Exhibit 10.28
SURFACE AGREEMENT
This Agreement, effective as of the 10th day of June, 1996, is between Joe
Henry Pacheco and Susie Pacheco, husband and wife: James Pacheco and Libbie
Pacheco, husband and wife; Rodolfo Rodriguez and Gladys Rodriguez, husband and
wife; Jerry Sanchez and Mary Sanchez, husband and wife; Henry Atencio and
Virginia Atencio, son and mother; Nelson Pacheco and Vickie Pacheco, husband
and wife; Johnny Gurule; Gilbert Pacheco and Kathy Pacheco, husband and wife
("Surface Owner", whether one or more), whose address is c/o Nelson Pacheco,
9833 4th St. N.W. #B, Albuquerque, New Mexico 87114 and SUMMO USA CORPORATION
("SUMMO"), whose address is 1776 Lincoln St., Suite 900, Denver, Colorado 80203.
RECITALS
Surface Owner represents that he is the owner of and is in possession of
the surface estate in certain lands in Taos County, New Mexico (the
"Property"), more particularly described in Exhibit A attached hereto and
incorporated by reference herein.
SUMMO is the owner of certain unpatented mining claims (the "Claims")
located on the reserved mineral estate underlying the Property.
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid to
Surface Owner, the receipt and sufficiency of which are hereby acknowledged,
and further in consideration of the mutual covenant, agreements, and promises
herein contained, the parties hereto agree as follows:
RIGHT TO USE SURFACE: Surface Owner grants to SUMMO the sole and
exclusive right to use the Property for the purpose of exploring,
developing, and mining the Claims.
TERM: The term of this Agreement shall be for twenty (20) years from the
date hereof and so long thereafter as SUMMO holds any interest in the
Claims, unless SUMMO sooner surrenders this Agreement.
OPERATIONS: (a) During the term of this Agreement, SUMO shall have
unrestricted access to the Property, and shall have the right (i) to
explore, develop, and mine from the Claims by means of operations on the
Property, (ii) to deposit ores, water, waste, and materials from the
Claims or from other mining properties within a two-mile perimeter of the
Property, and to use any part of the Property for waste dumps and tailings
disposal areas, (iii) to conduct on the Property general mining,
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milling, processing, and related operations respecting the Claims and other
mining properties, and to use any part of the Property for any purposes
incident to such operation, and (iv) to erect, construct, use, and maintain
on the Property such roads, buildings, structures, machinery, equipment,
personal property, fixtures, and improvements as may be necessary or
convenient for the conduct of SUMMO's operations.
(b) SUMMO shall conduct all operations on the Property in a good and
workmanlike manner and in accordance with accepted mining practice.
(c) SUMMO may use any mining method, whether or not the method is in
general use at the time of the execution of this Agreement, including,
without limitation, underground mining (including methods, such as block
caving, which result in the disturbance or subsidence of the surface),
surface mining (including strip mining, open pit mining, and dredging),
and in situ mining (including solution mining, leaching, gasification, and
liquification). Surface Owner shall be notified within ten (10) days if
SUMMO decides to use solution mining, leaching, gasification, and
liquification methods.
(d) SUMMO shall comply with all laws and regulations governing its
operations on the property. If this Agreement is inconsistent with or
contrary to any law or regulation, the law or regulation shall control and
this Agreement shall be deemed to be modified accordingly.
(e) SUMMO may use existing roads, if any, on the Property, and may
construct and maintain at its own expense any additional roads reasonably
necessary or convenient for the conduct of SUMMO's operations on the
Claims or on other mining properties. SUMMO will endeavor to construct
any such additional roads on the Property at a location agreeable to
Surface owner and SUMMO. All additional roads shall be constructed and
maintained in such manner to bear the traffic necessary to SUMMO's
operations. Surface Owner may use any additional road so long as his use
does not interfere with SUMMO's use. Upon notice to SUMMO given within
thirty (30) days after the termination of this Agreement, Surface Owner
may require that all or any part of any additional road be reclaimed.
(f) If SUMMO finds it necessary to cut any fence on the Property for the
purpose of passage, SUMMO shall, prior to cutting the fence, install and
brace heavy "corner-type" posts at each end of the opening to be made, to
which the fence wire shall be securely fastened in such manner as to
prevent sagging. Summo shall install a gate of a quality acceptable to
Surface Owner in each opening. If SUMMO desires that opening provide
uninterrupted ingress and egress, it may in the alternative install
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cattle guards of sufficient size and substance to bear the type of traffic
necessary for its operations and capable of turning all domestic livestock.
(g) SUMMO shall conduct no surface operations within three hundred (300)
feet of the main dwelling house, if any, now located on the Property
without first obtaining the written consent of Surface Owner.
(h) Neither SUMMO nor its agents, employees, contractors, or
subcontractors, nor their agents or employees, shall hunt or fish on the
Property, nor shall any of them carry onto the property firearms or other
equipment designed or adapted for such purposes.
(i) SUMMO shall advise Surface Owner prior to final mailing facility site
selections in order that Surface Owner may clear timber from the area
before construction commences.
COMPENSATION: SUMMO shall pay compensation to Surface Owner on the dates
and in the amounts as follows:
Signing bonus: $8,000.00, payable at signing.
Rentals:
Amount Date
------ ----
$5,600.00 Upon signing
$5,600.00 December 30, 1996.
$5,600.00 December 30, 1997.
$7,200.00 December 30, 1998 and 1999.
$8,400.00 December 30, 2000
Permanent Impact Compensation: At such time that SUMMO commences the
permitting for the construction of a milling project, a one-time
payment of $625.00/acre (or $325,000.00) will be made. If SUMMO has
not diligently begun this permitting phase by December 30, 2001, this
Agreement shall terminate. At the point when the one time payment is
made, rentals shall increase as follows:
Amount Date
------ ----
$12,000.00 December 30, 2001, 2002, and 2003
$13,600.00 December 30, 2004 and 2005.
$22,000.00 December 30, 2006
$26,800.00 December 30, 2007, 2008, 2009, 2010 and 2011
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$32,000.00 December 30, 2012, 2013, 2014, 2015 and 2016
$44,445.00 December 30, 2017, and each year thereafter.
DAMAGES: (a) SUMMO shall pay to Surface Owner, as compensation for any
crops or grasses damaged or destroyed, One Hundred Fifty Dollars ($150.00)
for each exploration drill hole drilled on the Property. Drill hole
compensation shall be paid within 30 days of the end of the month in which
the holes are drilled.
(b) Prior to the payment of the December 30, 2001 lump sum payment, SUMMO
shall pay compensation for the use or damage to the Property, not already
remunerated by the drill hole compensation, the amount of $500.00 for each
acre damaged.
(c) In addition to the compensation provided for in subparagraphs (a) and
(b), above, SUMMO shall pay Surface Owner reasonable compensation for any
damage to livestock or to fences, buildings, or other tangible improvements
on the Property resulting from SUMMO's operations.
PROTECTION FROM LIENS AND DAMAGES: SUMMO shall keep the Property free of
liens for labor performed or materials or merchandise furnished for use on
the Property under this Agreement, and shall hold Surface owner harmless from
all costs, loss, or damage which may result from any work or operations of
SUMMO or its occupancy of the property.
AFTER-ACQUIRED INTEREST IN LOT 7: If during the term of this Agreement,
Surface Owner acquires an interest in all or any part of the following
described Property:
TOWNSHIP 23 NORTH, RANGE 11 EAST, N.M.P.M.
TAOS COUNTY, NEW MEXICO
Section 17: Lot 7
the interest shall, at SUMMO's option, be deemed a part of the Property for
the purposes of this Agreement, and the Compensation described above
increased proportionately. Summo's option shall be exercised, if at all,
within 20 years after the date of execution of this Agreement by all parties.
ENVIRONMENTAL INDEMNITY: SUMMO shall indemnify, defend, and hold Surface
Owner harmless for all claims, costs, loss, or damage resulting from (i) the
presence of hazardous materials on the Property or the release of hazardous
materials from the Property after the date of this Agreement and (ii) any
violation after the date of this Agreement of any federal, state, or local
law, rule, regulation, order, or ordinance regarding the protection of the
environment or the remediation or reclamation of any
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portion of the property.
TERMINATION AND SURRENDER: (a) If SUMMO fails to comply with any of the
provisions of this Agreement, and if SUMMO does not initiate and diligently
pursue steps to correct the default within thirty (30) days after the notice
has been given to it by Surface Owner specifying with particularity the
nature of the default, then upon the expiration of the thirty-day period, all
rights of SUMMO under this Agreement (except as provided in the paragraphs
entitled "Removal of property" and "Access") shall terminate, and all
liabilities and obligations of SUMMO (except liabilities existing on the date
of termination) shall terminate. If SUMMO by notice to Surface Owner disputes
the existence of a default, then this Agreement shall not terminate unless
SUMMO does not initiate and diligently pursue steps to correct the default
within thirty (30) days after the existence, of a default has been determined
by decision of a court or arbitrators, or otherwise.
(b) Subject to the right of Surface Owner to terminate this Agreement as
provided in the foregoing subparagraph (a), controversy between the parties
hereto shall not interrupt performance of this Agreement or the continuation
of operations hereunder. In the event of any controversy, SUMMO may continue
operations hereunder and shall make the payments provided for herein
notwithstanding the existence of the controversy. Upon the resolution of the
controversy, such payments or restitutions shall be made as required by the
terms of the decision of the court or arbitrators, or otherwise.
(c) SUMMO may at any time terminate this Agreement as to all or any part of
the property by delivering to Surface owner or by filing for record in the
appropriate office (with a copy to Surface Owner) a good and sufficient
Surrender of this Agreement or a Partial Surrender describing that portion of
the Property as to which this Agreement is surrendered. Upon mailing the
Surrender or Partial Surrender to Surface owner or to the appropriate office,
all rights of SUMMO under this Agreement with respect to the portion of the
Property as to which this Agreement is terminated (except as provided in the
paragraphs entitled "Removal of Property" and "Access") shall terminate and
all liabilities and obligations of SUMMO with respect to the portion of the
property as to which this Agreement is terminated (except liabilities
existing on the date of termination) shall terminate.
REMOVAL OF PROPERTY: For a period of six (6) months after the termination of
this Agreement, SUMMO shall have the right to remove from the Property all
buildings, structures, machinery, equipment, personal property, fixtures, and
improvements owned by SUMMO or erected or placed on or in the Property by
SUMMO. Any broken or stockpiled ore, minerals, concentrates, or other
products, dumps, tailings, and residue remaining on the Property shall be
left in as neat, safe, and sightly a condition as possible. Upon termination
of this Agreement, SUMMO shall dispose
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of all rubbish, junk, and unused materials, and shall leave the Property, and
all buildings, structures, machinery, equipment, personal property, fixtures,
and improvements remaining on the Property, in a neat and safe condition.
SUMMO may keep one or more watchmen on the Property during the six-month
period. An equitable rental, consistent with then current rental rates, shall
be agreed on and paid to Surface Owner during the time in which one or more
watchmen occupy the Property.
ACCESS: For as long as necessary after termination of this Agreement, SUMMO
shall have the right of access to and across the Property for reclamation
purposes, and rent shall be paid at the rate that is foregoing at that time.
NOTICES: All notices and other communications to either party shall be in
writing and shall be sufficiently given if delivered in person or sent by
certified or registered mail, return receipt requested, addressed as
hereinafter set forth. Any notice given by or to Nelson Pacheco, with a copy
to Gilbert Pacheco, shall be notice by or to all Surface Owners. Notices
given by mail shall be deemed delivered as of the date of mailing. Until a
change of address is communicated as indicated above, all notices to Surface
Owner shall be addressed:
Nelson Pacheco
9833 4th St. N.W. #B
Albuquerque, New Mexico 87114
with a copy to:
Gilbert Pacheco
2610 Westchester Dr.
Denver, Colorado 80221
and all notices to SUMMO shall be addressed:
Greg Hahn, President
SUMMO USA CORPORATION
1776 Lincoln Street, Suite 900
Denver, Colorado 80203
ASSIGNMENT: The rights of either party hereunder may be assigned in whole or
in part by providing written notice of the assignment to the non-assigning
party. A fully executed memorandum of assignment in recordable form shall be
delivered to the non-assigning party by the assigning party within ten (10)
days after the assignment takes effect.
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INDEMNIFICATION: SUMMO shall hold Surface Owner free from all costs, loss, or
damage which may result from any work or operations of SUMMO or its occupancy
of the Property.
INSURANCE: SUMMO shall carry at all times during the term of this Agreement
worker's compensation and other insurance required by state laws and mining
regulations, or SUMMO may self-insure as to such matters if it qualifies as
a self-insurer under the appropriate laws and regulations. Copies of
insurance certificates will be provided to Surface Owner by SUMMO.
PERFORMANCE: SUMMO agrees that whenever possible it shall use its best
efforts to obtain labor from the local area.
BANKRUPTCY: In the event that SUMMO enters into bankruptcy proceedings, it
shall provide Surface Owner with written notification by of such within five
days.
DISPUTE RESOLUTION: All disputes arising under or in connection with this
Agreement which cannot be resolved by agreement between the parties shall be
resolved in accordance with applicable law.
INUREMENT: All covenants, conditions, limitations, and provisions herein
contained apply to and are binding upon the parties hereto, their heirs,
representatives, successors, and assigns.
MODIFICATION: No modification, variation, or amendment of this Agreement
shall be effective unless the modification, variation, or amendment is in
writing and is signed by Surface Owner and SUMMO.
WAIVER: No waiver of any breach or default under this Agreement shall be
effective unless the waiver is in writing and signed by the party against
whom the waiver is claimed. No waiver of any breach or default shall be deemed
to be a waiver of any other or subsequent breach or default.
ENTIRE AGREEMENT: This Agreement sets forth the entire agreement of the
parties and, except as herein expressly provided, supersedes all previous and
contemporaneous agreements, representations, warranties, or understandings,
written or oral.
CONSTRUCTION: The paragraph headings are for convenience only, and shall not
be used in the construction of this Agreement. The term "Surface Owner" shall
be deemed to be singular or plural, and shall be deemed to be masculine or
feminine, or both, or neuter, whenever the construction of the Agreement so
requires.
GOVERNING LAW: The formation, interpretation, and performance of this
Agreement shall be governed by the law of the State of New Mexico.
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INVALIDITY: The invalidity of any provision of this Agreement shall not
affect the enforceability of any other provision of this Agreement.
COUNTERPARTS: This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original. If any
person named as one of the Surface owners does not execute this
Agreement, it nevertheless shall be binding upon those persons executing
it.
ADDITIONAL DOCUMENTS: Surface Owner will provide SUMMO with such
additional documents as may be necessary to carry out the purposes of
this Agreement. If conditions change by reason of conveyances,
assignments, or other matters relating to the title to or description of
the Property, Surface Owner and SUMMO shall execute amendments of this
Agreement and the Short Form of Agreement, and any other documents which
may be necessary to reflect such changed conditions. The Short Form of
Agreement shall not supersede the long form of Surface Agreement.
OTHER: Surface Owner will have the opportunity to buy or bid on
buildings and other equipment or machinery upon termination of the
Agreement.
SUMMO shall hold regular briefings with Surface Owner, or
representatives, prior to site selections to discuss site plans and
other items pertinent to the Agreement. Upon consent of SUMMO, Surface
Owner shall have the right to construct or make improvements to the
Property as long as such improvements do not interfere with SUMMO'S
operations.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
- ---------------------------------- -----------------------------------
JOE HENRY PACHECO SUSIE PACHECO
- ---------------------------------- -----------------------------------
JAMES PACHECO LIBBIE PACHECO
- ---------------------------------- -----------------------------------
RODOLFO RODRIGUEZ GLADYS RODRIGUEZ
- ---------------------------------- -----------------------------------
JERRY SANCHEZ MARY SANCHEZ
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ADDITIONAL DOCUMENTS: Surface Owner will provide SMO with such additional
documents as may be necessary to carry out the purposes of this Agreement.
If conditions change by reason of conveyances, assignments, or other
matters relating to the title to or description of the Property, Surface
Owner and SUMMO shall execute amendments of this Agreement and the Short
Form of Agreement, and any other documents which may be necessary to
reflect such changed conditions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
/s/ Joe Henry Pacheco /s/ Susie Pacheco
- ---------------------------------- -----------------------------------
JOE HENRY PACHECO SUSIE PACHECO
/s/ James Pacheco /s/ Libbie Pacheco
- ---------------------------------- -----------------------------------
JAMES PACHECO LIBBIE PACHECO
/s/ Rodolfo Rodriguez /s/ Gladys Rodriguez
- ---------------------------------- -----------------------------------
RODOLFO RODRIGUEZ GLADYS RODRIGUEZ
/s/ Jerry Sanchez /s/ Mary Sanchez
- ---------------------------------- -----------------------------------
JERRY SANCHEZ MARY SANCHEZ
/s/ Henry Atencio /s/ Virginia Atencio
- ---------------------------------- -----------------------------------
HENRY ATENCIO VIRGINIA ATENCIO
/s/ Nelson Pacheco /s/ Vickie Pacheco
- ---------------------------------- -----------------------------------
NELSON PACHECO VICKIE PACHECO
/s/ Gilbert Pacheco /s/ Kathy Pacheco
- ---------------------------------- -----------------------------------
GILBERT PACHECO KATHY PACHECO
/s/ Johnny Gurule
- ----------------------------------
JOHNNY GURULE
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SUMMO USA CORPORATION
By: /s/ Gregory A. Hahn
--------------------------------
Gregory A Hahn, President
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STATE OF NEW MEXICO )
) ss:
County of Bernalillo)
The foregoing instrument was acknowledged before me this 26 day of
September, 1996, by JOE HENRY and SUSIE PACHECO, the persons named in and who
executed the foregoing instrument.
/s/ Sylvia Garcia
-----------------------------------
Notary Public
My Commission Expires: 1/31/97
---------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by JAMES PACHECO and LIBBIE PACHECO, the persons named in
and who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by RODOLFO RODRIGUEZ and GLADYS RODRIGUEZ, the persons named
in and who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
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STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by JERRY SANCHEZ and MARY SANCHEZ, the persons named in and
who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by HENRY ATENCIO and VIRGINIA ATENCIO, the persons named in
and who executed the foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF NEW MEXICO )
) ss:
County of Bernalillo)
The foregoing instrument was acknowledged before me this 30 day of
September, 1996, by NELSON PACHECO and VICKIE PACHECO, the persons named in
and who executed the foregoing instrument.
/s/ Sylvia Garcia
-----------------------------------
Notary Public
My Commission Expires: 1/31/97
---------------------------------
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STATE OF COLORADO )
) ss:
County of Adams )
The foregoing instrument was acknowledged before me this 3rd day of
October, 1996, by GILBERT PACHECO and KATHY PACHECO, the persons named in and
who executed the foregoing instrument
/s/ Susan K. Novak
-----------------------------------
Notary Public
7401 Federal Bldg
Westminster, CO
[NOTARY SEAL]
My Commission Expires: 3/13/99
--------------------------------------
STATE OF NEW MEXICO)
) ss:
County of Taos )
The foregoing instrument was acknowledged before me this 15th day of
September, 1996, by JOHNNY GURULE, the person named in and who executed the
foregoing instrument.
/s/ Elberta Rodriguez
-----------------------------------
Notary Public
My Commission Expires: 6/17/97
---------------------------------
STATE OF COLORADO)
) ss:
County of Denver )
The foregoing instrument was acknowledged before me this 4 day of
October, 1996, by GREGORY A. HAHN, the President of SUMMO USA CORPORATION, on
behalf of the corporation.
/s/ Michelle Hebert
----------------------------------
Notary Public
My Commission Expires: 3/18/99
---------------------------------
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EXHIBIT A
PROPERTIES
100% interest in and to the following surface estate in Township 23
North, Range 11 East, Section 17, Taos County, New Mexico:
PROPERTY OWNER ACREAGE
-------- ----- -------
Lot 1 Joe Henry Pacheco and Susie Pacheco 65
Lot 2 James Pacheco and Libbie Pacheco 65
Lot 3 Gladys Rodriguez and Rodolfo Rodriguez 65
Lot 4 Mary Sanchez and Jerry Sanchez 65
Lot 5 Virginia Atencio and Henry Atencio 65
Lot 6 Nelson Pacheco and Vickie Pacheco 65
Lot 8 Johnny Gurule 65
Lot 9 Gilbert Pacheco and Kathy Pacheco 65
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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the covenants and agreements herein contained the parties
hereto covenant and agree as follows:
1. From the date hereof, and for so long as the Optionee shall be an
employee of the Company, the Optionee shall have and be entitled to and the
Company hereby grants to the Optionee an option to purchase all or any
portion of SIXTY-SEVEN THOUSAND, FIVE HUNDRED (67,500) fully paid and
non-assessable common shares (the "SHARES") of the Company from the treasury
on or before APRIL 30, 2001 at the price of ONE DOLLAR AND FIFTY-ONE CENTS
($1.51) per share provided that:
(a) no more than 25% of the Shares may be purchased on or before April
30, 1997;
(b) no more than a total of 50% of the Shares may be purchased on or
before April 30,1998; and
(c) no more than a total of 75% of the Shares may be purchased on or
before April 30, 1999.
2. The right to take up shares pursuant to the option herein granted is
exercisable by notice in writing to the Company accompanied by a certified
cheque in favour of the Company for the full amount of the purchase price of
the shares being then purchased. When such payment is received, the Company
covenants and agrees to issue and deliver to the Optionee share certificates
in the name of the Optionee for the number of shares so purchased.
3. This is an option agreement only and does not impose upon the Optionee
any obligation to take up and pay for any of the shares under option.
4. Subject to paragraph 5 hereof, the option herein granted shall cease and
become null and void following the tenth day after which the Optionee ceases
to act as an employee of the Company.
5. The Optionee hereby acknowledges that in the event the Optionee is an
insider of the Company, the option herein granted may not be exercised in
full or in part until this agreement has been approved by the members at a
general meeting of the Company.
6. The Company hereby covenants that it will seek the approval of the
members to any amendments to the incentive stock option herein granted, at
the next general meeting of the company prior to exercise thereof by the
Optionee, in accordance with the requirements of The Toronto Stock Exchange,
and the Optionee warrants that he will not exercise all or any portion of the
subject option, if amended, until such approval is obtained.
7. If at any time during the continuance of this agreement, the parties
hereto deem it necessary or expedient to make any alteration or addition to
this agreement, they may do so by means of a written agreement between them
which will be supplemental hereto and form part hereof and which may be
subject to the approval of the securities regulatory bodies having
jurisdiction.