1
EXHIBIT 10(a)
TABLE OF CONTENTS
AMERICAN SILVER MINING LEASE
ARTICLE 1. DESCRIPTION OF THE PROPERTY.................................3
ARTICLE 2. GRANT OF LEASE..............................................3
ARTICLE 3. TERM OF LEASE...............................................3
ARTICLE 4...............................................................4
(A) POSSESSION AND CONTROL OF PROPERTY.............................4
(B) TIMBER.........................................................5
ARTICLE 5. MANNER OF WORK..............................................5
ARTICLE 6. WORK REQUIREMENTS...........................................5
ARTICLE 7. ROYALTIES...................................................5
(A) ROYALTY SCHEDULE...............................................6
(1) OPERATING EXPENDITURES....................................7
(2) EXPLORATION AND DEVELOPMENT EXPENDITURES................. 8
(B) COMMINGLING OF ORE.............................................8
(C) TREATMENT AT LESSEE'S PROCESSING FACILITIES....................9
(D) DISPUTES REGARDING ROYALTIES...................................9
(E) ADVANCE MINIMUM ROYALTY........................................9
ARTICLE 8. XXXXXXXX AND RESIDUE........................................9
2
ARTICLE 9. CROSS MINING RIGHTS........................................10
ARTICLE 10. VERTICAL BOUNDARY PLANES..................................10
ARTICLE 11. RECORDS AND INSPECTION....................................11
ARTICLE 12. TAXES.....................................................12
ARTICLE 13. STATE AND FEDERAL LAWS AND REGULATIONS....................12
ARTICLE 14. PROTECTION FROM LIENS AND DAMAGES.........................12
ARTICLE 15. FORCE MAJEURE.............................................13
ARTICLE 16. DEFAULT...................................................13
ARTICLE 17. CANCELLATION..............................................14
ARTICLE 18. SURRENDER OF PROPERTY.....................................15
ARTICLE 19. REMOVAL OF EQUIPMENT......................................15
ARTICLE 20. TITLE AND PATENT..........................................15
ARTICLE 21. ARBITRATION OF DISPUTES...................................16
ARTICLE 22. RECORDATION OF SHORT FORM NOTICE..........................17
ARTICLE 23. NOTICES...................................................17
ARTICLE 24. INUREMENT.................................................18
ARTICLE 25. CONSTRUCTION..............................................18
3
AMERICAN SILVER MINING LEASE
THIS MINING LEASE, effective as of the 1st day of June, 1997, regardless of
the actual times of signing and acknowledgment, between AMERICAN SILVER MINING
COMPANY, an Idaho corporation, hereinafter called Lessor, and SILVER VALLEY
RESOURCES CORPORATION, a Delaware Corporation, hereinafter called Lessee,
WITNESSETH:
ARTICLE 1. DESCRIPTION OF THE PROPERTY.
Lessor represents that it is the owner of 21 unpatented lode mining claims
situated in Shoshone County, Idaho, as described on Exhibit A which by this
reference is made a part of this Lease. Exhibit A also sets forth a description
of any water rights and property easements which may exist in conjunction with
the property ownership.
ARTICLE 2. GRANT OF LEASE.
The Lessor in consideration of the royalties herein reserved and the
covenants to be performed by Xxxxxx, does hereby lease, let and demise unto
Lessee, its successors and assigns, all of the above described property
(hereinafter referred to as the "leased premises" or "demised premises").
ARTICLE 3. TERM OF LEASE
The primary term of this lease shall be twenty (20) years to commence on
June 1, 1997 and so long thereafter as ores or minerals from the leased premises
are being developed, mined, processed or marketed on a continuing basis.
Whenever the continued term of this Lease is dependent upon continuing
development, mining, processing or marketing by Lessee and there occur periods
(i) when there is no reasonable market for ores or minerals which are or could
be produced by Lessee from the leased premises, or (ii) when the continuing
development, mining, processing or marketing by Lessee of ores or minerals from
the leased premises is prevented or interrupted by a condition or happening of
force majeure, the term of this Lease shall nevertheless continue during such
periods, subject to termination by Lessor if the suspension of operations for
the enumerated causes has continued without interruption for at least
3
4
five(5) years. When a satisfactory market becomes available, or upon cessation
of any period of force majeure, Lessee shall have a reasonable time thereafter
within which to resume development, mining, processing or marketing of ores and
minerals from the leased premises. No cessation of operations for one hundred
eighty (180) consecutive days or less, when such cessation is caused by any
other reason, shall be considered a break in the continuity of development,
mining, processing or marketing. A "reasonable market" shall not be deemed to
exist and Lessee may suspend operations during periods when the products of the
leased premises cannot be produced and sold at a profit by reason of low metal
prices or otherwise or when such products cannot be readily sold at prevailing
prices so that an unreasonable inventory thereof has accumulated or otherwise
would accumulate.
ARTICLE 4.
(a) POSSESSION AND CONTROL OF PROPERTY.
Lessee shall have, and it is hereby given and granted, the right to enter upon
and take over, at the beginning of the primary term hereof, the sole and
exclusive possession and control of the leased premises and the whole and every
part thereof, and, during the term of this lease, to remain in the sole and
exclusive possession and control thereof, and to investigate, measure, sample,
examine, test, develop, work, mine, operate, use, manage, and control the same
and the water and water rights appurtenant thereto, and to mine, extract and
remove from said property the ores and minerals therein and appurtenant and
belonging thereto, and to treat, mill, ship, sell or otherwise dispose of the
same and receive the full proceeds therefrom; and to erect, construct, maintain,
use and operate thereon and therein buildings, structures, machinery and
equipment. The time, nature, location and extent of such or any or all the above
activities and mining or mining operations and the cessation and resumption
thereof shall be at the sole discretion of Lessee, and may include, without
limitation, open pit, underground, strip, or solution mining methods, together
with the right to use so much of the surface as may be necessary, useful or
convenient for the enjoyment of all rights herein granted including construction
of a surface mine waste rock dump, if necessary, from development of Lessor's
property. Any surface mine waste dump constructed during the life of this lease
shall be reclaimed to industry standards by Lessee at lease termination.
4
5
(b) TIMBER. Lessee shall have the right, pursuant to applicable law, to
manage and use timber upon the property in accordance with law. In addition, in
the event Lessee elects to seek patents for the property described on Exhibit A,
Lessee shall have the right to manage and harvest the timber situated thereon.
In either event Lessee shall account for the value of timber removed and the
value shall be treated just as proceeds from the sale of metal is treated and
accounted for under this lease.
ARTICLE 5. MANNER OF WORK.
Xxxxxx agrees to cause all work, development and mining to be done in a
careful and minerlike manner, and to conform in all respects to the mining laws
and regulations of the United States and the State of Idaho.
ARTICLE 6. WORK REQUIREMENTS.
During the first five years of the primary term hereof Xxxxxx shall perform
a minimum of $100,000 of work upon or for the benefit of the leased premises.
Thereafter, for each successive five year period during the initial 20 year term
Lessee shall perform at least $100,000 of work upon or for the benefit of the
leased premises. In the event work is performed in excess of the minimum during
any five year period, the excess may be carried forward to the credit of Lessee
for subsequent periods. Provided, however in the event commercial production is
commenced at any time within the initial 20 year term, and continues without
interruption as defined in Article 3, this Article 6 requiring minimum work
shall not be applicable.
The term "work" includes, but is not limited to:
Diamond drilling, drifting, xxxxx sinking, raising, rehabilitation of
existing underground openings in advance of any such work, surface mapping,
geochemical surveys, stratigraphic and structural investigations,
metallurgical and other physical, analytical work, mine engineering and
geological analysis which enhances the understanding of the geology, and
unpatented claim holding costs.
ARTICLE 7. ROYALTIES.
5
6
(a) Royalty Schedule. Lessee shall pay Lessor a 20% Net Profits Royalty,
as defined in Exhibit B, on all development and production ores and minerals
extracted, milled and sold from the leased premises in accordance with Exhibit B
which is attached hereto and by this reference is made a part of this Lease.
The Net Profits Royalty shall be increased above twenty percent (20%), or
decreased to not less than twenty percent (20%), in accordance with the adjusted
quarterly average price of silver, as shown on the schedule which follows:
Sliding Scale Royalty Payments
---------------------------------------------------
Net Profit Royalty Quarterly Average
Percentage Silver Price
------------------ -----------------
20% less than $11.00
21% greater than $11.00
22% greater than $11.25
23% greater than $11.50
24% greater than $11.75
25% greater than $12.00
30% greater than $13.50
35% greater than $15.00
40% greater than $16.50
The term "quarterly average price of silver" means the sum of all closing
prices as quoted by the Comex Metals Exchange for each day of the calendar
quarter that a quote is given, divided by the number of days quoted.
"Adjusted Price of Silver" shall be determined for each quarter of each
calendar year by multiplying the Handy and Xxxxxx average quotation for that
quarter for silver in commercial bar form per Xxxx ounce of .999 fine refined
silver for nearby delivery at New York by an inflation factor. The inflation
factor to be applied shall be determined by dividing the Gross National
Production implicit price deflator index (as published by the U.S. Dept. of
Commerce) for 1997 by the Gross National
6
7
Product implicit price deflator index for the calendar year previous of the
royalty year in question. Thus, for example, if the Handy and Xxxxxx average
quarterly quotation during a quarter in 1999 should be $16.00 per Xxxx ounce,
and the Gross National Product implicit price deflators for 1997 and 1999 are
212.10 and 247.90 respectively, then the Adjusted Price of Silver for the
quarter in question is equal to $16.00 multiplied by 212.10 divided by 247.90
equals $13.69.
Obligation for quarterly payment of the Net Profits Royalty shall commence
after Xxxxxx has recovered all operating, exploration and development
expenditures incurred by Xxxxxx attributed to the leased premises following the
effective date of this lease. For the purpose of calculating these costs, all
applicable operating, exploration and development expenditures shall be
determined in accordance with generally accepted accounting principles for
metallic mining ventures within the United States applied on a consistent basis
("GAAP") which are incurred after the effective date of this lease, as follows
(calculation of Net Profits Royalty shall be determined exclusively under
Exhibit B after these operating, exploration and development expenditures have
been recovered):
(1) Operating expenditures include:
(i) Mining Costs. Costs incurred by Lessee in exploring for,
mining, extracting, removing and transporting to a mill ores
and minerals produced from the leased premises. Such costs
shall include, without limitation, those incurred for labor,
machinery operation, fuel, explosives and other materials,
exploration drilling, developmental or ore delineation
drilling, allowance for depreciation and amortization of
mining equipment and machinery acquired after the effective
date of this Lease. Mining costs shall not include depletion
or income taxes.
(ii) Milling and Processing Costs. Costs incurred in milling or
processing ores and minerals produced from the leased premises
at a mill or central processing facility utilized to process
ores and minerals produced from the leased premises, if any,
(hereinafter referred to as the "Mill").
7
8
(iii) General and Administrative Costs. Costs incurred as a direct
result of the administration of the leased premises, and the
production of ores and minerals therefrom, including costs
incurred in connection with the marketing, selling, and
collection of proceeds from sale of ores and minerals produced
from the leased premises.
(iv) Taxes. All taxes levied against Xxxxxx's operation of the
leased premises, excluding income taxes but including mining
and property taxes.
(2) Exploration and Development Expenditures. Costs incurred by Lessee
after the effective date hereof with respect to exploring and developing the
leased premises and all matters connected therewith including, but not limited
to, costs relating to geological, geochemical and geophysical studies,
exploration and developmental drilling, sampling and assaying, mine design and
development, acquisition of mining or processing equipment or machinery, direct
expenses of making application for and obtaining environmental and regulatory
permits from government agencies (including reasonable attorney's fees), costs
to patent the unpatented claims and any other costs which would be included
within mining costs and/or milling and processing costs if such costs were
incurred after the Commencement of Commercial Production.
If any of the costs otherwise includable in Lessee's costs as set
forth above are incurred partly for the benefit of any other properties or
interests of Lessee, only the portion of such costs reasonably attributable to
development and operation of the leased premises in accordance with GAAP shall
be included.
(b) Commingling of Ore.
Lessee may commingle ore from the leased premises with ore from other
properties, either before or after concentration or beneficiation, so long as
the data necessary to determine the weight and grade, both of the ore removed
from the leased premises and the ore with which it is commingled, are obtained
by Lessee. Lessee shall then use that weight and grade data to allocate Gross
Sales (as defined in Exhibit B) from the commingled ore between the leased
premises and the other properties from which the other 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
8
9
and sufficient at that time. If, in Xxxxxx's judgment, it is impractical to
determine which portions of any of the costs and expenses described in Paragraph
(a) above are directly attributable to ore removed from the leased premises,
Lessee may allocate all such costs and expenses on a straight-line, per-ton
basis among all ores that give rise to those expenses, in accordance with GAAP.
(c) Treatment at Lessee's Processing Facilities.
Lessee shall have the right to purchase and to treat concentrates and
smelting ores produced from the leased premises at its own or affiliated
company's metallurgical facility; provided, however, that any such purchase and
treatment shall be made under comparable terms as the metallurgical facility is
then offering to other shippers of concentrates and smelting ores on purchases
of like quantities and qualities.
(d) Disputes Regarding Royalties.
Lessor shall be deemed to have waived any right the Lessor may have
had to object to the royalty settlement made by Lessee in accordance with
Exhibit B for any calendar quarter, unless Lessor notifies Lessee in writing of
such objection within twelve (12) months after such royalty is due under this
Lease. If Xxxxxx and Xxxxxx are unable to resolve the question by agreement
within thirty (30) days after Xxxxxx's receipt of Xxxxxx's notice, the dispute
shall be resolved by arbitration, in accordance with the provisions of Article
21.
(e) Advance Minimum Royalty.
Commencing with the month this lease is executed and or each month
thereafter that this lease continues and while it remains unterminated, Lessee
shall pay an advance minimum royalty of $500 per month. This advance minimum
royalty shall be credited to the Net Profits Royalty obligation referred to
above in this Article 7. The royalty shall be paid during the month this lease
is executed on or before the last day of the month and thereafter on or before
the last day of each succeeding month. Also, the $500 sum, the "base amount",
shall be increased ten percent (10%) of the base amount, or $50.00, at the
commencement of each successive five year period.
ARTICLE 8. TAILINGS AND RESIDUE.
Tailings and other residue resulting from the milling or other
beneficiating of ores produced from the leased premises and subsequently
utilized in mining operations shall be the sole and
9
10
exclusive property of Lessee prior to termination of this lease. Tailings and
other residue remaining underground in the leased premises shall become the
property of the Lessor upon termination of this lease. A separate written
agreement will be negotiated by the parties in good faith for the construction
of a surface mill tailings impoundment on the leased premises if determined
necessary by the Lessee. The terms of such agreement shall be consistent with
industry standards and the parties agree to submit to arbitration any matter to
which the parties can not agree during the negotiation of such an agreement.
ARTICLE 9. CROSS-MINING RIGHTS.
Lessee is hereby granted the right, if it so desires, to mine or remove
from the leased premises any ores, waste, water and other materials existing
therein or thereon or in any part thereof, through or by means of shafts,
openings or pits which may be sunk or made upon adjoining or nearby property
owned or controlled by Lessee, and may stockpile any ores, waste, or other
materials and/or concentrated products of ores or materials from the leased
premises or any part thereof, upon stockpile grounds situated upon any such
adjoining or nearby property; and Lessee may, if it so desires, use the leased
premises and any part thereof and any shafts, openings, pits and stockpile
grounds sunk or made thereon for the mining, removal and/or stockpiling of any
ores, waste, water and other materials and/or concentrated products of ores or
materials from any such adjoining or nearby property, or for any purpose or
purposes connected therewith, not, however, preventing or interfering with the
mining or removal of ore from the leased premises. If, after this lease expires
or terminates, Lessee is exploring, mining or developing adjacent properties
thereto, it may use any haulageways developed during the terms of the lease for
ingress and egress reasonably necessary to explore, develop or mine such
adjacent properties. The Lessee shall be responsible for haulageway maintenance
costs and liabilities resulting from its negligent acts. The Lessee's right of
ingress and egress shall not interfere with future development of the property
by the Lessor. This provision for ingress and egress to and from such adjacent
properties shall survive the expiration or termination of this lease.
ARTICLE 10. VERTICAL BOUNDARY PLANES.
In consideration of Xxxxxx's execution of this mining lease, and the
reciprocal benefits received by reason of the terms of
10
11
this Article by the Lessor and the Lessee, Lessor and Lessee hereby agree with
each other that any and all ores and minerals within the surface boundaries
extended downward vertically of any claim so held under lease and herein defined
as leased premises shall belong to such claim and work requirements in Article 6
and the royalties in Article 7 apply to these claims. American Silver shall
receive a net profit royalty of 11% on all development and production ores and
minerals extracted, milled and sold from the claims belonging to Silver Valley
Resources outlined in pink on the attached map of claims (Exhibit C) which
constitute portions of the former Silver Standard, Coeur d' Alene Consolidated,
and Triangle Companies. The definition of "net profits" contained in this lease,
applies to the 11% royalty, but as to this 11% there shall be no sliding scale
as set forth in Article 7.
It is understood that the concept of vertical boundaries applies only as
between Lessor and Lessee, and that neither party intends to, or will, give up
any extralateral rights to third parties. In the case of extralateral rights
extending from the leased premises, then Lessee will either lease the adjacent
property or mine it by exercising extralateral rights. In both cases, the Lessee
and Lessor interests shall be diluted proportionately based on the cost of
leasing or acquiring the adjacent property. For example, if it costs a twenty
percent (20%) NPR to lease an adjacent property of a third party, the Lessor in
our agreement would suffer a twenty percent (20%) reduction in its net profit
interest, and the Lessee in our agreement would suffer a twenty percent (20%)
reduction as below:
Net Profits = $100 from Third Party Property
Lessor Dilution
20% of 20% = $4 (or 4% Net Reduction)
Lessee Dilution
20% of 80% = $16 (or 16% Net Reduction)
ARTICLE 11. RECORDS AND INSPECTION.
Xxxxxx's engineering progress maps and all factual exploration, development
and production data including drill core
11
12
and assay results (but excluding interpretive information or data) from the
leased premises shall be available upon reasonable request for Lessor's
inspection. The Lessor may enter said property at reasonable times for the
purpose of inspecting the same, and Lessee shall facilitate such inspection in
reasonable ways, but Lessor shall enter upon said leased premises at Lessor's
own risk and so as not to hinder unreasonably the operations of Lessee; and the
Lessor shall indemnify and hold harmless the Lessee from any damage, claim or
demand by reason of injury to or the presence of the Lessor or the Lessor's
agents, representatives, licensees, or guests or any of them on the leased
premises or approaches thereto. Lessee shall furnish to Lessor an annual
progress report during the first quarter of each year summarizing the work and
expenditures which occurred during the previous year. Lessee will also send
brief quarterly updates describing the prior quarter's work.
ARTICLE 12. TAXES.
Lessee shall pay before they are delinquent all general property taxes and
governmental rental fees for unpatented claims assessed against the Lessor's
ownership in the leased premises during the term of this lease, beginning with
the year 1997. Lessee shall also pay, before they are delinquent, all taxes
levied or assessed against any or all personal property, machinery and equipment
placed upon the leased premises by the Lessee during the term of this lease and
beginning in the year 1997. As to severance tax and all other taxes that are now
or may be hereafter levied and computed on the amount or value of ores produced
from the leased premises, Lessee shall pay the same.
ARTICLE 13. STATE AND FEDERAL LAWS AND REGULATIONS.
Lessee shall comply with the Workmen's Compensation laws of Idaho and with
Social Security, Unemployment Insurance and all other state and federal laws and
regulations relating to Xxxxxx's operations and shall save Lessor harmless from
any claim for damages or liability by reason thereof.
ARTICLE 14. PROTECTION FROM LIENS AND DAMAGES.
Lessee shall keep the leased premises and the whole and every part thereof
free and clear of liens for labor done or work performed upon the leased
premises or materials furnished to it
12
13
for the development or operation thereof under this lease while the same is in
force and effect, and will save and keep harmless Lessor from all costs, loss or
damage which may arise by reason of injury to any persons employed by Xxxxxx in
or upon the leased premises or any part thereof or which may arise by reason of
injury to any persons or damage to any property as the result of any work or
operations of the Lessee or of its possession and occupancy of the leased
premises. A lien upon the property shall not constitute a default if the Lessee
in good faith disputes the validity of the claim, in which event the existence
of the lien shall constitute a default only from and after the validity of the
lien has been adjudicated.
ARTICLE 15. FORCE MAJEURE.
If Lessee is unable to perform any of the terms or covenants of this lease
by reason of damage or delay resulting from disaster, labor disturbances,
shortage of labor, strikes, lockouts, act of God, or from any regulations or
restrictions of any governmental agency, or on account of any eventuality beyond
the reasonable control of Lessee, including state and federal environmental
statute or regulation, Lessee shall be excused from performance during the
period of such prevention and the time for performance of such obligations shall
be extended for a period equal to the period or periods of prevention. In the
event Lessee or its purchaser of concentrates or crude ore is, becomes or
believes it is about to become subject, at any time, to environmental
regulations (which shall include any governmental law, rule, order, regulation,
policy, proposal or restriction relating to environmental pollution) which will
prohibit or materially affect any operation Lessee is carrying out, or planning
to carry out hereunder, Lessee shall have the right to declare the existence of
a condition of force majeure during the period in which it is in good faith
seeking a feasible method to comply with, be exempted from, modify, obtain
necessary permits or licenses under, or prevent the enactment or promulgation of
said environmental regulations. Xxxxxx agrees to use reasonable diligence to
remove causes of force majeure as may occur from time to time, but shall not be
required to settle strikes or other labor difficulties contrary to its own
judgment.
ARTICLE 16. DEFAULT.
The failure of Lessee to make or cause to be made any of the material
payments herein provided for or to keep or perform
13
14
any material agreement on its part to be kept or performed according to the
terms and provisions of this lease, shall, at the election of the Lessor, work a
forfeiture hereof; provided, however, that in the event of a default on the part
of the Lessee, the Lessor shall give to the Lessee a written notice of its
intention to declare a forfeiture of this lease and to terminate the same on
account thereof, or of its intention to take other action to enforce this lease,
specifying the particular default or defaults relied upon by it, and Lessee
shall have a reasonable time (which in any case shall not be less than sixty
(60) days) after receipt of such notice in which to make good such default or
defaults, in which event there shall be no forfeiture therefor, and no other
action may be taken for enforcement. If Lessee disagrees that such default
occurred, it shall so advise Lessor in writing thirty (30) days after receipt of
the notice of default. If, within fifteen (15) days thereafter, the parties have
not resolved the dispute by mutual agreement, the issue of default shall then be
submitted to arbitration under Article 21 below. In the event that Lessor does
terminate this lease on account of a breach by Xxxxxx, Lessee shall be under no
further obligation or liability hereunder to Lessor from and after the date of
such termination except for the performance of obligations and the satisfaction
of liabilities to Lessor or third parties or respecting the leased premises,
which have accrued to the date of such termination.
ARTICLE 17. CANCELLATION.
Notwithstanding any provision herein to the contrary, Lessee may at any
time upon 30 days' written notice, cancel and terminate this lease in its
entirety. Upon total cancellation and termination of this lease, Lessee shall be
under no further obligation of whatsoever kind or nature to the Lessor except
for the making of payments which have already accrued to the date of such
cancellation and termination, including governmental rental fees for unpatented
claims and for the payment of Xxxxxx's proportion of the aforesaid property
taxes accrued while this lease was in effect. If Lessee shall have included any
part of the leased premises in a "producing group" for assessment purposes, and
taxes based on such assessment shall have been levied but shall not have been
paid at the time of cancellation and termination Lessee shall pay such taxes
before they are delinquent. Work requirements specified in Article 6 shall cease
upon the date such notice is given.
14
15
ARTICLE 18. SURRENDER OF PROPERTY.
In the event of a valid forfeiture, cancellation, or other termination of
this lease, Xxxxxx shall surrender to Lessor peaceable possession of the leased
premises and at the written request of Lessor shall deliver to the Lessor a
written relinquishment hereof, together with a copy, if requested by Lessor
within thirty (30) days after termination of this lease, of its engineering
progress maps showing any workings made or uncovered by Xxxxxx on the
above-described leased premises. The Lessee's factual exploration, development
and production data including drill core and assay results (but excluding
interpretive information or data) from the leased premises shall be available
upon request to the Lessor.
ARTICLE 19. REMOVAL OF EQUIPMENT.
Lessee shall have and is hereby given and granted twelve (12) months after
a valid forfeiture, cancellation or other termination of this lease to remove
from said property all buildings, structures, warehouse stocks, merchandise,
materials, tools, hoists, compressors, engines, motors, pumps, transformers,
electrical accessories, metal or wooden tanks, pipes and connections, rails,
mine cars and any and all machinery, trade fixtures, and equipment erected or
placed in or upon said property by it, provided that such right of removal shall
not extend to foundations and mine timbers in place unless Lessor shall have
given his previous written consent thereto. If Lessee is hampered by snowdrifts,
washouts, inclement weather, or other climatic conditions, from completing the
removal of said property and equipment within the time specified, then Lessor
agrees to extend the time by a reasonable period if requested by Xxxxxx.
ARTICLE 20. TITLE AND PATENT.
Lessor covenants that Lessor now holds title and possession of the leased
premises free and clear from all former grants, sales, liens, or encumbrances of
any kind, and that there are no delinquent taxes and all government rental fees
are current; that Lessor has no knowledge of any defects in title or adverse
claims and agrees to furnish Lessee such abstracts, deeds, or other evidences of
title as may be in Lessor's possession and control, and to allow and cooperate
with Lessee, at Xxxxxx's option and initial expense, to have abstracts brought
to date and to take such steps and proceedings to search and perfect title as
Lessee
15
16
shall deem advisable. All reasonable expense so incurred by Lessee shall apply
as a credit against royalties. Lessee shall have the right to seek to patent the
leased premises or any portion thereof in the name of Lessor if it so elects,
and the cost thereof may be charged as operating costs hereunder. Xxxxxx agrees
to cooperate to a reasonable extent in any patent proceedings.
ARTICLE 21. ARBITRATION OF DISPUTES.
Any controversy, dispute or claim arising out of or from this lease, or
alleged breach thereof, shall be settled by arbitration pursuant to the Uniform
Arbitration Act of the State of Idaho (Sections 7-901, et.seq., Idaho Code)
as amended and as in effect on the date either party commences arbitration
proceedings. Said Act shall control the substantive and procedural aspects of
the proceedings unless otherwise agreed in this lease. Judicial review may be
had pursuant to said Act.
(a) Proceedings shall be initiated by the complaining party serving upon
the other party a complaint, as would be done in court proceedings.
The allegations regarding the circumstances giving rise to the issues
to be arbitrated shall be stated in detail and with particularity. The
party upon whom the complaint is served shall answer or otherwise
respond with a pleading just as is required by the Idaho Rules of
Civil Procedure for a court action. Except, however, the response
shall be served upon the initiating party within 30 days from the date
of service of the complaint.
(b) The parties shall agree upon an arbitrator, who shall be a retired
State of Idaho District Court judge (not a retired Magistrate) who is
neutral, competent and willing to serve and, if possible, who has
experience in cases involving mining and mining contracts. Should the
parties fail to reach agreement within 20 days from the date
proceedings are initiated, either party may apply to the court for
appointment of an arbitrator who meets the criteria set forth herein
pursuant to the provisions of section 7-903 Idaho Code.
(c) Prehearing discovery shall not be allowed except upon order of the
arbitrator for good cause shown, the
16
17
parties being in agreement that the expense and time associated with
discovery should be minimized, and that this desire should, however,
be balanced against the need for each party to be able to effectively
present its case.
(d) Each party to the arbitration proceedings shall bear one-half of the
arbitrator's fees and expenses, which shall be promptly paid by each
party monthly within 15 days from the submission by the arbitrator to
the parties of his reasonably detailed and itemized statement for
services rendered, which statement shall be submitted by the
arbitrator at the end of each month.
(e) Each party shall bear its own attorney's fees and costs of litigation
for the proceedings before the arbitrator. This subparagraph (e) is
not applicable to court proceedings, in which event the parties
recognize that applicable law shall govern and the matter will be
decided by the court.
ARTICLE 22. RECORDATION OF SHORT FORM NOTICE.
Xxxxxx agrees to execute, upon request by Xxxxxx, a short-form notice of
this lease, which notice shall be for purposes of recordation in the real
property records of Shoshone County, Idaho.
ARTICLE 23. NOTICES.
Any notices required or permitted to be given to the Lessor hereunder shall
be considered as delivered forty-eight (48) hours after the same shall have been
deposited in the United States mail, duly registered, with postage thereon
prepaid. All notices given hereunder shall be addressed to the respective
addresses given below:
If to Lessor,
American Silver Mining Company
E. 0000 00xx Xxxxxx
Xxxxxxx, XX 00000-0000
17
18
and if to Lessee,
Silver Valley Resources Corporation
P.O. Box 440
Wallace, Idaho 83873
Xxxx addresses for receiving notices may be changed by either party upon
two (2) days previous notice to the other party.
ARTICLE 24. INUREMENT.
These presents shall inure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and assigns of the
parties hereto.
ARTICLE 25. CONSTRUCTION.
Titles to the respective articles hereof shall not be deemed a part of this
lease but shall be regarded as having been used for convenience only.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first above written.
LESSOR
AMERICAN SILVER MINING COMPANY
By
-----------------------------------------
Attest:
------------------------
Secretary
STATE OF IDAHO )
) ss.
18
19
COUNTY OF )
On this _____ day of _________, 1997, before me, ________________, the
undersigned, a Notary Public in and for the State of Idaho, personally appeared,
___________________, known to me to be the _____________ of American Silver
Mining Company and whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
---------------------------------
Notary Public for Idaho
Residing at
---------------------
My Commission expires
-----------
19
20
LESSEE
SILVER VALLEY RESOURCES CORPORATION
By
-----------------------------------------
Attest:
------------------------
Secretary
STATE OF NEW YORK )
) ss.
COUNTY OF )
On this _____ day of __________, 1997, before me, ________________, the
undersigned, a Notary Public in and for the State of New York, personally
appeared, ___________________, known to me to be the _____________ of Silver
Valley Resources Corporation and whose name is subscribed to the within
instrument, and acknowledged to me that he executed the same on behalf of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
---------------------------------
Notary Public for New York
Residing at
---------------------
My Commission expires
-----------
20
