EXHIBIT 10(l)
THIRD AMENDMENT TO OPTION AGREEMENT
AND GRANT OF EXPLORATION RIGHTS
THIS AGREEMENT made and entered into effective as of August 15, 1996, by
and between UNION PACIFIC RESOURCES GROUP, INC., a Utah corporation formerly
known as Union Pacific Minerals, Inc. (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 previously amended the Option Agreement
by Amendment to Option Agreement and Grant of Exploration Rights dated
effective as of November 30, 1994, and Second Amendment to Option Agreement
and Grant of Exploration Rights dated effective as of January 1, 1996, and
WHEREAS, Union Pacific and Royal desire to further 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. Royal hereby elects to extend the term of the Option Agreement, as
heretofore and herein amended, for the second segment of the first Extension
Period and Union Pacific agrees to such extension, subject to verification
that Royal fulfilled the minimum expenditure obligation contained in Section 6
during the first segment of the first Extension Period.
2. Notwithstanding any prior selections of property made by Royal
pursuant to the Option Agreement, the Subject Property (defined in Section 2C
of the Option Agreement) shall, as of the effective date hereof, comprise and
consist of the lands described in Exhibits 1, 2 and 3 attached hereto.
3. Section 2B of the Option Agreement is hereby amended to provide as
follows:
"B. The lands and interests from which Royal shall make the
selections provided for in Section 2A shall include and shall be
restricted to the mineral estates and mineral rights owned, held or
administered by Union Pacific Land Resources Corporation within the
exterior boundaries of the State Line Diamond Area described in Exhibit
B attached hereto. All lands and interests held or administered by
Union Pacific Railroad Company lying within the State Line Diamond Area
are expressly excluded from the coverage of this Agreement."
4. 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 by exercised at any time while this Option Agreement
remains in effect until December 31, 1997, to substitute or add other
lands and interests described in Section 2B for the lands and interests
theretofore selected and made part of the Subject Property. Substitution
or addition of lands and interests 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 or addition during the period
contemplated by this provision. Each such notice of substitution or
addition 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 at any time during the term hereof shall not exceed 50,000
acres and such lands and interests shall consist of not more that one
reasonably compact units."
2
5. The provisions of Section 6 of the Option Agreement, as amended,
relating to the second Extension Period are hereby further amended to provide
as follows:
(a) The second Extension Period shall be divided into two time
segments and each segment shall have a minimum expenditure obligation.
The fist segment of the second Extension Period shall comprise the
period beginning January 1, 1997 and ending December 31, 1997. The
second segment of the second Extension Period shall comprise the period
beginning January 1, 1998 and ending December 31, 1998. Royal shall
expend a minimum of Three Hundred Seventy Five Thousand Dollars
($375,000.00) in qualified work expenditures during the first segment of
the second Extension Period. If Royal elects to extend the term hereof for
the second segment of the second Extension Period Royal shall expend a
minimum of Three Hundred Seventy Five Thousand Dollars (375,000.00)
in qualified work expenditures during the second segment of the second
Extension Period.
(b) Royal shall provide Union Pacific written notice of its election
to extend the term hereof for the first segment of the second extension
Period on or before December 1, 1996. Royal shall provide Union Pacific
written notice of its election to extend the term hereof for the second
segment of the second Extension Period on or before November 30, 1997.
(c) Any excess work expenditure during the first segment of the second
Extension Period shall be credited against Royal's minimum expenditure
obligation for the second segment of the second Extension Period.
(d) Royal shall have no right to extend for the second segment of the
second Extension Period unless it fulfills its minimum expenditure
obligation for the first segment of the second Extension Period.
(e) In the event that Royal fails to expend a minimum of $375,000.00
in qualified work expenditures during the first segment of the second
Extension Period (having qualified to extend the term hereof for the
first segment of the second Extension Period by having fulfilled its
minimum expenditure obligation for the first Extension Period), Royal
shall, promptly following the end of the first segment of the second
Extension Period, pay to Union Pacific, in cash, as liquidated and
3
agreed damages, an amount equal to $375,000.00 less (i) credits
available due to excess expenditures during the first Extension Period,
as above provided in this Section 6, and (ii) the amount of qualified
work expenditures made during the first segment of the second Extension
Period. In the event that Royal fulfills its minimum expenditure
obligation for the first segment of the second Extension Period, elects
to extend the term hereof for the second segment of the second Extension
Period, and thereafter fails to expend a minimum of $375,000.00 during
such second segment of the second Extension Period (subject to credit as
above provided), Royal shall, promptly following the end of the second
segment of the second Extension Period, pay to Union Pacific in cash, as
liquidated an agreed damages, an amount equal to $375,000.00 less (i)
credits available due to excess expenditures during the first segment of
the second Extension Period, as above provided in this Section 6, and
(ii) the amount of qualified work expenditures made during the second
segment of the second Extension Period.
(f) If Royal is eligible to and elects to extend the term hereof for
the first segment of the second 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 during the first segment of the second Extension Period.
The $100,000.00 minimum expenditure obligation, if it arises, shall not
enlarge the minimum expenditure obligation for the first segment of the
second Extension Period provided for above, and the amount spent in
satisfaction of said $100,000.00 minimum expenditure obligation shall
constitute a credit against such minimum expenditure obligation. In the
event that Royal is eligible to and elects to extended the term hereof
for the first segment of the second Extension Period, has selected lands
and interests within the State Line Diamond Area pursuant to Section 2E,
and thereafter fails to expend a minimum of $100,000.00 in qualified
work expenditures on or for the benefit of such selected lands and
interests prior to the end of the first segment of such second Extension
Period, Royal shall, promptly following the end of the first segment of
the second Extension Period, irrespective of the amount of any other
4
qualified work expenditures made by Royal during the Initial Term, 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 made on or for the direct benefit of the
selected lands and interests within the State Line Diamond Area during
the first segment of the second Extension Period.
7. This instrument constitutes an amendment to the Option Agreement
and Grant of Exploration Rights. As herein and heretofore amended, the Option
Agreement and Grant of Exploration Rights shall continue in full force and
effect according to its terms.
IN WITNESS WHEREOF, Union Pacific and Royal have executed this Third
Amendment to Option Agreement and Grant of Exploration Rights to be effective
as of the day and year first above written.
EXECUTED: August 22, 1996
UNION PACIFIC:
UNION PACIFIC RESOURCES GROUP, INC.
Attest: /S/ By: /S/
------------------ ----------------
Cherie A. Helstrom V. Richard Eales
Assistant Secretary Executive Vice President
Attest: /S/ By: /S/
-------------- ---------------
Karen P. Gross Stanley Dempsey
Secretary Chairman of the Board
5
STATE OF TEXAS )
) ss.
COUNTY OF TARRANT )
The foregoing instrument was acknowledged before me by V. Richard Eales
as Executive Vice President of UNION PACIFIC RESOURCES GROUP, INC., a Utah
corporation, this 22nd day of August, 1996
WITNESS my hand and official seal.
/S/
-----------
Sylvia Hill
Notary Public
My commission expires: 4/20/2000
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me by Stanley Dempsey
as Chairman of the Board of ROYAL GOLD, INC., a Delaware corporation, this 6th
day of August, 1996.
WITNESS my hand and official seal.
/S/
----------------------
Karen Passavanti Gross
Notary Public
My commission expires: July 2, 1999
6