RESTATED OPTION AGREEMENT AND GRANT OF EXPLORATION RIGHTS
THIS RESTATED OPTION AGREEMENT AND GRANT OF EXPLORATION
RIGHTS (this "Restated Agreement"), made and entered into effective as of
January 1, 1997, by and between UNION PACIFIC RESOURCES GROUP INC., a Utah
corporation (hereinafter called "UPR") and ROYAL GOLD, INC., a Delaware
corporation (hereinafter called "Royal"),
WITNESSETH
WHEREAS, UPR holds mineral rights in the States of Wyoming and Colorado,
and desires to have such mineral rights evaluated and explored for their
precious metals and diamond potential, and
WHEREAS, Royal possesses the financial capability and technical expertise
necessary to conduct an evaluation and exploration program for precious metals
and diamonds, and is willing to undertake the program and to make certain
minimum expenditures for exploration work in consideration of the grant of
option rights in the lands explored, and
WHEREAS, effective as of May 1, 1994, UPR and Royal first entered into
this Option Agreement and Grant of Exploration Rights, which has now been
amended on three occasions; and
WHEREAS, UPR remains willing to grant such option rights as an inducement
to Royal to conduct the program and make the expenditures, and
WHEREAS, UPR and Royal now desire to restate their agreement, setting
forth the changed terms and conditions under which UPR has granted such
exploration and option rights, and Royal has agreed to undertake such program.
NOW, THEREFORE, in consideration of the premises, UPR and Royal,
intending to be legally bound, hereby agree as follows:
1. Subject Minerals. The minerals subject to this Restated Agreement
("Subject Minerals") shall include diamonds and diamondiferous minerals,
all precious metals (viz. gold, silver and platinum and platinum group
metals) and all other minerals that are locatable under the General Mining
Law of 1872, as amended, except any locatable minerals that are
hereinafter specifically excluded. This Restated Agreement specifically
excludes, and no rights are granted hereunder with respect to, oil, gas and
other hydrocarbon substances, coal, trona and other sodium minerals,
potassium, phosphate, limestone, stone, gypsum, oil shale, bentonite, sand
and gravel and zeolitized minerals. UPR expressly reserves the right to
enter into leases and other agreements with third parties, during the term
hereof, respecting the minerals specifically excluded from the coverage of
this Restated Agreement.
2. Grant of Non-Exclusive Selection Rights; Subject Property.
(a) UPR hereby grants to Royal the non-exclusive right, to be exercised
at any time, while this Restated Agreement remains in effect, to select up to a
maximum of fifty thousand (50,000) acres of the lands, rights and interests
described in Section 2(b) hereof, to be covered by and included in the
grants of exclusive exploration and option rights hereinafter in this
Restated Agreement contained.
(b) The lands and interests from which Royal shall make the selection
provided for in Section 2(a) shall include the mineral estates and mineral
rights owned or held by UPR and its affiliates in the States of Wyoming
and Colorado within the exterior boundaries of the State Line Diamond
Area, in the lands more specifically described in Exhibits B-1 and B-2
attached hereto. The mineral estates and mineral rights in Section 19 of
Township 12 North, Range 72 West are expressly excluded from the coverage
of this Restated Agreement.
(c) The property selected by Royal (the "Subject Property") shall
consist of and comprise no more than ten, reasonably compact groupings or
"units" of the lands and interests described in Section 2(b), and Royal
shall, from time to time, provide UPR with one or more written notices of its
selection of lands and interests. Such notices shall describe the lands and
interests selected in detail by government subdivision. The land descriptions
contained in such notices shall be organized on a unit-by-unit basis.
(d) UPR hereby grants to Royal the further, non-exclusive right, to be
exercised at any time, and from time to time, while this Restated
Agreement remains in effect, to substitute other lands and interests that are
described in Section 2(b) for the lands and interests theretofore selected
under Section 2 and made part of the Subject Property. Substitution of
lands and interests under this Section 2(d) shall be on an acre-for-acre
basis.
(e) UPR hereby confirms that, while this Restated Agreement remains in
effect, if UPR initiates or receives any solicitation or proposal from any
third party regarding any arrangement or agreement for exploration or
development of Subject Minerals on any of the lands or interests described
in Section 2(b) or on any of the lands or interests, any part of which is
included within the Area of Interest that encompasses all lands or interests
lying within one (1) mile, measured in any direction, from the exterior
boundaries of any of the UPR lands and interests described in Section
2(b), then, before accepting any such solicitation or proposal, UPR shall
provide notice of same to Royal, and shall extend to Royal, for not more
than 30 days, a right of first refusal to enter into an arrangement on the
same terms with respect to the arrangement or agreement that was the
subject of such solicitation or proposal.
3. Grant of Exploration Rights. UPR hereby grants to Royal, for the term
of this Restated Agreement, the sole and exclusive right to prospect, explore,
sample and test for Subject Minerals on the Subject Property, upon the terms
and conditions hereinafter in this Restated Agreement contained. UPR and
Royal agree that the primary aim and focus of the exploratory activities
conducted by Royal pursuant to this Restated Agreement shall be the discovery
of diamonds or precious metals in the Subject Property.
4. Initial Term. The initial term of this Restated Agreement shall be
twelve (12) months from the effective date hereof ("Initial Term").
5. Work Expenditure Commitment During Initial Term; Certain Definitions;
Statements of Expenditures. Royal agrees, as a firm commitment, to expend,
during the Initial Term of this Restated Agreement, a minimum total of Three
Hundred Seventy Five Thousand Dollars ($375,000.00) in qualified work
expenditures on or for the direct benefit of the Subject Property.
Any excess work expenditure made by Royal prior to the effective date of
this Restated Agreement (that is, any expenditure in excess of the aggregate
amount of $125,000 expended during 1996) shall be credited against Royal's
minimum expenditure obligation for the Initial Term.
The term "for the direct benefit of" shall mean those qualified work
expenditures made within an "Area of Interest" that encompasses all lands
lying within one (1) mile, measured in any direction, from the exterior
boundaries of any part of the lands within the State Line Diamond Area
described in Exhibits B-1 and B-2 attached hereto.
The term "qualified work expenditures" shall mean (A) those costs and
expenses on or for the benefit of the Subject Property which would qualify and
be recognized and accepted by the United States government under the General
Mining Law of 1872, as amended, as satisfying the "assessment work"
requirement of the Law, and (B) the direct acquisition costs of any leases or
mining claims covering lands acquired by or on behalf of Royal within an Area
of Interest; provided that no more than twenty-five percent (25%) of the total
qualified work expenditure obligation may be satisfied by such property
acquisition costs without the express written approval of UPR being first had
and obtained. In addition, "qualified work expenditures" shall include
C) the actual costs of industry-accepted geological, geophysical and
geochemical work (without limitation as to whether such work is performed in
consecutive years) and airborne geophysical and mapping work; (D) direct
expenses incurred in securing surface owner consents and performing title
curative work required to be performed prior to the conduct of exploration
activities; (E) direct expenses incurred in petitioning or appearing before
federal, state or local governmental bodies in order to clarify Royal's
exploratory or possessory rights to the Subject Property and the Area of
Interest; and (F) an amount to cover Royal's general and administrative
overhead expenses. The amount of overhead expense includable in
qualified work expenditures shall be ten percent (10%) of all direct
expenditures on the Subject Property. "Direct expenditures" shall mean all
qualified work expenditures other than general and administrative overhead
expenses. The parties agree that the costs and expenses of Royal's executive
staff (including information services) and the costs of all accounting work
whether or not performed by Royal's own personnel are to be covered by the
overhead expense credit and shall not be direct charges to the project for
purposes of satisfying Royal's work expenditure commitments.
The failure by Royal to fulfill any of the minimum expenditure obligation
set forth in Section 5 and Section 6 shall be an event of default under this
Agreement and shall entitle UPR to immediately terminate this Agreement as
provided in Section 14 hereof.
If Royal fails to expend a minimum total of $375,000.00 in qualified work
expenditures during the Initial Term, Royal shall, promptly following the end
of the Initial Term, pay to UPR in cash, as liquidated and agreed damages, an
amount equal to $375,000.00 less the amount of qualified work expenditures
made during the Initial Term.
Within thirty (30) days following (A) the end of the Initial Term and
(B) the end of any Extension Period, Royal shall furnish UPR with a detailed
written statement of qualified work expenditures made by Royal or any approved
assignee of Royal during the preceding interval. Such statement shall be
accompanied by summary information relating to all project invoices (but not
the invoices themselves) identified by types of work and including information
as to the dates such invoices were paid and to whom paid. UPR shall have the
right during all normal business hours, for a period of two (2) years
following the receipt of any such statement, to audit Royal's books and records
supporting such statement.
6. Extensions of this Agreement. Royal shall have the right to extend the
term of this Agreement for up to two (2) additional twelve month periods
following the end of the Initial Term, provided that Royal's minimum
expenditure obligation set forth in Section 5 has then been fulfilled. (Each
of said additional twelve month periods is herein called an "Extension
Period".)
Royal shall provide UPR written notice of its election to extend the
term hereof for an Extension Period at least sixty (60) days prior to the date
upon which such Extension Period is to commence.
If Royal is eligible to and elects to extend the term hereof for an
Extension Period, Royal agrees that, having made either of such elections to
extend, it shall thereupon become obligated, as a firm commitment, to make the
following minimum expenditures (subject to credits as hereinafter provided)
during the applicable Extension Periods:
(a) Royal shall expend a minimum of Three Hundred Seventy-Five Thousand
Dollars ($375,000.00) in qualified work expenditures during the first
Extension Period.
(b) Royal shall expend a minimum of One Million Dollars ($1,000,000.00)
in qualified work expenditures during the second Extension Period.
Any excess work expenditure during the first Extension Period shall be
credited against Royal's minimum expenditure obligation for the second
Extension Period.
Any excess work expenditures during the Initial Term shall be credited
against Royal's minimum expenditure obligations for the first and, if
sufficient, for the second Extension Period.
Royal shall have no right to extend for a second Extension Period unless
it fulfills its minimum expenditure obligation for the first Extension Period.
In the event that Royal fulfills its minimum expenditure obligation for
the Initial Term, elects to extend the term hereof for the first Extension
Period, and thereafter fails to expend a minimum of $375,000.00 in qualified
work expenditures during such first Extension Period (subject to credits as
above provided), Royal shall, promptly following the end of the first
Extension Period, pay to UPR in cash, as liquidated and agreed damages, an
amount equal to $375,000.00 less (I) credits available due to excess
expenditures during the Initial Term, as above provided in this Section 6, and
(ii) the amount of qualified work expenditures made during the first
Extension Period. Similarly, in the event that Royal fulfills its minimum
expenditure obligation for the first Extension Period, elects to extend the
term hereof for a second Extension Period, and thereafter fails to expend a
minimum of $1,000,000.00 in qualified work expenditures during such second
Extension Period (subject to credits as above provided) Royal shall, promptly
following the end of the second Extension Period, pay to UPR in cash,
as liquidated and agreed damages, an amount equal to $1,000,000.00 less
(I) credits available due to excess expenditures in prior periods, as above
provided in this Section 6, and (ii) the amount of qualified work expenditures
made during the second Extension Period.
7. Assignment.
(a) Royal shall have the right to assign its rights and obligations
under this Restated Agreement as to all or any portion of the Subject Property
provided that the prior approval and consent of UPR to the terms of any
such proposed assignment and to Royal's prospective assignee shall have
been first obtained. UPR shall have the right to withhold its consent to
any proposed assignment if it determines, in its sole judgment and
discretion, that the proposed assignee does not possess the technical or
financial capability to fully perform the exploration and reclamation
obligations provided for herein or to adequately fund and perform the
indemnities and other undertakings of Royal herein contained. Any
assignment of rights and obligations, whether voluntary, by operation of
law or otherwise, made without the consent required by this Section shall
be absolutely void and this Restated Agreement may be terminated in its
entirety at the option of UPR in the event its required consent to any such
assignment has not been obtained. Notwithstanding any such assignment
made with the approval and consent of UPR, all obligations of Royal to
UPR hereunder shall be and remain enforceable by UPR, its successors
and assigns, against Royal. Qualified work expenditures made by any
approved assignee shall be credited against the minimum expenditure
obligation of Royal set forth in Section 5 and Section 6.
(b) Any bonus, rental, advance royalty or other payments or
considerations provided to be paid to Royal pursuant to the terms of any
approved arrangement whereby the rights and obligations of Royal under this
Restated Agreement are assigned shall be the sole property of Royal.
8. Option to Lease. UPR hereby grants to Royal the sole and exclusive
right and option, exercisable at any time and from time to time during the
Initial Term or any Extension Period of this Restated Agreement, to enter
into a mining lease covering portions of the Subject Property or to cause
mining leases covering portions of the Subject Property to be executed and
delivered to third parties nominated by Royal, upon the following terms and
conditions:
(a) Royal shall describe and designate one or more Prospect Areas to
UPR. Prospect Areas are defined as blocks of lands and interests comprising
designated portions of the Subject Property and lands and interests lying
within one (1) mile, measured in all directions, from such designated
portions of the Subject Property. No Prospect Area shall comprise more
than one designated six hundred forty (640) contiguous acre block of the
Subject Property and the lands and interests lying within one (1) mile,
measured in all directions, from such designated block.
(b) Royal shall demonstrate to UPR's reasonable satisfaction that it
has made qualified work expenditures of at least Fifty Thousand Dollars
($50,000.00) within or for the direct benefit of each such designated
Prospect Area. Royal shall provide UPR with a summary statement
detailing all qualified work expenditures.
(c) All mining leases issued hereunder covering precious metals shall
be substantially in the form of Exhibit A attached hereto; and all mining
leases issued hereunder covering diamondiferous minerals shall be
substantially in the form of Exhibit A attached hereto, with the
presumption that the production royalty for a diamond lease shall be the
greater of four percent (4%) of "Net Returns" or twelve percent (12%) of
"Net Profits" derived from such property. Each such mining lease shall
cover a maximum of six hundred forty (640) and a minimum of one
hundred sixty (160) contiguous acres of Subject Property (full section or
full quarter section or the aliquot equivalent thereof) within the designated
Prospect Area. Royal's right to enter into mining leases or to cause
mining leases covering diamonds or precious metals to be issued
hereunder shall not be conditioned on Royal's prior discovery of
commercial quantities of diamonds or precious metals in the portion of the
Subject Property to be covered by such leases.
(d) Royal shall either be the lessee or shall nominate a technically
capable and financially responsible third party to be the lessee under each
such proposed lease or leases. UPR shall have the right to refuse to execute
and deliver a mining lease to any such proposed lessee if it determines, in
its sole judgment and discretion, that the party nominated does not possess
the technical expertise or financial capability to fully and satisfactorily
perform the obligations, undertakings and indemnification of the lessee
under the mining lease.
(e) It is expressly understood that none of the provisions of this
Section 8 grant any lease option rights with respect to mineral substances
excluded from the definition of Subject Minerals by the provisions of Section
1 of this Agreement.
9. Rights to Receive Overriding Royalty Interests. In the event that,
during the term of this Restated Agreement or any mining lease issued pursuant
to Section 8, or within one (1) year after the expiration thereof, Royal, UPR
or their respective assignees or lessees acquire any leases, mining claims or
other interests in lands within one (1) mile, measured in any direction, from
the exterior boundaries of any portion of the Subject Property (or within the
relevant Prospect Area if a mining lease has been issued pursuant to Section
8), the non-acquiring party (UPR or Royal, as the case may be) shall be
entitled to receive an overriding royalty interest in the lands and interests
covered thereby equal to twelve percent (12%) of the Net Profits (as defined
in the form mining lease attached hereto as Exhibit A) of production from
such property, it being understood that all such production royalty as may
already burden such property, including any hereafter-enacted royalty in
favor of the federal government, shall be a cost or expense of such property.
With respect to unpatented mining claims that are not burdened by any
other royalty interest, the overriding royalty hereunder shall be two percent
(2%) of Net Returns, as defined in the form mining lease attached as Exhibit
A. The parties hereto, for themselves and their respective assigns, lessees
and successors, hereby agree to execute and deliver, from time to time, such
assignments and other and further assurances as may be reasonably necessary to
effectuate the provisions of this Section and to legally vest such overriding
royalty interests in the party entitled to receive and hold the same. This
provision shall not have any application to the acquisition by either UPR or
Royal of the equity or debt securities of any entity that may hold mineral
interests within one (1) mile from the exterior boundaries of any portion of
the Subject Property.
10. [Omitted.]
11. General Provisions Regarding Royal's Operations. The following terms and
conditions shall govern the conduct of all prospecting and exploration
operations on the Subject Property:
(a) No entry shall be made on the portions of the Subject Property, or
within the Area of Interest, where UPR owns mineral rights only, and no
prospecting and exploration activities shall be conducted thereon, until all
necessary consents of the owners of the surface estate in such lands have
been obtained under agreements satisfactory in form to UPR. UPR shall
assist Royal in obtaining such consents from surface estate owners. In
addition to fully complying with any and all obligations contained in
agreements between Royal and surface estate owners, Royal shall observe
the following regulations in connection with its operation on the Subject
Property:
(i) all necessary precautions shall be taken to avoid any damage,
other than normal wear and tear, to gates, bridges, roads, culverts, cattle
guards, fences, dams, dikes, vegetative cover, improvements, stock
water and other facilities on the Subject Property.
(ii) appropriate measures shall be taken to protect any holes,
trenches or other openings made by Royal on the Subject Property, when
not in use, to protect the lives, safety and property of persons
and/or livestock and wildlife.
(iii) all vehicles and equipment shall be operated at reasonable
rates of speed and in a reasonable and prudent manner and due care shall
be taken to safeguard all livestock and wildlife in the vicinity of
operations. Existing roads and trails shall be used whenever possible.
(iv) upon the expiration of this Restated Agreement with respect
to any portion of the Subject Property upon which operations have been
conducted hereunder, such property shall be promptly restored and
reclaimed by Royal to its original condition and all holes and other
openings made thereon by Royal shall be safely plugged or filled
as required by law and in a manner reasonably satisfactory to UPR.
(b) Subject to Royal's obligation to obtain necessary consents of
surface estate owners and to fully comply with the regulations contained in
Section 11(a) of this Restated Agreement, Royal shall have, during the
term of this Agreement, free and unrestricted access to the Subject
Property, and shall have the right to explore, sample and test the Subject
Property, to extract and remove from the Subject Property, without royalty
or other compensation to UPR, such ore as may be mined in the course of
prospecting operations and such ore as Royal may require for bulk
sampling and testing; and to construct, use and maintain on the Subject
Property such roads, machinery, equipment, personal property, fixtures
and improvements as may be reasonably necessary for the conduct of
Royal's exploration operations. Royal shall have no right to conduct
commercial mining operations on the Subject Property or sell or remove
ores, minerals, or other products from the Subject Property prior to
exercising the Option to Lease granted in Section 8.
(c) Royal shall conduct all operations on the Subject Property in a
good and workmanlike manner and in accordance with the highest contemporary
mining industry standards and practices. All such operations shall be
conducted at the expense of Royal. All decisions with respect to
exploration of the Subject Property, including all decisions regarding the
commencement, suspension, resumption or termination of any operations,
shall be made by Royal in its sole discretion.
(d) Royal shall comply fully with all applicable local, state and
federal laws, regulations and ordinances governing its operations hereunder,
including all laws, regulations and ordinances regarding reclamation of the
Subject Property. If this Restated Agreement is inconsistent with or
contrary to any law, regulation or ordinance, the law, regulation or ordinance
shall control and this Restated Agreement shall be deemed to be modified
accordingly. If, as a result of Royal's operations or use of the Subject
Property hereunder, any law, ordinance, rule, regulation or requirement is
violated, Royal shall protect, save harmless, defend and indemnify UPR
and all of its affiliates and their respective officers, agents and employees
from and against any penalties, fines, costs, expenses or other impositions
of any kind or character whatsoever, including attorney's fees and court
costs, imposed upon or incurred by UPR or its affiliates or their respective
officers, agents and employees, caused by, resulting from, or connected
with such violation or violations.
(e) Royal shall indemnify, exonerate, save and hold harmless UPR and its
affiliates from and against any and all claims, demands, suits, judgments,
or recoveries of or by third parties including, but without limitation, the
agents, servants, employees, contractors and invitees of the parties hereto
for or on account of injury to or death of such third parties, or damage to
the property of such third parties caused by Royal in the conduct of any
activity in connection with Royal's exercise of any of the rights herein
granted.
(f) Royal assumes all risk of loss, damage, or destruction of or to
buildings or contents on the Subject Property and of or to other property
brought thereon by Royal or by any other person with the consent of Royal and
of or to property of Royal in proximity to the Subject Property and used in
connection with or incidental to the occupation thereof, and any incidental
loss or injury to the business of Royal unless such loss, damage,
destruction or injury is caused by the negligence of UPR or its affiliates,
in which event UPR shall be liable for the portion of such damage caused by
its negligence.
(g) Except as otherwise provided herein Royal shall not cause or permit
any Hazardous Material to be brought upon, generated, treated, leaked,
emitted, discharged, disposed, stored, or otherwise kept or used in, on or
about the Subject Property by Royal, its agents, employees, contractors or
invitees. The prohibition in the foregoing sentence shall not apply to any
of the foregoing actions allowed under permits or licenses issued to Royal
and/or allowed by law (whether statute, regulation, rule or ordinance) and
deemed by Royal to be necessary or useful in Royal's operation, but only
during the term of this Agreement. As used herein, the term "Hazardous
Material" means (a) any "hazardous waste" as defined by the Solid Waste
Disposal Act (as amended by the Resource Conservation and Recovery
Act of 1976), as amended from time to time ("RCRA"), and regulations
promulgated thereunder; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended from time to time ("CERCLA"), and regulations
promulgated thereunder; (c) any oil, petroleum products, and their by-
products; and (d) any hazardous substance, toxic substance, toxic
pollutant, or any substance whose release, disposal, generation, storage or
emission is during the term hereof regulated by the United States
government, or any State or any subdivision thereof where the Subject
Property is located.
Royal hereby agrees that it shall be fully liable for all costs and
expenses related to the use or storage of Hazardous Material kept on the
Subject Property by Royal and the disposal thereof by Royal subject to notice
from UPR to Royal of a Claim given as soon as reasonably practical following
UPR's notice and/or receipt thereof, and subject to Royal's right at its sole
discretion to handle, resolve and/or otherwise consider settlement of any
such Claim, as to actions taken by Royal on the Subject Property during
the term hereof.
Royal shall protect, defend, indemnify and hold harmless UPR and its
affiliates from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses (including, without
limitation, attorneys' and consultants' fees; remedial, removal or response
costs; court costs; costs incurred in connection with injunctive relief
sought on behalf of any governmental authority or private party; and
litigation expenses of whatever kind or nature), known or unknown,
contingent or otherwise arising out of or related to (a) the presence,
disposal, release or threatened release (it being understood that this
Restated Agreement prohibits disposal or unauthorized release) of any
Hazardous Material kept on the Subject Property by Royal (individually
and collectively "Claims") that is on, from or in the Subject Property or
the soil, water, vegetation, buildings, personal property, person or animals;
(b) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to Hazardous Material of Royal
that is on, from or in the Subject Property; (c) any lawsuit brought or
threatened, settlement reached by Royal, or government order relating to
Hazardous Material of Royal that is on, from or in the Subject Property; or
(d) any violation of any laws regulating Hazardous Material as defined
above. The provisions of this Section shall be in addition to any other
obligations and liabilities Royal may have to UPR at law or in equity and
shall survive the transactions contemplated herein and shall survive the
termination of this Restated Agreement.
(h) Royal shall not permit any liens of any kind or nature to be
enforced against the Subject Property for any work done or machinery,
equipment, materials, or supplies furnished thereon, or in connection with
exploration operations thereon, at the instance or request or on behalf of
Royal; and Royal agrees to indemnify and hold harmless UPR and its affiliates
and the owners of the surface estate of the Subject Property from and against
any and all liens, claims, demands, costs, and expenses of whatsoever
nature in any way connected with or growing out of such work done, labor
performed, or machinery, equipment, materials or supplies furnished at the
instance or request or on behalf of Royal.
(i) Royal shall comply with all applicable Federal enactments and those
of the various States in which the Subject Property is located regarding
Employer's Liability, Worker's Compensation and Worker's Insurance,
and Royal shall indemnify and hold harmless UPR and its affiliates from
and against the payment of any and all damages, claims, costs, and
expenses due to the existence of such enactments and of any and all
claims, costs and expenses in connection therewith under any claim of
subrogation provided for by said enactments or otherwise where any such
damages, claims, costs, and expenses arise or in any way grow out of the
operations of Royal hereunder.
(j) The exploration rights herein granted are expressly made subject to
all outstanding mineral and other leases, and any and all other outstanding
superior rights, including, but not limited to, rights-of-way for highways
and power and communication lines, and the right to renew or extend such
leases and other outstanding rights and the term or terms thereof.
(k) Royal shall, within thirty (30) days following the end of each
calendar quarter during the term of this Restated Agreement, furnish UPR
copies of all data and information generated during such quarter as a result
of Royal's exploration operations on the Subject Property and other lands
within any Area of Interest. The data and information to be furnished
UPR shall include interpretative and non-interpretative data and
information. Data and information to be furnished shall include all
geological, geophysical, geochemical hydrological and metallurgical data,
all engineering data, all maps, drill hole locations and logs, all drill hole
cuttings, cores, samples and any assay or other similar data. UPR shall
keep all such information confidential during the term of this Agreement
and during the term of any Lease issued pursuant to the terms hereof
covering the lands and interest to which such data relates, subject to the
provisions of Section 16 hereof. Royal shall also furnish UPR, within
thirty (30) days following the end of each calendar quarter during the term
of this Agreement, a written report that includes a statement of the work
performed hereunder during such quarter and a summary of the results of
such work.
(l) Royal shall maintain liability coverage for its operations hereunder,
with respect to all such risks, and in such amounts of coverage, as are deemed
prudent under accepted industry standards and acceptable to UPR.
12. Liability. All reclamation and other liabilities incurred by Royal or
its assignees under this Restated Agreement or as a consequence of
exploration operations conducted hereunder and all covenants,
indemnifications and other liabilities of Royal and its assignees hereunder
shall survive and be unaffected by the termination of this Restated
Agreement, and shall be enforceable until the expiration of all applicable
statutes of limitation including extensions and tolling thereof.
13. Dispute Resolution; Arbitration.
(a) Agreement to Arbitrate. Should any controversy arise between UPR
and Royal to which UPR and Royal are unable to effect a satisfactory
resolution, it shall be submitted to arbitration in accordance with the terms
and provisions of this Section 13 and in accordance with the rules of the
"Colorado Uniform Arbitration Act" (the "Arbitration Act"). The
provisions of the Arbitration Act, as from time to time amended and in
effect, will be followed, except as herein otherwise provided. During any
such arbitration procedure, this Restated Agreement shall remain in full
force and effect.
(b) Submission to Arbitration and Selection Arbitrators. A party to
this Restated Agreement desiring to submit to arbitration any such
controversy shall furnish its demand for arbitration in writing to the other
party, which demand shall contain a brief statement of the matter in
controversy, the amount involved, if any, the remedies sought and shall name
one (1) arbitrator. Within a period of five (5) days after service of such
demand the other party shall name one (1) arbitrator by written notice to the
other party. Within ten (10) days after such notice, the two (2) arbitrators
shall choose one (1) additional impartial arbitrator. If a party fails to
name an arbitrator within the specified five (5) day period or if the two (2)
arbitrators chosen by the parties fail to select with the ten (10) day period
one (1) additional arbitrator, then either party, on behalf of and on notice
to the other party, may request appointment of such arbitrator in
accordance with the Arbitration Act so that there will be a panel of three
(3) arbitrators. Each of the arbitrators chosen or appointed pursuant to this
Section 13 shall be a person having at least ten (10) years experience in the
United States in a calling related to the subject matter involved in the
dispute and shall not be a past or present officer, director or employee of
any of the parties or their affiliates.
(c) Arbitration Procedure. Each party shall furnish the arbitrator or
arbitrators with a brief written statement of matters it deems to be in
controversy for purpose of the arbitration procedures and a proposed decision
to be entered by the arbitrators. The arbitrators shall have the right to
retain and consult experts and competent authorities skilled in the matters
under arbitration. The arbitrators shall render their decision and award,
upon the concurrence of at least two (2) of their number, as soon as possible
but no later than thirty (30) days after the conclusion of hearings before
such arbitrators. Such decision and award shall be in writing and counterpart
copies thereof shall be delivered to each of the parties. In rendering such
decision and award, the arbitrators shall choose one of the decisions
proposed by the parties and shall not add to, subtract from, or otherwise
modify the decision so proposed. Each party agrees that judgment may be
had on the decision and award of the arbitrators so rendered and may be
enforced in accordance with the laws of the State of Colorado.
(d) Successor Arbitrators. Notwithstanding the above, in the event any
arbitrator appointed by a party dies, refuses to act, or becomes incapable of
acting, then such party shall appoint a successor arbitrator within five (5)
days of said notice of disability. In the event such party fails to appoint
the required successor within such time, any other party may apply, on
notice to the other parties, to the court as provided in the Arbitration Act
for the appointment of such necessary arbitrator.
(e) Cost of Arbitration. Each party shall bear the expense of the
arbitrator appointed by or for such party, its own counsel, experts and
presentation of proof. The parties shall share equally the expense of the
additional arbitrators and all other expenses of the arbitrations.
(f) (i) The right of UPR to exercise its sole judgment and discretion
in consenting to proposed assignments and accepting proposed lessees,
pursuant to Section 7 and Section 8, respectively, is absolute and no
exception taken by Royal to any such exercise by UPR of its sole discretion
shall be assumed to create a dispute to be resolved by arbitration pursuant to
this Section 13.
(ii) The right of Royal to exercise its discretion regarding
exploratory operations and decisions is not a matter that is subject to
arbitration.
14. Termination. If Royal fails to comply with any provision of this
Restated Agreement UPR shall have the right to terminate this Restated
Agreement upon thirty (30) days notice to Royal of its intention to do so.
Upon the expiration of the thirty (30) day period all rights of Royal under
this Restated Agreement shall terminate; provided that the obligations and
liabilities of Royal shall survive such termination as provided in Section
11(g) and Section 12 hereof.
15. Notices.
(a) Any notice or delivery of information hereunder by UPR to Royal
shall be given in writing, by personal delivery or by certified mail, return
receipt requested, and such writing shall be addressed to:
Royal Gold, Inc.
Suite 1000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
Telephone: 303/▇▇▇-▇▇▇▇
Facsimile: 303/595-9385
Royal may, from time to time, designate in writing, pursuant to this
Section 15, such other address or addresses to which notices should be
directed to Royal hereunder.
(b) Any notice or delivery of information hereunder by Royal to UPR
shall be given in writing, by personal delivery or by certified mail, return
receipt requested, and such writing shall be addressed to:
Union Pacific Resources Group Inc.
Post Office Box 7, M.S. 2905
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Manager, Land and Industrial Minerals
Telephone: 817/▇▇▇-▇▇▇▇
Facsimile: 817/877-7260
UPR may, from time to time, designate in writing, pursuant to this
Section 15, such other address or addresses to which notices should be
directed to UPR hereunder.
(c) Payments of monies to UPR shall be by personal delivery, or by first
class mail, postage prepaid, and shall be addressed to UPR in accordance with
its then-current instruction for notices pursuant to this Section 15.
(d) Except as otherwise provided herein, service of notice or delivery
of information hereunder shall be effective and complete upon personal
delivery, or upon the deposit thereof in the United States mail as certified
mail, return receipt requested, and with postage prepaid and addressed as
aforesaid.
16. Public Announcements; Confidentiality.
(a) Neither party hereto shall issue any press release or make any other
public announcement concerning the execution and existence of this Restated
Agreement, the activities and operations of either party conducted
pursuant to this Restated Agreement, the results of such activities and
operations or any other matter relating to this Restated Agreement without
the prior review and approval of the other party being first had and
obtained. A party shall respond to any request from the other party to
review and approve a proposed public announcement in a timely manner
consistent with the disclosure requirements of any stock exchange or
regulatory agency having jurisdiction.
(b) Both parties agree that they shall not, without the prior written
consent and approval of the other party, disclose to any third party any
information or data regarding the Subject Property which is not generally
available to the public; provided, however, that upon such prior written notice
to the nondisclosing party as is reasonable under the then-applicable
circumstances, setting forth the nature and content of a proposed
disclosure, either party may disclose information or data pertaining to the
Subject Property: (a) to any regulatory agency or stock exchange, if such
disclosure is required for compliance with applicable laws, rules,
regulations or orders of such agency or stock exchange; (b) to any third
party to whom the disclosing party, in good faith, anticipates selling or
assigning all or part of its interest hereunder; or (c) to a prospective
lender to whom an interest in payments to be made to the disclosing party
hereunder has been or may be granted as security; provided, however, in
either of the latter two instances, that the nondisclosing party shall have
been provided with a confidentiality agreement executed by such third
party or lender, which agreement shall include the confidentiality
provisions of this Section 16.
17. Captions. The captions used in this Restated Agreement are inserted for
convenience only, and shall not be considered to be a part of this Restated
Agreement, and shall not be used in its interpretation.
[Signatures appear on next page following.]
IN WITNESS WHEREOF, the parties have executed this Restated Agreement
effective as of the date first set forth above.
Attest: UPR:
UNION PACIFIC RESOURCES GROUP INC.
/S/ /S/
_____________________________ By: ____________________________
Assistant Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇
Executive Vice President
Attest: ROYAL:
ROYAL GOLD, INC.
/S/ /S/
_____________________________ By: ____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chairman and Chief Executive Officer
STATE OF TEXAS )
) ss.
COUNTY OF TARRANT )
The foregoing instrument was acknowledged before me by
▇▇▇▇▇▇▇ ▇▇▇▇▇ as Executive Vice President of UNION PACIFIC RESOURCES GROUP
INC., a Utah corporation, this 28th day of August, 1997.
WITNESS my hand and official seal.
/S/
______________________________
Notary Public
My commission expires: April 20, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as
Chairman of ROYAL GOLD, INC., a Delaware corporation, this 22nd day of
August, 1997.
WITNESS my hand and official seal.
/S/
______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Notary Public
My commission expires: July 2, 1999