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Case 14-33427 Doc 256 Filed 12/14/15 Entered 12/14/15 15:37:17 Desc Main
<br />Document Page 15 of 17
<br />LEASE AND OPTION TO PURCHASE AGREEMENT
<br />THIS LEASE AND OPTION TO PURCHASE AGREEMENT (the 'Agreement"), dated November 7, 2015, by and
<br />between RICHARD CIARDO, ("Tenant") and CAMP BIRD COLORADO, INC., a Colorado corporation ('CBC1') and CAMP
<br />BIRD TUNNEL, MINING AND TRANSPORTATION COMPANY ("TMTC"), a Colorado corporation, FEDERAL
<br />RESOURCES CORPORATION, a Nevada corporation ("FRC' and with CBC( and TMTC 'Owner" or "Landlord")
<br />Tenant and Owner each may be referred to herein as a "Party; and collectively they may be referred to herein as the Parties.
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<br />by 'Ow; 11r,r;rrupt-.y Cr,uot 01at,nx-..1 i;,:tc>ti.A,•;, Owner and Tenant agree as folows
<br />1. GRANT OF OPTION TO PURCHASE.
<br />Tenant shall have the exclusive option on the conditions stated herein (the 'Option') for 16 Months (the 'Option Period") from
<br />the Effective Date to enter into, obtain approval of the Bankruptcy Court and close a contract (the "Contract") with Owner to
<br />acquire the Option Property (as described below), provided, however, that the Owner shall have no less than 45 days from the
<br />date on which the Contract is fully executed to obtain approval of the Contract by the Bankruptcy Court. As used herein, the
<br />Effective Date means the first day of the calendar month immediately after the date on which the Bankruptcy Court for the District
<br />of Utah (the 'Bankruptcy Court`) in that certain jointly administered bankruptcy case entitled In re Federal Resources
<br />Corporation, jointly administered bankruptcy cases, under case number 14-33427 (collectively, the 'Bankruptcy Case') enters
<br />an order approving this Agreement (the "Effective Date). The terms of any Contract must be acceptable to Owner and its
<br />counsel.
<br />2. LEASED PROPERTY AND OPTION PROPERTY DEFINED.
<br />The property to be leased consists of four (4) claims totaling 28.13 acres and are as follows: (a) the Gertrude Mill -site Claim (5.00
<br />acres), (b) the midnight claim (8.56 acres), (c) the Idaho claim (9.57 acres), and (d) the Emily MITI -site claim (5.00 acres), plus the
<br />use, during the term of the Lease, of the Water Rights defined below (collectively, the "Leased Property"). The property
<br />available for purchase under the Option, consists of ten (10) acres described above as Gertrude Mill -site claim (5.00 acres) and
<br />the Emily Mill -site claim (5.00 acres), plus the Water Rights (collectively, the "Option Property" The Parties acknowledge that the
<br />Gertrude Mill -site Claim has a concrete slab which previously acted as the mill floor, which is currently covered with fill material.
<br />Any modification or reclamation of the Property to make the same suitable for Tenant's use shall be at Tenant's sole cost and
<br />expense. The Leased Property and the Option Property shall be used and acquired by Tenant as is, where Is, with no
<br />warranties.
<br />3. WATER RIGHTS.
<br />Tenant shall have the right to utilize up to 800,000 gallons per year of water from the Tunnel water rights. This water shall be
<br />transported to the location of Tenant's operations, at Tenant's sole cost and expense, by a piping/pumping system from the weir
<br />located at the portal to the tunnel.
<br />3. PURCHASE PRICE FOR OPTION PROPERTY. $6,000,000.00 U.S.
<br />4. TERM OF LEASE.
<br />The lease portion of the Agreement shall be a term of 16 Months commencing on the Effective Date (the 'Term').
<br />5. ADDITIONAL LEASE TERMS AND CONDITIONS.
<br />Tenant's right to lease the Leased Property during the Term Is for the any legal commercial purpose other than mining, but
<br />including the construction and use of commercial buildings to be located on the Leased Property, provided, however, that all such
<br />modifications or improvements shall be made In accordance with all applicable rules, regulations, environmental requirements
<br />and building codes, and, provided, further, that, at the end of the Term, all Improvements made to the Leased Property shall
<br />revert to Owner, unless Tenant purchases the Option Property under the Option. The Tenant may sublease the Leased Properly
<br />during the Term, provided, however, that Tenant and any subtenant shaft jointiy and severally be and remain liable for performance under
<br />the Lease during the Term notwithstanding any such assignment The following additional terms and conditions also apply to the lease:
<br />A) Tenant shall timely pay all taxes due and to become due with respect to the Leased Property, the Water Rights and
<br />the Improvements made by the Tenant on the Leased Property during the Term;
<br />B) Prior to the Effective Date, Tenant shall provide evidence, satisfactory to Owner, of adequate casualty,
<br />liability and environmental insurance to reasonably protect Owner from any potential liabilities associated with Tenant's use of
<br />the Leased Property and Water Rights during the Term, and Owner shall be a named loss payee under all such policies;
<br />C) Tenant shall Indemnify and hold Owner harmless from any and all losses, claims, environmental hazards and or
<br />damages associated with, related to or arising from Tenant's use of the Leased Property during the Term, and, prior to the
<br />Effective Date, Tenant shall provide Owner with satisfactory evidence of financial Capacity to support such Indemnification;
<br />D) During the Term, Tenant shall pay rent to Owner as follows: $5,000 per month
<br />commencing on the Effective Date, which shall be past due, and in default, if not received by Owner on or before the 101' day of
<br />each such month during the Term;
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