Exhibit 10.1(i)
MINING LEASE WITH OPTION TO PURCHASE
THIS MINING LEASE AGREEMENT MADE AND ENTERED INTO on this 19th day of
April, 2004, by and between NORTH ▇▇▇▇ JOINT VENTURE, L.L.C., a Utah limited
liability company (hereinafter referred to as "Lessor") and VALLEY HIGH MINING
COMPANY., a Nevada corporation (hereinafter referred to as "Lessee").
IN CONSIDERATION of a total of 5,000,000 (five million) post-
merger/change of domicile "restricted" common capital shares of Lessee to be
issued to and in the name of Lessor, par value $0.001 per share, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Lessor does hereby grant, demise and let exclusively unto
Lessee for the duration and for the purposes herein specified, all of Lessor's
right, title and interest in and to the following described patented lode
mining claims comprising 470.097 acres, more or less, and situated in the
Tintic Mining District of Juab County, State of Utah; including all dips,
spurs and appurtenant rights, including water rights, hereinafter collectively
referred to as the "Leased Premises."
FOR "LEASED PREMISES" DESCRIPTION, SEE EXHIBIT "A"
ATTACHED HERETO AND MADE A PART HEREOF
I. EXCLUSIVE RIGHTS GRANTED
1.1 The Leased Premises are hereby leased exclusively to Lessee and
its successor-in-interest for the following purposes, all or any of which may
be performed by Lessee in such manner and at such time or times as Lessee may
determine in its absolute discretion, subject to the terms hereof:
a. Exploring and prospecting for, developing, mining, excavating,
leaching, milling, processing and smelting, whether by open pit,
underground, strip mining, solution mining, heap leaching, or any
other methods deemed desirable by Lessee in its sole discretion,
all minerals, ores, valuable rocks, rare earths and materials of
all kinds, including mine dumps and tailings (hereinafter
collectively referred to as "Leased Substances");
b. Processing, concentrating, beneficiating, treating, milling,
smelting, shipping, selling and otherwise disposing of the Leased
Substances and receiving the proceeds of any such sale;
c. Erecting, constructing, maintaining, using and operating in and on
the Leased Premises such buildings, structures, machinery,
facilities and equipment as Lessee deems necessary; and
d. Engaging in any other activity that Lessee deems reasonable and
necessary to achieve the foregoing purposes.
II. TERM OF LEASE
2.1 The term of this Mining Lease shall be for five (5) years from the
effective date set forth above, and may be renewed by Lessee for successive
five (5) year periods upon substantially the same terms and provisions as set
forth herein based upon the then-capital structure of the Lessee, until
declared forfeited and canceled by Lessor or relinquished by Lessee as
provided herein. Lessee shall give Lessor written notice of each renewal at
least thirty (30) days prior to expiration of the respective five-year term.
III. ADVANCE ROYALTY AND WORK COMMITMENT
3.1 A portion of the "restricted" stock received by Lessor shall
constitute an Advance Royalty paid the Lessor as initial consideration upon
execution of this Mining Lease. Such shall further constitute the minimum
advance royalty on or before the anniversary date of each succeeding lease
year.
3.2 Lessee shall be entitled to a $30,000 credit in the amount of all
such Advance Royalties paid against Production Royalties otherwise owing to
Lessor pursuant to Article IV of this Lease.
3.3 Lessee shall perform exploration, mining, development, production,
processing or any other activity ("work" herein) which benefits the Leased
Premises at a minimum cost of $15,000 for each successive five (5) year term
during the term of this Mining Lease and commencing on the date of this Lease.
All work on other lands within 500 feet of the boundary of any portion of the
Leased Premises shall be deemed to benefit the Leased Premises for the work
commitment if such work is part of an overall plan or project that includes
the Leased Premises. All costs expended for work in excess of $15,000 for any
five (5) year term shall accrue and be applied to the work commitment for the
next successive 5-year term only; however, the maximum amount that can so
accrue for the next succeeding lease term shall be no more than $15,000.
3.4 In the event that Lessee does not perform work in the amount of
the entire $15,000 minimum expenditure (which amount will include any excess
amount accrued from the prior five year term), Lessee shall pay Lessor the
amount of any such shortage in cash. Within 30 days after the end of each
five (5) year term, Lessee shall submit an accounting report of the
expenditures toward the work commitment and a report containing factual, non-
interpretive data concerning the work of Lessee during the preceding 5-year
term. On or before August 10 of each year, a separate one-year report shall
be prepared and furnished to Lessor containing factual, non-interpretive data
concerning work of Lessee, if any, during the preceding calendar year.
3.5. The breach, by Lessee, of paragraphs 3.3 and/or 3.4 above shall
entitle Lessor to immediately terminate the Lease and in such event, Lessor
waives the right to ▇▇▇ for monetary damages.
IV. PRODUCTION ROYALTY
4.1 In addition to the consideration set forth herein, Lessee shall
pay Lessor a Three and One Half percent (3.5%) Net Smelter Royalty on all
mineral bearing ores.
4.2 The payment of Production Royalty shall be made not more than 45
days after the close of the month during which the payment is received from
the smelter or buyer on which such Royalty is calculated.
4.3 "Net Smelter Returns" shall mean the net amount of money received
by Lessee from the sale of Leased Substances to a smelter, refinery or other
buyer, after deduction of costs of transportation to point of sale and costs
of any concentration of Leased Substances prior to delivery to the smelter,
refinery or other buyer, and less the deduction of all cost, penalties or
charges required by said smelter, refinery or other buyer to be paid by Lessee
as a condition of sale. In the event a Leased Substance is sold to any buyer
other than a smelter, all costs incurred by Lessee after mining for processing
or treating such substances, including refining, shall be deductible costs.
4.4 The payment of Production Royalty shall be made not more than 45
days after the close of the month during which the payment is received from
the smelter or buyer on which such Royalty is calculated.
4.5 All Leased Substances which the Lessee chooses to market shall be
marketed at the best terms reasonably obtainable, with due regard to freight
differentials, and if such ores or concentrates or other products shall be
treated at a smelter or refinery of Lessee, the smelter or refinery schedules
used for determining the Net Smelter Returns thereon shall not be less
favorable than the terms and conditions either being offered to others or
being contracted with others at the time for products of like character and in
similar quantities for delivery to Lessee's smelters or refineries.
4.6 Lessee shall be entitled to credit all Advance Royalty payments
paid to Lessor pursuant to Article III of this Mining Lease against all
Production Royalties payable to Lessor under this Article IV.
V. INSPECTION, REPORTS, BOOKS AND RECORDS
5.1 Lessor, or its duly authorized agent or representative, shall be
permitted to enter into or upon the Leased Premises for the purpose of
inspection, at all reasonable times during business hours, after 48 hours
advance notice in writing to Lessee. Lessor shall enter upon said Leased
Premises at Lessor's own risk and so as not to hinder the operations of
Lessee. Lessor shall indemnify and hold harmless Lessee from any damage,
claim or demand arising from the entry or inspection by Lessor or its agent or
representatives, or any of them, on the Leased Premises or the approaches
thereto.
5.2 The books and records of Lessee insofar as they relate to
operations on the Leased Premises pursuant to this Mining Lease shall be open
to inspection and copying by Lessor or its duly authorized representatives, at
the expenses of Lessor, during regular business hours, after 48 hours advance
request in writing to Lessee. Within twenty-four (24) months after the end of
each calendar year, Lessor may at its sole cost and expense make or have made
an audit of the accounts and records of Lessee concerning operations on the
Leased Premises for that calendar year; provided that Lessor may audit the
accounts for a calendar year only once and provided further that Lessor must
notify Lessee in writing of its intention to cause such an audit to be made
sixty (60) days in advance of such date.
VI. DATA ON THE PROPERTY
6.1 Upon execution of this Mining Lease, Lessor will provide Lessee
with access to all data concerning the Leased Premises then in possession of
Lessor or its agents. Lessee shall have the right to make and remove copies
of all such data at the expense of Lessee, but Lessee shall not remove
original documents without written consent of Lessor. Lessee hereby
acknowledges that Lessor has provided all data in its possession.
VII. PROTECTION FROM LIENS, DAMAGES AND LIABILITY
7.1 Lessee shall keep the Leased Premises free and clear of liens for
labor done or performed or materials furnished on or for the development or
operation of the Leased Premises under this Mining Lease. Lessee will not be
considered in breach of this provision so long as Lessee, in good faith,
contests the validity of any liens or claims against the Leased Premises.
7.2 Lessee shall indemnify and shall hold harmless Lessor and all of
Lessor's partners, agents, and employees, and each of them, from and against
any and all obligations, debts, loss, damage, claims, demands, suits,
controversies, costs, fees, liens, encumbrances, and liabilities whatsoever,
including attorneys' fees, in any way resulting from or arising out of any
failure by Lessee to abide by any material term of the Mining Lease or any
negligent or intentional act or omission by Lessee's contractors arising out
of or in connection with the operations and activities of Lessee hereunder,
or out of its possession and occupancy of the Leased Premises, including
environmental costs resulting from Lessee's operations, or from any similar
actions by the public during the term of this Mining Lease. Lessor shall not
be responsible or liable for any loss or damage to Lessee or to Lessee's
property or business that may be occasioned by or through acts or omissions of
persons or entities (other than for negligent or reckless acts or willful
misconduct or omissions by Lessor or any of its partners, agents or employees)
occupying, using, or passing over any part of the Leased Premises. Lessee
shall use and occupy the Leased Premises at its own risk, and hereby releases
Lessor, to the full extent permitted by law, from all claims of every kind or
nature, including claims for loss of life, personal or bodily injury, or
property damage except as otherwise excluded herein.
7.3 Lessor is informed that the Environmental Protection Agency (EPA)
is involved in a Super Fund clean-up project in the City of Eureka, Utah, an
area near the Leased Premises. This project is based on alleged lead
contamination in the yards of Eureka city dwellers, contamination that is
allegedly the result of mining in the Tintic Mining District. (The actual
cause of the alleged contamination is the fact that Eureka city dwellers
reportedly took and used a variety of mineral tailings for fill dirt in their
front and back yards.) This project has been reported in local newspapers.
While Lessor does not believe that it has any liability whatsoever for
creating any lead contamination in the City of Eureka, Lessor cannot guarantee
that the EPA will not pursue it, along with other, similarly situated
landowners, for reimbursement of part of the cost of such clean-up project.
Accordingly, Lessor hereby indemnifies and holds Lessee harmless from and
against any claim by the EPA or some similar state agency based solely on past
mining contamination or violations. In the event the EPA or a similar state
agency brings suit against Lessee as a person in the chain of title, Lessor
further agrees to defend any such suit on Lessee's behalf at its sole cost and
expense.
VIII. COMPLIANCE WITH LAW
8.1 In conducting its operations hereunder, Lessee will cause all
work, development and mining to be done in a careful and miner-like manner,
and Lessee shall fully comply with the terms and provisions of worker's
compensation laws and other laws governing its operations under this Mining
Lease, including but not limited to any mining or environmental obligation,
under existing or hereafter enacted legislation.
IX. TERMINATION BY LESSEE
9.1 Lessee shall have the continuing right to terminate this Mining
Lease at any time and to surrender the Leased Premises to Lessor by giving
Lessor written notice thereof at least 30 days prior to the stated date of
termination.
9.2 In the event of termination, all sums theretofore paid Lessor by
Lessee shall, except in the case of manifest error, be retained by Lessor, and
all obligations of Lessee to make payments (expect those accruing prior to the
date to termination) and perform any other obligation set forth in this Mining
Lease shall terminate.
9.3 In the event of termination, Lessee, upon request by Lessor, shall
make, execute, acknowledge and deliver to Lessor a written relinquishment of
this Mining Lease in recordable form.
X. DEFAULT
10.1 Lessee shall be in default hereunder if either of the
following shall occur:
a. Lessee fails to fulfill an obligation to Lessor, or does not
in good faith contest in writing the particular obligation,
within thirty (30) days after receipt by Lessee of written
notice from Lessor that a required obligation has become due
and has not been satisfied; or
b. Lessee fails to perform any of the other covenants or
agreements herein contained, and such failure continues for
a period of 60 days after receipt by Lessee of written
notice from Lessor of such failure, stating how it may be
cured, and Lessee is not diligently proceeding to cure such
failure or is not in good faith contesting the claimed
failure.
10.2 In the event of default by Lessee as provided above, Lessor
may at once enter into and upon the Leased Premises or any part thereof and
declare a forfeiture and cancellation of this Mining Lease.
XI. REMOVAL OF EQUIPMENT
11.1 During the term hereof, Lessee is granted exclusive use of all
structures, improvements and personal property located on the Leased Premises
and owned by Lessor as of the date of this Mining Lease. Lessee acknowledges
the existence of a grazing lease held by ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., as of the date
hereof and will determine ownership of any structures or personal property on
the Leased Premises prior to use.
11.2 In the case of a valid forfeiture, surrender or other termination
of this Mining Lease, Lessee shall have the right for a period of one hundred
eighty (180) days to remove from the Leased Premises all warehouse stocks,
merchandise, materials, tools, hoists, compressors, engines, motors, pumps,
transformers, electrical accessories, metal or wooden tanks and mine cars and
any and all other machinery, trade-fixtures and equipment erected or placed in
or upon sad Leased Premises by it, except only rails, mine timbers, installed
pipes and connections. All property not removed within said period shall be
deemed abandoned to Lessor, unless such period is extended by agreement of
Lessee and Lessor or by reason of force majeure as defined herein.
XII. TITLE
12.1 Lessor warrants and covenants that it holds title and is in actual
and exclusive possession of the Leased Premises free and clear from all
grants, sales, liens, defects, adverse claims and encumbrances of any kind.
Lessor shall deliver said actual, peaceful and exclusive possession of the
Leased Premises to Lessee for the Term of this Mining Lease, and during the
Term of this Mining Lease Lessor shall not encumber or burden title to the
Leased Premises in any way without the prior written consent of Lessee.
12.2 Lessor agrees to furnish Lessee such abstract, deeds or other
evidence of title as may be in Lessor's possession and control, and to allow
and cooperate with Lessee, at Lessee's option and expense, to have abstracts
brought to date and to take such steps and proceedings to establish title as
Lessee shall deem advisable. Lessee hereby acknowledges that Lessor has
provided all title information in its possession.
12.3 Lessee is aware of Lessor's separate grazing lease with ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., and Lessee affirms the rights of the Grazing Lessee to
conduct grazing operations on the Leased Premises, provided the same do not
interfere with Lessee's rights hereunder.
XIII. FORCE MAJEURE
13.1 The obligations of Lessee hereunder shall be suspended to the extent
and for the period that performance of any of Lessee's obligations hereunder
is prevented by any cause, whether foreseeable or unforeseeable, which are
determined to be beyond Lessee's reasonable control (hereinafter "an event of
force majeure") including, without limitation any of the following, acts of
nature; labor disputes; strikes or threats of strike; fire; explosion;
earthquake; storm; flood; landslide; avalanche; drought or other adverse
weather condition; interruption or delay in transportation; war ;
insurrection; riot; laws, regulations, orders, proclamations, instructions or
requests of any government or governmental entity; judgments or orders of any
court; inability to obtain, on reasonably acceptable terms, any public or
private license, permit or other authorization; curtailment or suspension of
activities to remedy or avoid an actual or alleged, present or prospective,
enforcement of federal, state or local environmental standards; unavoidable
casualties; shortage of labor, equipment, fuel, material, parts, supplies,
services or equipment; plant breakdown; or any disabling cause, whether
similar or dissimilar to the foregoing enumeration.
13.2 If an event of force majeure occurs, the suspension of Lessee's
performance hereunder during such occurrence shall not be deemed a breach of
the Mining Lease, and the Term of this Mining Lease shall be extended for a
time period equal to the duration of such suspension. Lessee shall promptly
give notice to Lessor of the suspension of performance, stating therein the
cause and duration thereof. Lessee agrees to use reasonable diligence to
remove such causes of suspension as may occur from time to time, but shall not
be required to settle strikes or other labor difficulties contrary to its own
judgment.
XIV. NOTICES
14.1 All notices, payments and elections required, permitted or requested
hereunder shall be made in writing and delivered personally or made in writing
and sent by regular mail, facsimile transmission or e-mail (except notice of
termination or default, which shall be sent by certified mail, return receipt
requested), addressed as follows:
To Lessor: NORTH ▇▇▇▇ JOINT VENTURE, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
To Lessee: VALLEY HIGH MINING COMPANY
c/o MABEY & ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
unless otherwise changed or modified by written request of the recipient
party.
XV. COMMINGLING OF ORE
15.1 Lessee may commingle ore from the Leased Premises with ore from
other properties, either before or after concentration or benificiation, so
long as the data necessary to determine the weight and grade both of the ore
removed from the Leased Premises and from the premises with which it is
commingled, are obtained by Lessee. Lessee shall then use that weight and
grade data to allocate Net Smelter Returns from the commingled ore between the
Leased Premises and the other properties from which the commingled ore was
removed. All such weight, grade and allocation calculations by Lessee shall
be done in a manner recognized by the mining industry as practical and
sufficient at that time.
XVI. TAXES
16.1 Lessee agrees to pay all taxes assessed against the Leased Premises
during the term hereof (expect federal, state or local taxes assessed on
income) including, but not limited to, ad valorem property taxes, net proceeds
or mine taxes, and all taxes for ores mined and ores treated under this Mining
Lease. Payment of such taxes shall be made prior to the delinquency date of
the tax.
XVII. INCIDENTAL USE OF PROPERTY
17.1 Lessee may possess, occupy and use, in the course of and as
pertinent to its operations in the vicinity of, or upon the Leased Premises,
all or any of the structures owned by Lessor located upon or within the Leased
Premises. Lessee shall maintain in reasonably good state of repair all such
structures which it elects to use to which it is granted exclusive use within
the scope of such grant in Article XI, except for the ordinary wear and tear
and reasonable depreciation resulting from Lessee's said use and possession.
During the period of use by Lessee, Lessee shall pay the insurance, power,
light and miscellaneous costs that accrue on such structures as Lessee elects
to use. Lessor makes no warranty as to the condition or safety of any
structures upon the Leased Premises and Lessee agrees to accept the risk of
loss resulting from its use of structures.
XVIII. ASSIGNMENT
18.1 Each party reserves the right to assign or convey all or part of
its interest in this Mining Lease or the Leased Premises to any person or
entity, and any such assignment shall be made expressly subject to the terms
hereof. No such assignment shall be valid and effective until the assigning
party has delivered written notice of such assignment to the other party.
XIX. INUREMENT
19.1 The terms, provisions, covenants, warranties and agreements herein
contained shall extend to, be binding upon and inure to the benefit of the
heirs, personal representatives, successors and assigns of the parties.
XX. MEMORANDUM OF LEASE
20.1 Lessor and Lessee agree to execute a Memorandum setting forth the
basic terms and conditions of this Mining Lease. Said Memorandum may be
recorded in all public records where such documents are customarily recorded.
Lessor and Lessee agree that this Mining Lease shall not be recorded.
XXI. PUBLIC ANNOUNCEMENTS
21.1 Except as to public disclosures which are required by law or
regulations, all public announcements in respect of this Mining Lease shall be
made only after both Lessor and Lessee have each consented, in writing, to the
form and content of said announcement.
XXII. OPTION TO PURCHASE
Lessor grants to Lessee the sole and exclusive option to purchase all of
Lessor's right, title and interest in the property (the Leased Premises) for a
total purchase price of THREE MILLION dollars ($3,000,000.00) (hereinafter
referred to as the "Purchase Price"). Exercise of the option shall be
effective upon delivery of written notice thereof to Lessor at Lessor's
business address or the address of Lessor's registered agent. Lessee shall
deliver to Lessor a negotiable instrument in the full amount of the Purchase
Price in exchange for a properly executed and acknowledged Mining Deed in
recordable form. Closing shall occur within sixty (60) days after exercise of
the option.
IN WITNESS WHEREOF, the parties undersigned warrant that they are
properly authorized to bind their respective organizations and enter into this
Mining Lease according to all terms and provisions hereof, effective as of the
day and year first above written.
Lessor:
NORTH ▇▇▇▇ JOINT VENTURE, a Utah limited liability
company
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Managing Member
Lessee:
VALLEY HIGH MINING COMPANY, a Nevada corporation
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Exhibit "A"
to the Mining Lease with Option to Purchase dated April 19, 2004, by and
between North ▇▇▇▇ Joint Venture, a Utah LLC, as Lessor, and VALLEY MINING
COMPANY, a Nevada corporation, as Lessee, and covering the following patented
lode mining claims situate in the State of Utah, County of Juab, Tintic Mining
District to wit:
TOWNSHIP 10 SOUTH, RANGE 3 WEST, USB&M
SECTIONS 11, 12, 13, 24
CLAIM NAME SURVEY OR ACRES ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ # ▇▇▇ 34.24
Lulu Lode #4306 12.238
Peru Lode # 341 20.090
Wedge Lode #4448 1.667
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ # ▇▇▇ 12.240
Pinion & Fraction Lodes #4553 12.859
Black Warrior #3 Lode #4620 6.318
Black Warrior & Fraction Lodes #4552 24.789
West Cable, Cable Fraction, Columbia ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇ #▇▇▇▇ 42.339
Magazine Lode #6622 3.041
▇▇▇▇▇▇ #2 Lode #3275 13.652
Revenue, Manhattan, Outcast Lodes #3277 61.025
Stipended Lode #3276 18.750
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ #4101 2.305
Last Resort Lode #3215 20.659
Rescue Lode #5347 16.958
North ▇▇▇▇ & Jorave Lodes #▇▇▇▇ ▇.▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ Bear Fraction, North Seneca Lodes #6795 28.732
Damfino Lode # 262 20.511
▇▇▇▇▇ Consolidated Lode #4584 13.307
Equator, Cable Lode and Jumbo Lode #4302
#4303
#4304 16.323
Magnet Lode #3968 20.661
Bellmont Lode #4789 19.111
Blossom Lode #4556 0.806
St. Louis Mining Claims #1, 2, 3 and 4 #5267 51.446
containing in all 470.097 acres, more or less
INVESTMENT LETTER
April 19, 2004
The Board of Directors
VALLEY HIGH MINING COMPANY
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Acquisition of 5,000,000 (five million) "restricted" common capital
shares of VALLEY HIGH MINING COMPANY, a Nevada corporation ("VALLEY
HIGH"), by North ▇▇▇▇ Joint Venture, LLC ("North ▇▇▇▇"), a Utah limited
liability company
Gentlemen:
In connection with the execution on this day of a certain Mining Lease
by and between VALLEY HIGH MINING COMPANY, a Nevada corporation ("Lessee" or
"VALLEY HIGH") and North ▇▇▇▇ Joint Venture, LLC, a Utah limited liability
company ("Lessor" or "North ▇▇▇▇") by which Lessor is leasing 470.097 acres of
mining claims located in the Tintic Mining District of Juab County, State of
Utah, to Lessee for five (5) years commencing on this day, April 19, 2004, and
pursuant to which Lessor is entitled to receive a total of 5,000,000 (five
million) "restricted" shares of VALLEY HIGH, North ▇▇▇▇ hereby represents and
warrants to VALLEY HIGH as follows:
1. The 5,000,000 shares of common capital stock of VALLEY HIGH,
par value $0.001, (the "Securities") are being acquired by the
undersigned for the undersigned's account exclusively without a view to,
or for, resale in connection with any distribution of such Securities or
any interest therein without registration or other compliance under the
Securities Act of 1933, as amended (the "Act"), and that the undersigned
has no direct or indirect participation in any such undertaking or in
the underwriting of such an undertaking.
2. The undersigned, as set forth further below, will not take,
or cause to be taken, any action that would cause the undersigned to be
deemed an underwriter, as defined in Section 2(11) of the Act, as
amended.
3. The undersigned's managing member is currently an officer
and director of the VALLEY HIGH and therefore he is thoroughly familiar
with VALLEY HIGH and the nature of its development stage business,
including all risks attendant thereto.
4. The undersigned has had an opportunity to ask
questions of, and receive answers from others acting on behalf of the
VALLEY HIGH, including professionals such as its auditors or other
accountants or expects, to verify the accuracy and completeness of
information the undersigned has received while determining whether to
enter into the subject Mining Lease with VALLEY HIGH.
5. By reason of the undersigned's knowledge and experience in
financial and business matters in general, and investments in
particular, the undersigned and its individual members are capable of
evaluating the merits and risks of an investment in VALLEY HIGH.
6. The undersigned and each of its three members is capable of
bearing the economic risks of the subject investment. Moreover, the
undersigned's present financial condition is such that the undersigned
is under no present or contemplated future need to dispose of any
portion of the stock to satisfy any existing or contemplated
undertaking, need or indebtedness. Further, the undersigned does not
contemplate or foresee a change of circumstances in this regard.
7. The undersigned understands that the Securities have
not been registered, but are being acquired by reason of a specific
exemption under the Act as well as under certain state statutes for
transactions by an issuer not involving any public offering and that any
disposition of the subject Securities may, under certain circumstances,
be inconsistent with this exemption and may make the undersigned an
"underwriter" within the meaning of the Act. It is understood that the
definition of an "underwriter" focuses on the concept of "distribution"
and that any subsequent disposition of the subject Securities can only
be effected in transactions that are not considered distributions.
Generally, the term "distribution" is considered synonymous with "public
offering" or any other offer or sale involving general solicitation or
general advertising. Under present law, in determining whether a
distribution occurs when securities are sold into the public market,
under certain circumstances one must consider the availability of public
information regarding the issuer, a holding period for the securities
sufficient to assure that the persons desiring to sell the securities
without registration first bear the economic risk of their investment,
and a limitation on the number of securities which the stockholder is
permitted to sell and on the manner of sale, thereby reducing the
potential impact of the sale on the trading markets. These criteria are
set forth specifically in Rule 144 of the General Rules and Regulations
of the Commission promulgated under the Act. After one (1) year from
the date the Securities are fully paid for, all as calculated in
accordance with Rule 144(d), sales of the Securities in reliance on Rule
144 can only be made in limited amounts in accordance with the terms and
conditions of the rule. After two (2) years from the date the
Securities are fully paid for, as calculated in accordance with Rule
144(d), they can generally be sold in interstate commerce and otherwise
without meeting these conditions, provided the holder is not (and has
not been, for the preceding three (3) months) an affiliate of the
issuer.
8. The undersigned acknowledges that the Securities must be
held and may not be sold, transferred, or otherwise disposed of for
value unless they are subsequently registered under the Act or an
exemption from such registration is available; the issuer is under no
obligation to register the Securities under the Act or under Section 12
of the Securities Exchange Act of 1934, as amended, except as may be
expressly agreed to by it or its successor-in-interest in writing; if
Rule 144 is available, and no assurance is given that it will be,
initially only routine sales of such Securities in limited amounts can
be made in reliance on Rule 144 in accordance with the terms and
conditions of that rule; the issuer is under no obligation to the
undersigned to made Rule 144 available, except as may be expressly
agreed to by it in writing; in the event Rule 144 is not available,
compliance with some other disclosure exemption may be required before
the undersigned can sell, transfer, or otherwise dispose of such
Securities without registration under the Act; the issuer's registrar
and transfer agent, Atlas Stock Transfer, will maintain a stop transfer
order against the registration of transfer of the Securities; and the
certificate representing the Securities will bear a legend in
substantially the following form so restricting the sale of such
Securities:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
(the "Act"), AND ARE "RESTRICTED
SECURITIES" WITHIN THE MEANING OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT AND
MAY NOT BE SOLD OR TRANSFERRED WITHOUT
COMPLYING WITH RULE 144 IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT.
9. The issuer, VALLEY HIGH, may refuse to register transfer
of the Securities in the absence of compliance with Rule 144 unless the
undersigned furnishes the issuer with a "no action" or interpretative
letter from the Securities and Exchange Commission or an opinion of
counsel reasonably acceptable to the issuer stating that the transfer is
proper and permissible; further, unless such letter or opinion states
that the Securities are free of any restrictions under the Act, the
issuer may refuse to transfer the Securities to any transferee who does
not furnish in writing to the issuer the same representations and agree
to the same conditions with respect to such Securities as set forth
herein. The issuer may also refuse to transfer the Securities if any
circumstances are present reasonably indicating that the transferee's
representations are not accurate.
This Investment Letter shall be binding upon and shall inure to the
benefit of the parties hereto and to the successors and assigns of the VALLEY
HIGH and to the personal and legal representatives, heirs, guardians,
successors, and permitted assignees of the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Investment Letter
on behalf of and by and for Lessor, North ▇▇▇▇ Joint Venture, LLC, effective
on the 19th day of April, 2004.
NORTH ▇▇▇▇ JOINT VENTURE, L.L.C.
/S/▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Managing Member
Signature of Subscriber
NORTH ▇▇▇▇ JOINT VENTURE, L.L.C.
Typed or Printed Name
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Residence Address
Salt Lake City, Utah 84109-1481
City, State and Zip Code