September 12, 1996
Mr. Kyle Miller
President
Inland Resources Inc.
475 17th Street, Suite 1500
Denver, CO 80202
RE: AGREEMENT - OPTION TO PURCHASE INLAND'S TOIYABE PROPERTY, LANDER COUNTY,
NEVADA
DEAR MR. MILLER:
This letter is intended to constitute a legally binding agreement ("Agreement")
between Inland Resources Inc. ("Inland") and Placer Dome U.S. Inc. ("PDUS")
regarding the subject property as shown in attached Exhibit A ("Property").
RECITALS
1. There currently exists a Letter Agreement between the parties entitled
Letter Agreement, dated August 16, 1995.
2. Because of unforeseen circumstances, the parties desire to terminate the
August 16, 1995 Letter Agreement and replace it with this September 12,
1996 Agreement.
3. The parties intend that PDUS will perform environmental due diligence on
the Property in the form of water quality drill testing and within the
time period set forth below, PDUS must elect to either: 1) purchase the
Property, or 2) decline to purchase the Property, terminate this Agreement,
and release all of its rights and interests in the Property.
AGREEMENT
1. Upon execution by both parties of this Agreement, it is hereby agreed that
the August 16, 1995 Letter Agreement will automatically terminate and become
immediately null and void.
2. PDUS will immediately begin a water quality drill testing program ("The
Program") on the Property as described in Exhibit B attached hereto. PDUS
will pay all costs and expenses associated with The Program and will be
responsible for managing The Program.
3. PDUS agrees to Inland's request that The Program will not investigate or
intentionally produce any data related to the geologic or mineral
characteristics of the Property. The Program is intended for and restricted
to water quality testing only. PDUS will allow and welcome any Inland
employee (s) or agents (s) to be present during all work on the Program.
PDUS will allow Inland to keep all drill hole cuttings which must be
returned to PDUS only if and when PDUS purchases the Property.
4. It is agreed that PDUS may deviate somewhat from The Program; however, no
"significant" change may be made without the express written consent of
Inland. Any change in the number, direction, or location of any drill hole
as described in The Program is to be deemed a "significant change" and thus
will requires Inland's express written consent.
5. Inland agrees to allow PDUS to seek all required permitting on behalf of
Inland. PDUS will seek to amend Inland's current Plan of Operations
approved by the Bureau of Land Management. Inland will cooperate fully
with PDUS and will execute any documents required to effectuate the goal
of obtaining all necessary permits.
6. On or before THE EARLIER of the following two alternative dates (see below),
PDUS must elect, by written notice to Inland, to either: 1) release to
Inland any and all interest in the Property, or 2) complete the purchase of
the Property from Inland and accept any and all liability attaching to the
Property in exchange for a $240,000 payment from Inland to PDUS.
Date 1: 60 days following receipt by PDUS of written approval from all
necessary governmental agencies to carry out the Program.
Date 2: January 31, 1997.
7. If PDUS timely elects to purchase the Property, Inland will pay PDUS
$240,000 and cooperate fully with PDUS by executing all documents necessary
to transfer to PDUS all of Inland's leased and owned unpatented mining
claims and other property rights which include, but are not limited to, all
permits and any structures and equipment remaining on the Property but which
are not presently under contract for sale to a third party.
8. If PDUS fails to timely elect to purchase the Property, or elects to release
all interest in the Property, PDUS agrees that it will leave any well or all
the wells open, provided that; the governing agencies allow PDUS to do so;
and provided that Inland requests in writing that a specific well or wells
remain open, and further provided that no additional PDUS expenditures are
required and Inland agrees to take over the responsibility of operating and
closing all open wells in accordance with all applicable laws and
regulations. PDUS also agrees to turn over to Inland all data it creates or
obtains from its performance of The Program and from its work associated
with the Property.
9. If PDUS elects to complete the purchase of the Property, from and after the
delivery of title to PDUS, PDUS shall be wholly responsible for all past,
present and future environmental and reclamation liabilities associated
with the Property, whether known or unknown at the time of delivery of
title, and PDUS shall defend, hold harmless and indemnify Inland for any
and all claims, demands, obligations and expenses which may result from or
arise out of any such liabilities. If PDUS does not purchase the Property,
PDUS shall be responsible only for any reclamation, environmental or other
liabilities which result from its performance of The Program; except as
specifically provided in this sentence, Inland shall remain wholly
responsible for all past, present and future environmental, reclamation and
other liabilities associated with the Property, whether known or unknown,
and Inland shall defend, hold harmless and indemnify PDUS for any and all
claims, demands, obligations and expenses which may result from or arise out
of any such liabilities. Any reclamation which PDUS is responsible for
shall be performed without any unreasonable delay.
10. It is understood that PDUS and Inland might not concur in the interpretation
of the data generated under The Program; nevertheless, it is hereby agreed
that PDUS may exercise its election options (under Paragraph 5 herein), as
in its sole judgment and discretion, it so chooses.
11. Any notice or delivery of information herein contemplated to be given by
either party to the other party shall be given in writing by personal
delivery, electronic facsimile transmission, or by certified mail, return
receipt requested, and addressed to the receiving party as listed below:
Placer Dome U.S. Inc.
240 S. Rock Blvd., Suite 117
Reno, Nevada 89502
Attention: Land/Legal Manager
FAX: (702) 856-2552
Inland Resources Inc.
475 17th Street, Suite 1500
Denver, CO 80202
Attention: Kyle Miller, President
FAX: (303) 296-4070
12. Except as otherwise provided herein, service of notice of delivery of
information shall be effective and complete upon the deposit thereof in the
United States mail, certified, return receipt requested, and with postage
prepaid and addressed as aforesaid.
13. This writing sets forth the entire agreement and understanding between the
parties, there being no oral agreements, promises or representations which
are or may be incidental or supplementary to the provisions hereof. No
changes, additions to, or
waiver of any of the provisions of this Agreement shall be binding upon the
parties hereto unless in writing signed by an authorized representative of
the party to be bound. No waiver by any party or a breach of any of the
provisions of this Agreement shall be construed as a waiver of any
subsequent breach, whether of the same or of a different character.
14. This Agreement shall be construed and enforced in accordance with the laws
of the State of Nevada except insofar as it may become necessary to comply
with federal statutes, rules or regulations.
15. If any action is brought by either party for the enforcement,
interpretation, or declaration of rights of the parties with respect to
this Agreement, the negotiation of this Agreement or the operations
conducted hereunder, the prevailing party shall be entitled to reasonable
attorney fees in addition to any other relief awarded to the prevailing
party.
Thank you for working with us to accomplish our goals.
Very truly yours,
PLACER DOME U.S. INC.
By: /s/ DENNIS LEE
--------------------------
Dennis Lee
Land/Legal Manager
Accepted and Agreed To on this 25th day of September, 1996.
INLAND RESOURCES INC.
By: /s/ KYLE MILLER
--------------------------
Kyle Miller
President