EXHIBIT 10.26
JOINT VENTURE AGREEMENT
FOR THE RECOVERY OF DIAMONDS
THIS JOINT VENTURE AGREEMENT FOR THE RECOVERY OF DIAMONDS (the
"Agreement"), dated as of the 22 day of October 1998, by and between Imperial
Petroleum, Inc., a Nevada corporation ("Imperial") and The Natural Resource
Group, Inc., a Delaware corporation and Continental Resources party Ltd., a
South African corporation, (collectively referred herein as"NRG/Continental").
W I T N E S S E T H :
WHEREAS, the Board of Directors of Imperial and NRG/Continental deem it
advisable and in the best interests of each company to enter into this
Agreement; and
WHEREAS, NRG/Continental owns certain mining rights, claims and mining
licenses in the Republic of South Africa in connection with its agreements with
individual miners and others; and
WHEREAS, Imperial has an interest in pursuing diamond mining opportunities
with NRG/Continental in South Africa and can assist in the purchase, lease or a
combination thereof of mining equipment for the projects; and
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows.
1. Obligations of The Parties
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1.01 Obligations of NRG/Continental: NRG/Continental agrees to (a.)dedicate
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to the Joint Venture operation certain mining rights, claims and licenses under
its control in the Republic of South Africa as specified on Exhibit "A" attached
hereto and made a part hereof; (b.)make available its process technology,
including all drawings, flow charts, material balance calculations, chemical
formulas, tests, etc. or any other information useful or necessary to the Joint
Venture and any equipment or other materials currently in its possession in
South Africa which will aid in the recovery of diamonds from the diamondiferous
bearing gravels and ores to be processed by the Joint Venture. NRG/Continental
additionally agrees to assist in any modifications deemed appropriate in its
technology
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by the Joint Venture in tailoring the technology to the specific ores processed
by the Joint Venture; (c.) design, construct, manage and operate the facilities
planned by the Joint Venture in connection with the recovery of diamonds in
South Africa in its role as Joint Venture Manager; (d.) use its existing
agreements for the sale of diamonds recovered by the Joint Venture; and (e.)
disburse proceeds and pay invoices in connection with the Joint Venture
operations.
1.02 Obligations of Imperial: Imperial agrees to (a.) obtain a financial
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guarantee from an acceptable European insurance carrier to allow the Joint
Venture to obtain an equipment finance loan for mining equipment in an amount up
to $5.5 million; (b.) make available its process technology, including all
drawings, flow charts, material balance calculations, chemical formulas, tests,
etc. or any other information useful or necessary to the Joint Venture and any
equipment or other materials currently in its possession in South Africa which
will aid in the recovery of diamonds from the diamondiferous bearing gravels and
ores to be processed by the Joint Venture. Imperial additionally agrees to
assist in any modifications deemed appropriate in its technology by the Joint
Venture in tailoring the technology to the specific ores processed by the Joint
Venture; and (c.) provide technical assistance, where feasible to the Joint
Venture.
1.03 Obligations of Joint Venture Manager. NRG/Continental agrees to manage
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the Joint Venture on behalf of itself and Imperial in a good and workmanlike
manner and for the mutual benefit of the partners. NRG/Continental will, on
behalf of the Joint Venture, maintain the mining claims, mining rights and
licenses as required under the rules and regulations of South Africa and in
compliance with all local, state and federal laws and regulations.
NRG/Continental will file and maintain all permits, bonds, including reclamation
bonds, and insurance for the benefit of the Joint Venture in connection with the
development of the mining claims, mining rights and licenses, including but not
limited to, any mining plans as required by the regulatory agencies having
jurisdiction over the Joint Venture activities or operations. NRG/Continental
further agrees to use its best efforts on behalf of the Joint Venture to
develop, mine, treat, extract, process, sell, ship or otherwise develop the
properties listed on Exhibit "A" for the economic recovery of diamonds on behalf
of the Joint Venture partners.
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2. Representations and Warranties of NRG/Continental
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NRG/Continental represents and warrants to Imperial that the statements
contained in this Section 2 are correct and complete as of the date of this
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Agreement.
2.01 Authorization. NRG/Continental has full power and authority to execute
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and deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of
NRG/Continental, enforceable in accordance with its terms and conditions.
NRG/Continental need not give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government, governmental agency, or
other person in order to consummate the transactions contemplated by this
Agreement.
2.02 Noncontravention. Neither the execution and the delivery of this
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Agreement, nor the consummation of the transactions contemplated hereby, will
violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which NRG/Continental is subject or conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, security interest, or other arrangement to which NRG/Continental
is a party or by which it is bound or to which any of its mining claims, leases
or licenses are subject.
2.03 Ownership. NRG/Continental has validly existing and properly licensed
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diamond mining claims with full and proper right to mine, extract and sell the
diamonds recovered from the mining claims, leases and licenses listed on Exhibit
"A" attached hereto and made a part hereof.
2.04 Speculative Nature and Risk. NRG/Continental understands and
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acknowledges the speculative nature of and substantial risk of loss associated
with an investment in the Joint Venture. NRG/Continental further acknowledges
that there is no guarantee that the Joint Venture will economically mine,
recover or sell a sufficient volume of diamonds on acceptable terms to allow the
business of the Joint Venture to proceed as currently planned. In agreeing to
participate in the Joint Venture NRG/Continental acknowledges that it
constitutes an investment which is suitable and consistent with its financial
condition and that it is able to bear the risks of this investment for an
indefinite period of time,
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which may include the total loss of its investment. NRG/Continental further
represents that it has adequate means of providing for its current financial
needs and corporate contingencies and no need for liquidity in its investment in
the Joint Venture and that it has sufficient financial and business experience
to evaluate the merits and risks of this investment.
3. Representations and Warranties
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Concerning Imperial.
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Imperial represents and warrants to NRG/Continental that the statements
contained in this Section 3 are correct and complete as of the date of this
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Agreement.
3.01 Organization, Qualification and Corporate Power. Imperial is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. Imperial is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction in which the nature of its
business or the ownership or leasing of its properties requires such
qualification. Imperial has full corporate power and authority to carry on the
business in which it is engaged and to own and use the properties owned and used
by it.
3.02 Noncontravention. Neither the execution and the delivery of this
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Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which the Imperial is subject or any provision of its Certificate of
Incorporation or Bylaws of Imperial or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel or require any
notice under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, security interest or other arrangement to which Imperial is a
party or by which it is bound or to which any of its assets is subject or result
in the imposition of any security interest upon any of its assets. Imperial is
not required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government, governmental agency or
other person in order for Imperial to consummate the transactions contemplated
by this Agreement.
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3.03 Speculative Nature and Risk. Imperial understands and acknowledges the
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speculative nature of and substantial risk of loss associated with an investment
in the Joint Venture. Imperial further acknowledges that there is no guarantee
that the Joint Venture will economically mine, recover or sell a sufficient
volume of diamonds on acceptable terms to allow the business of the Joint
Venture to proceed as currently planned. In agreeing to participate in the
Joint Venture, Imperial acknowledges that it constitutes an investment which is
suitable and consistent with its financial condition and that it is able to bear
the risks of this investment for an indefinite period of time, which may include
the total loss of its investment. Imperial further represents that it has
adequate means of providing for its current financial needs and corporate
contingencies and no need for liquidity in its investment in the Joint Venture
and that it has sufficient financial and business experience to evaluate the
merits and risks of this investment.
4. Object of the Joint Venture
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4.01 Object. The purpose of the Joint Venture is to economically recover
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diamonds from diamondiferous bearing gravels and ores in South Africa. The
Joint Venture is being formed in connection with the organization by
NRG/Continental of individual miners and small mining companies in South Africa
under cooperative agreements to provide certain services for those individuals
and companies in exchange for certain services to be provided by those
individuals and companies on behalf of NRG/Continental. The Joint Venture
anticipates acquiring additional mining rights and claims in South Africa as the
cooperative agreements of NRG/Continental and the individual miners are expanded
and further anticipates acquiring marketing rights to third party diamonds.
5. Term of the Joint Venture
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5.01 Term. The term of the joint venture shall be 25 years.
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6. Ownership of the Joint Venture
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6.01 Ownership. NRG/Continental and Imperial shall own the Joint Venture,
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including all facilities constructed on behalf of the joint venture and any
distributions of cash or assets of the Joint Venture in equal amounts of 50%.
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6.02 Distributions to the Partners. The Joint Venture Manager agrees to
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disburse net proceeds from the Joint Venture on a monthly basis to the Partners.
Net proceeds are defined as that portion of monthly revenue which exceed monthly
expenses, including a reasonable charge by the Joint Venture Manager for its
overhead costs involved in Managing the business of the Joint Venture, such
overhead charges not to exceed $5,000 per month. NRG/Continental and Imperial
will execute a mutually acceptable Operating Agreement to govern disbursement of
funds and other accounting issues.
6.03 Capital Reinvestment Fund. NRG/Continental and Imperial agree to
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establish under a separate agreement a capital reinvestment fund from net
proceeds attributable to the Joint Venture operations up to 50% of the proceeds
that would otherwise be distributed to the partners. The purpose of the capital
reinvestment fund shall be to make additional capital contributions to the Joint
Venture to acquire additional mining rights, claims or licenses, additional
mining equipment, facilities or for infrastructure improvements to expand the
operations of the Joint Venture. The term of the capital reinvestment fund shall
be negotiated between the parties after considering the success of the Joint
Venture operations and the availability of additional opportunities for
expansion of the Joint Venture.
7. Termination of the Joint Venture
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7.01 Termination. The Joint Venture may be terminated by either party by
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giving 30 days written notice of its intent to terminate in the event of the
following: (a.) the failure of NRG/Continental to secure mining rights, claims
and licenses as provided in the attached Exhibit "A"; or (b.) the failure of the
Joint Venture to obtain a suitable equipment finance loan to provide mining
equipment in south Africa for use by the Joint Venture operations. The Joint
Venture may be terminated at any time prior to its expiration by mutual consent
and agreement of the parties hereto.
7.02 Effect of Termination. In the event of termination of the Joint Venture
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as a result of Section 7.01 (a.) or (b.) above, neither party shall have any
obligation or liability to the other arising out of the termination or its
actions or the failure of its actions. In the event the Joint Venture is
terminated by mutual consent, each party is entitled to an assignment of its
proportionate interest in the Joint Venture's assets, liabilities and
operations.
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8. General.
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8.01 Brokers and Finders. Each Party hereto represents that no broker,
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agent, finder or other party has been retained by either Party, and no brokerage
or finder's fees or agent's commissions or other like payment has been agreed to
be paid by him or it in connection with this Agreement or on account of the
transactions contemplated by this Agreement. Each Party agrees to indemnify and
hold harmless the other parties from and against any and every claim arising by
breach of the aforesaid representation and warranty and all costs and expenses,
legal or otherwise, which any such party may incur as the result of any such
claim.
8.02 Press Releases and Public Announcements. No Party shall issue any press
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release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Parties. Provided
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable efforts to advise the other Party prior to making the disclosure.
8.03 Governing Law. This Agreement and the legal relations between the
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parties shall be governed by and construed in accordance with the laws of the
State of Nevada.
8.04 Notices. Any notices or other communications required or permitted
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hereunder shall be sufficiently given if sent by registered mail or certified
mail, postage prepaid if addressed as follows:
If to Imperial:
Imperial Petroleum, Inc.
000 XX Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxx
President
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If to NRG/Continental:
The Natural Resources Group, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
President
8.05 No Assignment. This Agreement may not be assigned by operation of law
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or otherwise, without the express written consent of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
IMPERIAL Petroleum, Inc.
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx President
NRG/CONTINENTAL
The Natural Resources Group, Inc.
By: /s/ XXXXX XXXXX
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Xxxxx Xxxxx President
Continental Resources Party, Ltd.
By: /s/ XXXXXXX X. XXXXX XX.
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Appendix A
A-1 Continental Resources Party Limited
Membership Claims
A-2 Continental Resources Party Limited
Mining Claim, Longlands No. 350, Barkly West, SA
A-3 Vaalbos National Park Mining Claims
(To be included as acquired)
/s/ XXXXXXX X. XXXXXX 10/22/98
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IMPERIAL Petroleum, Inc.
/s/ XXXXXXX X. XXXXX XX. 10/22/98
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Continental Resources Pty Ltd
/s/ XXXXX XXXXX, XX. 10/22/98
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The Natural Resource Group, Inc.
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