LICENSE AGREEMENT
This agreement is made and entered into this 22nd day of January,
1999, by and between GeoResources, Inc. a Colorado Corporation ("Geo")
and Silverado Landscape Materials, an Arizona Limited Liability
Corporation ("SLM").
1. Grant of License. Geo hereby grants to SLM a exclusive license to
enter onto the property known as the Reymert Property located in the
Tonto National Forest in Pinal County, Arizona (the "Property") which is
shown in Exhibit A attached hereto, for the sole purpose of producing
and marketing decorative rock, boulders, rip rap, road base material and
similar commercial rock products. SLM shall be responsible for
providing all production equipment, including but not limited to all
trucks and manpower to produce such materials at its sole cost and
expense.
2. Term. The term of this Agreement shall commence on January 15,
1999, and shall continue in force and effect until January 15, 2002,
unless terminated earlier in accordance with the provisions of Section
10 hereof.
3. Designation of Locations for Production. The precise location or
locations for the production of materials from the Property shall be
determined by mutual agreement between Geo and SLM, taking into account
such factors as the quality of rock materials which can be produced, the
ease of access to such locations, and such other factors as the parties
shall deem relevant. In addition, Geo will provide access to a site or
sites on the Property for the set up and operation of SLM's production
equipment, and the storage of manufactured products and the disposition
of by-products or waste rock. SLM will do all site preparation work
necessary to provide access both to the production and the processing
sites and any other on-site work necessary to facilitate its operations.
4. Royalties. In consideration for the license hereby granted, SLM
will pay to Geo a royalty of Ten Percent (10%) of the gross selling
price before taxes as invoiced for all products produced and sold from
the Property. Such royalties will be paid on or before the 25th day of
each month for the term of this agreement for all material sold by
invoice during each second preceding calendar month. As an example of
this, invoiced sales for January, 1999 would have royalties due March
25th, 1999. In addition if SLM can show GEO documentation, acceptable
to GEO, that payment was never received for a particular invoiced sale
then royalties would not be due on that sale. If royalties for any
calendar month do not equal at least $250.00 then SLM agrees to pay GEO
a monthly minimum royalty of $250.00 to continue this license agreement
in effect. The failure of SLM to pay royalties or minimum royalties
under the terms of this paragraph shall terminate the license agreement
under the terms of paragraph 10
5. License Bonus Payment. As further consideration for the exclusive
license hereby granted SLM agrees to pay GEO an initial license bonus
payment of Twenty Five Hundred Dollars ($2500.00) which GEO and SLM
agree prepays any minimum royalties due for products sold through April
30th 1999, such that only monthly royalties in excess of $250.00 would
be due for calendar months January through April 1999.
6. Conduct of Operations. SLM agrees to conduct all of its operations
in compliance with the regulations of all state and federal governmental
agencies having jurisdiction over the Property. Such agencies include
but are not limited to the United States Forest Service and the Mine
Safety and Health Administration. Any bonds, permits or other
regulatory requirements by governmental agencies will be the provided by
SLM at its sole cost and expense.
7. Liability Insurance. During the term of this Agreement, SLM agrees
to carry comprehensive general liability insurance covering its
operations at the Property with liability in the amount of not less than
One Million Dollars ($1,000,000.00). Such insurance shall name Geo as
an additional insured and shall provide that it may not be cancelled
without at least 30 days advance written notice to Geo.
8. Indemnification. SLM will indemnify, defend and hold Geo harmless
from any loss or liability resulting from its operations on the Property
under this Agreement. Geo shall indemnify, defend and hold SLM harmless
for any loss, cost or injury resulting from any operations by GEO on the
Property.
9. Ownership of Reymert Porperty. GEO agrees that it will not enter
into any agreement to sell the Property to any third party without
giving SLM 60 days advance written notice of such intent.
10. Cancellation. Geo shall be entitled to terminate this Agreement
before January 15th, 2002, upon not less than 90 days advance written
notice to SLM if, in the exercise of its good faith judgment, Geo can
demonstrate that the continued operation by SLM at the Property shall
materially interfere with other more economic activities of Geo on the
Property. In addition, Geo may cancel this Agreement if, at any time,
SLM has failed to comply with all of its obligations hereunder and,
having received written notice of such failure, has not cured such
failure within 30 days after receipt of such notice or if SLM's
operation on the Property should be determined to be in violation of any
applicable law, rule or regulation of any governmental body having
jurisdiction.
SLM may cancel this Agreement upon not less than 30 days advance
written notice to GEO if they are unable to locate commercially
marketable material at a mutually acceptable location on the
Property or if SLM's operation on the Property should be determined
to be in violation of any applicable law, rule or regulation of any
governmental body having jurisdiction.
11. Notices. Various provisions of this agreement provide for delivery
of notices or other communications from one party to the other. Any
such notices shall be given in writing and may be delivered in person or
by deposit into the United States mails, by delivery by FAX or by any
overnight courier. Notices delivered in person, by deposit into the
United States mail or by overnight courier shall be effective when
received. Notices delivered by FAX shall be effective when sent but any
such notices shall be followed by delivery of a signed original notice.
Any such notices shall be sent to the following addresses:
Silverado Landscaping Material
0000 Xxxx Xxxxx Xxxxxx
Xxxx, XX 00000
Attn: Xxxxx Xxxxx, President
FAX: (000) 000-0000
GeoResources, Inc.
P. O. Box 1505
0000 X. Xxxxxx Xxxxxxx, Xxx. 0X
Xxxxxxxxx, XX 00000
Attn: X. X. Xxxxxxx, President
Fax: (000) 000-0000
13. Taxes. SLM shall be responsible for the payment of any severance,
mining or sales taxes due to the State of Arizona on account of the
operations hereunder. Geo shall be responsible for the payment of
all property taxes payable on its Property.
14. Choice of Laws. This Agreement shall be deemed to have been made
in the State of Arizona and shall be subject to the jurisdiction of
Arizona courts. In the event of any litigation between the parties
with respect to the Agreement, the prevailing party shall be entitled
to recover such attorneys' fees and costs as the court may award.
IN WITNESS WHEREOF this Agreement is made as of the date first
above written.
SILVERADO LANDSCAPE MATERIAL
an Arizona Limited Liability Corporation
By /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Vice President
GeoResources, Inc.
a Colorado Corporation
By /s/ X. X. Xxxxxxx
X. X. Xxxxxxx
President
