EXHIBIT 10.38
DEVELOPMENT AND OPERATING AGREEMENT
(CALCIUM CARBONATES, CIBOLA COUNTY, NM)
This Agreement ("Agreement") is dated this February 14, 2005 ("Effective
Date") by and among TECUMSEH PROFESSIONAL ASSOCIATES, INC., a New Mexico
corporation ("TPA"), TECUMSEH INDUSTIRAL MINERALS, LLC, a New Mexico limited
liability company ("TIML"), and CA PROPERTIES, INC., a Nevada corporation
("CAP"). TPA, TIML, and CPA are sometimes collectively referred to as the
"Parties". The Parties agree:
1. BACKGROUND.
1.1 STATUS OF TECUMSEH. TPA is a small, national business firm
having its principal office in Albuquerque, New Mexico. TPA is engaged (directly
or indirectly through subsidiary and/or "brother/sister" firms) in a variety of
business activities including without limitation government facilities
management and operation services, environmental assessment and remediation
services, oil and gas activities, and information technology services. TIML is a
wholly owned subsidiary of TPA. Tecumseh has the financial capability and
technical expertise to operate a mining and marketing venture for the Mineral
Interests. TPA and TIML are sometimes collectively referred to as "Tecumseh".
1.2 STATUS OF CAP. CAP is a wholly owned subsidiary of CLEAN AGE
MINERALS, INC., a Nevada corporation ("CAMI"). CAMI is a wholly owned subsidiary
of DALECO RESOURCES CORPORATION, a Nevada corporation ("DRC"). DRC is publicly
held, international asset and technology aggregation and monetization company
having its principal office in West Chester, Pennsylvania.
1.3 CAP'S CALCIUM CARBONATE MINERAL INTERESTS. CAP is the lessee
("Lessee") under a Limestone Mining Lease and Agreement dated August 4, 1993
("Limestone Agreement"), wherein New Mexico and Arizona Land Company was the
lessor. On September 10, 2004, the Limestone Agreement was amended by an
Amendment to Limestone Agreement ("First Amendment") wherein NZ Travertine, LLC
is the current lessor ("Lessor"). The Limestone
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Agreement as amended by the First Amendment is hereinafter sometimes
collectively referred to as the "Amended Limestone Lease". Copies of the
Limestone Agreement and First Amendment are attached hereto as Exhibit A and
incorporated herein. The Amended Limestone Lease covers land and minerals
located in Cibola County, New Mexico, being part of the Mesa del Oro deposit.
Some of the minerals covered by the Amended Limestone Lease are owned by the
Lessor in fee and some are controlled by the Lessor being the current holder of
a number of federal mining claims for Calcium Carbonate in Cibola County, NM
("Calcium Carbonate Mining Claims") shown on Exhibit B attached hereto and
incorporated herein. All such Calcium Carbonate Mining Claims are active, in
good standing, and have all of the required assessment work completed and
documentation of such assessment work duly filed with the BLM for the calendar
year 2005. All payments and other obligations to be performed by CAP, in its
capacity as the Lessee, under the Limestone Agreement have been timely
paid/performed. However, CAP has not yet completed its production/sales
requirements due under the Limestone Agreement for the lease year ending August
4, 2005. All of CAP's right, title, and interest in and to the minerals, i.e.,
primarily Calcium Carbonate, covered by the Amended Limestone Lease are
hereinafter referred to as the "Mineral Interests".
1.4 CURRENT OPERATIONS. CAP is presently mining the Mineral
Interests and selling products therefrom.
1.5 INTENTION TO ENTER INTO BUSINESS ARRANGEMENT. The Parties
acknowledge their mutual intention to enter into a business relationship whereby
TIML, directly or through its parent, TPA, subsidiaries, affiliates, agents,
representatives, and other third-party contractors, shall be responsible for the
commercial development, exploration, mining or other extraction, processing,
packaging, storage, transporting, marketing, and administrative operations and
activities related to the Mineral Interests all for the purpose of monetizing
the Mineral Interests, and all in substantial accordance with the provisions of
this Agreement.
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2. DEFINITIONS.
2.1 "AFE" shall mean an Authority for Expenditure.
2.2 "ALLOWABLE COSTS" shall have the meaning ascribed to it in
Exhibit C hereto.
2.3 "BLM" shall mean the Bureau of Land Management, a Federal
Agency and any successor agency to the BLM.
2.4 "CALCIUM CARBONATE" shall mean all of the Calcium Carbonate,
i.e., all of the CACO3, minerals included within the Mineral Interests. For all
purposes of this Agreement, the term Calcium Carbonate shall include without
limitation limestone, travertine, and all other minerals primarily composed of
Calcium Carbonate and/or all other minerals covered by the Amended Limestone
Agreement.
2.5 "EMERGENCY" shall mean any explosion, fire, flood, leakage,
spill, other like event or catastrophes whether man made or act of God, which
could, if not addressed, cause harm to life or property or create an unsafe
Environmental Condition.
2.6 "ENVIRONMENTAL CONDITION" shall mean any condition existing
on, in, or under the atmosphere, the ground surface, any surface or subsurface
or ground water, or other environmental medium which results, or could
reasonably be expected to result, in any damage, loss, cost, expense, claim,
investigation, lien and/or liability relating or attributable to the Calcium
Carbonate as a result of or under any Environmental Law.
2.7 "ENVIRONMENTAL LAW" shall include, by way of example and not
limitation, any Environmental Act; the Clean Air Act, as amended, the Clean
Water Act, as amended, the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, and all other Federal, state and local
regulations, orders, implementations or rulings issued thereunder or pursuant
thereto.
2.8 "ENVIRONMENTAL ACT" shall mean any environmental law or
regulation enacted by the State of New Mexico governing the protection of the
environment, the operation of mines, the permitting of mines, the hauling of
minerals over state roads, or other laws governing, either directly or
indirectly, the mining, extraction, transportation and marketing of the Calcium
Carbonate.
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2.9 "MINERAL SITE MANAGER" shall mean that entity designated
herein to oversee the daily and long term development, exploration,
exploitation, and marketing of the Calcium Carbonate.
2.10 "NET PROFITS" shall mean that certain residual amount
remaining from all revenues derived from the development, exploration,
exploitation, monetization or other sale or disposition in any manner of the
Calcium Carbonate during the term of this Agreement AFTER DEDUCTING all
Allowable Costs. Net Profits shall be determined by United States generally
accepted accounting principles consistently applied. Capitalized terms not
otherwise defined herein shall have the meaning attributed to them in the text
hereof.
3. OPERATIONS.
3.1 DESIGNATION OF TIML AS MINERAL SITE MANAGER. TIML shall be
the Mineral Site Manager and shall be the operator of record with the BLM and
the State of New Mexico with respect to the Mineral Interests.
3.2 DUTIES OF MINERAL SITE MANAGER. In its capacity as the
Mineral Site Manager during the term of this Agreement, TIML shall:
3.2.1 GENERAL RESPONSIBILITY FOR OPERATIONS. Be
responsible for capital formation, improvement, and implementation of CAP's
present exploitation strategies with regard to the Mineral Interests, including
without limitation all commercial development, exploration, exploitation, mining
or other extraction, processing, packaging, transportation, marketing, and
administrative operations, activities, and functions associated with or related
to the monetization of the Mineral Interests and as required by the Amended
Limestone Lease;
3.2.2 GUARANTY OF AMENDED LIMESTONE LEASE. Guaranty the
production of Calcium Carbonate from the Mineral Interests in "paying
quantities" (as such term is defined in the Limestone Agreement) sufficient to
keep the Amended Limestone Lease in full force and effect, all as more fully set
forth in Paragraphs 4, 6, and 7 of the Limestone Agreement; i.e., TIML shall
sell and/or remove from the Mineral Interests a quantity of Calcium Carbonate
(or other products as permitted under the Amended Limestone Lease) sufficient to
result in the requirement for
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payment to the Lessor under the Amended Limestone Lease of a production royalty
of not less than the Minimum Annual Royalty as provided for and calculated in
Paragraph 6 of the Limestone Agreement. TIML shall make or cause to be made in a
timely manner all reports required by the Amended Limestone Lease.
3.2.3 CONSULTATION WITH COMPANY. Consult with CAP when
establishing its exploitation, pricing and marketing plans for the Mineral
Interests.
3.2.4 DISCLOSURE OF MARKET LEADS. Disclose to CAP all
client and market potential leads and consult with CAP in order to further the
commercialization and monetization of the Mineral Interests;
3.2.5 MINING PERMITS. Obtain all mining permits and such
other permits as is necessary for the development, exploration, exploitation,
mining or other extraction, processing, packaging, marketing, and transportation
of the Calcium Carbonate and assist CAP in obtaining the cancellation,
termination, and/or release of its permits with respect to the Calcium
Carbonate;
3.2.6 ACCOUNTING. Prepare all reasonable, necessary, and
appropriate accounting with regard to its operations under this Agreement,
including without limitation accounting for all production and sales of Calcium
Carbonate under the Limestone Agreement and the payment of all royalties due
under the Amended Limestone Lease, and provide to CAP and, as required, the
Lessor, in a timely manner copies of all such accounting;
3.2.7 SALES IN ACCORDANCE WITH PRICING PARAMETERS. Sell
or otherwise dispose of limited quantities of specific Calcium Carbonate
products, including without limitation limestone and/or travertine, within the
Mineral Interests ONLY in conformance with the pricing parameters established by
CAP and subject to review by CAP's management and/or Board of Directors. For the
purpose of this Paragraph 3.2.7, the term "limited quantities of specific
Calcium Carbonate products within the Mineral Interests" shall mean quantities
less than all or substantially all of the Calcium Carbonate minerals within the
Mineral Interests;
3.2.8 DISPOSITION OF ENTIRE MINERAL INTEREST. Sell or
otherwise dispose of all or substantially all of the Calcium Carbonate minerals
within the Mineral Interests ONLY upon
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prior written notice to CAP with all of the specifics of the proposed
transaction fully disclosed to CAP AND ONLY with the prior written consent of
CAP to the proposed transaction; provided, however, within ten (10) days after
the effective date of receipt of TIML's written notice in accordance with
Paragraph 10 below, fully disclosing all information which a prudent seller
would want to know about the transaction so that an informed decision could be
made. CAP shall respond in writing consistent with Paragraph 10 below to TIML
(i) by rejecting the proposed transaction, (ii) by accepting the proposed
transaction, or (iii) by making a good faith, reasonable request for additional
information which CAP may need to make an informed decision.
3.3 DUTIES OF CAP. During the term of this Agreement, CAP shall:
3.3.1 Provide TIML with a complete list of all of CAP's
current customers, prospective customers and leads for products from the Mineral
Interests together with all pricing information relative to such customers and
products;
3.3.2 From time to time as reasonably requested by TIML,
assist, advise and provide information to TIML with regard to the Mineral
Interest;
3.3.3 Neither engage in any mining activities on or with
respect to the Mineral Interests nor take any action to terminate, modify,
amend, or change in any manner whatsoever the Amended Limestone Lease or any
provision thereof without the prior written consent of TIML .
3.4 AUTHORITY FOR EXPENDITURE.
3.4.1 REGULAR AFES. During the term of this Agreement,
TIML shall prepare and provide to CAP, or its designee, DRC, a detailed AFE for
each capital project, improvement or enhancement, and operation with respect to
the Calcium Carbonate for which the total estimated cost shall exceed
$15,000.00. Each AFE shall set forth the proposed project, improvement or
enhancement, or operation, its estimated cost and the rationale for the proposed
project, improvement or enhancement, or operation. CAP acknowledges that an AFE
is only an estimate of the costs reasonably anticipated to be incurred in the
performance of the proposed project, improvement or enhancement, or operation
and is not a guaranteed or "turnkey price." Subject to the provisions of
Paragraph 3.4.2 below, upon the approval and execution of an AFE by CAP,
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either as originally proposed or as amended by the parties hereto, CAP shall
have unequivocally committed to fund its thirty-five percent (35%) of the
proposed project, improvement or enhancement, or operation.
3.4.2 TIML'S SOLE RESPONSIBILITY FOR FIRST YEAR
EXPENSES. Notwithstanding the provisions of Paragraph 3.4.1 above, during the
first year of the initial term of this Agreement, TIML shall have the sole and
exclusive obligation to pay all costs of the operation, exploration,
exploitation, development, marketing, processing and delivering the Calcium
Carbonate.
3.4.3 EMERGENCIES. TIML shall cause to be taken such
actions as reasonably and prudently necessary, in its sole and absolute opinion
and discretion, to deal with an Emergency to safeguard life and property. In
such event, TIML shall promptly report the occurrence of an Emergency to CAP,
the nature of the Emergency and the actions taken in response to the Emergency.
TIML shall be entitled to reimbursement for all of its reasonable actual costs
and expenses incurred in connection with such an Emergency.
4. RECORDS, REPORTS, AND BONDING.
4.1 RECORD KEEPING. TIML shall maintain complete records
relating to its operations relative to the Mineral Interests under this
Agreement, and TIML shall provide copies of such records to CAP as and when
reasonably requested by CAP and to the Lessor as required by the Amended
Limestone Lease. TIML shall render monthly reports to CAP setting forth the
status of the project and the production, commercialization, and monetization of
the Calcium Carbonate.
4.2 PREPARATION AND FILING OF REPORTS. TIML shall prepare and
file, as necessary, all reports, if any, with the State of New Mexico and the
BLM, including by way of example and not limitation, all production reports,
water usage reports, and water disposal reports.
4.3 BONDING. TIML shall be responsible for and cause all
required bonds to be in place and properly maintained, from time to time,
covering the operation of the Calcium Carbonate, including by way of example and
not limitation:
4.3.1 mining bond;
4.3.2 restoration bond; and
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4.3.3 all bonds required by the Environmental Protection
Agency or by any agency of the State of New Mexico. In addition, TIML shall
assist CAP obtaining the cancellation, termination, and/or release of all its
bonds with respect to the Calcium Carbonate.
5. POLLUTION.
5.1 POLLUTION LIABILITY. TIML shall maintain its equipment,
facilities and machinery in sound working condition at all times. Any pollution
resulting from the failure of said equipment, facility or machinery shall be the
responsibility of the owner/operator of that equipment, facility or machinery.
To the extent that TIML is not the owner/operator of the equipment, TIML shall
require the owner/operator of the equipment to carry sufficient insurance to
cover the costs of any pollution caused by such equipment. Each TIML employee
having actual knowledge of any spill of hazardous material greater than five (5)
gallons shall immediately report such spill to his supervisor. The TIML
supervisor shall then immediately report the situation to a designated CAP
representative.
5.2 POLLUTION PREVENTION RESPONSE PLAN. TIML has in place and
shall maintain a "Pollution Prevention Response Plan" for any breach of an
Environmental Law.
5.2.1 TIML represents and warrants that it and its
designated personnel are qualified to meet all requirements of and to provide
and implement a "Pollution Prevention Response Plan" in full compliance with the
Environmental Laws.
5.2.2 Consistent with Paragraph 6.1 (TPA's Duty to
Indemnify CAP) below, TIML shall reimburse CAP for all actual costs and expenses
incurred by CAP in regards to an Emergency or subsequent fine, obligation,
penalty or costs (including the costs of CAP's, CAMI's and/or DRC's counsel)
resulting from the violation of an Environmental Law.
5.3 PRE-EXISTING CONDITIONS. Within thirty (30) days after the
Effective Date of this Agreement, TIML shall inspect the Mineral Interests and
designate in writing (with appropriate photographic and/or other documentation)
to CAP each pre-existing environmental condition, hazard, or violation of any
Environmental Law with respect to the Mineral Interests for which TIML declines
to be responsible under this Agreement ("Pre-Existing Environmental
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Conditions"). Nothing in this Agreement shall be interpreted or construed to
impose upon TIML any liability for any Pre-Existing Environmental Condition,
hazard, or violation of any Environmental Law with respect to the Mineral
Interests. Except as otherwise limited by the provisions of this Paragraph 5.3,
TIML shall accept the Mineral Interests AS IS and WHERE IS for all purposes.
6. INDEMNIFICATION AND INSURANCE.
6.1 TPA'S DUTY TO INDEMNIFY CAP. TIML and TPA shall indemnify
and hold CAP, its officers, directors, employees, agents, representatives and
affiliated entities, including without limitation CAMI and DRC, harmless from
all losses, liability, claims, cause of action or damage (including attorney's
fees and settlement costs) and/or loss of the Amended Limestone Lease
(collectively "Claims") which CAP, its officers, directors, employees,
representatives, agents and affiliated entities, including without limitation
CAMI and DRC, may sustain or become liable for as a result of any act or
omission by TIML or by any of TIML's officers, directors, managers, employees,
agents, representatives, affiliated entities or third-party contractors EXCEPT
such Claims caused by the gross negligence or willful misconduct of CAP or by
any of CAP's officers, directors, employees, agents, representatives, or
affiliated entities.
6.2 TIML'S DUTY RELATIVE TO INSURANCE. TIML shall carry the
following minimum insurance protection at all times during which operations
relative to the Mineral Interests are being conducted hereunder:
6.2.1 All Workers' Compensation obligations required by
the State of New Mexico.
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6.2.2 Such other insurance (including, without
limitation, liability and property damage coverage) as is customarily maintained
by TIML in the mineral operation business in Cibola County, New Mexico. Such
insurance policies shall, at a minimum, provide coverage of the type and amount
normally provided in said industry and shall provide limits of not less than the
following:
Bodily Injury $1,000,000 per occurrence
Property Damage $5,000,000 per occurrence;
and shall name CAP as an additional insured under TIML's policy as indicated in
the Master Service Agreement required by CAP's Insurance Carrier and attached
hereto for reference. If an unrelated third-party is retained by TIML to perform
authorized services, TIML shall require said third-party to maintain insurance
coverage similar to that required of TIML and to name CAP as an additional
insured under such insurance coverage.
6.3 CAP'S DUTY TO INDEMNIFY TIML. CAP shall indemnify and hold
TIML, its officers, directors, managers, employees, agents, representatives and
affiliated entities (including without limitation TPA) harmless from any and all
Claims which TIML, its officers, directors, managers, employees, agents,
representatives and affiliated entities (including without limitation TPA) may
sustain or become liable for as a result of any act or omission by CAP or by any
of CAP's officers, directors, managers, employees, agents, representatives,
affiliated entities or third-party contractors EXCEPT if such Claim is caused by
the gross negligence or willful misconduct of TIML or by any of TIML's officers,
directors, managers, employees, agents, representatives, or affiliated entities.
7. ALLOCATION OF NET PROFITS AND REIMBURSEMENT OF ALLOWABLE COSTS.
7.1 ALLOCATION OF NET PROFITS. All Net Profits derived from the
Mineral Interests shall be allocated thirty-five percent (35%) to CAP and
sixty-five percent (65%) to TIML; provided, however, the first (1st) Two Hundred
Thousand Dollars ($200,000.00) of Net Profits shall be allocated and paid fifty
percent (50%) to CAP and fifty percent (50%) to TIML (all such percentages are
collectively referred to as the "Net Profit Allocations").
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7.2 REIMBURSEMENT OF ALLOWABLE COSTS. Except as provided in
Paragraph 7.3 below, TIML shall be entitled to receive reimbursement for all its
Allowable Costs in accordance with Exhibit C hereto.
7.3 TIML'S DUTY TO ADVANCE AND BE SOLELY RESPONSIBLE FOR ALL
FIRST YEAR COSTS. As additional consideration for entering into this Agreement
and the receipt of the Net Profit Allocations as defined above, TIML shall
advance and be solely and exclusively responsible for paying all costs of the
venture, i.e., the commercial development, exploration, mining or other
extraction, processing, packaging, storage, transporting, marketing, and
administrative operations and activities related to the monetization of the
Mineral Interests, during the initial twelve (12) months of the initial term of
this Agreement.
8. TERM OF THE AGREEMENT.
8.1 INITIAL AND EXTENSION TERMS. Except as otherwise set forth
herein, this Agreement shall be for an initial term of three (3) years ("initial
term") and so long thereafter as TIML produces Calcium Carbonate in reasonably
commercial quantities, i.e., in "paying quantities" as such term is defined in
Paragraph 4 of the Limestone Agreement.
8.2 VOLUNTARY TERMINATION BY TIML. At any time, with or without
cause, TIML may terminate this Agreement on not less than ninety (90) days prior
notice to CAP; provided, however, if TIML gives any such notice on or and before
August 3 of any lease year, then TIML shall have no responsibility to assure
compliance with the minimum production and/or sale or removal requirements set
forth in the Amended Limestone Lease for the lease year ending on August 4 of
the immediately next lease year. However, if the notice given under this
Paragraph 8.2 is not given until after August 3 of any "lease year" as defined
in the Amended Limestone Lease, then TIML shall remain liable and responsible to
assure compliance with the minimum production and/or sale or removal
requirements set forth in the Amended Limestone Lease for the "lease year"
ending on August 3 of the "lease year" ending the immediately next August 3rd
following the date of the notice.
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8.3 INVOLUNTARY TERMINATION. TIML may be removed for:
8.3.1 Good cause. For the purposes of this Paragraph
7.3.1, "good cause" shall mean gross negligence, willful misconduct, or the
material breach of or inability to meet the standards of a prudent mining site
operator, developer and marketer under the same or similar circumstances in New
Mexico; or
8.3.2 TIML's material failure to perform any of its
obligations under this Agreement. Unless mutually agreed to by the parties
hereto, the removal of TIML as Mineral Site Manager in accordance with this
Paragraph 8.3 shall become effective only after TIML has received written notice
from CAP, in accordance with Paragraph 10 below, detailing the alleged
deficiency and TIML's failure to cure or to take the necessary steps to
implement a remediation of the deficiency within thirty (30) days following
receipt by TIML of such notice.
8.4 POST-TERMINATION DUTIES. Post-termination of this Agreement,
each Party shall remain liable for all expenses, losses, and third-party costs
incurred by it or for which it was or became liable during the term of this
Agreement, including without limitation the payment of royalties and its share,
if any, of AFE expenses, and including, in the case of TIML, all costs and
expenses incurred in order to maintain the Amended Limestone Lease in full force
and effect during such period.
9. CONFLICT RESOLUTION. In the event of any dispute between the parties,
the parties shall resolve such disputes as follows:
9.1 ORAL PROPOSAL AND DISCUSSION. The parties shall attempt to
resolve any disputes which might arise between or among them by discussing with
one another their relative positions and interests.
9.2 WRITTEN PROPOSALS. The party who desires a change from the
status quo ("Claimant") shall give the other party ("Respondent") a written
request for the proposed change and a concise written statement of the reasons
for such proposed change. The Claimant's request and supporting statement shall
provide enough information so that the Respondent may reasonably investigate the
facts and circumstances asserted as the basis for the proposed change. The
Respondent shall investigate the asserted facts and circumstances and, within
ten (10) days
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after such receipt, shall respond in writing with an acceptance, rejection, or
counter-proposal to the requested change.
9.3 MEDIATION. If the parties are unable to resolve their
dispute after compliance with Paragraphs 9.1 and 9.2 above, Claimant and
Respondent shall participate in good faith in non-binding mediation with an
impartial, professional mediator for at least two (2) hours. Either party may
give written notice of the proposal for mediation. The proposal shall contain
the name, address, and telephone number(s) of a proposed mediator. If the other
disputant rejects the proposed mediator, then, within five (5) days after
receipt of the notice of proposal for mediation, such other disputant shall
advise the proposing disputant of such rejection and name an additional proposed
mediator. The two (2) proposed mediators shall designate the mediator who shall
conduct the mediation. Subject to the mediator's availability, the mediation
shall be conducted within twenty (20) days after the date of the original
proposal for mediation.
9.4 ARBITRATION. If the parties are unable to resolve their
dispute after compliance with Paragraphs 9.1, 9.2, and 9.3 above, the dispute
shall be decided by BINDING ARBITRATION on a confidential basis using a
professional arbitrator experienced in mining and/or development and
monetization of mineral resource matters as hereinafter provided. The
requirement to arbitrate disputes shall be specifically enforceable under the
prevailing arbitration law.
9.4.1 NOTICE OF DEMAND. The Claimant shall deliver to
the Respondent a written demand for arbitration setting forth with reasonable
specificity the nature of Claimant's claim and the relief sought by Claimant.
The demand shall contain the name, address, and telephone number(s) of
Claimant's proposed arbitrator. The demand for arbitration shall be made within
a reasonable time after written notice of the claim, dispute or other matter in
question has been given, and in no event shall such demand be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute, or other matter in question would be barred by the applicable statute
of limitations, whichever shall first occur.
9.4.2 ARBITRATORS. If the Respondent rejects the
proposed arbitrator named in the Claimant's demand, then, within five (5) days
after receipt of the demand, the Respondent shall advise the Claimant of such
rejection and name an additional proposed arbitrator. The two
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(2) proposed arbitrators shall designate a third arbitrator (sometime "neutral
arbitrator") who shall act as the sole arbitrator of the dispute unless the
parties agree that all three (3) arbitrators shall decide the dispute. Each
party reserves the right to object to any neutral arbitrator who owns or is
employed by or affiliated with a competing organization or entity.
9.4.3 LOCATION OF ARBITRATION. Unless the disputants
otherwise agree, all of the arbitration proceedings shall be held and conducted
in Albuquerque, New Mexico, unless the Claimant and Respondent agree upon a
different location.
9.4.4 DISCOVERY. The disputants shall be entitled to
reasonable discovery upon such terms and conditions as the neutral arbitrator
shall determine; provided, however, that without further notice, request, or
demand, not later than thirty (30) days after the notice of demand for
arbitration both the Claimant and Respondent shall have the affirmative duty to
make good faith, full disclosure to the other party of all matters relevant to
the arbitration including without limitation (i) the names, addresses, contact
information of all witnesses having knowledge of relevant facts, (ii) the names,
addresses, contact information of all witnesses the disclosing party intends to
call as witnesses at the arbitration, (iii) a fair, detailed, and complete
summary of the testimony each such witness is likely to offer at the
arbitration, (iv) copies of all documents (and all other tangible physical
evidence) relevant to the dispute, and (v) copies of all documents (and all
other tangible physical evidence) the disclosing party intends to offer as
evidence at the arbitration.
9.4.5 AWARD. Except as otherwise provided herein or
agreed upon by the parties, the award rendered by the arbitrator(s) shall be
made within one hundred twenty (120) days after the notice of demand for
arbitration, shall be final, and judgment may be entered upon it in accordance
with applicable laws in any court having jurisdiction. The arbitrator, in the
sole discretion of the arbitrator, may assess all of the costs and expenses of
the arbitration proceeding, including without limitation all attorneys fees,
against the non-prevailing party.
9.5 APPEAL OF ARBITRATION AWARD. Notwithstanding the provisions
of Paragraph 9.4.5 above, within ten (10) days after notice of the arbitration
award, either Claimant or Respondent may appeal the award to any court of
competent jurisdiction based only on the
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grounds of lack of jurisdiction or substantial abuse of discretion by the
arbitrator(s), and, upon such timely appeal, if the court first makes a finding
of fact and conclusion of law that the arbitrator(s) lacked jurisdiction, the
matter shall be decided by the court by trial de novo without reference to or
consideration of the arbitration award, or, if the court first makes a finding
of fact and conclusion of law that the arbitrator(s) committed a substantial
abuse of discretion which resulted in an arbitration award not supported by
substantial evidence or was clearly not in accordance with prevailing law, the
court may hear and modify only those portions of the arbitration award necessary
to make a decision based on substantial evidence and in accordance with
prevailing law. The decision of such court shall be final and binding upon all
of the parties.
9.6 COSTS OF DISPUTE RESOLUTION. Except as otherwise provided
herein, the fees of the mediator(s) and arbitrator(s) shall be split equally
between the parties; provided, however, any Court judgment shall provide that
the non-prevailing party shall pay all of the reasonable attorney's fees and
costs of the prevailing party unless the prevailing party does not obtain a
judgment from such Court in its favor substantially better than the arbitration
award such prevailing party received.
10. NOTICES.
10.1 MANNER OF NOTICE. All notices which are required to be
given under this Agreement or which any party desires to give to any other party
relative to any matter under this Agreement shall be in writing and (i)
delivered personally to the other party or to any officer, director, or other
agent or representative of the other party designated by such other party as
having authority to receive such notices, or (ii) transmitted to the other party
by facsimile or other telecopier transmission, or (iii) sent for Federal
Express, UPS, or other overnight courier or mailed by certified mail, return
receipt requested, or (iv) transmitted to the other party by email (with
evidence of receipt by the other party).
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10.2 NOTICES TO CAP. Any notice to CAP shall be sent c/o DRC at
the following address/fax number/email address, or to such other address/fax
number/email address as DRC may hereafter designate:
DALECO RESOURCES CORPORATION
ADDRESS: 000 XXXXX XXXXXX
XXXX XXXXXXX, XX 00000
FAX NUMBER: 000-000-0000
EMAIL ADDRESS: xxxxxxxxxx@xxxxxxxx.xxx
10.3 NOTICES TO TECUMSEH. Any notice to TIML shall be sent c/o
TPA at the following address/fax number/email address, or to such other
address/fax number/email address as TPA may hereafter designate:
TECUMSEH PROFESSIONAL ASSOCIATES, INC.
ADDRESS: 0000 XXXXXXX XX, XXXXX 000
XXXXXXXXXXX, XX 00000
FAX NUMBER: 000-000-0000
EMAIL ADDRESS: xxxxxxxxx@xxxxxxxxxx.xxx
10.4 EFFECTIVE DATE OF NOTICE. Any notice given pursuant to this
Paragraph 10 shall be effective upon receipt if hand delivered or sent by
overnight courier or mailed by certified mail return receipt requested, or on
the date such notice is sent by facsimile transmission or e-mail message
provided that the original notice document is delivered by close of business the
next business day following the day of the facsimile transmission or e-mail
transmission.
11. MISCELLANEOUS PROVISIONS.
11.1 ENTIRE AGREEMENT. Except as specifically provided herein,
this Agreement constitutes the entire and sole agreement of the parties relating
to the subject matter set forth herein and supercedes all prior representations,
agreements, and understandings, whether written or oral, relative to such
subject matter; provided, however, that nothing in this Agreement shall be
construed or interpreted to impair, limit, or modify in any manner whatsoever
any rights, powers, duties, and obligations established or recognized under any
other written agreement now in effect between the parties, the subject matter of
which other agreements is unrelated to the subject matter of this Agreement.
This Agreement cannot be modified, changed or amended, except by a writing
signed by each of the parties or by a duly authorized representative of each of
the parties.
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11.2 BINDING. Each party warrants that it has full, legal
capacity and authority to enter into this Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties, their heirs,
representatives, successors and assigns.
11.3 GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed in accordance with the laws of the State of Nevada. The parties consent
to the exclusive jurisdiction and venue of the federal and state courts located
in Xxxxx County, Nevada, in any action arising out of or relating to this
Agreement. The parties waive any other venue to which either party might
otherwise be entitled by domicile or otherwise. This paragraph shall not be
construed to limit in any way the provisions of Paragraph 9 above relating to
arbitration.
11.4 WAIVER. The failure to exercise any right provided in this
Agreement shall not be deemed to be a waiver of any prior or subsequent rights.
11.5 INVALIDITY AND SEVERABILITY. If any provision of this
Agreement is declared invalid or unenforceable, such provision shall be deemed
modified to the extent necessary and possible to render it valid and
enforceable. In any event, the unenforceability or invalidity of any provision
shall not affect any other provision of this Agreement, and this Agreement shall
continue in full force and effect, and be construed and enforced, as if such
provision had not been included, or had been modified as above provided, as the
case may be.
11.6 ADDITIONAL DOCUMENTS. Each party shall execute any and all
documents required to further the intent of this Agreement.
11.7 CAPTIONS/NUMBER/GENDER/CASE. The captions herein are for
convenience only and shall have no legal effect. Likewise, unless the context
clearly requires a different interpretation, the singular shall include the
plural, the masculine shall include the feminine, and upper case shall include
lower case, and vice versa.
11.8 COOPERATION. The parties shall have a duty to cooperate
with one another in all matters of mutual interest to them.
11.9 SURVIVAL. This Agreement and the terms and conditions set
forth herein shall survive its execution by the parties hereto.
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11.10 INDEPENDENT CONTRACTOR. TIML shall in all instances be an
independent contractor. All work done by TIML shall be performed in accordance
with good industry practice and in a xxxxxxx like manner.
11.11 AUTHORSHIP. This Agreement shall be conclusively deemed to
have been jointly prepared and authored by all of the parties and their
representatives and no ambiguity shall be construed against any party hereto
based on such authorship.
11.12 ASSIGNMENT AND DELEGATION. No party shall assign or
delegate any rights, duties or obligations under this Agreement to any other
person and/or entity without prior express written approval of the other party.
11.13 EXTENSION OF CONFIDENTIALITY, NON-DISCLOSURE, AND
NON-CIRCUMVENTION AGREEMENT. On October 13, 0000, XXX xxx XXX entered into a
Mutual Confidentiality, Non-Disclosure, and Non-Circumvention Agreement
("TPA/DRC NDA"). The two (2) year period of non-circumvention provided for in
Paragraph 15 of the TPA/DRC NDA is extended to the term of this Agreement PLUS
two (2) years from the effective date of the termination of this Agreement.
TECUMSEH PROFESSIONAL ASSOCIATES, INC.
BY /s/ XXXXX X. XXXXX DATED: FEBRUARY 14, 2005
----------------------------------------
XXXXXX X. XXXXX, CHIEF EXECUTIVE OFFICER
TECUMSEH INDUSTRIAL MINERALS, LLC
BY: TECUMSEH PROFESSIONAL
ASSOCIATES, INC., MANAGER
BY /s/ XXXXX X. XXXXX DATED: FEBRUARY 14, 2005
----------------------------------------
XXXXXX X. XXXXX, CHIEF EXECUTIVE OFFICER
CA PROPERTIES, INC.
BY /S/ XXXX X. XXXXXXXXX DATED: FEBRUARY 14, 2005
----------------------------------------
XXXX X. XXXXXXXXX, VICE PRESIDENT
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EXHIBIT A
TO THE
DEVELOPMENT AND OPERATING AGREEMENT
(CALCIUM CARBONATES, CIBOLA COUNTY, NM)
LEASE AGREEMENTS
1. Limestone Mining Lease and Agreement (sometimes known as the
"Limestone Agreement")
Lessor: New Mexico Arizona Land Company
Lessee: CA Properties, Inc.
Date: August 4, 1993
2. Amendment to Limestone Agreement
Lessor: NZ Travertine, LLC
Lessee: CA Properties, Inc.
Date: September 10, 2004
EXHIBIT B
TO THE
DEVELOPMENT AND OPERATING AGREEMENT
(CALCIUM CARBONATES, CIBOLA COUNTY, NM)
FEDERAL MINING CLAIMS
EXHIBIT C
TO THE
DEVELOPMENT AND OPERATING AGREEMENT
(CALCIUM CARBONATES, CIBOLA COUNTY, NM)
For the purposes of this Agreement, all of the following costs shall be
deemed Allowable Costs for the purpose of determining Net Profits under the
Agreement:
1. LEASE, ROYALTY, AND CLAIMS MAINTENANCE COSTS.
1.1 All underlying lease and/or royalty obligations, if any,
relative to the Mineral Interests, including without limitation all minimum
annual royalties and all other production royalties under the Amended Limestone
Lease;
1.2 All existing net revenue interest obligations, if any,
relative to the Mineral Interests;
1.3 All fees, costs, and expenditures related to the
maintenance, protection, and preservations of the parties' rights, title, and
interest in any mining claims relative to the Mineral Interests.
2. PERMITS, ENVIRONMENTAL PROTECTION COSTS, AND TAXES.
2.1 All fees, costs, and expenditures for all necessary or
appropriate permits issued by any governmental agency or entity and required for
the operations contemplated by this Agreement;
2.2 All fees, costs, and expenditures for all necessary or
appropriate environmental assessment, protection, and remediation activities
(except any such fees, costs, or expenditures arising out of or related to any
willful misconduct or gross negligence of TIML) relative to the Mineral
Interests;
2.3 All taxes, including without limitation all gross
receipts, sales, compensating, and extraction taxes, directly related to the
Mineral Interests or TIML's operations and activities under this Agreement, but
not including any income tax on or attributable to any income allocated to any
party to this Agreement.
3. INSURANCE AND BONDING COSTS. All premiums and other fees, costs, and
expenditures for any insurance and bonds relative to the Mineral Interests or
otherwise required under this Agreement, other than the posting of collateral
for any bond, letter of credit or cash deposit, associated with the obtaining a
bond or guaranty for the operation of the Mineral Interests.
4. DIRECT OPERATING EXPENSES AND COSTS.
4.1 LABOR. All salaries, wages, benefits, and a reasonable and
fair share of TIML's general and administrative costs of or related to TIML's
personnel directly employed by TIML in the conduct of TIML's operations and
activities under this Agreement; provided, however, that there shall be no
"double-charging" for any personnel or costs otherwise includible as an
Allowable Cost under Paragraph 5.1 below;
4.2 MATERIAL. All costs, expenses, and expenditures of or for
all materials, supplies, and other consumables purchased or furnished by TIML
with respect to its operations under this Agreement;
4.3 EQUIPMENT. All costs, expenses, and expenditures of or for
all third-party equipment and rentals hired by TIML for use on the Calcium
Carbonate site or with respect to TIML's operations under this Agreement;
4.4 OTHER DIRECT EXPENSES. All other direct expenses, including
without limitation all expenses for power, transportation, communication,
travel, consultants, and other third-party operators used on the Calcium
Carbonate site or with respect to the development and monetization of the
Mineral Interests or reasonable and necessary with regard to TIML's operations
and activities under this Agreement.
5. GENERAL AND ADMINISTRATIVE COSTS.
5.1 A fair and reasonable sum for TIML's administrative,
accounting, supervisory, and office services related to TIML's operations and
activities under this Agreement;
5.2 All costs associated for first tier supervisors of TIML
may be charged, at an hourly rate commensurate with such first tier supervisor's
annual salary, for that proportionate time associated with his/her duties
pertaining to TIML's operations and activities under this Agreement.
6. MISCELLANEOUS PROVISIONS RELATED TO ALLOWABLE COSTS. The following
shall apply to all direct or indirect costs, expenses, and expenditures claimed
by TIML to be Allowable Costs under this Agreement:
6.1 EXPANSION AND/OR LIMITATION GENERALLY. All of the foregoing
listed costs shall be expanded and/or limited to direct or indirect costs,
expenses, and expenditures consistent with similar costs, expenses, and
expenditures incurred by competent and prudent mineral developers and mining
operators of similar minerals in New Mexico and related to their commercial
development, exploration, exploitation, mining or other extraction, processing,
packaging, storage, transporting, marketing, and administrative operations and
activities related to such minerals;
6.2 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. The determination
of all costs, expenses, and expenditures shall be in accordance with United
States generally accepted accounting principles consistently applied;
6.3 CAP'S AUDIT RIGHTS. Not more frequently than once each
calendar year, CAP shall have the right to require an audit of TIML's claimed
costs, expenses, and expenditures, and the cost of such audit shall be deemed a
deductible expense and Allowable Cost under this Exhibit C; provided, however,
if the auditor finds substantial irregularities, i.e., substantial over-claiming
by TIML of costs, expenses, and expenditures as Allowable Costs, TIML shall pay
all costs of the audit, and in such event such costs of the audit shall not be
deemed deductible expenses or Allowable Costs under this Exhibit C. For the
purpose of this Paragraph 6.3, the term "substantial irregularities" and
Asubstantial over-claiming by TIML of costs, expenses, and expenditures as
"Allowable Costs" shall mean an over-claiming by TIML of a net aggregate of more
than Ten Thousand Dollars ($10,000.00) of costs, expenses, and expenditures as
Allowable Costs in the year being audited. Thus, by way of example and not
limitation, if TIML over-charged $5,000.00 for fuel and $12,000.00 for
transportation costs, but
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under-charged $8,000.00 for equipment rentals, the net aggregate over-claimed
for those categories would be $9,000.00.
6.4 LOWEST COST. All of TIML's (or any Affiliate's) equipment
used on the Calcium Carbonate site shall be charged at the lower of (i) actual
cost, or (ii) prevailing competitive third-party rates in New Mexico, after
giving effect to any and all available discounts, whether or not actually taken
or realized;
6.5 DISPUTE RESOLUTION. All disputes relative to the
deductibility of any costs, expenses, and expenditures shall be resolved
pursuant to Paragraph 9 (Dispute Resolution) of the Agreement.
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