JOINT VENTURE AGREEMENT
This AGREEMENT, made by and entered into as of February 22, 2001, by and among
PGM Corporation, an Oklahoma Corporation ("PGM") and Texxon, Inc. an Oklahoma
Corporation ("Texxon") (hereinafter the parties may be collectively referred to
as "Joint Venturers").
WITNESSETH:
WHEREAS, the parties hereto desire to form a Joint Venture (hereinafter referred
to as "Joint Venture") for the term and the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is agreed by and among the parties hereto as follows:
ARTICLE I
BASIC STRUCTURE
1.1 Form
In General. The Parties hereby form a Joint Venture and not a Partnership.
In this regard, it is the intention of the parties:
(a) That the Venture not engage in a business enterprise.
(b) That no party shall have the right to bind the other without
doing so pursuant to the power of attorney herein provided for.
In this regard, each Venturer (the "Indemnifier") hereby agrees to hold
harmless, indemnify, and defend (including but not limited to, for the cost
of reasonable attorney fees) each other Venturer (the "Indemnified
Venturer(s)") for any liabilities that arise out of the activities of such
Indemnifier unless such Indemnifier has specific written authority to
engage in such activity on behalf of such Indemnified Venturer(s).
1.2 Name
The business of the Joint Venture shall be conducted under the name
"TEXXON/PGM Joint Venture.
1.3 Office
(a) Joint Venture. The principal office of the Joint Venture shall be
located at 0000 X. Xxxx Xxx., Xxxxx 000, Xxxxx, XX 00000, or at
such other place as the Joint Venturers may from time to time
designate.
(b) Operating Office. Joint venture operations will be conducted from
offices located at 00000 X 000xx Xxxxxx, Xxxxxxxx XX 00000
(c) Operations. PGM will secure the necessary ore, equipment,
processing site, and facilities for the Joint Venture.
1.4 Term
81
(a) In General. The Joint Venture shall commence on a date set by
mutual agreement of the parties to this Agreement and shall
continue for one year unless earlier terminated in the following
manner:
(1) By applicable Oklahoma State law, or
(2) By death, insanity, bankruptcy, retirement, expulsion,
or disability of any of the then Joint Venturers
(b) Extension of Term. The term of the Joint Venture may be extended
by written agreement of the Joint Venturers.
1.5 Purpose
(a) Background Facts. The Joint Venturers hereby recognize the
following;
(1) That PGM has access to a processing site ("Processing Site")
in Phoenix, Arizona.
(2) That Texxon has been granted a License by the Inventor and
Owner, Xxxxxxx Xxxxxxx ("Xxxxxxx") to a newly developed
experimental precious metal recovery technology ("Licensed
Technology") and makes no representations or guarantees
about the viability and/or success of the Licensed
Technology.
(3) That Texxon requires that the above-mentioned Licensed
Technology be tested and documented.
(b) General Purpose. The purpose for which the Joint Venture is
organized is for the testing and documentation of the Licensed
Technology. Furthermore, the Joint Venturers intend to extract
and recover precious metals in paying quantities.
1.6 Employees
Employment Status. It is understood and agreed that for all purposes under
the Joint Venture Agreement, that Texxon nor the TEXXON/PGM Joint Venture
shall have any employees. Any party working towards the purpose of the
Joint Venture shall be considered either an employee of PGM and paid
according to existing PGM policy or an independent contractor.
ARTICLE II
FINANCIAL ARRANGEMENTS
2.1 Initial Contributions of Joint Venturers
Capital Contributions. Each Joint Venturer has contributed to the initial
capital of the Joint Venture property in the amount and form indicated
below.
(1) Texxon. Texxon shall contribute an amount that covers Joint
Venture capital costs and operational expenses for the Joint
Venture. These expenses shall include land lease, fuel,
utilities, insurance, permits, equipment, and payroll cost
including salary, taxes and benefits. (Schedule A)
(2) PGM. PGM will make available the facilities, processing site,
equipment and supervise the Joint Venture operations.
82
2.2 Additional Capital Contribution.
Increase in capital. If at anytime during the existence of the Joint
Venture it becomes necessary to increase the capital with which the Joint
Venture is doing business then:
No Joint Venturer shall be required to make additional contributions to the
capital of the Joint Venture. Any Joint Venturer who shall make a
contribution shall be deemed to have made a loan to such Joint Venture,
which loan shall bear interest at an annual rate of 12%, which principal
and interest shall have priority over any and all other sums owed to or
payable to the Joint Venturers.
2.3 Percentage Share of Profits and Capital
(a) Definition of Profits. Profits shall be the monies received from the
sale of precious metals after deducting all of PGM's costs
attributable to the Joint Venture including but not limited to
reimbursement of expenses and direct and indirect costs.
(b) Initial Percentage. The percentage share of profits and capital of
each Joint Venturer shall be (unless modified by the terms of this
agreement or by Joint Venturers in writing) as follows.
PGM 50%
TEXXON 50%
2.4 Interest
Contribution of Capital. No interest shall be paid on the initial
contribution to the capital of the Joint Venture. No interest shall be paid
on capital contributions except as herein provided including but not
limited to paragraph 2.2 of this Agreement.
2.5 Return of Capital Contributions
(a) Rights of Venturer. PGM shall have first priority of the distributions
until all costs attributable to the Joint Venture Including but not
limited to reimbursement of expenses and direct and indirect costs. No
Joint Venturer shall have the right to demand the return of such
entities' capital contributions except the above costs and as herein
provided.
(b) Capital Equipment. Any Equipment purchased by the Joint Venture for
use during the term of the Joint Venturer shall be accounted for as an
expense and shall become the property of TEXXON.
(c) Supplies. All consumable supplies including but not limited to
chemicals and fuel purchased for the Joint Venture at the expiration
of the term of the Joint Venture shall become the property of TEXXON.
2.6 Rights of Priority
Rights of Venturer. Except as herein provided, the individual Joint
Venturers shall have no right to any priority over each other as to the
return of capital contributions except as herein provided.
2.7 Distributions
Distributions to the Joint Venturers. Distributions to the Joint Venturers
shall be as soon a reasonably possible after the commercial sale of
precious metals in the amount and manner as set forth in paragraphs 2.3-2.6
and 6.2 herein. The distribution will continue as provided
83
in paragraph 2.3 herein until payment for all of the precious metal shipped
by the Joint Venture has been accounted for.
2.8 Compensation
Unless they otherwise agree, no Joint Venturer shall receive any
compensation from the Joint Venture, nor shall any Joint Venturer receive a
drawing account from the Joint Venture.
2.9 Acquisition of PGM
At any time during the term of this Joint Venture or at any time
thereafter, Texxon will have the right to acquire PGM by issuing Texxon
common stock in exchange for PGM common stock. Texxon must exercise the
right to acquire PGM within 30 days after the end of the first fiscal year
of profitable operations.
ARTICLE III
MANAGEMENT AND HOLD HARMLESS
3.1 Managing Joint Venturer
(a) In General. The Managing Joint Venturer shall be Texxon.
(b) Additional Liabilities. It is not the parties intention for the
Managing Joint Venturer to incur any additional liabilities for the
performance of the duties of Managing Joint Venturer.
(c) Restriction of Rights. No Venturer has any right to bind the other
Venturer except as expressly provided herein.
(d) Management. The Managing Joint Venturer shall have the sole authority
for all decisions and expenditures for the duration of the term of the
Joint Venture.
(e) Operations. The Managing Joint Venturer shall appoint an Operations
Manager who will have authority for all operating decisions and
expenditures and who will consult with the Managing Joint Venturer for
approval on any major expenditures. The Operations Manager shall make
an accounting of all expenses at the close of each week.
(f) Books and Records. It shall be the Managing Joint Venturers obligation
to maintain the books and records of the Joint Venture.
(g) Accounting. The Managing Joint Venturer shall make an accounting to
the other Joint Venturer at the close of each business week.
3.2 Hold Harmless
(a) Indemnification of the parties. Nothing to the contrary in this
agreement between the parties withstanding, each party (the
"Indemnifying Party") agrees to indemnify the other (the "Indemnified
Party") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind whatsoever that may at any time arise out of
their relationship as Joint Venturers to the extent which:
(1) The Indemnifying Party has, by its actions, generated a claim
that the Indemnified party is liable for the acts of the
Indemnifying Party, whether or not
84
such actions were, in and of themselves justified;
(2) The Indemnifying Party has, by its actions, generated a claim for
a contractual obligation other than may arise directly as a
result of the Joint Venture Agreement dated February 22, 2001
between the Indemnifying Party and the Indemnified Party;
(3) The Indemnifying Party has, by tortuous or other improper actions
generated a claim against the Indemnified Party or any property
of the Indemnified Party or any property owned by, leased by or
from, or otherwise in the possession or control of the Joint
Venture; or
(4) A claim that may otherwise be imposed on, incurred by, or
asserted against the Indemnified Party in any way relating to or
arising out of this Agreement, the Joint Venture Agreement, or
any documents contemplated by or referred to herein (the
"Collateral Documents"), or the transactions contemplated hereby,
or any action taken or omitted by the Indemnifying Party under or
in connection with any of the foregoing;
Provided that the Indemnifying Party shall not be liable for:
(1) The payment of any portion of the authorized liabilities of the
Joint Venturer; or
(2) Any obligations, losses, damages, penalties, actions judgments,
suits costs, expenses, or disbursements resulting primarily from
the Indemnified Party's negligence or willful misconduct.
(b) Indemnification for Specific Acts. TEXXON specifically indemnifies PGM
for any and all claims arising out of the day-to-day operation of the
Processing Site including but not limited to employment related
claims(contractual and tortuous) and injury (to person or property)
claims.
ARTICLE IV
DISSOLUTION
4.1 Dissolution
(a) Account of Assets, Liabilities and Transactions. If the Joint Venture
shall hereafter be dissolved for any reason whatsoever, a full and
general account of its assets, liabilities and transactions shall at
once be taken. Such assets may be sold and turned into cash as soon as
possible and all debts and other amounts due the Joint Venture
collected. The proceeds thereof shall thereupon be applied as follows:
(1) To discharge the debts and liabilities of the Joint Venture and
the expenses of the liquidation.
(2) To pay each Joint Venturer or legal representative any interest
or profits to which each Joint Venturer shall then be entitled
and in addition, to repay to any Joint Venturer capital
contributions in excess of such Joint Venturer's original capital
contribution.
(3) To divide the surplus, if any, among the Joint Venturers or legal
representatives as follows:
85
(a) First (to the extent of each Joint Venturer's then capital
account) in proportion to their then capital accounts.
(b) Then, according to each Joint Venturer's then percentage
share of capital.
4.2 Right To Demand Property
Either Joint Venturer may accept proceeds either in precious metals or
cash, with this excepted no Joint Venturer shall have the right to demand
and receive property in kind for his or her distribution.
ARTICLE V
MISCELLANEOUS
5.1 Accounting Year, Books, Statements
(a) In General. The Joint Venture's fiscal year shall commence on January
1st of each year and shall end on December 31st of each year. Full and
accurate books of account shall be kept at such place as the Managing
Joint Venturer may from time to time designate, showing the condition
of the business and finances of the Joint Venture; each Joint Venturer
shall have access at their sole expense to such books of account and
shall be entitled to examine them during ordinary business hours, at a
location determined by the Managing Joint Venturer. At the end of each
working week, the Managing Joint Venturer shall cause the Joint
Venture's accountant to prepare a balance sheet setting forth the
financial position of the Joint Venture as of the end of that working
week and a statement of operations (income and expenses) for that
working week. A Copy of the balance sheet and statement of operations
shall be delivered to each Joint Venturer as soon as it is available.
(b) Waiver of Objections. Each Joint Venturer shall be deemed to have
waived all objections to any transaction or other facts about the
operation of the Joint Venture disclosed in such balance sheet and/or
statement of operations unless he or she shall have notified the
managing Joint Venturer in writing of any such objections within
fifteen (15) days of the date on which such statement is mailed.
5.2 Banking
(a) All monies received from the sale of precious metals will deposited in
a newly opened bank account in the name of TEXXON/PGM Joint Venture at
bank of Oklahoma, Tulsa, Oklahoma. The Managing Joint Venturer shall
solely maintain the account and make any and all distributions. Checks
and drafts shall be drawn on the Joint Venture's bank account for
Joint Venture purposes only and shall be signed by the Managing Joint
Venturer or their designated agent.
(b) A Joint Venture Operating Account will be opened in the name of
TEXXON/PGM Joint Venture at the Xxxxx Fargo Bank, Gilbert, Arizona.
Checks and drafts shall be drawn on the Joint Venture's Operating
Account for Joint Venture purposes only and shall be signed by the
Managing Joint Venturer or their designated agent.
5.3 Titles and Subtitles
Usage. Titles of the paragraphs and subparagraphs are placed herein for
convenient reference only and shall not to any extent have the effect of
modifying, amending or
86
changing the express terms and provisions of this Joint Venture Agreement.
5.4 Words and Gender or Number
Usage. As used herein, unless the context clearly indicates the contrary,
the singular number shall include the plural, the plural the singular, and
the use of any gender shall be applicable to all genders.
5.5 Execution in Counterpart
This Joint Venture Agreement may be executed in any number of counterparts,
each of which shall be taken as an original.
5.6 Severability
If any parts of this agreement are found to be void, the remaining
provisions of this agreement shall nevertheless be binding with the same
effect as though the void parts were deleted.
5.7 Effective Date
This agreement shall be effective only upon execution by all of the
proposed Joint Venturers.
5.8 Waiver
No waiver of any provisions of this agreement shall be valid unless in
writing and signed by the person or party against whom charged.
5.9 Applicable Law
This Agreement shall be subject to and governed by the laws of Oklahoma.
5.10 Venue
The exclusive venue for any dispute related to this agreement shall be the
District Court in and for Tulsa County.
5.11 Jurisdiction
The exclusive jurisdiction for any dispute related to this agreement shall
rest with the District Court in and for Tulsa County. The Joint Venturers
hereby waive any removal rights to Federal Court. If this waiver is found
to be invalid, the exclusive jurisdiction shall rest with the United States
District Court for the Northern District of Oklahoma.
5.12 Assignment
This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns.
87
In WITNESSETH hereof this 22nd day of February, 2001.
PGM Corporation Texxon, Inc.
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxx
----------------------- ---------------------
Xxxxxxx Xxxxxxx Xxxxxxx Xxxxx III
President President
88
