Exhibit 10.9
------------
EXPLORATION LICENSE
WITH OPTION
This Agreement, effective the 1st day of October, 1998, is between
Xxxxxxx X. Xxxxxx, III, Xxxxxx X. Xxxxxx, Xx., Xxxxx Xxxxxx, Xxxxx X. Xxxxx,
Xxxxxxx Saint Onge, Xxxxxxx Xxxxxxxx and Xxxxx Xxxxx as Trustees of Heritage
Equity Trust, Xxxx Xxxxx and Xxxxx Xxxxx as Trustees of Miggie Equity Trust, X.
Xxxxxxxxx Xxxxxxx, Trustee of "The Xxxxxxx Family Trust", which is the sole and
separate property of Settlor husband, Xxxxxx Xxxxxxx Xxxxx, Trustee of "The
Xxxxxx X. Xxxxx Revocable Living Trust", Xxxxxxx X. Xxxxxx, Trustee of the
Xxxxxx Family Trust dated October 2, 1987, Xxxxxxx Xxxxxx Xxxxx, Trustee of the
Xxxxxxx Xxxxxx Xxxxx 1996 Trust Dated April 8, 1996, and Xxxx X. Xxxxxx, Trustee
of the Xxxx Xxxxxxx Xxxxxx Trust dated July 11, 1996 (collectively, "Xxxxxx"),
whose address is X.X. Xxx 0000, Xxxx, XX 00000, and California Recovery Systems,
Inc., a Nevada corporation, ("CRS") whose address is 000 Xxxxx Xxxx Xxxx., Xxxxx
00, Xxxx, Xxxxxx 00000.
1. License. In consideration of Ten Thousand Dollars ($10,000), Xxxxxx
hereby grants CRS a license to enter upon the land described in Exhibit A
attached hereto and incorporated by reference herein (the "Property") for the
purpose of prospecting and exploring for Heavy Minerals and evaluating the
Property as a situs of an operation for extracting, processing, and shipping of
Heavy Minerals.
2. Term. The term of this Agreement and the license granted herein
shall be for one year from the date hereof, unless sooner surrendered or
otherwise terminated.
3. Option.
(a) Xxxxxx hereby grants to CRS the exclusive right to enter
into a production agreement with Xxxxxx subject to all the terms, conditions and
covenants in the form of Agreement attached hereto as Exhibit B (the "Production
Agreement"). CRS may exercise its option at any time during the term of this
Exploration License ("The Option Period"), and the Option will lapse if not
timely exercised. Xxxxxx and CRS specifically acknowledge that they have
bargained for The Option Period as provided herein and that under no
circumstances shall The Option Period be extended except by written agreement
duly executed by Xxxxxx and CRS and supported by adequate consideration.
(b) The parties shall execute the Production Agreement, which
may be in counterparts, and place such executed documents into escrow with a
mutually acceptable escrow agent. CRS may exercise the Option by, and only by,
giving notice of exercise to said escrow agent. The escrow agent shall be
authorized to date and deliver the Production Agreement to the parties effective
upon the date of receipt of such notice. Upon receipt of such delivery, CRS
shall forthwith make the initial payment required under Section 3.01 of the
Production Agreement to Xxxxxx. Upon written request of CRS after exercise of
the Option, any one or more of the individuals constituting Xxxxxx, or their
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Exhibit 10.9
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successors, shall execute and deliver a ratification of the Production Agreement
and of its status as a party thereto in a form acceptable to CRS acting
reasonably.
4. Heavy Minerals. "Heavy Minerals" means pseudorutile, leucoxene,
rutile, anatase, ilmenite, zircon, monazite, tourmaline, aluminium silicates,
and related minerals which are commonly referred to as heavy minerals within the
mining industry that are located principally in active and inactive tailing
ponds within the limits of the Property.
5. Operations.
(a) CRS shall conduct its prospecting, exploration, and
evaluation operations, which may include, without limitation, mapping, sampling,
drilling, trenching, excavating test pits, sampling the waste stream from an
existing silica sand processing operation, and measurement and evaluation of
existing environmental conditions, in a manner which will minimize damage to the
surface and shall comply with all federal, state, and local statutes,
regulations, and ordinances, including all statutes, regulations, and ordinances
regarding reclamation and protection of the environment,
(b) (i) CRS shall conduct its operations in strict compliance
with all applicable federal, state and local laws, decisions of the court, and
regulations, rules, directives, decrees, and orders of federal, state, and local
government authorities regarding Hazardous Materials (collectively, the
"Hazardous Materials Laws"), and shall not allow any contamination of the
Property or other property of Xxxxxx (including the soil, water, or air on,
below, or above the same) by Hazardous Materials used in or resulting from its
operations. If CRS fails or is not able, for any reason, to comply with
applicable Hazardous Materials Laws or its obligations under this Section 5(b),
in whole or in part, including without limitation any contamination of the
Property or other property of Xxxxxx caused or permitted by CRS, Xxxxxx may,
after notice and a reasonable opportunity to cure, terminate this Agreement and
shall also have the right, but not the obligation, to act in the place of CRS
and to take all actions action reasonable and necessary or desirable to ensure
compliance or to mitigate, xxxxx, or correct the violation of the Hazardous
Materials Laws. All costs and expenses incurred by Xxxxxx in connection with any
such action, including without limitation, consultant and legal fees, shall
become immediately due and payable by CRS to Xxxxxx.
(ii) Notwithstanding any provision in this
Agreement to the contrary, CRS shall have no responsibility, liability, or
obligation, including without limitation any indemnification obligation to
Xxxxxx, for any noncompliance with Hazardous Materials Laws or other laws or for
any contamination by Hazardous Materials on the Property prior to the
commencement of operations by CRS on the Property, or with respect to any
noncompliance with Hazardous Materials Laws or other laws by persons other than
CRS or CRS's employees, contractors, subcontractors, or agents or any
contamination by or release of Hazardous Materials caused solely by persons
other than CRS or CRS's employees, contractors, subcontractors, or agents
whether occurring before, during, or after the period when this Agreement is in
effect.
35
Exhibit 10.9
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(iii) For the purposes of this Agreement,
Hazardous Materials shall include, but shall not be limited to., those
substances defined as "hazardous substances", "hazardous materials", or "toxic
substances" in the Comprehensive Environmental Response, Comprehensive and
Liability Act of 1980, as amended, 42 U.S.C. ss. 9601, et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1801, et. seq.; and the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, ct seq; those substances
defined as "hazardous wastes" in Section 25117 of the California Health & Safety
Code; and those substances defined in the regulations adopted and publications
promulgated pursuant to the above-referenced laws.
(c) CRS shall fill all test pits dug by it upon the Property
after they have served their purpose, and shall fill all exploratory drill holes
within seventy-two (72) hours after the completion of drilling. CRS shall keep
all test pits and other excavations made by it properly and adequately fenced,
to the extent that its operations will not constitute a hazard to persons or
livestock, and shall construct and maintain during the term of this Agreement
all necessary fences, cattle guards, or gates which may be required to achieve
the purpose outlined above.
6. Data. Within thirty (30) days after the conclusion of drilling or
prospecting, CRS shall provide to Xxxxxx true copies of all non-interpretive
geological, geophysical, and other pertinent data, including, but not limited
to, logs, graphs, charts, location maps, together with splits of all core or
other samples taken, and any other basic information necessary to make
interpretations and calculations concerning the occurrences of Heavy Minerals.
Xxxxxx and their representatives shall at all times have the right to observe
and log drilling progress.
7. Covenant Against Liens. CRS shall immediately notify Xxxxxx of the
commencement of any work of improvement upon the Property. CRS shall pay for all
work done and all materials furnished for use or used in its operations on the
Property and in the construction or installation of buildings, structures,
fixtures, or equipment on the Property and shall keep the Property free from
mechanics' and miners' liens and other liens by reason of claims of laborers or
materialmen on account of such work or materials. CRS agrees to indemnify and
save Xxxxxx harmless against any such claim of laborers or materialmen or of the
failure of CRS to perform the agreements of this Section. XXXXXX reserves the
right to post and maintain notices of nonresponsibility, as provided by
California law.
8. Indemnity. Subject to Section 5(b)(ii), CRS shall defend, indemnify
and hold harmless Xxxxxx, its trustees, beneficiaries, employees, agents, and
invitees ("Indemnified Persons") from any and all claims (including, without
limitation, damages, demands, liabilities, statements, stipulated penalties,
response costs, awards and all costs and expenses [including without limitation,
reasonable attorney's fees, costs of expert witnesses, court costs, and other
expenses of litigation], consulting fees, response costs, engineering and
construction costs) made by third parties, including any government agency,
arising directly or indirectly from CRS's operations on or in connection with
the Property, including, without limitation, claims made by CRS's employees,
contractors, subcontractors or agents or by members of the public, or by any
government entity or agency for loss of or damage to property or for injuries to
or death of any person or for violation of any law, regulation or ordinance
36
Exhibit 10.9
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(including without limitation those relating to Hazardous Materials) or damage
to the environment, (including, without limitation, the cleanup, repairs, or
detoxification, any violation of laws, orders or demands of governmental
authorities, any lawsuit brought or threatened, settlement reached or
governmental order received, any personal injuries or property damage, and any
migration of Hazardous Materials from the Premises to other properties), except
claims resulting from the sole negligence or willful misconduct of any
Indemnified Party or lessee or licensee of Xxxxxx (other than CRS). CRS's
obligations under this section shall survive the expiration or sooner
termination of this Agreement.
9. Insurance.
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CRS shall obtain and maintain the following insurance coverage:
(a) Workers' Compensation Liability within statutory
limits.
(b) Commercial Automobile Liability including all
non-owned, hired, rented or owned motor vehicles with a combined single limit
for property damage and bodily injury of not less than one million dollars
($1,000,000) per occurrence.
(c) Commercial General Liability Insurance on an
occurrence basis with a combined single limit for bodily injury and property
damage of not less than one million dollars ($1,000,000) per occurrence, and an
annual aggregate of not less than two million dollars ($2,000,000), including:
(1) Premises Operations,
(2) Products and Complete Operations,
(3) Contractual Liability, and
(4) Independent Contractors.
(d) Excess Liability with a limit of liability of
not less than Five million dollars ($5,000,000).
(e) CRS shall not permit its insurance coverage to
be reduced below the amounts set out above by reason of claims under any
policies of insurance at other locations.
XXXXXX shall be named as an additional insured on all policies except
Workers' Compensation and XXXXXX shall receive 30 days' advance notice prior to
cancellation or material changes in policies. Except for the Workers'
Compensation policy, each of CRS's policies shall contain a waiver of
subrogation by CRS's insurer against XXXXXX. Each policy shall be underwritten
by a company having a "General Policyholder's Rating" of at least A as set forth
in the most current issue of "Best's Insurance Guide". CRS shall promptly
deliver to XXXXXX complete and accurate certificates evidencing such coverage
and all renewal certificates will be delivered to XXXXXX not less than fifteen
(15) days after the expiration date of the policy and all extensions.
10. Property Taxes.
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37
Exhibit 10.9
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(a) CRS will pay all taxes levied on its equipment and
personal property on the Property.
(b) CRS shall pay such taxes promptly and before delinquency
and shall keep the Property free from liens on account thereof. CRS will
indemnify Xxxxxx against loss, cost, or expense by reason of taxes which CRS is
required to pay.
11. Notices. Any notice or demand which may be required to be served or
which either party may desire to serve hereunder may be served by depositing it
in the United States mail, enclosed in an envelope, as registered or certified
mail, with postage prepaid, or in an appropriate parcel with charges paid or
charged to the sender's account deposited with Federal Express, United Parcel
Service, or other such air express courier, addressed to each of the following:
To: Xxxxxx
------
Xxxxxxx X. Xxxxxx, III
X.X. Xxx 000
Xxxxxxx, XX 00000
Xxxxxx Properties
X.X. Xxx 0000
Xxxx, XX 00000
To: California Recovery Systems, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
California Recovery Systems, Inc.
000 Xxxxx Xxxx Xxxx., Xxxxx 00
Xxxx, XX 00000
Attn: C. Xxxxxxx Xxxxxx
Xxxx, Waddoups, Brown, Gee & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Either party may at any time by written notice to the other change its address
to which a notice or demand shall be addressed. Any notice given in accordance
with the provisions of this Section shall be deemed given as of the third
business day after mailing with proper postage affixed and as of the second
business day after deposit with an air express courier. Any notice given by or
to Xxxxxxx X. Xxxxxx III shall constitute notice by or to all persons and
entities comprising XXXXXX.
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Exhibit 10.9
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12. Waiver. Any waiver, express or implied, by Xxxxxx of any breach by
CRS of any of the covenants of this Agreement shall not be a waiver of any
subsequent breach of a like or other covenant of this Agreement.
13. Waiver Not a Release. If either party has a right hereunder which,
for whatever reason, it elects not to enforce, such non-enforcement shall not
constitute a waiver of the party's right to demand enforcement of that same
right at a later time unless it expressly agrees in writing signed by both
parties, to waive for the future.
14. Sale or Encumbrance by Xxxxxx.
------------------------------
(a) Nothing in this Agreement shall be a limitation upon the
right of Xxxxxx to sell or otherwise dispose of or encumber in any way any or
all of the Property, or any or all of the Xxxxxx Seco Rancho, at any time during
the term of this Agreement, subject to the rights of CRS under this Agreement,
which shall be acknowledged in writing by the grantee and any subsequent
grantee.
(b) If Xxxxxx xxxxx or conveys the Property of any part
thereof, the sale or conveyance shall operate to release Xxxxxx from future
liability upon any of the covenants or conditions, express or implied, herein
contained in favor of CRS, provided that the purchaser or transferee expressly
assumes the obligations of all such covenants and conditions. In such event CRS
agrees to look solely to the responsibility of the successor in interest of
Xxxxxx in and to this Agreement with respect to such future liability. This
Agreement shall not be affected by any such sale or conveyance and CRS agrees to
attorn to the purchaser or assignee.
15. Estoppel Certificates. Either party may request from time to time in
writing, as a part of a sale, assignment, or hypothecation of all or part of its
interest in this Agreement or in the Property, that the other party furnish to
the requesting party an Estoppel Certificate. The Estoppel Certificate shall be
limited to certifying that this Agreement is in full force and effect and
unamended (or if amended, stating such amendments), that this Agreement is not
in default by the requesting party (or if in default, specifying the nature of
such default), and the dates to which any payments under this Agreement have
been paid in advance. The requesting party shall set forth in writing the
foregoing information to be certified, and shall serve the same on the other
party pursuant to Section 15, with the request that the other party execute,
acknowledge, and deliver to the requesting party, with thirty (30) days after
service of the request, certification that said information is correct (or if
not correct, specifically setting forth what is correct and what should be the
correct information). The request for certification by the requesting party and
the certification by the other party shall together constitute the Estoppel
Certificate. If the other party fails to timely so respond, such other party
hereby constitutes and appoints the requesting party the other party's attorney
in fact to execute the certification. It is intended that any Estoppel
Certificate may be relied upon and shall be for the benefit of any purchaser,
assignee, encumbrancer, or other person or entity for whose benefit the Estoppel
Certificate is obtained as part of the transaction set forth above, and shall be
binding upon the other party.
39
Exhibit 10.9
16. Subordination.
--------------
(a) This Agreement is and shall be prior to any encumbrance
recorded after the date this Agreement is recorded. If Xxxxxx desires to
encumber all or part of the Property by an encumbrance that encumbers no
property except the Property, and if the lender requires that this Agreement be
subordinate to the encumbrance, this Agreement shall be subordinate to the
encumbrance, provided that the lender is a bank, insurance company, savings and
loan association, pension plan, or other regulated institutional lender, and
provided further that Xxxxxx first obtain from such lender and deliver to CRS a
written recordable instrument which provides substantially as follows:
No foreclosure of, deed given in lieu of foreclosure of, or sale under
the mortgage, and no steps or procedures taken under the mortgage, shall effect
lessee's rights under the Agreement. Any purchaser at any foreclosure sale, or
any grantee or transferee designated in any deed given in lieu of foreclosure,
shall take the premises subject to the terms of the Agreement. No holder of the
mortgage shall, nor shall have the power to, join CRS by reason of its interest
in the Property under this Agreement in any action or proceeding to enforce the
rights of such holder under the mortgage or the debt thereby secured, for the
purpose of terminating CRS's interest or estate under this Agreement.
(b) The provisions of this Section 16 shall prevail over any
conflicting provisions in the encumbrance.
(c) CRS shall attorn to any purchaser at any foreclosure sale,
or to any grantee or transferee designated in any deed given in lieu of
foreclosure. CRS shall execute a written agreement and any other documents
required by the lender to accomplish the purposes of this Section.
17. Miscellaneous.
--------------
(a) California Law. This Agreement shall be construed and
applied under and in accordance with the laws of the State of California.
(b) Titles Not Determinative. Titles or captions are for
convenience only and are not to supersede or in any way alter the meaning of the
language of the paragraphs to which they pertain.
(c) Integration. This Agreement sets forth the entire contract
between the parties, and there are no promises or representations other than
those set forth herein. This Agreement shall not be amended except by written
agreement.
(d) Severability. If any term, covenant, condition, or
provision of this Agreement is held by a court of competent jurisdiction to be
40
Exhibit 10.9
------------
invalid, void, or unenforceable, the remainder of the provisions hereof shall
remain in full force and effect and shall in no way be affected, impaired, or
invalidated.
(e) Inurement. The rights and liabilities of the parties
hereto shall be binding upon and inure to the benefit of their respective heirs,
executors, administrators, legal representatives, successors, and assigns in
accordance with the provisions hereof.
(f) Survival of Terms and Conditions. The following Sections
shall survive the termination of this Agreement to the full extent necessary for
their enforcement and the protection of the party in whose favor they run:
Sections 4, 7, and 11.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be treated and be effective as an original.
(h) Recording. This Agreement, with a short form summarization
of Exhibit B attached, may be recorded by a party.
XXXXXX:
Dated:
------------ -----------------------------------------------
Xxxxxxx X. Xxxxxx, III
Dated:
------------ -----------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Dated:
------------ -----------------------------------------------
Xxxxx Xxxxxx
Dated:
------------ -----------------------------------------------
Xxxxx X. Xxxxx
Dated:
------------ -----------------------------------------------
Xxxxxxx Saint Xxxx
Dated:
------------ -----------------------------------------------
Xxxxxxx Xxxxxxxx, as Trustee
of Heritage Equity Trust
Dated:
------------ -----------------------------------------------
Xxxxx Xxxxx, as Trustee
of Heritage Equity Trust
41
Exhibit 10.9
------------
Dated:
------------ -----------------------------------------------
Xxxx Xxxxx, as Trustee
of the Miggie Equity Trust
Dated:
------------ -----------------------------------------------
Xxxxx Xxxxx, as Trustee
of the Miggie Equity Trust
Dated:
------------ -----------------------------------------------
X. Xxxxxxxxx Xxxxxxx, as Trustee
of the Xxxxxxx Family Trust
Dated:
------------ -----------------------------------------------
Xxxxxx Xxxxxxx Xxxxx, as Trustee
of The Xxxxxx X. Xxxxx Revocable Living Trust
Dated:
------------ -----------------------------------------------
Xxxxxxx X. Xxxxxx, as Trustee
of the Xxxxxx Family Trust dated 10/2/87
Dated:
------------ -----------------------------------------------
Xxxxxxx Xxxxxx Xxxxx, as Trustee of the
Xxxxxxx Xxxxxx Xxxxx 1996 Trust dated 4/8/96
Dated:
------------ -----------------------------------------------
Xxxx X. Xxxxxx, as Trustee of the Xxxx
Xxxxxxx Xxxxxx Trust dated 7/11/96
California Recovery Systems, Inc.:
Dated: By:
-----------------------------------------
its
-----------------------------------------
[notary signature pages omitted]
42
