MASTER RELATIONSHIP AGREEMENT
Exhibit 10.48
This
MASTER RELATIONSHIP AGREEMENT,
(the "MA Agreement") is dated as of the ___2nd__ day of
_March________, 2021, and is made and entered into by and among CLR
ROASTERS, LLC, a Florida Limited Liability Company (“CLR"),
and XXXXXXXXX, XXXXXXXXX EXPORT Y COMPAPAÑIA LIMITADA,
(“H&H”) a Nicaraguan business entity, H & H
COFFEE GROUP EXPORT CORP., A Florida corporation (H&H EXPORT),
XXXXX XXXXXX XXXXXXXXX, (“XXXXXXXXX”) a United States
citizen living in Nicaragua and XXXXXXX DEL XXXXXX XXXXX XXXXXX,
(“XXXXXX”) a national of Nicaragua and citizen of the
United States. CLR may also be referred to as the American Partner
while CLR, H&H, H&H
EXPORT, XXXXXXXXX, and XXXXXX may also be referred to as the
Nicaraguan Partner. CLR, H&H, H&H EXPORT, XXXXXXXXX, and
XXXXXX are sometimes referred to herein collectively as the
"Parties" or in the singular as Party.
WHEREAS,
the Parties have business relationships which have caused them to
execute various agreements and modifications thereto in order to
memorialize each business relationship;
WHEREAS,
pursuant to these agreements, an accounting of profits and/or
losses, both net and gross are due form one party to the
other;
WHEREAS,
certain events have occurred that have kept the Parties form
necessarily complying with the terms of each said agreement and
have caused there to be an imbalance with the respect to the funds
owed from one Party to the other; and
WHEREAS,
the Parties desire to set forth a detailed accounting of their
different business relationships that would reconcile their
monetary obligations among each other through fiscal year
2020;
NOW,
THEREFORE, for
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as
follows:
1.
AGREEMENTS COVERED.
1.1 The
Parties hereby acknowledge that the agreements covered by this MA
Agreement are as follows:
●
Operating and Profit Sharing Agreement;
●
First Amendment to Operating and Profit Sharing
Agreement;
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Goodwill Purchase Agreement;
●
Sourcing Agreement;
●
CLR Mill Construction Agreement;
●
Sourcing,
Supply and Service Agreement; ☐
Loan
Agreement;
●
Amendment One to Loan Agreement; and
●
Finance, Security and AR AP Monetization
Agreement
1.2 The
agreements referred to hereinabove shall continue to be binding
upon the Parties and shall neither be terminated, nor the terms
modified hereby unless specifically set forth
hereinafter.
1.3 Any
agreement previously executed by the Parties, whether it be all of
the
Parties
or only some of the Parties and not listed hereinabove does not
indicate that the Parties shall not be bound to provide an
accounting to one another as may be called for in that agreement or
agreements.
2. OPERATING AND PROFIT SHARING AGREEMENT
2.1 The Parties entered into an Operating and Profit Sharing
Agreement (the “OPSA”) on 24 July 2014 which at
paragraph 8. thereof provides for an accounting from Expenses and
Distributions from Operations.
2.2 The Parties expressly agree that the terms of that OPSA
are in full force and effect except as modified by the First
Amendment to Operating and Profit Sharing Agreement (the
“First Amendment to OPSA”).
2.3 Paragraph 10.3 of the OPSA provides for a $300,000.00
offset owed to CLR by the Nicaraguan Partners which, as of the date
of this MA Agreement has not been satisfied.
2.4
The Parties pursuant to paragraph 4. of the OPSA are parties to a
contract for the purchase of a coffee plantation in Matagalpa,
Nicaragua known as El Paraisito (“El
Paraisito”).
2.5 The Parties have recently been notified that the legal
impediments to the transaction for the purchase of El Paraisito
have been satisfied and that the seller pursuant to the contract
for the sale of said property is ready to proceed to closing. The
Parties hereby recognize the amounts that each is to pay for the
purchase of El Paraisito pursuant to the OPSA and its ability to
pay said amount(s). Xxxxxxxxx has opened negotiations with the
owners of El Paraisito to work toward a satisfactory solution and
will keep the parties up to date on his
progress.
3. FIRST AMENDMENT TO OPERATING AND PROFIT SHARING
AGREEMENT
3.1
The Parties entered into the First Amendment to OPSA on 15 January
2019.
3.2
Paragraph
4 of the First Amendment to OPSA provides that the OPSA shall be
amended by adding paragraph 10A.1. which set certain benchmarks for
the distribution of profits if any based on a New Contract for the
sale and purchase of green coffee beginning in 2019.
3.3
The
Parties, pursuant to the provisions of paragraph 10A.1., shall
calculate the imbalance due to the New Contract.
3.4 The Parties pursuant to paragraph 5. of the First
Amendment to OPSA have added paragraph 10A.2. to the OPSA in order
to establish a Hedging Account as part of their Green Coffee
business and have established certain procedures for the operation
of said account, including but not limited to the amount to be held
therein; the management of said account; and initial
contribution.
3.5 The Parties, pursuant to the provisions of paragraph 10A.2.,
have calculated the amount held in the Hedging Account in either
cash; positions; or a combination of the two and have determined
shortfall in said Hedging Account and have attached a detailed
accounting thereof as Exhibit 3, which is attached hereto and made
a part of this MA Agreement.
3.6 The Nicaraguan Partner shall make up the shortfall in
either cash; verifiable positions; or a combination of the
two.
3.7 The Nicaragua Partner acknowledge that they are in
default of the $5 million note and have agreed to extend the note
through 2021 and satisfy the note through the green coffee
shipments and payments and required by H&H and provided for in
Exhibit 9 and outlined below in paragraph 8.
4. GOODWILL PURCHASE AGREEMENT
4.1 The Parties entered into a Goodwill Purchase Agreement
(the “GP Agreement”) on 20 March
2014.
4.2 The Parties pursuant to paragraph 1.3 of the GP
Agreement, established to execute 3 Purchase Money Notes for a
total of Three Million Two Hundred Thousand and 00/100 Dollars
($3,200,000.00) at the terms provided for
therein.
5. SOURCING AND SUPPLY AGREEMENT
5.1 The Parties entered into a Sourcing and Supply Agreement (the
“SS Agreement”) on 1 October 2013.
5.2 The Parties hereby wish to acknowledge that the terms of the SS
Agreement have expired, with no renewals thereof and that no monies
or other consideration is owed by either Party to the other
Party.
6. CLR XXXXX MILL CONSTRUCTION AGREEMENT
6.1
The Parties entered into The CLR XXXXX Mill Construction Agreement
(the “CS Mill Agreement”) on 15 January
2019.
6.2 Pursuant to Section 2 of the CS Mill Agreement, each
Party is to contribute $4,700,000.00 towards the construction of
the Mill and a schedule is set forth detailing the amounts and
dates due of the contributions by the Parties in order to reach the
total each is to contribute.
6.3 The Parties by this CS Agreement wish to clarify the
status of said capital contributions and have attached at Exhibit 1
a detailed accounting thereof and which has become a part of this
MA Agreement.
6.4 Section 3 of the CS Agreement provides for the financing
and budgeting for the operation of the mill and the division of
profits, if any, from the milling operations.
6.5 The Parties, pursuant to the provisions of Section 3 of the CS
Agreement have calculated the imbalance in the expenses and
distributions from Operations and have attached a detailed
accounting thereof as Exhibit 1, which is attached hereto and made
a part of this MA Agreement.
6.6 The Parties acknowledge that there is in imbalance
whereby CLR has contributed beyond the required capital under the
agreement and whereby H&H is deficient in its contribution of
the required capital under the agreement. H&H acknowledges that
it has contributed $4,933,723 less than CLR as outlined on Exhibit
5.
6.7 To make up the capital deficiency H&H has agreed to
pledge its 25% profit participation toward satisfying the
deficiency and has also agreed to provide the remaining capital, in
total, for the mill completion. H&H will provide a full
accounting of the additional capital utilized toward completing the
mill and this amount will adjust the imbalance amount accordingly.
The Parties estimate that it will not take more than $1,800,000.00
to complete the Mill.
6.8 H&H agrees to assign its 50% interest in the real
estate and the mill building and equipment to the favor of CLR
until the imbalance is cured.
7. SOURCING, SUPPLY AND SERVICE AGREEMENT
7.1 The Parties entered into a Sourcing, Supply and Service
Agreement (the “SSS Agreement”) on 31 March
2019.
7.2. The Parties refer within the SSS Agreement to a Loan
Agreement (the “Loan Agreement”) also executed on 31
March 2019 whereby CLR promised to loan up to $5,000,000.00 to
H&H Export to be used for its Producer Hedging
Program.
7.3
Pursuant to the terms of the Loan Agreement, H&H Export is to
provide CLR a monthly Hedging Account Statement and detail of trade
receivables and inventory in a form acceptable to CLR, which is
being attached hereto through 31 January 2021, as Exhibit
2 and
made a part of this MA Agreement.
7.4 The Loan Agreement was later amended on 31 October 2019
by Amendment One to Loan Agreement dated March 31, 2019
(“Amendment One to Loan Agreement).
7.5 Pursuant to the amendment, H&H Export was given until no
later than 30
November 2020 to pay all outstanding principal and interest
pursuant to the Loan Agreement.
7.6 Due to circumstances not contemplated by H&H Export
it has not been able to satisfy the payment terms of the Loan
Agreement and the Parties shall extend same as
follows:
●
The Parties Agree the full value of the note ($5 million) and
$450,000 in interest will be paid in full via the shipment of green
coffee as outlined in paragraph 8 below.
●
H&H acknowledges it is in default and can only satisfy the
default through the satisfactory shipment and credits of green
coffee to CLR and its customers as outlined in paragraph 8 below or
by paying the note in full via other means.
7.7 This modification by the Parties shall be memorialized as
Amendment 2 to the Loan Agreement, which the Parties shall execute
pursuant to the terms as provided in Paragraph 8.4
hereinafter.
8. FINANCE, SECURITY, AND AR AP MONETIZATION
AGREEMENT
8.1 The Parties entered into a Sourcing, Supply and Service
Agreement (the “FSM Agreement”) on 28 February
2020.
8.2 Due to unforeseen circumstances beyond the control of the
Parties, the terms of the FSM Agreement shall be modified as
follows:
● The
parties have agreed to use the FSM to resolve a number of financial
issues between the parties
● The
Parties have established that H&H owes CLR $10,663,059.22 for
the items outlined on Exhibit 9 further described as “H&H
Coffee Liability”, including past due accounts receivable
owed to CLR from H&H for 2019 and 2020; the $5 million note
plus interest described in paragraph 9 hereinabove; CLR lost
profits in 2019 and 2020; and the return of working capital
provided by CLR for the 2019 and 2020 green coffee program as
described in the FSM Agreement.
● The
Parties also will include as an offset the H&H’s 25%
profit sharing participation for 2019 and 2020 which is outlined
and included in Exhibit 2 and an offset of H&H’s open
payables owed by CLR in the amount of
$243,001.79
8.3 The
Parties have attached hereto as Exhibit 2 an accounting of the
Accounts Payable and Accounts Receivables through December 31,
2020, which is made a part of this MA
Agreement.
8.4 To
satisfy the amount of $10,663,059.22 pursuant to paragraph 8.2
hereinabove, owed to CLR by H&H, H&H agrees to ship a
minimum of 20 containers of strictly high grown coffee (each
container having approximately 41,250 pounds of coffee) per month,
commencing at the end of March 2021 and continuing monthly until
the aforesaid amount is paid in full. It is agreed to by the
Parties that the coffee to be provided by H&H to CLR in order
to satisfy its debt shall not be produced on any plantation that
the Parties have a joint interest in.
8.5 CLR
has confirmed that there is an open balance on CLR’s books
whereby CLR owes H&H of AP $243,001.79 and this is offset as
described above. The parties agree these AP balances are reflected
on Exhibit 9. If there are additional amounts owed to H&H above
the $243,001.79 H&H will provide the documentation and if
accurate and agreed by CLR the amounts will be adjusted
accordingly.
9. PARAGRAPH 9 HAS INTENTIONALLY BEEN OMITTED
10. GENERAL
10.1 ASSIGNMENT: BINDING EFFECT. This Agreement and the rights of
CLR hereunder may be assigned by CLR. This Agreement and the rights
of H&H, XXXXXXXXX and/or ORZCO hereunder may not be assigned by
either H&H, XXXXXXXXX and/or ORZCO. This Agreement shall be
binding upon and shall inure to the benefit of the Parties hereto,
the successors and assigns of CLR and the heirs, beneficiaries and
legal representatives of H&H, XXXXXXXXX and/or
ORZCO.
10.2 EXECUTION. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute but
one and the same instrument. Execution and delivery of this
Agreement by delivery of a facsimile copy bearing the facsimile
signature of a party shall constitute a valid and binding execution
and delivery of this Agreement by such party. Such facsimile copies
shall constitute enforceable original
documents.
10.3
BROKERS.
Each party represents and warrants that it employed no broker or
agent in connection with this transaction and agrees to indemnify
the other against all loss, cost, damage or expense arising out of
claims for fees or commissions of brokers or agents employed or
alleged to have been employed by such indemnifying
party.
10.4
NOTICES.
Any notice or communication required or permitted hereunder shall
be sufficiently given if sent by first class mail, postage
prepaid:
(a)
If to CLR, addressed to it at:
Telephone
No.
(b)
If to: H&H adressed to each of them at:
XXXXXXXXX, XXXXXXXXX EXPORT Y COMPAPAÑIA
LIMITADA
Telephone
No.
XXXXX XXXXXX XXXXXXXXX
Telephone
No.
XXXXXXX
DEL XXXXXX XXXXX
XXXXXX
Telephone
No.
10.5 APPLICABLE
LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO SUCH
STATE'S CONFLICTS OF LAWS OR CHOICE OF LAW RULES. H&H,
XXXXXXXXX and ORZCO HEREBY WAIVE WITH FULL KNOWLEDGE THAT EACH IS
DOING SO, THE RIGHT TO HAVE ANY MATTER LITIGATED IN OR HAVE THE LAW
OF NICARAGUA APPLIED IN ANY WAY TO THE ENFORCEMENT OF THE AGREEMENT
OR ANY PROVISION THEREOF. THE PARTIES FURTHER AGREE THAT SHOULD THE
NEED ARISE TO EXECUTE FURTHER DOCUMENTS EITHER IN THE SATE OF
FLORIDA OR IN NICARAGUA TO GIVE FULL FORCE AND EFFECT TO THIS
PARAGRAPH OR ANY OTHER PROVISION(S) OF THIS AGREEMENT UNDER THE
LAWS OF THE STATE OF FLORIDA THAT THEY WILL DO SO IMMEDIATELY AND
WITHOUT DELAY. VENUE SHALL BE PROPER IN MIAMI-DADE COUNTY,
FLORIDA.
10.6 CAPTIONS.
The captions in this Agreement are for convenience only and shall
not be considered a part hereof or affect the construction or
interpretation of any provisions of this
Agreement.
10.7 ATTORNEY’S
FEES. In any action between the Parties to enforce any of the terms
of this Agreement or any other matter arising from this Agreement,
the prevailing Party shall be entitled to recover its costs and
expenses, including reasonable attorneys' fees up to and including
all negotiations, trials and appeals, whether or not litigation is
initiated.
10.8 CONSTRUCTION.
The terms of this Agreement shall not be more strictly construed
against one Party by virtue of having drafted the Agreement as both
Parties have reviewed same and have had an opportunity to make
changes thereto.
10.9 ENTIRE
AGREEMENT. This Agreement (including the schedules and annexes
hereto) and the documents delivered pursuant hereto or in
connection herewith constitute the entire agreement and
understanding between the Parties and supersedes any prior
agreement and understanding, written or oral, relating to the
subject matter of this Agreement. H&H, XXXXXXXXX and XXXXX each
acknowledge that they have (a) had the opportunity to seek the
advice of independent counsel, including independent tax counsel,
regarding the consequences of this Agreement; and (b) received no
representations from CLR or its counsel regarding the legal
consequences of this Agreement. This Agreement may be modified or
amended only by a written instrument executed by the
Parties.
IN WITNESS WHEREOF, the
parties have entered into this Agreement as of the day and year
first above written.
XXXXXXXXX, XXXXXXXXX EXPORT Y COMPAPAÑIA
LIMITADA
H&H Coffee Group Export And Xxxxx X. Xxxxxxxxx
Indiv.
Xxxxx
X. Xxxxxxxxx
Print Name
XXXXX XXXXXX XXXXXXXXX
3/4/2021
XXXXXXX DEL XXXXXX XXXXX XXXXXX,
CLR ROASTERS, LLC
_________________________________________
Company
Representative’s Signature 3/2/2021
_________________________________________
Xxxx Xxxxxxx
Company
Representative’s
Printed
Name
Exhibit 2
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CLR and HH Coffee Reconciliation
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CLR Balance Owed
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Net AR
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Notes
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AR less AP Net SHG Only
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$ 6,260,595.00
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Mill leasing Expense
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$ (2,339,494.75)
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Expenses
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$ -
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Producers (Finance Fees)
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$ (1,270,050.00)
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Gross Profit 2019 Program SHG
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$ 2,651,050.25
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$ (662,762.56)
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H&H Profit Participation 25% SHG
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Net SHG
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$ 1,988,287.69
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Gross Profit 2019 Program Naturals PENDING
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$ 1,245,120.00
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$ (311,280.00)
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H&H Profit Participation 25% Naturals
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Net Naturals
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$ 933,840.00
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Total Green SHG and Naturals
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$ 2,922,127.69
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CLR Contribution
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Hedging Capital
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$ 5,000,000.00
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Interest Hedging 9%
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$ 450,000.00
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CLR Working Capital
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$ 1,864,816.13
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Gross Profit and CLR Contributiion 2019
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$ 10,236,943.82
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CLR Gross Profit 2020 Program
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$ 2,183,671.00
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$ (545,917.75)
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H&H Profit Participation 2020 25% ALL
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CLR Net Profit 2020 Program
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$ 1,637,753.25
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CLR Profit 2019 and 2020 Program
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$ 11,874,697.07
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Amount of SHG Shipped to Rothfos Thus Far 2020
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$ (1,067,216.06)
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$ 10,807,481.01
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DGI Tax Xxxx for SHG that need to be paid back in
Coffee
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40178,40179 and 40180
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$ 98,580.00
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Final Reconciled amount 2019 & 2020 Owed to CLR
Coffee
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$ 10,906,061.01
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AP
Open Balance Owed to H&H
(243,001.79)
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Final Balance Owed To CLR
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After
Clearing
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H&H Open of $243,001.79
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$10,663,059.22
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Exhibit 1
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New Mill Payments
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2018 Wires
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$ 1,050,000.00
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2019 Wires
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$ 2,000,000.00
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2020 Wires
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$ 1,906,000.00
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2019 Equip Payments
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$ 391,117.00
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2020 Equip Payments
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$ 912,606.00
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Customs Appox
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$ 500,000.00
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CLR Contribution Tota
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$ 6,759,723.00
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2019 Wires from HH
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$ 1,160,000.00
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2020 Wires from HH
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$ 606,000.00
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HH Contribution Total
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$ 1,766,000.00
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HH Additional
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*Est 1.8Million
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*
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HH
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$ 1,766,000.00
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Grand Total
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$ 8,525,723.00
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HH Imbalance
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$ 4,993,723.00
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Offset from 75/25
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* HH Responsible for all costs to Mill
Completion
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