EXHIBIT 10.37
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is made and entered into
effective as of the 1st day of March, 1997 by and between Shoshone Mining Co., a
Delaware corporation ("Shoshone"), and Desert Minerals, Inc., a Delaware
corporation ("DMI").
RECITALS:
WHEREAS, Shoshone controls certain tracts of land (the "Tracts"); and
WHEREAS, the sands located on the Tracts are believed to contain
precious minerals, and Shoshone is interesting in confirming whether or not such
sands contain precious minerals and if so, whether or not such precious minerals
can be extracted from such sands; and
WHEREAS, DMI has rights to a certain proprietary, low-toxicity
microfine precious metals extraction technology (the "Technology") and a "pilot"
plant capable of utilizing the Technology (the "Pilot Plant"), and the
Technology and the Pilot Plant are believed to be capable of separating any
precious minerals contained in the sands mined from the Tracts from such sands;
and
WHEREAS, both the Technology and the Pilot Plant are in a developmental
stage, and both the Technology and the Pilot Plant will require additional
financing and will involve additional costs and expenses; and
WHEREAS, if the Technology and the Pilot Plant are successfully
developed, DMI intends to construct a much larger plant for commercially
exploiting the Technology (the "Definitive Plant"); and
WHEREAS, Shoshone desires to engage DMI to utilize the Technology
and the Pilot
Plant in an effort to confirm whether or not precious minerals contained in the
sands located on the Tracts can be separated from such sands, and Shoshone
desires to engage DMI to utilize the Technology and the Definitive Plant to
commercially exploit the precious minerals contained in the sands located on the
Tracts, if precious minerals are confirmed to be contained in the sands located
on the Tracts, the Technology and the Pilot Plant are successfully developed and
are capable of extracting precious metals from such sands, and the Definitive
Plant is constructed; and
WHEREAS, Shoshone is willing to provide a portion of the additional
financing and to bear a portion of the costs and expenses in connection with the
development of the Technology and the Pilot Plant; and
WHEREAS, DMI is willing to be engaged by Shoshone to utilize the
Technology and the Pilot Plant in an effort to confirm whether or not any
precious mineral contained in the sands located on the Tracts can be extracted
from such sands, and DMI is willing to be engaged by Shoshone to utilize the
Technology and the Definitive Plant to commercially exploit the precious
minerals contained in the sands located on the Tracts, if Shoshone so desires
and once the Technology and the Pilot Plant are successfully developed and are
proven capable of extracting precious metals from such sands, and the Definitive
Plant is constructed; and
WHEREAS, Shoshone and DMI are willing to undertake all of the foregoing
upon the terms, provisions and conditions set forth hereinafter;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
AGREEMENTS:
l. Engagement. Subject to the terms, provisions and conditions
hereinafter stated, Shoshone hereby engages DMI to utilize the Technology and
the Pilot Plant in an effort to confirm whether or not any precious mineral
contained in the sands located on the Tracts can be extracted from such sands,
and DMI hereby accepts such engagement. The preceding engagement shall be
subject to the following terms and conditions, in addition to all other terms,
provisions and conditions set forth herein:
(a) In DMI's efforts to confirm whether or not any precious mineral contained in
the sands located on the Tracts can be extracted from such sands, DMI shall be
obligated to process such sand at the Pilot Plant but only in such quantities as
are reasonable in view of the capacity of the Pilot Plant and DMI's obligations
to its other customers and other persons with whom it has contracted. (b) Upon
receipt at the Pilot Plant from Shoshone of a quantity of sand complying with
the restriction set forth above, DMI shall proceed as promptly as is reasonably
possible to process such sand using the Technology to confirm whether or not any
precious mineral contained in the sands located on the Tracts can be
extracted from such sands. In this connection, as soon as is reasonably possible
after such sand is received at the Pilot Plant, DMI shall inform Shoshone as to
date by which the related processing is expected to be completed. If at any time
DMI realizes that it will not be able to complete the processing by the date
previously indicated to Shoshone, DMI shall immediately notify Shoshone, and DMI
and Shoshone shall reasonably discuss the possibility of extending the date for
completion if legitimate reasons for the delay exist. (c) As promptly as is
reasonably possible after the completion of the processing of any sand pursuant
to this Agreement, DMI shall deliver its report as to whether or not any
precious mineral contained in the sands located on the Tracts can be extracted
from such sands. Such report shall be in such form and containing such
information as Shoshone shall reasonably request. Shoshone shall have the right
for 10 days to review the report and communicate to DMI its tentative comments
on any matter in which it regards the report or the processing to be deficient
in its reasonable discretion. DMI and Shoshone shall then reasonably cooperate
with each other in an effort to cure any such deficiencies and to modify the
report or the processing. Notwithstanding the preceding, DMI shall endeavor to
cure any matter in which Shoshone believes the initial report or processing to
be deficient within a reasonable period of time after Shoshone has communicated
to DMI such deficiencies. Once DMI believes that the deficiencies have been
cure, it shall notify Shoshone to such effect, and Shoshone shall have the right
to review the modified report and processing. If the modified report or
processing is still deficient to Shoshone in its reasonable discretion, Shoshone
shall have the right to notify DMI as to the remaining deficiencies and to
permit DMI the opportunity to cure such deficiencies to the reasonable
satisfaction of Shoshone within a reasonable period of time. This procedure of
notice, review, report of deficiencies and attempt to cure shall be followed
until an acceptable report or processing or both are finalized. If either DMI or
Shoshone believes that they will be unable to agree upon the final report and
processing, then either DMI or Shoshone shall be entitled to submit the issue to
arbitration in accordance with Section 18 hereof.
2. Non-Exclusivity. Shoshone hereby recognizes that during the term of
this Agreement, DMI will be engaged by persons other than Shoshone in much the
same capacity in which Shoshone is engaging DMI hereunder. Furthermore, Shoshone
hereby consents to DMI's engagement by all such other persons, and Shoshone
hereby recognizes that DMI's engagement hereunder is not exclusive.
3 Standard of Performance. In providing services pursuant to this
Agreement, DMI shall use reasonable and its best efforts, shall render such
services in a competent manner of the highest caliber, and cooperate with
Shoshone and to take all suggestions of Shoshone under serious considerations.
However, Shoshone hereby acknowledges that the Technology and the Pilot Plant
are new and unproven. Accordingly, Shoshone hereby acknowledges that DMI is not
making any representation, warranty or guarantee as to the results of the
Technology and the Pilot Plant or any other matter relating to this Agreement.
4. Payment for Services. In consideration of the services to be
provided by DMI to Shoshone hereunder, Shoshone agrees to pay to DMI a fee equal
to the sum of (a) all direct costs incurred by DMI during the course of
processing Shoshone's sands (without any allocation for any overhead amounts),
plus (b) 10% of the amount of (a) immediately preceding. All fees that become
due to DMI pursuant to this Agreement for any services rendered by DMI shall be
due and payable to DMI within 30 days after the final report of the related
services is approved and accepted by Shoshone pursuant to the above, such
approval and acceptance being deemed given and made for purposes of this Section
4 only on the 10th day after the initial report of the related services is
delivered unless Shoshone has communicated to DMI its deficiency comments on any
tentative results prior to such 10th day, in which case only actual approval and
acceptance shall commence the aforementioned 30-day period. Moreover, Shoshone
may, at DMI's discretion, pay for the fee provided for by this Section 4 through
the payment of costs, expenses or capital expenditures incurred by DMI, and if
Shoshone pays any fee through this method, the fee owed by Shoshone shall be
credited with the amount of the DMI costs, expenses or capital expenditures paid
by Shoshone.
5. Term. The term of this Agreement shall begin on the effective date
hereof and shall continue for two years thereafter unless this Agreement is
terminated earlier in accordance with the provisions of Section 6 below.
6. Termination Upon Certain Events. (a) Notwithstanding anything else contained
herein, Shoshone may terminate this Agreement and be relieved of any further
liability hereunder (except for obligations provided for in Section 4(a) above
concerning accrued but unpaid fees and the obligations provided for in Section 7
below) at any time after notice is given to DMI after and regarding the
following events: (i) DMI's failure to provide the services required of it
hereunder up to the standards set forth in Section 3 hereof, provided, however,
that DMI has failed to cure such failure within 30 days after the notice
required by this Section 6(a) has been given; or (ii) DMI's other material
breach of this Agreement, provided, however, that DMI has failed to cure such
breach within 30 days after the notice required by this Section 6(a) has been
given. (b) Notwithstanding anything else contained herein, DMI may terminate
this Agreement and be relieved of any further liability hereunder (except
obligations provided for in Sections 7 and 8 below) at any time after
notice is given to Shoshone after and regarding the following events: (i)
Shoshone's failure to pay amounts that become due under Section 4(a), provided,
however, that Shoshone has failed to cure such failure within 30 days after the
notice required by this Section 6(b) has been given; or (ii) Shoshone's other
material breach of this Agreement, provided, however, that Shoshone has failed
to cure such breach within 30 days after the notice required by this Section
6(b) has been given. (c) Notwithstanding anything else contained herein, either
party may immediately terminate this Agreement and be relieved of any further
liability hereunder (except for obligations provided for in Section 4(a) above
concerning accrued but unpaid fees and the obligations provided for in Sections
7 and 8 below) at any time after notice is given to the other party after the
other party's dissolution, insolvency, filing of a voluntary bankruptcy
petition, filing against it an involuntary bankruptcy petition, rendering of a
material judgment against it, assignment for the benefit of creditors, or
admission in writing of its inability to pay its debts as they become due. (d)
This Agreement shall automatically terminate upon the execution and delivery of
an agreement pertaining to the Definitive Plant by DMI and Shoshone.
7. Confidentiality.
Each party hereto (the "Recipient" for purposes of this Section 7)
hereby recognizes and acknowledges that it will receive information from, or
will develop information on the behalf of, the other party hereto (the
"Disclosing Party" for purposes of this Section 7) pertaining to the Disclosing
Party and its business or its properties that is confidential and proprietary.
All such information is referred to hereinafter as the "Information". Each party
as the Recipient hereby agrees to maintain on a confidential basis all
Information, and each party as the Recipient hereby agrees that it will not,
without the prior express written consent of the other party as the Disclosing
Party, use for its or anyone else's benefit or disclose to any other person any
Information, except in connection with such Recipient's work on behalf of such
Disclosing Party. Each party as the Recipient hereby acknowledges that, as
between the other party as the Disclosing Party and such Recipient, such
Disclosing Party has the complete, sole and full right, title and interest in
and to the Information, and that such Recipient has no rights, expressed or
implied, with respect to the foregoing other than those expressly provided for
to the contrary in a writing signed by both such Disclosing Party and such
Recipient. Each party as the Recipient further agrees that it will, immediately
upon the request of the other party as the Disclosing Party, return to such
Disclosing Party all written Information and all writings regarding oral
Information whether such writings were authorized or not. Each party as the
Recipient hereby agrees that the confidentiality agreement provided for hereby
shall last with respect to any Information for ten years after such Information
is
disclosed by the other party as the Disclosing Party to such Recipient or
developed by such Recipient on behalf of such Disclosing Party, as the case may
be.
8. Property of Shoshone. DMI acknowledges that the services to be
provided by it pursuant to this Agreement are on a "for hire" basis.
Accordingly, DMI acknowledges that all right, title, interest and ownership in
and to all tangible or intangible property created by DMI pursuant to this
Agreement shall vest in Shoshone, and DMI hereby assigns and conveys to Shoshone
all right, title, interest and ownership in and to all such tangible or
intangible property. DMI agrees to take such further action as Shoshone may
reasonably request with regard to the perfection of its ownership in such
tangible or intangible property. DMI agrees that, upon the termination of DMI's
engagement with Shoshone, DMI shall immediately surrender to Shoshone all
property, equipment, funds, lists, books, records, and other materials of
Shoshone or any affiliate thereof in the possession of or provided to DMI.
9. Definitive Plant. In the event that the Technology meets Shoshone's
expectations, Shoshone and DMI each agree to negotiate in good faith the form,
terms, provisions and conditions of an agreement pertaining to the Definitive
Plant with a view to the execution and delivery of the same.
10. Law Governing. THIS AGREEMENT HAS BEEN ENTERED INTO IN THE STATE OF
TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
11. Notices. Any notice or request herein required or permitted to be
given to any party hereunder shall be given in writing and shall be personally
delivered or sent to such party by prepaid mail at the address set forth below
the signature of such party hereto or at such other address as such party may
designate by written communication to the other party to this Agreement. Each
notice given in accordance with this paragraph shall be deemed to have been
given, if personally delivered, on the date personally delivered, or, if mailed,
on the third day following the day on which it is deposited in the United States
mail, certified or registered mail, return receipt requested, with postage
prepaid.
12. Headings. The headings of the paragraphs of this Agreement have
been inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.
13. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement and the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and enforceable.
14. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and
supersede all prior agreements and understandings, whether written or oral,
relating to the subject matter hereof.
15. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of each party hereto and its successors and assigns, but
neither this Agreement nor any rights hereunder may be assigned by any party
hereto without the consent in writing of the other party.
16. Remedies. No remedy conferred by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. The election of any one or more remedies by any party hereto shall
not constitute a waiver of the right to pursue other available remedies.
17. Independent Contractor. DMI and Shoshone are independent
contracting parties, and nothing in this Agreement shall make either party the
agent or legal representative of the other for any purpose whatsoever, nor does
it grant either party any authority to assume or to create any obligations on
behalf of or in the name of the other.
18. Arbitration. All disputes arising out of this Agreement shall be
submitted by either party hereto to arbitration in Houston, Texas pursuant to
the rules of the American Arbitration Association, Commercial Division, as such
party's sole remedy in this regard.
IN WITNESS WHEREOF, the undersigned have set their hands hereunto as of
the first date written above.
"SHOSHONE""
SHOSHONE MINING CO.
BY:_________________________________
NAME:_______________________________
TITLE:______________________________
ADDRESS:____________________________
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"DMI"
DESERT MINERALS, INC.
BY:_________________________________
NAME:_______________________________
TITLE:______________________________
ADDRESS:____________________________
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