AMENDMENT TO OPTION AGREEMENT
AND GRANT OF EXPLORATION RIGHTS
THIS AGREEMENT, made and entered into effective as of
November 30, 1994, by and between UNION PACIFIC MINERALS, INC.,
a Utah corporation (hereinafter called "Union Pacific") and
ROYAL GOLD, INC., a Delaware corporation (hereinafter called
"Royal").
WITNESSETH:
WHEREAS, Union Pacific and Royal entered into an Option
Agreement and Grant of Exploration Rights dated effective as of
May 1, 1994 (hereinafter called the "Option Agreement")
granting Royal certain exploration and option rights in lands
administered by Union Pacific, and
WHEREAS, Union Pacific and Royal desire to amend the
Option Agreement effective as of the effective date hereof,
NOW, THEREFORE, in consideration of the premises, Union
Pacific and Royal, intending to be legally bound, hereby agree
as follows:
1. Section 2B of the Option Agreement is hereby amended
to provide as follows:
"B. The lands and interests from which Royal shall
make the selection provided for in Section 2A shall include
all of the mineral estates and mineral rights owned, held or
administered by Union Pacific Land Resources Corporation in
the States of Wyoming, Colorado and Utah except the
following: (a) the rights and interests described in
Exhibit C hereto, and (b) the rights and interests within
the exterior boundaries of the Known Sodium Leasing Area
(KSLA) described in Exhibit D attached hereto. All lands
and interests held or administered by Union Pacific Railroad
Company are expressly excluded from the coverage of this
Agreement."
2. Section 2E of the Option Agreement is hereby amended
to provide as follows:
"E. Union Pacific hereby grants to Royal the
further, non-exclusive right, to be exercised during the
period September 1, 1994 through December 31, 1995, to
substitute other lands and interests described in Section 2B
for the lands and interests theretofore selected and made
part of the Subject Property during the selection period
ended August 31, 1994. Substitution of lands and interests
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under this Section 2E shall be on an acre-for-acre basis.
Royal may provide Union Pacific with one or more written
notices of substitution during the sixteen-month period
contemplated by this provision. Each such notice of
substitution shall describe the lands and interests to be
selected and added to the Subject Property in detail by
government subdivision and shall describe the lands and
interests to be "dropped" from the Subject Property (and
from the coverage of this Agreement) in similar detail. The
total amount of lands, rights and interests included in the
Subject Property and subject to the coverage of this
Agreement at the conclusion of the period described in this
Section 2E shall not exceed 50,000 acres and such lands and
interests shall consist of not more than twenty reasonably
compact units."
3. Section 4 of the Option Agreement is hereby amended to
provide as follows:
"4. Initial Term. The initial term of this
Agreement ("Initial Term") shall have a duration of twenty
(20) months, commencing May 1, 1994 and ending December 31,
1995."
4. The first paragraph of Section 5 of the Option
Agreement is hereby amended to provide as follows:
"Royal agrees, as a firm commitment, to expend,
during the Initial Term of this Agreement, a minimum total
of Five Hundred Thousand Dollars ($500,000.00) in qualified
work expenditures on or for the direct benefit of the
Subject Property."
5. The fifth paragraph of Section 5 of the Option
Agreement is hereby amended to provide as follows:
"If Royal fails to expend a minimum total of
$500,000.00 in qualified work expenditures during the
Initial Term, Royal shall, promptly following the end of the
Initial Term, pay to Union Pacific in cash, as liquidated
and agreed damages, an amount equal to $500,000.00 less the
amount of qualified work expenditures made during the
Initial Term."
6. Section 6 of the Option Agreement is hereby amended to
provide as follows:
"6. Extensions of this Agreement. Royal shall have
the right to extend the term of this Agreement for two (2)
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additional periods following the end of the Initial Term,
provided that Royal's minimum expenditure obligation set
forth in Section 5 has been fulfilled. (Each of said
additional periods is herein called an "Extension Period".)
The first Extension Period shall have a duration of twenty-
four (24) months commencing January 1, 1996 and ending
December 31, 1997. The second Extension Period shall have a
duration of twelve (12) months commencing January 1, 1998
and ending December 31, 1998.
Royal shall provide Union Pacific written notice of
its election to extend the term hereof for the first
Extension Period on or before December 1, 1995. Royal shall
provide Union Pacific written notice of its election to
extend the term hereof for the second Extension Period on or
before November 1, 1997.
If Royal is eligible to and elects to extend the term
hereof for an Extension Period Royal agrees that, having
made either of such elections to extend, it shall thereupon
become obligated, as a firm commitment, to make the
following minimum expenditures (subject to credits as
hereinafter provided) during the applicable Extension
Periods:
(i) Royal shall expend a minimum of Six Hundred Thousand
Dollars ($600,000) in qualified work expenditures
during the first Extension Period.
(ii) Royal shall expend a minimum of One Million Dollars
($1,000,000.00) in qualified work expenditures during
the second Extension Period.
Any excess work expenditure during the first Extension
Period shall be credited against Royal's minimum expenditure
obligation for the second Extension Period. Any excess work
expenditures during the Initial Term shall be credited
against Royal's minimum expenditure obligations for the
first and, if sufficient, for the second Extension Period.
Royal shall have no right to extend for a second
Extension Period unless it fulfills its minimum expenditure
obligation for the first Extension Period.
In the event that Royal fulfills its minimum
expenditure obligation for the Initial Term, elects to
extend the term hereof for the first Extension Period, and
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thereafter fails to expend a minimum of $600,000.00 in
qualified work expenditures during such first Extension
Period (subject to credits as above provided), Royal shall,
promptly following the end of the first Extension Period,
pay to Union Pacific in cash, as liquidated and agreed
damages, an amount equal to $600,000.00 less (i) credits
available due to excess expenditures during the Initial
Term, as above provided in this Section 6, and (ii) the
amount of qualified work expenditures made during the first
Extension Period. Similarly, in the event that Royal
fulfills its minimum expenditure obligation for the first
Extension Period, elects to extend the term hereof for a
second Extension Period, and thereafter fails to expend a
minimum of $1,000,000.00 in qualified work expenditures
during such second Extension Period (subject to credits as
above provided), Royal shall, promptly following the end of
the second Extension Period, pay to Union Pacific in cash,
as liquidated and agreed damages, an amount equal to
$1,000,000.00 less (i) credits available due to excess
expenditures in prior periods, as above provided in this
Section 6, and (ii) the amount of qualified work
expenditures made during the second Extension Period.
If Royal is eligible to and elects to extend the term
hereof for the first Extension Period and if Royal shall
have selected pursuant to Section 2E hereof any lands and
interests within the exterior boundaries of the State Line
Diamond Area described in Exhibit B attached hereto, Royal
shall become obligated, as a firm commitment, to expend a
minimum of One Hundred Thousand Dollars ($100,000.00) in
qualified work expenditures on or for the direct benefit of
the selected lands and interests within the State Line
Diamond Area prior to the end of the first Extension Period.
Any qualified work expenditures made on or for the benefit
of the selected lands and interests within the State Line
Diamond Area during the Initial Term shall be credited
against such $100,000.00 minimum expenditure obligation.
The $100,000.00 minimum expenditure obligation, if it
arises, shall not enlarge the minimum expenditure
obligations for the Initial Term or the first Extension
Period provided for above, and amounts spent in satisfaction
of said $100,000.00 minimum expenditure obligation shall
constitute credits against such minimum expenditure
obligations for the time periods in which they are expended.
In the event that Royal fulfills its minimum expenditure
obligation for the Initial Term, elects to extend the term
hereof for the first Extension Period, selects lands and
interests within the State Line Diamond Area pursuant to
Section 2E, and thereafter fails to expend a minimum of
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$100,000.00 in qualified work expenditures on or for the
benefit of such selected lands and interests prior to the
end of such first Extension Period (subject to credits as
above provided in this paragraph), Royal shall, promptly
following the end of the first Extension Period,
irrespective of the amount of any other qualified work
expenditures made by Royal during the Initial Term or the
first Extension Period, pay to Union Pacific in cash, as
liquidated and agreed damages, an amount equal to
$100,000.00 less the amount of qualified work expenditures
madeon or for the direct benefit of the selected lands and
interests within the State Line Diamond Area during the
Initial Term and the first Extension Period."
7. The concluding sentence of Section 7B of the Option
Agreement is hereby amended to provide as follows:
"For purposes of this Section 7B only, there shall be added
to and included in "qualified work expenditures" the actual
costs of travel, meals and entertainment incurred by Royal
in attracting or "promoting" the approved assignee, not to
exceed Ten Thousand Dollars ($10,000.00) per year."
8. This instrument constitutes an amendment to the Option
Agreement and Grant of Exploration Rights. As herein amended,
the Option Agreement and Grant of Exploration Rights shall
continue in full force and effect according to its terms.
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IN WITNESS WHEREOF, Union Pacific and Royal have executed
this Amendment to Option Agreement and Grant of Exploration
Rights to be effective as of the day and year first above
written.
EXECUTED: March 16, 1995.
UNION PACIFIC:
Attest: UNION PACIFIC MINERALS, INC.
/s/ R. A. See By: /s/ U. Richard Eales
Assistant Secretary President
ROYAL:
Attest: ROYAL GOLD, INC.
/s/ Karen P. Gross By: /s/ Stanley Dempsey
Secretary Stanley Dempsey
Chairman of the Board
STATE OF TEXAS )
) ss.
COUNTY OF TARRANT )
The foregoing instrument was acknowledged before me by U.
Richard Eales as President of UNION PACIFIC MINERALS, INC., a
Utah corporation, this 16th day of March, 1995.
WITNESS my hand and official seal.
/s/ Sylvia Hill
Notary Public
My commission expires: 4/20/96 (Texas)
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me by
Stanley Dempsey as Chairman of ROYAL GOLD, INC., a Delaware
corporation, this 14th day of March, 1995.
WITNESS my hand and official seal.
/s/ Karen Passavanti Gross
Notary Public
My commission expires: July 2, 1995 (Colorado)
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