Exhibit 10.17
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Technology Option Agreement dated
December 18, 2001 between Newmont Technologies
Limited and U.S. Gold Corporation.
TECHNOLOGY OPTION AGREEMENT
Preamble
This is an agreement (the Agreement) between U.S. Gold Corporation, a Colorado
corporation having a business address at 0000 Xxxxxxx Xx., Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000-0000 (USGC) and Newmont Technologies Limited, a Nevada
Corporation having a business address at 00000 X. Xxx Xxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxx 0000000 (NTL). This Agreement is to be effective as of December 18,
2001 (Effective Date).
Recitals
A. NTL and/or its parent Newmont Mining Corporation (NMC) has patents and
know-how concerning certain inert gas flotation technology (the N2TEC Flotation
Technology) that has application to flotation of certain refractory sulfide gold
ores, and NTL is interested in licensing others to operate within the scope of
these patent rights and/or to use the know-how.
B. USGC has at its Tonkin Springs Mine in Eureka County, Nevada refractory
sulfide gold ores that appear to be amenable to processing with the N2TEC
Flotation Technology and USGC is interested in possible implementation and use
of the N2TEC Flotation Technology at an appropriate time during development at
the Tonkin Springs Mine, but is not interested in entering into a license
agreement with NTL at this time.
C. NTL is willing to provide to USGC and USGC is willing to accept certain
option rights according to the terms and conditions set forth below concerning
possible future licensing and use of the N2TEC Flotation Technology for
processing refractory sulfide gold ore at the Tonkin Springs Mine.
Agreement
1. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the meanings set forth below:
Option Period means a period of time beginning with the Effective Date and
expiring May 31, 2002.
Negotiation Period means a period of time beginning with Exercise Of Option and
expiring June 30, 2002.
Exercise Of Option has the meaning as provided in section 2.2.
Option Fee means the sum of $US10,000 (ten thousand United States dollars).
2. OPTION/EXERCISE OF OPTION/OPTION FEE.
2.1 NTL hereby grants to USGC an option to have NTL enter into good faith
negotiations between NTL and USGC during the Negotiation Period to pursue
agreement concerning definitive terms of a license agreement (the License
Agreement) by which NTL would nonexclusively license NTL's and NMC's U.S.
patents and know-how concerning the N2TEC Flotation Technology to USGC for use
to process refractory sulfide gold ore at the Tonkin Springs Mine (NTL's and
NMC's existing U.S. patents concerning the N2TEC Flotation Technology are listed
in Exhibit A attached hereto). The License Agreement would include provisions to
effect at least the following key concepts:
(a) NTL would grant to USGC a nonexclusive license to NTL's and NMC's U.S.
patents and know-how concerning the N2TEC Flotation Technology for use in
flotation processing of refractory sulfide gold ore from the Tonkin Springs
Mine.
(b) USCG would pay to NTL license fees including (i) an initial license fee
of $US50,000 (fifty thousand United States dollars), with USCG receiving a
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credit against such initial license fee for payment of the Option Fee and
(ii) ongoing production royalties, to be reported and paid quarterly, based
on two percent (2%) of precious metals paid from concentrates prepared
using the N2TEC technology, to be paid at NTL's option in- kind in
concentrate containing xxxxx xxxxxxxx metals that are calculated to net to
the paid quantity or in money based on net smelter returns or an equivalent
net return if subsequently processed by other than smelting, with the
ongoing production royalties being subject to an annual minimum of $10,000
per year starting with the second year of the License Agreement. Upon
expiration of the last-to-expire of NTL's and NMC's patents concerning the
N2TEC(r) Flotation Technology, ongoing production royalties would
thereafter be reduced by one-half. NTL would have a right to audit at least
annually pertinent records concerning the Tonkin Springs Mine to verify the
accuracy of ongoing production payments. USCG would be permitted to pay the
initial license fee in installments due as follows: (i) $US30,000 (thirty
thousand United States dollars) to be paid upon execution by USGC of the
License Agreement (with the credit for payment of the Option Fee being
applied against this installment), (ii) $US10,000 (ten thousand United
States dollars) to be paid no later than three months following execution
by USGC of the License Agreement and (iii) $US10,000 (ten thousand United
States dollars) to be paid no later than six months following execution by
USGC of the License Agreement.
(c) Within the first two (2) years of the License Agreement, USGC would
have an option to buy-out one-half or all of any further production
royalties (including further annual minimums) at a rate of $US500,000 (five
hundred thousand United States dollars) for buy-out of one-half (1% of
precious metals paid from concentrates) or $1,000,000 (one million United
States dollars) for buy-out of all (2% of precious metals paid from
concentrates) of any further production royalties.
(d) All improvements, enhancements, modifications and adaptations of any
portion of the N2TEC Flotation Technology discovered or developed during
the term of the License Agreement would be reported to and owned by NTL.
(e) USGC would maintain in confidence and not use for any purpose other
than exercise of its license rights all information and know-how concerning
the N2TEC Flotation Technology, including all improvements, enhancements,
modifications and adaptations.
(f) NTL would commit to provide a reasonable amount of technical
consultation during design, start-up and operation of a flotation operation
implementing the N2TEC Flotation Technology at the Tonkin Springs Mine for
at least the first two (2) years of the License Agreement. USGC would pay
for all technical consultation provided by NTL, except that during the
first two (2) years of the License Agreement, NTL would provide free of
charge up to five (5) man days per year of technical consultation.
(g) To the extent that NTL or NMC agrees to perform any additional test
work for USGC related to amenability of the N2TEC Flotation Technology for
processing refractory sulfide gold ore from the Tonkin Springs Mine, NTL or
NMC would be paid for performing the test work.
(h) NTL would make no representations or warranties (including any
representations or warranties with respect to the validity of any patents,
freedom to practice any technology or the quality or extent of any know-how
or technical consultation services), except for a representation that NTL
has the right to enter into the License Agreement. NTL would have no
obligation to enforce any patents. USGC would have no right to enforce any
of NTL's or NMC's patents.
(i) The License Agreement would have a term that lasts until the
last-to-expire of NTL's and NMC's U.S. patents concerning the N2TEC
Flotation Technology and so long thereafter as the N2TEC Flotation
Technology is used to process refractory sulfide gold ore from the Tonkin
Springs Mine, provided that USGC would be permitted to prematurely
terminate the License Agreement with at least three (3) months prior
written notice to NTL, in which case USGC would immediately cease all use
of N2TEC Flotation Technology.
(j) The License Agreement would be interpreted construed and governed in
accordance with the laws of the State of Colorado, without reference to
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conflict of laws principles, and all disputes arising from or relating to
the License Agreement would be within the exclusive jurisdiction of the
state and/or federal courts located within the State of Colorado.
2.2 Exercise Of Option requires that USGC provide to NTL during the Option
Period effective written notice that USGC desires to commence good faith
negotiations with NTL to pursue agreement between NTL and USGC concerning
definitive terms for the License Agreement. Such written notice shall be
effective only upon actual receipt by NTL.
2.3 Upon execution of this Agreement, USGC shall pay to NTL the Option Fee.
2.4 NTL represents that it has a good faith interest in nonexclusively licensing
USGC to use the N2TEC Flotation Technology to process refractory sulfide gold
ore from USGC's Tonkin Springs Mine and believes that good faith negotiations
between NTL and USGC will lead to a definitive agreement for such a license.
NTL's only obligation under this Agreement, however, shall be to in good faith
enter into and in good faith participate in and pursue the negotiations with
USGC during the Negotiation Period as provided in this Agreement. This Agreement
grants no rights to USGC to any patents, know-how or other rights of NTL or NMC
concerning the N2TEC Flotation Technology. USGC understands and acknowledges
that there is no assurance that final agreement will actually be reached on
definitive terms for the License Agreement and that USGC shall have no right to
use the N2TEC Flotation Technology unless definitive terms for the License
Agreement are finally agreed upon and the License Agreement containing such
definitive terms is finalized and duly executed on behalf of both NTL and USGC
prior to expiration of the Negotiation Period. Upon expiration of the
Negotiation Period, NTL shall have no further obligations under this Agreement.
3. MISCELLANEOUS.
3.1 USGC shall not assign or otherwise transfer this Agreement, or any portion
of this Agreement, without the prior written consent of NTL. NTL shall not
assign or otherwise transfer this Agreement, or any portion of this Agreement,
without the prior written consent of USGC; provided that NTL can without prior
consent of USGC to transfer this Agreement, or any rights or obligations of NTL
under this Agreement, to any affiliate(s) of NTL, including without limitation a
right by NTL to delegate to any affiliate(s) of NTL any obligation under this
Agreement or the License Agreement.
3.2 Time is of the essence of this Agreement. In particular, USGC understands
and acknowledges that NMC is currently in negotiations with another company
concerning a possible arrangement whereby NMC and/or NTL would license rights in
the N2TEC Flotation Technology to the other company and the other company would
then be the exclusive source for sublicensing the N2TEC Flotation Technology for
use in non-Newmont operations, and in the event that NTL and USGC do not agree
to definitive terms for the License Agreement and duly execute the License
Agreement during the Negotiation Period, it is possible that NTL would not
thereafter have an ability to license the N2TEC Flotation Technology to USGC for
use at the Tonkin Springs mine and NTL can provide no assurances to USGC
concerning the terms under which a sublicense to the N2TEC Flotation Technology
might then be available from the other company.
3.3 All notices and payments made pursuant to this Agreement shall be delivered
to the person/address as provided below, or to such other person/address as a
party may hereafter designate in writing to the other party:
If to NTL: K. Xxxx XxXxxx
Newmont Technical Facility
00000 X. Xxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
If to USGC: Xxxxxxx Xxxx
U.S. Gold Corporation
0000 Xxxxxxx Xx., Xxxxx 000
Xxxxxxxx, XX 00000-0000
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3.4 This Agreement constitutes the entire agreement and understanding of the
parties relating to licensing of rights to N2TEC Flotation Technology and this
Agreement supercedes all previous communications, proposals, representations and
agreements, whether oral or written, relating thereto, provided that a prior
Nondisclosure Agreement between Newmont Gold Company (now NMC) and Tonkin
Springs LLC (the Nondisclosure Agreement having been signed on behalf of Tonkin
Springs LLC on January 25, 2000 and on behalf of Newmont Gold Company on
February 1, 2000) shall be unaffected by this Agreement, and further provided
that USGC, as the sole owner of Tonkin Springs LLC, shall be bound by the terms
of that Nondisclosure Agreement, which Nondisclosure Agreement shall apply to
any information disclosed to or otherwise made available to USGC in furtherance
of this Agreement, and further provided that NTL shall be an intended
beneficiary under such Nondisclosure Agreement and shall have a full right and
authority to enforce any rights of NMC under such Nondisclosure Agreement.
3.5 This Agreement shall be interpreted construed and governed in accordance
with the laws of the State of Colorado, without reference to conflict of laws
principles. All disputes arising from or relating to this Agreement shall be
within the exclusive jurisdiction of the state and/or federal courts located
within the State of Colorado, and the parties hereby consent to such exclusive
jurisdiction and waive objections to venue therein.
3.6 This Agreement shall be modified only by a writing signed by both parties,
referring specifically to this Agreement and setting forth the specific
modifications hereto.
3.7 Any headings of the various paragraphs and sections of this Agreement have
been inserted for convenience only and shall not be deemed to be made a part of
this Agreement.
IN WITNESS WHEREOF, each party hereto acknowledges that the representative named
below has the authority to execute this Agreement on behalf of the respective
party to form a legally binding contract and has caused this Agreement to be
duly executed on its behalf.
Newmont Technologies Limited
/s/ Xxxxxxx Xxxxx Xxxx
Name: Xxxxxxx Xxxxx Xxxx
Title: Vice President
Date: December 18, 2001
U.S. Gold Corporation
/s/ Xxxxxxx X. Xxxx
By: Xxxxxxx X. Xxxx
Title: President
Date: December 18, 2001
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