ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Agreement") has been made
and entered into on November 11, 1994, effective as of December
1, 1994, by and between ROYAL GOLD, INC., a Delaware corporation
with principal address of Suite 1000, 1660 Wynkoop Street,
Denver, Colorado 80202-1132 ("Assignor"), and SANTA FE PACIFIC
GOLD CORPORATION, a Delaware corporation with principal address
of Suite 400, 6200 Uptown Boulevard NE, Albuquerque, New Mexico
87110 ("Assignee").
Whereas, Assignor holds certain rights, as Lessee, under
each of two Mining Leases (with each such Mining Lease being
hereinafter referred to, respectively, as the "Steninger Lease"
and the "Aquarian Lease"), and in and to the lands and unpatented
mining claims that are now or may hereafter be subject to such
Mining Leases, with each of such Mining Leases and all such lands
and mining claims (with such lands and mining claims being
collectively referred to herein as the "Properties") being
described in more particular detail in Exhibit C attached hereto
and made a part hereof;
Whereas, Assignee has reviewed each of the Mining Leases,
and other pertinent information that Assignor has provided to
Assignee with respect to the Properties;
Whereas, Assignor desires to assign and transfer all of its
right, title and interest in and to the Mining Leases and in and
to the Properties to Assignee, subject to the terms and
conditions of this Agreement;
Whereas, Assignee desires to accept such an assignment from
Assignor, and to assume Assignor's rights and obligations under
each of the Mining Leases, and with respect to the Properties,
subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the
other agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Assignment. Assignor hereby assigns to Assignee,
effective as of December 1, 1994, all of Assignor's right,
title and interest in and to all of the Properties, as more
particularly described in Exhibit C attached hereto and made
a part hereof.
2. Assignor's Representations. Assignor represents, to the
best of its knowledge, information, and belief, as follows:
a. It has full power and authority to enter into this
Agreement and to perform all of the transactions herein
contemplated. This Agreement and the provisions hereof
constitute legal and binding obligations of Assignor that
are enforceable in accordance with their terms. Neither the
execution and delivery of this Agreement, nor compliance by
Assignor with its provisions, will conflict with or result
in a breach of, or a default under, any of the terms,
conditions or provisions of any agreement or instrument to
which Assignor is a party, or of any law or regulation
applicable to Assignor.
b. There are no actions, suits, claims, proceedings, or
investigations pending or threatened against Assignor that
could interfere with its ability to perform under this
Agreement.
c. Assignor has not previously transferred or encumbered
any of its interest in either of the Mining Leases (or in
any of the Properties), and has no knowledge that any other
person (excluding the respective Lessors) is claiming any
interest therein.
d. Assignor has not committed or suffered any act or
omission which could, whether by notice or lapse of time,
result in the breach, termination, abandonment, forfeiture,
relinquishment, or other premature termination of any of the
rights of Assignor in either of the Mining Leases, or in any
of the Properties.
e. Except as is explicitly set forth in the Mining Leases,
there are no royalties, fees, or monies payable or required
to be paid to any persons having any interest in any of the
Properties, and all sums required to be paid, as of the date
of this Agreement, to the Bureau of Land Management, to
Eureka County, or to either Lessor, have been timely paid,
and no default exists under the Mining Leases of the
Properties.
f. Assignor and other parties performing activities on the
Properties prior and up to the effective date of this
Agreement have complied with all applicable laws and
regulations, whether federal, state or local.
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3. Assignee's Acceptance of Assignment. Assignee
acknowledges receipt of a complete copy of each of the
Mining Leases, and Assignee accepts the assignment,
effective as of December 1, 1994, of the entirety of
Assignor's right, title and interest under each of the
Mining Leases, and of Assignor's right, title and interest
in and to the Properties, excluding, however, the
obligations of Assignor which are set forth in Paragraph 4.1
of the Aquarian Lease (and excluding also the obligations
set forth in Exhibit B attached to the Aquarian Lease)
(namely, the recurring obligations of Assignor to tender
shares of its common stock to the Lessor under the Aquarian
Lease), which obligations Assignor shall continue to honor,
subject to Paragraph 6.b. below. With the exception of the
obligations of Assignor that are set forth in Paragraph 4.1
of the Aquarian Lease (and in Exhibit B attached thereto),
Assignee shall assume and discharge all obligations of
Assignor that arise pursuant to either of the Mining Leases,
to the extent that any such obligations arise from and after
the effective date of the assignment.
4. Assignee's Representations and Covenants.
a. Assignee represents, to the best of its knowledge,
information, and belief, as follows:
i. It has full power and authority to enter into this
Agreement and to perform all of the transactions herein
contemplated. This Agreement and the provisions hereof
constitute legal and binding obligations of Assignee that
are enforceable in accordance with their terms. Neither the
execution and delivery of this Agreement, nor compliance by
Assignee with its provisions, will conflict with or result
in a breach of, or a default under, any of the terms,
conditions or provisions of any agreement or instrument to
which Assignee is a party, or of any law or regulation
applicable to Assignee.
ii. There are no actions, suits, claims, proceedings, or
investigations pending or threatened against Assignee that
could interfere with Assignee's ability to perform under
this Agreement.
iii. Assignee shall conduct all activities with respect to
the Mining Leases and with respect to any of the Properties
in a good, workmanlike and efficient manner, in accordance
with sound mining and other applicable industry standards
and practices, and in accordance with all of the terms and
conditions of any applicable lease, license, permit,
contract or other agreement pertaining to any such Mining
Lease or to any such Property.
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b. Assignee covenants that it shall, in accordance with
the requirements of each of the Mining Leases, either
maintain in good standing all of the mining claims that are
now subject to, or that may hereafter become subject to,
either of the Mining Leases; or that it will otherwise
provide advance written notice to Assignor, such notice to
be provided not less than 30 days prior to Assignee taking
any action or omitting to take any action with respect to a
decision to abandon, forfeit, or relocate any such mining
claim; and Assignee also covenants that as and when it
communicates with either Lessor, it shall simultaneously
provide Assignor a true and accurate written copy of any
such communication.
5. Reciprocal Indemnification.
a. Assignor shall indemnify Assignee against, and hold it
harmless from, any loss, claim, demand or liability
whatsoever (including any attorney's fees or other costs of
legal defense for Assignee) that may arise or accrue with
respect to any activity of Assignor that occurred on any of
the Properties, to the extent that any such activity
occurred prior to the effective date of this Agreement.
This indemnity shall include, but not be limited to,
reclamation or other liabilities under applicable local,
state and federal laws and regulations.
b. Assignee shall indemnify Assignor against, and hold it
harmless from, any loss, claim, demand or liability
whatsoever (including any attorney's fees or other costs of
legal defense for Assignor) that may arise or accrue with
respect to any activity of Assignee on any of the
Properties, as such Properties may be hereafter augmented,
amended, patented, or relocated, to the extent that any such
activity occurs after the effective date of this Agreement.
This indemnity shall include, but not be limited to,
reclamation or other liabilities under applicable local,
state and federal laws and regulations.
6. Royalties and Reimbursement Payments. Until such time as
this Agreement is terminated, Assignee shall be responsible
for the following payment obligations to Assignor:
a. On or before the effective date of the assignment
described in Paragraph 1 of this Agreement, Assignee shall
pay Assignor $20,000.
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b. On a prospective basis, from and after August 31, 1996,
to the extent that Assignee has continued to maintain the
Aquarian Lease, and to the extent that Assignor has,
pursuant to Paragraph 4.1(a) of the Aquarian Lease, made
tender of its treasury shares to the Lessor under the
Aquarian Lease, Assignee shall, upon receipt of reasonable
documentation from Assignor that any such tender of shares
(or that any substitute performance acceptable to such
Lessor) has been made, pay to Assignor:
(i) As to biennial tenders of shares (i.e., tenders that
are scheduled to occur on August 31, 1996, August 31, 1998,
August 31, 2000, etc.), the lesser of the cumulative fair
market value of 1,000 shares of Royal Gold common stock on
the date of each such tender, or $15,000; and
(ii) As to the tender that is to be made following the
commencement of production in commercial quantities, the
lesser of the cumulative fair market value of 10,000 shares
of Royal Gold common stock on the date of such tender, or
$100,000.
c. Assignee shall pay to Assignor a production royalty
equivalent to two percent (2.0%) of the net smelter returns
of all production from any portion of any of the Properties
that are now, or may hereafter be, subject to either of the
Mining Leases. "Net smelter returns", for the purposes of
this provision, shall be defined in the same manner as is
set forth in Paragraph 4.2(a) of the Aquarian Lease, and the
timing of any such payment of production royalty shall occur
on the same schedule as is set forth in Paragraph 4.2(b) of
the Aquarian Lease. The production royalty payable to
Assignor hereunder shall not be subject to escalation, as
set forth in Paragraph 4.2(c) of the Aquarian Lease, and the
only sums creditable against payment of such production
royalty shall be the sums described in Paragraph 6.a. and
6.b. above, and, to the extent applicable, any payment made
to Assignor in lieu of Work, as described in Paragraph 7
below. Assignor shall have the same inspection and audit
rights, and Assignee shall be entitled to tender payment of
production royalty in the same manner, as are set forth in
the Aquarian Lease. In addition, Assignor shall be entitled
to elect, on an annual basis, whether to take its production
royalty payments hereunder "in kind", with delivery of any
such "in kind" production royalty to occur at the smelter or
refiner selected by Assignee, and with any additional cost
or expense attributable to such "in kind" production royalty
election to be borne by Assignor.
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7. Work Commitments.
a. For so long as Assignee continues to maintain any
interest under this Agreement, or under either of the Mining
Leases, Assignee covenants that it shall, on an annual
basis, commencing with the effective date of this Agreement,
complete on such portion or portions of the Properties as it
may, in its complete discretion, select, the following
minimum quantities of geological, geophysical, geochemical,
mapping, sampling, assaying, reclamation or physical
exploration and development work (collectively, "Work"):
Work Period Dollar Value of Work
December 1, 1994 - November 30, 1995 $ 150,000
December 1, 1995 - November 30, 1996 $ 250,000
December 1, 1996 - November 30, 1997 $ 400,000
December 1, 1997 - November 30, 1998 $ 500,000
b. In the event that Assignee fails to accomplish Work on
the Properties in the minimum amount of $ 150,000 by
November 30, 1995, Assignee covenants that it shall pay to
Assignor, on or before December 15, 1995, the difference
between such amount of Work as Assignee can document was
completed on the Properties prior to November 30, 1995, and
$ 150,000. This covenant shall survive termination of this
Agreement.
c. In the event that Assignee fails, at any time following
November 30, 1995, to complete such minimum amount of Work
as is required within any relevant Work Period that
commences after November 30, 1995, such failure shall
constitute a default under Paragraph 11, and Assignor's sole
remedy shall be its right to terminate under Paragraph 10.
Assignee may avoid termination of this Agreement at the
election of Assignor by tendering to Assignor, within 15
days following the expiration of the relevant Work Period,
one-half of the difference between such amount of Work as
was required to be performed on the Properties during such
Work Period, and the amount of Work that Assignee can
document was completed on the Properties during such Work
Period.
d. Any sum expended on Work during any Work Period that
exceeds the minimum amount required to be spent on the
Properties during such Work Period may be applied by
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Assignee, on a cumulative basis, against the obligation(s)
in subsequent Work Period(s).
8. Force Majeure. Assignee shall not be liable for failure to
perform any of its obligations hereunder during periods in
which performance is prevented by any cause reasonably
beyond Assignee's control, which causes hereinafter are
called "force majeure." For purposes of this Agreement, the
term "force majeure" shall include acts of God, fire, flood,
undue shortage of power, strikes, insurrection or mob
violence, inability after reasonable diligence to obtain
permits, or imposition of governmental statutes,
requirements or regulations making it impractical to carry
out such operations, and other causes of a similar nature
which are beyond the control of Assignee. Assignee shall
notify Assignor of the date of commencement, and the cause
of, any such period of force majeure, and shall also notify
Assignor of the time of removal of such force majeure.
During any period of force majeure, Assignee shall
nevertheless (i) comply with all requirements of this
Agreement relative to maintaining the status and title of
the Properties (and the Mining Leases) in good standing; and
(ii) continue to make all payments to Assignor as are
required under Paragraph 6 above.
9. Information and Data.
a. During the term of this Agreement, Assignor is entitled
to have access to the Properties, at Assignor's sole risk
and expense, and upon reasonable prior notice, to permit
Assignor to observe Assignee's activities thereon or for any
other lawful purpose, provided that Assignor's presence on
the Properties shall not unreasonably interfere with, or
delay, the conduct of Assignee's activities on any such
Property.
b. During the term of this Agreement, Assignee shall
deliver to Assignor, on a calendar quarterly basis, a
written report that describes in reasonable detail all
operations of Assignee that were conducted on or for the
benefit of any of the Properties during the most-recently
concluded calendar quarter. Such report shall, at a
minimum, include all material non-interpretive exploration
and operations information, and/or all factual data
resulting from Work. In the event that Assignee generates
any significant exploration or operations information or
data that would be material to Assignor's understanding of
the Properties, Assignee shall deliver such information to
Assignor on an ad hoc basis, rather than waiting for the
next quarterly reporting period. Assignee may also deliver
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interpretive data to Assignor, at any time, at the
discretion of Assignee; provided, however, that Assignor
covenants to maintain the confidential nature of all such
interpretive data as may be so delivered by Assignee.
10. Termination.
a. Assignee may terminate this Agreement at any time, by
providing not less than 60 days' prior written notice to
Assignor, at the address set forth on the initial page of
this Agreement. In the event that any such notice of
termination is delivered to Assignor's offices on or after
July 1, however, Assignee covenants that it shall also
simultaneously tender to Assignee such sum as may then be
required to maintain in good standing (at the federal, state
and local levels) all of the mining claims then constituting
the Properties that are subject to the Mining Leases, or
shall otherwise simultaneously produce to Assignor
reasonably acceptable documentary evidence that all such
sums have been paid, and that all necessary actions have
been taken, to maintain all such claims in good standing at
least through the balance of the "assessment year" beginning
on the September 1 next following Assignor's receipt of any
such termination notice.
b. In the event that Assignee determines to terminate the
entirety of its interest under either or both of the
Aquarian Lease and the Steninger Lease, Assignee covenants
that it shall provide Assignee not less than 30 days'
written notice of such determination prior to providing any
such notice of termination to the relevant Lessor; and that
it shall simultaneously tender to Assignor, for its
consideration and possible acceptance (such acceptance to
occur within such 30-day time period), a recordable re-
assignment to Assignor of Assignee's interest in such Mining
Lease(s); provided that, in such event, Assignee shall not
reserve any residual interest in any of the Properties that
are the subject of the Mining Lease(s) as to which Assignee
shall have made such termination determination, and Assignee
shall be relieved of all unincurred obligations under such
re-assigned Mining Lease(s).
c. Upon termination of this Agreement by Assignee, all
payments theretofore made to Assignor by Assignee shall be
retained by Assignor without further liability to Assignee,
and all liabilities and obligations of Assignee hereunder
not then due or accrued shall cease and terminate, except
for any liabilities arising out of Paragraphs 3, 4, 5.b.,
7.b. or 9.b.
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d. Assignor may terminate this Agreement at any time, in
the event of Assignee's failure to perform as required
hereunder, provided that if Assignor seeks to terminate
because of any such alleged default by Assignee, Assignor
must proceed in accordance with the provisions of Paragraph
11 below.
11. Default. Should either party default in its performance of
any obligation hereunder, the non-defaulting party shall
give notice in writing to the defaulting party, specifying
the alleged default. The defaulting party shall have such
reasonable period as may be specified in the notice (or if
no such period is specified, a period of not more than 30
days, except in the event of default in payment of a sum due
and owing, in which event the period shall be not more than
5 days) in which to cure the default, or in which to
commence such action as is intended to lead to a diligent
cure of the default. In the event that the defaulting party
fails to cure (or fails promptly to undertake, and continue
with diligence its efforts to achieve, a cure) the noticed
default within the relevant cure period, then the non-
defaulting party, may, at its election, upon written notice
to the defaulting party, terminate this Agreement, and
proceed with all appropriate action, including, as may be
applicable, demand of re-assignment to Assignor of
Assignee's interest(s) in the Mining Leases and in the
Properties.
12. Memorandum Recording. This Agreement shall not be
recorded for, by, or on behalf of either party. The parties
agree that they shall execute a Memorandum of this Agreement
that shall be in a form suitable for recording in Eureka
County, Nevada, and such Memorandum shall simply state that
Assignee's interest in the Mining Leases, and in the several
Properties, is subject to the terms and conditions of this
Agreement.
13. Governing Law. This Agreement shall be subject to, and shall
be construed in accordance with, the law of the state of
Nevada.
14. Notices and Payments. Any notice or payment required or
permitted hereunder shall be made to the office of the
respective party at the appropriate address noted on the
first page hereof, or at such other address as either such
party may hereafter notice in writing. Notices are
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effective upon confirmed receipt only. Subject to
confirmation of receipt, notices may be provided by
facsimile transmission.
15. Construction; Complete Agreement. As used herein, the
singular includes the plural, as may be required by context.
The titles of the several paragraphs of this Agreement are
for reference or convenience only, and shall not in any way
affect the meaning or construction of the substantive
provisions hereof. This Agreement constitutes the complete
understanding and agreement of the parties with respect to
the matters set forth herein, and it shall not be modified
or amended except by a subsequently-dated instrument that
has been executed by both parties.
16. Assignment. Either party hereunder may assign its
interest in this Agreement, such assignment to be effective
upon 10 days' prior written notice to the other party.
17. Notice to Lessors. Assignor covenants that it shall give
notice of the assignment to be effected by this Agreement to
each of the Lessors under the Mining Leases, such that the
effective date of Assignor's assignment of its interests
under the Mining Leases shall be on or before December 1,
1994, the effective date of this Agreement, as referenced in
Paragraph 1 above.
IN WITNESS WHEREOF, the parties have executed this Agreement on
November 11, 1994, effective as of December 1, 1994.
ROYAL GOLD, INC.
By: /s/ Stanley Dempsey
Stanley Dempsey, Chairman and
Chief Executive Officer
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ K. Sageser
K. Sageser, Vice President
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