EXHIBIT 10.8
JOINT VENTURE AGREEMENT
THIS AGREEMENT mired into this the 11th day of May, 2004, by and between
U.S. Canadian Minerals, Inc. ("U.S. Canadian"), of Las Vegas, state of Nevada,
and El Capitan Precious Metals, Inc. (El Capitan), of Englewood, state of
Nevada.
WITNESSETH:
WHEREAS, (U.S. Canadian) is in the business of
Acquiring and Funding Mining Property , and
WHEREAS, (El Capitan) is in the business of:
Operating Mining Property , and
WHEREAS, both parties desire to work together for the purpose of
Developing the COD Mining Claim
NOW THEREFORE,, for good and valuable consideration, receipt of which is
hereby acknowledged, and the mutual promises and benefits to be derived by the
parties, they do hereby agree to the following terms and conditions:
ARTICLE I
FORMATION
SECTION 1.1 Formation and Name.
1.1.1 FORMATION. The Joint Venturers hereby confirm that they have
formed a Joint Venture for the purposes and scope set forth in this agreement.
1.1.2 NAME. The name of the Joint Venture is and shall continue to be
XxxXxx ("XxxXx"). The business and affairs of the Joint Venture shall be
conducted solely under that name and under no other unless modified in writing
by addendum to this agreement:
SECTION 1.2 PURPOSES and Scope of the Joint Venture.
The purpose of the Joint Venture is to:
Explore, operate and otherwise utilize the COD Mining Claim.
SECTION 1.3 PRINCIPAL Place of Business.
The principal place of business of the Joint Venture shall be Initially
located at:
0000 X. Xxxxxxx, #000, Xxx Xxxxx, XX 00000.
SECTION 1.4 TERM.
The term of the Joint Venture shall commence on the first above written
day, and shall continue, unless sooner terminated in accordance with other
provisions of this Agreement, until May 11, 2020.
SECTION 1.5 No Partition.
No Joint Venturer shall have the right and each Joint Venturer hereby
agrees not to withdraw from the Joint Venture nor to dissolve, terminate,
partition, or liquidate, or to petition a court for the dissolution,
termination, partition, or liquidation of the Joint Venture or its assets,
except as provided for in this Agreement, and no Joint Venturer at any time
shall have the right to petition or to take any action to subject the operation
of the Project or any part thereof or the Joint Venture assets or any part
thereof to the authority of any court of bankruptcy, insolvency, receivership,
or similar proceeding.
ARTICLE II
CAPITAL CONTRIBUTIONS, RESERVES, VOTING,
FINANCING, AND DISTRIBUTIONS
SECTION 2.1 Joint VENTURE Percentage Interest.
U.S. Canadian shall receive 80% of the interest in the mining claims designated
as the COD Mining Claim, currently owned by El Capitan and whose legal
description is attached as Exhibit A in exchange for 720,000 newly issued shares
of U.S. Canadian. The items in this paragraph are property of the parties and
not the joint venture and are not subject to termination or sale to satisfy
liabilities of the Joint Venture.
El Capitan shall operate the operations as they relate to the tailings and
settlement pond and contribute the equipment needed for such operations. U.S.
Canadian shall contribute to the operating capital for 90 days which shall not
exceed the wages for 3 or 4 workers, fuel and equipment repair and maintenance,
and necessary equipment for operation approved by J.V. Partners. The net profit
from the tailings and settlement pond operations shall be split 50-50 among the
parties.
SECTION 2.2 ADJUSTMENTS and Interest.
Unless otherwise approved by the Joint Venturers, no adjustment to the
Percentage Interest of any Joint Venturer shall be made except as otherwise
provided herein or as a result of a transfer of a Joint Venturer's Joint Venture
interest or a portion thereof.
SECTION 2.3 CAPITAL Accounts.
2.3.1 GENERAL. As used herein, the term Capital Account shall refer to the
capital account of each Joint Venturer reflecting the value of each Joint
Venturer's relative interest in the capital of the Joint Venture. A Capital
Account, as defined herein, shall be maintained for each Joint Venturer and
shall be subject to adjustment as provided in subsection 2.3.3.
2.3.2 INITIAL CAPITAL CONTRIBUTION AND INITIAL CAPITAL. Upon the execution of
this Agreement, the parties shall make contributions as stated in paragraph 2.1
of this Agreement.
SECTION 2.4 Allocations of Profits and Losses to Joint Venturers.
All profits shall be retailed by U. S, Canadian other than as disclosed
in 2.1.
SECTION 2.5 Time LIMIT for Approval
Where an issue arises needing a vote, such vote shall be given within
five (5) calendar days of a written request by the other party for a vote.
Should a response not be returned within the stated period, then the vote will
be considered in the affirmative.
ARTICLE III
MANAGEMENT
SECTION 3.1 JOINT Venture Manger.
U.S. Canadian is hereby appointed Manager or Venture Manager of the Joint
Venture and shall be responsible for the internal operation of the venture. Any
direct cost incurred shall be paid out of Joint Venture funds.
SECTION 3.2 Other BUSINESS Activities.
Nothing herein is to be construed as giving any party an interest in
other business of the parties except those construed specifically by this
Agreement or incorporated by an amendment hereto.
The parties mutually acknowledge that each is involved in additional
businesses and are not restricted to participating with each other except as
stated in the first right of refusal for additional projects.
ARTICLE IV
ACCOUNTING
SECTION 4.1 Books, RECORDS, and Fiscal Year.
4.1.1 GENERAL. The Joint Ventures books and records of account shall be
maintained in accordance with generally accepted accounting principles
consistently applied on the cash basis and shall be adequate to provide any
Joint Venturer with all financial information as may be needed by any Joint
Venturer or any Affiliate of any Joint Venturer for purposes of satisfying the
financial reporting obligations of any Joint Venturer or his or its respective
affiliate or affiliates. The fiscal year of the Joint Venture shall end on
December 31 of each year. The books and records shall be maintained at the Joint
Ventures' principal place of business.
SECTION 4.2 Other ACCOUNTING Decisions.
All accounting decisions and tax elections for the Joint Venture (other
than those specifically provided for in other Sections of this Agreement) shall
be made from time to time as required and approved by the Venture Manager.
ARTICLE V
SALE, TRANSFER, OR MORTGAGE
SECTION 5.1 GENERAL.
Except as expressly permitted herein, no Joint Venturer shall sell,
sign, transfer, mortgage, charge, or otherwise encumber, or permit any of the
foregoing, whether voluntarily or by operation of law (herein sometimes
collectively called a transfer), any part or all of his or its Joint Venture
interest without the prior written approval of the other Joint Venturers, and
any attempt to do so shall be void.
5.1.1 PERMITTED TRANSFERS
(a) Any Joint Venturer may transfer or assign his or its interest in the
Joint Venture to any corporation or general partnership that is controlled by
such Joint Venturer, or to any limited partnership in which the Joint Venturer
would be the general partner, and such transfers or assignments shall not be
subject to this SUBSECTION,, but the transferee thereof shall be subject to all
the terms and conditions of this Agreement, including without limitation this
subsection, and as a condition precedent to any such transfer, such transferee
shall enter into a written agreement agreeing to be bound by the terms hereof.
SECTION 5.2 CLOSINGS.
5.2.1 TERMINATION OF OBLIGATIONS. As of the effective date of any
transfer not prohibited hereunder by a Joint Venturer of its entire interest in
the Joint Venture, such Venturers' rights and obligations hereunder shall
terminate except as to items accrued as of such date and except as to any
indemnity obligations of such Joint Venturer attributable to acts or events
occurring prior to such date. Thereupon, except as limited by the preceding
sentence, this Agreement shall terminate as to the transferring Joint Venturer
but shall remain in effect as to the other Joint Venturers. In the event of a
transfer of its or his entire Joint Venture, interest by a Joint Venturer to
another Joint Venturer, the Joint Venturer to whom such interest is transferred
shall indemnify, defend, and hold harmless the Joint Venturer so transferring
its or his Joint Venturer interest from and against any and all claims, demands,
liabilities, expenses, actions, lawsuits, and other proceedings, judgments,
awards and costs (including reasonable attorneys fees) incurred in or arising
directly or indirectly, in whole or in part, out of operation of the business of
the Joint Venture, excluding only those matters listed above, if any, accruing
prior to the date of such transfer.
SECTION 5.3 WITHDRAWALS.
Each of the Joint Venturers does hereby covenant and agree that it will not
withdraw or retire from the Joint Venture, except as a result of a permitted
transfer of its entire interest in the Joint Venture pursuant to the terms of
this Agreement, and that it will carry out its duties and responsibilities
hereunder until the Joint Venture is terminated, liquidated, and dissolved.
ARTICLE VI
DEFAULT AND DISSOLUTION
SECTION 6.1 EVENTS of Default.
6.1.1 DEFINITIONS AND CURE PERIODS. The occurrence of any of the
following events shall constitute an event of default (Event of Default)
hereunder on the part of the Joint Venturer with respect to whom such event
occurs (Defaulter) if within thirty (30) days following written notice of such
default from the Joint Venture Manager the Defaulter fails to pay such monies,
or in the case of nonmonetary defaults, fails to commence substantial efforts to
cure such default or thereafter fails within a reasonable time to prosecute to
completion with diligence and continuity the curing of such default; provided,
however, that the occurrence of any Act of Insolvency (as hereafter defined in
subsection 6.1.2) shall constitute an Event of Default immediately upon such
occurrence without any requirement of notice or passage of time except as
specifically set forth in any such subparagraph.
(a) the violation by a Joint Venturer of any of the restrictions set
forth in Article V of this Agreement upon the right of a Joint Venturer to
transfer its Joint Venture interest;
(b) default in performance of or failure to comply with any other
agreements, obligations, or undertakings of a Joint Venturer herein contained.
SECTION 6.2 CAUSES of Dissolution.
The Joint Venture shall be dissolved only if a Dissolving Event shall
occur. A Dissolving Event shall occur when:
(a) An Event of Defaults has occurred as provided in Section 6.1 and the
nondefaulting Joint Venturers elect to dissolve the Joint Venture as provided
in Section 6.3 hereof;
(c) he Joint Venture, by its terms as set forth in this Agreement, is
terminated.
SECTION 6.3 ELECTION OF NONDEFAULTING JOINT VENTURER.
6.3.1 PURCHASE OF DEFAULTERS INTEREST. Upon .the occurrence of an Event
of Default by any Joint Venturer (Defaulter), the other Joint Venturers
(Nondefaulters) shall have the right to acquire all, but not less than all, of
the Joint Venture interest of the Defaulter for cash, except as provided in
subsection 6.3.2 hereof, at a price determined pursuant to the appraisal
procedure set forth in Article VII, subject to adjustment as otherwise herein
set forth. In furtherance of such right, a Nondefaulter (the Electing
Nondefaulter) may notify the Defaulter at any time following an Event of Default
of its election to institute the appraisal procedure set forth in Article VII.
Upon receipt of notice of determination of the fair market value of the
Defaulters Joint Venturer interest, the Electing Nondefaulter may notify the
Defaulter of its election to purchase the interest of the Defaulter.
6.3.3 DEFAULTERS RIGHT TO CURE. The right of a Defaulter to cure an
Event of Default shall expire upon a Joint Venturer giving to the Defaulter a
notice of election to purchase the Defaulters interest in the Joint Venture.
6.3.4 DISTRIBUTION UPON DISSOLUTION. The assets of the Joint Venture
shall be applied or distributed in liquidation upon the happening of a
Dissolving Event in the following order of priority:
(b) in payment of debts and obligations of the Joint Venture to any
Joint Venturer;
(c) to the Joint Venturers is the same manner and in the same priorities
and percentages as Net Proceeds are allocated and distributed to the Joint
Venturers as set forth herein.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1 Complete AGREEMENT; Amendment; Notice.
7.1.1 ENTIRE AGREEMENT. This Agreement embodies the entire understanding
of the parries, and any changes must be made is writing and signed by all
parties.
7.1.2 AMENDMENT. This instrument may be amended or modified only by an
instrument of equal formality signed by all of the respective parties hereto.
7.1.3 NOTICE. All notices under this Agreement shall be in writing and
shall be delivered by personal service, or by certified or registered mail,
postage prepaid, return receipt requested, to the Joint Venturers (and where
required, to the person required to be copied with the notice) at the addresses
herein or at such other address as the addressee may designate in writing, and
to the Joint Venture at its principal place of business as sot forth in Section
1.3 hereof, and shall be effective upon receipt (or refusal to accept).
The addresses for notices to the Joint Venturers are as follows:
U.S. Canadian Minerals, Inc.
0000 X. Xxxxxxx #000
Xxx Xxxxx, XX 00000
El Capitan Precious Metals, Inc.
0000 Xxxx Xxxxxxxx Xxx.
Xxxxxxxxx, Xx. 00000
SECTION 7.2 ATTORNEYS' Fees.
Should litigation be commenced between the parties hereto or their
representatives, or should any party institute any proceeding in a bankruptcy or
similar court which has jurisdiction over any other party hereto or any or all
of his or its property or as concerning any provision of this Agreement or the
rights and duties of any xxxxxx or entity in relation thereto, the party or
parties prevailing in such litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum as and for his or its or
their attorneys' fees and court costs in such litigation or in a separate action
brought for that purpose.
SECTION 7.3 VALIDITY.
In the event that any provision of this Agreement shall be held to be
invalid or unenforceable, the same shall not affect in any respect whatsoever
the validity or enforceability of the remainder of this Agreement.
SECTION 7.4 SURVIVAL of Rights.
Except as provided herein to the contrary, this Agreement shall be
binding upon and inure to the benefit of the parties signatory hereto, their
respective heirs, executors, legal representatives, and permitted successors and
assigns.
SECTION 7.5 GOVERNING Law.
This Agreement has been entered into in the state of Nevada, and all
questions with respect to this Agreement and the rights and liabilities of the
parties hereto shall be governed by the laws of Nevada, and the venue of any
action brought hereunder shall be in Xxxxx County, state of Nevada.
SECTION 7.6 WAIVER.
No consent or waiver, express or implied, by a Joint Venturer to or of
any breach or default by another Joint Venturer in the performance by such other
Joint Venturer of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other Joint Venturer hereunder. Failure on the part of a Joint Venturer to
complain of any act or failure to act of another Joint Venturer or to declare
another Joint Venturer in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Joint Venturer of its rights
hereunder. The giving of consent by a Joint Venturer in any one instance shall
not limit or waive the necessity to obtain such Joint Venturer's consent in any
future instance.
SECTION 7.7 REMEDIES IN EQUITY.
The rights and remedies of any of the Joint Venturers hereunder shall
not be mutually exclusive, i.e., the exercise of one or more of the provisions
hereof shall not preclude the exercise of any other provisions hereof. Each of
the Joint Venturers confirm that damages at law may be an inadequate remedy for
a breach or threatened breach of this Agreement and agree that, in the event of
a breach or threatened breach of any provision hereof, the respective rights and
obligations hereunder shall be enforceable by specific performance, injunction,
or other equitable remedy, but nothing herein contained is intended to, nor
shall it, limit or affect any rights at law or by statute or otherwise of any
party aggrieved as against the other for a breach or threatened breach of any
provision hereof, it being the intention by this Section to make clear the
agreement of the Joint Venturers that the respective rights and obligations of
the Joint Venturers hereunder shall be enforceable in equity as well as at law
or otherwise.
SECTION 7.8 INDEMNIFICATION.
Each Joint Venturer (Indemnifying Venturer) hereby agrees to indemnify
and hold the other Joint Venturers and the Joint Venture harmless from and
against any and all claims, demands, actions, and rights of action (including
attorneys fees and costs) that shall or may arise by virtue of anything done or
omitted to be done by the Indemnifying Venturer (through or by its agents,
employees, or other representatives) outside the scope of, or in breach of the
terms of, this Agreement; provided, however, that the other Joint Venturers
shall be notified promptly of the existence of any such claim, demand, action,
or cause of action and shall be given reasonable opportunity to participate in
the defense thereof. In the event that one Joint Venturer shall be held
severally liable for the debts of the joint venture he shall be awarded
contribution from the other Venturers so that each Joint Venturer shall only be
obligated to pay that portion of such liability as shall be proportion to such
Joint Venturers interest in the Joint Venture.
SECTION 7.9 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which shall constitute one
and the same Agreement.
SECTION 7.10 FURTHER ASSURANCES.
Each party hereto agrees to do all acts and things and to make, execute,
and deliver such written instruments as shall from time to time be reasonably
required to carry out the terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above set forth.
/s/ Xxxxxx Xxxxxxxx, President
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By: Xxxxxx Xxxxxxxx, President
U.S. Canadian Minerals, Inc.
/s/ Xxxxxxx X. Xxxxxxx
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By: Xxxxxxx X. Xxxxxxx, President
El Capitan Precious Metals, Inc.
EXHIBIT A
C.O.D. PROPERTY
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COUNTY RECORDER B.L.M.
A.M.C. NOS.
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CLAIM NAME BOOK PAGE
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XXXXX 841 806-907 175025
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XXX 841 808-809 175025
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XXXX 841 810-811 175015
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MARC 841 812-813 175030
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O.J.B. 841 814-815 175033
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GOLDEN MOON 841 816-817 175024
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RICO 841 834-835 175039
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NOON NO. 1 841 832-833 175032
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WHITE EAGLE 841 850-851 175044
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WHITE EAGLE #2 841 852-853 175045
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REUBE 841 848-849 175035
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UNIT 841 846-847 175043
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RENO 841 844-845 175034
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