Attached files
Exhibit J
JCL
01-30-87
780406
LEASE AGREEMENT
BY THIS LEASE AGREEMENT
effective as of the 5th day of February , 1987,
by and between H. B. LAYNE CONTRACTOR, INC., an Indiana corporation, whose
address is 2500 East Hallandale Beach Blvd., Penthouse I, Hallandale,
Florida 33009 (the "Lessor" herein),
and
ST. JOE GOLD CORPORATION, a Delaware corporation, whose address is 2002
North Forbes Boulevard, Tucson, Arizona 85745 ("St. Joe" herein),
the Lessor, in consideration of the agreements set forth herein, has granted
certain rights to St. Joe under the following terms and conditions:
1. Grant
a. Lease - Lessor hereby grants, demises, leases and lets that certain
real property, more particularly described in the attached Exhibit A
(the "Property" herein), including, but without being limited to,
all soil, sand and gravel, rock, ores, minerals and mineral rights
in, upon and under the Property (the "Leased Substances"),
exclusively unto St. Joe, its successors and assigns, with the
exclusive rights and privileges:
-- to drill and excavate holes, pits, shafts and other
excavations, to construct roads and to conduct surveys,
explorations, sampling, investigations and other operations in such
a manner and to the extent as St. Joe, in its sole judgment and
discretion, may deem advisable for the purpose of ascertaining any
and all facts relating to the occurrence of ores and minerals in and
under the Property and the metallurgical and physi- cal properties
of any such ores;
-- to mine (by open pit, strip, underground, solu- tion mining
or any other method, including any method hereafter developed),
extract, mill, store, process, remove and market Leased Substances
from the Property;
-- to place, construct, maintain, use, and remove such
structures, facilities, equipment, roadways,
haulaaeways and such other improvements on the surface or subsurface
of the Property as St. Joe may deer necessary, useful or convenient
for the full enjoyment of all of the rights herein granted:
-- to mix or commingle Leased Substances with any other ores
produced off the Property, provided that St. Joe shall first weigh,
sample, and assay the Leased Substances in accordance with
recognized industry practice;
-- to conduct any mining upon the Property and St. Joe's
mining of adjoining or nearby lands as a single mining operation as
if the Property and all such other properties constituted a single
tract of land, in which event St. Joe shall have the exclusive right
to use structures, facilities, equipment, roadways, haulageways, and
all other appurtenances installed on the Property for the purpose of
producing, removing, treating or transporting metals, ores, minerals
or materials from adjoining or nearby property owned or controlled
by St. Joe and the right to mine and remove Leased Substances from
the Property through or by means of shafts, openings or pits which
may be made in or upon adjoining or nearby property;
-- to use other resources of the Property (to the extent
Lessor has such rights), including water, in connection with the
exploration, mining and processing rights granted hereunder;
-- to use the surface of the Property to deposit waste,
overburden, surface stripping and other materials from mining
operations on the Property and adjoining property being mined with
the Property as a single mining operation; provided the materials
from other lands may not be deposited on the Property if it would
interfere with mining operations on the Property.
h. Sublease - St. Joe understands and acknowledges that this Lease
is a sublease as to Claims Ace 1, 2 and 3 and is subject to that certain
"Mining Lease and Option to Purchase Agreement," entered into on August 3,
1978, by and between Robert A. Revert and Claron Burnett, as Lessors and
Kelly Minerals, Inc., as Lessee, a copy of which is attached hereto as
Exhibit B.
2. Term
Unless sooner terminated under the termination provisions
hereinafter contained, the term of this Agreement shall an initial term of
three (3) years commencing on the effective date hereof; provided,
however, that St. Joe may
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extend such tern by making the payments specified in sub-section b of
Section 1.
3. Payments to Lessor
a. Rental - St. Joe shall pay Lessor as rental Twelve Thousand
Dollars ($12,000.00) during the first one (1) year of the term nereof;
Twenty -Four Thousand Dollars (S24,000.00) during each of the second and
third years of the term hereof; and Fifty Thousand Dollars ($50,000.00,
per year during each year thereafter while this Agreement is in force.
Such payments shall be due in advance on or before the anniversary of the
effective date of this Agreement. Rental for the first year of the term
shall be due upon final execution of this Agreement.
b. Advance Minimum Royalty - After three, (3) years of the effective
date hereof, or such earlier time St. Joe mines and markets leased
substances from the property, St. Joe shall pay Lessor Fifty Thousand
Dollars ($50,000.00) per annum, which shall constitute an advance minimum
royalty which shall be payable in the same manner as set for above. Such
advance royalties shall be a credit insofar as they will go toward any
monies due Lessor under the provisions of subsection c of this Section 3.
c. Production Royalty - If St. Joe mines and markets Leased
Substances from the Property, St. Joe shall pay to Lessor a production
royalty of five percent (5%) of the "Net Returns' received by St. Joe from
the sale or other disposition of Leased Substances; provided, however,
that St. Joe shall not be required to pay Lessor any production royalty
under the terms of this Agreement from the mining claims subject to the
Mining Lease and Option to Purchase Agreement attached hereto as Exhibit B
until the purchase price thereunder has been fully paid. The term Net
Returns" shall mean the total dollar value received from the purchaser of
Leased Substances, less:
(1) in the case of sale of raw ore or concentrates: (a) any
weighing, sampling, penalty, processing or other charges assessed by
the purchaser; (b) selling charges; (c) any sales, severance, gross
production, privilege or similar taxes assessed on or in connection
with the ore or measured by the value thereof; and (d) the cost of
transportation from the Property to the purchaser.
(2) in the case of leaching or other solution mining
techniques in addition to the deductions specified in (1) above, all
processing and recovery costs incurred beyond the point at which the
leaching reagents are applied to the ore being treated (including
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the cost of reagents) shall be deducted from the selling price.
If ores or concentrates are processed at a smelter or other facility owned,
operated or controlled by St. Joe or treated on a toll basis for St. Joe, the
selling price shall be computed in the above manner with deductions for all
charges and items of cost equivalent to the deductions extended in arms-length
transactions, and in any case, not more than changes that would be made at the
nearest treatment facility otherwise available.
d. Payment of Production Royalty - Production royalty paid to Lessor
hereunder shall be due and payable within thirty (30) days after the end of each
calendar quarter for those Leased Substances sold and a settlement sheet
received during the applicable calendar quarter after first deducting any
advance minimum royalty paid under subsection b of Section 3 not previously
recovered from prior payments under this subsection d. A11 production royalty
shall be accompanied by the settlement sheets or a similar statement showing the
basis upon which the payment was computed.
e. Method of Making Payments - A11 payments required hereunder may be
mailed or delivered to Lessor's address or to any single depository as Lessor
may instruct. Upon making payment to the authorized agent or depository, St. Joe
shall be relieved of any responsibility for the distribution of such payment to
Lessor. The delivery or the deposit in the mail of any payment hereunder on or
before the due date thereof shall be deemed timely payment hereunder.
f. Fractional Interest - A11 payments under this Agreement, unless
specified otherwise, are based on a grant by Lessor of full undivided rights and
title to the Property. If Lessor's interest in the Property is less than such
full interest, all payments made hereunder shall be paid in the same proportion
thereof as the undivided rights and title actually owned by Lessor bear to the
entire undivided rights and title to the Property or the areas included therein.
4. Inspection
Lessor (or any agent of Lessor with authorization in writing), at Lessor's
risk and expense, may (1) enter upon the Property to inspect the same at such
times and upon such notice to St. Joe as shall not unreasonably or unnecessarily
hinder or interrupt the operations of St. Joe, and (2) inspect the accounts and
records used in calculating production royalty paid to Lessor hereunder, which
right may be exercised, at any reasonable time during a period of one (1) year
from and after the date on which the applicable
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quarterly payment of production royalty was made. Lessor agrees to treat all
information received hereunder as confidential and not to disclose the same
without prior permission of St. Joe.
5. Obligations of St. Joe
a. Conduct of Operations - A11 work performed by St. Joe on the Property
pursuant to this Agreement shall be done in a good and workmanlike manner and in
compliance with all state or federal laws and regulations governing such opera-
tions. The operations of St. Joe shall be further subject to the following
special requirements:
(1) St. Joe shall pay any and all withholding and Social Security
taxes levied by the United States Government or unemployment compensation
taxes levied by the Unemployment Compensation Division of the State of
Nevada upon it as an employer and permit no delinquencies to be created;
(2) St. Joe shall protect all employees under the Nevada Industrial
Insurance Act and the Nevada Occupational Diseases Act as amended, pay all
premiums required by the laws, rules and regulations of the State of
Nevada pertaining to industrial insurance;
(3) St. Joe shall maintain records and reports and submit, according
to the requirements of the Inspector of Mines, reports of production,
employment, mine activity, status, accidents, bodily injury, loss of life,
occupational illness and related data as required by Nevada Revised
Statutes ss. 512.160 as amended.
b. Sublease - St. Joe hereby assumes and agrees to keep, perform and
fulfull all of the terms, covenants, conditions and obligations required to be
kept, performaed and fulfilled by the Mining Lease and Option to Purchase
Agreement subleased hereby, including the making of all payments due to or
payable to or on behalf of the lessor thereunder when due and payable, including
but not limited to advance and production royalties; provided, however, that St.
Joe shall have the right to surrender such Mining Lease and Option to Purchase
Agreement to the Lessor hereunder and thereby terminate any further liability or
obligation thereunder for duties or payments not accrued as of the date of such
surrender. Such payments shall be in addition to the rents and royalties
reserved herein to the Lessor.
c. Weights and Analysis - In all cases where ore or concentrates are
stockpiled off the Property or commingled concentrates not mined from the
Property, St. Joe with ore or
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shall establish procedures for determining the proportional amount of the total
metal content in the commingled materials attributable to the input from each of
the properties by calculating on a metallurgical basis, in accordance with
sampling schedules and mining efficiency experience, so that production
royalties applicable to materials produced from each of the properties from
which materials are commingled may reasonably be determined. St. Joe shall
inform Lessor of such procedures by written statement and shall make all records
related to such activities available for inspection by Lessor in accordance with
Section 4.
d. Protection from Liens - St. Joe shall pay all expenses incurred by it
in its operations on the Property hereunder and shall allow no liens arising
from any act of St. Joe to remain upon the Property; provided, however, that St.
Joe shall not be required to remove any such lien as long as St. Joe is
contesting in good faith the validity or amount thereof.
e. Indemnity - St. Joe shall protect, defend and indemnify Lessor against
and hold Lessor harmless from any suit, claim, judgment or demand,
administrative proceeding or sanction, expense, including reasonable attorney's
fees, whatsoever arising out of St. Joe's exercise of any of its rights pursuant
to this Agreement and the Mining Lease and Option to Purchase Agreement
subleased hereby, provided that Lessor, or any one of them, or any person or
instrumentality acting on its behalf, shall not have been a contributing cause
to the event giving rise to such suit, claim, demand, judgment, administrative
proceeding or sanction.
f. Payment of Taxes - St. Joe shall pay all taxes levied against its
improvements on the Property. In the event of commercial development of the
Property, St. Joe shall pay all ad valorem taxes assessed against that amount of
the Property used in such commercial development and shall, in addition, pay all
taxes related to production of Leased Substances from the Property, subject to
St. Joe's right to deduct the amount of such production-related taxes from the
dollar value received from the purchaser of Leased Substances in the computation
of Net Returns under the provisions of subsection c(1)(c) of Section 3. Lessor
shall pay, before delinquency, all other taxes and assessments on Property and
improvements of Lessor thereof. In no event the St. Joe be liable for any taxes
levied or measured by shall Lessor, or for taxes applicable to or levied income
of against or based upon advance or production royalty payments to Lessor under
this Agreement. St. Joe shall have the made in the courts or otherwise, the
validity or right to contest, taxes or assessments, before it shall be amount of
any pay the same. St. Joe shall have the right, at required to
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its sole discretion, to pay any delinquent property taxes. together with
interest, penalties and charges, that a the responsibility of the Lessor, the
payment of which shall be a credit against payments thereafter tc be made by St.
Joe under the provisions of Section 3. If this Agreemdeent is terminated or
otherwise expires, all ad valorem taxes that are St. Joe's responsibility shall
be prorated as of the date St. Joe has removed its improvements from the
Property or Lessor agrees to their abandonment.
g. Assessment Work - St. Joe agrees to perform assessment work (unless
excused, suspended or deferred) for the benefit of the Property for each
assessment year during which this Agreement continues in force beyond July 1 of
the applicable assessment year. The work performed shall be of a kind generally
accepted as assessment work, and St. Joe shall expend the total amount
sufficient to meet the minim= requirements with respect to all of the unpatented
claims. Lessor acknowledges and agrees that the mining claims included within
the Property are one contiguous group and that development and exploration work
on any one or more of the claims will be for the benefit of all of them. Lessor
further agrees that if St. Joe acquires a right to explore areas adjacent to the
Property by location, purchase, lease or option, St. Joe shall have the right to
perform assessment work required hereunder pursuant to a common plan of
exploration or development of all the areas, claims or groups of claims, whether
performed on or off the Property.
6. Title Matters
a. Representations and Warranties - Lessor represents and warrants to St.
Joe that to the best of its knowledge and belief that: (1) the unpatented mining
claims constituting the Property have been located and appropriate record made
thereof in compliance with the laws of the United States and the laws of Nevada;
(2) the assessment work for the year ending September 1 prior to the effec- tive
date of this Agreement has been performed and appropriate record made thereof in
compliance with applicable law; (3) there is no valid claims of adverse mining
rights affecting such claims; (4) except as specified in Exhibit A, Lessor's
possessory right to the Property is free and clear of all liens and
encumbrances, and (5) the Lessor has the full right, power and capacity to enter
into this Agreement upon the terms set forth herein.
b. Title Documents; Data - Upon written request of St. time during the
term hereof, Lessor shall promptly Joe at any St. Joe all abstracts of title to
and copies of deliver to
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all title documents affecting the Property which Lessor has in its possession.
If Lessor is in possession or knows the whereabouts of technical data concerning
the mineral estate of the Property, Lessor shall, at St. Joe's expense, furnish
copies of such materials to St. Joe or notify St. Joe of the location of such
information.
c. Title Defects, Defense and Protection - If -- (1) in the opinion of
counsel retained by St. Joe, Lessor's title to any of the Property is defective
or less than as represented herein, or (2) title to any of the Property is
contested or questioned by any person, entity or governmental agency -- and if
Lessor is unable or unwilling to promptly correct the defects or alleged defects
in title, St. Joe may attempt, with all reasonable dispatch, to perfect, defend
or initiate litigation to protect such title. In that event, Lessor shall take
such actions as are reasonably necessary to assist St. Joe in its efforts to
perfect, defend or protect such title. If title is less than as represented in
this Section 6, then (and only then) the costs and expenses of perfecting,
defending or correcting title, including, but without being limited to the cost
incurred in the amendment or relocation of unpatented claims, the cost of
attorney's fees and the cost of releasing or satisfying any mortgages, liens and
encumbrances), shall be a credit against payments thereafter to be made by St.
Joe under the provisions of Section 3, unless the encumbrance or dispute arises
from St. Joe's failure to perform obligations hereunder (in which case such
costs shall be borne by St. Joe).
d. Lesser Interest Provisions - If the rights and title granted hereunder
are less than represented herein, St. Joe shall have the right and option,
without waiving any other rights it may have hereunder, to reduce all payments
to be made to Lessor hereunder in the proportion that the interest actually
owned by Lessor bears to the interest as represented herein.
e. Amendment and Relocation of Mining Claims - St. Joe shall have the
right to amend or relocate in the name of Lessor the unpatented claims which are
subject to this Agreement which St. Joe, in its sole discretion deems advisable
to amend or relocate. St. Joe shall not be liable to Lessor for any act (or
failure to act) by it or any of its agents in connection with the amendment or
relocation of such claims as long as such act (or omission) does not arise from
gross negligence or is not made in bad faith.
f. Patent Proceedings - Upon request of St. Joe at any time or times
during the term of this Agreement, Lessor agrees to undertake to obtain patent
to any or all of the unpatented mining claims which are subject to this
Agreement.
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St. Joe shall prepare all documents and compile all data and comply in all
respects with the applicable law, all at the expense of St. Joe. Lessor shall
execute any and all documents required for this purpose and shall cooperate
fully with St. Joe in the patent application proceedings subsequent thereto. If
Lessor begins such proceedings and St. Joe thereafter requests Lessor to
discontinue such proceedings, or if this Agreement is terminated while
proceedings are pending, St. Joe shall have no further obligation with respect
thereto except to pay any unpaid expenses accrued in such proceedings prior to
its request to discontinue or prior to termination, whichever occurs first.
g. Change of Law - If the laws of the United States concerning acquisition
of mineral rights on federally managed lands is repealed, amended, or new
legislation is enacted, St. Joe shall have the right to take whatever action it
deems appropriate to preserve a right to explore for, develop, and mine Leased
Substances. If St. Joe elects to take any action under the terms of this
subsection, it shall first notify Lessor in writing setting forth the nature of
the proposed action and an explanation thereof. Lessor agrees to cooperate with
St. Joe and execute whatever documents are deemed necessary by St. Joe to
accomplish such action. Nothing in this subsection shall impose any obligation
upon St. Joe to take any action, or diminish the right of Lessor to take action
it deems appropriate; provided, however, that if Lessor chooses to take any
action, it will first inform St. Joe of the nature of such contemplated action.
h. General - Nothing herein contained and no notice or action which may be
taken under this Section 6 shall limit or detract from St. Joe's right to
terminate this Agreement in the manner hereinafter provided.
7. Termination; Removal of Property; Data
a. Termination by Lessor - If St. Joe defaults in the performance of its
obligations hereunder, Lessor shall give St. Joe written notice specifying the
default. If the default is not cured within thirty (30) days after St. Joe has
received the notice, or if St. Joe has not within that time begun action to cure
the default and does not thereafter diligently prosecute such action to
completion, Lessor may terminate this Agreement by delivering to St. Joe written
notice of such termination, subject to St. Joe's right to remove its property
and equipment from the Property, as hereinafter provided. Lessor's right to
terminate this Agreement shall be its sole remedy for any defaults in the
payment of rental or advance minimum royalty. If St. Joe in good faith disputes
the existence of a default, St. Joe shall initiate appropriate action in a court
of competent
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jurisdiction within the 30-day period and the time to cure shall run from the
date of a final determination that a default exists. Lessor shall have no right
to terminate this Agreement except as set forth in this subsection a of Section
7.
b. Termination by St. Joe - St. Joe shall have the right to terminate this
Agreement at any time by written notice from St. Joe to Lessor. St. Joe shall
also have a separate right of termination of its obligations under the Mining
Lease and Option to Purchase Agreement as set forth in subsection b of Section
5. From and after the date of termination, all right, title and interest of St.
Joe under this Agreement shall terminate, and St. Joe shall not be required to
make any further payments or to perform any further obligations hereunder
concerning the Property, except payment and obligations, the due dates for the
payment or performance of which occur prior to the termination date, including
the obligations related to damages to the surface and improvements thereon.
c. Removal of Property - Upon any termination or expiration of this
Agreement, St. Joe shall have a period of one (1) year from and after the
effective date of termination within which it may elect to remove from the
Property all of its machinery, buildings, structures, facilities, equipment and
other property of every nature and description erected, placed or situated
thereon, except supports placed in shafts, drifts or openings in the Property.
Failure of St. Joe to so remove the same shall constitute an abandonment by St.
Joe to Lessor of the same; provided, however, that St. Joe may still be required
to remove such property upon notice from Lessor at any time during the one-year
period and thirty (30) days thereafter.
d. Delivery of Data - If this Agreement is terminated, upon written
request given by Lessor within thirty (30) days of said termination, St. Joe
shall, within a reasonable time, furnish Lessor copies of all available
noninterpretive exploration, development and mining data pertaining to the
Property prepared by or for St. Joe.
e. Relinquishment of Record - If this Agreement is terminated or otherwise
expires, St. Joe shall provide Lessor with a recordable document sufficient to
provide notice that St. Joe no longer asserts rights to the Proflerty under this
Agreement.
8. Notices
Any notice or communication required or permitted here- shall be effective
when personally delivered or under
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deposited, postage prepaid, certified or registered, in the United States mail
to the addresses specified above. Either party may, by notice to the other given
as aforesaid, change its mailing address for future notices.
9. Binding Effect; Assignment
The rights of either party hereunder may be assigned in whole or in part
and the provisions hereof shall inure to the benefit of and be binding upon the
heirs, personal representatives, beneficiaries, successors and assigns, but no
change or division of ownership of the Property or payments hereunder, however
accomplished, shall operate to enlarge the obligations or diminish the rights of
St. Joe hereunder. No such change or division in the ownership of the Property
shall be binding upon St. Joe for any purpose until the first day of the month
next succeeding the month in which such person acquiring any interest shall
furnish evidence to St. Joe's satisfaction of such change, transfer or division
of ownership.
10. Force Majeure; No Implied Covenants
If St. Joe is delayed or interrupted in or prevented from exercising its
rights or performing its obligations, as herein provided, by reasons of "force
majeure," then, and in all such cases, St. Joe shall be excused, without
liability, from performance of its obligations set forth in this Agreement
(except as to obligations to pay money set forth in Sections 3 and 5), but the
provisions shall again come into full force and effect upon the termination of
the period of delay, prevention, disability or condition. St. Joe shall notify
Lessor of the beginning and ending date of any period of forree majeure and the
period of time required for performance under this Agreement shall be extended
for the period of the disability. "Force majeure" includes all disabilities
arising from causes beyond the reasonable control of St. Joe; including, without
limitation, acts of God, accidents, fires, damages to facilities, labor
troubles, unavailability of fuels, supplies and equipment, orders or
requirements of courts or government agencies, or the inability to obtain
environmental clearance or operating permits that may be required by
governmental authorities. It is expressly agreed that no implied covenant or
condition whatsoever shall be read into this Agreement relating to any time
frame as the measure of diligence for prospecting, mining, resumption of mining
if mining operations once commenced are suspended, or any other operations of
St. Joe hereunder.
. . .
. . .
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11. Memorandum
The parties to this Agreement agree to execute and record a Memorandum of
this Agreement in a form sufficient to constitute record notice to third parties
of the rights granted hereunder, which may be recorded in the official records
of Nye County, Nevada.
12. Construction
a. Governing Law - This Agreement shall be construed by the internal laws
but not the laws of conflict of the State of Nevada.
b. Headings - The headings used in this Agreement are for convenience only
and shall not be deemed to be a part of this Agreement for purposes of
construction.
13. Approval; Effective Date
This Agreement shall not be effective until it has been approved by
management of St. Joe and executed by its authorized officer. The effective date
shall be the date of such execution by St. Joe.
SIGNED, effective as of the date recited above.
LESSOR: ST. JOE:
H. B. LAYNE CONTRACTOR, INC. ST. JOE GOLD CORPORATION
By By
Richard N., Lundgren John W. Horton
President Assistant Vice President
STATE OF FLORIDA )
) ss.
County of Broward )
The foregoing instrument was acknowledged before me this 5th day of
February, 1987, by Richard N. Lundgren, the President of H. B. Layne Contractor,
Inc., an Indiana corporation, for an on behalf of the corporation.
My commission expires: Notary Public
NOTARY PUBLIC STATE OF FLORIDA
MY COMMISSION EYP JUNE 24, 1989
'BONDED THRU GENERAL INS. UND.
STATE OF ARIZONA )
) ss.
County of Pima )
The foregoing instrument was acknowledged before me this 3rd day of
February, 1987, by John W. Horton, the Assistant Vice President of St. Joe Gold
Corporation, a Delaware corporation, for an on behalf of the corporation.
My commission expires: Notary Public
My Commission expires August 15, 1990
EXHIBIT A
The "Property" consists of those certain unpatened lode mining claims
situated in the Bullfrog Mining District, Nye County, Nevada, the names of which
and the place of record of the location notices thereof in the official records
of the county recorder and the authorized office of the Bureau of Land
Management are as follows:
Nye Cty Rcds BLM Serial #
Name of Claim Book Page N MC
Mining claims subject to the Mining Lease and Option to Pur- chase Agreement
dated August 3, 1987, by and between Robert A. Revert and Claron Burnett, as
lessors, and Kelly Minerals, Inc., as lessee:
Ace No. 1 110 426 11229
Ace No. 2 110 427 11230
Ace No. 3 110 428 11231
unencumbered mining claims vested 100X in the Lessor under the forgoing Lease
Agreement between H. B. Layne Contractor, Inc., and St. Joe Gold:
Golden Eagle # 2 424 120 298788
Golden Eagle # 3 424 121 298789
Golden Age # 1 424 103 298790
Golden Age # 2 424 104 298791
Golden Age # 3 424 105 298792
Golden Age # 4 424 106 298793
Golden Age # 5 424 107 298794
Golden Age # 6 424 108 298795
Golden Age # 7 424 109 298796
Golden Age # 8 424 110 298797
Golden Age # 9 424 111 298798
Golden Age # 12 424 112 298799
Golden Age # 13 424 113 298800
Golden Age # 14 424 114 298801
Golden Age # 15 424 115 298802
Golden Age # 16 424 116 298803
Golden Age # 17 424 117 298804
3,5-129
A-1
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED BOND GOLD CORPORATION
October 5, 1989
H. B. Layne Contractor, Inc.
Attn: S. Lee Crouch, Esq.
1001 North Federal Highway, Suite 206
Hallandale, Florida 33009
Re: Lease Agreement Dated February 5, 1987
Dear Lee:
As always, it was a pleasure seeing you and Dick again. I hope that
you were reassured that our commingling procedures are in accordance with
standard industry practice, and that any questions you may have had were
answered to your satisfaction.
As we discussed this day, Bond Gold Bullfrog Inc. has recently
"mined and marketed Leased Substances" from the Property, thus triggering
Bond's obligation to pay the advance minimum royalty provided for in
Section 3.b. of the Lease Agreement dated February 5, 1987. The subject
Section provides that the advance minimum royalty is payable in the same
manner as the rental payments. From a cold reading of this provision I was
not entirely clear on the intent of the parties. As you and I discussed
and agreed, the language is ambiguous, but you have advised me this day
that, in your opinion, the proper interpretation is that the advance
minimum royalty payment is due on February 5, 1990 or at such earlier time
that Bond Gold mines and markets Leased Substances from the Property and
is to be paid in advance every twelve months thereafter.
I have spoken with Bond Gold's accounting department who has
informed me that the first revenues from production of gold and silver
from the Bullfrog Mine were booked on August 31, 1989. Accordingly, I have
enclosed a check in the amount of $50,000.00 as advance minimum royalty
under Section 3.b. of the Lease Agreement, and will make subsequent
advance minimum royalty payments on or before each August 31st hereafter
during the period that the Lease Agreement remains in effect.
S. Lee Crouch, Esq.
October 5, 1989
Page 2
We understand that, as provided in Section 2 of the Lease Agreement,
payment of the enclosed advance minimum royalty payment will extend the
term of the Lease Agreement up to and including August 31, 1990.
Furthermore, the payment each year of advance minimum royalty on or before
the above anniversary date will extend the term of the Lease Agreement to
and including August 31st of the following year.
Please indicate below your agreement regarding the effect of the
advance minimum royalty and rental payments and return one copy of this
letter to me. Thank you for assisting in this matter.
Very truly yours,
Garry L. Miller
Manager, Land Department
Agreed to this 19th day of OCTOBER, 1989.
H. B. LAYNE CONTRACTOR, INC.
Enclosure
cc: Richard N. Lundgren
6205 S. W. 108th Street
Miami, Florida 33156
