EXHIBIT 10.18
MINERAL LEASE AND LANDFILL FACILITIES LEASE AGREEMENT
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THIS MINERAL LEASE AND LANDFILL FACILITIES LEASE AGREEMENT is made and
entered into, to be effective as of the Closing (as hereinafter defined), by and
between XXXXXX NATURAL RESOURCES COMPANY, a Delaware general partnership
("HNRC"), HOSPAH COAL COMPANY, a Delaware corporation ("Hospah") and SANTA FE
PACIFIC MINERALS CORPORATION, a, Delaware, corporation ("SFPMC").
RECITALS:
A. HNRC owns or controls the Mesquite Properties (as hereinafter defined)
situated in Imperial County, California;
B. Pursuant to the Asset Exchange Agreement (as hereinafter defined),
HNRC has agreed to convey, lease or otherwise transfer to Hospah and SFPMC
certain of the Mesquite Properties so that Hospah and SFPMC may freely and
profitably operate the Mesquite Mine (as hereinafter defined);
C. HNRC proposes to develop the Landfill Project (as hereinafter defined)
on property that is either adjacent to or currently encompassed within the
Mesquite Properties. The Asset Exchange Agreement provides that HNRC shall
retain certain of the Mesquite Properties for this purpose;
D. The Parties desire that Hospah and SFPMC be able freely and profitably
to operate the Mesquite Mine and that HNRC be able freely and profitably to
develop and operate the Landfill Project. Accordingly, the Parties further
desires: (i) to provide for cooperation and coordination between the Parties
and their respective operations; (ii) to avoid and minimize conflicts between
the operations of the Parties; (iii) to ensure that the operations of one Party
do not result in the imposition of greater costs on the other Party; (iv) to
provide for the joint utilization of certain properties, facilities and
resources; (v) to benefit both of the Parties and society generally through the
efficient and thorough use of resources, including without limitation by the
possible recycling of Overburden and Spent Ore generated by the Mesquite Mine
for use in connection with the Landfill Project, and (vi) to optimize the
efficiency, capabilities and profitability of the Parties' respective
operations.
E. The Parties desire to enter into this Agreement in order to specify
their respective rights, title and interests in and to the Mesquite Properties
and to provide for cooperation between the Parties, the joint utilization of
certain facilities and resources and the optimization of the Parties' respective
operations, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth herein and in the Asset Exchange Agreement, the Parties agree as follows:
ARTICLE I
DEFINED TERMS
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1.1 Definitions. As used in this Agreement, the following terms shall
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have the following meanings:
"Acceptance Notice" shall have the meaning set forth in Section 3.9 of this
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Agreement.
"Access Road Easement" shall mean the non-exclusive Easement to use the
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Present Access Road granted by HNRC unto SFPMC pursuant to Section 4.5 of this
Agreement.
"Affiliate." shall mean, with respect to any person or entity, any other
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person or entity, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with such person or entity.
The term "control," as used in the immediately preceding sentence, means, with
respect to any person or entity, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled person or entity.
"Agreement" shall mean this Mineral Lease and Landfill Facilities Lease
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Agreement, together with all Exhibits appended hereto, which Exhibits are fully
incorporated by reference.
"Alterations and Additions" shall mean all modifications, alterations,
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additions, improvements, supplements, repairs, renovations or changes to or upon
any real or personal property, including without limitation those made
subsequent to Closing.
"Applicable Law" shall mean all applicable laws, statutes, regulations,
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decrees or orders of governmental or judicial entities and applicable Licenses,
as the same may change from time to time.
"Asset Exchange Agreement" shall mean that certain Asset Exchange Agreement
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dated as of January 25, 1993, as amended, between HNRC, Hospah, SFPMC, and
certain Affiliates of Hospah and SFPMC.
"BLM" means the Bureau of Land Management of the U.S. Department of the
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Interior.
"Clay" shall mean all xxxx, xxxx minerals clay materials, and clay earths,
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including without limitation Fullers Earth and Montmorillonite and all other
minerals, materials and earths suitable for use as liners or cover due to their
characteristics relating to impermeability.
"Clay Reserves" shall have the meaning set forth in Section 6.1 off this
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Agreement.
"Closing" shall mean the closing of the transfers and exchanges held
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pursuant to the Asset Exchange Agreement, which is the same as the "Closing"
defined in and for purposes of the Asset Exchange Agreement.
"Closing Date" shall mean the date of the Closing held pursuant to the
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Asset Exchange Agreement.
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"Commercial Landfill Operations" shall mean the disposal at the Landfill
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Project of waste in, commercial quantities and on a commercial basis, exclusive
of site preparation, construction, testing, bulk testing and commissioning of
facilities.
"Easements" shall mean easements, licenses, privileges, rights-of-way and
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rights of use.
"Electrical Tap Facilities," shall have the meaning set forth in Section
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3.8 of this Agreement.
"Electrical Service Agreement" shall mean the agreement of the same name,
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dated September 12, 1985, originally between IID and Gold Fields Operating Co. -
Mesquite, as amended.
"Emergency Vehicle" shall mean the emergency vehicle situated upon the
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Mesquite Properties and owned by HNRC immediately prior to the Closing.
"Environmental Costs" shall mean any clean-up costs, remediation,
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mitigation, removal or other response costs (including, without limitation,
costs to come into compliance with Environmental Laws), investigation costs
(including, without limitation, fees of consultants, counsel and other experts
in connection with any environmental investigation, testing, audits or studies),
losses, liabilities, obligations, payments, damages (including, without
limitation,, any, actual, punitive or consequential damages recovered by a third
party under any statutory or common law cause of action for personal injury,
proper damage or damage to natural resources) fines, penalties, judgments and
amounts paid in settlement arising out of or relating to or resulting from any
Environmental Matter.
"Environmental Laws" shall mean any federal, state, local or foreign law,
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rule or regulation pertaining to Environmental Matters, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, ("CERCLA") (42 U.S.C. Sec. 9601 et. seq.); the Surface Mining
Control and Reclamation Act of 1977 ("SMCRA") (30 U.S.C. Sec. 1201 et. seq.);
the California Surface Mining and Reclamation Act of 1975 (9 Cal. Pub. Resources
Code Sec. 2710 et. seq.); the Hazardous Material Transportation Act (49 U.S.C.
Sec. 1801 et. seq.); the Clean Water Act (33 U.S.C. Sec. 1251 et. seq.); the
Resource Conservation and Recovery Act (42 U.S.C. Sec. 6091 et. seq.); the Clean
Air Act (42 U.S.C. Sec. 7401 et. seq.); the Toxic Substance Control Act (15
U.S.C. Sec. 2601 et. seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. Sec. 136 et. seq.); the Federal Land Policy and Management Act (43
U.S.C. Sec. 270 et. seq.); the Endangered Species Act (16 U.S.C. Sec. 1531 et.
seq.); and the Migratory Bird Conservation, Act (6 U.S.C. Sec. 703 et. seq.);
all as amended; and any provisions of common law providing for any remedy or
right or recovery with respect to Environmental Matters, as these laws, rules,
regulations and provisions may change from time to time.
"Environmental Matter" shall mean any matter arising out of, relating to,
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or resulting from protection of the environment or human safety or health,
including, without limitation, matters relating to emissions, spills, leaching,
disposal,, discharges, disseminations, releases or threatened releases, of any
material or substance whatsoever into the air, surface water, groundwater,
drinking water supply, soil, land surface or subsurface, buildings or facilities
or any other claims under any Environmental Law.
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"Escrow Agent" shall have the meaning set forth in Section 2.2 of this
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Agreement.
"Escrow Instructions" shall have the meaning set forth in Section 2.2 of
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this Agreement.
"Escrowed Deed" shall have the meaning set forth in Section 3.10 of this
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Agreement.
"Escrowed Partial Release" shall have the meaning set forth in Section 2.2
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of this Agreement.
"Exchange Parcel" shall have the meaning set forth in Section 2.2 of this
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Agreement.
"Fair Market Value," with respect to any particular Selected Option
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Property, shall mean the most probable price for which the Selected Option
Property would sell in a competitive and open market for uses other then those
associated with the development or operation of a landfill and under all
conditions requisite to a fair sale, the buyer and seller, each acting
prudently, knowledgeably and assuming that the price, is not affected by
coercion, undue stimulus, urgency or extraordinary need, subject to the
following: (i) Fair Market Value shall be determined with reference to sales,
closed during the five years prior to the making of the determination, of
similar properties in similar areas for uses other than those associated with
the development or operation of a landfill; and (ii) the Fair Market Value of
the Selected Option Property shall reflect any adjustment in value to a third
party purchaser that would likely result from HNRC's rights under this Agreement
to make use of the Selected Option Property.
"Fee Property" shall mean real property, the underlying or paramount title
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to which is held by parties other than the United States, including without
limitation, patented mining and patented millsite claims.
"Financing Liens" shall have the meaning set forth in Section 4.12 of this
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Agreement.
"Helipad" shall mean the existing helicopter landing and take-off pad
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situated on patented millsite claim MILS 7 in the SE 1/4 of Section 8, T. 13 S.,
R. 19 E., S.B.M., Imperial County, California.
"HNRC" shall mean Xxxxxx Natural Resources Company, a Delaware general
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partnership.
"HNRC Indemnitees" shall mean HNRC, its partners and Affiliates and their
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respective officers, directors, employees, agents and representatives.
"HNRC Retained Property" shall mean the Mesquite Properties, exclusive of
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the SFPMC Leased Property and the Hospah Owned Property, as further described
and defined in Section 2.1 of this Agreement.
"Hospah" shall mean Hospah Coal Company, a Delaware corporation and a
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wholly owned subsidiary of Santa Fe Pacific Mining, Inc., a Kansas corporation.
"Hospah Assets" shall mean that portion of the Hospah Owned Property that
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is conveyed, assigned, transferred or leased to Hospah at the Closing, including
without limitation
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Hospah Owned Property in which an undivided interest is conveyed, assigned,
transferred or leased to Hospah at the Closing.
"Hospah Indemnitees" shall mean Hospah, SFPMC and their respective
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Affiliates and their respective officers, directors, employees, agents and
representatives.
"Hospah Owned Property" shall mean the portion of the Mesquite Properties
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the ownership of which HNRC shall convey or assign unto Hospah or SFPMC at the
Closing, as further described and defined in Section 3.1 of this Agreement
"Hospah Property Lease" shall have the meaning set forth in Section 9.13 of
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this Agreement.
"Hospah's First Call on Clay" shall have the meaning set forth in Section
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6.1 of this Agreement.
"IID" shall mean the Imperial Irrigation District.
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"IID - WAPA Agreements" shall mean those two certain agreements dated
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September 10, 1985 between IID and WAPA entitled "Construction of Gold Mine Tap
Substation on the Blythe-Knob 161-KV Transmission Line" and "Operation,
Maintenance, Replacement of Facilities," respectively.
"LID - WAPA Electrical Facilities" shall mean the transmission lines, power
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tap substation, related Easements and any other Improvements, facilities,
equipment or Licenses owned, used or held for use by IID and/or WAPA in
connection with the transmission, distribution or supply of electrical power to
or at the Mesquite Mine, exclusive of the Owned Power Facilities.
"Improvements" shall mean all buildings, improvements, structures,
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fixtures, dumps, tailings, pits, Overburden or residue piles, gold xxxxx, gold
processing and recovery plants, crushers, xxxxx pads, solution ponds, solution
collection systems, slurry ponds, refuse areas, railroad loadouts, access roads,
Clay Stockpiles, Ore or Spent Ore Stockpiles, water xxxxx, water and gas
pipelines, powerplants, substations, powerlines, catchment dams, Surface Runoff
Drainage Facilities, Monitoring Facilities, fencing or any other structures or
facilities that are located in, on or under, affixed to, or erected upon any,
real property that comprises, or is used or held for use in the operation of the
Mesquite Mine or the Landfill Project (as the case may be).
"Incremental Costs" shall mean all additional or incremental costs and
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expenses incurred as a result of any particular activity or undertaking,
including without limitation any Losses directly attributable thereto, less any
savings realized as a result of the activity or undertaking.
"Information" shall mean all documents, data, maps, reports, studies,
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records, correspondence, assays, files, royalty and production, computer records
or files or other information of any type or description whatsoever.
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"Landfill EIS/EIR" shall mean the First Screen Check Draft of the
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Environmental Impact Statement/Environmental Impact Report for the Landfill
Project dated October 1, 1992.
"Landfill Footprint" shall mean the area potentially to be encompassed
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within the lined portion of the Landfill Project under the most land consumptive
scenario currently contemplated, as depicted on the map appended as Exhibit A of
this Agreement, together with immediately adjacent areas reasonably required
either: (i) for backslope to construct the lined facility, or (ii) for Surface
Runoff Drainage Facilities (to drain precipitation away from the lined
facility)
"Landfill Project" shall mean the proposed Mesquite Regional Landfill
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situated in Imperial County, California, as generally described in the Landfill
EIS/EIR and Exhibit G to this Agreement.
"Xxxxx Pad Certification" shall have the meaning set forth in Section 7.3 A
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of this Agreement.
"Leased Exchange Property," shall have the meaning set forth in Section 2.2
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of this Agreement.
"Licenses" shall mean all governmental or regulatory licenses, permits,
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approvals, authorizations, consents, planning permissions, instruments,
franchises and agreements (and applications for the foregoing).
"Lien" shall mean any lien, encumbrance, security interest, pledge,
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mortgage, adverse claim or hypothecation.
"Losses" shall mean amounts incurred with respect to claims, losses,
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liabilities, damages, fines, penalties, costs and expenses (including, without
limitation, reasonable attorneys' fees.).
"Material Adverse Effect" shall mean a material adverse effect on the
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assets, business, financial condition or results of operations of the Mesquite
Mine or the Landfill Project (as the case may be).
"Mesquite Mine" shall mean the operations upon the Mesquite Properties
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comprising or relating to the exploration, development, mining, storage,
treatment, leaching, beneficiation and shipment of gold.
"Mesquite Properties" shall mean all right, title and interest held by HNRC
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immediately prior to the Closing in or, to all real or personal property,
tangible or intangible, comprising, used or held for use in connection with
either the Mesquite Mine or the Landfill Project.
"Mine Equipment and Unaffixed Personal Property" shall mean all unaffixed
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personal property comprising, used or held for use in connection with the
operation of the Mesquite Mine, including without limitation all equipment,
machinery, vehicles, tools, parts, spare parts, furnishings, unaffixed pipes and
piping, supplies, chemicals, reagents, inventories, computer
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systems, computer software (to the extent transferable) and office supplies, but
excluding Ore, Spent Ore, Clay, Overburden and Stockpiles thereof.
"Mineral Lease and Purchase Option Agreements" shall mean those certain
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agreements between HNRC, as lessee and optionee, and certain, third parties, as
lessors and optionors, as further described in Exhibit B to this Agreement.
"Monitoring Facilities" shall mean all monitoring stations, equipment and
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machinery used or held for use in gathering Information relative to the
environment, Environmental Matters or the condition or status of air,
precipitation, surface or, groundwater, climate, temperature, wildlife, plants
or living organisms.
"Non-Essential Property" shall mean the Mine Equipment and Unaffixed
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Personal Property and all Improvements situated upon the SFPMC Leased Property
or the Hospah Owned Property, together with all Alterations and Additions
thereto, but expressly excluding: (i) all Ore, Spent Ore, Clay, Overburden and
Stockpiles of such substances; and (ii) the Water System, the IID-WAPA
Electrical Facilities, the Monitoring Facilities and the Surface Runoff Drainage
Facilities.
"Option Closing" shall have the meaning set forth in Section 3.7 E of this
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Agreement.
"Option Property" shall mean the real and personal property subject to the
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Purchase option, as further described and defined in Section 3.7 A of this
Agreement.
"Option Purchase Price" shall have the meaning set forth in Section 3.7 D
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of this Agreement.
"Option Period" shall have the meaning set forth in Section 3.7 B of this
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Agreement.
"Ore" shall mean naturally occurring materials containing gold in such
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quantities and of such quality that Hospah or SFPMC reasonably believes that the
gold is or may become economically recoverable.
"Overburden" shall mean all overburden, soil, topsoil, earth, rock,
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residue, waste and other naturally occurring materials, exclusive only of Clay,
Ore and Spent Ore.
"Owned Power Facilities" shall mean all electrical distribution lines and
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related Improvements, Easements and Licenses owned by HNRC prior to the Closing
and encompassed within the Mesquite Properties.
"Parties" shall mean HNRC, Hospah and SFPMC.
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"Party" shall mean HNRC Hospah, or SFPMC as the case may be.
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"Possible Exchange or Desert Tortoise Compensation Properties" shall mean
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all right, title and interest of HNRC or Gold Fields Mining Corporation in or to
real property outside of the central and contiguous operating properties of the
Mesquite Mine that are owned or held for possible future use by HNRC either:
(i) to exchange with the BLM for real property required in
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connection with the Landfill Project; or (ii) as lands to compensate or mitigate
for impacts caused by the Landfill Project upon the desert tortoise. The
Possible Exchange or Desert Tortoise Compensation Properties shall include,
without limitation, the real property described in Exhibit C to this Agreement.
"Power System" shall mean the Owned Power Facilities and the IID - WAPA
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Electrical Facilities, collectively.
"Present Access Road" shall mean the currently existing access road running
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from Xxxxxxx 00 to the administration and plant area of the Mesquite Mine, as
depicted on the map appended as Exhibit A to this Agreement.
"Primary Term" shall mean the primary term of the SFPMC Lease, as further
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described and defined in Section 4.2 of this Agreement.
"Purchase Option" shall mean the option to purchase the Option Property
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granted by Hospah and SFPMC unto HNRC pursuant to Section 3.7 of this Agreement.
"Railroad Spur Property" shall mean the rail spur proposed to connect the
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Landfill Project to the main line of the Southern Pacific Railroad, as generally
depicted on Figure 2.1.1-2 of the Landfill EIS/EIR, and all real property
reasonably required in connection with the construction, operation, maintenance
or repair thereof.
"Reclamation and Environmental Responsibilities" with respect to a
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specified property or asset, shall mean all responsibilities, obligations and
liabilities for, relating to or arising out of: (i) reclamation of the
specified property or asset in accordance with all applicable Licenses and
Applicable Law; (ii) Environmental Costs relating to or arising out of the
property or asset; or (iii) Losses, including without limitation Losses
resulting from Third Party Claims, that relate to or arise out of Environmental
Matters pertaining to the property or asset.
"Remainder Property" shall have the meaning set forth in Section 3.10 of
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this Agreement.
"Retained Exchange Parcel" shall have the meaning set forth in Section 2.2
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of this Agreement.
"Reversion Property" shall have the meaning set forth in Section 3.10 of
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this Agreement.
"Sales Offer," shall have the meaning set forth in Section 3.9 of this
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Agreement.
"Selected Option Property," shall mean the Option Property which HNRC
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elects to purchase pursuant to the Purchase Option, as further described and
defined in Section 3.7 B of this Agreement.
"SFPMC" shall mean Santa Fe Pacific Minerals Corporation, Delaware
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corporation.
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"SFPMC Assets" shall mean the SFPMC Leased Property and that portion of the
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Hospah Owned Property that is conveyed, assigned, transferred or leased to SFPMC
at the Closing, including without limitation Hospah Owned Property in which an
undivided interest is conveyed, assigned, transferred or leased to SFPMC at the
Closing.
"SFPMC Lease" shall mean the lease of the SFPMC Leased Property granted by
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HNRC unto SFPMC pursuant to Article IV of this Agreement.
"SFPMC Lease Term" shall mean the term of the SFPMC Lease, including the
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Primary Term and any and all extensions thereto, as further described in Section
4.2 of this Agreement.
"SFPMC Leased Property" shall mean the portion of the Mesquite Properties
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leased for mining and other mining related purposes by HNRC to SFPMC pursuant to
Article IV of this Agreement, as further described and defined in Section 4.1 of
this Agreement.
"Solution Ponds" shall mean the two solution ponds existing upon the
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Mesquite Properties as of the Closing bate and situated in the S 1/2 S 1/2 of
Section 18 and the N 1/2 N 1/2 of Section 19, T. 13 S., 19 E., S.B.M., Imperial
County, California.
"Solution Pipeline Easement" shall mean the non-exclusive Easement
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appurtenant to the SFPMC Leased Property for a pipeline to carry process
solution between the Solution Ponds, xxxxx pads and associated processing
facilities, which Easement shall be granted by HNRC unto SFPMC pursuant to
Section 4.6 of this Agreement.
"Spent Ore" shall mean the rock residue remaining after treatment of Ore,
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once leaching or other beneficiation has been discontinued or is no longer
economic, notwithstanding the fact that the rock may contain residual amounts of
gold, together with all materials intermingled or associated therewith.
"Stockpiles" shall mean any and all stockpiles, dumps or man-made piles
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containing a specified substance, whether existing now or established in the
future.
"Subdivision Map Act" shall have the meaning set forth in Section 2.2 of
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this Agreement.
"Subject Patent Property" shall have the meaning set forth in Section 3.10
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of this Agreement.
"Surface Runoff Drainage Facilities" shall mean all trenches, culverts, or
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similar or related facilities for the diversion or control of surface runoff or
precipitation.
"Surplus Personal Property" shall mean Non-Essential Property declared by
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Hospah and/or SFPMC (i.e. by the Party or Parties that hold an interest in the
Non-Essential Property at issue) to be surplus to and not capable of being
effectively used by Hospah and/or SFPMC (i.e. by the Party or Parties that hold
an interest in the Non-Essential Property at issue), either in connection with
the Mesquite Mine or in connection with other operations of Hospah or SFPMC at
other locations.
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"Third Party Claim" shall mean any claim, demand,, action, proceeding or
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lawsuit brought by any person or entity other than the Parties.
"Undertakings" shall have the meaning set forth in Section 9.13 of this
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Agreement
"Unpatented Claims" shall mean unpatented lode or placer mining claims or
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unpatented millsite claims, as the case may be.
"WAPA" shall mean Western Area Power Authority.
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"Water System" shall mean the MILS 261, 262, 265, 267 and 269 patented
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millsite claims (Patent No. 04-88-0044), situated in portions of Section 33, T.
13 S., R. 19 E. and of Xxxxxxx 0, X. 00 X., X. 19 E., S.B.M., Imperial County,
California, together with all water xxxxx, pumps and water development,
production and transport facilities situated on such patented millsite claims
and all water rights, water xxxxx, water pipelines, Easements, Licenses and
water development, production, storage and transport facilities encompassed
within the Mesquite Properties and used or held for use in connection with the
development, transport, storage or use of water at or to the Mesquite Mine,
exclusive of the Water Tap Pipeline and other water facilities and water rights
developed, constructed or acquired subsequent to the Closing Date in connection
with the Landfill Project.
"Water Tap Pipeline" shall have the meaning set forth in Section 3.4 of
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this Agreement.
ARTICLE II
HNRC RETAINED PROPERTY
2.1 Description of HNRC Retained Property. Pursuant to the Asset Exchange
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Agreement, and except as expressly set forth in this Agreement to the contrary,
at the Closing HNRC shall retain all of its right, title and interest whatsoever
in and to the Mesquite Properties, exclusive only of the Hospah Owned Property
and the SFPMC Leased Property (the "HNRC Retained Property"). The HNRC Retained
Property includes, but is not limited to, all of HNRC's right, title and
interest, if any, in and to the following: (i) the Unpatented Claims and Fee
Property described in Exhibit D to this Agreement, and encompassed within the
area depicted and labeled as "HNRC Retained Property" on the maps appended as
Exhibit A to this Agreement, together with all Improvements thereon (exclusive
only of Improvements that are expressly included within the Hospah Owned
Property, as described and defined in Section 3.1 of this Agreement) (ii) the
Possible Exchange or Desert Tortoise Compensation Properties, together with all
Improvements thereon, and all minerals and mineral rights thereon, therein or
thereunder; and (iii) the Railroad Spur Property, together with all Improvements
thereon. Except as expressly, set forth in this Agreement to the contrary,
nothing in this Agreement or in the Asset Exchange Agreement shall be construed
as transferring to Hospah, SFPMC or their Affiliates any right, title or
interest whatsoever in or to the HNRC Retained Property or the Landfill Project.
Any exchange will be effected in such a manner as to avoid any interference with
or interruption of Hospah or SFPMC in the mining and treatment of gold reserves
or recovery of gold associated with the Mesquite Mine.
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2.2 Treatment and Subdivision of U.S. Patent No. 04-87-0023.
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A. Background and Intention of the Parties. United States Patent
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No. 04-87-0023, issued January 3, 1987, covers approximately 1,440.24 acres of
land as depicted on the map appended as Exhibit A-3 to this Agreement (the
"Exchange Parcel"). A portion of the Exchange Parcel (the "Retained Exchange
Property") is a part of the HNRC Retained Property and the following portions of
the Exchange Parcel (collectively, the "Leased Exchange Property") are SFPMC
Leased Property:
(i) a portion of the N/2, SE/4 of Section 7 and the NW/4 NW/4 of
Section 8 (covering the southernmost extension of the "220 Dump" and the 11220
Extension Dump");
(ii) a portion of the W/2 of Section, 17 (covering the
southwestern portion of the most westerly xxxxx pad); and
(iii) a portion of the S/2 S/2 of Section 18 and the N/2 N/2 of
Section 19 (covering the solution ponds).
All of the Leased Exchange Property is located in T-13-S, R-19-E, SBBM, Imperial
County, California, and is depicted and established as shown on the map appended
as Exhibit A-3 to this Agreement. Because the SFPMC Lease is a mineral lease,
the Parties have concluded that the inclusion of the Leased Exchange Property
within the SFPMC Lease does not require that the Exchange Parcel be subdivided
under the California Subdivision Map Act (California Government Code Sec.Sec.
66410-66499.37) and ordinances of Imperial County, California enacted pursuant
thereto (collectively the "Subdivision Map Act"). However, in the event that
SFPMC reasonably determines that events subsequent to the Closing make it
necessary to subdivide the Exchange Parcel into the Retained Exchange Property
and the Leased Exchange Property, SFPMC may require, by notice to HNRC, that
HNRC take actions described in Section 2.2.C.
B. Boundary Line Survey. The boundary line between the Retained
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Exchange Property and the Leased Exchange Property is depicted and established
only on the Map appended as Exhibits A and A-3 to this Agreement. If, pursuant
to Section 2.2.A, SFPMC elects to require HNRC to take the actions described in
Section 2.2.C, and HNRC elects to attempt to subdivide the Exchange Parcel (or
to seek a waiver or exemption from compliance with the Subdivision Map Act),
then the parties agree to engage an independent and disinterested third party
contractor who is duly qualified, competent and experienced in surveying
property of this kind, to conduct and prepare a survey to be used in the
subdivision of the Exchange Parcel or the obtaining of a waiver or exemption
from compliance with the Subdivision Map Act. All instructions to the surveyor
shall be in writing and shall be executed by each of the Parties. The surveyor
shall provide to each of the Parties a copy of all preliminary and final drafts
of the survey. The costs and expenses of such survey shall be paid one-half by
HNRC and one-half by SFPMC.
C. Division of the Exchange Parcel Grant of Option. Upon notice
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from SFPMC under the circumstances and as provided in Section 2.2.A, HNRC shall,
at its sole cost and expense, undertake one or more of the, following courses of
action described below in this
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Section 2.2.C. HNRC, in its sole discretion, shall elect which (or both) of the
following courses of action to undertake and shall notify SFPMC of such
election:
(i) take such action as may be required (x) to comply with the
requirements of the Subdivision Map Act, including without limitation the
preparation, submission, and approval of parcel maps or (y) to obtain from the
pertinent government agency or agencies a valid waiver or exemption from
compliance with the Subdivision Map Act, in each case in order to properly
describe and lease to SFPMC the Leased Exchange Property. HNRC shall, at its
sole cost and expense, take such actions as it deems necessary, prudent or
advisable, in its sole discretion, to satisfy either of the conditions set forth
in clauses (x) or (y) of the preceding sentence. HNRC shall have the right to
take such actions in SFPMC's name, as SFPMC's agent or in SFPMC's stead. Upon
request and subject to the direction of HNRC, SFPMC shall cooperate in all
reasonable ways and take all such reasonable actions, including without
limitation the execution and filing of additional documents, instruments or
maps, as may be necessary or helpful to assist HNRC in such endeavors, provided
that SFPMC shall not be required to pay any out-of-pocket cost or expense in
connection , therewith. Upon notice to SFPMC that HNRC has elected to seek such
a subdivision of the Exchange Parcel or such a waiver or exemption from the
Subdivision Map Act, the Parties shall execute an instrument in form and
substance reasonably satisfactory to each of them amending this Agreement in
order to include as a part of the SFPMC Leased Property the Exchange Parcel.
(In furtherance of this obligation, HNRC hereby grants and conveys to SFPMC a
conditional option to acquire such lease on the Exchange Parcel, to be exercised
only under the circumstances and as provided herein.) Contemporaneously with
the execution of such instrument, SFPMC shall execute and place in escrow with
Commerce Escrow Company or such other escrow agent as may be acceptable to HNRC
and SFPMC ("Escrow Agent") a partial release in form and substance reasonably
satisfactory to HNRC (the "Escrowed Partial Release") releasing and surrendering
the Retained Exchange Property from the SFPMC Lease. Upon accomplishing either
of the conditions set forth in clauses (x) or (y) of this Section 2.2.C. (i) and
pursuant to the terms of escrow instructions given to the Escrow Agent (such
instructions, to be substantially in the form attached as Exhibit I to this
Agreement, herein called the "Escrow Instructions"), the Escrowed Partial
Release shall be delivered to HNRC. Upon such delivery, the Retained Exchange
Property shall become a part of the HNRC Retained Property and the Leased
Exchange Property shall remain part of the SFPMC Leased Property, provided that
SFPMC shall not be relieved of or released from its obligations or liabilities,
if any, with respect to the Retained Exchange Property that shall have accrued
during the term of SFPMC's lease thereof; or
(ii) grant to SFPMC a non-exclusive Easement, on terms and
conditions reasonably satisfactory to SFPMC, permitting SFPMC to occupy, use and
possess the Leased Exchange Property as contemplated by the Parties as though it
were, from the Closing through the date of termination of the SFPMC Lease, a
portion of the SFPMC Lease. Such Easement shall be expressly subject to the
same rights and obligations of the Parties as apply under this Agreement with
respect to SFPMC Leased Property. In furtherance of this obligation, HNRC
hereby grants and conveys to SFPMC a conditional option to acquire the Easement
contemplated by this Section 2.2.C.(ii), to be exercised under the circumstances
and as provided herein.
12
D. Rights and Obligations the Parties Pending Release of the
-----------------------------------------------------------------
Retained Exchange Property. Notwithstanding any provision of this Agreement to
---------------------------
the contrary, SFPMC shall not pledge, mortgage, hypothecate or otherwise
encumber, its interest in the Retained Exchange Property, except as permitted by
and subject to the limitations of Section 4.12 of this Agreement.
E. Further Assurances. Upon request by any Party, the Parties
-------------------
covenant, at any time and from time to time, to cooperate reasonably with each
other and take all such further actions, including without limitation the
execution and filing of, additional instruments or documents, as may be
reasonably necessary to carry out the intent, purposes and terms of the
provisions of this Section 2.2.
F. Use by SFPMC of the Retained Exchange Property. The Parties
---------------------------------------------------
agree that upon HNRC's exercise of its election under Section 2.2.C.(i) the
Exchange Parcel shall become SFPMC Leased Property subject to Article IV and
Section 2.2.C(i) of this Agreement; provided, however, that SFPMC shall have no
rights to occupy or use the Retained Exchange Property in addition to or beyond
such rights that SFPMC holds under this Agreement with respect to HNRC Retained
Property; and provided further that HNRC shall have the same rights to occupy or
use the Retained Exchange Property as it holds with respect to HNRC Retained
Property. In particular, and without limitation, the Exchange Parcel is subject
to the restrictions set forth in Section 4.19. SFPMC further agrees with
respect to the Retained Exchange Property that it will, cooperate in good faith
with HNRC in the development of the Landfill Project (provided that SFPMC shall
not be obligated to bear any out-of-pocket cost or expense in connection
therewith) and that it will not interfere with HNRC's activities on or with
respect to the Retained Exchange Property.
G. Other Rights of HNRC to Terminate Lease on Some or All of the
-----------------------------------------------------------------
Exchange Parcel. In addition to HNRC's right to receive the Escrowed Partial
----------------
Release as provided in Section 2.2.C.(i) and HNRC's rights to require the
surrender by SFPMC of a portion of the SFPMC Leased Property as provided in
Section 4.13.B., HNRC shall have the additional right, at any time after the
date which is 20 years after the Closing and from time to time, upon not less
than 90 days prior written notice to SFPMC, to terminate the SFPMC Lease as to
any portion of the Exchange Parcel and to terminate any Easement granted by HNRC
pursuant to Section 2.2.C(ii) with respect to the Leased Exchange Property;
provided that HNRC has made arrangements reasonably satisfactory to SFPMC to
ensure that the operations of the Mesquite Mine are not materially adversely
affected by such termination including the construction.(at HNRC's sole cost and
expense and on property then included within the SFPMC Leased Property or Hospah
Owned Property) of any replacement or relocated Improvements used in connection
with the, Mesquite Mine (including, without limitation, the Solution Ponds, the
solution pipeline and related facilities and the Water System) which may be
required by the termination of the SFPMC Lease or by the termination of the
Easement as to such parcels. Additionally, upon receipt of a sufficient
invoice, HNRC shall reimburse to SFPMC any Incremental Costs that SFPMC incurs
as a result of the termination.
13
ARTICLE III
HOSPAH OWNED PROPERTY
---------------------
3.1 Description of Hospah Owned Property. Pursuant to the Asset Exchange
-------------------------------------
Agreement, and subject to the rights and obligations of the Parties set forth in
this Agreement, at the Closing HNRC has conveyed or assigned unto Hospah or
SFPMC all of HNRC's right, title and interest in and to the Hospah Owned
Property. As used herein, the "Hospah Owned Property" shall mean the following
real and personal property:
(i) the Unpatented Claims and Fee Property described in Exhibit
E to this Agreement, and encompassed within the area depicted and labeled as
"Hospah Owned Property" on the maps appended as Exhibit A and Exhibit A to this
Agreement, together with all Improvements thereon and all minerals and mineral
rights thereon, therein or thereunder;
(ii) the Mineral Lease and Purchase Option Agreements;
(iii) the Mine Equipment and Unaffixed Personal Property;
(iv) the Emergency Vehicle;
(v) all, Ore, Spent Ore and other unaffixed materials present
upon the xxxxx pads on the SFPMC Leased Property as of the Closing Date;
(vi) all equipment, pipes, pipelines, process solution,
application equipment and related equipment and machinery used or held for use
in connection with the application, circulation, storage and transport of
process solution at the Mesquite Mine as of the Closing Date, regardless of
whether situated upon the HNRC Retained Property, the SFPMC Leased Property or
the Hospah Owned Property, and regardless of whether affixed or unaffixed to
real property;
(vii) all processing equipment for recovery and refining of gold
together with all process solution, pregnant or otherwise, and regardless of
whether or not contained within the process solution pipeline and application
circuit or the Solution Ponds, situated upon any portion of the Mesquite
Properties as of the Closing Date;
(viii) the Helipad, subject in particular to the provisions of
Section 3.3 of this Agreement;
(ix) all Monitoring Facilities situated upon the Hospah Owned
Property, subject in particular to the provisions of Section 8.2 of this
Agreement;
(x) all Surface Runoff Drainage Facilities situated upon the
Hospah Owned Property, subject in particular to the provision of Section 8.3 of
this Agreement;
(xi) all mine fencing situated upon the Hospah Owned Property,
subject in particular to the provision of Section 8.1 of this Agreement;
14
(xii) the Water System, subject in particular to the provisions
of Section 3.4 of this Agreement;
(xiii) the Owned Power System and all of HNRC's right, title and
interest in and to the IID-WAPA Electrical Facilities, the IID-WAPA Agreements
and the Electrical Service Agreement, subject in particular to the provisions of
Section 3.5 of this Agreement;
(xiv) all Licenses used or held for use or otherwise relating to
the Mesquite Mine, to the extent transferable and subject in particular to the
provisions of Section 9.10 of this Agreement and of Section 9.1 of the Asset
Exchange Agreement;
(xv) all Information (or copies thereof) in the possession or
under the control of HNRC or its Affiliates as of the Closing Date that pertain
directly or indirectly to the Mesquite Mine, the SFPMC Leased Property or the
Hospah Owned Property;
(xvi) copies of all files and documents relating to customers and
vendors of the Mesquite Mine (including, without limitation, accounting records,
credit files, notes, guarantees and collateral relating thereto); and
(xvii) all warranty, insurance and other rights of HNRC and its
Affiliates against a third party relating to any of the Hospah Owned Property,
to the extent that such Hospah Owned Property has not been restored, repaired or
replaced prior to Closing.
The deeds, bills of sale, assignments and other instruments of conveyance to be
delivered at the Closing shall specify which portions of the Hospah Owned
Property have been conveyed or assigned to Hospah and which portions, of the
Hospah Owned Property have been conveyed or assigned to SFPMC.
3.2 Assumption of Reclamation and Environmental Responsibilities. HNRC
---------------------------------------------------------------
has retained all Reclamation and Environmental Responsibilities, with respect to
the Hospah Owned Property and the Improvements thereon, that had accrued and
were legally required to be performed and completed prior to the Closing Date.
Hospah (as to the Hospah Assets) and SFPMC (as to the SFPMC Assets) shall and do
hereby assume all other accrued and unaccrued Reclamation and Environmental
Responsibilities, now existing or arising in the future, with respect to the
Hospah Owned Property, the Improvements thereon, together with all Alterations
and Additions. Hospah and/or SFPMC shall post (at or prior to the Closing if
reasonably possible,, but in any event as soon as possible after the Closing),
all reclamation bonds and other financial assurances and undertakings necessary
or helpful to allow and facilitate the release of, bonds and other financial
assurances_ and undertakings currently posted by HNRC or its Affiliates with the
BLM or other governmental agencies relating in any way to the operation or
reclamation of the Mesquite Mine or of the Hospah Owned Property or the
Improvements thereon (excluding bonds or portions of bonds that relate to
Reclamation and Environmental Responsibilities retained by HNRC hereunder). The
Parties shall cooperate including without limitation by the preparation,
execution and filing of documents with appropriate government agencies, in order
to expedite the release of all such existing bonds and other financial
assurances and undertakings of HNRC. All such releases of HNRC's existing
15
bonds and other, financial assurances and undertakings shall inure to the sole
benefit and be for the sole account of HNRC. The provisions and procedures and
rights and obligations of the Parties set forth in this Section 3.2 relative to
the release of bonds and other financial assurances and undertakings shall be
deemed incorporated by this reference, and without reiteration, into all other
provisions of this Agreement in which a Party assumes Reclamation and
Environmental Responsibilities with respect to any properties or assets
whatsoever.
3.3 Use of Helipad. Hospah and SFPMC (to the extent of their respective
----------------
interests) hereby grant and convey unto HNRC, its successors and assigns and
their respective agents and designees, a non-exclusive Easement in perpetuity to
use the Helipad, together with all Alterations and Additions thereto, provided
that HNRC, upon receipt of a sufficient invoice, shall reimburse to Hospah and
SFPMC all Incremental Costs incurred_ by such Parties as a result of such use,
and provided further that such use of the Helipad by HNRC shall not materially
interfere with or cause a Material Adverse Effect upon the operations of the
Mesquite Mine. During the Option Period, Hospah and/or SFPMC shall maintain the
Helipad in accordance with the provisions of applicable Licenses and Applicable
Law. Notwithstanding the foregoing, in the event that Hospah and SFPMC
discontinue and cease all operations at the Mesquite Mine (either permanently or
temporarily), neither Hospah nor SFPMC shall be obligated to maintain the
Helipad during the period of such discontinuance or cessation. In that event,
HNRC shall have the right, but not i the obligation, at its sole election and
cost, to maintain the Helipad during the period of discontinuance or cessation.
3.4 Use and Operation of Water System.
--------------------------------------
A. Rights of HNRC to Tap Into Water System. Subject to the terms
------------------------------------------
and conditions set forth in this Section 3.4 and to the extent that Hospah and
SFPMC have the right and power to do so, Hospah and SFPMC (to the extent of
their respective interests) hereby grant unto HNRC, its successors and assigns,
the right to take water from the Water System for any use associated with the
Landfill Project, provided, subject to the availability of water, that such
taking of water by HNRC shall be subject to Hospah's and SFPMC's first call to
use water as required for Hospah's and/or SFPMC's operations. HNRC shall have
the right (to the extent that Hospah and SFPMC have the right and power, to
grant it) to tap into the Water System at any point of HNRC's choosing and to
construct, operate, maintain, repair and remove a water pipeline (the "Water Tap
Pipeline") to transport water from the Water System to the Landfill Project, or
to a water storage facility owned, controlled or otherwise used by HNRC,
provided that neither the point at which the Water Tap Pipeline connects too the
Water System nor the selected route of the Water Tap Pipeline shall interfere
with or cause a Material Adverse Effect upon the operations of the Mesquite
Mine. Prior to construction of the Water Tap Pipeline, the Parties shall agree
in writing upon a mutually agreeable route ,(to the extent that the route
crosses lands encompassed within SFPMC Leased Property or the Hospah Owned
Property). Upon request by HNRC, Hospah and SFPMC shall execute and deliver to
HNRC a recordable instrument, in form and substance reasonably satisfactory to
HNRC, evidencing that Hospah and SFPMC (to the extent of their respective
interests) have granted and conveyed unto HNRC a non-exclusive Easement in
perpetuity to construct, operate, maintain, repair and remove the Water Tap
Pipeline. Upon request and subject to the direction of HNRC, Hospah and SFPMC
shall cooperate to assist HNRC in obtaining Easements or Licenses from the BLM
or from other governmental or private entities or persons in connection with the
construction, operation,
16
maintenance, repair or removal of the Water Tap Pipeline, provided that neither
Hospah nor SFPMC shall be obligated to bear or incur any out-of-pocket costs or
expenses in connection with such efforts. HNRC shall bear and pay all costs and
expenses associated with the construction, operation, maintenance, repair or
removal of the Water Tap Pipeline. HNRC shall indemnify the Hospah Indemnitees
against all Losses resulting from Third Party Claims that arise out of the
construction, operation, maintenance, repair or removal of the Water Tap
Pipeline.
B. Operation and Maintenance of the Water System. During the SFPMC
----------------------------------------------
Lease Term, Hospah and/or SFPMC shall operate, maintain and repair the Water
System for the benefit of all of the Parties. The Parties shall share the costs
and expenses of operating, maintaining and repairing the Water System in
proportion to the volumes of water taken or used from the Water System by their
respective operations during the six month period prior to the performance of
the activity at issue. Hospah and/or SFPMC shall pay all such costs and
expenses in the first instance and shall provide to HNRC a written invoice for
HNRC's proportionate share thereof. The invoice, and the reimbursements
requested pursuant thereto, shall conform to the requirements set forth in
Section 9.5 of this Agreement. Notwithstanding the foregoing, in the event that
Hospah and SFPMC discontinue and cease all operations at the Mesquite mine
(either permanently or temporarily), neither Hospah nor SFPMC shall be obligated
to operate, maintain or repair the Water System during the period of such
discontinuance or cessation. In that event, HNRC shall have the right,, but not
the obligation, at its sole election and cost, to operate, maintain and repair
the Water System during the period of discontinuance or cessation as well as
during the Option Period after termination of the SFPMC Lease.
C. Licenses. Hospah and/or SFPMC shall be responsible to obtain and
--------
maintain all Licenses necessary or relating to the operation, maintenance and
repair of the Water System. In the event that HNRC elects to construct the
Water Tap Pipeline, HNRC shall be responsible to obtain and maintain all
Licenses necessary or relating to the construction, operation, maintenance and
repair of, the Water Tap Pipeline. Notwithstanding the foregoing, and in
accordance with the provisions of Section 9.3 of this Agreement, the Parties
shall cooperate in all reasonable ways with each other relative to the obtaining
and maintaining of such Licenses.
D. Alterations and Additions. all references to the "Water System"
--------------------------
appearing in this Section 3.4 shall conclusively be deemed to include all
Alterations and Additions thereto.
3.5 Power System.
-------------
A. Rights of HNRC to Tap into Power System. Subject to the terms
------------------------------------------
and conditions set forth in this Section 3.5 and to the extent that Hospah and
SFPMC have the right and power to do so, Hospah and SFPMC (to the extent of
their respective interests) hereby grant unto HNRC, its successors and assigns,
the right to tap into and take electrical power from the Power System for use in
connection with the Landfill Project, provided that such taking of power by HNRC
does not deprive Hospah or SFPMC of any electrical power required by them in
connection with the operation of the Mesquite Mine. HNRC shall have the right
(to the
17
extent that Hospah and SFPMC have the right and power to grant it) to tap into
the Power System at any point of HNRC's choosing and to construct, operate,
maintain, repair and remove an electrical tap substation and/or electrical
distribution lines (collectively, the "Electrical Tap Facilities") to tap,
transmit and distribute electrical power from the Power System to the Landfill
Project, provided that neither the point at which the Electrical Tap Facilities
connect to the Power System nor the selected route of any associated
distribution lines shall interfere with or cause a Material Adverse Effect upon
the operations of the Mesquite Mine. All electrical power taken or tapped by
HNRC from the Power System shall be separately and accurately metered. Prior to
construction of the Electrical Tap Facilities, the Parties shall agree in,
writing upon a mutually agreeable route and location for the Electrical Tap
Facilities to the extent such route or location impacts Hospah Owned or SFPMC
Leased Property. Upon request by HNRC, Hospah and SFPMC shall execute and
deliver to HNRC a recordable instrument, evidencing that Hospah and SFPMC (to
the extent of their respective interests) have granted and conveyed unto HNRC a
non-exclusive Easement to construct, operate, maintain, repair and remove the
Electrical Tap Facilities. HNRC shall bear and pay all costs and expenses
associated with the construction, operation, maintenance, repair or removal of
the Electrical Tap Facilities. HNRC shall indemnify the Hospah Indemnitees
against all Losses resulting from Third Party Claims that arise out of the
construction, operation, maintenance, repair, or removal of the Electrical Tap
Facilities.
B. Maintenance Costs. HNRC shall bear and pay all costs and
------------------
expenses relating to the operation, maintenance and repair of the Electrical Tap
Facilities. Hospah and/or SFPMC shall bear and pay all costs and expenses
associated with the operation, maintenance and repair of the Owned Power
Facilities. The Parties shall pay and share all charges by LID and WAPA under
the Electrical Service Agreement or under the IID-WAPA Agreements relating to
the operation, maintenance and repair of the IID-WAPA Electrical Facilities, in
proportion to the amount of electricity taken from the Power System and consumed
by their respective operations during the,, six month period immediately
preceding the charge at issue. Notwithstanding the foregoing, each of the
Parties shall bear sole responsibility for all utility charges directly based
upon the quantity of electricity consumed in their respective operations. In
the event that Hospah and SFPMC discontinue and cease all operations at the
Mesquite Mine (either permanently or temporarily), neither Hospah nor SFPMC
shall be obligated to operate, maintain or repair the Owned Power Facilities
during the period of such discontinuance or cessation. In that event, HNRC
shall have the right, but not the obligation, at its sole election and cost, to
operate, maintain and repair the owned Power Facilities during the period of
discontinuance or cessation.
C. Reimbursement of Original Capital Costs. Pursuant to the terms
-----------------------------------------
of the Electrical Service Agreement, HNRC is entitled to reimbursement of
certain capital costs in the event of the addition of a new user to the Power
System. The Parties agree to waive such right of reimbursement against each
other. The Parties shall take all such actions as may be reasonably necessary
to waive such right of reimbursement against each other. If such reimbursement
is paid notwithstanding such a waiver, the Parties agree that the entirety of
any reimbursement paid as a result of the addition of the Landfill Project as a
new user to the Power System shall inure to the benefit of and be paid
exclusively to HNRC and that the entirety of any reimbursement paid as a result
of the addition of facilities associated with the Mesquite Mine as a new user to
the Power System shall inure to the benefit of and be paid exclusively to
18
Hospah and SFPMC. In the event that a third party (unrelated to the Landfill
Project) is added as a new user to the Power System, Hospah and SFPMC shall be
entitled too any resulting reimbursement of original capital costs.
D. Transmission of Power from the Landfill Project. In the event
--------------------------------------------------
that electrical power is generated in connection with the operation of the
Landfill Project, at the sole election and direction of HNRC, the Parties shall
take all reasonably practicable actions to allow the transmission of such
generated power over or through the Power System. HNRC shall bear and pay all
Incremental Costs that result from the transmission of such generated power
through the Power System, including without limitation any Incremental Costs
resulting from necessary modifications or repairs to the Power System.
E. Licenses. For so long as Hospah and/or SFPMC elect to operate
--------
the Mesquite Mine, Hospah and/or SFPMC shall obtain and maintain all Licenses
necessary or relating to the operation, maintenance and repair of the Owned
Power Facilities. In the event that HNRC elects to construct the Electrical Tap
Facilities and for so long thereafter as HNRC elects to operate such
facilities,, HNRC shall obtain and maintain all Licenses necessary or relating
to the construction, operation, maintenance and repair of the Electrical Tap
Facilities or to the transmission of electrical power generated_ in connection
with the Landfill Project. Each of the Parties shall be responsible for their
own contractual, and regulatory relationships and dealings with IID, WAPA and
other utility companies or agencies. Notwithstanding the foregoing, and in
accordance with the provisions of Section 9.3 of this Agreement, the Parties
shall cooperate in all reasonable ways with each other relative to the obtaining
and maintaining of such Licenses.
F. Alterations and Additions. All references in this Section 3.5 to
-------------------------
the "Power System," "Owned Power Facilities," and "IID-WAPA Electrical
Facilities" shall conclusively be deemed to include all Alterations and
Additions thereto.
3.6 Proration of Property Taxes. Real and personal property taxes levied
----------------------------
or assessed upon or with respect to the Hospah Owned Property for 1993 shall be
prorated as of the Closing Date, with HNRC paying all such taxes attributable to
the period prior to the Closing Date and Hospah (as to the Hospah Assets) and
SFPMC (as to the SFPMC Assets) paying all such taxes attributable to the period
including and following the Closing Date.
3.7 HNRC's Purchase Option.
----------------------
X. Xxxxx of Option to Purchase. Subject to the provisions of
-------------------------------
Section 3.8 of this Agreement (governing the rights of Hospah or SFPMC to remove
Non-Essential Personal Property for use by Hospah, SFPMC or their respective
Affiliates in connection with operations other than the Mesquite Mine) and
subject to the provisions of Section 3.9 of this Agreement (governing the right
of Hospah and SFPMC to sell Surplus Personal Property to third parties), Hospah
(as to the Hospah Assets) and SFPMC (as to the SFPMC Assets) hereby grant and
convey unto HNRC a conditional option to purchase (the "Purchase Option") all or
any portion of the real and personal property comprising or encompassed within
Hospah Owned Property and the, Improvements thereon (including without
limitation Improvements owned by Hospah or SFPMC but situated upon real property
encompassed within the SFPMC Leased Property),
19
together with Alterations and Additions thereto (the "Option Property"), such
option to be exercised only under the circumstances and as provided herein.
With respect to Overburden, Clay and Spent Ore situated or to be situated upon
the Hospah owned Property and Spent Ore situated or to be situated upon the
SFPMC Leased Property, HNRC's Purchase Option is in addition to, rather than in
lieu of HNRC's rights to remove such materials free of charge pursuant to the
provisions of Articles V, VI and VII of this Agreement.
B. Exercise. The Purchase Option may be exercised by HNRC, at its
--------
sole and absolute discretion, at any time during the Option Period. As used in
this Agreement, the "Option Period" means a four month period commencing upon
the termination, expiration or surrender of the SFPMC Lease in its entirety.
HNRC shall exercise the Purchase Option (if it elects, in its sole and absolute
discretion, to do so) by providing written notice of exercise to Hospah and
SFPMC within the Option Period. The notice shall specify the Option Property
with respect to which HNRC has elected to exercise the Purchase Option (the
"Selected Option Property"). In the event that the Selected Option Property is
a parcel or parcels of real property, neither Hospah nor SFPMC shall be
obligated to convey such property unless such conveyance may be made in
compliance with (or pursuant to a waiver from) the Subdivision Map Act. HNRC
may, at its election, take such measures as are necessary to sub-divide the
option Property so that the Selected Option Property may be conveyed in
compliance with the Subdivision Map Act or may seek a waiver of such compliance.
All actions taken in respect of such proposed sub-division or waiver, .whether
in the name of HNRC, Hospah, or SFPMC shall be at the sole cost, risk and
expense of HNRC. Upon request and subject to the direction of HNRC, Hospah and
SFPMC shall cooperate in all reasonable ways and take all such reasonable
actions, including without limitation the execution and filing of additional
documents, instruments or maps, as may be necessary or helpful to assist HNRC in
such endeavors, provided that neither Hospah nor SFPMC shall be required to pay
any out-of-pocket cost or expense in connection therewith. HNRC shall have the
right too exercise the Purchase Option with respect to any Improvement owned by
Hospah or SFPMC, even if HNRC elects not to exercise the Purchase Option with
respect to the real property upon which the Improvement at issue is situated.
In that circumstance, HNRC shall have a reasonable period of time following the
Option Closing (not to exceed 12 months) in which to remove the Improvement.
HNRC shall have the right to enter upon the Hospah Owned Property for purposes
of such removal.
C. Due Diligence. During the Option Period, HNRC and its agents
--------------
shall be provided free and unrestricted access to the Option Property and all,
Information in the possession or under the control of Hospah, SFPMC or their
respective Affiliates which relate in any way to the Option Property, for
purposes of conducting due diligence investigations. HNRC shall indemnify the
Hospah Indemnitees against all Third Party Claims that arise as a result of such
due diligence investigations.
D. Purchase Price. In the event that HNRC timely exercises the
---------------
Purchase Option, the purchase price for the Selected Option Property (the
"Option Purchase Price") shall be determined as set forth in this Section 3.7 D.
The Option Purchase Price shall be equivalent to the Fair Market Value of the
Selected Option Property Immediately following exercise by HNRC of the Purchase
Option, the Parties shall meet and in good faith endeavor to establish and agree
upon the Fair Market Value of the Selected Option Property. In the event that,
within 30 days following the provision to Hospah and/or SFPMC of HNRC's written
notice exercising
20
the Purchase Option, the Parties are unable to agree in writing upon the Fair
Market Value of the Selected Option Property, then such Fair Market Value shall
be determined by a board of three appraisers. Hospah and/or SFPMC shall
collectively select one appraiser, HNRC shall select one appraiser and those,
two appraisers shall select a third appraiser mutually agreeable to each of
them. All appraisers shall be independent, disinterested, duly qualified and
experienced in the appraisal of property similar to the Selected Option
Property. All appraisers shall also be familiar with the prevailing market
conditions in the rural parts of Imperial County, California. An appraisal
approved by a majority of the three appraisers or, if no appraisal is approved
by a majority of the appraisers, an appraisal equal to the average of the two
closest appraisals, shall conclusively establish the Fair Market Value, of the
Selected Option Property (and the Option Purchase Price). The appraisers shall
jointly execute and provide to each of the Parties a written notice setting
forth their determination of Fair Market Value. The determination of Fair
Market Value reached by the appraisers pursuant to the foregoing procedures
shall be conclusive, final and binding upon the Parties. HNRC shall pay the
fees and expenses of the appraiser selected by HNRC, Hospah and/or SFPMC shall
pay the fees and expenses of the appraiser selected by Hospah and/or SFPMC and
Hospah (together with SFPMC) shall pay 50% of the fees and expenses of the third
appraiser and HNRC shall pay 50% of the fees and expenses of the third
appraiser.
E. Option Closing. The closing of the purchase by HNRC of the
---------------
Selected Option Property (the "Option Closing") shall be held within 30 days
after determination of the Option Purchase Price in accordance with the
procedures set forth in Section 3.7 D of this Agreement, subject to such
extensions as may be necessary to comply with requirements of the Subdivision
Map Act. The specific time, date and place of the option Closing shall be as
reasonably agreed upon by the Parties. At the Option Closing, the following
shall occur:
(i) HNRC shall pay to Hospah and/or SFPMC (i.e. to the Party or
Parties that hold an interest in the Selected Option Property) the Option
Purchase Price, net of any credits allowed under this Agreement. Such payment
shall be made in cash, by certified or cashier's check or by wire transfer of
immediately available funds, as elected by HNRC in its sole discretion;
(ii) Hospah and/or SFPMC (i.e. to the Party or Parties that hold
an interest in the Selected Option Property) shall execute and deliver unto HNRC
deeds, assignments and bills of sale, as appropriate, in form and substance
reasonably satisfactory to HNRC, conveying and assigning the Selected Option
Property unto HNRC; and
(iii) Hospah and/or SFPMC (i.e. to the Party or Parties that hold
an interest in the Selected Option Property) shall deliver to HNRC all
Information in the possession or under the control of Hospah, SFPMC or their
respective Affiliates that is reasonably necessary to the permitting, operation
or ownership of the Landfill Project. Hospah and/or SFPMC (i.e. to the Party or
Parties that hold an interest in the Selected Option Property) shall execute and
deliver unto HNRC a xxxx of sale conveying and selling such Information unto
HNRC.
Real and personal property taxes levied or assessed upon or with respect to the
Selected Option Property shall be prorated as of the date of the Option, Closing
and Hospah and/or SFPMC (i.e.
21
to the Party or Parties that hold an interest in the Selected Option Property)
shall be solely responsible for the portion of such unpaid taxes attributable to
the period prior to that date. Prior to the Option Closing, Hospah and/or SFPMC
(i.e. to the Party or Parties that hold an interest in the Selected Option
Property) shall take all actions necessary to fully pay-off, discharge and
remove all Liens encumbering the Selected Option Property. In the event that
Hospah and/or SFPMC (i.e. to the Party or Parties that hold an interest in the
Selected Option Property) fails fully to discharge and remove any such Liens,
HNRC shall have the right, but not the obligation, to pay-off and discharge such
Liens itself, in whole or in part, and to deduct the amounts paid by it from the
Option Purchase Price. HNRC shall also have the right, but not the obligation,
to assume the obligations under any such Liens and to credit against the Option
Purchase Price an amount equal to the amount necessary to fully discharge such
Liens. Notwithstanding the foregoing, the Parties understand and agree that
neither Hospah nor SFPMC shall make, at the Option Closing or in the instruments
to be delivered at the option Closing or otherwise, any representations or
warranties whatsoever, express or implied, with respect to its ownership of or
title to the Selected Option Property. Furthermore, all conveyances at the
Option Closing shall be subject to the disclaimers set forth in Section 9.10 of
this Agreement.
F. Covenants of Further Cooperation. From and after the Option
---------------------------------
Closing, each of the Parties covenants that, upon request by the other Party, it
shall do all such further things, including without limitation the execution and
recordation of further or additional instruments or documents, as may be
necessary or helpful to effect the intent of the Parties as set forth in this
Agreement.
G. Reclamation and Environmental Responsibilities. Notwithstanding
-----------------------------------------------
any provision of this Agreement to the contrary, neither exercise by HNRC of the
Purchase Option nor the occurrence and completion of the option Closing shall
relieve or release Hospah or SFPMC from any Reclamation and Environmental
Responsibilities with respect to the Selected Option Property that shall have
accrued prior to the Option Closing, including without limitation accrued
obligations required to be performed subsequent to the(,Option Closing. HNRC
shall assume all Reclamation and Environmental Responsibilities with respect to
the Selected Option Property that accrue subsequent to the Option Closing.
H. Obligations of Hospah and SFPMC Prior to the Option Closing. At
------------------------------------------------------------
all times during the Option Period, and, if HNRC timely exercises the Purchase
Option, at, all times prior to the Option Closing, Hospah (as to the Hospah
Assets), and SFPMC (as to the SFPMC Assets), shall perform and comply with the
following duties and obligations:
(i) In the event that Hospah and/or SFPMC desires to abandon any
of the Option Property, Hospah and/or SFPMC (i.e. the Party or Parties that hold
an interest in the Option Property at issue) shall provide HNRC with written
notice of its intentions no less than 90 days prior to abandonment. The notice
shall identify with specificity the Option Property to be abandoned. HNRC shall
have the right, by providing written notice thereof to Hospah and/or SFPMC (i.e.
to the Party or Parties that hold an interest in the Option Property at issue)
within the 90 day period described above, to elect to receive from Hospah and/or
SFPMC (i.e. from the Party or Parties that hold an interest in the Option
Property at issue) at no charge, an assignment or conveyance of the Option
Property at issue. Within ten days following the
22
provision of such written notice to Hospah and/or SFPMC (i.e. to the Party or
Parties that hold an interest in the Option Property at issue) Hospah and/or
SFPMC (i.e. the Party or Parties that hold an interest in the option Property at
issue) shall execute and deliver to HNRC a deed, assignment, or xxxx of sale, as
appropriate, in form and substance reasonably satisfactory to HNRC, conveying
the Option Property at issue unto HNRC; and
(ii) Subject to the rights of Hospah and/or SFPMC to abandon
Option Property in accordance with the provisions of Section 3.7 H (i) above,
Hospah (as to the Hospah Assets) and SFPMC (as to the SFPMC Assets) shall
protect, maintain and keep in good standing all real and personal property
subject to the Purchase Option. Hospah (as to the Hospah Assets) and SFPMC (as
to the SFPMC Assets) shall timely, fully and properly make all filings, perform
all assessment work and pay all fees, rentals and other payments required under
Applicable Law to maintain all Unpatented Claims encompassed within the Option
Property. Hospah (as to the Hospah Assets) and SFPMC (as to the SFPMC Assets)
shall timely and fully perform all obligations and make all payments required in
order to keep the Mineral Lease and Purchase Option Agreements in full force and
effect, subject to such amendments and modifications thereto as may be
acceptable to Hospah (as to the Hospah Assets) and SFPMC (as to the SFPMC
Assets) and the counter-parties thereto. Hospah (as to the Hospah Assets) and
SFPMC (as to the SFPMC Assets) shall pay when due all taxes and assessments
levied or assessed upon the Option Property and in no event shall Hospah (as to
the Hospah Assets) and SFPMC (as to the SFPMC Assets) allow any portion of the
Option Property to be sold for unpaid taxes; and
(iii) each of Hospah and SFPMC shall take all actions necessary
to remove Liens arising by, through, or under it, upon the Selected Option
Property prior to the Option Closing. Furthermore, HNRC shall have the right,
at any time and from time to time, to pay off and discharge, in whole or in
part, any Lien upon the option Property, in which case HNRC shall be subrogated
to all right, title and interests of the holder of such Lien. Additionally,
HNRC shall have the right to credit against the option Purchase Price any
amounts expended by HNRC in connection with the discharge, in whole or in part,
of such Liens.
I. Restrictions on Transfers. Except as expressly allowed and
---------------------------
subject to all limitations and restrictions set forth elsewhere in this
Agreement, any conveyance, assignment or other transfer by Hospah or SFPMC, of
any of its or their respective right, title or interest in or to the Option
Property shall be expressly subject to the Purchase Option and all of HNRC's
rights incident thereto; provided, however, that nothing in this Section 3.7 or
elsewhere in this Agreement shall be construed so as to prevent Hospah or SFPMC,
from freely selling, pledging, or encumbering any gold Ore, gold concentrates,
gold dore or gold bullion.
J. Restrictions on Removal. Notwithstanding any provision of the
-------------------------
Asset Exchange Agreement or of this Agreement to the contrary, prior to the
expiration or surrender of the Purchase Option, neither Hospah nor SFPMC, shall,
without the prior written consent of HNRC, which consent shall not unreasonably
be withheld, remove from the real property encompassed within the Hospah Owned
Property or the SFPMC Leased Property any portion of the Water System, Power
System, Monitoring Facilities, Surface Runoff Drainage Facilities, Spent Ore,
Overburden or Clay (or Stockpiles of such substances), except for:
23
(i) Surplus Personal Property sold to a third party pursuant to
Section 3.9 of this Agreement;
(ii) Non-Essential Personal Property removed by Hospah and SFPMC
pursuant to Section 3.8 of this Agreement;
(iii) Non-Essential Personal Property retired as obsolete; or
(iv) such items of Personal Property as may be removed in the
ordinary course of business, provided they are replaced with items whose value
and utility are comparable to or better than those removed.
K. Right of HNRC to Request Delay in Reclamation of option Property.
----------------------------------------------------------------
HNRC shall have the right, at any time and from time to time and at its sole and
absolute discretion, to provide to Hospah (as to the Hospah Assets) and SFPMC
(as to the SFPMC Assets) a written notice setting forth specific Improvements
included within the Option Property, including without limitation Alterations
and Additions thereto, that HNRC would like left in place for its future use.
In that event, subject to compliance with Applicable Law and the Parties'
ability to obtain any required Licenses or modifications to then existing
Licenses, Hospah and SFPMC shall not reclaim or remove and shall leave in place
for HNRC's future use, the Improvements specified in HNRC's notice. The Parties
shall cooperate and take all actions to obtain any necessary Licenses or
modifications, to then existing Licenses. The inclusion in HNRC's written
notice to Hospah and/or SFPMC of any Improvement shall be deemed an irrevocable
election by HNRC to purchase that Improvement at such time as HNRC exercises the
Purchase Option.
3.8 Right of Hospah and SFPMC to Remove Non-Essential Property. At any
-------------------------------------------------------------
time and from time to time prior to termination or expiration of the SFPMC
Lease, Hospah and SFPMC shall have the right, in its or their sole and absolute
discretion and at its or their sole cost, to dismantle and remove from the real
property encompassed within either the Hospah Owned Property or the SFPMC Leased
Property, any or all Non-Essential Property for use by Hospah or SFPMC at any
other location in connection with operations other than the Mesquite Mine.
Non-Essential Property that Hospah or SFPMC removes in good faith from such real
property pursuant to the provisions of this Section 3.8 shall not thereafter be
subject to the Purchase Option.
3.9 Offer to Sell Surplus Personal Property. In the event that, at any
------------------------------------------
time and from time to time during the Option Period, Hospah and/or SFPMC desires
or intends to sell any Surplus Personal Property, Hospah (as to the Hospah
Assets) and SFPMC (as to the SFPMC Assets) shall offer to sell such Surplus
Personal Property to HNRC in accordance with the provisions of this Section 3.9.
Hospah and/or SFPMC (i.e. the Party or Parties who hold an interest in the
Surplus Personal Property at issue) shall provide to HNRC a written and binding
good faith offer of sale (a "Sales Offer"), setting forth with specificity the
Surplus Personal Property offered for sale, a sales price with respect to each
item and any other pertinent terms and conditions of sale In the event that HNRC
desires to purchase any of such items, HNRC shall, within 30 days after the
provision to it of the Sales Offer, provide to Hospah and/or SFPMC (i.e. the
Party or Parties who hold an interest in the Surplus Personal Property at issue)
24
a written notice (an "Acceptance Notice") specifying the Surplus Personal
Property that HNRC desires to purchase and irrevocably committing to purchase
those items at the price and on the terms and conditions stated in the Sales
Offer. The closing of the sale and purchase, of the Surplus Personal Property
at issue shall be held within ten days following the provision to Hospah and/or
SFPMC, as applicable, of the Acceptance Notice. At such closing, the following
shall occur (i) Hospah and/or SFPMC (i.e. the Party or Parties who hold an
interest in the Surplus Personal Property at issue) shall execute and deliver to
HNRC a xxxx of sale, in form and substance reasonably satisfactory to HNRC,
transferring and selling unto HNRC the Surplus Personal Property at issue, and
(ii) HNRC shall pay unto Hospah and/or SFPMC (i.e. the Party or Parties who hold
an interest in the Surplus Personal Property at issue) the purchase price
specified in the Sales Offer. Thereafter, Hospah and/or SFPMC (i.e. the Party
or Parties who hold an interest in the Surplus Personal Property at issue) shall
be free to dispose of said surplus Personal Property in any manner it or they
see fit.
A. Background and Intentions of the Parties. United States Patent
------------------------------------------
No. 04-90-0066, issued on August 17, 1990, covers approximately 387 acres of
land, comprised of 85 patented millsite claims (the "Subject Patent Property").
It is the intention of the Parties that part of the Subject Patent Property (the
"Reversion Property") be SFPMC Leased Property and that the remainder of the
Subject Patent Property (the "Remainder Property") be Hospah Owned Property.
The Reversion Property and the Remainder Property are depicted on the map
appended as Exhibit A-2 to this Agreement and are described in Exhibit H to this
Agreement. However, division of the Subject Patent Property into the Reversion
Property and the Remainder Property may require compliance with the California
Subdivision Map Act. At the Closing, HNRC shall convey to Hospah all of the
Subject Patent Property, which pursuant to Section 3.1 of this Agreement, shall
initially be classified as Hospah Owned Property. However, following the
Closing and pursuant to the provisions of this Section 3.10, Hospah shall place
in escrow with Escrow Agent a special warranty deed (the "Escrowed Deed")
reconveying the Reversion Property to HNRC. Upon accomplishing any of the
conditions set forth in clauses (i), (ii) and (iii) of the second sentence of
Section 3.10 B and pursuant to the terms of the Escrow Instructions, the
Escrowed Deed shall be delivered to HNRC. Upon such delivery, the Reversion
Property shall become part of the SFPMC Leased Property, subject to all of the
terms and conditions of the SFPMC Lease set forth in Article IV.
Contemporaneously with such delivery, HNRC shall confirm, by appropriate
instrument in recordable form, that the Reversion Property has become a part of
the SFPMC Leased Property. The Remainder Property shall remain part of the
Hospah Owned Property.
B. Division of the Subject Patent Property. After the Closing, HNRC
---------------------------------------
shall, at its sole cost and expense, take such actions as may be necessary to
allow the division of the Subject Patent Property into the Reversion Property
and the Remainder Property. For purposes of this Agreement, the Escrowed Deed
shall be delivered to HNRC pursuant to the Escrow Instructions upon satisfying
one or more of the following conditions: (i) compliance with the requirements
of the Subdivision Map Act, including without limitation the preparation,
submission and approval of parcel maps; (ii) obtaining from the pertinent
government agency or agencies a valid waiver or exemption from compliance with
the Subdivision Map Act, or (iii) there shall be an acknowledgment in writing
between HNRC and Imperial County, reasonably satisfactory to SFPMC, that the
Subdivision Map Act is not applicable to this transaction. HNRC shall, at its
sole cost and expense, take such actions as it deems necessary, prudent or
25
advisable, in its sole discretion, to satisfy any of the conditions set forth in
clauses (i), (ii) or (iii) of the preceding sentence. HNRC shall have the right
to take such actions in Hospah's or SFPMC's name, as Hospah's or SFPMC's agent
or in Hospah's or SFPMC's stead. Upon request and subject to the direction of
HNRC, Hospah and SFPMC shall cooperate in all reasonable ways and take all such
reasonable actions, including without limitation the execution and filing of
additional documents, instruments or maps, as may be necessary or helpful to
assist HNRC in such endeavors, provided that Hospah and SFPMC shall not be
required to pay any out-of-pocket cost or expense in connection therewith. Upon
accomplishing any of the conditions set forth in clauses (i), (ii) or (iii),
above, HNRC shall provide to Hospah and the Escrow Agent, pursuant to the Escrow
Instructions, written notice requesting delivery of the Escrowed Deed, together
with relevant documentation supporting such request. In the event that prior to
delivery of the Escrowed Deed to HNRC, HNRC, its partners, or respective
successors or assigns, elect, in their sole discretion, to permanently
discontinue efforts to permit or develop the Landfill Project, HNRC shall
provide, written notice of such election to Hospah and SFPMC. In the event
that, as of the date of HNRC's notice, the Reversion Property has not yet been
reconveyed to HNRC, Hospah and SFPMC shall be released from all further
obligations under this Section 3.10 to reconvey the Reversion Property to HNRC;
provided, however, that HNRC shall retain all of its other rights, title and
interest in or to the Reversion Property, including without limitation, its
rights under the Purchase Option. Hospah may, at any time, provide to HNRC a
written inquiry regarding the status of actions taken by HNRC to comply with the
Subdivision Map Act and the status of the Landfill Project HNRC shall reply in
writing, describing such status and confirming, if a decision has been made at
the time of the Hospah request, that HNRC has or has not, as the case may be,
elected to permanently discontinue efforts to permit or develop the Landfill
Project or other lawful, industrial, non-mining activity related to or derived
from landfill activities.
C. Rights and Obligations of the Parties Pending Reconveyance of the
-----------------------------------------------------------------
Reversion Property. Notwithstanding any provision of this Agreement to the
-------------------
contrary, prior to the reconveyance of the Reversion Property to HNRC, the
Parties shall have the same rights and obligations with respect to the Reversion
Property, and shall be subject to the same limitations and restrictions, as
apply under this Agreement with respect to SFPMC Leased Property.
Notwithstanding any provision of this Agreement to the. contrary, prior to
delivery of the Escrowed Deed to HNRC, neither Hospah nor SFPMC shall pledge,
mortgage, hypothecate or otherwise encumber its. interest in the Reversion
Property except for Liens granted in connection with financing transactions.
All Liens upon the Reversion Property arising by, through or under Hospah or
SFPMC shall be expressly subject and subordinated to all of the right, title and
interest of HNRC in or to the Reversion Property, whether accrued or unaccrued,
absolute or contingent, including without limitation all right, title and
interest of HNRC arising under this Agreement. Subsequent to delivery of the
Escrowed Deed to HNRC, SFPMC may encumber its leasehold interest in the
Reversion Property in accordance with and subject to the limitations of Section
4.12 of this Agreement.
D. Further Assurances. Upon request by any Party, the Parties
-------------------
covenant, at any time and from time to time, to cooperate reasonably with each
other and take all such further actions, including without limitation the
execution and filing of additional instruments or documents, as may be
reasonably necessary to carry out the intent, purposes and terms of the
provisions of this Section 3.10.
26
ARTICLE IV
SFPMC LEASE
4.1 Grant of Lease and Appurtenant Easements.
---------------------------------------------
A. SFPMC Leased Property. To the extent that it has the right and
-----------------------
power to do so, HNRC hereby grants and conveys unto SFPMC, its successors and
assigns, a lease for mining and other mining related purposes unto the SFPMC
Leased Property, on the terms and conditions set forth in this Agreement. As
used in this Agreement, the term "SFPMC Leased Property shall mean all of
HNRC's, right, title and interest, as of the Closing, in and to the following
real and personal property:
(i) the Unpatented Claims and Fee Property described in Exhibit
F to this Agreement, and encompassed within the area depicted and labeled as
"SFPMC Leased Property" on the maps appended as Exhibit A and Exhibit A-1 to
this Agreement, together with all Improvements thereon, exclusive of the Hospah
Owned Property;
(ii) the Solution Ponds, together with such real property
adjacent to the Solution Ponds as may be required by SFPMC during the SFPMC
Lease Term either for expansion of the Solution Ponds_ or for surge or overflow
ponds or areas;
(iii) all Monitoring Facilities situated upon the SFPMC Leased
Property, subject in particular to the provisions of Section 8.2 of this
Agreement;
(iv) all Surface Runoff Drainage Facilities situated upon the
SFPMC Leased Property, subject in, particular, to the provisions of Section 8.3
of this Agreement; and
(v) all mine fencing situated upon the SFPMC Leased Property,
subject in particular to the provisions of Section 8.1 of this Agreement.
B. Access Road Easement and Solution Pipeline Easement. In
---------------------------------------------------------
addition, as provided in Section 4.5 (as to the Access Road Easement) and in
Section 4.6 (as to the Solution Pipeline Easement) HNRC is granting unto SFPMC
appurtenant non-exclusive Easements for SFPMC's use and enjoyment of the SFPMC
Leased Property. SFPMC's and HNRC's respective rights and obligations for the
use of the Access Road Easement and the Solution Pipeline Easement are as set
forth in this Agreement. Notwithstanding any provision of this Agreement to the
contrary, the obligations of SFPMC set forth in this Agreement with respect to
SFPMC Leased Property shall apply also with respect to the Access Road Easement
and the Solution Pipeline Easement.
4.2 Term. The primary term of the SFPMC Lease (the "Primary Term") shall
----
commence on the Closing Date and shall remain in effect for a period of 31
years, unless sooner terminated or surrendered in accordance with the provisions
of this Agreement. The SFPMC Lease shall remain in effect beyond the Primary
Term for so long as SFPMC continues to mine or process Ore upon the SFPMC Leased
Property or the Hospah Owned Property and otherwise to comply with the terms and
conditions of this Agreement (the "SFPMC Lease Term")
27
provided that under no circumstances shall the SFPMC Lease Term exceed 85 years
in total (including the Primary Term and all extensions).
4.3 Possession and Control. To the extent that it has the right and power
----------------------
to do so, and subject to Applicable Law and SFPMC obtaining all necessary
Licenses, HNRC hereby grants unto SFPMC, during the SFPMC Lease Term and subject
to the terms and conditions of this Agreement, the following rights with respect
to the SFPMC Leased Property:
(i) the right of entry;
(ii) to explore for, mine, extract, produce, stockpile, remove,
transport, xxxxx, concentrate, mill, smelt, beneficiate, process, use, treat,
ship, market and sell all Ore, whether extracted from the Hospah Owned Property,
the SFPMC Leased Property or from other properties, subject only to the
limitations expressly set forth in this Agreement, including without limitation
in Section 4.14
(iii) to construct, use, maintain, repair and, replace any and
all buildings, roads, pipelines, slurry lines, Ore bins, xxxxx pads, Ore
treatment facilities, Ore Stockpiles, Clay Stockpiles, overburden Stockpiles,
Spent Ore Stockpiles, reservoirs, power and communication lines and any other
Improvements of any kind or description whatsoever, subject only to the
limitations expressly set forth in this Agreement;
(iv) to use the SFPMC Leased Property for the storage or
permanent disposal of Ore, Overburden, Clay, Spent Ore, and related by-products
produced from the Hospah Owned Property, the SFPMC Leased Property or from other
properties, subject to the restrictions, terms and conditions set forth in this
Agreement;
(v) to use all Easements and means of access to which HNRC may
be entitled to, from, across and through the SFPMC Leased Property, subject in
particular to the restrictions, terms and conditions set forth in Section 4.5 of
this Agreement
(vi) to operate water xxxxx, and to use, develop, impound, store,
consume and dispose of all water and water rights, subject in particular to the
provisions of Sections 3.4 and 4.14 of this Agreement;
(vii) to remove from Stockpiles upon the SFPMC Leased Property
and dispose of any Ore, Overburden, Clay or Spent Ore for testing purposes
(including without limitation for bulk samples, assays, geochemical analyses,
amenability to milling and recovery determinations, pilot plant tests and
testing relating to reclamation methods), without payment of any additional
consideration whatsoever to HNRC;
(viii) to remove from Stockpiles upon the SFPMC Leased Property
any Ore, Ore concentrates, dore or bullion, without restriction and without
payment of any additional consideration whatsoever to HNRC, provided that SFPMC
shall not remove from the SFPMC Leased Property any Overburden, Clay or Spent
Ore, except to the extent expressly authorized pursuant to Articles V, VI, and
VII of this Agreement; and
28
(ix) to use the SFPMC Leased Property for all of the mining and
other mining related. purposes stated in this Section 4.3 in connection with or
in furtherance of SFPMC's activities on the Hospah Owned Property or other
properties, subject to the restrictions and limitations set forth in this
Agreement.
4.4 Rental Payments. During the SFPMC Lease Term, SFPMC shall make rental
---------------
payments to HNRC in the amount of $1,500 per year. The first such rental
payment shall be due on or before a date 30 days after the Closing Date.
Subsequent rental payments shall be due and payable on or before each
anniversary of the Closing Date. Except for the rental payments described above
(and in partial consideration of the rights granted to HNRC elsewhere in this
Agreement to remove Overburden, Clay and Spent Ore from the SFPMC Leased
Property and from the Hospah Owned Property for use in connection with the
Landfill Project), SFPMC shall not be obligated to pay unto HNRC any advance
minimum, production or other royalties or payments attributable to the
extraction, processing or removal_ of Ore.
4.5 Access Road Easement.
----------------------
X. Xxxxx of Access Road Easement. HNRC hereby grants unto SFPMC a
-------------------------------
non-exclusive Easement (the "Access Road Easement") appurtenant to the SFPMC
Leased Property to use portions of the Present Access Road situated upon the
HNRC Retained Property, for ingress to and egress from the SFPMC Leased Property
and the Hospah Owned Property, on the terms and conditions set forth in Article
IV, including this Section 4.5.
B. Term. As an easement appurtenant to the SFPMC Lease, the Access
----
Road Easement shall commence on the Closing Date and, unless sooner surrendered
or terminated pursuant to the provisions of this Agreement, shall continue in
full force and effect throughout the SFPMC Lease Term and shall terminate upon
termination or expiration of the SFPMC Lease. Notwithstanding the foregoing,
HNRC shall have the right, at any time and in its sole discretion, to terminate
the Access Road ,Easement by. providing SFPMC not less than six months prior
written notice of termination. In the event of termination of the Access Road
Easement pursuant to the preceding sentence, the termination shall be deemed
effective only upon the later to occur of the following events:
(i) the effective date of termination of the Access Road
Easement, as set forth in HNRC's written notice to SFPMC (which in no event
shall be less than six months from and after the date of the notice); or
(ii) completion and construction of a new access road to the
Mesquite Mine pursuant to Section 4.5 C of this Agreement.
Upon termination of the Access Road Easement, SFPMC shall duly execute and
deliver to HNRC a release of all of SFPMC's right, title and interest in and to
the Access Road Easement and the property covered thereby. Such release shall
be in form and substance reasonably satisfactory to HNRC and shall be suitable
for recordation.
C. Construction of New Access Road.
-----------------------------------
(1) Route of the New Access Road. Pursuant to the provisions of
----------------------------
this
29
Section 4.5 C, SFPMC and HNRC shall cooperate to construct and complete a new
access road to the Mesquite mine prior the commencement of Commercial Landfill
Operations. HNRC shall provide to SFPMC not less than six months prior written
notice of its intention to commence Commercial Landfill Operations. As soon as
practicable following the provision of such notice, SFPMC and HNRC shall consult
with each other relative to the construction of a new access road from Highway
78 to the administration and plant area of the Mesquite Mine. Prior to the
commencement of construction, SFPMC and HNRC shall agree in writing to a
mutually acceptable route for the new access road. A map or maps illustrating
the new route shall be appended to the written agreement of SFPMC and HNRC. In
the event that the route of the new access road crosses any portion of the HNRC
Retained Property, HNRC shall, to the extent that it has the right and power to
do so, grant unto SFPMC an exclusive Easement for the new access road, which
Easement shall be appurtenant to the SFPMC Leased Property and shall be subject
to all of the terms and conditions of the SFPMC Lease and this Agreement (on
terms and conditions comparable to those applicable to the Access Road Easement)
Such grant of Easement shall be in form and substance reasonably satisfactory to
SFPMC and shall be suitable for recordation.
(2) Construction of the New Access Road. The new access road
--------------------------------------
shall be constructed to a length, width, standard and quality comparable to the
Present Access Road as of the Closing Date. The new access road shall be
constructed by HNRC or by a contractor of HNRC's selection. HNRC shall pay and
bear all costs and expenses associated with the construction of the new access
road, including without limitation the fees and expenses of the road engineer
and of the construction contractor. HNRC shall indemnify the Hospah Indemnitees
against all Losses resulting from Third Party Claims that arise out of the
construction of the new access road. All instructions, guidance and directions
to the road engineer and construction contractor shall be provided by HNRC,
subject to the mutual agreement of SFPMC and HNRC relative to the route of the
new access road. HNRC shall provide to SFPMC written notice of completion of
construction and, if the new access road meets the design and construction.
criteria set forth in this Section 4.5 C, SFPMC shall execute and deliver to
HNRC a written notice of acceptance of the new access road.
(3) Subsequent Use of Access Roads. Subsequent to SFPMC's
----------------------------------
acceptance of the new access road, HNRC, its agents and representatives shall
not use the new access road without the prior written consent of SFPMC, which
consent shall not be unreasonably withheld, and SFPMC, its agents and
representatives shall not use the portions of the Present Access Road situated
upon the HNRC Retained Property without the prior written consent of HNRC, which
consent shall not unreasonably be withheld. It is the intention of SFPMC and
HNRC that, in general and to the extent practicable, each of them shall use
separate access roads so as to minimize interferences between their respective
operations.
D. Cooperation and Coordination. The Parties shall cooperate in all
----------------------------
reasonable ways, including without limitation by the coordination of schedules,
in order to ensure that their respective uses of the Present Access Road do not
interfere,. hinder or cause undue delays to the operations of the other Party;
provided, however, that under no circumstances shall HNRC's use of the Present
Access Road be allowed to cause a Material Adverse Effect upon the operations of
the Mesquite Mine.
30
E. Repairs and Maintenance. During the term of. the Access Road
-------------------------
Easement, SFPMC shall be solely responsible and obligated to repair and maintain
the Present Access Road, so that at no point in time will the condition thereof
be materially, worse than on the Closing Date. Notwithstanding the foregoing,
in the event that SFPMC and Hospah discontinue or, cease all operations at the
Mesquite Mine (permanently or temporarily), SFPMC shall not be obligated to
maintain or repair the Present Access Road during such period of discontinuance
or cessation. In that event, HNRC shall have the right, but not the obligation,
at its sole election and cost, to maintain and repair the Present Access Road
during the period of discontinuance or cessation. Hospah and SFPMC shall take
all actions necessary to ensure that, upon termination of the Access Road
Easement, the Present Access Road is left in a condition no worse than its
condition as of the Closing Date.
F. Other Relocations of the Present Access Road. Each of HNRC (at
----------------------------------------------
any time and from time to time) and SFPMC (at any time and from time to time
during the term of the Present Access Road) shall have the right, at its sole
election and cost, to reroute or relocate the Present Access Road or portions
thereof, provided that the new route does not cause a, Material Adverse Effect.
upon the operations or interests of the other Party, and provided further that
the rerouted or relocated road is designed and built to a standard and condition
at least comparable to the Present Access Road.
4.6 Easement for a Process Solution Pipeline.
---------------------------------------------
X. Xxxxx of Solution Pipeline Easement. HNRC hereby grants unto
---------------------------------------
SFPMC, its successors and assigns, the Solution Pipeline Easement to construct,
operate, maintain and repair a process solution pipeline (together with
accompanying water supply lines) upon the HNRC Retained Property in order to
connect the Solution Ponds to the xxxxx pads (currently situated upon the SFPMC
Leased Property) and associated processing facilities on the terms and
conditions set forth in Article IV, including this Section 4.6. Although the
Solution Pipeline Easement is of a limited duration, the personal property
comprising the process solution pipeline itself shall be owned by SFPMC as part
of the Hospah Owned Property.
B. Term. As an easement appurtenant to the SFPMC Lease, the
----
Solution Pipeline Easement shall commence on the Closing Date and, unless sooner
surrendered or terminated pursuant to the provisions of this Agreement, shall
continue in full force and effect throughout the SFPMC Lease Term and shall
terminate upon termination or expiration of the SFPMC Lease.
C. Location of Easement. The Solution Pipeline Easement shall run
----------------------
from the Solution Ponds to the xxxxx pads situated upon the SFPMC Leased
Property. The Solution Pipeline Easement shall be of a sufficient width to
allow SFPMC to conduct all activities relating or incidental to the
construction, operation, maintenance and repair of the process solution pipeline
and related facilities. The route of the Solution Pipeline Easement shall
generally follow the same route as the pipeline and/or trenches employed by HNRC
immediately prior to the Closing for purposes of circulating process solution
between the Solution Ponds and the xxxxx pads and associated processing
facilities. Upon request by
31
SFPMC or HNRC, SFPMC and HNRC shall meet for purposes of establishing a more
definitive description of the location and width of the Solution Pipeline
Easement.
D. Environmental Responsibility. HNRC shall retain all Reclamation
-----------------------------
and Environmental Responsibilities (if any), with respect to the process
solution pipeline and the real property covered by the Solution Pipeline
Easement, that had accrued and that were legally required to be performed and
completed prior to the Closing Date. SFPMC shall assume all other accrued
and unaccrued Reclamation and Environmental Responsibilities, now existing or
arising in the future,, with respect to the process solution pipeline, the real
property covered by the Solution Pipeline Easement, and all Alterations and
Additions.. Within a reasonable period of time following the expiration or
termination of the SFPMC Lease Term, SFPMC shall dismantle and remove from the
HNRC Retained Property the process solution pipeline, accompanying water supply
lines and all Alterations and Additions thereto, and shall fully reclaim, in
accordance with the terms and conditions of all applicable Licenses and
Applicable Law, the real property covered by the Solution Pipeline Easement.
SFPMC shall indemnify the HNRC Indemnitees against all Losses, including without
limitation all Losses arising out of Third Party Claims, that relate to the
process solution pipeline or the operation thereof. Each of Hospah and SFPMC
(during the period of operations of the Mesquite Mine) and HNRC (during the
period_ of operations of the Landfill Project) shall provide to the other
Parties written notice of any release, spill, discharge or emission of any
leachate, gas, contaminated or toxic material or any other substance required to
be reported to any governmental agency under any applicable Environmental Law.
4.7 Standard of Operations. Subject to SFPMC's rights to surrender SFPMC
-----------------------
Leased Property from the SFPMC Lease in accordance with the provisions of
Section 4.18 of this Agreement, SFPMC shall, at all times during the SFPMC Lease
Term, protect, maintain and keep in good standing all real and personal property
comprising or encompassed within the SFPMC Leased Property, including without
limitation all Alterations and Additions thereto. Subject to SFPMC's rights to
surrender SFPMC Leased Property from the SFPMC Lease in accordance with the
provisions of Section 4.18 of this Agreement, SFPMC shall timely, fully and
properly make all filings, perform all assessment work and pay all fees, rentals
and other payments required under Applicable Law to maintain all Unpatented
Claims encompassed within the SFPMC Leased Property.
4.8 No Implied Covenants. Except as expressly set forth in this Agreement
--------------------
to the contrary, SFPMC does not make any express or implied covenant to conduct
any activity upon or for the benefit of the SFPMC Leased Property. Except as
expressly set forth in this Agreement to the contrary, whether or not any
activity allowed under this Agreement shall at any time be conducted and the
location, manner, method, extent, rate and timing, of such activities shall be
determined within the sole and absolute discretion of SFPMC
4.9 Reclamation. HNRC shall retain all Reclamation and Environmental
-----------
Responsibilities (if any), with respect to the SFPMC Leased Property and all
Improvements thereon, that had accrued and that were legally required to be
performed and completed prior to the Closing Date., SFPMC shall and does hereby
assume all, other accrued and unaccrued Reclamation and Environmental
Responsibilities, now existing or arising at any time during the SFPMC Lease
Term, with respect to the SFPMC Leased Property, all Improvements thereon
32
and all Alterations and Additions thereto, including without limitation
Improvements constructed or placed upon the SFPMC Leased Property by SFPMC, its
agents or contractors during the SFPMC Lease Term. Termination, surrender or
expiration of the SFPMC Lease shall not relieve or release SFPMC from any such
Reclamation and Environmental Responsibilities. Pursuant to Articles V, VI and
VII of this Agreement, HNRC may, under certain specific circumstances, reassume
Reclamation and Environmental Responsibilities with respect to certain of the
Overburden, Clay and Spent Ore situated or to be situated upon the SFPMC Leased
Property. Except as expressly, set forth in this Agreement to the contrary,
including without limitation in the Articles referenced in the preceding
sentence, upon expiration, surrender or termination of the SFPMC Lease, SFPMC.
shall reclaim all portions of the SFPMC Leased Property, including without
limitation all Improvements thereon, together with all Alterations and
Additions, in accordance with the terms and conditions of all Licenses and
Applicable Law. SFPMC shall have the right to enter upon the SFPMC Leased
Property subsequent to the SFPMC Lease Term for purposes of performing such
reclamation work, provided that all such work shall be performed within a
reasonable period of time. Notwithstanding the foregoing, at the request of
HNRC and subject to the Parties obtaining any necessary Licenses or modification
to then existing Licenses, SFPMC shall forego or delay the reclamation of any
Improvements designated by HNRC and, unless the Parties agree otherwise, HNRC
shall thereupon assume all reclamation obligations with respect to the
designated Improvements. The Parties shall cooperate in all reasonable ways to
obtain such Licenses or modifications to Licenses.
4.10 Licenses. HNRC understands that SFPMC may make efforts to obtain
--------
Licenses in connection with the exercise by SFPMC of its rights under the SFPMC
Lease. Upon request by Hospah or SFPMC, as the case may be, HNRC shall assist
and cooperate fully with Hospah or SFPMC, as the case may be, in any such
endeavors, including without limitation by the execution and filing of pertinent
documents, provided that HNRC shall not be obligated to incur or bear any
out-of-pocket costs in connection with such efforts.
4.11 Taxes. During the SFPMC Lease Term, SFPMC shall pay when due all
-----
taxes and assessments, including without limitation all real and personal
property taxes, levied upon, assessed against or relating to the SFPMC Leased
Property, the Access Road Easement, the Solution Pipeline Easement, or to any
Improvements or personal property situated thereon, or Alterations and Additions
thereto. With respect to such taxes levied or assessed with respect to 1993,
taxes shall be prorated as of the Closing Date, HNRC shall be responsible for
the taxes attributable to the period prior to and including the Closing Date and
SFPMC shall be responsible for the taxes attributable to the period subsequent
to the Closing Date. In the event that the SFPMC Lease is surrendered or
terminated, in whole or in part, prior to the end of any particular calendar
year, taxes levied and assessed with respect to that calendar year for the SFPMC
Leased Property at issue shall be prorated as of the effective date of the
surrender or termination, SFPMC shall be responsible for the taxes attributable
to the period prior to that date and HNRC shall be responsible for the taxes
attributable to the period from and after that date. SFPMC shall pay when due
all taxes and assessments imposed or assessed in connection with its operations
upon the SFPMC Leased Property, including without limitation any net proceeds,
production, occupation, sales, severance, privilege, ad valorem or other similar
or related taxes. Each of SFPMC and HNRC shall provide to the other copies of
all bills, demands, notices, statements or valuations received by it which
relate to any tax or assessment
33
described in this Section 4.11. Additionally, upon request by HNRC, SFPMC shall
provide to HNRC evidence of payment by it of all applicable taxes.
4.12 Financing.
---------
A. Liens. SFPMC shall not encumber the SFPMC Leased Property,
-----
except for Liens and encumbrances granted in connection with financing
transactions, (collectively, "Financing Liens"). SFPMC shall take all action
necessary too ensure that, upon termination, surrender or expiration of the
SFPMC Lease, in whole or in part, the SFPMC Leased Property shall be free and
clear of all Liens arising by and through SFPMC, its Affiliates or their
respective agents or contractors. Notwithstanding any provision of this
Agreement to the contrary, (1) all Liens upon the SFPMC Leased Property arising
by, through or under SFPMC shall be expressly subject and subordinated to all of
the right, title and interest of HNRC in or to the SFPMC Leased Property,
whether accrued or unaccrued, absolute or contingent, including without
limitation all right, title and interest of HNRC arising under this Agreement;
and (ii) all Liens upon the SFPMC Leased Property, the Access Road Easement, the
Solution Pipeline Easement and the Exchange Parcel arising by, through or under
HNRC shall be expressly subject and subordinated to all of the right, title and
interest of SFPMC in or to such property, whether accrued or unaccrued, absolute
or contingent, including without limitation, all right, title and interest of
SFPMC arising under this Agreement. HNRC shall have the right, at its sole
discretion and at any time and from time to time, to pay off and discharge, in
whole or in part, any Lien (other than Financing Liens) upon the SFPMC Leased
Property arising by or through SFPMC, its Affiliates or their respective agents
or contractors, in which case HNRC shall be subrogated to all right, title and
interest of the holder of such Lien. Additionally, HNRC shall have the right to
credit against the Option Purchase Price any amounts expended by HNRC in
connection with the discharge, in whole or in part, of such Liens.
B. Cooperation with Financing Endeavors. At the request and subject
------------------------------------
to the direction of Hospah and/or SFPMC, HNRC shall take all such reasonable
actions as may be necessary or helpful to assist Hospah and/or SFPMC in
obtaining financing with respect to the Mesquite Mine or in pledging any of
Hospah's and/or SFPMC's respective right, title or interest in or to the SFPMC
Leased Property, the Hospah Owned Property, the HNRC Retained Property and/or
Hospah's and SFPMC's respective other rights and interests in and under this
Agreement in connection with such financing, including without limitation by the
execution and delivery of estoppel certificates relating to the status of the
SFPMC Lease or of this Agreement, provided that: (i) HNRC shall not be
obligated to incur or bear any out-of-pocket cost or expense in connection with
such endeavors; and (ii) HNRC shall not be obligated to take any action that
limits or reduces its rights or that increases its obligations under this
Agreement. At the request and subject to the direction of HNRC, Hospah and
SFPMC shall take all such reasonable actions as may be necessary or helpful to
assist HNRC in obtaining financing with respect to the Landfill Project or in
pledging any of HNRC's right, title or interest in or to the SFPMC Leased
Property, the Hospah Owned Property, the HNRC Retained Property and/or HNRC's
other rights and interests in and under this Agreement in connection with such
financing, including without limitation by the execution and delivery of
estoppel certificates relating to, the status of the SFPMC Lease or of this
Agreement, provided that: (a) Neither Hospah nor SFPMC shall be obligated to
incur or bear any out-of-pocket cost or expense in connection with such
endeavors; and (b) Neither Hospah nor SFPMC shall be obligated to take
34
any action that limits or reduces its rights or that increases its obligations
under this Agreement. The estoppel certificates referred to in this Section
4.12.B shall, if requested, state, if then true and except as otherwise set
forth in the estoppel certificate: (1) that the SFPMC Lease is the only lease
between the parties for the SFPMC Leased Property and that, except for the SFPMC
Lease and this Agreement, there are no other agreements, written or oral,
between the Parties relating to the SFPMC Leased Property or the SFPMC Lease;
(2) that no consent or approval is required of the Party executing the estoppel
certificate in connection with the financing transaction; (3) the then remaining
term of the SFPMC Lease; (4) that the Party executing the estoppel certificate
has not in any way transferred, pledged or assigned any portion of its interest
under the SFPMC Lease or, if such Party has so transferred, pledged or assigned
such interest, the name and address of the transferee, pledgee or assignee, as
appropriate; (5) that the SFPMC Lease and this Agreement are in full force and
effect and enforceable against the Party executing the estoppel certificate in
accordance with their terms; (6) that the Party attempting, to obtain financing
is, to the best knowledge of the Party executing the estoppel certificate, not
in default with respect to any monetary obligation (including, without
limitation, taxes and assessments) or any non monetary obligation or any other
term or condition under the SFPMC Lease or under this Agreement; and (7) that
the Party executing the estoppel certificate has no accrued claim against the
Party attempting to obtain financing which could result, to the best knowledge
of the, Party executing the estoppel certificate, in any offset, defense or
counterclaim against any of the monetary obligations or charges payable under
the SFPMC Lease or under this Agreement.
4.13 Title Curative Measures.
-------------------------
A. Title Defect. If title to any part of the SFPMC Leased Property
-------------
is defective,, SFPMC shall have the right (during the SFPMC Lease Term), but not
the obligation, to undertake to cure any such defects or to defend or to
initiate litigation to perfect, defend, or cure title to the SFPMC Leased
Property. Any actions that SFPMC elects to take or pursue pursuant to this
Section 4.13 A shall be at its sole discretion and at its sole cost. In the
event that, during the SFPMC Lease Term, HNRC desires, on its own part, to
undertake to cure any title defects or to defend or to initiate litigation to
perfect, defend or cure title to the SFPMC Leased Property, HNRC shall provide_
to SFPMC written notice of the title defects at issue and the action that it
proposes to take with respect thereto. In the event that, within a reasonable
period of time following such notice, SFPMC has not initiated the proposed
action on its own or if SFPMC fails diligently to pursue such action thereafter,
HNRC shall be free, in its sole discretion and at its sole cost, to take such.
actions as it deems desirable or advisable with respect to such title matters.
B. Amendment, Relocation and Abandonment of Unpatented Claims.
----------------------------------------------------------------
During the SFPMC Lease Term, SFPMC shall have the right, but not the obligation,
to amend, relocate or abandon any of the Unpatented Claims encompassed within
the SFPMC Leased Property, to the extent that such amendment, relocation or
abandonment is reasonably necessary to facilitate or optimize the operations of
the Mesquite Mine. SFPMC shall provide to HNRC no less than 30 days prior
written notice of such a proposed amendment, relocation or abandonment. Such
notice shall set forth with specificity the action to be taken, the rationale
therefor and the specific Unpatented Claims involved. HNRC shall have the right
to consult with SFPMC relative to the advisability of the proposed action. HNRC
shall also have the
35
right, by providing written notice thereof to SFPMC within the 30 day period
described above, to elect to receive from SFPMC, at no charge, an assignment or
conveyance of any Unpatented Claims proposed for abandonment. Within ten days
following the provision of such written notice to SFPMC, SFPMC shall execute and
deliver to HNRC a deed, in form and substance reasonably satisfactory to HNRC,
conveying unto HNRC the Unpatented Claims at issue. Any new locations,
amendments or relocations effected or established by SFPMC pursuant to the
provisions of this Section 4.13 B shall be in the name of HNRC and shall be
deemed part and parcel of the SFPMC Leased Property, subject to all the terms
and conditions of this Agreement. Except as set forth above to the contrary,
HNRC shall cooperate with any amendment, relocation or abandonment proposed by
SFPMC and, upon request by and subject to the direction of SFPMC, HNRC shall
take all reasonable actions to assist therein, including without limitation by
the execution and filing of instruments, notices or other documents, provided
that HNRC shall not be obligated to incur any out-of-pocket costs or expenses in
connection with such actions.
C. Exchanaes. HNRC intends to pursue an exchange of lands with the
---------
BLM, pursuant to which HNRC would convey to the BLM certain Fee Property not
directly associated with the operations of the Mesquite Mine and the BLM would
convey to HNRC fee title to certain public lands, including without limitation
certain public lands situated within the Landfill Footprint. Certain of the
public lands at issue (in which HNRC may attempt to obtain fee title) are
currently covered by Unpatented Claims encompassed within the SFPMC Leased
Property. At the request and subject to the direction of HNRC, SFPMC covenants
to cooperate with any such exchange and to take all reasonably practicable
actions in furtherance thereof, including without. limitation by the execution
and filing of instruments, notices or other documents, provided that SFPMC shall
not be obligated to incur any out-of-pocket costs or expenses in connection with
such actions. Any fee title in real property obtained by HNRC pursuant to such
a land exchange shall, to the extent that the land at issue was previously
covered by Unpatented Claims encompassed within the SFPMC Leased Property, be
deemed part and parcel of the SFPMC Leased Property, subject to all the terms
and conditions of this Agreement.. Upon SFPMC's request, HNRC shall execute and
deliver to SFPMC an appropriate instrument in form and substance reasonably
satisfactory to SFPMC, confirming that such newly-acquired title to such parcels
is subject to this Agreement as a portion of the SFPMC Leased Property. HNRC
shall provide to SFPMC not less than 90 days prior written notice of its intent
to close such a land exchange, with the BLM. The notice shall set forth with
specificity the lands involved in the exchange. SFPMC shall have the right to
consult with HNRC relative to the advisability of the proposed exchange.
Notwithstanding any provision of this Agreement to the contrary, HNRC shall not
effect any land exchange with the BLM with respect to the SFPMC Leased Property
that would cause a Material Adverse Effect upon the operations of the mesquite
mine.
D. Additional and After-Acquired Title. If, during the SFPMC Lease
------------------------------------
Term, HNRC acquires any further right, title or interest in or to the SFPMC
Leased Property, HNRC shall provide SFPMC with written notice thereof and such
right, title and interest shall, without payment or additional consideration,
become part and parcel of the SFPMC Leased Property subject to all of the terms
and conditions of this Agreement. Upon SFPMC's request,_ HNRC shall execute and
deliver to SFPMC an appropriate instrument in form and substance
36
reasonably satisfactory to SFPMC, confirming that such newly-acquired title to
such parcels is subject to this Agreement as a portion of the SFPMC Leased
Property.
4.14 Restriction on Certain Drilling and Excavation.
--------------------------------------------------
A. General Prohibition. Except to the extent expressly allowed
--------------------
under Section 4.14 B of this Agreement, neither Hospah nor SFPMC shall conduct
any drilling or significant excavation operations, (i) within the Landfill
Footprint, or (ii) within areas adjacent to the Landfill Footprint where
subsidence could adversely affect the Landfill Footprint. This restriction
shall apply only with respect to operations upon the SFPMC Leased Property and
to operations upon the Reversion Property (including without limitation, the
Leased Exchange Property). SFPMC and/or Hospah shall provide to HNRC no less
than 30 days prior written notice of its intention to conduct any drilling or
significant excavation operations upon the MILS 13 patented millsite claim
(which claim is encompassed within the Hospah Owned Property).
B. Drilling of Monitoring Xxxxx. The provisions of this Section
-------------------------------
4.14 shall not be construed as prohibiting SFPMC from drilling monitoring xxxxx,
installing a Vados monitoring system or conducting other drilling or excavations
that are reasonably necessary in connection with the construction or operation
of a new xxxxx pad upon the SFPMC Leased Property, provided that, no less than
30 days prior to the commencement of the drilling or excavation at issue, SFPMC
provides to HNRC written notice of its intentions (which notice shall describe
and specify the size, depth, scope, and location of the anticipated drilling or
excavation as well as the reason or need therefor), and provided further that,
prior to surrender of the xxxxx pad at issue from the SFPMC Lease, SFPMC shall
completely, permanently, and thoroughly plug and fill the drill hole or
excavation at issue, from the surface to its total depth.
4.15 Overlook Trail. To the extent that it has the right and power to do
---------------
so, SFPMC shall provide the public with access over the Present Access Road, as
well as over any new access road constructed pursuant to Section .4.5 of this
Agreement, in order to facilitate visitation by the public of the existing
self-guided overlook trial, as further described in the Landfill EIS-EIR.
During the SFPMC Lease Term and at SFPMC's sole cost and expense, SFPMC shall
maintain and repair such overlook trail in accordance with the terms and
conditions of applicable Licenses and agreements with the BLM and so that its
condition at all times is at least comparable to its condition as of the Closing
Date. SFPMC shall take all actions relative to the overlook trail required
pursuant to applicable Licenses, as the same may change or be modified from time
to time. The obligations set forth in this Section 4.15 may, be modified or
terminated pursuant to a written agreement between the Parties, provided that
the BLM agrees to such modification or termination.
4.16 Access by HNRC. HNRC, its agents and designees shall have the right,
--------------
at any time and from time to time upon the provision of reasonable prior notice
to SFPMC, to enter upon the SFPMC Leased Property for any purposes relating to
the Landfill Project or in furtherance of any right granted or obligation
assigned to it under this Agreement, providing that no such entry shall
interfere with or cause a Material Adverse Effect upon the, operations of the
Mesquite Mine. Additionally, subject to compliance with Applicable Law and the
requirements of SFPMC's health and safety program, HNRC, its agents and
designees shall
37
have the right, no more than once during any three month period and upon not
less than ten days prior written notice to SFPMC, at a mutually convenient time
and during normal business hours, and at the sole risk of HNRC, to enter upon
the SFPMC Leased Property for purposes of inspecting the operations and
facilities of the Mesquite Mine. SFPMC or its designated representative shall
have the right to accompany HNRC upon any such inspection. Any entry upon the
SFPMC Leased Property by HNRC, its agents or designees pursuant to this Section
4.16 shall be subject to the Indemnities set forth in Section 9.12 A of this
Agreement.
4.17 Insurance. Throughout the SFPMC Lease Term, SFPMC shall maintain,
---------
with financially responsible insurance companies fully licensed to transact
business in the State of California, policies of insurance covering its
operations upon the SFPMC Leased Property. Such policies of insurance shall,.
at a minimum, be of the types and in coverage amounts customarily maintained by
operators of mines comparable in size and scope to the Mesquite Mine. SFPMC
shall also ensure that all of its agents and contractors maintain insurance
coverages in compliance with the standards set forth above. Prior to entering
upon the SFPMC Leased Property, SFPMC shall deliver to HNRC certificates
evidencing the required insurance coverages. Each certificate shall include an
endorsement stating that HNRC shall be given not less than thirty (30) days
prior written notice of any termination, cancellation or reduction of coverage.
HNRC shall be named as an additional insured under all policies of insurance.
Likewise, whenever HNRC is conducting Landfill related activities on Hospah
Owned Property (other than casual use such as inspection, collection of
monitoring data, etc.) HNRC will provide similar insurance coverage and will
name Hospah and SFPMC as additional insureds under all policies of insurance.
4.18 Termination and Surrender.
---------------------------
A. Surrender by SFPMC. SFPMC shall have the right, at any time and
-------------------
from time to time, to surrender and terminate the SFPMC Lease, as to all or any
part of the SFPMC Leased Property, the Access Road Easement and/or the Solution
Pipeline Easement, by providing to HNRC written notice of such surrender. The
termination shall take effect upon the date specified in SFPMC's notice. Except
as expressly set forth in this Agreement to the contrary, surrender of the SFPMC
Lease by SFPMC, in whole or in part, shall not relieve or release SFPMC from any
of its responsibilities or obligations arising under this Agreement with respect
to the surrendered Property, including without limitation Reclamation and
Environmental Responsibilities. Furthermore, in the event that SFPMC surrenders
any Unpatented Claims from the SFPMC Leased Property after September 1, 1993 or
after July 1 of any calendar year subsequent to 1993, SFPMC shall nevertheless
be responsible to perform all work, file all documents and * make all payments
required by Licenses or Applicable Law to maintain the Unpatented Claims in good
standing through the remainder of that calendar year. In the event that SFPMC
surrenders some but not all of the SFPMC Leased Property, the SFPMC, Lease shall
remain in full force and effect with respect to that portion of the SFPMC Leased
Property that is not surrendered. Surrender of xxxxx pads and associated real
property from the SFPMC Lease shall be governed by the provisions of Article VII
of this Agreement. Notwithstanding any provision of this Agreement to the
contrary, in the event that SFPMC determines that commercial gold mining and
mineral processing operations are permanently concluded at the Mesquite Mine,
SFPMC shall surrender the SFPMC Lease, the Xxxxxx Xxxx
00
Easement and the Solution Pipeline Easement in their entirety, subject to the
on-going obligations and responsibilities set forth in this Agreement.
B. Termination With Respect to Areas Within the Landfill Footprint.
----------------------------------------------------------------
The Leased Exchange Property is leased to SFPMC as part of the SFPMC Leased
Property, and is situated within the Landfill Footprint. Notwithstanding any
provision of this Agreement to the contrary, HNRC shall have the right, at any
time and from time to time, upon not less than 90 days prior written notice to
SFPMC, to, terminate the SFPMC Lease with respect to any such lands situated
within the Landfill Footprint, including the Leased Exchange Property,
reasonably required for use in connection with the Landfill Project., Upon such
termination, HNRC shall assume all accrued and unaccrued Reclamation and
Environmental Responsibilities with respect to the property at issue, as well as
with respect to the Overburden and Clay Stockpiles thereon. Additionally, upon
receipt of a sufficient invoice, HNRC shall reimburse to SFPMC any Incremental
Costs that SFPMC incurs as a result of the termination.
4.19 Prohibition on Dumping on the Portion of the 220 Dump within the
---------------------------------------------------------------------
Landfill Footprint. Neither SFPMC nor Hospah shall dump or stockpile any Ore,
-----------------
Spent Ore, Clay, Overburden or other materials on those portions of the 11220
Dump" situated within the Landfill Footprint (area to be lined) and the
backslope necessary to allow construction of the lined landfill facility, except
for the following:
(i) inert materials (average 350 tons per year) to be disposed
of by Hospah or SFPMC at the inert material landfill within the "220 Dump", and
(ii) the Overburden needed to cover such materials in accordance
with applicable rules, regulations and permits.
4.20 Provisions Contained Within Other Articles. In addition to the
----------------------------------------------
provisions of this Article IV, there. are numerous other provisions of this
Agreement that relate to the SFPMC Lease or the SFPMC Leased Property. All such
provisions are incorporated by reference into this Article IV and the SFPMC
Lease. All rights and obligations of the Parties with respect to SFPMC Leased
Property set forth in other Articles of this Agreement shall be deemed rights
and obligations arising under the SFPMC Lease.
4.21 Assignment. SFPMC may assign all or any part of its interest in the
----------
SFPMC Lease to any person or entity provided that SFPMC provide HNRC with at
least thirty (30) days advance notice and any such assignment be made subject to
all the terms and conditions of this Agreement, and further provided that SFPMC
may, without the consent of HNRC, grant Financing Liens (including Deeds of
Trust) pursuant to Section 4.12.
ARTICLE V
OVERBURDEN
5.1 Assumption of Reclamation and Environmental Responsibilities. HNRC
---------------------------------------------------------------
shall retain all Reclamation and Environmental Responsibilities (if any), with
respect to Overburden and Stockpiles of Overburden situated, as of the Closing
Date, upon the SFPMC Leased Property and the Hospah Owned Property, that had
accrued and that were legally required to be
39
performed and completed prior to the Closing Date. SFPMC shall and does hereby
assume all other accrued and unaccrued Reclamation and Environmental
Responsibilities, now existing or arising in the future, with respect to all
Overburden and Stockpiles of Overburden situated, as of the Closing Date, upon
the Hospah Owned Property or the SFPMC Leased Property. Notwithstanding the
ownership thereof, Hospah shall bear and assume all Reclamation and
Environmental Responsibilities with respect to Overburden generated by its
operations subsequent to the Closing Date or placed or deposited upon the Hospah
Owned Property or the SFPMC Leased Property by Hospah, its agents or contractors
subsequent to the Closing Date. Notwithstanding the ownership thereof, SFPMC
shall bear and assume all Reclamation and Environmental Responsibilities with
respect to Overburden generated by its operations subsequent to the Closing Date
or placed or deposited upon the Hospah Owned Property or the SFPMC Leased
Property by SFPMC, its agents or contractors subsequent to the Closing Date.
Reclamation and Environmental Responsibilities with respect to Overburden or
Stockpiles of Overburden situated or to be situated upon the Hospah Owned
Property or the SFPMC Leased Property shall transfer or be deemed transferred to
HNRC under the specific circumstances and pursuant to the express provisions,
terms and conditions set forth in this Agreement.
5.2 Title to Overburden. As between the Parties and subject to any
---------------------
approvals of the BLM or other government agencies required under Applicable Law,
the ownership of Overburden situated or to be situated. upon the Hospah Owned
Property or the SFPMC Leased Property shall be as set forth in this Section 5.2.
Ownership of Overburden and Stockpiles of Overburden situated upon the Hospah
Owned Property as of the Closing Date shall be conveyed to SFPMC at the Closing
as part of the Hospah Owned Property. Ownership of Overburden and Stockpiles of
Overburden situated upon the SFPMC Leased Property as of the Closing Date shall
be retained by HNRC, subject to SFPMC's leasehold interest under the SFPMC
Lease, provided that, pursuant to the provisions, of Section 5.1 of this
Agreement, SFPMC shall assume all accrued and unaccrued Reclamation and
Environmental Responsibilities with respect to such Overburden (except for
accrued Reclamation and Environmental Responsibilities legally required to be
performed and completed prior to the Closing Date). Ownership of Overburden
placed or deposited upon the SFPMC Leased Property subsequent to the Closing
Date shall, as between the Parties and subject to Applicable Law and HNRC
obtaining all required Licenses, be deemed transferred to HNRC on the date and
at the time of such placement or deposit upon the SFPMC Leased Property,
provided that, pursuant to the provisions of Section 5.1 of this Agreement,
SFPMC shall bear and assume all Reclamation and Environmental Responsibilities
with respect to such Overburden. The ownership of Overburden, as set forth in
this Section 5.2, shall change only pursuant to the express provisions, terms
and conditions of this Agreement or pursuant to a written agreement executed by
each of the Parties. Pursuant to the provisions of Sections 5.1 and 5.2 of this
Agreement, SFPMC shall assume Reclamation and Environmental Responsibilities
with respect to certain Overburden that is or will be owned by HNRC.
5.3 Use of Overburden by SFPMC. Subject to Applicable Law and SFPMC
------------------------------
obtaining any necessary Licenses, and to the extent, that HNRC has the right and
power to do so, HNRC grants unto SFPMC the right to remove Overburden from
Stockpiles situated upon the SFPMC Leased Property during the SFPMC Lease Term
for use in connection with the Mesquite Mine. Additionally, HNRC shall not
object to any removal by Hospah or SFPMC of Overburden from the Hospah Owned
Property for use in connection with the Mesquite Mine.
40
Each of Hospah and SFPMC shall retain and/or assume all Reclamation and
Environmental Responsibilities relative to Overburden that it removes from
Stockpiles or otherwise uses in connection with the Mesquite Mine. As between
the Parties and to the extent permitted by Licenses and Applicable Law,
ownership of Overburden removed by SFPMC from Stockpiles situated upon the SFPMC
Leased Property for use in connection with the Mesquite Mine shall be deemed
transferred to SFPMC upon such removal of the Overburden from Stockpile.
SFPMC's right to remove Overburden from the SFPMC Leased Property during the
SFPMC Lease Term and Hospah's and SFPMC's right to remove overburden from the
Hospah Owned Property pursuant to this Article V for use in connection with the
Mesquite Mine, shall be superior to and take priority over all rights of HNRC to
remove Overburden from such lands for use in connection with the Landfill
Project. HNRC shall not remove Overburden from such lands for use in connection
with the Landfill Project unless, immediately following such removal, sufficient
Overburden remains available to Hospah and SFPMC to satisfy their reasonably
foreseeable requirements for Overburden in connection with the Mesquite Mine.
5.4 Prohibition on Sale. Neither SFPMC nor Hospah shall sell, lease or
---------------------
otherwise transfer unto any third party any right, title or interest whatsoever
in or to Overburden that, prior or subsequent to the Closing Date, is extracted
from or stockpiled, upon either the Hospah Owned Property or the SFPMC Leased
Property, or, subject to the BLM's rights to sell or otherwise dispose of such
materials, if any, allow the removal or use of Overburden by third parties.
5.5 Stockpiling of Overburden Subsequent to Closing Date.
--------------------------------------------------------
A. Stockpiling at Sites Upon the SFPMC Leased Property. Within the
----------------------------------------------------
limitations of its then current haulage fleet for the Mesquite Mine, SFPMC shall
exercise its best efforts to stockpile all Overburden extracted or generated in
connection with the operations of the Mesquite Mine at sites upon the SFPMC
Leased Property specified by HNRC, in its sole and absolute discretion, provided
that such sites do not materially interfere with the operations of the Mesquite
Mine. Whenever necessary the Parties shall discuss and determine specific sites
upon the SFPMC Leased Property for the future stockpiling of Overburden. The
Parties shall endeavor in good faith to agree upon mutually satisfactory sites
for such Stockpiles. HNRC shall reimburse to SFPMC any Incremental Costs
incurred by SFPMC as a result of the location of HNRC's designated Stockpile
sites. The Parties shall agree in advance and in writing to the estimated
amount of such Incremental Costs per ton of Overburden to be stockpiled and such
estimated amount per ton shall conclusively be deemed the amount payable by HNRC
to SFPMC hereunder (for each ton of Overburden actually stockpiled by SFPMC),
regardless of the Incremental Costs per ton actually incurred by SFPMC. Such
estimated Incremental Costs per ton of Overburden shall serve as liquidated
damages and is reasonable and appropriate in view of the fact that it would be
impossible, as a practical matter, to determine_ with certainty the actual
Incremental Costs incurred by SFPMC.
B. Records of Origin of Overburden. In accordance with past
-----------------------------------
practices at the Mesquite Mine, Hospah and/or SFPMC shall keep and maintain
reasonably accurate records of the site of origin (prior to extraction from the
ground) of all Overburden that, subsequent to the Closing Date, is extracted
from or stockpiled upon the Hospah Owned Property or the SFPMC Leased Property.
Such records shall be of sufficient detail and accuracy so that the
41
Parties will be able to determine, with a reasonable degree of certainty, the
percentage of Overburden in any particular Stockpile that originated from
Unpatented Claims and the percentage of Overburden in that Stockpile that
originated from Fee Property. No more than once each calendar year, HNRC shall,
at its sole cost, have the right to review and copy all such records.
C. Rights of HNRC to Move Stockpiles. In the event that SFPMC is
------------------------------------
unable, for whatever reason, to stockpile Overburden at sites upon the SFPMC
Leased Property designated by HNRC, HNRC shall have the right, at its sole cost
and in its sole and absolute discretion, to enter upon the SFPMC Leased Property
and/or the Hospah Owned Property and to haul Overburden from any initial or
undesignated dump site to stockpile sites designated by HNRC. HNRC shall
conduct such haulage operations so as not to materially interfere with or cause
a Material Adverse Effect upon the operations of the Mesquite Mine.
5.6 Removal of Overburden by HNRC for Use in Connection with the Landfill
----------------------------------------------------------------------
Project.
-------
A. HNRC's Right of Removal. Subject to HNRC obtaining all necessary
-----------------------
Licenses and to the extent permitted by Applicable Law, and further subject to
Hospah's and SFPMC's superior and priority rights to remove Overburden for use
in connection with the Mesquite Mine pursuant to Section 5.3 of this Agreement,
HNRC shall have the right, without charge or payment of any kind, to remove
Overburden from Stockpiles situated upon the Hospah Owned Property or the SFPMC
Leased Property for use in connection with the Landfill Project. The rights of
HNRC set forth in the preceding sentence shall apply with respect to all
Overburden situated in stockpiles upon the Hospah Owned Property or the SFPMC
Leased Property, regardless of whether the Overburden was extracted, generated
or stockpiled prior or subsequent to the Closing Date. In the event that,
pursuant to this Section 5.6, HNRC removes Overburden from Stockpiles situated
upon the Hospah Owned Property, ownership of the Overburden shall, as between
the Parties, and subject to Applicable Law and HNRC obtaining any required
Licenses, be deemed transferred to HNRC upon removal thereof by HNRC from the
Hospah Owned Property. Notwithstanding any provision of this Agreement to the
contrary, ownership of Overburden originally extracted from Unpatented Claims
shall not be deemed transferred to HNRC unless and until HNRC obtains necessary
approvals for such transfer from the BLM, if any such approvals are required
under Applicable Law. HNRC's right to remove Overburden from Hospah Owned
Property shall terminate on a date 86 years after the Closing Date, except with
respect to Overburden purchased by HNRC pursuant to the Purchase Option.
B. Assumption of Obligations by HNRC. HNRC shall assume all accrued
---------------------------------
and unaccrued Reclamation and Environmental Responsibilities with respect to
Overburden that it removes from Stockpiles situated upon either the SFPMC Leased
Property or the Hospah Owned Property for use as cover in connection with the
Landfill Project. Additionally, HNRC shall reimburse to Hospah and/or SFPMC any
Incremental Costs that those Parties incur as a result of HNRC's removal of
Overburden.
C. Covenant of Non-Interference. In the event that HNRC removes
------------------------------
Overburden from Stockpiles situated upon either the Hospah Owned Property or the
SFPMC Leased Property, for use in connection with the Landfill Project, HNRC
shall conduct such
42
removal operations so as not to materially interfere with or cause a Material
Adverse Effect upon the operations of the Mesquite Mine.
ARTICLE VI
CLAY
----
6.1 Joint Use of Clay Reserves. There are certain Stockpiles of Clay
------------------------------
present upon the SFPMC Leased Property and the Hospah Owned Property, as well as
unextracted deposits of Clay in the ground in or underlying the Hospah Owned
Property (collectively, "Clay Reserves"). The Parties anticipate that HNRC
shall require a certain amount of this Clay in connection with the Landfill
Project and that Hospah and SFPMC may require a certain amount of this Clay in
connection with its or their gold processing and reclamation operations at the
Mesquite Mine. Pursuant to the provisions of this Article VI, the Parties
covenant to cooperate reasonably with each other so as to facilitate the joint
use of such Clay Reserves.
6.2 Hospah's First Call on Clay. As between the Parties and subject to
------------------------------
Applicable Law and Hospah and/or SFPMC obtaining any required Licenses, Hospah
(as to the Hospah Assets) and SFPMC (as to the SFPMC Assets) shall have a
superior and priority right to remove and use Clay Reserves for its own
purposes. This right shall be referred to in this Agreement as "Hospah's First
Call on Clay. Hospah's First Call on Clay shall be limited to the quantity of
Clay that Hospah and/or SFPMC reasonably anticipate they will require in
connection with their gold processing operations at the Mesquite Mine. Provided
that there are sufficient overall Clay Reserves to satisfy Hospah's First Call
on Clay, neither Hospah nor SFPMC shall exercise Hospah's First Gallon Clay so
as to prevent HNRC from removing any specific Clay Reserves for use in
connection with the Landfill Project, unless Hospah or SFPMC in good faith
intends, within the following 12 month period, to remove those specific Clay
Reserves for its own use. As between the Parties and subject to Applicable Law
and Hospah and/or SFPMC obtaining any required Licenses, the ownership of Clay
Reserves removed by SFPMC from Stockpiles situated or to be situated upon the
SFPMC Leased Property, for use in connection with gold processing operations at
the Mesquite Mine, shall be deemed transferred unto SFPMC upon the removal by
SFPMC of such Clay from Stockpile. Nothing in this provision shall be construed
as granting unto Hospah any right to extract or remove Clay Reserves from the
SFPMC Leased Property.
6.3 Prohibition on Sale of Clay to Third Parties. Neither Hospah nor
-------------------------------------------------
SFPMC shall sell, lease or otherwise transfer unto any third party any right,
title or interest whatsoever in or to Clay Reserves, or, subject to the BLM's
right, if any, to sell or otherwise dispose of such material, allow the removal
or use of Clay by third parties.
6.4 Assumption of Reclamation and Environmental Responsibilities. HNRC
---------------------------------------------------------------
shall retain all Reclamation and Environmental Responsibilities (if any), with
respect to Clay and Stockpiles of Clay situated, as of the Closing Date, upon
the Hospah Owned Property or the SFPMC Leased Property, that had accrued and
that were legally required to be performed and completed prior to the Closing
Date. Hospah and SFPMC shall and do hereby assume all other accrued and
unaccrued Reclamation and Environmental Responsibilities, now existing or
arising in the future, with respect to all Clay and Stockpiles of Clay situated,
as of the Closing
43
Date, upon the Hospah Owned Property or the SFPMC Leased Property.
Notwithstanding the ownership thereof, Hospah shall bear and assume all
Reclamation and Environmental Responsibilities with respect to Clay, generated
or extracted by its operations subsequent to the Closing Date or placed or
deposited upon the Hospah Owned Property or the SFPMC Leased Property by Hospah,
its agents or contractors subsequent to the Closing Date. Notwithstanding the
ownership thereof, SFPMC shall bear and assume all Reclamation and Environmental
Responsibilities with respect to Clay generated or extracted by its operations
subsequent to the Closing Date or placed or deposited upon the Hospah Owned
Property or the SFPMC Leased Property by SFPMC, its agents or contractors
subsequent to the Closing Date. Reclamation and Environmental Responsibilities
with respect to Clay or Stockpiles of Clay situated or to be situated upon the
Hospah Owned Property or the SFPMC Leased Property shall transfer or be deemed
transferred to HNRC under the specific circumstances and pursuant to the express
provisions, terms and conditions set forth in this Agreement.
6.5 Title to Clay Reserves. As between the Parties and subject to any
-------------------------
approvals of the BLM or other government agencies required under Applicable Law,
the ownership of Clay Reserves shall be as set forth in this Section 6.5.
Ownership of Clay Reserves situated upon the Hospah Owned Property as of the
Closing Date shall be conveyed to SFPMC and/or Hospah at the Closing as part of
the Hospah Owned Property, provided that, pursuant to the provisions of Section
6.4 of this Agreement, SFPMC shall assume all accrued and unaccrued Reclamation.
and Environmental Responsibilities with respect to such Clay Reserves (exclusive
of accrued Reclamation and Environmental Responsibilities legally required to be
performed and completed prior to the Closing Date). Ownership of Clay Reserves
situated upon the SFPMC Leased Property as of the Closing Date shall be retained
by HNRC, subject to SFPMC's leasehold interest under the SFPMC Lease, provided
that, pursuant to the provisions of Section 6.4 of this Agreement, SFPMC shall
assume all accrued and unaccrued Reclamation and Environmental Responsibilities
with respect to such Clay Reserves (exclusive of accrued Reclamation and
Environmental Responsibilities legally required to be performed and completed
prior to the Closing Date)., Ownership of Clay placed or deposited upon the
SFPMC Leased Property subsequent to the Closing Date shall, as between the
Parties and subject to Applicable Law and HNRC obtaining any required Licenses,
be deemed transferred to HNRC on the date and at the time of such placement or
deposit upon the SFPMC Leased Property, provided that, pursuant to thee
provisions of Section 6.4 of this Agreement, SFPMC shall bear and assume all
Reclamation and Environmental Responsibilities with respect to such Clay. The
ownership of Clay Reserves, as set forth in this Section 6.5, shall change only
pursuant to the express provisions, terms and conditions of this Agreement or
pursuant to a written agreement executed by each of the Parties. Pursuant to
the provisions of Sections 6.4 and 6.5 of this Agreement, Hospah and/or SFPMC,
to the extent of their respective interests, shall assume Reclamation and
Environmental Responsibilities with respect to certain Clay Reserves that are or
will be owned by HNRC.
6.6 Stockpiling of Clay by Hospah and SFPMC. Clay extracted by Hospah or
----------------------------------------
SFPMC from the Hospah Owned Property or by SFPMC from the SFPMC Leased Property
and not removed and used immediately in connection with the gold processing
facilities and reclamation requirements at the Mesquite Mine, shall be
identified, separated by quality and stockpiled by Hospah or SFPMC at sites upon
the SFPMC Leased Property or the Hospah Owned Property designated by HNRC. HNRC
shall provide to Hospah or SFPMC a written
44
notice setting forth procedures and practices to be followed in connection with
the identification and segregation of Clay, as well as the specific sites or the
SFPMC Leased Property upon which Clay is to be stockpiled. In the event that
Hospah objects to any aspect of such notice, it shall provide to HNRC a written
notice setting forth its preferred practices, procedures and locations for
stockpiling. Any disagreements between the Parties with respect to such matters
shall be resolved in favor of HNRC, provided that HNRC shall reimburse to Hospah
and SFPMC all Incremental Costs incurred by those Parties as a result of the
implementation of HNRC's favored practices, procedures and locations for
Stockpiles, and provided further that Neither Hospah nor SFPMC shall be required
to stockpile Clay at sites designated by HNRC if the hauling of Clay such
distances exceeds the capabilities of Hospah's and SFPMC's then current haulage
fleet for the Mesquite Mine (in which case HNRC shall have the right, at its
sole election and cost, to haul the Clay from the Stockpile Sites employed by
Hospah or SFPMC to. the Stockpile sites designated by HNRC) . Notwithstanding
the foregoing, HNRC shall not be required to reimburse to Hospah or SFPMC its
Incremental Costs with respect to the first Clay so stockpiled, up to a quantity
equivalent to the amount of Clay that Hospah and/or SFPMC reasonably anticipate
they will require in connection with gold processing facilities and reclamation
requirements at the, Mesquite Mine. Unless the 'specific Clay Reserves at issue
have been claimed and reserved by Hospah or SFPMC pursuant to Hospah's First
Call on Clay, all identification, segregation and stockpiling of Clay by Hospah
or SFPMC shall be subject to the direction/participation by HNRC's staff.
6.7 Removal of Clay by HNRC.
---------------------------
A. Removal and Mining of Clay by HNRC.
----------------------------------------
(1) Removal from Hospah Owned Property. Subject to Applicable
------------------------------------
Law, Hospah's First Call on Clay and HNRC obtaining any necessary Licenses or
BLM approvals HNRC shall have the right, without charge or payment of any kind,
at any time and from time to time within 86 years following the Closing Date, to
extract and to remove, for use in connection with the Landfill Project: (i)
Clay Reserves situated in deposits in the ground underlying Fee Property
encompassed within the Hospah Owned Property, and (ii) Clay Reserves situated or
to be situated in Stockpiles upon either Unpatented Claims or Fee Property
encompassed within the Hospah Owned Property, provided that the Clay at issue
was originally mined or extracted from Fee Property. For a period of 86 years
following the Closing Date, and subject to Applicable Law, Hospah's First Call
on Clay and HNRC obtaining any necessary Licenses or BLM approvals, neither
SFPMC nor Hospah shall object to HNRC's extraction and removal, at any time and
from time to time, for use in connection with the Landfill Project, of: (i)
Clay Reserves situated in deposits in the ground underlying Unpatented Claims
encompassed within the Hospah Owned Property, or (ii) Clay Reserves originally
mined or extracted from Unpatented Claims and situated or to be situated in
Stockpiles upon either. Unpatented Claims or Fee Property encompassed within
the Hospah Owned Property.
(2) Removal from SFPMC Leased Property. Subject to Applicable
------------------------------------
Law, Hospah's First Call on Clay and HNRC obtaining any necessary Licenses or
BLM approvals, HNRC shall have the right, without charge or payment of any kind
and at any time and from time to time, to extract and to remove, for use in
connection with the Landfill Project: (i) Clay situated in deposits in the
ground underlying Fee Property encompassed within the
45
SFPMC Leased Property, and (ii) Clay Reserves situated or to be situated in
Stockpiles upon either Unpatented Claims or Fee Property encompassed within the
SFPMC Leased Property, provided that the Clay at issue was originally mined or
extracted from Fee Property. Subject to Applicable Law, Hospah's First Call on
Clay and HNRC obtaining any necessary Licenses or BLM approvals, neither SFPMC,
nor Hospah shall object to HNRC's extraction and removal, at any time and from
time to time, for use in connection with the Landfill Project, of: (i) Clay
Reserves situated in deposits in the ground underlying Unpatented Claims
encompassed within the SFPMC Leased Property, or (ii) Clay Reserves originally
mined or extracted from Unpatented Claims and situated or to be situated in
Stockpiles either upon Unpatented Claims or Fee Property encompassed within the
SFPMC Leased Property.
(3) Transfer of Ownership. As between the Parties and subject to
---------------------
Applicable Law and necessary BLM approvals, ownership of Clay Reserves that HNRC
removes from either the Hospah Owned Property or the SFPMC Leased Property, for
use in connection with the Landfill Project, shall be deemed transferred unto
HNRC upon such removal. HNRC shall assume all accrued and unaccrued Reclamation
and Environmental Responsibilities with respect to Clay Reserves that it removes
from the Hospah Owned Property or the SFPMC Leased Property, pursuant to this
Section 6.7, for use in connection with the Landfill Project.
(4) Limitation on Removal Rights. Notwithstanding any provision
----------------------------
of this Agreement to the contrary, HNRC shall not remove Clay Reserves from the
Hospah Owned Property or the SFPMC Leased Property unless, immediately following
such removal, there will remain sufficient Clay Reserves in or upon the Hospah
Owned Property and/or the SFPMC Leased Property to satisfy Hospah's and SFPMC's
minimum requirements for Clay needed in the construction of then currently
planned xxxxx pads or other uses consistent with operating the Mesquite Mine,
including, but not limited to reclamation responsibilities.
B. Disclaimer and Licenses. The provisions of Section 9.3 and 9.10
------------------------
of this Agreement, pertaining to disclaimers and Licenses, are applicable to the
provisions of this Article VI and the use and ownership of Clay hereunder.
C. Covenants of Non-Interference. In the event that HNRC enters
-------------------------------
upon the SFPMC Leased Property or the Hospah Owned Property for purposes of
mining or removing Clay Reserves pursuant to the provisions of this Article VI,
HNRC covenants that it shall not materially interfere with or cause a Material
Adverse Effect upon the operations of the Mesquite Mine.
D. Solicitation of Bid from Hospah and SFPMC. In the event that HNRC
-----------------------------------------
intends, pursuant to the provisions of this Article VI, to mine any previously
unextracted Clay Reserves, HNRC shall seek bids from Hospah and SFPMC for the
contract mining of such Clay. HNRC shall be under no obligation to accept
Hospah's and SFPMC's bid. HNRC shall have the right, at its sole and absolute
discretion, to elect to conduct such mining operations itself or through a third
party contractor of its selection, regardless of whether the bid of such
contractor is higher, lower or the same as Hospah's or SFPMC's bid.
46
E. Removal of Clay for Testing Purposes. Notwithstanding any
-----------------------------------------
provision of this Agreement to the contrary, HNRC shall have the right, at any
time and from time to time, to enter upon the SFPMC Leased Property or the
Hospah Owned Property and to remove Clay from any Clay Reserves for testing
purposes provided that HNRC shall not materially interfere with the operations
of the Mesquite Mine.
F. Prohibition on Excavations in Active Cold Pits. Notwithstanding
-----------------------------------------------
any provision of this Agreement to the contrary, HNRC shall not mine Clay from a
pit upon either the Hospah Owned Property or the SFPMC Leased Property, in which
Hospah or SFPMC is actively conducting gold mining operations, without the prior
written consent of the Party conducting such operations, which consent shall not
unreasonably be withheld.
6.8 Records of Clay Origin. In accordance with past practices at the
------------------------
Mesquite Mine, Hospah and/or SFPMC shall keep and maintain reasonably accurate
records of the site of origin (prior to the extraction from the ground) of all
Clay that, subsequent to the Closing Date, is mined from or stockpiled upon, the
Hospah Owned Property or the SFPMC Leased Property. Such records shall be kept
in accordance with the standards and procedures, for the purposes and subject to
the rights of HNRC set forth and described in Section 5.5 B of this Agreement
(relative to record keeping with respect to the site of origin of Overburden).
ARTICLE VII
SPENT ORE AND XXXXX PADS
------------------------
7.1 Ownership and Reclamation Responsibilities. Pursuant to the Asset
---------------------------------------------
Exchange Agreement and Section 3.1 of this Agreement, all Ore, Spent Ore and
associated materials situated upon the xxxxx pads on the SFPMC Leased Property
as of the Closing Date shall be conveyed to SFPMC at the Closing. However, HNRC
shall retain ownership of the pads and real property on which such Ore, Spent
Ore and associated materials are located, subject to SFPMC's leasehold interest
under the SFPMC Lease. As between the Parties, ownership of all Ore, Spent Ore
and associated materials placed upon the xxxxx pads on the SFPMC Leased Property
subsequent to the Closing Date shall reside exclusively in SFPMC and/or Hospah.
Ownership of Ore, Spent Ore and associated materials located or to be located
upon the xxxxx pads on the SFPMC Leased Property shall be deemed transferred to
HNRC only in the specific circumstances and pursuant to the express provisions
set forth in this Article VII. HNRC shall retain all Reclamation and
Environmental Responsibilities (if any), with respect to Ore, Spent Ore and
associated materials situated, as of the Closing Date, upon the xxxxx pads on
the SFPMC Leased Property, that had accrued and that were legally required to be
performed and completed prior to the Closing Date. SFPMC shall and does hereby
assume all other accrued and unaccrued Reclamation and Environmental
Responsibilities, now existing or arising in the future, with respect to Ore,
Spent Ore and associated materials situated, as of the Closing Date, upon the
xxxxx pads on the SFPMC Leased Property. SFPMC shall also bear and assume all
Reclamation and Environmental Responsibilities with respect to Ore, Spent Ore
and associated materials placed upon the SFPMC Leased Property by SFPMC, its
agents or contractors subsequent to the Closing Date. Notwithstanding the
ownership of such assets, Reclamation and Environmental Responsibilities with
respect to Ore, Spent Ore and associated materials shall be deemed transferred
to HNRC only in the specific circumstances and pursuant to
47
the express provisions of this Article VII. SFPMC shall, upon a written request
from HNRC to the Mesquite Mine Manager and the Vice President of Operations for
SFPMC, confirm whether a particular, portion of Ore on a xxxxx pad or elsewhere,
is then considered by SFPMC and Hospah to be Spent Ore. If SFPMC does not reply
to the request within 45 days, the Ore shall be deemed to be Spent Ore.
7.2 Operation of Xxxxx Pads.
--------------------------
A. Location of Pads. In the event that any new xxxxx pads are
------------------
required in connection with the operation of the Mesquite Mine, SFPMC shall
construct such new xxxxx pads, if reasonably practicable, upon the SFPMC Leased
Property. If necessary to the efficient treatment of Ore, Hospah and SFPMC
shall have the right to construct and operate new xxxxx pads upon the Hospah
Owned Property. Similarly, in the event that SFPMC or Hospah desires to
stockpile Ore on property not covered by xxxxx pads, SFPMC shall stockpile such
Ore, to the extent reasonably practicable, upon the SFPMC Leased Property.
However, if necessary to the efficient treatment of Ores, Hospah and/or SFPMC
may establish such Stockpiles of Ore upon the Hospah Owned Property.
B. Records of Ore Origin. In accordance with past practices at the
----------------------
Mesquite, Mine, Hospah and/or SFPMC shall keep and maintain reasonably accurate
records of the site of origin (prior to extraction from the ground) of all Ore
that, subsequent to the Closing Date, is mined from or stockpiled upon the
Hospah Owned Property or the SFPMC Leased Property. Such records shall be kept
in accordance with the standards and procedures, for the purposes and subject to
the rights of HNRC set forth and described in Section 5.5 B of this Agreement
(relative to record keeping with respect to the site of origin of Overburden).
7.3 Rights and Obligations of the Parties Following Cessation of Leaching.
---------------------------------------------------------------------
A. Applicable Law. Within a reasonable period of time following
---------------
cessation of leaching operations upon any particular xxxxx pad, and in
accordance with a schedule that benefits gold recoveries and does not, adversely
affect ongoing operations of the Mesquite Mine, SFPMC shall rinse and neutralize
the Spent Ore upon the pad at issue in accordance with the terms, conditions and
requirements of applicable Licenses and Applicable Law. Upon completion of all
required rinsing and neutralization, SFPMC shall provide to HNRC SFPMC's written
certification, certifying that the xxxxx pad has been rinsed and neutralized in
full compliance with all requirements of applicable Licenses and Applicable Law
(a "Xxxxx Pad Certification"). If agreed upon in advance by the Parties, HNRC
or its agents may perform any or all rinsing and neutralization operations on
behalf of SFPMC. In that event, SFPMC shall, after receipt of a sufficient
written invoice, reimburse to HNRC all costs and expenses incurred by HNRC in
rinsing and neutralization of the Spent Ore in accordance with the requirements
of applicable Licenses and Applicable Law (exclusive of Incremental Costs
incurred by HNRC as a result of any election by HNRC to rinse and neutralize the
Spent Ore to a standard in excess of that required by applicable Licenses and
Applicable Law), In the event that HNRC or its agents perform all rinsing and
neutralization functions with respect to a particular xxxxx pad, HNRC shall be
required to provide to SFPMC HNRC's Xxxxx Pad Certification for that xxxxx pad.
48
B. Surrender of the Xxxxx Pad from the SFPMC Lease. Following
------------------------------------------------------
receipt of a Xxxxx Pad Certification, HNRC, its agents and representatives shall
have the right to enter upon the SFPMC Leased Property for purposes of
inspecting and testing the xxxxx pad and Spent Ore at issue. In connection with
such inspection, HNRC shall have the right to remove samples of the Spent Ore
for off-site testing. HNRC shall also have the right, but not the obligation,
to perform testing of the Spent Ore on-site. In the event that HNRC confirms
that the facts and statements contained in the Xxxxx Pad Certification are true
and correct in all respects, and that SFPMC has complied with all conditions
prerequisite to the issuance of the Xxxxx Pad Certification, the xxxxx pad at
issue shall be surrendered from the SFPMC Lease and the Spent Ore on the pad
shall be conveyed to HNRC. Hospah and SFPMC shall execute and deliver to HNRC a
quitclaim deed and xxxx of sale, conveying, unto HNRC all of Hospah's and
SFPMC's right, title and interest in and to the xxxxx pad at issue, the real
property on which the xxxxx pad is situated and all Spent Ore and other
materials situated upon the xxxxx pad. Thereafter, the SFPMC Lease shall be
deemed terminated as to the xxxxx pad and real property at issue.
Notwithstanding the execution and delivery of the quitclaim deed or the xxxx of
sale described above, SFPMC shall not be relieved of or released from any
Reclamation and Environmental Responsibilities with respect to the xxxxx pad,
real property, Spent Ore or other materials at issue. HNRC shall assume such
Reclamation and Environmental Responsibilities only under the circumstances and
subject to the terms and conditions expressly set forth in Section 7.3D of this
Agreement.
C. Right of HNRC to Request Further Rinsing and Neutralization. At
-------------------------------------------------------------
any time and from time to time following cessation of leaching operations upon
any particular xxxxx pad, HNRC may provide to SFPMC a written request that SFPMC
conduct rinsing and neutralization of the Spent Ore on the pad at issue in
excess of or in addition to the rinsing and neutralization that is required by
applicable Licenses and Applicable Law. Such requested rinsing and
neutralization of Spent Ore in addition to or in excess of that required by
applicable Licenses or Applicable Law shall be referred to hereinafter as
"supplemental rinsing, and neutralization." HNRC may request supplemental
rinsing and neutralization either prior or subsequent to the conduct of the
rinsing and, neutralization operations described above in Section 7.3 A or the
surrender of the xxxxx pad at issue from the SFPMC Lease. HNRC's request shall
specify the particular methods, procedures or standards that HNRC desires to be
applied or followed in connection with the supplemental rinsing and
neutralization. The supplemental rinsing and neutralization of Spent Ore may
benefit SFPMC and/or Hospah through greater gold recoveries. In the event that
SFPMC agrees to conduct the supplemental rinsing and neutralization requested by
HNRC, HNRC shall reimburse to SFPMC, upon receipt of a sufficient invoice, all
Incremental Costs incurred by SFPMC as a result thereof. In other words, HNRC
shall reimburse to SFPMC the costs and expenses incurred by SFPMC in conducting
supplemental rinsing and neutralization requested by HNRC, to the extent that
such costs and expenses exceed those that SFPMC would have incurred had it
merely rinsed and neutralized the Spent Ore in accordance with the requirements
of applicable Licenses and Applicable Law. The value of any gold recovered by
SFPMC as a result of the conduct of supplemental rinsing and neutralization
shall constitute an offset against, and shall accordingly reduce, the
Incremental Costs reimbursable to SFPMC. Within 45 days following HNRC's
written request for supplemental rinsing and neutralization, SFPMC shall provide
to HNRC a written notice either agreeing or declining to perform the
supplemental rinsing and neutralization requested by HNRC. If SFPMC shall fail
to deliver such notice within such time,
49
it shall be deemed to have declined to undertake such activities. SFPMC shall
agree to perform the supplemental rinsing and neutralization if it possesses the
necessary capabilities and if doing so will not interfere with or create a
Material Adverse Effect upon the ongoing operations of the Mesquite Mine. In
the event that SFPMC is unable to perform the supplemental rinsing and
neutralization requested by HNRC, HNRC shall have the right, at its sole
discretion and cost, to perform such supplemental rinsing and neutralization
itself or through an agent or contractor of its selection, in which event HNRC
shall be entitled to retain, for its own account, all gold recovered as a result
of the supplemental rinsing and neutralization.
D. Rights of HNRC to Remove Spent Ore. Subject to Applicable Law
-------------------------------------
and HNRC obtaining any required Licenses or BLM approvals, HNRC shall have the
right, at any time and from time to time, and at its sole discretion and cost,
to remove from the xxxxx pads for use in connection with the Landfill Project,
Spent Ore that has been rinsed, certified and conveyed by SFPMC to HNRC pursuant
to the provisions of this Section 7.3. HNRC shall assume Reclamation and
Environmental Responsibilities only with respect to. Spent Ore that it actually
removes from the xxxxx pads for use in connection with the Landfill Project.
Upon receipt of a sufficient invoice from SFPMC, HNRC shall reimburse to SFPMC
any Incremental Costs that SFPMC incurs as a result of HNRC's removal of Spent
Ore from the xxxxx pads. HNRC shall assume Reclamation and Environmental
Responsibilities with respect to the xxxxx pads and associated real property
only in the event and to the extent that such xxxxx pads and real property are
actually occupied by HNRC and incorporated by construction into the Landfill
Project.
7.4 Spent Ore Situated Upon the Hospah Owned Property. Within a
--------------------------------------------------------
reasonable period of time following the cessation of leaching or other
processing, operations with respect to Spent Ore situated upon the Hospah Owned
Property (whether situated upon xxxxx pads or otherwise), Hospah and/or SFPMC
shall rinse and neutralize the Spent Ore at issue in accordance with the
procedures, requirements and provisions set forth in Section 7.3 of this
Agreement (including without limitation provisions pertaining to the rinsing,
neutralization, inspection, testing, certification and supplemental rinsing and
neutralization of Spent Ore), provided that title to the Spent Ore at issue
shall be conveyed to HNRC only in the circumstances and pursuant to the terms
and conditions set forth in this Section 7 4. HNRC shall have the right, at its
sole and absolute discretion and without charge or payment of any kind to SFPMC
or to Hospah, at any time and from time to time prior to a date 86 years after
the Closing Date, to enter upon the Hospah Owned Property and to remove all or
any portion of the Spent Ore situated thereon that has been rinsed and
neutralized in accordance with the provisions of this Section 7.4. HNRC shall
assume Reclamation and Environmental Responsibilities only with respect to such
Spent Ore that HNRC actually removes from the Hospah Owned Property. Hospah (as
to Spent Ore remaining upon the Hospah Assets) and SFPMC (as to Spent Ore
remaining upon the SFPMC Assets) shall retain all Reclamation and Environmental
Responsibilities with respect to all other Spent Ore remaining upon the
Hospah-Owned Property. HNRC shall not be deemed to have assumed any Reclamation
and Environmental Responsibilities with respect to the xxxxx pads or other real
property encompassed within the Hospah Owned Property upon which such Spent Ore
was situated prior to removal thereof by HNRC. Upon receipt of a sufficient
invoice, HNRC shall reimburse to Hospah and SFPMC any Incremental Costs that
such Parties incurs as a result of HNRC's removal of Spent Ore from the Hospah
Owned Property pursuant to this Section 7.4. Title to
50
such Spent Ore shall pass to HNRC only upon the removal thereof by HNRC from the
Hospah Owned Property pursuant to the provisions of this Section 7.4 upon the
acquisition of such Spent Ore pursuant to the provisions of Section 3.7 of this,
Agreement (following exercise of HNRC's Purchase Option).
7.5 Rights to Terminate SFPMC Lease as to Xxxxx Pads. Notwithstanding any
------------------------------------------------
provision of this Agreement to the contrary, HNRC shall have the right, at any
time and from time to time and in its sole and absolute discretion, to terminate
the SFPMC Lease as to any xxxxx pad and the real property associated therewith,
by providing to SFPMC reasonable advance written notice of termination (which
notice shall set forth the effective date of the termination), provided that the
effective date of termination is: (i) subsequent to the Primary Term, or (ii)
after Ore placed on the xxxxx pad has reached design load capacity and further
leaching thereof is no longer economic, or (iii) more than five years following
cessation of regular applications of solution reagent for leaching purposes upon
the xxxxx pad. In the event of such a termination, HNRC shall pay unto SFPMC
any damages that SFPMC incurs in connection with the loss of prospective profits
from recoverable gold left on thee pad. The calculation of such loss of
prospective profits shall be based upon: (i) all reasonably anticipated
operating, processing, treatment, storage, transportation, smelting, refining,
and related or incidental costs, (ii) a good faith estimate of the timing of
anticipated processing operations and gold recovery; (iii) a reasonable estimate
as to the value of contained and recoverable gold left, on the pad; and (iv)
application of a reasonable discount rate to determine the present value of both
operating costs and revenues from recovered gold. The value of the contained
and recoverable gold left on the pad shall conclusively be determined based upon
the final quotation for gold on the London Metal Exchange (commonly referred to
as the "second London fixing," the "London fixing p.m." or the "final London
quote") on the first day on which the London Metal Exchange is open for trading
following the date of HNRC's written notice of termination, as such price is
published by Metals Week, the Wall Street Journal or other publication of
------------ ---------------------
comparable reliability. If trading on the London Metal Exchange shall be
discontinued, the applicable spot price of gold shall be determined based upon a
comparable quotation, reasonably acceptable to both Parties. In the event that,
pursuant to the provisions of this Section 7.5, HNRC terminates the SFPMC Lease
with respect to a xxxxx pad not loaded to capacity and upon which SFPMC desires
to load and process additional Ore, as soon as practicable following the
provision of HNRC's written notice of termination, SFPMC shall commence and
thereafter diligently proceed with the construction, and commissioning of a new
xxxxx pad. In that case, HNRC shall also reimburse unto SFPMC, upon receipt of
a sufficient invoice, all Incremental Costs, if any, incurred by SFPMC in
connection with the construction and operation of the new xxxxx pad (or the
portion thereof needed to treat a quantity of Ore equivalent to the unused Ore
capacity of the terminated xxxxx pad), including without limitation any
Incremental Costs relating to delays in operations in the event that the new
xxxxx pad is not ready for Ore loading at the time that SFPMC is required (by
HNRC's termination notice) to cease the loading of Ore upon the terminated xxxxx
pad. Upon termination of the SFPMC Lease with respect to a xxxxx pad pursuant
to the provisions of this Section 7.5, SFPMC shall rinse and neutralize the
Spent Ore upon the xxxxx pad in accordance with the procedures and provisions
set forth in Section 7.3 of this Agreement. The rights and obligations of the
Parties with respect to the rinsing and neutralization of such Spent Ore shall
be the same as those set forth in Section 7.3 of this Agreement. Following a
partial termination of the SFPMC Lease pursuant to this Section 7.5, SFPMC,
shall execute and deliver unto HNRC a quitclaim deed and xxxx of sale, in
51
form and substance .reasonably satisfactory to HNRC, conveying and transferring
unto HNRC all of SFPMC's right, title and interest in and to the xxxxx pad and
associated real property at issue and all Spent Ore and other materials situated
thereon. Notwithstanding such conveyance, SFPMC shall not be relieved of or
released from any Reclamation and Environmental Responsibilities with respect to
the Spent Ore, material, xxxxx pad or real property at issue. HNRC shall assume
Reclamation and Environmental Responsibilities only with respect to Spent Ore
that HNRC actually removes from the xxxxx pads. HNRC shall assume Reclamation
and Environmental Responsibilities with respect to the xxxxx pads and associated
real property, at issue only if, and to the extent, that HNRC occupies the real
property and incorporates it by actual construction into the Landfill Project.
7.6 Prohibition on Transfers. Except as expressly set forth in this
--------------------------
Agreement to the contrary, neither Hospah nor SFPMC shall transfer to any third
party any right, title or interest in or to any Spent Ore located or to be
located upon either the Hospah Owned Property or the SFPMC Leased Property, or,
subject to BLM's right, if any, to sell or otherwise dispose of such material,
allow the removal or use of such Spent Ore by third parties.
ARTICLE VIII
OPERATION AND MAINTENANCE OF FENCING
------------------------------------
MONITORING FACILITIES AND SURFACE RUNOFF DRAINAGE FACILITIES
------------------------------------------------------------
8.1 Fencing. Pursuant to the Asset Exchange Agreement and Articles II and
-------
III of this Agreement, HNRC has conveyed unto Hospah and/or SFPMC ownership of
all mine fencing situated upon the Hospah Owned Property as of the Closing Date
and has leased unto SFPMC all mine fencing situated upon the SFPMC Leased
Property as of the Closing Date During the SFPMC Lease Term, SFPMC shall
maintain and repair all mine fencing situated upon the SFPMC Leased Property.
During the Option Period, Hospah (as to mine fencing constituting or situated
upon the Hospah Assets) and SFPMC (as to mine fencing constituting or situated
upon the SFPMC Assets) shall maintain and repair all mine fencing situated upon
the Hospah Owned Property. Additionally, prior to commencement of Commercial
Landfill Operations, SFPMC shall maintain and repair all mine fencing situated
upon the HNRC Retained Property, to the extent required by Licenses applicable
to the operation of the Mesquite Mine. HNRC shall have the right, at its sole
and absolute discretion and at any time and from time to time during the SFPMC
Lease Term, to enter upon the SFPMC Leased Property for purposes of improving or
adding to fencing, as may be necessary or convenient to the permitting or
operation of the Landfill Project. At any time and from time to time during the
Option Period, HNRC shall have the right, at its sole and absolute discretion,
to enter upon the Hospah Owned Property for purposes of improving or adding to
fencing, as may be necessary or convenient to the permitting or operation of the
Landfill Project. Each of the Parties shall bear its own costs relating to the
maintenance, repair or improvement of fencing.
8.2 Monitoring Facilities. Pursuant to the Asset Exchange Agreement and
Articles III and IV of this Agreement, HNRC has conveyed unto Hospah and/or
SFPMC ownership of all Monitoring Facilities situated on the Hospah Owned
Property as of the Closing Date and has leased unto SFPMC all Monitoring
Facilities situated on the SFPMC Leased Property as of the Closing Date. During
the SFPMC Lease Term, SFPMC shall operate and maintain all
52
Monitoring Facilities situated upon the SFPMC Leased Property and Hospah (as to
monitoring Facilities constituting or situated upon Hospah Assets) and SFPMC (as
to Monitoring Facilities constituting or situated upon SFPMC Assets) shall
operate such facilities on the Hospah Owned Property. Hospah and SFPMC may, at
their discretion, operate and maintain, or shall allow HNRC to operate and
maintain all such Monitoring Facilities upon Hospah Owned Property during the
Option Period. Additionally, prior to commencement of Commercial Landfill
Operations, SFPMC shall operate and maintain all Monitoring, Facilities situated
upon the HNRC Retained Property, to the extent required by Licenses applicable
to the operation of the Mesquite Mine. Subject to the prior written approval of
Hospah (as to Monitoring Facilities constituting or situated upon the Hospah
Assets) and /or of SFPMC (as to Monitoring Facilities constituting or situated
upon the SFPMC Assets), which approval shall not be unreasonably withheld, HNRC
shall have the right to construct, operate and maintain new Monitoring
Facilities on the SFPMC Leased Property or on the Hospah Owned Property, for use
in conjunction with the planning, permitting, construction, or operation of the
Landfill Project. HNRC shall be the owner of such Monitoring Facilities.
Except as set forth in the preceding sentence to the contrary, each of the
Parties shall bear its own costs and expenses with respect to the construction,
operation and maintenance of Monitoring Facilities.. The Parties agree to share
all Information generated by or in connection with the operation of their
respective Monitoring Facilities, regardless of whether such Information is
generated prior or subsequent to the Closing Date. Additionally, each Party
shall provide the other Parties with access to its Monitoring Facilities and the
right to take measurements and gather Information therefrom, provided that the
Party using such Monitoring Facilities shall reimburse to the Party, that owns
the Monitoring Facility at issue (the "Owning Party") all Incremental Costs
incurred by the Owning Party as a result of the use of its Monitoring
Facilities. The Parties make no representations or warranties whatsoever, and
expressly disclaim, the truth, accuracy, completeness or representative nature
of any Information whatsoever supplied or to be supplied pursuant to the
provisions of this Section 8.2.
8.3 Surface Runoff Drainage Facilities. Pursuant to the Asset Exchange
-------------------------------------
Agreement and Articles III and IV of this Agreement, HNRC has conveyed unto
Hospah and/or SFPMC ownership of all Surface Runoff Drainage Facilities situated
upon the Hospah Owned Property as of the Closing Date and has leased to SFPMC
all Surface Runoff Drainage Facilities situated upon the SFPMC Leased Property
as of the Closing Date. During the SFPMC Lease Term, SFPMC shall operate and
maintain all Surface Runoff Drainage Facilities situated upon the SFPMC Leased
Property and Hospah (as to Surface Runoff Drainage Facilities constituting or
situated upon Hospah Assets) and SFPMC (as to Surface Drainage Runoff Facilities
constituting or situated upon SFPMC Assets) shall operate such facilities on the
Hospah Owned Property. During the Option Period, Hospah and/or SFPMC may, at
their discretion, operate and maintain, or shall allow HNRC to operate and
maintain, all Surface Runoff Drainage Facilities situated upon the Hospah Owned
Property. Additionally, prior to commencement of Commercial Landfill
Operations, SFPMC shall operate and maintain all Surface Runoff Drainage
Facilities situated upon the HNRC Retained Property, to the extent required by
Licenses applicable to the operation of the Mesquite Mine and HNRC hereby grants
to SFPMC such rights of access to such facilities as may be reasonably necessary
to so operate and so maintain such facilities. Neither Hospah nor SFPMC shall
make any Alterations or Additions to Surface Runoff Drainage Facilities or
construct any new Surface Runoff Drainage Facilities without obtaining the prior
written approval of HNRC, which approval shall not be
53
unreasonably withheld. In the event that Hospah and/or SFPMC desires to make
any such Alterations or Additions or to construct any new Surface Runoff
Drainage Facilities, Hospah (as to Surface Runoff Drainage Facilities
constituting or situated upon Hospah Assets) and SFPMC (as to Surface Drainage
Facilities constituting or situated upon SFPMC Assets) shall provide written
notice of its intentions to HNRC, setting forth in detail the location, scope
and design of the planned facilities. HNRC shall have the right to require
Hospah (as to Surface Runoff Drainage Facilities constituting or situated upon
Hospah Assets) and SFPMC (as to Surface Drainage Facilities constituting or
situated upon SFPMC Assets) to modify the- location or design of any such
facility, to the extent reasonably necessary to ensure consistency with drainage
plans for the Landfill Project Any such modifications required by HNRC shall be
planned so as not to adversely affect drainage with respect to the Mesquite
Mine. Additionally, upon receipt of a sufficient invoice, HNRC shall reimburse
to Hospah and/or SFPMC any Incremental Costs incurred by such Parties in the
construction or operation of its Surface Runoff Drainage Facilities so as to
comply with modifications required by HNRC. HNRC shall indemnify the Hospah
Indemnitees against any Losses resulting from Third Party Claims that relate to
drainage problems at the Mesquite Mine that are caused by the construction or
operation by HNRC of the Landfill Project or associated facilities Except as set
forth in this Section 8.3 to the contrary, each. of the Parties shall bear its
own costs with respect to the construction, operation and maintenance of Surface
Runoff Drainage Facilities.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Emission_ Offsets. At such time as Hospah and SFPMC elects, in their
------------------
sole and absolute discretion, to permanently close and shut down the Mesquite
Mine, HNRC shall be entitled to utilize any resulting air emission source
offsets and, upon request by HNRC, Hospah and SFPMC shall deliver to HNRC a duly
executed instrument of conveyance, in form and substance reasonably satisfactory
to HNRC, transferring unto HNRC such air emission source offsets. Prior
thereto, all permitted emission offsets not utilized in connection with the
Mesquite Mine shall be made available to HNRC without charge for the benefit of
the Landfill Project. The covenants set forth in this Section 9.1 shall be
subject to Applicable Law and HNRC obtaining any necessary Licenses.
9.2 Desert Tortoises
-----------------
A. Tortoise Mitigation _Credits. Subject to Applicable Law and HNRC
----------------------------
obtaining any necessary Licenses, mitigation credits relating to the taking of
desert tortoises or their habitat that had already been earned or acquired as of
the Closing Date, so as to allow the conduct of operations upon certain land,
shall stay in place and continue to apply notwithstanding the change in intended
use, of such lands from purposes relating to the Mesquite Mine to purposes
relating to the Landfill Project.
B. Taking of Tortoises. In the event that any desert tortoise or
---------------------
other endangered or threatened species is killed, relocated or otherwise "taken"
(within the meaning of the Endangered Species Act and the regulations
promulgated thereunder) as a result of either the actions of Hospah, SFPMC, or
their respective employees, agents or representatives or the
54
operations of the Mesquite Mine, Hospah and/or SFPMC, as applicable, shall be
solely responsible therefor and shall indemnify and hold harmless the HNRC
Indemnitees from and against all Losses, including without limitation Losses
resulting from Third Party Claims, that arise out of or relate to such killing,
relocation or taking. In the event that any desert tortoise or other endangered
or threatened species is killed, relocated or otherwise "taken" (within the
meaning of the Endangered Species Act and the regulations promulgated
thereunder) as a result of either the actions of HNRC, its employees, agents or
representatives or the operations of the Landfill Project, HNRC shall be solely
responsible therefor and shall indemnify and hold harmless the Hospah
Indemnitees from and against all Losses, including without limitation Losses
resulting from Third Party Claims, that arise out of or relate to, such killing,
relocation or taking. The Parties shall consult and cooperate with each other,
and take such other actions_ as may be reasonably necessary, to ensure that
neither the BLM, nor the United States Fish and Wildlife Service nor any other
government agency attempts to hold a Party partially or wholly responsible for
the killing, relocation or taking of wildlife, if such killing, relocation or
taking is the responsibility of another Party pursuant to the provisions of this
Section 9.2B.
9.3 Cooperation Relative to Licenses. Each of the Parties shall be
-----------------------------------
responsible to obtain and maintain all Licenses required with respect to its own
operations. However, each of the Parties covenants to cooperate in all
reasonable ways with efforts by each other Party to obtain or maintain Licenses,
including without limitation, at the request and subject to the direction of the
Party seeking to obtain or maintain a License, by the execution and filing of
documents, consents or other instruments. Each of the Parties covenants not to
oppose, challenge, appeal or interfere with any efforts by each other Party to
obtain or maintain any License. The Parties shall cooperate with each other in
all reasonable ways in approaching the BLM and other permitting agencies
relative to the separation and operation of the Mesquite Mine and the Landfill
Project, the joint use of certain lands and Improvements and any and all other
matters arising pursuant to this Agreement.
9.4 Prohibition on Development of Landfill of Hospah or SFPMC. Hospah,
------------------------------------------------------------
SFPMC, and their respective Affiliates and the respective successors and assigns
shall_ be strictly prohibited from developing or operating a commercial waste
disposal facility on the Hospah Owned Property or the SFPMC Leased Property or
any portion thereof without the prior written consent of HNRC, which consent may
be freely withheld.
9.5 Invoices and Audits. Any invoice for reimbursement provided pursuant
-------------------
to this Agreement shall set forth, in reasonable detail, an accounting of all
costs and expenses incurred by the Party seeking reimbursement. The invoice
shall describe, by date, the specific actions or tasks undertaken or performed,
the hours worked, the personnel or contractor performing the work and the costs
or expenses incurred in connection with each entry. With respect to work
performed by a Party's own employees, the amount charged shall not exceed the
Party's actual out-of-pocket costs and the documented cost to it of the
employee's time, based solely upon the direct costs of the employee's wages and
benefits. The Parties shall not charge for overhead, administration or any
portion of general expenses associated with their respective operations. With
respect to work performed by or payments to third parties, all invoices shall be
accompanied by receipts and sufficient evidence of payment. A Party required
pursuant to this Agreement to pay to another Party any reimbursement, including
without limitation reimbursements relating to Incremental Costs, shall have the
right, at its sole and absolute
55
discretion and at its sole cost, to conduct or cause to be conducted, during
normal business hours, an audit of the financial books and records of the Party
seeking reimbursement, to the extent and in a manner reasonably necessary to
confirm or determine the proper amount of the reimbursement.
9.6 Notices. All notices and other communications under this Agreement
shall been in writing (including telex or similar writings) and shall be deemed
given when delivered in person, sent by registered mail (return-receipt
requested) or sent by cable, telex, telegram, facsimile transmission, or
reputable overnight service, to the Parties at the following addresses (or to
such address as a Party may have specified by notice given to the other Parties
pursuant to this provision):
(i) If to HNRC:
c/x Xxxxxx Industries
00 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
with a copy to:
Manager, Mesquite Regional Landfill
000 X 0xx Xxxxxx
Xx Xxxxxx, XX 00000
(ii) If to Hospah:
Hospah Coal Corporation
0000 Xxxxxx Xxxxxxxxx, X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
with a copy to:
Manager, Mesquite Mine
0000 X. Xxxxxxx 00
Xxxxxx, XX 00000-0000
(iii) If to SFPMC:
Santa Fe Pacific Minerals Corporation
0000 Xxxxxx Xxxxxxxxx, X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
with a copy to:
56
Manager, Mesquite Mine
0000 X. Xxxxxxx 00
Xxxxxx, XX 00000-0000
9.7 Patents. Any decision to apply to the BLM for patents to Unpatented
-------
Claims encompassed within the Hospah Owned Property shall be made by Hospah, in
its sole and absolute discretion. All costs and expenses associated with such a
patent application shall be paid and borne exclusively by Hospah, provided that,
in the event that Hospah applies for patents to Unpatented Claims encompassed
within the Hospah-Owned Property pursuant to a written request from HNRC, HNRC
shall reimburse to Hospah, upon receipt of a sufficient invoice, all costs and
expenses incurred by Hospah in connection with such patent application. Either
HNRC or (during the SFPMC Lease Term) SFPMC may elect to apply to the BLM for
patents to Unpatented Claims encompassed within the SFPMC Leased Property,
provided that the Party initiating such patent application shall pay and bear
all costs and expenses associated therewith. HNRC shall not submit any patent
application that will cause a foreseeable Material Adverse Effect upon the
operations of the Mesquite Mine, as such operations are reflected in the mine
plan filed with the BLM as of the date of filing of the patent application. At
the request and subject to the direction of the Party filing or intending to
file a patent application hereunder, each other Party shall take all reasonably
practicable actions in support of such patent application, including without
limitation by the execution and filing of documents, instruments and notices.
Each of the Parties agrees not to object to, protest or adverse a patent
application filed by another Party hereunder. Any patent issued with respect to
the SFPMC Leased Property, the Hospah owned Property or the HNRC Retained
Property shall become subject to the terms and conditions of this Agreement to,
the same extent and in the same manner as the Unpatented Claims with respect to
which patent is issued. Prior to applying to the BLM for a patent, to any
Unpatented Claim encompassed within the Hospah Owned Property, Hospah shall
obtain a written agreement with HNRC as to the Option Purchase Price that will
be paid with respect to that claim in the event that HNRC exercises the Purchase
Option with respect thereto.
9.8 Confidentiality. Each of the Parties covenants and agrees that it
---------------
shall protect as confidential any and all non-public Information that it obtains
or acquires relative to the business, properties, finances or operations of each
other Party as a result of or in connection with the Performance of this
Agreement, and shall not give, disclose or make available any such Information
to any third party or to the public generally without the prior written consent
of the Party to whom the Information pertains (the "non-disclosing Party"),
which consent shall, not be withheld unless the non-disclosing Party believes in
good faith that the Information at issue is truly confidential or proprietary to
its business or operations, except to the extent that such disclosure is
required by Applicable Law or strictly necessary in connection with the conduct
of the disclosing Party's own operations. No party shall have any obligation to
seek the consent of the non-disclosing Party prior to disclosing pursuant to any
corporate reporting in the ordinary course of business to its board of directors
or shareholders any non-public Information that it obtains or acquires relative
to the business, properties, finances or operations of the non-disclosing Party
as a result of or in connection with the performance of this Agreement;
provided, however, that no Party shall disclose such Information to its
directors or shareholders in such a fashion, unless required by Applicable Law
and provided further that Hospah and SFPMC shall take such actions as are
necessary to ensure that the confidentiality of such
57
Information is protected by their respective directors or shareholders to whom
it is disclosed. The provisions of confidentiality set forth in, this Agreement
are in addition to, and are not intended to replace or supersede, that certain
Confidentiality Agreement dated September 15, 1992 between Xxxxxx Industries and
Santa Fe Pacific Corporation. The restrictions of confidentiality set forth in
this Agreement shall apply throughout the SFPMC Lease Term and the term of the
Purchase Option and so long thereafter as any of the rights or obligations of
the Parties hereunder continue in effect.
9.9 Memorandum. The Parties shall execute and record a Memorandum of this
----------
Agreement with the Imperial County Clerk and Recorder's Office, which Memorandum
may set forth any and all terms and conditions of this Agreement exclusive only
of confidential financial matters. Additionally, each of SFPMC and Hospah shall
have the right, in their discretion and at their sole cost, to file the
Memorandum with the U.S. Department of Interior.
9.10 Disclaimer. THE PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES
----------
WHATSOEVER, EXPRESSED OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, SUITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY,
WITH RESPECT TO ANY ASSETS TRANSFERRED OR TO BE TRANSFERRED (BY HOSPAH OR BY
HNRC) PURSUANT TO THIS AGREEMENT, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF
OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT. Additionally,
subject to the provisions of Section 3.7 of this Agreement relative to the
removal of Liens encumbering Selected Option Property prior to the Option
Closing, the Parties make no representations or warranties whatsoever, expressed
or implied, with respect to: (i) their right or power to convey any right,
title or interest in or to any real or personal property transferred or to be
transferred pursuant to this Agreement; (ii) the truth, accuracy, completeness
or representative nature of any Information provided or to be provided by it,
its agents or its representatives pursuant to this Agreement (iii) whether or
not any action provided for or contemplated under this Agreement is in
compliance with Applicable Law, and (iv) the Licenses that may be required to
conduct any operation or take any action provided for or contemplated under this
Agreement.
9.11 Liens. Each of the Parties shall take such actions as may be
-----
reasonably necessary to ensure that its operations and activities do not result
in any Liens upon any right, title or interest held by any other Party in or to
any real or personal property; provided, however, nothing in this Section 9.11
shall prohibit the granting of Liens upon the granting Party's right, title or
interest as permitted by and subject to the provisions of Section 4.12.
9.12 Indemnities.
-----------
A. By HNRC. HNRC shall indemnify and hold harmless the Hospah
-------
Indemnitees, from and against any and all Losses arising out of or resulting
from:
(i) any failure by HNRC to perform or comply with any of its
covenants, obligations or agreements contained in this Agreement;
58
(ii) any Third Party Claim arising out of the operations, actions
or failures to act of HNRC or its agents upon or with respect to the properties
subject to this Agreement; and
(iii) any Third Party Claim relating to Reclamation and
Environmental Responsibilities of HNRC under this Agreement.
B. By Hospah. Hospah shall indemnify and hold harmless the HNRC
----------
Indemnitees from and against any and all Losses arising out of or resulting
from:
(i) any failure by Hospah to perform or comply with any of its
covenants, obligations or agreements contained in this Agreement
(ii) any Third Party Claim arising out of the operations, actions
or failures, to act of Hospah or its agents upon or with respect_ to the
properties subject to this Agreement and
(iii) any Third Party Claim relating to Reclamation and
Environmental Responsibilities of Hospah under this Agreement.
C. By SFPMC. SFPMC shall indemnify and hold harmless the HNRC
---------
Indemnitees from and against any and all Losses arising out of or resulting
from:
(i) any failure by SFPMC to perform or comply with any of its
covenants, obligations or agreements contained in this Agreement;
(ii) any Third Party Claim arising out of the operations, actions
or failure to act of SFPMC or its agents upon or with respect to the properties
subject to this Agreement; and
(iii) any Third Party Claim relating to Reclamation and
Environmental Responsibilities of SFPMC under this Agreement.
D. Indemnities Set Forth in Other Provisions. The indemnities set
-------------------------------------------
forth in this Section 9.12 are in addition to other indemnities expressly set
forth in other provisions of this Agreement and in Sections 13.1 and 13.2 of the
Asset Exchange Agreement.
9.13 Binding Obligations; SFPMC Lease.
-----------------------------------
A. Obligations. Each of SFPMC and Hospah shall be jointly and
-----------
severally liable for all Undertakings which are binding upon both of them,
including without limitation Undertakings to be performed by Hospah and/or
SFPMC, except to the extent that the specific provisions of this Agreement limit
such joint and several liability. As used in this Agreement, "Undertakings"
shall mean all obligations, terms, conditions, covenants, undertakings,
indemnities, liabilities, responsibilities and agreements of Hospah and/or of
SFPMC under this Agreement.
59
B. Following the Closing, Hospah and SFPMC may enter into a Lease
Agreement (the "Hospah Property Lease") pursuant to which Hospah would lease
that portion of the Hospah Owned Property owned by Hospah to SFPMC. In such
event, SFPMC, in its capacity as lessee of a portion of the Hospah Owned
Property, would assume and perform all of Hospah's obligations and be entitled
to exercise all of Hospah's rights and privileges under this Agreement. The
Hospah Property Lease shall in no way increase the obligations or diminish the
rights of HNRC under this Agreement. Termination or expiration of the Hospah
Property Lease shall not release or relieve SFPMC from Undertakings, that accrue
under this Agreement or under the Hospah Property Lease prior to the date of
such termination or expiration. Termination or expiration of the Hospah
Property Lease shall release and relieve SFPMC from Undertakings that accrue
under this Agreement or under the Hospah Property Lease subsequent to the date
of such termination or expiration. HNRC hereby consents to the granting of the
Hospah Property Lease and the transactions contemplated thereunder. Upon
entering into the Hospah Property, Lease, SFPMC and Hospah shall promptly
provide to HNRC written notice thereof.
9.14 Relationship to Asset Exchange Agreement. In general, the provisions
----------------------------------------
of this Agreement are intended to supplement and coexist with the provisions of
the Asset Exchange Agreement (relative to matters pertaining to the Mesquite
Properties). However, in the event than any of the terms and conditions set
forth in this Agreement conflict directly with the terms and conditions set
forth in the Asset Exchange Agreement, the terms and conditions of this
Agreement shall in all instances prevail and govern with respect to all matters
pertaining to the Mesquite Properties. No provision of this Agreement shall be
construed as intending to limit or abrogate in any way any provision of Sections
3.3 and 13.2 of the Asset Exchange Agreement, which (among various other
provisions of the Asset Exchange Agreement) are intended to survive in full
force and effect.
9.15 Entire Agreement. This Agreement (together with all of its Exhibits)
----------------
and the Asset Exchange Agreement (subject to the limitations set forth in
Section 9.14 of this Agreement): (i) contain, and are intended, as a complete
statement of all the terms of the arrangements of the Parties with respect to
the matters provided for herein, (ii) supersede any previous agreements, written
or oral, and understanding among the Parties with respect to those matters, and
(iii) cannot be changed or terminated, orally.
9.16 Governing Law. Notwithstanding any provision of the Asset Exchange
--------------
Agreement to the contrary, this Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
conflicts of law principles. In particular, the Parties agree that the laws of
the State of California shall govern the construction, interpretation and
enforceability of this Agreement with respect to all matters pertaining to
permissible time periods for the vesting of any right, title or interest in or
to any real or personal property.
9.17 Table of Contents and Headings. The table of contents and section
---------------------------------
headings of this Agreement and titles given to Exhibits to this Agreement are
for reference purposes only and are to be given no effect in the construction or
interpretation off this Agreement.
60
9.18 Separability. The invalidity or unenforceability of any provision of
------------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
Additionally, in the event that any provision of this Agreement is finally
determined, after exhaustion of any applicable appeals or appeal periods, to be
unenforceable, that provision shall be revised so as to be enforceable under
Applicable Law and so as best to reflect the intentions of the Parties
hereunder.
9.19 Waiver. Any Party may waive compliance by the other Party with
------
respect to any provisions of this Agreement. No waiver of any provision shall
be construed as a waiver of any other provision. No waiver shall be construed
as an ongoing waiver with respect to subsequent events unless it expressly so
provides. Any waiver must be in writing, signed by the waiving Party and recite
the provision being waived.
9.20 Binding Effect; Assignment. This Agreement shall be binding upon and
--------------------------
inure to the benefit of the Parties and their respective successors and
permitted assigns. All of the terms and conditions of this Agreement shall be
deemed to run with the land. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights of any person or entity not
a Party to this Agreement. Subject to the terms and conditions set forth in
this Section 9.20 or elsewhere in this Agreement, any of the Parties may sell or
transfer to any third party any of its right, title or interest in or to this
Agreement or the properties subject hereto, provided that any such sale or
transfer of real property by Hospah or SFPMC shall be solely to a transferee who
intends in good faith to use such real property for bona fide mining and related
purposes. The transferring Party shall require the purchaser or transferee of
such right, title or interest to agree to be bound by all the terms and
conditions of this Agreement and to assume all (or a percentage equal to the
undivided interest transferred) of the obligations and liabilities whatsoever of
the transferring Party. Additionally, notwithstanding any provision of this
Agreement or off the Asset Exchange Agreement to the contrary, no transfer or
assignment of any right, title or interest in or to any of the real or personal
property subject to this Agreement or in or to this Agreement itself, shall
relieve or release the transferring or assigning Party from any of its
liabilities or obligations arising under this Agreement. Any assignments or
transfers by the Parties of any right, title or interest in or to any of the
real or personal property subject to the terms and conditions of this Agreement
shall be subject to the further express restrictions and limitations expressly
set forth elsewhere in this Agreement or in the Asset Exchange Agreement.
9.21 Right of Cure. In the event that any Party (the "defaulting Party")
--------------
fails fully, timely or properly to perform any duty, obligation or covenant set
forth in any provision of this Agreement, and such failure remains uncured for a
Period of 30 days following the provision by the non-defaulting Party to the
defaulting Party of a written notice detailing the failure, the non-defaulting
Party shall have the right (in addition to any other rights or remedies provided
elsewhere in this Agreement or otherwise available, at law or in equity, under
Applicable Law), but not the obligation, to take such actions as the
non-defaulting Party, in its sole and absolute discretion, may deem necessary or
prudent to attempt to cure or commence to cure the failure and to enter upon all
property of the defaulting Party for purposes relating thereto, in which case
the defaulting Party shall reimburse to the non-defaulting party, upon receipt
of a sufficient invoice, all costs and expenses incurred by the non-defaulting
Party in curing or attempting to cure the failure; provided, however, that in an
emergency a Party may take such action without
61
the necessity of such prior notice (although such notice shall be given
contemporaneously with or promptly after such actions). The provisions of this
Section 9.21 shall apply with respect to all duties, obligations and covenants
arising under this Agreement, including without limitation those that pertain to
the SFPMC Lease.
9.22 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be an original, but which together shall constitute one in the same
Agreement.
9.23 Remedies. The remedies and relief set forth in this Agreement are
--------
cumulative and not in the alternative and are in addition to any other remedies
or relief that may otherwise be available to the Parties, at law or in equity.
The Parties shall have the right to pursue any and all available remedies and
relief, either sequentially or in concert.
9.24 Further Assurances. Upon request by any Party, the Parties covenant,
------------------
at any time and from time to time, to cooperate reasonably with each other and
take all such further actions, including without limitation the execution and
filing of additional instruments or documents, as may be reasonably necessary to
carry out the intent, purposes and terms of this Agreement. Each of the Parties
shall have the right to enter upon the properties of each other Party, to the
extent reasonably necessary to perform any obligations or to exercise any right
set forth in this Agreement.
9.25 Perpetuities. Notwithstanding any provision of this Agreement to the
------------
contrary, any right or option to acquire any interest in real or personal
property under this Agreement must be exercised, if at all, so as to vest such
interest in the acquirer within the time period allowed under Applicable Law.
9.26 Quarterly Meetings. The manager o f each Party's operations shall
-------------------
have the right to call a meeting upon no less than thirty (30) days prior
written notice whenever it is deemed necessary for purposes of coordinating
their respective operations and activities upon or with respect to the Mesquite
Properties and for other purposes arising under or relating to the
administration of this Agreement. Such quarterly meetings shall be held for so
long as any of the rights or obligations of any of the Parties arising under
this Agreement remain in effect. Such meetings shall be held at such places and
times and on such specific dates as may be mutually agreeable to the Parties.
9.27 Effective Date. This Agreement shall be deemed effective upon and
---------------
simultaneously with the Closing.
9.28 Disputes. In the event that any dispute or disagreement arises
--------
between the Parties with respect to this Agreement, or the transactions,
operations or properties subject hereto or contemplated hereby, the Parties
shall meet in a good faith attempt to resolve such dispute or disagreement, in a
manner consistent with the objectives, intent and purposes set in Section 9.28
shall not be construed as limiting or abrogating other remedies, relief or
forums for dispute resolution otherwise available to the Parties.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized.
62
XXXXXX NATURAL RESOURCES COMPANY HOSPAH COAL COMPANY
By: Its General Partners:
Gold Fields Mining Corporation By: /s/ K.T. Zitling
----------------------------------
By:/s/ Xxxxxx X. Xxxxxxx Name: K.T. Zitling
---------------------------- Title: President
Name: Xxxxxx X. Xxxxxxx
Title: Vice President SANTA FE PACIFIC MINERALS CORPORATION
Cavenham Forest Industries, Inc. By:__________________________________
Name:________________________________
Title:_______________________________
By:/s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Cavenham Energy Resources, Inc.
By:/s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
63
AMENDMENT TO MINERAL LEASE AND
LANDFILL FACILITIES LEASE AGREEMENT
THIS AMENDMENT TO MINERAL LEASE AND LANDFILL FACILITIES LEASE AGREEMENT
("Amendment") is to be effective as of April 24, 1995 by and between XXXXXX
NATURAL RESOURCES COMPANY ("HNRC"), a Delaware general partnership, HOSPAH COAL
COMPANY ("HOSPAH"), a Delaware corporation' and SANTA FE PACIFIC GOLD
CORPORATION, a Delaware corporation, formerly known as Santa Fe Pacific Minerals
Corporation ("SFPMC"). HNRC, Hospah and SFPMC are sometimes hereinafter
individually and collectively referred to as the "Parties".
RECITALS:
A. The Parties entered into a Mineral Lease and Landfill Facilities Lease
Agreement dated June 25, 1993 ("Agreement") and
B. The Parties desire to amend the Agreement in the manner set forth
below.
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth herein the Parties agree as follows:
1. Terms defined in the Agreement have the same meaning in this Amendment
unless otherwise defined herein.
2. Section 2.3 is added immediately after Section 2.2 as follows
"2.3 Taxes. HNRC shall pay when due all taxes and assessments, including
without limitation all real and personal property taxes, levied upon,
assessed against or relating to the HNRC-Retained Property, or to any
Improvements or personal property situated thereon, or Alterations and
Additions thereto. If HNRC hereafter constructs facilities for the Landfill
Project on the SFPMC Leased Property, HNRC shall be solely responsible for
the payment of the increased amount of tax directly attributable to the new
facilities."
3. Section 3.10 B is amended by adding the following immediately after
the last sentence thereof:
"HNRC, using its best efforts, has determined that a lot line adjustment,
approved by Imperial County, accomplishes the objectives of Section 3.10 A
and satisfies the conditions of Section 3.10B. HNRC hereby requests that
Hospah join in the execution and filing of the lot line adjustment
application attached hereto, and Hospah agrees to join in such application.
HNRC shall indemnify and hold'
harmless the Hospah Indemnities from and against any and all Losses arising
out of or resulting from HNRC's filing of a lot line adjustment application
or any resulting alleged violation of the Subdivision Map Act in its
efforts to accomplish the objectives of Section 3.10 A. Upon the approval
of the lot line adjustment by the appropriate governmental agency for
Imperial County, the Escrowed Deed shall be delivered to HNRC.
Since the SFPMC Lease is a mineral lease, the Parties have concluded that
pursuant to Sec. 66412 of the California Government Code, the Subdivision
Map Act is inapplicable to the SFPMC Lease and the inclusion of any
additional property within the SFPMC Lease."
4. Section 4.19 is amended in its entirety to read as follows:
"Prohibition on Dumping on the Portion of the 220 Dump within the Landfill
Footprint Neither SFPMC nor Hospah shall dump or stockpile any Ore, Spent
Ore, Clay, Overburden or other materials on those portions of the "220
Dump", or any extension or expansion thereof, situated within the Landfill
Footprint, except for the following:
(i) inert materials (average 350 tons per year) to be disposed of by
Hospah or SFPMC at the inert material landfill within the "220 Dump",
(ii) the Overburden needed to cover the inert materials in accordance
with applicable rules, regulations, and permits, and
(iii) any, other materials expressly allowed by HNRC in writing after
Hospah or SFPMC submits to HNRC a written proposal specifying the type
and quantity of materials to be dumped, a description of where
materials will be dumped (including a map), and any other information
requested by HNRC after receiving SFPMC's written proposal. HNRC may,
for any reason, within thirty (30) days after receipt of such
proposal, reject Hospah or SFPMC's proposal. If HNRC allows Hospah or
SFPMC to dump materials on any extension or expansion of the "220
Dump" into the Landfill Footprint, the area encompassed by such
extension or expansion shall become SFPMC Leased Property and shall be
subject to all of the terms and conditions set forth herein."
5. This Amendment shall be deemed to be an amendment to the Agreement,
and the Agreement, as amended, is hereby ratified, approved and confirmed in
each and every; respect. All references to the Agreement herein and in any
other document, instrument, agreement or writing shall hereafter be deemed to
refer to the Agreement as amended hereby.
2
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed
by their respective duly authorized officers.
XXXXXX NATURAL RESOURCES COMPANY HOSPAH COAL COMPANY
By Its General Partners: By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Gold Fields Mining Corporation Title: President
Name: /s/ Xxxxxx X. Xxxxxxx SANTA FE PACIFIC GOLD
------------------------- CORPORATION, formerly known
By: Xxxxxx X. Xxxxxxx as Santa Fe Pacific Minerals
Title: Vice President Corporation
Cavenham Forest Industries,Inc. By: /s/ Xxxxx X. Xxxxx
------------------
Name: /s/ Xxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxx
------------------------------ Title: Vice President
By: Xxxxxx X. Xxxxxxx
Title: Vice President
Cavenham Energy Resources, Inc.
Name: /s/ Xxxxxx X. Xxxxxxx
------------------------------
By: Xxxxxx X. Xxxxxxx
Title: Vice President
3
SECOND AMENDMENT TO MINERAL LEASE
AND LANDFILL FACILITIES LEASE AGREEMENT
THIS SECOND AMENDMENT TO MINERAL LEASE AND LANDFILL FACILITIES LEASE
AGREEMENT ("Second Amendment") is made and entered into effective as of the 24th
day of August, 1998, by and between:
GOLD FIELDS MINING CORPORATION, a Delaware corporation, with offices
at 14062 Denver Xxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000-0000
("GFMC"), successor in interest to Peabody Natural Resources Company
("PNRC") formerly known as Xxxxxx Natural Resources Company,
and
SANTA FE PACIFIC GOLD CORPORATION, a Delaware corporation with offices
at 0000 Xxxxxxx Xx., Xxxxxx, Xxxxxxxx 00000 ("SFPGC") formerly known as
Santa Fe Pacific Minerals Corporation,
and
HOSPAH COAL COMPANY, a Delaware corporation with offices at 0000
Xxxxxxx Xx., Xxxxxx, Xxxxxxxx 00000 ("Hospah" )
GFMC, SFPGC and Hospah are sometimes hereinafter individually and collectively
referred to as the "Parties".
RECITALS:
A. PNRC, SFPGC and Hospah entered into a Mineral Lease and Landfill
Facilities Lease Agreement dated June 25, 1993 ("Agreement") a memorandum of
which was recorded in Book 1736, Page 1505 in the Official Records of Imperial
County, California.
B. PNRC, SFPGC and Hospah entered into an Amendment to Mineral Lease and
Landfill Facilities Lease Agreement dated April 24, 1995 ("First Amendment").
C. A Memorandum of Amendments to Mineral Lease and Landfill Facilities
Lease Agreement dated February 26, 1996 was recorded in Book 1838, Page 1331 in
the official Records of Imperial County, California.
D. On January 31, 1997, GFMC completed a land exchange with the Bureau of
Land Management which affects certain lands covered by the Agreement, as amended
by the First Amendment.
E. On August 7, 1997, an Affidavit and a Registration of Trade Name were
filed in the records of New Castle County, Delaware to effectuate a name change
from Xxxxxx Natural Resources Company to Peabody Natural Resources Company. The
partners in PNRC are GFMC and Peabody America, Inc.
4
F. Since June 25, 1993, ownership interests and property descriptions for
the property covered by the Agreement have changed. The Parties have conveyed
property among each other, abandoned certain unpatented mining claims and mill
sites, terminated leases and option agreements, purchased properties, and
received patents from the United States. The BLM has invalidated certain
unpatented mining claims and issued supplemental plats describing portions of
the property covered by the Agreement, as amended by the First Amendment.
G. On August 21, 1998, PNRC transferred to GFMC all of its rights, title
and interests in or to the Agreement, as amended by the First Amendment, and the
property subject to the Agreement.
H. The Parties desire to amend the Agreement, as amended by the First
Amendment, in accordance with this Second Amendment to reflect the current
ownership interests in the property covered by the Agreement, as amended.
NOW THEREFORE, in consideration of the premises and mutual agreements set
forth herein, the parties agree as follows
1. EXHIBITS. Exhibits A, B, C, D, E and F to the Agreement are amended
---------
and replaced by the exhibits attached hereto. Exhibit A-1 is deleted in its
entirety.
2. MEMORANDUM. The parties shall execute a memorandum of this Second
-----------
Amendment to be recorded in the Official Records of Imperial County, California.
3. RATIFICATION. The parties hereby ratify, approve and confirm the
-------------
Agreement as amended by the First Amendment and this Second Amendment.
IN WITNESS WHEREOF, the parties have executed this SECOND AMENDMENT TO
MINERAL LEASE AND LANDFILL FACILITIES LEASE AGREEMENT effective as of the day
and year first above written.
GOLD FIELDS MINING CORPORATION, a HOSPAH COAL COMPANY, a
Delaware corporation Delaware corporation
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- ------------------------------
Its: Vice President Its: President
SANTA FE PACIFIC GOLD
CORPORATION,
a Delaware corporation, formerly known as
Santa Fe Pacific Minerals Corporation
By: /s/ X.X. Xxxxxxx
-----------------------------
Its: Vice President and Secretary
5