Document:

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                                                                   Exhibit 10-56

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
January 12th, 2004 by and between CKE RESTAURANTS, INC., a Delaware corporation
(the "Company"), and E. MICHAEL MURPHY (the "Employee").

                                    RECITALS:

         A.       Employee is a key employee of the Company.

         B.       The Company and Employee desire to enter into this Agreement
to set forth the terms and provisions of Employee's employment by the Company.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties agree as follows:

         1.       Employment and Duties. Subject to the terms and conditions of
this Agreement, the Company employs the Employee to serve in an executive and
managerial capacity as Executive Vice President, General Counsel and Secretary
of the Company, and the Employee accepts such employment and agrees to perform
such reasonable responsibilities and duties commensurate with the aforesaid
positions as directed by the Company's Board of Directors or as set forth in the
Articles of Incorporation and the Bylaws of the Company. Any change in such
titles or delegation of duties inconsistent with such titles or any requirement
that Employee relocate from Santa Barbara County, California, without the
consent of Employee, shall be deemed a termination without cause under Section
7(b) below.

         2.       Term. The term of this Agreement shall commence on the first
day of the Company's fiscal year commencing in the year 2004 (the "Effective
Date") and shall terminate on the last day of the Company's fiscal year ending
in the year 2007, subject to prior termination as set forth in Section 7 below
(the "Term"). The Term may be extended at any time upon mutual written agreement
of the parties.

         3.       Salary. Commencing on the Effective Date, and subject to the
other provisions of this Agreement, the Company shall pay the Employee a minimum
base annual salary of $350,000. The Compensation Committee of the Company may,
from time to time, increase such salary in its sole discretion.

         4.       Other Compensation and Fringe Benefits. In addition to any
executive bonus, pension, deferred compensation and stock option grants which
the Company may from time to time make available to the Employee upon mutual
agreement, the Employee shall be entitled to the following:

                  (a)      The standard Company benefits enjoyed by the
Company's other top executives;

                  (b)      Payment by the Company of the Employee's initiation
and membership dues in a social and/or recreational club as deemed necessary and
appropriate by the Employee (and pre-approved by the Company at the Company's
discretion) to maintain various business relationships on

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behalf of the Company; provided, however, that the Company shall not be
obligated to pay for any of the Employee's personal purchases and expenses at
such club;

                  (c)      Provision by the Company during the Term and any
extensions thereof to the Employee and his dependents of the medical and other
insurance coverage provided by the Company to its other top executives, and, in
addition, the Company will reimburse Employee for all medical, dental and vision
care expenses incurred by the Employee and his dependents that are not otherwise
reimbursed or covered by the base health insurance plan;

                  (d)      Provision by the Company of supplemental disability
insurance sufficient to provide two-thirds of the Employee's pre-disability
minimum base annual salary for a two-year period;

                  (e)      For the fiscal years ending in January 2005, 2006 and
2007, Employee and the Compensation Committee of the Board of Directors shall,
prior to the commencement of each such fiscal year, agree upon a reasonable
Target Income (as defined below) for such fiscal year. Employee shall then earn
an annual bonus for each such fiscal year determined as follows:

                           (i)      If Actual Income (as defined below) is below
80% of Target Income, no bonus shall be earned.

                           (ii)     If Actual Income is 80% of Target Income,
Employee shall receive a bonus equal to 50% of his minimum base annual salary in
effect on the last day of such fiscal year (the "Current Base").

                           (iii)    If Actual Income is greater than 80%, but
less than 100%, of Target Income, Employee shall receive a bonus equal to the
Current Base multiplied by the percentage determined as follows:

                        50% + [% in excess of 80% x 50%]
                               ------------------
                                       20

                           (iv)     If Actual Income is 100% of Target Income,
Employee shall receive a bonus equal to 100% of Current Base.

                           (v)      If Actual Income is greater than 100%, but
less than 120%, of Target Income, Employee shall receive a bonus equal to the
Current Base multiplied by the percentage determined as follows:

                       100% + [% in excess of 100% x 100%]
                               -------------------
                                        20

                           (vi)     If Actual Income is 120% or greater of
Target Income, Employee shall receive a bonus equal to 200% of Current Base.

If the Term terminates within a fiscal year, any bonus hereunder shall be
calculated at the end of such year and prorated for such year based upon the
number of days of such year preceding the termination of the Term. The annual
bonus shall be paid within 90 days after the end of the fiscal year. For
purposes hereof, (a) "Actual Income" shall be "Income (loss) before income
taxes, discontinued operations and cumulative effect of accounting change for
goodwill", as reflected on

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the Company's Consolidated Statement of Operations for the applicable fiscal
year; provided, however, that if there are write-offs of goodwill or other
extraordinary items included therein, such write-offs shall be added back to
Actual Income; and (b) "Target Income" shall be the targeted Actual Income for
the applicable fiscal year. Nothing in this subsection (e) shall prevent the
Compensation Committee from paying to Employee any other bonus as and when the
Compensation Committee believes that such other bonus is warranted.

         The Company shall deduct from all compensation payable under this
Agreement to the Employee any taxes or withholdings the Company is required to
deduct pursuant to state and federal laws or by mutual agreement between the
parties.

         5.       Vacation. For and during each year of the Term and any
extensions thereof, the Employee shall be entitled to reasonable paid vacation
periods consistent with his positions with the Company and in accordance with
the Company's standard policies, or as the Company's Board of Directors may
approve. In addition, the Employee shall be entitled to such holidays consistent
with the Company's standard policies or as the Company's Board of Directors may
approve.

         6        Expense Reimbursement. In addition to the compensation and
benefits provided herein, the Company shall, upon receipt of appropriate
documentation, reimburse the Employee each month for his reasonable travel,
lodging, entertainment, promotion and other ordinary and necessary business
expenses in accordance with the Company's policies then in effect.

         7.       Termination.

                  (a)      For Cause. The Company may terminate this Agreement
immediately for cause upon written notice to the Employee, in which event the
Company shall be obligated only to pay the Employee that portion of the minimum
base annual salary due him through the date of termination. Cause shall be
limited to (i) the persistent failure to perform duties consistent with a
commercially reasonable standard of care; (ii) the willful neglect of duties;
(iii) criminal or other illegal activities involving dishonesty; or, (iv) a
material breach of this Agreement.

                  (b)      Without Cause. Either party may terminate this
Agreement immediately without cause by giving written notice to the other. If
the Company terminates under this Section 7(b), then it shall pay to the
Employee the sum of (i) all amounts owed through the date of termination, plus
(ii) an amount equal to the product of the Employee's minimum base annual salary
in effect as of the date of termination times the number of years (including
partial years) remaining in the Term, plus (iii) a pro rata portion of the bonus
for the year in which the termination occurs, as provided in Section 4(e) above.
Payments under (i) and (ii) shall be made in a lump sum on or before the fifth
day following the date of termination, and the payment under (iii) shall be made
as provided in Section 4(e), and all such payments shall be in lieu of all
further salary and bonus obligations under this Agreement. In addition, if the
Company terminates under this Section 7(b), (i) all options granted to the
Employee which had not vested as of the date of such termination shall vest
concurrently with such termination, and, notwithstanding the terms of any option
agreements, Employee may exercise any vested options, including by reason of
acceleration, for a period after such termination which is the greater of what
is provided in the respective option agreement or 30 days, and (ii) the Company
shall maintain in full force and effect for the continued benefit of the
Employee for the remainder of the Term, all employee benefit plans (except for
the Company's stock option plans) and programs in which the Employee was
entitled to participate immediately prior to the date of termination, provided
that the Employee's continued participation is possible under the

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general terms and provisions of such plans and programs. In the event that the
Employee's participation in any such plan or program is prohibited, the Company
shall, at its expense, arrange to provide the Employee with benefits
substantially similar to those which the Employee would otherwise have been
entitled to receive under such plans and programs from which his continued
participation is prohibited. If the Employee terminates under this Section 7(b),
then the Company shall only be obligated to pay the Employee the minimum annual
base salary due him through the date of termination.

                  (c)      Disability. If the Employee fails to perform his
duties hereunder on account of illness or other incapacity for a period of six
consecutive months, then the Company shall have the right upon written notice to
the Employee to terminate this Agreement without further obligation by paying
the Employee the minimum base annual salary, without offset, for the remainder
of the Term in a lump sum or as otherwise directed by the Employee.

                  (d)      Death. If the Employee dies during the Term, then
this Agreement shall terminate immediately and the Employee's legal
representatives shall be entitled to receive the minimum annual base salary for
the remainder of the Term in a lump sum or as otherwise directed by the
Employee's legal representative. Executive's outstanding Company options will
immediately vest in full and be exercisable for a period of 90 days from
Employee's death.

                  (e)      Effect of Termination. Termination for any reason or
for no reason shall not constitute a waiver of the Company's rights under this
Agreement nor a release of the Employee from any obligation hereunder except his
obligation to perform his day-to-day duties as an employee.

                  (f)      Mitigation. Employee shall not be required to
mitigate the amount of any payment provided for in this Section 7 by seeking
other employment or otherwise, nor shall any compensation or other payments
received by the Employee after the date of termination reduce any payments due
under this Section 7.

         8.       Non-Delegation of Employee's Rights. The obligations, rights
and benefits of the Employee hereunder are personal and may not be delegated,
assigned or transferred in any manner whatsoever, nor are such obligations,
rights or benefits subject to involuntary alienation, assignment or transfer.

         9.       Confidential Information. The Employee acknowledges that in
his capacity as an employee of the Company he will occupy a position of trust
and confidence and he further acknowledges that he will have access to and learn
substantial information about the Company and its operations that is
confidential or not generally known in the industry, including, without
limitation, information that relates to purchasing, sales, customers, marketing,
and the Company's financial position and financing arrangements. The Employee
agrees that all such information is proprietary or confidential, or constitutes
trade secrets and is the sole property of the Company. The Employee will keep
confidential, and will not reproduce, copy or disclose to any other person or
firm, any such information or any documents or information relating to the
Company's methods, processes, customers, accounts, analyses, systems, charts,
programs, procedures, correspondence or records, or any other documents used or
owned by the Company, nor will the Employee advise, discuss with or in any way
assist any other person, firm or entity in obtaining or learning about any of
the items described in this Section 9. Accordingly, the Employee agrees that
during the Term and at all times thereafter he will not disclose, or permit or
encourage anyone else to disclose, any such

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information, nor will he utilize any such information, either alone or with
others, outside the scope of his duties and responsibilities with the Company.

         10.      Non-Competition During Employment Term. The Employee agrees
that, during the Term and any extensions thereof, he will devote substantially
all his business time and effort, and give undivided loyalty, to the Company,
and that he will not engage in any way whatsoever, directly or indirectly, in
any business that is competitive with the Company or its affiliates, nor
solicit, or in any other manner work for or assist any business which is
competitive with the Company or its affiliates. In addition, during the Term and
any extensions thereof, the Employee will undertake no planning for or
organization of any business activity competitive with the work he performs as
an employee of the Company, and the Employee will not combine or conspire with
any other employee of the Company or any other person for the purpose of
organizing any such competitive business activity.

         11.      Non-Competition After Employment Term. The parties acknowledge
that the Employee will acquire substantial knowledge and information concerning
the business of the Company and its affiliates as a result of his employment.
The parties further acknowledge that the scope of business in which the Company
is engaged as of the Effective Date is national and very competitive and one in
which few companies can successfully compete. Competition by the Employee in
that business after this Agreement is terminated would severely injure the
Company. Accordingly, for a period of two years after this Agreement is
terminated or the Employee leaves the employment of the Company for any reason
whatsoever, except as otherwise stated hereinbelow, the Employee agrees (i) not
to become an employee, consultant, advisor, principal, partner or substantial
shareholder of any firm or business that in any way competes with the Company or
its affiliates in any of their presently-existing or then-existing products and
markets; and (ii) not to solicit any person or business that was at the time of
such termination and remains an executive employee of the Company or any of its
affiliates. Notwithstanding any of the foregoing provisions to the contrary, the
Employee shall not be subject to the restrictions set forth in this Section 11
under the following circumstances:

                  (a)      If the Employee's employment with the Company is
terminated by the Company without cause; or

                  (b)      If the Employee's employment with the Company is
terminated as a result of the Company's unwillingness to extend the Term of this
Agreement.

         12.      Return of Company Documents. Upon termination of this
Agreement, Employee shall return immediately to the Company all records and
documents of or pertaining to the Company and shall not make or retain any copy
or extract of any such record or document.

         13.      Improvements and Inventions. Any and all improvements or
inventions which the Employee may conceive, make or participate in during the
period of his employment shall be the sole and exclusive property of the
Company. The Employee will, whenever requested by the Company, execute and
deliver any and all documents which the Company shall deem appropriate in order
to apply for and obtain patents for improvements or inventions or in order to
assign and convey to the Company the sole and exclusive right, title and
interest in and to such improvements, inventions, patents or applications.

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         14.      Actions. The parties agree and acknowledge that the rights
conveyed by this Agreement are of a unique and special nature and that the
Company will not have an adequate remedy at law in the event of a failure by the
Employee to abide by its terms and conditions nor will money damages adequately
compensate for such injury. It is therefore agreed between the parties that, in
the event of a breach by the Employee of any of his obligations contained in
this Agreement, the Company shall have the right, among other rights, to damages
sustained thereby and to obtain an injunction or decree of specific performance
from any court of competent jurisdiction to restrain or compel the Employee to
perform as agreed herein. The Employee agrees that this Section 14 shall survive
the termination of his employment and he shall be bound by its terms at all
times subsequent to the termination of his employment for so long a period as
Company continues to conduct the same business or businesses as conducted during
the Term or any extensions thereof. Nothing herein contained shall in any way
limit or exclude any other right granted by law or equity to the Company.

         15.      Amendment; Integration. This Agreement contains, and its terms
constitute, the entire agreement of the parties, and it may be amended only by a
written document signed by both parties to this Agreement.

         16.      Governing Law. California law shall govern the construction
and enforcement of this Agreement and the parties agree that any litigation
pertaining to this Agreement shall be adjudicated in courts located in
California.

         17.      Attorneys' Fees. If any party finds it necessary to employ
legal counsel or to bring an action at law or other proceedings against the
other party to enforce any of the terms hereof, the party prevailing in any such
action or other proceeding shall be paid by the other party its reasonable
attorneys' fees as well as court costs, all as determined by the court and not a
jury.

         18.      Severability. If any section, subsection or provision hereof
is found for any reason whatsoever, to be invalid or inoperative, that section,
subsection or provision shall be deemed severable and shall not affect the force
and validity of any other provision of this Agreement. If any covenant herein is
determined by a court to be overly broad thereby making the covenant
unenforceable, the parties agree and it is their desire that such court shall
substitute a reasonable judicially enforceable limitation in place of the
offensive part of the covenant and that as so modified the covenant shall be as
fully enforceable as if set forth herein by the parties themselves in the
modified form. The covenants of the Employee in this Agreement shall each be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of the Employee against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants in this Agreement.

         19.      Notices. Any notice, request, or instruction to be given
hereunder shall be in writing and shall be deemed given when personally
delivered or three days after being sent by United States certified mail,
postage prepaid, with return receipt requested, to the parties at their
respective addresses set for the below:

                           To the Company:

                                  CKE Restaurants, Inc.
                                  6307 Carpinteria Avenue, Suite A
                                  Carpinteria, CA 93013
                                  Attention: General Counsel

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                           To the Employee:

                                  E. Michael Murphy
                                  835 Centinela Lane
                                  Santa Barbara, CA 93109

         20.      Waiver of Breach. The waiver by any party of any provisions of
this Agreement shall not operate or be construed as a waiver of any prior or
subsequent breach by the other party.

         IN WITNESS WHEREOF the parties have executed this Agreement to be
effective as of the date first set forth above.

                                                       CKE RESTAURANTS, INC.

                                                       By: /s/ Andrew F. Puzder
                                                           ---------------------
                                                       Its: President & CEO

                                                       EMPLOYEE

                                                       /s/ E. Michael Murphy
                                                       -------------------------
                                                       E. Michael Murphy

                                        7EXHIBIT 10.1

 

April 2, 2004

Christopher E. Herald

CEO                                                  Via Telecopier & Courier

Solitario Resources                               303-534-1809

4251 Kipling Street, Suite 390

Wheat Ridge, Colorado 80033

Telephone: 303-534-1030

 

 

          Re:          La Tola  Property, Peru

Dear Mr. Herald:

          This binding Letter Agreement is entered into and effective on the date agreed and accepted as set forth below by and between Newmont Peru Limited, a Delaware corporation ("Newmont") and Solitario Resources Corp., a company incorporated under the laws of Colorado ("Solitario"), and confirms Newmont's interest in forming a joint venture (the "Joint Venture") to explore, and if warranted, develop the property described in Exhibit A attached hereto, hereinafter referred to as the "Property".  This Letter Agreement is subject to approval by the Toronto Stock Exchange.

          The parties agree to negotiate and agree upon the form of the definitive joint venture agreement (the "Agreement"), to be executed within twelve months of signing this Letter Agreement (unless extended by written consent of both parties).  The Agreement shall contain the following basic terms and such other provisions as are necessary or customary for agreements of this type and as are acceptable to the parties.  These terms and conditions will become binding upon the full execution of this Letter Agreement by Solitario. 

          The "Effective Date" as used herein shall be the day of execution of this Letter Agreement.

1.          The Property.  Solitario warrants that (i) it has the exclusive right to explore, develop, mine and market mineral products from the Property; (ii) except for the Polet concession, for which Solitario has an option to purchase as per the agreement referenced in Exhibit A (the "Polet Option to Purchase Agreement"), Solitario has a 100% interest in the Property; (iii) the Property is free and clear of all claims, encumbrances, and liens and is in good standing under the laws of Peru; and (iv) it has the right to enter into this Letter Agreement and the Agreement regarding the Property. 

          The Polet concession will remain part of the Properties as long as Newmont pays for Solitario's obligations under the Polet Option to Purchase Agreement (the "Polet Option Payments"); provided, however, that Newmont will have the right to exclude the Polet concession from the Properties, by notifying Solitario in writing no later than 30 days before a Polet Option Payment becomes due.  Upon such notice from Newmont, the Polet concession will be excluded from the Properties and from the Area of Interest (as defined in paragraph 9 herein) and Solitario will be solely responsible for its rights and obligations under the Polet Option to Purchase Agreement.

2.          Earn-in. Subject to Newmont's right, pursuant to paragraph 10, to terminate this Letter Agreement and the Agreement at any time and be relieved of all obligations hereunder and thereunder,  Newmont will earn up to a 65% undivided interest in the Property pursuant to the following conditions (the "Earn-in"):

a)          Phase I Earn-in.. Newmont will earn a 51% undivided interest in the Property by: (i) completing a minimum of 2,500 meters of drilling within the Property, on or before the first anniversary of the Effective Date, that shall include at least 300 meters of drilling within the Polet concession, as per the Polet Option to Purchase Agreement (the "Drilling Commitment"); and (ii) spending a cumulative total of US$7,000,000 in exploration on the Property (which includes the cost of the Drilling Commitment as well as the Polet Option Payments), on or before the fourth anniversary of the Effective Date (the "Expenditures"), according to the following schedule: 

	
Due Date                                            

On or by the second anniversary of the Effective Date

On or by the third anniversary of the Effective Date

On or by the fourth anniversary of the Effective Date
	
Cumulative total

US$1,250,000

US$3,000,000

US$7,000,000

          Newmont shall be responsible for conducting exploration at its sole cost and discretion. If the Drilling Commitment is delayed by surface rights owners and/or local communities and/or the lack of approval of the required environmental permits, the Phase I Earn-in may be extended at Newmont's sole option, for a period of up to one year. Excess amounts spent during any given year may be credited towards expenditure requirements in subsequent years. Newmont's expenditures shall include, without limitation: all exploration expenses made in the Property including any expenses incurred toward ascertaining the existence, location, quantity, quality or commercial value of mineral deposits in, under, upon or which may be produced from the Property including, without limitation, expenses for sampling and assaying, geochemical analysis, geophysical surveys, drilling, metallurgical and engineering work, reclamation, Property maintenance fees and salaries or fees paid for work on the Property. 

b)          Phase II Earn-in.  After completing the Phase I Earn-in, Newmont will have the option to earn an additional 9% undivided interest in the Property.  This interest shall be earned by producing, at its sole cost and discretion, a positive feasibility study, as defined in Exhibit B, attached hereto (the "Feasibility Study"), within 3 years after Phase I Earn-in. 

c)          Phase III Earn-in.  After completing the Phase II Earn-in, and once a production decision has been reached, Newmont will have the option to earn an additional 5% undivided interest in the Property, by providing to Solitario certain conditions and certain guarantees to secure its share of project financing at commercially competitive terms. The Newmont guarantees will be set forth in the Agreement.

3.          Technical Committee and Data.  During the Earn-in periods, a technical committee will be formed with two representatives from each party, with the purpose of presenting exploration programs, budgets and results and the level of Expenditures incurred during the Phase I Earn-in, and the Feasibility Study conducted during the Phase II Earn-in; provided, however, that the technical committee shall be advisory in nature. The technical committee will hold timely meetings, on a semi-annual basis from the Effective Date. Newmont will prepare an exploration summary report that will be presented to Solitario in such technical committee meetings.  If drilling operations are ongoing, Newmont will use its best efforts to report drill hole assay results at least once a month to Solitario. 

 

4.          Joint Venture.  Upon Newmont's completion of the Phase I Earn-in, the parties shall establish a Joint Venture pursuant to paragraph 16.  Upon completion of the Phase I Earn-in or Phase II Earn-in (depending upon whether Newmont elects to exercise its Phase II Earn-in) the parties shall contribute to programs and budgets thereafter, in proportion to their participating interest, subject to dilution as set forth in paragraph 7 below. 

5.          Management Committee.  Upon completion of the Phase II Earn-in (unless Newmont elects not to produce a Feasibility Study, in which case after the Phase I Earn-in) the parties shall establish a management committee to determine overall policies, objectives, procedures, methods and actions under the Agreement. The management committee shall consist of four members:  two members appointed by Newmont and two members appointed by Solitario.  Each party, acting through its appointed members, shall have votes on the management committee, in proportion to its participating interest. 

6.          Operator.  Upon completion of the Phase II Earn-in (unless Newmont elects not to produce a Feasibility Study, in which case after the Phase I Earn-in),  the party holding at least 51% participating interest shall be the Operator.  The Operator shall present work programs and budgets to the management committee for approval. In addition, the Operator shall provide the management committee with quarterly and annual reports of its work program together with all factual and interpretive data generated thereby.  The Operator will earn a management fee equal to 5% of the "Allowable Costs" (as defined below) up to $10 million, and 3% of Allowable Costs over $10 million in a budgetary year, incurred after Phase II Earn-in (unless Newmont elects not to produce a Feasibility Study, in which case after the Phase I Earn-in), which shall continue through development and mining operations.  

          Allowable Costs shall include all expenses of the Joint Venture excluding (i) the management fee set forth herein; (ii) depreciation, wear and tear and amortization of tangible and intangible assets; (iii) capital investments; (iv) working capital until it is used in the operation; (v) financial expenses; (vi) royalties; and (vii) workers' profit sharing, penalties, taxes and indemnities corresponding to the Joint Venture.

7.          Project Expenditures and Dilution.  The Operator will provide the non operating party the program and budget for a calendar year, within the last quarter of the previous calendar year.  The non operating party will then have 30-days to advise the Operator that it will: (a) participate in funding the program at its then participating interest, or (b) dilute its interest pursuant to this paragraph. Expenditure projections for an approved budget will then be prepared by the Operator in advance for each calendar quarter and provided to the non operating party.  The non operating party will then have to remit its share of projected expenditures within 30-days from the date such funds were requested by the Operator.  If  a party fails to remit its share of projected expenditures within such 30-day period, such party shall have 15 days from the date it receives a notice of default, to cure such default before being subjected to dilution.  

          If either party elects not to contribute its proportionate share to an agreed work program, such party's participating interest shall be subject to dilution and determined as follows:

          A Participant's Interest = 100% x Aggregate of Participant's Actual and Deemed Expenditures

                              Aggregate of All Participant's Actual and Deemed Expenditures

          For dilution calculation purposes, at Phase I Earn-in, Newmont's initial contribution shall be deemed to be US$7,000,000 and Solitario's initial contribution shall be deemed to be US$6,725,490, with a total project expenditure deemed to be US$13,725,490 on a 51:49 basis.  Newmont's initial contribution and Solitario's initial contribution at Phase II Earn-in (60:40 basis) and at Phase III Earn-in (65:35 basis) will be set forth in the Agreement based on all actual project expenditures incurred by Newmont during the period of preparation of the Feasibility Study through financing.  

          If a party elects to contribute to a work program but fails to make such contribution, the amount of dilution shall be equal to twice the dilution that would have occurred had the defaulting party initially elected not to contribute.

          Solitario Royalty. Solitario shall retain a net smelter returns (the "NSR" as defined in Exhibit C) royalty from gold and silver production in the Property (the "Solitario Royalty").  The Solitario Royalty for gold shall be calculated as a function of the price of gold  according to the following:   

	
Price of Gold (US$ per oz)
	
% NSR

	
Less than US$350

Equal or greater than US$350 but less than US$450

Equal or greater than US$450
	
1.25

1.75

2.25

          The Solitario Royalty from silver production shall be a 1.75 % NSR.

          The parties understand that there is a ongoing effort in Peru to approve legislation under which a royalty would be applied to mining concessions (the "Country Royalty"); therefore, the parties agree to limit the Solitario Royalty such that the Solitario Royalty for gold or for silver plus the Country Royalty shall never exceed the equivalent a 4.75% NSR.  As an example for gold, if the Country Royalty is equivalent to a 3% NSR and the price of gold is greater than US$450, then the Solitario Royalty for gold shall be reduced from 2.25% NSR to 1.75% NSR.

9.          Area of Interest. The Area of Interest shall be defined by a line which is parallel to all exterior boundaries of the Property and separated by 3km from such exterior boundary. Any interest or right to acquire any interest within the Area of Interest, including, without limitation, mining concessions, surface or water rights related thereto, or royalty interest, acquired while this Letter Agreement or the Agreement is in effect, by or on behalf of a Participant or any affiliate, shall be subject to the terms and provisions of this Letter Agreement and the Agreement.

10.          Withdrawal.  Provided that Newmont has completed the Drilling Commitment, prior to completing Phase I, Newmont may terminate this Letter Agreement or the Agreement at any time after 30 days prior written notice. If Newmont terminates this Letter Agreement or the Agreement without completing the Drilling Commitment, it shall pay Solitario in cash an amount of US$100 per meter for the balance between the amount of meters drilled and the Drilling Commitment. Prior to completing the Phase I, the Agreement will also terminate if Newmont fails to complete the annual Expenditures for any given year, unless Newmont decides to pay Solitario in cash, the difference between the spent amount and the Expenditures required for any given year.  Either party will have the right at any time after 90 days prior written notice to the other party to withdraw from the Joint Venture by transferring its interest in the Joint Venture to the other party; provided, however, that such withdrawing party will be responsible for any obligations incurred by it prior to such withdrawal.

11.          Governing Law.  This Letter Agreement and the Agreement will be governed by the laws of the State of Colorado, USA.  The laws of Peru shall apply to the extent applicable to the Property and the mineral rights.

12.          Right of First Refusal.  Each party shall have a right of first refusal with respect to any bona fide proposed sale, directly or indirectly, of the other party's interest in the Agreement, the Joint Venture, the Property, or the Solitario Royalty. Such right shall permit Solitario or Newmont, whichever the case may be, to purchase such interest on the terms offered by any third party and shall be exercised, if at all, within 30 days after written notice from the other party of the proposed offer.  This preferential purchase right shall not apply to transfers to affiliated or related companies, to corporate reorganizations, mergers, amalgamations, or the sale of all or substantially all of the stock of Newmont Mining Corporation or of Solitario,  provided that the interest in the Joint Venture does not constitute more than 60% of the assets of Newmont Mining Corporation or Solitario at the time of such transaction.

13.          No Pledge. Neither party shall pledge, mortgage, or otherwise encumber its interest in the Joint Venture or the Property, except for the purpose of financing for its share of expenditures, pursuant to paragraph 2 (c) herein, after a production decision has been made.

 

14.          Indemnity. Solitario will indemnify Newmont from and against all liability relating to Solitario's activities on the Property and,  Newmont will indemnify Solitario from and against all liability relating to Newmont's activities on the Property.

15.          Dispute Resolution. Disputes of the parties shall be resolved by binding arbitration in Denver, Colorado in English in accordance with the International Rules of the American Arbitration Association (the "Rules").  For a period of at least 60 days prior to submission of a matter to arbitration, an executive officer of Newmont and an executive officer of Solitario will attempt to resolve the dispute, failing which either party may refer the matter to arbitration by written notice to the other party.  For disputes involving amounts of US$2 million dollars or less, the parties shall attempt, by mutual agreement, to nominate a sole arbitrator within 30 days from the date of the initiating party's written notice to the other party.  If the parties cannot agree upon a sole arbitrator within such 30 day period, or in the case of disputes involving amounts of more than US$2 million dollars, the arbitration shall be carried out by a panel of three arbitrators with one arbitrator being selected by the initiating party, one arbitrator being selected by the responding party and the third arbitrator being selected by mutual agreement of such two arbitrators.  If such two arbitrators cannot agree within 75 days upon the appointment of the third arbitrator, the third arbitrator shall be appointed by the AAA in accordance with the Rules.  Moreover, if any party shall fail to appoint an arbitrator within the specified time period, such arbitrator and the third arbitrator shall be appointed by the AAA in accordance with the Rules.  Notwithstanding the foregoing, the arbitrator or arbitrators, as the case may be, shall be lawyers with at least ten year's experience with international joint venture agreements, trained in the common law tradition.  Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction.

16.          Venture Structure/Tax Matters.  The parties agree that in order to form the Joint Venture and negotiate and conclude the Agreement, they will need to consult with tax and legal advisors, and that the Joint Venture may be structured as a corporation or partnership, owned either onshore or offshore as determined pursuant to such tax or legal advice and as necessary to comply with Peruvian law, maximize organizational and operational efficiencies and minimize the tax liability (to the extent possible) of each of Newmont and Solitario. 

17.          Force Majeure.  The parties' obligations and the timeframes established under this Letter Agreement shall be suspended to the extent and for the period that performance is prevented by any cause beyond the party's control, whether foreseeable or unforeseeable, including, without limitation, labor disputes, opposition by local communities, acts of God, laws, regulations, orders, proclamations, or requests of any governmental authority, inability to obtain on reasonable terms required permits, licenses, or other authorizations, or any other matter similar or dissimilar to the above that constitutes an event of force majeure.

18.          Confidentiality and Press Releases. Except where regulatory or stock exchange requirements prohibit, the terms of this Letter Agreement are to be held by the parties and their directors, officers, employees, consultants, agents, accountants, legal counsel, financing sources and those of its direct and indirect wholly-owned subsidiaries and parent companies (herein the "Representatives"), in strict confidence. It being agreed that each such Representative will be informed by the respective party of the confidential nature of this Letter Agreement and will agree to be bound by its terms and further, that each party will be responsible for any breach hereof by its Representatives. The parties understand that disclosure may be required pursuant to law or regulations of an applicable stock exchange, and, in the event that a party desires to make public disclosure, to the extent legally permissible, the other party shall receive two business days to review and approve such disclosure, with such approval not to be unreasonably withheld.  The party wishing to make a public disclosure shall make all reasonable edits requested by the other party.

          It is understood that this Letter Agreement shall be a binding and enforceable agreement as of the date it is executed by Solitario; provided, however, the Agreement shall be subject to a due diligence period during which Newmont shall have free access to examine all data, to sample the Property and to satisfy itself with respect to land title, the absence of environmental liabilities and similar matters. Newmont shall complete this due diligence within 30 days from the date of execution of this Letter Agreement, and to the extent that the results of such due diligence are deemed to be unsatisfactory, at Newmont's reasonable discretion, Newmont may withdraw from this Letter Agreement and its obligation to perform the Drilling Commitment.

          In the event any provision of this Letter Agreement is found to be inconsistent with, or contrary to law, rule or regulation, the latter shall be deemed to control and this Letter Agreement shall be regarded as modified accordingly and, as so modified, shall continue in full force and effect.

          This Letter Agreement contains the entire understanding of the parties relating to the specific subject matter hereof, and supersedes all prior agreements and understandings between the parties.  The parties have the necessary power and authority to enter into this Letter Agreement which shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.  Any amendments hereto shall be in writing and signed by the parties hereto. 

Newmont Peru  Limited

 

By: /s/ Carlos Santa Cruz

Name: Carlos Santa Cruz

Title: President and Managing          Director

Agreed to and accepted this 5th day of April, 2004.

Solitario Resources Corp.

 

By: /s/James R. Maronick

Name: James R. Maronick

Title: CFO

EXHIBIT A

The Property

 

	 	
Name
	
Hectares
	
Code
	
Status

	
1
	
ZORAIDA UNO
	
1,000
	
01-02901-03
	
Titled

	
2
	
ZORAIDA DOS
	
1,000
	
01-03338-03
	
Titled

	
3
	
ZORAIDA TRES
	
700
	
01-03339-03
	
Titled

	
4
	
ZORAIDA CUATRO
	
800
	
01-03340-03
	
Titled

	
5
	
ZORAIDA CINCO
	
800
	
01-03348-03
	
Titled

	
6
	
ZORAIDA SEIS
	
900
	
01-03349-03

	
Titled

	
7
	
ZORAIDA SIETE
	
800
	
01-03406-03

	
In process

	
8
	
ZORAIDA OCHO
	
900
	
01-03407-03
	
Titled

	
9
	
ZORAIDA NUEVE
	
900
	
01-03633-03
	
In process

	
10
	
ZORAIDA DIES
	
1,000
	
01-03408-03
	
Titled

	
11
	
ZORAIDA ONCE
	
1,000
	
01-03409-03
	
Titled

	
12
	
ZORAIDA DOCE
	
700
	
01-00082-04
	
In process

	
13
	
ZORAIDA TRECE
	
500
	
01-00083-04
	
In process

	
14
	
ZORAIDA CATORCE
	
1,000
	
01-00084-04
	
In process

	
15
	
POLET [1]
	
100
	
01-02680-03
	
Titled

	
Total
	
12,100
	 

 
[1]           Polet Option to Purchase Agreement is the agreement executed  between Minera Solitario S.A.C., a wholly owned subsidiary of Solitario and Mr. Placido Remigio Pariguana Moncca, in front of Mr. Alfredo Paino Scarpati Notary Public of Lima, on March 24, 2003. 

 

 

EXHIBIT B

 

Feasibility Study

Feasibility Study means a detailed report recommending the development of a mine, within the Property, for being economically viable and profitable to exploit the relevant deposit or deposits according to the parameters established in such study, contemplating the maximum prospective development and operation as is reasonable and economically viable according to the data available at the time such study is prepared. The study shall at least include the following information:

1.          An estimate of recoverable mineral reserves and an estimate of its composition and content; the proposed procedure for the development and production of the mine;

2.          Test results of the minerals that may be treated; 

3.          Characteristics and area where the proposed mine facilities will be located, which facilities may include mineral treatment facilities, if the size and location of the mineralized body renders such mineral treatment facility feasible; in which case, the report shall include a preliminary design of said mineral treatment facility;

4.          Total costs, including the budget of capital costs reasonably required to acquire, build and install the structures, machinery and equipment required for the proposed mine, including an estimated timing of such requirements;

5.          All environmental impact studies and cost thereof;

6.          Proposed period in which commercial production of the mine will start;

7.          Other data and information that is reasonably necessary to support the existence of a mineralized deposit of sufficient grade and size to justify the development of the mine, taking into account all business considerations, taxes and other economic considerations; and

8.          Working capital requirements for the first four months of the mine operation, or for a longer period that is reasonably justified by the circumstances.

The information contemplated above shall be of the quality and content that is generally required to produce a bankable feasibility study for lending institutions in the United States of America or Canada, with the purpose of determining the convenience of providing funding for the project.  The preparation of a bankable feasibility study shall be at the sole expense of the party desiring to produce such study.

 

EXHIBIT C

 

NET SMELTER RETURNS

1.          Calculation of Net Smelter Returns.  

(a)          When and after a dore or other form of concentrate is shipped to a refinery and there has been a final settlement by the refinery with respect to such delivery, the "Net Smelter Returns" shall mean:  (i)  with respect to gold, the value of gold (stated in U.S. Dollars per ounce of gold) multiplied by the number of ounces of gold produced, less Allowable Deductions, and (ii)  with respect to all other minerals, the value of such other minerals (stated in U.S. Dollars), less Allowable Deductions.

          The value of gold shall be the numerical average of the closing prices of gold as reported on the COMEX (or, if the COMEX shall cease reporting gold prices, then the London P.M. fix; or, if that should cease to be reported, then as reported by another mutually agreed substitute index) at the conclusion of each day of said month in which final settlement occurred; such average price shall then be used to value all gold products for which there was final settlement during such month.  The value of all other minerals contained in such dore or other form of concentrate shall be the numerical average of the closing prices of such minerals as reported on the London Metals Exchange at the conclusion of each day of said month; such average price shall then be used to value all such minerals (other than gold) during such month.  In all other cases, "Net Smelter Returns" shall be as defined in subsection (b) of this Section 1.

(b)          Except as provided in subsection (a) of this Section 1, "Net Smelter Returns" means:

(i)          in the case of ores, minerals, or other products which are sold in the crude state, the amount received by the Operator from the purchaser of the ores, minerals of other products, less Allowable Deductions, 

(ii)          in the case of ores, minerals, or other products which are processed by or for the account of the Operator to produce concentrates or other saleable intermediate products to be smelted or otherwise further processed by or for the account of the Operator, an amount equal to the market value of the concentrates or other saleable intermediate products f.o.b. the plant producing the concentrates or other saleable intermediate products (which amount shall be deemed to have been received by the Operator), less Allowable Deductions, and in all other cases, the amount received by the Operator from the purchaser of the ores, minerals, or other products, less Allowable Deductions.

(c)          "Allowable Deductions" means, to the extent borne or to be borne by the Operator:

(i)          charges for and taxes on transportation of mineral product from the mine or plant producing the concentrates or other saleable products to a smelter or other place of treatment, from the smelter or other place of treatment to the refinery and from the refinery to the place of sale, 

(ii)          insurance and security costs and charges,

(iii)          smelting and refining costs, treatment charges and penalties, including without limitation metal losses and penalties for impurities,

(iv)          representation, assaying, and umpire costs and fees, and marketing costs and commissions, and

(v)          production, sales, severance, and other taxes measured by production or the value of production.

(d)          Advance sales, forward sales, hedging, and other speculative sales arrangements shall be solely for the account, benefit and risk of the Operator, and shall not inure to the benefit of the royalty owner.

2.          Commingling.  The Operator may commingle ores from the Property with ores from other properties, either before or after concentration or beneficiation, so long as all data necessary to determine the weight and grade, both of the ores removed from the Property and the ores with which they are commingled, are obtained and preserved by the Operator.  The Operator shall then use that weight and grade data to allocate any value received between the Property and the other properties from which the other commingled ores were removed.  All such weight, grade and allocation calculations shall be done in a minerlike fashion.

3.          Payment.  Net Smelter Returns shall be calculated for each calendar quarter in which Net Smelter Returns are realized, and payment shall be made within thirty (30) days following the end of each such calendar quarter.  Such payments shall be accompanied by a statement summarizing the computation of Net Smelter Returns.  Such quarterly payments are provisional and subject to adjustment within ninety (90) days following the end of each calendar year.  All royalty payments made during or with respect to a calendar year shall conclusively be deemed to be true and correct unless within six (6) months following the end of said calendar year the royalty owner or the Operator takes or makes written exception, specifying with particularity the items to which exception is made and grounds for each exception.

4.          Inspection of Records. The Operator's records of all mining and milling operations within the Property, and its records with respect to commingling of production from the Property, shall be available for Solitario's (or its authorized agents') inspection and/or audit upon reasonable advance notice and during normal business hours, but no more frequently than once each quarter.  If any such audit or inspection reveals that Net Smelter Returns for any calendar year (after giving effect to year-end adjustments) are underpaid by more than five percent, the Operator shall reimburse Solitario for its reasonable costs incurred in such audit or inspection.

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