EXHIBIT 10.E
License Agreement Between Gold City, Inc. and Xxxxx, Inc.
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This agreement ("Agreement") is made and entered into this day of March 28,
2003, by and between Gold City, Inc., a Nevada corporation ("GCI"), and Xxxxx
Inc., a Delaware corporation ("Xxxxx"), for the licensed use of the Xxxxx Gold
Process (as defined below).This license shall become effective and shall
commence only when an offering document for financing of GCI has been prepared
and completed and ready for distribution to prospective investors in GCI
("Effective Date"); provided, however, that the effective date must occur on or
before Apri1 30, 2003. Now, therefore, the parties agree as set forth below:
ISSUANCE OF LICENSE.
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Xxxxx hereby grants to GCI, a non-exclusive license ("License"), without the
right of transfer or sublicense, for the commercial use of the Xxxxx Gold
Process ("HGP") for the extraction of gold from their mines and ore concentrates
obtained from third parties. The use of the HGP shall be under the direction and
control of Xxxxx. GCI hereby undertakes and agrees to use the Xxxxx process on
all precious metals material from property leased or owned by GCI and all
concentrates obtained from others.
CCI agrees to keep confidential the HGP and other elements of Xxxxx'x
proprietary technology to which they are exposed in conjunction with using the
HGP. GCI shall only disclose the HGP and other Xxxxx technology only to those
employees with a need to know in the performance of their GCI duties. In
addition, all such GCI employees shall sign confidentiality agreements that have
been approved by Xxxxx, which approval shall not be unreasonably withheld.
Further, Xxxxx may request that GCI employees exposed to the HGP shall be bonded
in an amount not to exceed $5,000,000.
A provision of this license is that Xxxxx shall maintain full control of the
operation of said technology(s) and that GCI shall provide the facilities in
accordance, with the personnel, equipment and location conducive of the
licensors practical means to so function.
For the term of this Agreement, Xxxxx shall have the right to appoint two
members to the GCI Board of Directors. One appointee shall be a full voting
member while the second appointee shall only have the power to vote on matters
concerning the license granted under this Agreement.
GCI agrees to restrict, during the term of this Agreement, the number of
Directors to not more than seven persons.
During the term of this Agreement,
Xxxxxx Xxxxx shall be the senior consultant to GCI for the related use of
geochemical and extractive metallurgical services and shall be compensated as a
paid consultant for said purpose on a mutually agreed basis.
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LICENSE FEE AND ROYALTIES:
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As consideration for granting this License, GCI shall pay seventy five thousand
($75,000) dollars to Xxxxx and issue Xxxxx eight hundred thousand (800,000)
shares of GCI common stock. Upon the first successful use [Defined as extracting
the first 2oz of gold] of the HGP with GCI ore or concentrates GCI shall issue
to Xxxxx an additional one million two hundred thousand (1,200,000) shares of
GCI common stock.
During the term of this Agreement, Xxxxx will also receive a royalty for the
License of the greater of the following: 1) An ongoing 12% share of GCI profits
(as defined in a. below), distributed [thirty days after the end of each
calendar quarter] from the sale of head ore, concentrate or mineral
rights(restricted to properties Assigned to GCI from Spartan Scientific Holdings
LTD. agreement dated March 28, 2003), or recovery of precious and non-precious
metals from all properties controlled or mined by GCI, or 2) A 12% net smelter
return ("NSR") in cash or bullion from each quarter's production plus 5% of all
free gold produced. If any project does not yield a profit after taking into
account the 12% NSR due to Xxxxx, then the NSR due to Xxxxx shall be reduced to
a minimum of 8%, regardless of profit. Any forward sale of bullion by CCI shall
be considered as production and is subject to the foregoing royalty.
For the purposes of this Agreement, "profits" shall be calculated as set forth
below:
a. "Profits" will be calculated as gross revenues less standard production costs
on all projects GCI undertakes. Start-up costs for each project will be
reimbursed to GCI out of revenues before any profits are calculated, except
that, if amortized, only the amortization amount shall be deducted as expenses.
b. Capital investments and expenditures will be amortized in a time frame to be
approved by both GCI and Xxxxx and consistent with GAAP.
c. Operating costs will be expensed as incurred.
d. Licensee's corporate SG&A will be deducted as a project cost on an
apportioned basis over all projects.
e. Sale of bullion forward shall not exceed 25% of established three (3) month
production unless agreed to in writing by the GC1Board of Directors and Chairman
of Xxxxx.
f. GCI will have responsibility for keeping each established project's records
and profit calculation and distribution. Xxxxx will have the right to inspect
the books of any GCI projects, and of GCI as a whole, upon timely request.
x. Xxxxx will be responsible for distribution of royalty moneys to any royalty
holders to which Xxxxx is obligated
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DURATION OF THE LICENSE. OBLIGATIONS OF LICENSEE CONDITIONS FOR EXTENSION OF THE
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LICENSE.
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The license Agreement is non-exclusive and shall remain in force in perpetuity
after the Effective Date.
If the license is terminated for any reason other than default due to any
misrepresentation or criminal act or other serious impropriety such as may
involve trade secrets, it will not affect the right of GCI to continue to
utilize Xxxxx'x gold technologies in projects that are already either in
production or under construction and engineering contract to go into production.
Also, Xxxxx will continue to receive its royalty hereunder from such contracts,
until production ends.
NON TRANSFERABILITY OF LICENSE:
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The license that Xxxxx issues to GCI will not be transferable to other parties.
GCI cannot act as an agent or independent conduit for any aspect of Xxxxx'x
technologies to any other party, group, or company. Also, in the event of the
sale of GCI or the takeover or merger of GCI by another company or group, the
license will be subject to review, renegotiation, and termination at Xxxxx'x
option.
These situations, however, will not affect the availability of the licensed
technologies, as described above, to projects that are already under way. It is
understood that the projects that GCI negotiates and brings into production will
have the continuing rights to use the HGP as long as production continues. The
termination or renegotiation of the license will not restrict the availability
of technologies to projects that are in production or contracted to go into
production at the time of termination.
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OPERATING FEATURES:
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GCI shall provide personnel, expenses and field facilities, process equipment,
and laboratory facilities approved by Xxxxx for use of Xxxxx'x technology.
GCI shall purchase and outfit a mobile trailer, assay, and analytical
laboratory. The estimated cost is $125,000 in accordance with the "Use of
Proceeds" in their 504- investment document. When necessary for use by GCI at
their mine site, said facility will also be available for use by Xxxxx.
Any improvements or variations on Xxxxx'x technology shall be made known and
available to Xxxxx and not be used to diminish Xxxxx'x compensation.
This agreement shall cover the rights to Xxxxx'x technology in perpetuity for
mining or processing operations in the United States, Mexico, or Canada. The Net
Smelter Return (NSR) and profit sharing for additional projects shall be
individually negotiated.
Joint venture projects between GCI and Xxxxx, shall be part of this Agreement
except as regarding the specifics of profit sharing as described in the section
titled "License Cost and Fee." Xxxxx retains the right to renegotiate with GCI
if the source of third party projects is introduced by Xxxxx.
POTENTIAL COMPETITION BETWEEN PARTIES TERMINATION, CONFLICTS:
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There will be no restriction on Xxxxx arranging processing ventures directly for
its own account, of arranging for other licensees. In effect, Xxxxx, Inc, can
compete directly with its licensee.
Both parties will continue to cooperate, including technical work, with each
other and will freely exchange processing and geochemical information provided
that proper confidentiality agreements and security procedures are in place,
unless by doing so in specific instances they consider their competitive
position is damaged.
When one company does work for the other, it will be reimbursed for all direct
and indirect costs for equipment, facilities, and personnel.
In the event that an alternative technology may be deemed available, GCI may
not, without the prior permission of Xxxxx, terminate the Agreement nor
discontinue the use of the HGP (or reduce production) until the completion of
the term of the applicable license period then in effect.
The termination of this license, by either party, shall require at least ninety
(90) days' notice in writing to the other party, setting forth the reasons for
termination.
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In the event of a conflict between the two parties where both claim the same
project account, the party that made the first business contact after the
issuance of the license will be entitled to that account. if the two parties are
unable to agree on this question, the American Arbitration Association in the
State of Nevada will resolve the issue
In the event of termination of the License or this Agreement, neither party or
its employees, officers, directors or agents shall not disparage the other party
or comment in an unfavorable manner about the relationship under, or operation
of, this Agreement.
AGREED:
For XXXXX INC. Date: 3/28/03
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Xxxxxx Xxxxx, CEO
For GOLD CITY, INC. Date: 3/28/03
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Xxxxxxx Xxxxxxxx, President
