 2001 at the price of ONE DOLLAR AND FIFTY-ONE CENTS
($1.51) per share provided that:
(a) no more than 25% of the Shares may be purchased on or before April
30, 1997;
(b) no more than a total of 50% of the Shares may be purchased on or
before April 30,1998; and
(c) no more than a total of 75% of the Shares may be purchased on or
before April 30, 1999.
2. The right to take up shares pursuant to the option herein granted is
exercisable by notice in writing to the Company accompanied by a certified
cheque in favour of the Company for the full amount of the purchase price of
the shares being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
in the name of the Optionee for the number of shares so purchased.
3. This is an option agreement only and does not impose upon the Optionee
any obligation to take up and pay for any of the shares under option.
4. Subject to paragraph 5 hereof, the option herein granted shall cease and
become null and void following the tenth day after which the Optionee ceases
to act as an employee of the Company.
5. The Optionee hereby acknowledges that in the event the Optionee is an
insider of the Company, the option herein granted may not be exercised in
full or in part until this agreement has been approved by the members at a
general meeting of the Company.
6. The Company hereby covenants that it will seek the approval of the
members to any amendments to the incentive stock option herein granted, at
the next general meeting of the company prior to exercise thereof by the
Optionee, in accordance with the requirements of The Toronto Stock Exchange,
and the Optionee warrants that he will not exercise all or any portion of the
subject option, if amended, until such approval is obtained.
7. If at any time during the continuance of this agreement, the parties
hereto deem it necessary or expedient to make any alteration or addition to
this agreement, they may do so by means of a written agreement between them
which will be supplemental hereto and form part hereof and which may be
subject to the approval of the securities regulatory bodies having
jurisdiction.
<PAGE>
EXHIBIT 10.29
DIRECTOR'S/EMPLOYEE
INCENTIVE STOCK OPTION AGREEMENT
(PLAN)
THIS AGREEMENT is made as of the 26th day of March, 1996,
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under
the laws of the Province of British Columbia, having its
registered office at 860-625 Howe Street, Vancouver, B.C.,
V6C 2T6
(hereinafter called the "COMPANY")
OF THE FIRST PART
AND:
GREGORY A. HAHN, of Suite 1100, 1776 Lincoln Street, Denver,
Colorado, U.S.A. 80203
(hereinafter called the "OPTIONEE")
OF THE SECOND PART.
WHEREAS:
A. the Optionee is a director and employee of the Company and requires as
a condition of holding such position that the parties enter into this
Incentive Stock Option Agreement on the terms and conditions hereinafter set
forth;
B. this incentive stock option is granted by the Company in reliance on
the exemptions from registration and prospectus requirements contained in
Sections 31(2)(l0) and 55(2)(9) of the SECURITIES ACT (British Columbia) and
Sections 35(1)(19) and 72(1)(n) of the SECURITIES ACT (Ontario);
C. the Company has been classified as a "Resource" company by the
Vancouver Stock Exchange and as a "Non-Exempt" resource company by the
Toronto Stock Exchange;
D. the directors of the Company passed a resolution at their board
meeting held January 15, 1996 implementing an Incentive Stock Option Plan
(the "PLAN"), subject to shareholder ratification, a copy of which is
attached hereto as "Schedule "A";
E. the option herein granted is subject to the terms and conditions of
the Plan;
<PAGE>
2
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained the parties
hereto covenant and agree as follows:
1. From the date hereof, and for so long as the Optionee shall be an
employee of the Company, the Optionee shall have and be entitled to and the
Company hereby grants to the Optionee, on the terms and conditions
hereinafter set out, an option to purchase all or any portion of an aggregate
of ONE HUNDRED AND TWENTY THOUSAND (120,000) fully paid and non-assessable
common shares of the Company from the treasury on or before MARCH 25, 2001 at
the price of ONE DOLLAR AND TEN CENTS ($1.10) per share.
2. The right to exercise the option herein granted is based upon the
progress of permitting, financing and completion of construction of the
Company's principal mining property situated near Moab, Utah, and known as
the Lisbon Valley Project (the "PROJECT"), since the Optionee is part of
senior management of the Company and in such position is materially
responsible for bringing the Project into commercial production as a mine.
3. The Optionee shall have the right to purchase 30,000 shares of the
Company subject to this agreement (the "FIRST TRANCHE") only if, on or before
December 31, 1996, all material permits have been issued by the applicable
federal, state, county and other regulatory bodies to allow the commencement
of construction for the Project.
4. Whether or not the Optionee becomes entitled to purchase the First
Tranche, the Optionee shall have the right to purchase an additional 40,000
shares of the Company subject to this agreement (the "SECOND TRANCHE") only
if, on or before June 30, 1997, agreements have been entered into between the
Company and third parties which, on completion, will provide financing for
the completion of construction for the Project.
5. Whether or not the Optionee becomes entitled to purchase the First
Tranche and/or the Second Tranche, the Optionee shall have the right to
purchase an additional 50,000 shares of the Company subject to this agreement
(the "THIRD TRANCHE") only if, on or before the first anniversary of the
production of cathode copper at the Project, the Company has substantially
satisfied all of the conditions established for the commercial completion of
the Project by the senior lending institutions providing the financing.
6. The determination as to whether the conditions have been met for the
purchase by the Optionee of each of the First Tranche, the Second Tranche and
the Third Tranche shall be made by the directors of the Company, and prompt
notice of such determination shall be given to the Optionee.
7. Notwithstanding that none or only some of the conditions set out in
paragraphs 3, 4 and 5 hereof have been met, the Optionee shall become
immediately entitled to purchase any unexercised part of the 120,000 shares
subject to this agreement in the event that the Company undergoes a "Change
of Control" (as that term is hereinafter defined). For the purposes of this
Agreement, a "CHANGE OF CONTROL" shall be deemed to have occurred at any time
following the effective date of this agreement when:
(a) a person becomes a new control person (as that term is defined in
the SECURITIES ACT of British Columbia) of the Company; or
<PAGE>
3
(b) a majority of the directors elected at any annual or special
general meeting of shareholders of the Company are not individuals
nominated by the Company's then-incumbent board of directors.
8. The right to take up shares pursuant to the option herein granted is
exercisable by notice in writing to the Company accompanied by a certified
cheque in favour of the Company for the full amount of the purchase price of
the shares being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
in the name of the Optionee for the number of shares so purchased.
9. This is an option agreement only and does not impose upon the Optionee
any obligation to take up and pay for any of the shares under option.
10. Subject to paragraph 11 hereof, the option herein granted shall cease
and become null and void following the tenth day after which the Optionee
ceases to act as a director of the Company.
11. The Optionee hereby acknowledges that in the event the Optionee is an
insider of the Company, the option herein granted may not be exercised in
full or in part until this agreement has been approved by the members at a
general meeting of the Company.
12. The Company hereby covenants that it will seek the approval of the
members to the incentive stock option herein granted, together with any
amendments thereto, at the next general meeting of the Company prior to
exercise thereof by the Optionee, in accordance with the requirements of The
Toronto Stock Exchange, and the Optionee warrants that he will not exercise
all or any portion of the subject option until such approval is obtained.
13. The Company hereby covenants and agrees to and with the Optionee that
it will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Optionee upon full exercise of the option herein
granted.
14 If at any time during the continuance of this agreement, the parties
hereto deem it necessary or expedient to make any alteration or addition to
this agreement, they may do so by means of a written agreement between them
which will be supplemental hereto and form part hereof and which may be
subject to the approval of the securities regulatory bodies having
jurisdiction.
15. This agreement may be executed in several parts in the same form and
such parts as so executed will together constitute one original agreement,
and such parts, if more than one, will be read together as if all the signing
parties hereto had executed one copy of this agreement.
16. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors.
17. Wherever the plural or masculine are used throughout this agreement,
the same shall be construed as meaning singular or feminine or neuter or the
body politic where the context of the parties thereto require.
18. The Optionee hereby acknowledges and confirms that he has obtained
independent legal advice with respect to this agreement and understands and
is aware that the securities of the
<PAGE>
4
Company have not been registered under the Securities Act of 1933, as
amended. The Optionee covenants with and to the Company that he will exercise
the option herein granted, and dispose of the shares thereby acquired, only
in accordance with all applicable laws.
19. In this agreement, all references to money are references to Canadian
dollars.
IN WITNESS WHEREOF the parties have hereunto caused these presents to
be executed as of the day and year first above written.
The COMMON SEAL of )
SUMMO MINERALS CORPORATION )
in the presence of: )
/s/ [Illegible] )
- ------------------------ ) c/s,
Authorized signatory )
Corporate Sec'y
SIGNED, SEALED AND DELIVERED )
by GREGORY A. HAHN )
in the presence of: )
/s/ Michelle Hebert ) /s/ Gregory A. Hahn
- ------------------------ ---------------------------------
Witness GREGORY A. HAHN
This is page 3 to that certain Incentive Stock Option Agreement between SUMMO
MINERALS CORPORATION and GREGORY A. HAHN dated as of the 26th day of March,
1996.
<PAGE>
Schedule "A"
- --------------------------------------------------------------------------------
SUMMO MINERALS CORPORATION
EMPLOYEE INCENTIVE STOCK OPTION PLAN
1. PURPOSE
The purpose of the Employee Incentive Stock Option Plan (the "Plan")
is to promote the profitability and growth of SUMMO MINERALS CORPORATION
("Summo") by facilitating the efforts of Summo and its subsidiaries to obtain
and retain key individuals. The Plan provides an incentive for and encourages
ownership of Summo's shares by its key individual so that they may increase
their stake in Summo and benefit from increases in the value of Summo's
shares.
2. ADMINISTRATION
The Plan will be administered by a committee (the "Committee") of
Summo's Board of Directors (the "Board"), which will consist of two or more
members. All members of the Committee shall be non-employee directors who a
"Disinterested Persons" with regard to Plan administration, within the
meaning of Rule 16b-3 as promulgated and amended from time to time by the
United States Securities and Exchange Commission.
The Committee will be authorized, subject to the provisions of the
Plan, to adopt such rules and regulations which it deems consistent with the
Plan's provisions and, in its sole discretion, to designate options
("Options") to purchase shares of Summo pursuant to the Plan. The Committee
may authorize one or more individuals of Summo to execute, deliver and
receive documents on behalf of the Committee.
3. ELIGIBILITY
All directors and officers and employees of Summo and its subsidiaries
will be eligible to receive Options. The term "subsidiaries" for the purpose
of the Plan will include Summo U.S.A. Corporation, which definition may be
varied by the Committee to conform with the changing interests of Summo.
Nothing in the Plan or in any option shall confer any right on any
individual to continue in the employ of or association with Summo or its
subsidiaries or will interfere in any way with the right of Summo or
subsidiaries to terminate at any time the employment of a person who is an
optionee ("Optionee") under an Option.
4. SHARES SUBJECT TO OPTION
The shares to be optioned under the Plan will be authorized but
unissued Common Shares without par value ("Shares") of Summo.
At no time will more than 2,000,000 Shares be under option either
pursuant to the Plan or pursuant to other incentive stock options issued by
Summo. The number of Shares under option at any specific time to any one
Optionee shall not exceed 5% of the issued and outstanding common share
capital of Summo, subject to adjustment under Section 12 below.
Shares subject to and not delivered under an Option which expires or
terminates shall again be available for option under the Plan. The maximum
number of Shares which may be issued pursuant to
<PAGE>
2
the Plan shall not however exceed 2,000,000 Shares.
5. GRANTING OF OPTIONS
The Committee may from time to time at its discretion, subject to the
provisions of the Plan, determine those eligible individuals to whom Options
will be granted, the number of Shares subject to such Options, the dates on
which such Options are to be granted and the expiration of such Options.
The Committee may, at its discretion, with respect to any Option,
impose additional terms and conditions which are more restrictive on the
optionee than those provided for in the Plan.
Each Option will be evidenced by a written agreement between, and
executed by, Summo and the individual containing such terms and conditions
established by the Committee with respect to such Option and will be
consistent with the provisions of the Plan.
Options shall be granted to directors only according to the following
formula:
(i) Each director who was a member of the Board of Directors prior to
January 1, 1996, shall upon adoption of this Plan be issued
Options for that number of Shares necessary to bring the aggregate
number of Shares underlying incentive options issued to such
director to 150,000 Shares. The exercise price of such Options
shall be determined as provided in Section 6 hereof.
(ii) Each director who becomes a member of the Board of Directors after
January 1, 1996, shall be granted Options for 50,000 Shares upon
his or her election or appointment to the Board. The exercise
price shall be determined as provided in Section 6 hereof.
(iii) Upon the expiration date of any Options issued to a director
(regardless of whether such Options were exercised on or prior to
the expiration date), such director shall be issued Options for an
additional 50,000 Shares. The exercise price shall be determined
as provided in Section 6 hereof. The provisions of this
paragraph (iii) shall also apply upon the expiration date of any
other incentive stock options issued to a director if at the time
of such expiration date, the director holds incentive options,
including Options, for fewer than an aggregate of 50,000 Shares
underlying such options, in which case the director shall be
issued that number of Options necessary to bring the aggregate
number of Shares underlying incentive options issued to such
director at such time to 50,000 Shares. The calculation of
incentive options held by any director shall not include any
warrants to purchase Summo shares held by a director provided
such warrants were issued by Summo in connection with securities
offered by Summo.
(iv) The foregoing formulas shall not be amended more than once every
six months other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder.
(v) Additional options may be granted to directors at the discretion
of the Committee,
<PAGE>
3
provided that no director may receive additional options while
serving on the Committee if the receipt of such options would
cause him to cease to be a Disinterested Person.
6. OPTION PRICE
The price per Share at which Shares may be purchased upon the exercise
of an Option (the "Option Price") will not be lower that the "market price"
of the Shares on The Toronto Stock Exchange (the "TSE") at the time of grant.
In the context of the Plan, "market price" means the closing price of Summo's
shares on the TSE at the close of trading which immediately preceded the time
that the option was granted. If the shares of Summo do not trade on such day,
the "market price" shall be the average of the bid and ask prices on the
previous trading day.
7. TERM OF OPTION
The maximum term of any Option will be 10 years.
The Option Price will be paid in full at the time of exercise of the
Option and no Shares will be delivered until full payment is made.
An Optionee will not be deemed the holder of the Shares subject to his
Option until the Shares are delivered to him.
8. TRANSFERABILITY OF OPTIONS
An Option may not be assigned. During the lifetime of an Optionee, the
Option may be exercised only by the Optionee.
9. TERMINATION OF EMPLOYMENT
Upon termination of employment for any reason except death or
retirement or failure of reelection as a director or failure to be
re-appointed an officer of Summo, an Optionee may, at any time within 30 days
after the date of termination but not later than the date of expiration of
the Option, exercise the Option to the extent the Optionee was entitled to do
so on the date of termination. Any option or portions of Options of
terminated individuals not so exercised will terminate and again be available
for future Options under the Plan. A change of employment will not be
considered a termination so long as the Optionee continues to be employed by
Summo or its subsidiaries.
10. DEATH
Notwithstanding any other provision of this Plan other than the
maximum of 10 years provided for in Section 7, if any Optionee shall die
holding an Option which has not been fully exercised, his personal
representative, heirs or legatees may, at any time within 60 days of grant of
probate of the will or letters of administration of the estate of the
decedent or within one year after the date of such death, whichever is the
lesser time, exercise the Option with respect to the unexercised balance of
the Shares subject to the Option.
<PAGE>
4
11. RETIREMENT
Notwithstanding any other provision of this Plan, if any Optionee
shall retire or terminate his employment with the consent of the Board under
circumstances equating retirement, while holding an Option which has not been
fully exercised, such Optionee may exercise the Option at any time during the
unexpired term of the Option.
12. CHANGE IN SHARES
In the event the authorized common share capital of Summo as
presently constituted is consolidated into a lesser number of Shares or
subdivided into a greater number of Shares, the number of Shares for which
Options are outstanding will be decreased or increased proportionately as the
case may be and the Option Price will be adjusted accordingly and the
Optionee will have the benefit of any stock dividend declared during the
period within which the said Optionee held his Option. Should Summo
amalgamate or merge with any other company or companies (the right to do so
being expressly reserved) whether by way of arrangement, sale of assets and
undertakings or otherwise, then and in each such case the number of shares of
the resulting corporation to which an Option relates will be determined as if
the Option has been fully exercised prior to the effective date of the
amalgamation or merger and the Option Price will be correspondingly increased
or decreased, as applicable.
13. CANCELLATION AND RE-GRANTING OF OPTIONS
The Committee may, with the consent of the Optionee, cancel any
existing Option, and re-grant the Option at an Option Price determined in the
same manner as provided in Section 6 hereof, subject to the prior approval of
the TSE.
14. AMENDMENT OR DISCONTINUANCE
The Board may alter, suspend or discontinue the Plan, but may not,
without the approval of the shareholders of Summo and the TSE, may any
alteration which would (a) increase the aggregate number of Shares subject to
Option under the Plan except as provided in Section 12 or (b) decrease the
Option Price except as provided in Section 12. Notwithstanding the foregoing,
the terms of an existing Option may not be altered, suspended or discontinued
without the consent in writing of the Optionee.
15. INTERPRETATION
The Plan will be construed according to the laws of the Province of
British Columbia.
16. LIABILITY
No member of the Committee or any director, officer or employee of
Summo will be personally liable for any act taken or omitted in good faith in
connection with the Plan.
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
(PLAN)
THIS AGREEMENT is made as of the 30th day of April, 1996,
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under the laws
of the Province of British Columbia, having its registered office at
860-625 Howe Street, Vancouver, B.C., V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
MATTHEW J. MASON, of 860-625 Howe St.
---------------- -------------------------------------------------
Vancouver, BC V6C 2T6
----------------------------------------------------------------------
(RESIDENTIAL ADDRESS, INCLUDING POSTAL (ZIP) CODE)
(hereinafter called the "Optionee")
OF THE SECOND PART.
WHEREAS:
A. the Optionee is a director of the Company and requires as a condition of
holding such position that the parties enter into this Incentive Stock Option
Agreement on the terms and conditions hereinafter set forth;
B. this incentive stock option is granted by the Company in reliance on the
exemptions from registration and prospectus requirements contained in Sections
31(2)(10) and 55(2)(9) of the SECURITIES ACT (British Columbia) and Sections
35(1)(19) and 72(1)(n) of the SECURITIES ACT (Ontario);
C. the Company has been classified as a "Resource" company by the Vancouver
Stock Exchange and as a "Non-Exempt" resource company by The Toronto Stock
Exchange;
D. the directors of the Company passed a resolution at their board meeting held
January 15, 1996 implementing an Incentive Stock Option Plan (the "PLAN"),
subject to shareholder ratification, a copy of which is attached hereto as
"Schedule "A";
E. the option herein granted is subject to the terms and conditions of the
Plan;
<PAGE>
3
8. This agreement may be executed in several parts in the same form and such
parts as so executed will together constitute one original agreement, and such
parts, if more than one, will be read together as if all the signing parties
hereto had executed one copy of this agreement.
9. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors.
10. Wherever the plural or masculine are used throughout this agreement, the
same shall be construed as meaning singular or feminine or neuter or the body
politic where the context of the parties thereto require.
11. The Optionee hereby acknowledges and confirms that he has obtained
independent legal advice with respect to this agreement and understands and
is aware that the securities of the Company have not been registered under
the Securities Act of 1933, as amended. The Optionee covenants with and to
the Company that he will exercise the option herein granted, and dispose of
the shares thereby acquired, only in accordance with all applicable laws.
12. In this agreement, all references to money are references to Canadian
dollars.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
The COMMON SEAL of )
SUMMO MINERALS )
CORPORATION )
in the presence of: )
)
[illegible] )
- ----------------------------- ) c/s
Authorized signatory )
SIGNED, SEALED AND DELIVERED )
by MATTHEW J. MASON )
in the presence of: )
[illegible] ) /s/ Matthew J. Mason
- ----------------------------- ) ------------------------------------
Witness Matthew J. Mason
This is page 3 to that certain Incentive Stock Option Agreement between SUMMO
MINERALS CORPORATION and MATTHEW J. MASON dated as of the 30th day of April,
1996.
<PAGE>
Schedule "A"
- --------------------------------------------------------------------------------
SUMMO MINERALS CORPORATION
EMPLOYEE INCENTIVE STOCK OPTION PLAN
1. PURPOSE
The purpose of the Employee Incentive Stock Option Plan (the "Plan") is
to promote the profitability and growth of SUMMO MINERALS CORPORATION
("Summo") by facilitating the efforts of Summo and its subsidiaries to obtain
and retain key individuals. The Plan provides an incentive for and encourages
ownership of Summo's shares by its key individual so that they may increase
their stake in Summo and benefit from increases in the value of Summo's
shares.
2. ADMINISTRATION
The Plan will be administered by a committee (the "Committee") of Summo's
Board of Directors (the "Board"), which will consist of two or more members.
All members of the Committee shall be non-employee directors who a
"Disinterested Persons" with regard to Plan administration, within the
meaning of Rule 16b-3 as promulgated and amended from time to time by the
United States Securities and Exchange Commission.
The Committee will be authorized, subject to the provisions of the Plan,
to adopt such rules and regulations which it deems consistent with the Plan's
provisions and, in its sole discretion, to designate options ("Options") to
purchase shares of Summo pursuant to the Plan. The Committee may authorize
one or more individuals of Summo to execute, deliver and receive documents on
behalf of the Committee.
3. ELIGIBILITY
All directors and officers and employees of Summo and its subsidiaries
will be eligible to receive Options. The term "subsidiaries" for the purpose
of the Plan will include Summo U.S.A. Corporation, which definition may be
varied by the Committee to conform with the changing interests of Summo.
Nothing in the Plan or in any option shall confer any right on any
individual to continue in the employ of or association with Summo or its
subsidiaries or will interfere in any way with the right of Summo or
subsidiaries to terminate at any time the employment of a person who is an
optionee ("Optionee") under an Option.
4. SHARES SUBJECT TO OPTION
The shares to be optioned under the Plan will be authorized but unissued
Common Shares without par value ("Shares") of Summo.
At no time will more than 2,000,000 Shares be under option either
pursuant to the Plan or pursuant to other incentive stock options issued by
Summo. The number of Shares under option at any specific time to any one
Optionee shall not exceed 5% of the issued and outstanding common share
capital of Summo, subject to adjustment under Section 12 below.
Shares subject to and not delivered under an Option which expires or
terminates shall again be available for option under the Plan. The maximum
number of Shares which may be issued pursuant to
<PAGE>
2
the Plan shall not however exceed 2,000,000 Shares.
5. GRANTING OF OPTIONS
The Committee may from time to time at its discretion, subject to the
provisions of the Plan, determine those eligible individuals to whom Options
will be granted, the number of Shares subject to such Options, the dates on
which such Options are to be granted and the expiration of such Options.
The Committee may, at its discretion, with respect to any Option, impose
additional terms and conditions which are more restrictive on the optionee
than those provided for in the Plan.
Each Option will be evidenced by a written agreement between, and
executed by, Summo and the individual containing such terms and conditions
established by the Committee with respect to such Option and will be
consistent with the provisions of the Plan.
Options shall be granted to directors only according to the following
formula:
(i) Each director who was a member of the Board of Directors prior to
January 1, 1996, shall upon adoption of this Plan be issued
Options for that number of Shares necessary to bring the aggregate
number of Shares underlying incentive options issued to such
director to 150,000 Shares. The exercise price of such Options
shall be determined as provided in Section 6 hereof.
(ii) Each director who becomes a member of the Board of Directors after
January 1, 1996, shall be granted Options for 50,000 Shares upon
his or her election or appointment to the Board. The exercise
price shall be determined as provided in Section 6 hereof.
(iii) Upon the expiration date of any Options issued to a director
(regardless of whether such Options were exercised on or prior to
the expiration date), such director shall be issued Options for an
additional 50,000 Shares. The exercise price shall be determined
as provided in Section 6 hereof. The provisions of this paragraph
(iii) shall also apply upon the expiration date of any other
incentive stock options issued to a director if at the time of
such expiration date, the director holds incentive options,
including Options, for fewer than an aggregate of 50,000 Shares
underlying such options, in which case the director shall be
issued that number of Options necessary to bring the aggregate
number of Shares underlying incentive options issued to such
director at such time to 50,000 Shares. The calculation of
incentive options held by any director shall not include any
warrants to purchase Summo shares held by a director provided such
warrants were issued by Summo in connection with securities
offered by Summo.
(iv) The foregoing formulas shall not be amended more than once every
six months other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder.
(v) Additional options may be granted to directors at the discretion
of the Committee,
<PAGE>
3
provided that no director may receive additional options while
serving on the Committee if the receipt of such options would
cause him to cease to be a Disinterested Person.
6. OPTION PRICE
The price per Share at which Shares may be purchased upon the exercise of
an Option (the "Option Price") will not be lower that the "market price" of
the Shares on The Toronto Stock Exchange (the "TSE") at the time of grant. In
the context of the Plan, "market price" means the closing price of Summo's
shares on the TSE at the close of trading which immediately preceded the time
that the option was granted. If the shares of Summo do not trade on such day,
the "market price" shall be the average of the bid and ask prices on the
previous trading day.
7. TERM OF OPTION
The maximum term of any Option will be 10 years.
The Option Price will be paid in full at the time of exercise of the
Option and no Shares will be delivered until full payment is made.
An Optionee will not be deemed the holder of the Shares subject to his
Option until the Shares are delivered to him.
8. TRANSFERABILITY OF OPTIONS
An Option may not be assigned. During the lifetime of an Optionee, the
Option may be exercised only by the Optionee.
9. TERMINATION OF EMPLOYMENT
Upon termination of employment for any reason except death or retirement or
failure of re-election as a director or failure to be re-appointed an
officer of Summo, an Optionee may, at any time within 30 days after the date
of termination but not later than the date of expiration of the Option,
exercise the Option to the extent the Optionee was entitled to do so on the
date of termination. Any option or portions of Options of terminated
individuals not so exercised will terminate and again be available for future
Options under the Plan. A change of employment will not be considered a
termination so long as the Optionee continues to be employed by Summo or its
subsidiaries.
10. DEATH
Notwithstanding any other provision of this Plan other than the maximum
of 10 years provided for in Section 7, if any Optionee shall die holding an
Option which has not been fully exercised, his personal representative, heirs
or legatees may, at any time within 60 days of grant of probate of the will
or letters of administration of the estate of the decedent or within one year
after the date of such death, whichever is the lesser time, exercise the
Option with respect to the unexercised balance of the Shares subject to the
Option.
<PAGE>
4
11. RETIREMENT
Notwithstanding any other provision of this Plan, if any Optionee shall
retire or terminate his employment with the consent of the Board under
circumstances equating retirement, while holding an Option which has not been
fully exercised, such Optionee may exercise the Option at any time during the
unexpired term of the Option.
12. CHANGE IN SHARES
In the event the authorized common share capital of Summo as presently
constituted is consolidated into a lesser number of Shares or subdivided into
a greater number of Shares, the number of Shares for which Options are
outstanding will be decreased or increased proportionately as the case may be
and the Option Price will be adjusted accordingly and the Optionee will have
the benefit of any stock dividend declared during the period within which the
said Optionee held his Option. Should Summo amalgamate or merge with any
other Company or companies (the right to do so being expressly reserved)
whether by way of arrangement, sale of assets and undertakings or otherwise,
then and in each such case the number of shares of the resulting corporation
to which an Option relates will be determined as if the Option has been fully
exercised prior to the effective date of the amalgamation or merger and the
Option Price will be correspondingly increased or decreased, as applicable.
13. CANCELLATION AND RE-GRANTING OF OPTIONS
The Committee may, with the consent of the Optionee, cancel any existing
Option, and re-grant the Option at an Option Price determined in the same
manner as provided in Section 6 hereof, subject to the prior approval of the
TSE.
14. AMENDMENT OR DISCONTINUANCE
The Board may alter, suspend or discontinue the Plan, but may not,
without the approval of the shareholders of Summo and the TSE, may any
alteration which would (a) increase the aggregate number of Shares subject to
Option under the Plan except as provided in Section 12 or (b) decrease the
Option Price except as provided in Section 12. Notwithstanding the foregoing,
the terms of an existing Option may not be altered, suspended or discontinued
without the consent in writing of the Optionee.
15. INTERPRETATION
The Plan will be construed according to the laws of the Province of
British Columbia,
16. LIABILITY
No member of the Committee or any director, officer or employee of Summo
will be personally liable for any act taken or omitted in good faith in
connection with the Plan.
<PAGE>
EXHIBIT 10.31
INCENTIVE STOCK OPTION AGREEMENT (NON-PLAN)
THIS AGREEMENT is made as of the 30th day of April, 1996,
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under the
laws of the Province of British Columbia, having its registered
office at 860-625 Howe Street, Vancouver, B.C., V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
MATTHEW J. MASON, of 860-625 Howe St.
-----------------------------------
Vancouver, B.C. V6C 2T6
--------------------------------------------------------
(RESIDENTIAL ADDRESS, INCLUDING POSTAL (ZIP) CODE)
(hereinafter called the "Optionee")
OF THE SECOND PART.
WHEREAS:
A. the Optionee is a director or an employee of the Company and requires as
a condition of holding such position that the parties enter into this
Incentive Stock Option Agreement on the terms and conditions hereinafter set
forth;
B. this incentive stock option is granted by the Company in reliance on the
exemptions from registration and prospectus requirements contained in
Sections 31(2)(10) and 55(2)(9) of the SECURITIES ACT (British Columbia) and
Sections 35(1)(19) and 72(1)(n) of the SECURITIES ACT (Ontario); and
C. the Company has been classified as a "Resource" company by the
Vancouver Stock Exchange and as a "Non-Exempt" resource company by The
Toronto Stock Exchange (the "TSE").
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained the parties
hereto covenant and agree as follows:
1. From the date hereof, and for so long as the Optionee shall be an
employee of the Company, the Optionee shall have and be entitled to and the
Company hereby grants to the
<PAGE>
2
Optionee an option to purchase all or any portion of EIGHTY-TWO THOUSAND,
FIVE HUNDRED (82,500) fully paid and non-assessable common shares (the
"SHARES") of the Company from the treasury on or before April 30, 2001 at
the price of ONE DOLLAR AND FIFTY-ONE CENTS ($1.51) per share provided that:
(a) no more than 25% of the Shares may be purchased on or before April 30,
1997;
(b) no more than a total of 50% of the Shares may be purchased on or
before April 30, 1998; and
(c) no more than a total of 75% of the Shares may be purchased on or
before April 30, 1999.
2. The right to take up shares pursuant to the option herein granted is
exercisable by notice in writing to the Company accompanied by a certified
cheque in favour of the Company for the full amount of the purchase price of
the shares being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
in the name of the Optionee for the number of shares so purchased.
3. This is an option agreement only and does not impose upon the optionee
any obligation to take up and pay for any of the shares under option.
4. The option herein granted shall be non-transferable and non-assignable by
the Optionee otherwise than by Will or the law of intestacy and the option
may be exercised during the lifetime of the Optionee only by the Optionee.
5. If the Optionee should die while he is either a director or an employee
of the Company the option herein granted may then be exercised by his legal
heirs or personal representatives to the same extent as if the Optionee were
alive and either a director or an employee of the Company for a period of six
(6) months after the death of the Optionee but only for such shares as the
Optionee was entitled to at the date of the death of the Optionee.
6. The Optionee represents and warrants that he is either a director or an
employee of the Company or an affiliate thereof. Subject to paragraph 5
hereof, the option herein granted shall cease and become null and void
following the tenth day after which the Optionee ceases to act as either a
director or an employee of the Company.
7. The provisions of this agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approvals of the
British Columbia Securities Commission or, if listed thereon, the TSE and the
Vancouver Stock Exchange; PROVIDED, HOWEVER, THAT in the event that such
approvals are not obtained within 12 months of the date of this agreement,
then this agreement shall from that date be null and void and of no further
force and effect.
8. The Optionee hereby acknowledges that in the event the Optionee is an
insider of the Company, the option herein granted may not be exercised in
full or in part until this agreement has been approved by the members at a
general meeting of the Company.
<PAGE>
3
9. The Company hereby covenants that it will seek the approval of the
members to the incentive stock option herein granted, together with any
amendments thereto, at the next general meeting of the Company prior to
exercise thereof by the Optionee, in accordance with the requirements of the
TSE, and the Optionee warrants that he will not exercise all or any portion
of the subject option until such approval is obtained.
10. In the event of any subdivision, consolidation or other change in the
share capital of the Company while any portion of the option hereby granted
is outstanding, the number of shares under option to the Optionee and the
price thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
11. The Company hereby covenants and agrees to and with the Optionee that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Optionee in the event the Optionee exercises the
option herein granted.
12. If at any time during the continuance of this agreement the parties
hereto deem it necessary or expedient to make any alteration or addition to
this agreement, they may do so by means of a written agreement between them
which will be supplemental hereto and form part hereof and which will be
subject to the approval of the Exchange and the members at a general meeting
of the Company and/or any requirements of the securities regulatory bodies in
effect at that time.
13. This agreement may be executed in several parts in the same form and
such parts as so executed will together constitute one original agreement,
and such parts, if more than one, will be read together and construed as if
all the signing parties hereto had executed one copy of this agreement.
14. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors.
15. Wherever the plural or masculine are used throughout this agreement, the
same shall be construed as meaning singular or feminine or neuter or the body
politic where the context of the parties thereto require.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
The COMMON SEAL of )
SUMMO MINERALS CORPORATION )
in the presence of: )
)
/s/ illegible )
- -------------------------- ) c/s
Authorized signatory
<PAGE>
4
SIGNED, SEALED AND DELIVERED )
by MATTHEW J. MASON )
in the presence of: )
)
/s/ illegible ) /s/ Matthew J. Mason
- ---------------------------- ----------------------------
Witness Matthew J. Mason
This is page 4 to that certain Incentive Stock Option Agreement between SUMMO
MINERALS CORPORATION and MATTHEW J. MASON dated as of the 30th day of April,
1996.
<PAGE>
EXHIBIT 10.32
INCENTIVE STOCK OPTION AGREEMENT
(NON-PLAN)
THIS AGREEMENT is made as of the 9th day of June, 1996,
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under the
laws of the Province of British Columbia, having its registered
office at 860-625 Howe Street, Vancouver, B.C., V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
GREGORY A HAHN of Suite 1100, 1776 Lincoln Street, Denver, Colorado,
U.S.A. 80203
(hereinafter called the "Optionee")
OF THE SECOND PART.
WHEREAS:
A. the Optionee is a director or an employee of the Company and requires as a
condition of holding such position that the parties enter into this Incentive
Stock Option Agreement on the terms and conditions hereinafter set forth;
B. this incentive stock option is granted by the Company in reliance on the
exemptions from registration and prospectus requirements contained in Sections
31(2)(10) and 55(2)(9) of the SECURITIES ACT (British Columbia) and Sections
35(1)(19) and 72(1)(n) of the SECURITIES ACT (Ontario); and
C. the Company has been classified as a "Resource" company by the Vancouver
Stock Exchange and as a "Non-Exempt" resource company by The Toronto Stock
Exchange (the "TSE").
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained the parties hereto
covenant and agree as follows:
<PAGE>
2
1. From the date hereof, and for so long as the Optionee shall be an employee
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase all or any portion of FIFTY
THOUSAND (50,000) fully paid and non-assessable common shares (the "Option
Shares") of the Company from the treasury on or before June 9, 2001 at the price
of TWO DOLLARS AND TEN CENTS ($2.10) per share provided that:
(i) no more than 25% of the Option Shares may be purchased on
or before June 9, 1997;
(ii) no more than a total of 50% of the Option Shares may be
purchased on or before June 9, 1998; and
(iii) no more than a total of 75% of the Option Shares may be
purchased on or before June 9, 1999.
2. The right to take up shares pursuant to the option herein granted is
exercisable by notice in writing to the Company accompanied by a certified
cheque in favour of the Company for the full amount of the purchase price of the
shares being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates in
the name of the Optionee for the number of shares so purchased.
3. This is an option agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under option.
4. The option herein granted shall be non-transferable and non-assignable by
the Optionee otherwise than by Will or the law of intestacy and the option may
be exercised during the lifetime of the Optionee only by the Optionee.
5. If the Optionee should die while he is either a director or an employee of
the Company the option herein granted may then be exercised by his legal heirs
or personal representatives to the same extent as if the Optionee were alive and
either a director or an employee of the Company for a period of six (6) months
after the death of the Optionee, but only for such shares as the Optionee was
entitled to at the date of the death of the Optionee.
6. The Optionee represents and warrants that he is either a director or an
employee of the Company or an affiliate thereof. Subject to paragraph 5 hereof,
the option herein granted shall cease and become null and void following the
tenth day after which the Optionee ceases to act as an employee of the Company.
7. The provisions of this agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approvals of the
British Columbia Securities Commission or, if listed thereon, the TSE and the
Vancouver Stock Exchange; PROVIDED, HOWEVER, THAT in the event that such
approvals are not obtained within 12 months of the date of this agreement,
then this agreement shall from that date be null and void and of no further
force and effect.
<PAGE>
3
8. The Optionee hereby acknowledges that in the event the Optionee is an
insider of the Company, the option herein granted may not be exercised in full
or in part until this agreement has been approved by the members at a general
meeting of the Company.
9. The Company hereby covenants that it will seek the approval of the members
to the incentive stock option herein granted, together with any amendments
thereto, at the next general meeting of the Company prior to exercise thereof by
the Optionee, in accordance with the requirements of the TSE, and the Optionee
warrants that he will not exercise all or any portion of the subject option
until such approval is obtained.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the option hereby granted is
outstanding, the number of shares under option to the Optionee and the price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
11. The Company hereby covenants and agrees to and with the Optionee that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Optionee in the event the Optionee exercises the
option herein granted.
12. If at any time during the continuance of this agreement the parties hereto
deem it necessary or expedient to make any alteration or addition to this
agreement, they may do so by means of a written agreement between them which
will be supplemental hereto and form part hereof and which will be subject to
the approval of the Exchange and the members at a general meeting of the Company
and/or any requirements of the securities regulatory bodies in effect at that
time.
13. This agreement may be executed in several parts in the same form and such
parts as so executed will together constitute one original agreement, and such
parts, if more than one, will be read together and construed as if all the
signing parties hereto had executed one copy of this agreement.
14. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors.
15. Wherever the plural or masculine are used throughout this agreement, the
same shall be construed as meaning singular or feminine or neuter or the body
politic where the context of the parties thereto require.
16. The Optionee hereby acknowledges and confirms that he has obtained
independent legal advice with respect to this agreement and understands and is
aware that the securities of the Company have not been registered under the
Securities Act of 1933, as amended, and that the granting of this option is
conditional upon it being exempt from the application of the Securities Act of
1933 and any applicable state laws. The Optionee covenants with and to the
Company that he will exercise the option herein granted, and dispose of the
shares thereby acquired, only in accordance with all applicable laws.
<PAGE>
4
17. In this agreement, all references to money are references to Canadian
dollars.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
The COMMON SEAL of )
SUMMO MINERALS CORPORATION )
in the presence of: )
/s/ illegible )
- ------------------------- ) c/s
Authorized signatory )
SIGNED, SEALED AND DELIVERED )
by GREGORY A. HAHN )
in the presence of: )
)
/s/Michelle Hebert ) /s/Gregory A Hahn
- ------------------------- --------------------------
Witness GREGORY A. HAHN
This is page 4 to that certain Incentive Stock Option Agreement between SUMMO
MINERALS CORPORATION and GREGORY A. HAHN dated as of the 9th day of June, 1996.
<PAGE>
EXHIBIT 10.32
INCENTIVE STOCK OPTION AGREEMENT
(NON-PLAN)
THIS AGREEMENT is made as of the 9th day of June, 1996,
BETWEEN:
SUMMO MINERALS CORPORATION, a company duly incorporated under the
laws of the Province of British Columbia, having its registered
office at 860-625 Howe Street, Vancouver, B.C., V6C 2T6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
GREGORY A HAHN of Suite 1100, 1776 Lincoln Street, Denver, Colorado,
U.S.A. 80203
(hereinafter called the "Optionee")
OF THE SECOND PART.
WHEREAS:
A. the Optionee is a director or an employee of the Company and requires as a
condition of holding such position that the parties enter into this Incentive
Stock Option Agreement on the terms and conditions hereinafter set forth;
B. this incentive stock option is granted by the Company in reliance on the
exemptions from registration and prospectus requirements contained in Sections
31(2)(10) and 55(2)(9) of the SECURITIES ACT (British Columbia) and Sections
35(1)(19) and 72(1)(n) of the SECURITIES ACT (Ontario); and
C. the Company has been classified as a "Resource" company by the Vancouver
Stock Exchange and as a "Non-Exempt" resource company by The Toronto Stock
Exchange (the "TSE").
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained the parties hereto
covenant and agree as follows:
<PAGE>
2
1. From the date hereof, and for so long as the Optionee shall be an employee
of the Company, the Optionee shall have and be entitled to and the Company
hereby grants to the Optionee an option to purchase all or any portion of FIFTY
THOUSAND (50,000) fully paid and non-assessable common shares (the "Option
Shares") of the Company from the treasury on or before June 9, 2001 at the price
of TWO DOLLARS AND TEN CENTS ($2.10) per share provided that:
(i) no more than 25% of the Option Shares may be purchased on
or before June 9, 1997;
(ii) no more than a total of 50% of the Option Shares may be
purchased on or before June 9, 1998; and
(iii) no more than a total of 75% of the Option Shares may be
purchased on or before June 9, 1999.
2. The right to take up shares pursuant to the option herein granted is
exercisable by notice in writing to the Company accompanied by a certified
cheque in favour of the Company for the full amount of the purchase price of the
shares being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates in
the name of the Optionee for the number of shares so purchased.
3. This is an option agreement only and does not impose upon the Optionee any
obligation to take up and pay for any of the shares under option.
4. The option herein granted shall be non-transferable and non-assignable by
the Optionee otherwise than by Will or the law of intestacy and the option may
be exercised during the lifetime of the Optionee only by the Optionee.
5. If the Optionee should die while he is either a director or an employee of
the Company the option herein granted may then be exercised by his legal heirs
or personal representatives to the same extent as if the Optionee were alive and
either a director or an employee of the Company for a period of six (6) months
after the death of the Optionee, but only for such shares as the Optionee was
entitled to at the date of the death of the Optionee.
6. The Optionee represents and warrants that he is either a director or an
employee of the Company or an affiliate thereof. Subject to paragraph 5 hereof,
the option herein granted shall cease and become null and void following the
tenth day after which the Optionee ceases to act as an employee of the Company.
7. The provisions of this agreement and the exercise of the rights
hereinbefore granted to the Optionee are subject to the approvals of the
British Columbia Securities Commission or, if listed thereon, the TSE and the
Vancouver Stock Exchange; PROVIDED, HOWEVER, THAT in the event that such
approvals are not obtained within 12 months of the date of this agreement,
then this agreement shall from that date be null and void and of no further
force and effect.
<PAGE>
3
8. The Optionee hereby acknowledges that in the event the Optionee is an
insider of the Company, the option herein granted may not be exercised in full
or in part until this agreement has been approved by the members at a general
meeting of the Company.
9. The Company hereby covenants that it will seek the approval of the members
to the incentive stock option herein granted, together with any amendments
thereto, at the next general meeting of the Company prior to exercise thereof by
the Optionee, in accordance with the requirements of the TSE, and the Optionee
warrants that he will not exercise all or any portion of the subject option
until such approval is obtained.
10. In the event of any subdivision, consolidation or other change in the share
capital of the Company while any portion of the option hereby granted is
outstanding, the number of shares under option to the Optionee and the price
thereof shall be deemed adjusted in accordance with such subdivision,
consolidation or other change in the share capital of the Company.
11. The Company hereby covenants and agrees to and with the Optionee that it
will reserve in its treasury sufficient shares to permit the issuance and
allotment of shares to the Optionee in the event the Optionee exercises the
option herein granted.
12. If at any time during the continuance of this agreement the parties hereto
deem it necessary or expedient to make any alteration or addition to this
agreement, they may do so by means of a written agreement between them which
will be supplemental hereto and form part hereof and which will be subject to
the approval of the Exchange and the members at a general meeting of the Company
and/or any requirements of the securities regulatory bodies in effect at that
time.
13. This agreement may be executed in several parts in the same form and such
parts as so executed will together constitute one original agreement, and such
parts, if more than one, will be read together and construed as if all the
signing parties hereto had executed one copy of this agreement.
14. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors.
15. Wherever the plural or masculine are used throughout this agreement, the
same shall be construed as meaning singular or feminine or neuter or the body
politic where the context of the parties thereto require.
16. The Optionee hereby acknowledges and confirms that he has obtained
independent legal advice with respect to this agreement and understands and is
aware that the securities of the Company have not been registered under the
Securities Act of 1933, as amended, and that the granting of this option is
conditional upon it being exempt from the application of the Securities Act of
1933 and any applicable state laws. The Optionee covenants with and to the
Company that he will exercise the option herein granted, and dispose of the
shares thereby acquired, only in accordance with all applicable laws.
<PAGE>
4
17. In this agreement, all references to money are references to Canadian
dollars.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
The COMMON SEAL of )
SUMMO MINERALS CORPORATION )
in the presence of: )
/s/ illegible )
- ------------------------- ) c/s
Authorized signatory )
SIGNED, SEALED AND DELIVERED )
by GREGORY A. HAHN )
in the presence of: )
)
/s/Michelle Hebert ) /s/Gregory A Hahn
- ------------------------- --------------------------
Witness GREGORY A. HAHN
This is page 4 to that certain Incentive Stock Option Agreement between SUMMO
MINERALS CORPORATION and GREGORY A. HAHN dated as of the 9th day of June, 1996.
<PAGE>
EXHIBIT 10.34
** Portions of this Exhibit Redacted **
[LETTERHEAD]
BY FAX March 4, 1997
Mr. Gregory A. Hahn
President and C.E.O.
Summo Minerals Corporation
900 Denver Center Building
1776 Lincoln St.
Denver, CO 80203
Re: Commitment - Lisbon Valley Copper Project (the "Project") $45 Million
Financing
Dear Mr. Hahn:
We are pleased to inform you that we have received credit approval for the
above referenced $45 million project financing facility (the "Facility").
This letter will serve as ING (US) Capital Corporation's ("ING Capital")
commitment to underwrite $27.5 million of the Facility, subject to the terms
and conditions set forth in the attached Definitive Term Sheet and completion
of ING Capital's legal and technical due diligence. It is our understanding
that the Facility's co-underwriter, Heller Financial, Inc. has also received
the requisite credit approvals and will, under separate cover, confirm to you
their firm commitment to underwrite $17.5 million of the Facility.
As discussed, the attached Definitive Term Sheet incorporates the revisions
agreed to by ING Capital, including the following:
1. The Ore Reserves will be increased to permit at least two additional
years of production as a condition of Commercial Completion.
2. The Economic Test for Commercial Completion will require achieving the
following Debt Coverage Ratios:
Life of Loan at least 1.50
Life of Reserves at least 1.75
3. Following Commercial Completion, distributions of Cash Flow
Participation will be permitted so long as there exist no events of
default and the Debt Coverage Ratio is at least 1.50.
We are at this time not able to commit to the $7.0 million hedging facility.
We see this facility as being in the best long term interest of the Borrower.
We propose to revisit this matter and to give it consideration within the
next twelve months.
ING GROUP
135 East 57h Street New York, New York 10022-2101
Telephone: (212) 446-1500 Fax: (212) 644-0428
Telex: TRT 177792 RCA INTL 238686 ITT INTL 428379
<PAGE>
Mr. Gregory A. Hahn
March 4,1997
Page 2 of 2
If you are in agreement with the foregoing and the terms and conditions
provided for in the attached Definitive Term Sheet, please sign in the space
provided below and return a signed copy to my attention prior to the close of
business on March 7, 1997. Please be advised that the contents of this letter
(including the attached Definitive Term Sheet) are confidential and may not
be disclosed to any third party (other than your legal or accounting
advisors) without the prior written consent of ING Capital and Heller.
In addition, by signing below, you agree to jointly and severally indemnify
and hold harmless ING Capital and each of its directors, officers, employees
and affiliates (collectively, the "Indemnified Parties") from and against any
damages, losses, claims, liabilities, demands, charges, suits, costs and
expenses (including court costs and reasonable attorneys' fees and expenses)
(collectively, the "Indemnifiable Costs"), which any Indemnified Parties may
sustain, or to which any of the Indemnified Parties may be subject, or which
in any way relate to or result from the Project, this letter, the attached
Definitive Term Sheet or the financing contemplated thereby (other than those
Indemnified Costs which result primarily from the gross negligence or willful
misconduct of such Indemnified Parties). The provisions of this paragraph
shall survive any termination of this letter or the attached Definitive Term
Sheet.
Again we are pleased to lead this transaction and very much look forward to
working with you and your team on this exciting project.
Sincerely,
ING (U.S.) Capital Corporation
/s/ Ricardo M. Campoy
Ricardo M. Campoy
Managing Director
AGREED AND ACCEPTED AGREED AND ACCEPTED:
this 5th day of March 1997 this 5th day of March 1997
on behalf of SUMMO MINERALS CORPORATION on behalf of SUMMO USA CORPORATION
By: /s/ Gregory D. Hahn By: /s/ James D. Hahn
----------------------- ---------------------
Name: Gregory D. Hahn Name: James D. Hahn
----------------------- ---------------------
Title: President and CEO Title: V.P. Finance and CFO
----------------------- ---------------------
cc: Mr. Mark Condon
James H. Dunnett
Hovey Kemp
<PAGE>
[LETTERHEAD]
March 5, 1997
Summo Minerals Corporation
Summo USA Corporation
900 Denver Center Building
1776 Lincoln Street
Denver, CO 80203
Attn: Mr. Gregory A. Hahn
Re: Commitment - Lisbon Valley Copper Project (the "Project")
$45 Million Financing
Dear Mr. Hahn:
We are pleased to inform you that we have received credit approval for the
above referenced $45 million project financing facility (the "Facility").
This letter will serve as Heller Financial Inc.'s ("Heller") commitment to
underwrite $17.5 million of the Facility, subject to the terms and conditions
set forth in the attached Definitive Term Sheet and completion of Heller's
legal and technical due diligence.
If you are in Agreement with the foregoing and the terms and conditions
provided for in the attached Definitive Term Sheet presented by Heller and
ING (U.S.) Capital Corporation ("ING Capital"), please sign in the space
provided below and return a signed copy to my attention prior to the close of
business on March 7, 1997. Please be advised that the contents of this letter
(including the attached Definitive Term Sheet) are confidential and may not
be disclosed to any third party (other than your legal or accounting
advisers) without the prior written consent of Heller and ING Capital.
In addition, by signing below, you agree to jointly and severally indemnify
and hold harmless Heller and each of its directors, officers, employees and
affiliates (collectively, the "Indemnified Parties") from and against any
damages, losses, claims, liabilities, demands, charges, suits, costs and
expenses (including court costs and reasonable attorneys' fees and expenses)
(collectively, the "Indemnifiable Costs"), which any Indemnified Parties may
sustain, or to which any of the Indemnified Parties may be subjected, or
which in any way relate to or result from the Project, this letter, the
attached Definitive Term Sheet or the financing contemplated thereby (other
than those Indemnifiable Costs which result primarily from the gross
negligence or willful misconduct of such Indemnifiable Parties). The
provisions of this paragraph shall survive any termination of this letter or
the attached Definitive Term Sheet.
<PAGE>
Mr. Gregory A. Hahn
March 5, 1997
Page 2
Again, we are pleased to be taking part in this transaction and very
much look forward to working with you and your team on this exciting project.
Sincerely,
HELLER FINANCIAL. INC.
/s/ Mark S. Condon
Mark S. Condon
Vice President
AGREED AND ACCEPTED:
SUMMO MINERALS CORPORATION
By: /s/ Gregory A. Hahn
-----------------------------
Name: Gregory A. Hahn
-----------------------
Title: President and CEO
-----------------------
SUMMO USA CORPORATION
By: /s/ James D. Frank
-----------------------------
Name: James D. Frank
-----------------------
Title: V.P. Finance and CFO
-----------------------
cc: Ricardo M. Campoy
<PAGE>
DEFINITIVE TERM SHEET
THE PROJECT: The development, construction, and operation of copper
mining facilities within the mining claims at Lisbon Valley
in east central Utah, as described in the October 1996
Update of Feasibility Study prepared by Roberts & Schaefer
(the "Feasibility Study").
BORROWER: A newly formed special purpose company, as sole owner and
operator of the Project.
GUARANTORS: Summo USA Corporation, a US corporation, and;
Summo Minerals Corporation, a Canadian corporation.
AGENT & ING Capital.
ARRANGER:
UNDERWRITERS: ING Capital and Heller Financial, Inc.
LENDERS: ING Capital and Heller Financial, Inc. and one or more
financial institutions acceptable to the Underwriters, the
Borrower, and the Guarantors.
FACILITY: The Underwriters commit to provide their respective share
for up to a $45.0 million senior credit facility as
detailed below:
ING Capital $27.5 million
Heller Financial, Inc. $17.5 million
EQUITY: The Borrower will place, in cash, a minimum of $13.2
million into the Proceeds Account to satisfy the Lenders
that these funds are available for the Project prior to
drawdown of the Facility.
PURPOSE: Drawdowns to be used solely to fund expenditures identified
in the following Sources and Uses:
SOURCES: MILLION USES: MILLION
------------------- ---------------------------------------
Equity 13.2 Construction Costs $42.0
Debt facility 45.0 Working Capital & Preprodn 4.6
Capitalized Interest & Fees 3.0
Contingency 3.6
----
53.2
Debt Service Reserve 5.0
----
Total $58.2 Total $58.2
----- ----
----- ----
AVAILABILITY: The Facility will be drawn on the basis of an agreed
Development and Operating Plan, each draw being no more
frequently than monthly, and each draw to be
approved/certified by the Independent Engineer.
Page 1 of 9
<PAGE>
FINAL No later than December 31, 2005.
MATURITY:
SCHEDULED Facility repayments shall be in quarterly installments
REPAYMENTS: commencing six months after Commercial Completion, but not
later than March 31, 1999. The anticipated repayment
schedule (Exhibit I) is structured in recognition of the
Project's currently projected Cash Available for Debt
Service.
MANDATORY Mandatory Repayments equal to the Prescribed Percentage of
REPAYMENTS: Excess Cash Flow will be made quarterly within 45 days of
quarter-end. Mandatory Repayments will be applied to
Scheduled Repayments in their inverse order of maturity.
Following achievement of Commercial Completion, the
Prescribed Percentage will be 50%, except that, if the then
Ore Reserves provide for a mine life of 24 months or more
beyond Final Maturity, then, if the lower of the Debt
Coverage Ratio and Historic Debt Coverage Ratio is between
1.5 and 2.0, the Prescribed Percentage for that quarter
will be 25%, and if it is greater than 2.0, then 0%.
VOLUNTARY The Borrower may prepay all or a portion of outstandings
REPAYMENTS: without penalty, such prepayments to be applied in their
inverse order of maturity. The Borrower will reimburse
Lenders for funding costs associated with making repayments
on non-interest rollover dates.
EXCESS CASH Cash Available for Debt Service less Debt Service.
FLOW:
CASH AVAILABLE Gross revenue less all associated royalties, cash
FOR DEBT production costs, taxes, non-discretionary capital
SERVICE: expenditures, and working capital changes.
DEBT SERVICE: Scheduled principal and interest payments.
ORE RESERVES: Those ore reserves certified by the Independent Engineer as
being proven and probable.
CAPITAL Those expenses necessary for the development of the Project
EXPENDITURES: and which will be more fully described in the Development
Plan.
DEBT COVERAGE Debt Coverage Ratio shall be the ratio of Cash Available
RATIO: For Debt Service plus the balance in the Debt Service
Reserve to Debt Service through the Facility's Final
Maturity as projected under the Development and Operating
Plan. Gross revenue will be calculated using the actual
hedged price for all future hedged production, and the
unhedged price for the balance. The unhedged price will be
the lesser of (1) the average of the historic 12 monthly
spot price, (2) the then spot price and (3) the average of
the future 12 month LME forward price.
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** Portions of this Page Redacted **
HISTORIC DEBT Historic Debt Coverage Ratio shall be the ratio of Cash
COVERAGE Available for Debt Service to Actual Debt Service (interest
RATIO: due and scheduled principal due) over the prior
four-quarter period to date of calculation.
PROCEEDS All proceeds for project development derived from Equity
ACCOUNT & and the Facility, operating cash flows, commodity hedges,
PRIORITY: sales of assets, insurance payments, etc., will be
deposited in the Borrower's Proceeds Account. During
construction a construction sub-account will be operative.
During the operating phase all transactions will be shifted
to the operating sub-account. All disbursements from these
sub-accounts will be made in the following priority: (i)
taxes; (ii) project development costs, Contingency, and
initial Debt Service Reserve; (iii) all operating and
maintenance costs, working capital, and non-discretionary
capital requirements; (iv) debt service; (v) top up of
Debt Service Reserve (if deficient) or reimbursement to
Summo of excess over its initial $5.0 million funding; (vi)
reimbursement to Summo of unused Contingency amount; (vii)
cash flow split to Underwriters and Summo; and (viii)
discretionary expenditures.
INTEREST RATE: LIBOR plus a margin of [**Redacted -- Confidential Treatment
Sought**]% p.a. prior to Commercial Completion and
[**Redacted -- Confidential Treatment Sought**]% p.a.
following Commercial Completion. The Borrower may select
interest periods of 1, 2, 3, or 6 months. Interest to be
paid on the last day of each interest period, but at least
quarterly.
ACCEPTANCE A $[**Redacted -- Confidential Treatment Sought**] fee was
FEE: paid to the Underwriters on the basis of the Guarantors'
acceptance of the Definitive Term Sheet under cover letter
dated December 26, 1996. With delivery of the Underwriters'
firm commitment, this fee has been earned.
AGENT FEE: $[**Redacted -- Confidential Treatment Sought**] p.a. will be
paid to the Agent annually in advance at Closing and annually
thereafter.
ARRANGEMENT [**Redacted -- Confidential Treatment Sought**]% of the
FEE: Facility to be paid at Closing to the Arranger (i.e.
$[**Redacted -- Confidential Treatment Sought**]).
FRONT END FEE: [**Redacted -- Confidential Treatment Sought**]% of the
principal amount of the Facility, less the Acceptance Fee
payable to the Underwriters at Closing (i.e. $[**Redacted --
Confidential Treatment Sought**]).
COMMITMENT [**Redacted -- Confidential Treatment Sought**]% p.a., payable
FEE: quarterly in arrears, on the unutilized amounts under the
Facility, but limited to the amounts not drawndown against an
agreed drawdown schedule.
CASH FLOW For underwriting the Facility, the Underwriters will be
PARTICIPATION: granted additional consideration in the form of 13.5%
(carried) of the Project's Excess Cash Flow calculated
before income taxes over the first 382 million pounds of
copper sold. Cash flow participations will be paid
quarterly within 45 days of quarter-end and will be
annually adjusted.
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<PAGE>
HEDGING No hedging requirements will be imposed on the Borrower.
REQUIREMENTS:
SECURITY: Prior to Commercial Completion to include, without
limitation (except that if the Borrower is a newly formed
LLC, then this security will be restructured
appropriately):
(1) First and floating priority liens and/or assignments on
all of the Borrower's assets, construction/proceeds
accounts, insurance policies, contracts, rights, permits
that are required under the Facility, and are necessary
to the Borrower's business, and to the Project's
development, operations, and sale of Product.
(2) Pledge of the Guarantors' stock in the Borrower.
(3) The Guarantors' full and unconditional guarantee of the
Borrower's obligations under the Facilities.
(4) Negative pledge over Guarantors' other assets.
Following Commercial Completion, to include, without
limitation, only (1) and (2) above.
DEBT SERVICE The Debt Service Reserve will be maintained with a balance
RESERVE: at least equaling the next 2 quarters' Scheduled Debt
Service and budgeted capital expenditures, but in any event
not less than $5.0 million. Distributions from the Debt
Service Reserve will be permitted to meet these
obligations to the extent that funds are not available from
other sources.
PHYSICAL AND Subject to absence of Events of Default and of Material
COMMERCIAL Adverse Effect, the date upon which the Independent
COMPLETION: Engineer has determined to the Underwriters'
satisfaction that the Project's construction and
development is physically complete and that its operating
performance over an agreed period of time (e.g. 90
consecutive days) generally accords with the Feasibility
Study's projections upon which the Lenders' credit
evaluation was predicated (see Exhibit II for examples).
CONDITIONS The drawdown under the Facility shall be subject to certain
PRECEDENT TO conditions, including, without limitation, absence of
DRAWDOWN OF Events of Default and of Material Adverse Effect, and the
THE FACILITY: Underwriters' satisfaction with the following:
(1) Loan and Security documentation with related legal
opinions.
(2) Assurances as to the corporate existence and authority
of the Borrower and the Guarantor.
(3) The Independent Engineer's technical and environmental
review of the Project.
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<PAGE>
(4) The Independent Insurance Advisor's opinion that there
is usual and adequate insurance policies with respect
to the Borrower's business and the Project's assets.
(5) Evidence of the necessary regulatory approvals,
licenses, authorizations, and permits having been
issued for the Project.
(6) Funding of Equity.
(7) EPCM and contract mining contracts satisfactory to the
Underwriters. EPCM contract to be fixed cost with
respect to the Construction Costs and include
liquidated damages equal to at least 15% of such
Construction Costs.
(8) A detailed project Development and Operating Plan.
(9) Other documents and third party consents and approvals
as the Underwriters and their Legal Counsel shall deem
necessary or appropriate.
BORROWER'S To include, without limitation:
COVENANTS:
(1) Usual reporting requirements including notifications,
audited financials, monthly Project construction and
operating reports, and quarterly operating plans. The
Lenders reserve the right to have such information
audited by the Independent Engineer.
(2) No additional indebtedness, nor liens and encumbrances
with respect to Security, except in regard to
equipment lease finance attendant to the Brown & Root
contract or, for reasonable purposes in the normal
course of business.
(3) Achieve Commercial Completion by no later than
December 31, 1998.
(4) Maintain the Debt Coverage Ratio greater than or equal
to 1.25, calculated up to Final Maturity and a Historic
Debt Coverage Ratio greater than or equal to 1.25.
Failure to meet either test will result in the
Prescribed Percentage being 100% of Excess Cash Flow
and will be an Event of Default.
(5) Distributions of Cash Flow Participation will be
permitted after Commercial Completion so long as the
Borrower is in compliance and the Debt Coverage Ratio
is equal to or greater than 1.5OX.
Other covenants to include: limits on hedging; conduct of
business; no sale of assets; restricted payments (capital
expenditures); and insurance proceeds.
GUARANTORS' To include, without limitation:
COVENANTS:
(1) Until Commercial Completion, maintain a net worth of at
least $20,000,000, such figure to be revised upward in the
event of a successful equity offering prior to Closing.
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<PAGE>
(2) Until Commercial Completion, maintain current assets in
excess of current liabilities of at least 3,000,000.
(3) Until Commercial Completion, incur no additional
indebtedness.
(4) Maintain 100% ownership of the Borrower.
(5) Assumption of the Borrower's income tax liabilities.
OTHER TERMS & Representations & Warranties, Events of Default, Material
CONDITIONS: Adverse Effect, and other terms and conditions usual for
Facilities as described herein.
EXPENSES: All consulting, legal, and any other out-of-pocket expenses
incurred by the Lenders in connection with the Facility due
diligence, credit preparation, negotiation, documentation,
execution, administration, and enforcement shall be for the
account of the Borrower. These expenses will remain the
Borrower's responsibility in the event that for whatever
reason the transaction does not close.
EXCLUSIVITY The Borrower and the Guarantors undertake not to solicit or
& COMMITMENT: negotiate with other parties for the provision of competing
financing for the Project for a period of 120 days
commencing on January 2, 1997 (i.e. from acceptance of the
Definitive Term Sheet dated December 26, 1996). The
Underwriters' commitment will terminate at the end of this
period.
CONFIDENTIALITY: Borrower, Guarantors, and any of their affiliates agree to
not release any material terms contained herein to third
parties not related to this transaction, without the
written consent of the Underwriters, except as required by
law. Any press releases regarding the Facility are to be
agreed in advance with the Underwriters.
INDEPENDENT The Winters Company.
ENGINEER:
LEGAL COUNSEL: Davis Graham & Stubbs.
GOVERNING LAW/ This Definitive Term Sheet and all other subsequent credit
JURISDICTION/ documentation among the Lenders, the Borrower, and the
JURY TRIAL Guarantor will be governed by and construed in
WAIVER: accordance with the laws of the State of New York
(excluding any conflict of laws provisions). The parties
hereto hereby waive all rights to a trial by jury with
respect to the matters set forth herein.
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<PAGE>
EXHIBIT I
REPAYMENT SCHEDULE
($ 000)
TOTAL TOTAL
YEAR # YEAR QUARTER QUARTER ANNUAL
1 1998 1st
2nd
3rd
4th
--------------------------------------------
2 1999 1st $1,250
2nd $1,250
3rd $1,250
4th $1,250
--------------------------------------------
$5,000
3 2000 1st $1,250
2nd $1,250
3rd $1,250
4th $1,250
--------------------------------------------
$5,000
4 2001 1st $1,250
2nd $1,250
3rd $1,250
4th $1,250
--------------------------------------------
$5,000
5 2002 1st $1,250
2nd $1,250
3rd $1,250
4th $1,250
--------------------------------------------
$5,000
6 2003 1st $1,750
2nd $1,750
3rd $1,750
4th $1,750
--------------------------------------------
$7,000
7 2004 1st $2,250
2nd $2,250
3rd $2,250
4th $2,250
--------------------------------------------
$9,000
8 2005 1st $2,250
2nd $2,250
3rd $2,250
4th $2,250
--------------------------------------------
$9,000
Total $45,000
-------------
-------------
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EXHIBIT II
PHYSICAL COMPLETION EXAMPLE
1. The plant, equipment, and related infrastructure have been completed and
installed essentially as described in the Feasibility Study
[Development and Operating Plan and/or EPCM Contract] and shall have been
commissioned.
2. All construction costs have been paid in full and the Project shall be
free and clear of any lien, charge or encumbrance of any kind not
permitted under the loan documents and free and clear of any
materialmen's liens arising in connection with the construction of the
Project.
3. All governmental, regulatory and third party permits, licenses, consents
and approvals necessary for a continuous operation of the Project in
accordance with the Feasibility Study are in full force and effect.
4. Management and a work force in appropriate numbers and with the
appropriate qualifications are on the job in accordance with good mine
operating practice.
5. The required insurance is in full force and effect as certified by the
Independent Insurance Advisor.
COMMERCIAL COMPLETION TEST EXAMPLES
Commercial Completion shall occur on the date on which (a) there is no Default
or Event of Default and (b) the Independent Engineer submits to the Agent a
certificate stating that (i) the conditions set forth below have occurred and
are correct and (ii) the conditions required for Physical Completion continue to
be satisfied by the Borrower.
1. For 30 consecutive days, after pregnant leach solution ("PLS")
strengths and flows have been built up to permit the continuous, full
operation of the solvent extraction and electrowinning plants, the
Project has produced at least [xx] tons of Class I copper cathodes
meeting LME "A" Grade specifications ("Product") during which period such
production has totaled at least [yy] tons for 10 consecutive days.
2. For 90 consecutive days following satisfaction of the test set forth in
paragraph 1 above, cumulative production of Product has been no less than
90% of cumulative copper cathode production calculated in accordance with
the Feasibility Study to be recoverable from the actual ore placed and
leached on the heap leach pad since Physical Completion.
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3. The Ore Reserve as defined in the Feasibility Study has been increased in
an amount sufficient to allow at least an additional two years of full
production;
4. The cumulative grade, tonnage and contained copper of at least [X,000,000]
consecutive tons measured by the plant head sampling systems have each
been no less than 90 percent of the cumulative grade, tonnage and
contained copper of Ore Reserves fed to the plant, such Ore Reserves,
together with Ore Reserves within stockpiles and planned open pits, being
sufficient to sustain no less than 90% of the ore and Product production
forecasted by the Feasibility Study.
5. For 30 consecutive days within the test period referenced in paragraph 2
above, aggregate operating costs per ton of ore mined and processed and
per pound of Product produced have each been less than 110% of the
Feasibility Study's unescalated unit operating costs projected for the
Ore Reserves mined and processed. Operating costs shall include all
direct and indirect cash costs incurred by the Project toward the
production and sale of Product.
6. For 30 consecutive days within the test period referenced in paragraph 3
above, at least (Y,000,000) tons of ore and waste have been mined and
delivered to their respective crusher, stockpile and waste disposal areas
during which time such mining rate has exceeded (Z,000) ton per day for
10 days.
7. For 30 consecutive days within the test period referenced in paragraph 3
above, at least (A,000) tons of ore has been crushed to 100% at minus (P)
in. during which time such crushing rate has exceeded (B,000) tons per
day for 10 days.
8. For 30 consecutive days within the test period referenced in paragraph 3
above, at least (C,000) tons of crushed ore has been conveyed and stacked
on the heap leach pads during which time such delivery rate has exceeded
(D,000) tons per day for 10 days.
9. For 30 consecutive days within the test period referenced in paragraph 3
above, the flowrate of PLS to the solvent extraction circuit shall
average the equivalent of at least (H,000) kilograms per hour of copper
contained in PLS.
ECONOMIC TEST
In lieu of the tests set forth in paragraphs 5 through 8 above, the Borrower
may elect to satisfy an economic test to be agreed between the Borrower and
the Lenders. For example, to meet the Economic Test, the Debt Coverage Ratio
shall be shown to be in excess of 1.50 for the period remaining to Final
Maturity and 1.75 for the period to end of reserve life.
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EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Summo USA Corporation, a Colorado corporation
