EXHIBIT 10.1
LEASE AGREEMENT
▇▇▇ ▇▇▇▇▇▇▇▇▇ (Lessor) agrees to lease to TARI, INC. (Tari or Lessee) the lode
mining claims attach as Exhibit "A", located in portions of sections 21 and 22,
T 17 N, R 21 E, MDB&M in Storey County, Nevada (referred to as property),
subject to the following conditions:
RECITALS:
A. "Effective Date" means May 15, 2001.
B. "Lease Year" means each one (1) year period following the Effective
Date and each anniversary of the Effective Date.
C. WARRANTIES. The Lessor warrants that he is the owner of the lode mining
claims more particularly described in Exhibit A and said claims are
free from all liens and encumbrances.
D. EXPLORATION AND DEVELOPMENT RIGHTS. Lessor will grant the Property to
Lessee for the Lease period with the exclusive right to explore,
develop, and mine the Property for gold, silver, and other valuable
minerals.
E. PERFORMANCE REQUIREMENTS / ASSUMPTION OF CLAIM MAINTENANCE. Under
applicable Federal, State and County laws and regulations, Federal,
State, and County annual mining claim maintenance or rental fees are
required to be paid for the unpatented mining claims which constitute
all or part of the Property, beginning with the annual assessment work
period of September 1, 2001 to September 1, 2002. Tari shall timely and
properly pay the Federal, State, and County annual mining claim
maintenance or rental fees, and shall execute and record or file, as
applicable, proof of payment of the Federal, State, and County annual
mining maintenance or rental fees and of Lessor's intention to hold the
unpatented mining claims which constitute the Property. If Tari does
not terminate this Lease before June 1 or any subsequent Lease Year,
Tari will be obligated either to pay the Federal, State, and Local
annual mining claim maintenance or rental fees for the Property due
that year or to reimburse Lessor for same.
F. AREA OF INTEREST. Any additional claims located or acquired by the
Lessee within one (1) mile from the exterior boundaries of the mining
claims described in Exhibit "A" shall become a part of the leased
property and shall be subject to the terms of this lease as of the
Effective Date.
G. SCHEDULE OF MINIMUM PAYMENTS. The Lessee shall pay to the Lessor
minimum payments, which shall be advance payments of the Royalty, of
US$5000.00 (five thousand dollars) upon execution of this lease. The
Lessee may extend this lease upon payment of the following:
1. Pay Lessor US$10,000.00 on or before the first anniversary of
the execution of this lease.
2. Pay Lessor US$15,000.00 on or before the second anniversary of
the execution of this lease.
3. Pay Lessor US$20,000.00 on or before the third anniversary of
the execution of this lease.
4. Pay Lessor US$25, 000.00 on or before the fourth anniversary
of the execution of this lease.
5. Each annual payment thereafter shall be US$50,000.00 plus an
annual increase or decrease equivalent to the rate of
inflation designated by the Consumer's Price Index (CPI) for
that year with execution year as base year. Each such payment
shall be made on or before the successive anniversary of the
execution of this lease.
H. BUYOUT. Buyout price is US$5,000,000 (five million dollars) from which
advance royalty payments, made up to the day of the buyout, may be
subtracted from the Buyout price. Lessee will pay Lessor a perpetual
one-half per cent (0.5%) royalty on Net Smelter Returns (as defined
below in Section I. of this document) thereafter.
I. DEFINITION OF NET SMELTER RETURNS. During the term of this Agreement,
Lessee shall pay to Lessor, as a land owner's Production Royalty, a
percentage of the Net Smelter Returns (as defined below) from the sale
of any Valuable Minerals, Ore, and Product mined and sold from the
Property. "Net Smelter Returns" are defined as the gross revenues
actually received by the Lessee from the sales of any Valuable Minerals
extracted and produced from the Property less the following charges:
1. All costs to Lessee of weighing, sampling, determining
moisture content and packaging such material and of loading
and transporting it to the point of sale, including insurance
and in-transit security costs.
2. All smelter costs and all charges and penalties imposed by the
smelter, refinery, or purchaser.
3. Marketing costs and commissions.
4. Not withstanding the foregoing, for purposes of determining
the royalty payable to Lessor on any gold and/or silver
produced from the Property, the price attributed to such gold
and/or silver shall be the price per ounce of gold and/or
silver on which the royalty is to be paid (as the case may be)
as quoted on the London Metals Exchange at the PM fix on the
day prior to the date of final settlement from the smelter,
refinery or other buyer of the gold and/or silver on which the
royalty is to be paid (the "Quoted Price"). For purposes of
determining the gross revenues, in the event the Lessee elects
not to sell any portion of the gold and/or silver mined from
the Property, but instead elects to have the final product of
any such gold and/or silver credited to be held for its
account with any smelter, refiner, or broker, such gold and/or
silver shall be deemed to have been sold at the Quoted Price
on the day such gold and/or silver is actually credited to or
placed in Lessee's account. The percentage for this Production
Royalty shall be four per cent (4%).
5. Lessor shall be paid the Production Royalty quarterly by
certified check by the Lessee.
J. CONDITIONS OF TERMINATION BY LESSOR. This Lease may be terminated at
any time by the Lessor subject to the following:
1. If Lessee fails to meet the above lease payments, Lessor must
give written notice to Lessee of such default. After receipt
of default, Lessee has 15 days to cure the default.
2. If Lessee fails to make Federal, State, and County maintenance
payments or filing fees at least 15 days prior to due date,
Lessee shall notify Lessor of a possible default. After 10
days, if the default is not cured Lessor may initiate payment
on the claims. Lessee will be able to cure this default by
reimbursing all Federal, State, and County Payments made by
the Lessor plus a 20% penalty within 30 days.
K. CONDITIONS OF TERMINATION BY LESSEE. This Lease may be terminated at
any time by the Lessee subject to the following:
1. Lessee must give written notice 30 days prior to relinquishing
the leased property.
2. In the event Lessee desires to terminate the agreement after
June1 of any year, Lessee shall be responsible for all
Federal, State, and County maintenance and filing fees for the
next assessment year regarding the leased property.
3. Lessee shall deliver to Lessor, in reproducible form, all data
generated or obtained for the leased property, whether factual
or interpretive as defined in section P.
4. Lessee shall quitclaim to Lessors all claims located or
acquired by Lessee within one (1) mile area of interest
described in section F.
L. RECLAMATION, COMPLIANCE WITH THE LAW. All exploration and development
work performed by the Lessee during the term of this Agreement shall
conform with the applicable laws and regulations of the state in which
the Property is situated and of the United States of America. Lessee
shall be fully responsible for compliance with all applicable Federal,
State, and local reclamation statutes, regulations, and ordinances
relating to such work, at Lessee's cost, and Lessee shall indemnify and
hold harmless Lessor from any and all claims, assessments, fines, and
actions arising from Lessee's failure to perform the foregoing
obligations. Lessee's reclamation obligation shall survive termination
of the Agreement. Lessor agrees to cooperate with Lessee in Lessee's
application for governmental licenses, permits, and approvals, the
costs of which shall be borne by Lessee. Lessee shall own all
governmental licenses, permits, and approvals.
M. LIENS. Lessee shall keep the property free from any and all liens and
encumbrances.
N. TRANSFER, ASSIGNMENT, RIGHT OF FIRST REFUSAL. Either party shall be
free to assign its rights under the detailed agreement to an affiliate
company. They also shall have the right to transfer all or part of
their interest in the Agreement to a third party, but transfers to a
third party shall be subject to a right of first refusal by the Lessor.
Assignments permitted under this paragraph shall not be effective
unless and until the permitted assignee agrees in writing in form and
substance acceptable to the remaining party assuming all of the
assigning party's obligations under this Lease Agreement. The party
assigning interest in this lease shall notify the other party within 15
days of such assignment and all parts of this agreement will remain in
effect.
O. LEASE TERM. The term of this lease is for twenty (20) years, renewable
for an additional twenty (20) years so long as conditions of the lease
are met.
P. DATA AND REPORTS. Upon and after execution of the detailed agreement,
Lessor will make available to Lessee all technical data, survey notes
or maps, samples, drilling results including drill logs and reports
concerning the Property which Lessor possesses, or to which it has
access, of which it acquires in the future. Within 60 days after
termination of the detailed agreement, Lessee shall return to Lessor
all information of a nature similar to that described above and
developed by Lessee during the term of the Mining Lease. If requested
by Lessor not more than once in any 12 calendar months, Lessee shall
submit to Lessor, within 60 days of Lessee's receipt of such request,
an annual progress report describing Lessee's work upon the Property,
the results of such work, and the amounts expended by Lessee in
furtherance thereof to the date of such report.
Q. NOTIFICATION TO LESSOR. All notices and payments from Lessee to Lessor
shall be sent to:
▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ U. S. A.
or any other person Lessor shall designate. If Lessor designates an
alternative person to receive notices and payment, they shall provide
written notice of such to Lessee. All lease payments shall be made in
the form of a check payable to ▇▇▇ ▇▇▇▇▇▇▇▇▇.
R. NOTIFICATION TO LESSEE. All notices from Lessor to Lessee shall be sent
to:
▇▇▇ ▇▇▇▇▇▇, President
Tari, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
or any other person Lessee shall designate. If Lessee designates an
alternative person to receive notices, they shall provide written
notice of such to Lessor.
The parties have executed this Lease Agreement effective as of the Effective
Date.
/s/ ▇▇▇ DRUSSOLIS
▇▇▇ DRUSSOLIS
/s/ ▇▇▇ ▇.▇. ▇▇▇▇▇▇
▇▇▇ Y.E. ▇▇▇▇▇▇
EXHIBIT "A"
Description of Property
A. Unpatented Lode Mining Claims.
CLAIM NAME BLM SERIAL NUMBER
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