ASSIGNMENT OF INTEREST IN JOINT VENTURE AGREEMENT
THIS AGREEMENT is entered into this 3rd day of March, 2005, by and
between Caldera Partners Limited Partnership, a Washington limited partnership
("Caldera"), and LKA International, Inc., a Delaware corporation ("LKA").
WHEREAS, in December, 1982, the Company's wholly-owned subsidiary, LKA
International, Inc., a Nevada corporation ("LKA Nevada"), entered into a Joint
Venture Agreement with Lake City Mines, Inc., a Colorado corporation, by which
LKA Nevada acquired a 51% interest in the proceeds and benefits derived from
the Ute-Ule and Golden Wonder mining properties located in Lake City, Colorado
(collectively, the "Properties");
WHEREAS, immediately after the execution of the Joint Venture Agreement,
LKA Nevada assigned to Caldera 90% of its interest in the Properties
thereunder, such that Caldera currently owns a 45.9% interest in the proceeds
and benefits derived from the Properties;
WHEREAS, on December 15, 1993, LKA Nevada acquired all of Lake City
Mines' interests in the Properties pursuant to a Sheriff's Deed, with the
result that LKA Nevada currently owns a 54.1% interest in the Properties and
Caldera currently owns a 45.9% interest therein;
WHEREAS, the holders of approximately 67.4% of the partnership interests
in Caldera have voted in favor of Caldera's assignment of all of its interest
in the Properties to LKA in consideration of LKA's issuance of 6,434,042
"unregistered" and "restricted" shares of its common stock to Caldera ; and
WHEREAS, such vote is sufficient under its Limited Partnership Agreement
to enable Caldera to proceed with the proposed assignment;
NOW, THEREFORE, the parties hereby agree as follows:
1. Assignment of Interest in Golden Wonder Property. Caldera hereby
assigns all of its interest in the proceeds and benefits derived from the
Properties to LKA.
2. Issuance of LKA common stock. In consideration of the above
assignment, LKA hereby agrees to issue to Caldera 6,434,042 "unregistered" and
"restricted" shares of its common stock (the "Common Stock").
3. Representations and Warranties of Caldera. Caldera hereby
represents and warrants as follows:
A. It is a limited partnership duly organized and in good
standing in the State of Washington, has full power and authority to
execute and deliver this Agreement, without qualification, and has
obtained all approvals and consents that are required for it to
enter into this Agreement;
B. Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated
hereby will, directly or indirectly (with or without notice or lapse
of time):
(i) Breach any provision of any of its governing documents;
(ii) Breach or give any governmental body or other entity the right to
challenge the contemplated transactions or to exercise any remedy or
obtain any relief under any legal requirement or any order to which
Caldera or either of the Properties may be subject;
(iii) contravene, conflict with or result in a violation or breach of
any of the terms or requirements of, or give any governmental body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
governmental authorization that is held by Caldera or that otherwise
relates to the Properties;
(iv) Breach any provision of, or give any entity the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any
contract by which Caldera or either of the Properties is or may become
bound; or
(v) result in the imposition or creation of any encumbrance upon or with
respect to either of the Properties.
X. Xxxxxxx is not required to give any notice to or obtain any
consent from any entity in connection with the execution and
delivery of this Agreement or the consummation or performance of any
of the transactions contemplated hereby.
X. Xxxxxxx'x interest in the Properties is free and clear of any
encumbrances.
E. There is no pending or, to Caldera's knowledge, threatened
proceeding:
(i) by or against Caldera or that otherwise relates to or may affect the
Properties; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the
transactions contemplated hereby.
To the knowledge of Caldera, no event has occurred or circumstance exists
that is reasonably likely to give rise to or serve as a basis for the
commencement of any such proceeding.
X. Xxxxxxx has conducted its own investigation of the risks and
merits of an investment in LKA, and to the extent desired,
including, but not limited to a review of LKA's books and records,
financial and otherwise, its annual, quarterly and current reports
and any registration statements filed with the Securities and
Exchange Commission, and has had the opportunity to discuss this
documentation with the directors and executive officers of LKA and
to ask questions of these directors and executive officers, and that
to the extent requested, all such questions have been answered to
its satisfaction;
X. Xxxxxxx is not relying on any representation or warranty of LKA
whatsoever, except those representations and warranties contained in
this Agreement;
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H. By reason of the education, experience, business acumen or
other educational factors related to its principals, Caldera is a
"sophisticated investor" or an "accredited investor" as those terms
are known or defined under applicable United States securities laws,
rules and regulations, and/or is fully capable of evaluating the
risks and merits associated with the execution of this Agreement and
the acquisition of the Common Stock, without qualification;
X. Xxxxxxx is acquiring the Common Stock for its account only, and
not for the account of or in concert with any other person or
entity, and there are no arrangements, understandings or agreements,
written or oral, regarding the subsequent resale of any of the
Common Stock;
X. Xxxxxxx'x principals understand that Caldera must bear the
economic risk of ownership of any of the Common Stock for a long
period of time, the minimum of which will be one (1) year, as these
shares are "unregistered" shares and may not be sold unless any
subsequent offer or sale is registered with the United States
Securities and Exchange Commission or otherwise exempt from the
registration requirements of the Securities Act of 1933, as amended
(the "Act"), or other applicable laws, rules and regulations;
K. The Common Stock is being acquired for investment purposes and
not with a view toward further distribution;
X. Xxxxxxx'x principals understand that without approval of
counsel for LKA, all shares of Common Stock shall be represented by
one stock certificate only, which certificate shall be imprinted
with the following legend or a reasonable facsimile thereof on the
front and reverse sides thereof:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold or otherwise transferred unless compliance with the
registration provisions of such Act has been made or unless
availability of an exemption from such registration provisions has
been established, or unless sold pursuant to Rule 144 under the
Act.
X. Xxxxxxx agrees that LKA's stock transfer records shall reflect
that it has requested LKA not to effect any transfer of any stock
certificate representing any of the shares being acquired unless it
shall first have obtained an opinion of legal counsel to the effect
that the shares may be sold in accordance with applicable laws,
rules and regulations, and Caldera's principals understand that any
opinion must be from legal counsel satisfactory to LKA and,
regardless of any opinion, Caldera's principals understand that the
exemption covered by any opinion must in fact be applicable to the
shares;
X. Xxxxxxx'x principals fully understand that the Common Stock is
"risk capital," and Caldera is fully capable of bearing the economic
risks attendant to this investment, without qualification; and
X. Xxxxxxx will fully comply with all provisions of federal and
state securities laws, rules and regulations in the resale of any of
the Common Stock acquired hereunder, and it shall do no more than
place the Common Stock for sale in "broker's transactions" as that
term is defined in Rule 144 of the Securities and Exchange
Commission, meaning that it will not solicit or arrange for the
solicitation of orders to buy the Common Stock and that it will only
pay the usual and customary sales commission in connection with the
sale of any of the Common Stock.
4. Representations and Warranties of LKA. LKA hereby represents
and warrants that it is a corporation duly organized and in good standing in
the State of Delaware, has full power and authority to execute and deliver
this Agreement, without qualification, and has obtained all approvals and
consents that are required for it to enter into this Agreement.
5. Holding Period for Common Stock. In order to ensure compliance
with applicable U.S. securities laws, rules and regulations, Caldera agrees
that it will hold the Common Stock for at least one year and one day before
making any distribution thereof.
6. Entire Agreement. This Agreement supersedes any and all other
agreements, oral or written, between the parties with respect to the subject
matter hereof, and no other agreement, statement or promise relating to the
subject matter of this Agreement which is not contained or referred to herein
shall be valid or binding.
7. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
8. Severability. If, and to the extent that, any court of
competent jurisdiction holds any provision of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity of the
remainder of this Agreement.
LKA INTERNATIONAL, INC.
By /s/ Xxx X. Xxxxxxx
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Xxx X. Xxxxxxx, President
CALDERA PARTNERS LIMITED
PARTNERSHIP
By /s/ Xxx X. Xxxxxxx
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Xxx X. Xxxxxxx, General Partner
