Exhibit 10.1 Big Jim
Agreement dated May 10, 1979
AGREEMENT
THIS AGREEMENT is made
and entered into as of the 10 th day of May
, 1979 by and between the following parties:
BULLION MONARCH COMPANY,
a Utah corporation (BULLION); POLAR RESOURCES CO., a Nevada
corporation (POLAR);
UNIVERSAL GAS (MONTANA),
INC., a Montana corporation, and UNIVERSAL EXPLORATIONS, LTD., a
Canadian corporation (UNIVERSAL);
CAMSELL RIVER
INVESTMENTS, LTD., a Canadian corporation (CAMSELL);
LAMBERT MANAGEMENT LTD.,
a Canadian corporation (LAMBERT) and
ELTEL HOLDINGS LTD., a
Canadian corporation (ELTEL);
W I T N E S S E T
H:
WHEREAS the parties
hereto would all profit from the mining of and production of
certain mining properties located in the Lynn Mining District,
Eureka County, Nevada, more fully described in Exhibit A-l attached
hereto and incorporated herein by reference, hereinafter
collectively referred to as the "Subject Property;" and
WHEREAS the parties have
interest in exploring a wider range of mineral properties in which
the Subject Property is embedded, hereinafter referred to as the
"Area of Interest," more fully described in Exhibit A-2 attached
hereto and incorporated herein by reference; and
WHEREAS the parties
hereto are desirous of developing the Subject Property's mineral
potential by building adequate milling facilities and developing a
mine ("the Project"); and
WHEREAS BULLION purports
to own a royalty interest in and to the Subject Property as is more
fully set forth in Exhibit A-1;
WHEREAS POLAR purports
to own a 100% interest in and to part of the Subject Property as is
more fully set forth in Exhibit subject to possible outstanding
interests and royalties, purports to own a 100% interest in and to
other portions of the Subject Property as is more fully set forth
in Exhibit A-1, and has under a lease and Option a 77½%
interest to other portions of the Subject Property; and
WHEREAS CAMSELL, LAMBERT
and ELTEL are interrelated organizations acting in concert as to
the Subject Property, collectively being referred to hereinafter as
" CAMSELL" unless specifically referred to otherwise,
and have invested monies in the development of the Subject Property
to date, their interest and relationship to the Project being
governed by that certain Letter Agreement with Polar dated March
14, 1979, as amended by the letters of March 16,1979, April 6, 1979
and April 10, 1979, attached thereto, all attached hereto as
Exhibit B; and
WHEREAS UNIVERSAL GAS
(MONTANA), INC. is presently financing further development of the
mining and production potential of the Subject Property, primarily
for the production of precious metals basically under the terms of
that certain Agreement with POLAR dated March 14, 1979 attached
hereto as Exhibit C; and
WHEREAS UNIVERSAL
EXPLORATIONS, LTD. is prepared and able to guarantee the financial
obligations of UNIVERSAL GAS (MONTANA) INC. contained herein, both
corporations wil1 be collectively referred to as UNIVERSAL
herein with the understanding amongst the
parties hereto
that UNIVERSAL GAS (MONTANA), INC. will be the active participant
referred to as UNIVERSAL while any reference to UNIVERSAL
EXPLORATIONS, LTD. under the collective term UNIVERSAL speaks only
to its financial backing of the UNIVERSAL obligations recited
herein;
NOW THEREFORE, in
consideration of the conditions, covenants, promises, obligations,
payments and agreements herein contained, the parties agree as
follows:
1. SOLE
AGREEMENT: That as between the parties hereto this Agreement
shall be the sole and only agreement governing the ownership,
operations and payment from the Subject Property, canceling,
revoking, rescinding and terminating any and all other deeds,
conveyances, contracts or agreements between the parties hereto, or
any combination thereof, affecting the Subject Property, except any
agreement that may exist between CAMSELL, LAMBERT and ELTEL as to
investment in Subject Property development and divisions of
proceeds received there from, and except any agreement, contract or
deed specifically preserved by the terms hereof. Should the terms
of any agreement, letter agreement or other document or
understanding preserved by specific reference herein be in conflict
with this Agreement the terms of this Agreement shall
control.
2.
OWNERSHIP OF SUBJECT PROPERTY: That as between the parties
hereto it is understood and agreed that the ownership of the
Subject Property as presently constituted is as set forth in
Exhibit A-1 attached hereto, subject only to the terms and
conditions of this Agreement specifically referred to herein. In
addition, it is understood, agreed and warranted amongst the
parties hereto that except
for agreements,
deeds and other documents specifically mentioned herein that none
of the parties hereto, individually, in combination or
collectively, have conveyed or encumbered the Subject
Property.
A.
Simultaneously herewith,
BULLION shall execute and deliver a Grant Deed to UNIVERSAL
conveying all of its right, title and interest in the Subject
Property to UNIVERSAL. Such interest of BULLION conveyed to
UNIVERSAL shall be subject to the payment provisions of Paragraph
4, infra.
B.
Simultaneously
herewith, POLAR shall execute and de-liver a Grant Deed to
UNIVERSAL conveying all of its right, title and interest in the
Subject Property to UNIVERSAL, subject to the terms and conditions
of the `arch 14, 1979 POLAR - UNIVERSAL, Agreement.
C.
Simultaneously herewith,
CAMSEEL shall execute and deliver a Quitclaim Deed to UNIVERSAL
conveying and quitclaiming all of its right, title and interest in
the Subject Property to UNIVERSAL.
D.
At all times pertinent
hereto, UNIVERSAL shall have the right to pled g e or
otherw i se hypothecate the titles to any persons, or
the whole of, the Subject Property for the purpose of obtaining
financing for development of the Subject Property, except that no
more than a total of FIFTY PERCENT (50%) of the then current market
value of such property shall be so hypothecated or encumbered. At
the time, under the March 14, 1979 Agreement, Exhibit C, UNIVERSAL
reaches the "earning point", its conveyance to POLAR of 50%
interest shall be unencumbered.
3.
UNIVERSAL AS OPERATOR: That on March 14, 1979 POLAR and
UNIVERSAL entered into an Agreement, a copy of which is attached
hereto as Exhibit C and incorporated herein by reference, whereby
UNIVERSAL, under the terms and conditions thereof, was to become
the sole and only operator of the mineral production from the
Subject Property as of March 1, 1979, and that all of the parties
hereto agree to the terms of said Agreement allowing UNIVERSAL the
sole and only control over further development and production from
the Subject Property pursuant to the March 14, 1979 Agreement and
ratify the same as if they had been signatory thereto.
4.
PAYMENTS TO BULLION:
A. Commencing May 1,
1979, UNIVERSAL shall pay to BULLION an advance minimum royalty of
$2,500.00 each and every month through October 1979 or until gross
production sales from the Subject Property have reached the amount
of $62,500.00 per month, whichever comes first.
B. Commencing on
November 1, 1979, UNIVERSAL shall pay to BULLION an advance
minimum royalty of $5,000.00 each and every month until gross
production sales from the Subject Property has reached The amount
of $125,000.00 per month, or until Bullion has received an
aggregate of $25O,000.00 under these subparagraphs, A and
B
C. BULLION shall receive
a FOUR PERCENT (4%) gross smelter return from production from the
Subject Property (based on 100% operating' interest in UNIVERSAL,
otherwise prorated) until BULLION has received an aggregate of
$500,000.00 under these subparagraphs, A, B and C.
D. Thereafter BULLION
shall receive a TWO PERCENT (2%) gross smelter return royalty from
production from the Subject Property (based on 100% operating
interest in UNIVERSAL, otherwise prorated) until BULLION has
received an aggregate of $1,000,000.00 under these subparagraphs,
A, B, C and D.
E. Thereafter BULLION
shall receive a ONE PERCENT (1%) gross smelter return royalty from
production from the Subject Property (based on 100% operating
interest in UNIVERSAL, otherwise prorated).
Gross smelter return,"
as used above, shall mean the amount of earned revenues, as used in
accordance with generally accepted accounting principles, payable
to UNIVERSAL by any smelter or other purchaser of metals, ores,
minerals or mineral substances, or concentrates produced therefrom
for products mined from the Subject Property.
Upon SIXTY (60) days'
written notice by BULLION to UNIVERSAL, BULLION may elect to take
any monthly production royalty in kind but will be totally
responsible for all loading and transportation and the costs
thereof. BULLION agrees not to materially interfere with
UNIVERSAL'S operations should it elect to receive payment in
kind, and will hold all the remaining parties hereto harmless from
its actions in loading and transporting the in kind
payments.
All advance royalty
payments shall be due on the first day of each month and production
royalties shall be due no later than FORTY-FIVE (45) days after the
date payment for production sales is received by
UNIVERSAL.
5.
OBLIGATIONS OF BULLION AND POLAR: BULLION and POLAR shall
assume and retain all obligations that they have independently
incurred by virtue of their activities on and for the Subject
Property prior to the date of this Agreement and, in particular,
BULLION, shall assume and retain the obligation of that certain
Deed of Trust made in favor of Ira J. Jaffee, Trustee, as
Beneficiary, recorded in the Official Records of Eureka County,
Nevada, 'Book 41, Page 362. At all times pertinent hereto,
UNIVERSAL shall have the unqualified right to direct any and all
funds due BULLION or POLAR hereunder to remove any obligations of
BULLION or POLAR, respectively, secured by the Subject Property, or
any portion thereof, and such will be credited toward the payment
schedule due BULLION or POLAR. See Paragraph 4,
supra.
6.
PURCHASE OF BULLION'S INTEREST: That at the time BULLION has
received an aggregate of $1,000,000.00 under the terms and
conditions of Paragraph 4, supra, BULLION will have been
deemed to have sold and UNIVERSAL and POLAR deemed to
have purchased all of Bullion's rich, title and interest in the
Subject Property (50% each, subject to the terms and conditions of
the Marc: 14, 1979 Agreement, Exhibit C) and forever
relieving UNIVERSAL and POLAR from any contractual commitment to
BULLION by virtue of UNIVERSAL or POLAR's actions or operations on
the Subject Property, save and except for the ONE PERCENT (l% gross
smelter return royalty from p roduction from the Subject
Property (based on 100% operating interest in UNIVERSAL, otherwise
prorated) set forth in Paragraph 4 (E) , supra. At...that
time, UNIVERSAL and POLAR will execute and deliver to BULLION a
Royalty deed forever evidencing such royalty interest,' ONE-HALF
PERCENT (1/2%) being chargeable each against UNIVERSAL and
POLAR.
7.
DEFAULT OF OBLIGATIONS TO BULLION: If, at any time,
UNIVERSAL is in default of its payment obligations to BULLION,
BULLION, upon FORTY-FIVE (45) days' written notice to all of the
parties hereto, may terminate this Agreement and demand that
UNIVERSAL execute and deliver to BULLION a Quitclaim Deed of all of
its right, title and interest to that portion of the then Subject
Property that is specifically listed in Exhibit A attached hereto,
but not the additional properties added to the Subject Property
list subsequent to the date of this Agreement. During the notice
period, UNIVERSAL, or any other party hereto not BULLION, or anyone
on their behalf, may pay such obligation to BULLION and cure such
default.
8.
PRODUCTION EXPENSE OVERRUN : Pursuant to the terms of the
Letter Agreement between POLAR and CAMSELL dated March 14, Exhibit
B, POLAR and CAMSELL agree to share in cost overruns incurred by
UNIVERSAL in bringing the Project into production should UNIVERSAL
' s initial development costs prior to production exceed
ONE MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 ($1,250,000.00),
or should UNIVERSAL's initial development costs and production
costs exceed $1,250,000.00 at any time after production commences
but production expenses exceed production payments or
revenues.
The parties agree to
share in cost overruns in excess of $1,250,000.00 commitment of
UNIVERSAL in the following percentage
UNIVERSAL
50%
POLAR-CAMSELL 50%
Except as herein
outlined, the terms, conditions and penalties for cost overruns and
the non-participation in such overruns are governed by Clause
10(D), Schedule B, POLAR - UNIVERSAL Agreement of March 14,
1979.
9.
DIVISION OF
PROCEEDS: The
proceeds of production shall be governed by the terms of this
Agreement only (except for the CAMSELL, LAMBERT and ELTEL
arrangements). As operator under the March 14, 1979 Agreement (see
Paragraph 3, supra), UNIVERSAL shall have the right to pay
all normal operating and production expenses, including insurance
and taxes (excepting income taxes accruing to the individual
parties hereto, but specifically including net proceed of mine
taxes, real and personal property taxes associated with mining and
income taxes accruing to the venture), pursuant to normal and usual
accounting practices and the terms of the March 14, 1979 Agreement
from production payments received. In addition, UNIVERSAL shall be
able to treat as production expenses and deduct from production
payments received all rentals, advance royalties and production
royalties paid to BULLION, the Poulsen Group and any others. The
amounts received from products produced from the Subject
(production payments) less the production expenses, as defined
herein and in the March 14, 1979 Agreement between POLAR and
UNIVERSAL, shall be the net production receipts.
As between the parties
hereto, the net production receipts shall be divided as
follows:
A. BULLION: none, being only entitled to the
payments set forth above in Paragraph 4;
B. UNIVERSAL: FIFTY PERCENT (50%); and
C. POLAR, CAMSELL:
FIFTY PERCENT (50%), pursuant to that Letter Agreement between
POLAR
and
CAMSELL dated March 14, 1979, Exhibit B.
Nothing herein shall be
construed as prohibiting POLAR CAMSELL from taking their interest
in kind provided that they give UNIVERSAL SIXTY (60) .
days' written notice of such election. POLAR CAMSELL will be
totally responsible for all loading and transportation and the
costs thereof. POLAR-CAMSELL will not materially interfere with
UNIVERSAL's operations should it elect to receive payment in kind
and will hold all the remaining parties hereto harmless from its
actions in loading and transporting the in kind payments. It is
understood and agreed that all such in kind payments are net, after
deduction of the proportionate amount of mini and operation
costs.
10.
TERMINATION BY UNIVERSAL: UNIVERSAL ' s
participation in the Project is governed by the terms and
conditions of the POLAR - UNIVERSAL Agreement of March 14, 1979,
Exhibit C, except as specifically modified herein. Upon fulfilling
its obligations thereunder, UNIVERSAL has the right to terminate
its position as Project Operator and to terminate its further
participation in Project development and expenses thereof. Such
termination is governed by the terms and conditions of the March
14, 1979 UNIVERSAL - POLAR Agreement and, in particular, Schedule B
attached thereto.
11.
ADDITIONAL PROPERTY ACQUISITIONS: UNIVERSAL,, as operator,
shall have the exclusive right to acquire additional mineral
properties within the Area of Interest on behalf of the parties
hereto, be such acquisition by virtue of the rights and privileges
under the 1872 Mining Law, or the leasing or purchase of private
lands and minerals, or unpatented mining claims. All parties hereto
agree to immediately quitclaim and assign to UNIVERSAL any and all
other real property or interest in such that they may have within
the Area of Interest, Exhibit A-2, as of the date of this
Agreement, subjecting the same to the terms and conditions of this
Agreement, excepting any interest of BULLION in and to those
properties presently being worked by Western States Minerals
(Pancana).
Upon acquiring such
properties within the Area of Interest, UNIVERSAL shall offer to
include such into the Subject Property upon payment by
POLAR-CAMSELL of FIFTY PERCENT (50%) of all acquisition costs
incurred in acquiring such properties. Acquisition costs shall
include, but are not limited to, purchase price, rental fees, real
estate finder's commissions, legal fees, closing costs, title
examinations, appraisal fees and costs incurred by UNIVERSAL in
otherwise evaluating the property to be acquired.
Should POLAR-CAMSELL
reject such offer or fail to pay or reach agreement for paying such
acquisition on cost within FORTY-FIVE (45) days of such offer by
UNIVERSAL, then such properties within the Area of Interest shall
not become part of the Subject Property as they apply POLAR-CAMSELL
and will remain the sole property of UNIVERSAL without any
obligations
POLAR-CAMSELL , but
subject to the royalty interest of BULLION.
However, should POLAR
accept such offer and pay or reach an agreement with UNIVERSAL for
paying such acquisitions costs, the newly acquired properties shall
become part of the Subject Property and will be treated thereafter
under the terms of this Agreement pertaining to the Subject
Property.
12.
POULSEN LEASE AND OPTION: The parties hereto recognize the
Lease and Option of POLAR with the Poulsens, a copy of which is
attached hereto as Exhibit D. UNIVERSAL shall make all payments due
thereunder and shall credit such as a development or production
expense.
While under Lease, the
Paulsen properties shall be, and are, part of the Subject Property,
however, at any time, UNIVERSAL may elect to exercise the purchase
option. Upon doing so, UNIVERSAL shall offer such to POLAR-CAMSELL
under the terms of Paragraph 12, supra. Failure of
POLAR-CAMSELL to participate in the acquisition (purchase
shall remove such properties from Subject Property
status as the same applies to POLAR-CAMSELL.
13.
TERM: The term of this Agreement, as it affects the
continuing contractual relationships between the parties hereto is
for a period of NINETY-NINE (99) years commencing on the date
hereof, unless sooner terminated, surrendered or
forfeited
14.
TITLE PERFECTION: The parties hereto recognize that title to
the Subject property, or portions thereof, may contain certain
imperfections, clouds thereon or outstanding interests that may
require acquisition, clearing or otherwise perfecting.
UNIVERSAL shall, in its discretion, seek out such imperfections and
cure the same. All expenses incurred by UNIVERSAL in investigating
title to the Subject Property from March 1, 1979, and curing
imperfections or acquiring outstanding interests in the same shall
be treated as a development or production expense by UNIVERSAL
pursuant to the March 14, 1979 POLAR - UNIVERSAL
Agreement.
15.
INSPECTION, RECORDS: At all times pertinent hereto, the
non-operating parties shall have the right to reasonable inspection
of the Subject Property and all geological and production records
upon giving FIVE (5) days' written notice to UNIVERSAL. Such
inspection shall be at the Subject Property or at any offices of
UNIVERSAL in the Elko-Carlin, Nevada area. Personal inquiry by the
parties hereto directly to UNIVERSAL shall be made only to the
following UNIVERSAL officers and employees, and no
others:
Joseph A. Mercier Dan
Mercier Don Hargrove
or their
nominees.
Monthly,
or the monthly anniversary of this Agreement, UNIVERSAL shall
prepare and deliver to the parties hereto a summary report of
development on the Subject property, including building
construction, geological finds, etc., and setting forth production
and development expenditures.
16.
NOTICES
All notices - fired
herein shall be writing by certified or registered mail, (United
States or Canada, as the case may be), return receipt requested for
the Canadian equivalent of such service;, to the addresses listed
below. Service of such notice is to be deemed accomplished as of
the date of mailing:
BULLION MONARCH
COMPANY
Attention: R. D.
Morris
Henderson Bank
Building
Elko, NV
89801
UNIVERSAL GAS (MONTANA),
INC.
Attention: Joe Mercier,
President
640 8th Avenue, S.
W.
Calgary, Alberta CANADA
T2P 1G7
With a copy to:
UNIVERSAL GAS (MONTANA), INC.
Attention: John C.
Miller, Esq.
Blohm Building, Suite
201
Elko, NV
89801
POLAR RESOURCES CO.
Attention: C. Warren Hunt
1119 Sydenham Road, S.
W.
Calgary, Alberta CANADA
T2T OT5
CAMSELL RIVER
INVESTMENTS
Attention: K. H. Lambert
808 Home Oil Tower
324 8th Avenue, S.
W.
Calgary, Alberta CANADA
T2P 2Z2
LAMBERT MANAGEMENT
LTD.
Attention: K. H.
Lambert
808 Home Oil Tower 324
8th Avenue, S. W.
Calgary, Alberta CANADA
T2P 2Z2
ELTEL HOLDINGS LTD.
Attention: K. H. Lambert
808 Home Oil Tower 324
8th Avenue, S. W.
Calgary, Alberta CANADA
T2P 2Z2
17.
RECORDATION: This Agreement may be recorded into
the Official Records either Eureka County or Elko County, Nevada or
both, by any one of the parties hereto.
18.
BINDING
EFFECT: The
terms and conditions of this Agreement shall inure to the benefit
of, and be binding upon, the successors and assigns of the parties
hereto.
19.
ASSIGNABILITY: The respective positions and interests of the
parties hereto shall be freely assignable except that such
assignment shall not be binding on or affect the remaining parties
hereto in any manner, unless and until such assignment is noted in
writing to UNIVERSAL, or any successor Operator.
IN WITNESS WHEREOF, the
parties hereto set their hands as of the day and year first above
written.
BULLION MONARCH COMPANY,
a Utah corporation
BY:/s/
TITLE:
POLAR RESOURCES CO., a
Nevada corporation
BY: /s/
UNIVERSAL GAS (MONT
.CIA) , INC. a Montana corporation
BY:/s/
TITLE:
CAMSELL RIVER
INVESTMENTS, a Canadian corporation
By:/s/K H
Lambert
TITLE:
President
LAMBERT MANAGEMENT LTD.,
a Canadian corporation
By:/s/K H
Lambert
Title:
President
ELTEL HOLDINGS LTD., A
Canadian corporation
By:/s/K H
Lambert
Title Director &
Secretary
UNIVERSAL EXPLORATIONS,
LTD. a Canadian corporation
By:/s/
Title:
STATE OF NEVADA
)
SS.
COUNTY
OF
)
On May 10,1979,
personally appeared before John C. Miller, a Notary Public,
, a duly qualified and officer of / BULLION
MONARCH COMPANY, who acknowledged to that he executed the above
instrument in that capacity.
NOTARY
PUBLIC'
JOHN C.
MILLER
)
)ss
COUNTY OF
)
On May 10, 1979,
personally appeared before me, a Notary Public, duly qualified and
acting officer of POLAR RESOURCES CO., who acknowledged to me that
he executed the above instrument in that capacity.
/s/
NOTARY PUBLIC
)
)
SS
COUNTY
OF
)
On May
10
,
1979, personally
appeared, before me, a Notary Public , a duly qualified and
acting officer of UNIVERSAL GAS (MONTANA), INC., who acknowledged
to me that he executed the above instrument in that
capacity
COUNTY OF
On May 10, 1979,
personally appeared before me, a Notary Public, a duly qualified
and acting officer of CAMSELL RIVER INVESTMENTS, who acknowledged
to me that me that he executed the above instrument in that
capacity.
/s/NOTARY
PUBLIC
AFFIDAVIT OF
EXECUTION
I Susan Lee Nicholl of
the City of Calgary, in the Province of Alberta, make oath and say
that:
1.
I was personally present
and did see Mr. C. Warren Hunt named in the within or in annexed
instrument who is personally known to me to be the person named
therein, duly signed and executed the same for
