EXHIBIT 10.2.3 JOINT ACTIVITY
AGREEMENT
City of Tomsk, Russia July 7, 2006
CIGMA METALS CORPORATION, a corporation, listed on the stock exchange in the USA
(hereunder CIGMA), represented by its President Xx. Xxxx Xxxxx, from one side,
and
SCIENCE-INDUSTRIAL CORPORATION <> LTD, registered in Russia
(hereunder GEOS), represented by its Director Xx. Xxxxxxx Anastasia Evgenievna,
acting pursuant to the Charter, on the other side,
hereinafter referred to as the Parties, agreed to enter into a new Agreement as
follows:
1. SUBJECT OF THE AGREEMENT
1.1. Subject to the terms and conditions of this Agreement, the Parties
shall combine their capital investment and shall pursue joint
activity without establishing a legal entity.
1.2. The joint activity shall be carried as a simple partnership in
accordance with Chapter 55 of the Part 2 of the Civil Code of the
Russian Civil Code and other Russian regulations, applicable to the
Joint Activity on the territory of Russian Federation.
1.3. The purpose of the Joint Activity shall be the completion by the
Parties of the geological exploration works on the Tugoyakovka license
area (further <>) to find and develop one or more gold
deposits.
1.4. For the accomplishment of such common purpose the Parties shall pursue
the following objectives:
1.4.1. Financing the exploration work on the Area from the funds to
be provided by CIGMA.
1.4.2. Establishing a new company in the Russian Federation.
1.4.3. Transfer of the license for the Tugoyakovka area from GEOS
to the new company.
1.4.4. CIGMA shall become one of the founders of the new company.
1.4.5. CIGMA shall invest the new company for further completion of
the geological exploration works on the Area.
2. CONTRIBUTIONS BY THE PARTIES
2.1. The contributions to the Joint Activity shall have a monetary
valuation based on a joint determination of the Parties. The
value of any contribution shall be agreed and confirmed by each of the
Parties.
2.2. Contributions by the Parties:
2.2.1. CIGMA's contribution shall be in cash funds in the amount
of US$126,440 (one hundred twenty six thousand four hundred forty) to
be provided over the year of 2005. This contribution shall be the
initial investment into the Joint activity of the Parties.
2.2.2. GEOS's contribution shall be the license for the
Tugoyakovka area (XXX No 00831BP, given by <> on December
1, 2004) and all geological information on this subsoil area, which is
owned by GEOS, as well as professional knowledge, skills and business
contracts. For the purposes of this Agreement such contribution by
GEOS shall be valued by the Parties at US$100,000 (one hundred
thousand).
2.3. The Parties agree unanimously that the distribution of shares in the
Joint Activity shall be as follows: GEOS - 20%, CIGMA - 80%.
2.4. After making the initial contribution CIGMA shall make additional
contributions. The sum of the additional contribution must be
established annually by the Council of Parties according to point 9 of
this Agreement in the form of the Budget for the next financial year
signed by the Parties.
2.5. The sum of the additional contribution of CIGMA for 2006 shall be
US$600,400 (sixty hundred thousand forty hundred).
2.6. After contributing by CIGMA the whole sum of the additional
contribution the share holding of the Parties into the Joint
activity shall remain without any change.
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3. OBLIGATIONS OF THE PARTIES AND MUTUAL WARRANTIES
3.1. GEOS on the terms, which are most favorable for the Joint Activity,
and subject to the requirements of the license agreement and
investment program, shall :
3.1.1. Provide drilling, field, office and laboratory work in
respect of the Area consistent with the requirements of
the license agreement and funding approved by the Parties in
Budgets.
3.1.2. Comply with the environmental and engineering requirements,
as well as applicable laws and statutory legal acts of
the Russian Federation and Tomsk Region.
3.1.3. Ensure timely payments to the appropriate authorities in
respect of all charges and taxes, payable under the
GEOS license.
3.1.4. Liaise with the local and regional authorities, companies,
organizations, land owners with the purpose of
obtaining all requisite information, approvals, permits and
land access rights for the Joint Activity operations.
3.1.5. Provide to CIGMA the geological and other information with
respect to the completed work.
3.2. CIGMA shall:
3.2.1. Finance the work according to this Agreement and the Budget
approved by the Parties. The financing shall be made by
advancing in the amount necessary for conducting of works on
the Area, once in two months for fulfilling by GEOS its
obligations on the license agreement.
3.2.2. Subject to approved changes in the Budget, provide
additional funding in case, stipulated herein, which
the Parties could not foresee on the date of the Agreement.
3.3. Each Party provides to the other Party the following warranties:
3.3.1. The Parties are legal entities, duly incorporated and
existing in accordance with the laws of the country of
their incorporation.
3.3.2. The person, executing this Agreement, has full powers to do
that, and, if executed, the Agreement constitutes valid
and binding obligation of each of the Parties from the
moment of its execution.
3.3.3. The Parties are not involved in any administrative, court or
other proceedings that may adversely affect the ability
of the each of the Parties to perform its obligations
hereunder or to impede the Joint Activity operations as
contemplated hereunder.
3.4. Each of the Parties shall:
3.4.1. Comply with and properly perform its obligations hereunder.
3.4.2. Not do or cause to do any acts that may result in full or
partial revision, revocation, non-issuance or refusal
to issue the license to the new company.
3.4.3. Conduct its business with the other Party in fair and honest
way.
4. CONDUCT OF COMMON BUSINESS OF THE PARTIES
4.1. The Parties hereby appoint GEOS as Manager responsible for the general
conduct of the Joint Activity.
4.2. Rights and obligations of the Manager:
4.2.1. Manager directs and controls the prospecting and exploration
geological work in accordance with the approved Budget.
4.2.2. Manager is obliged to maintain accounting and provide
separate records of operations on this Agreement.
4.2.3. Manager shall hire and discharge personnel, consultants and
contractors for the purpose of accomplishing the
objectives of the Joint Activity.
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4.2.4. Manager shall have to provide the Parties with the
information, regarding the Joint Activity, as required
by them.
4.2.5. Manager has a right to carryout any other activity to the
extent reasonably required for the performance of this
Agreement.
4.3. In conducting the common business the Manager shall be entitled to the
reimbursement of the expenses incurred by it for such purposes.
4.4. For payments with respect to the operations under the Agreement the
Parties shall use GEOS' hard currency and current bank accounts.
5. ESTABLISHMENT OF NEW - MPANY
5.1. The joint activity is not the final structure for conducting and
financing of geological exploration work on the Area, and in the
future the Parties intend to restructure the Joint Activity by setting
up a new legal entity.
5.2. If the conditions of financing by CIGMA according to this Agreement
and Budget for 2006 shall be fulfilled and when the sum of the
initial and additional contributions by CIGMA into the Joint activity
shall consist of US$700,000 (seven hundred thousand), GEOS shall
within reasonable time incorporate in accordance with the Russian law
a subsidiary legal person (limited liability company) with a minimum
required charter capital and register the same with the Tomsk Region
tax authorities.
5.3. Following the formation and incorporation of the new company GEOS
shall submit the application for the transfer of the Area license
to such company.
5.4. GEOS shall control such company, which shall assume the obligations
under such license.
5.5. The Parties shall transfer to new company all of its rights for and
interests in the existing license, all of the geological
information relating to the exploration work and associated with this
Area.
5.6. If by any reasons the license shall not be transferred to the new
company during 2006-2007, the Parties shall continue their joint
activity on providing the geological exploration works at the Area
with taking into account the arrangements made in this Agreement, if
another agreements shall be not made by the Parties.
6. NEW COMPANY FINANCING AND CHARTER CAPITAL DISTRIBUTION PLAN
6.1. After creating the new company and transfer of the license for the
Area to it, GEOS shall admit CIGMA as a founder of this new
company by selling a portion of its share in the Charter Capital of
this new company in amount of 80% (eighty per cent).
6.2. The value of sales of the above-mentioned share shall be established
by the Parties in the sum of US$100,000 (one hundred thousand).
The payment can by made by CIGMA either at a time or in parts. After
CIGMA shall complete the payment of US$100,000, GEOS shall be
obligated to make changes in the foundation agreements of the new
company, connected with redistribution of the Charter Capital and
joining of a new partner and to register them in the established
order.
6.3. Subject to the Parties' performance under points 6.1 and 6.2, -IGMA
commits to finance the new joint venture for providing geological
exploration works at the Area till the end of the term of license in
the sum not less than US$3,000,000.
6.4. The sum of financing of geological exploration works for 2007 shall be
established by the Parties in amount of US$1,500,000.
6.5. If the financing in the mentioned volume shall be not provided in full
during 2007 and it shall be between US$800,000 to US$1,499,000,
-IGMA shall transfer to GEOS 10 % of its ownership interests in the
new company, so that the distribution of ownership interests be as
follows:
GEOS - 30% (thirty per cent) of the Charter Capital of the new
venture;
CIGMA - 70 % (seventy per cent) of the Charter Capital of the new
venture.
6.6. If the financing provided by CIGMA during 2007 shall be between
US$350,000 to US$799,000, CIGMA shall transfer to GEOS 20% of its
ownership interests in the new company, so that the distribution of
the ownership interests be as follows:
GEOS - 40% (forty per cent) of the Charter Capital of the new
venture;
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CIGMA -60% (sixty per cent) of the Charter Capital of the new
venture.
6.7. If the financing provided by CIGMA during 2007 is between US$200,000
to US$350,000, -IG shall transfer to GEOS 31% of its ownership
interests in the new company, so that the distribution of ownership
interests be as follows:
GEOS - 51% (fifty one per cent) of the Charter Capital of the new
venture;
CIGMA - 49 % (forty nine per cent) of the Charter Capital of the
new venture.
6.8. If the financing of works provided by CIGMA shall be fully fulfilled
during 2007, the Parties shall jointly develop the subsequent
scheme for fulfilling the works on the Area and making contributions
into the new company with taking into account point 6.3. The share of
GEOS in the Charter Capital of the new company shall be not less than
20%.
6.9. In the event financing provided by CIGMA is irregular or insufficient,
resulting in delay in completion of the work, required to be
completed under the license agreement, the work program and/or
approved annual Budget, the Parties shall mutually agree on the
further financing scheme for the project, including by way of
attracting exterior investments and/or a third party for such
purposes.
6.10. If the third party financing is approved under point 6.9, such third
equity participation could be considered through reduction of
CIGMA's ownership interests.
6.11. If no financing is provided by CIGMA during 2007 or it shall be less
than US$200,000, -IG shall assign to GEOS 100 % equity interest
in the new venture and withdraw from it as a member. In that case
CIGMA shall have no right for compensation of earlier transferred to
the new venture monetary funds.
7. FORCE MAJEUR
7.1. Neither of the Parties shall be liable before the other Party for not
fulfilling or for a delay in fulfilling any obligation as
provided in the present Agreement if the said non-fulfillment or delay
is caused by a force-majeur situation. The Parties to the Agreement
recognize the following as force-majeur events without limitations:
flood, fire, earthquake, hurricane, explosion, epidemic or other
similar occurrence, as well as revolts, political disturbances,
uprisings or military action between or within countries in which the
present Agreement is to be fulfilled.
7.2. Neither of the Parties shall be liable before the other Party for not
fulfilling or for a delay in fulfilling any obligation as
provided in the present Agreement if the said non-fulfillment or delay
is caused by the action (or inaction) of government authorities, by
the acceptance of legal acts by government authorities that make the
fulfillment of the present Agreement impossible, or by any other
reason that is beyond the reasonable control of the Party in the said
situation. However, the non-fulfillment or a delay in fulfilling its
obligations by the Parties if the said non-fulfillment or delay is
partially or completely caused or created by the Parties themselves.
7.3. The Party affected by a force-majeur event shall inform the other
Party by any means possible of the beginning and end of the said
events and of the conditions interfering with the timely performance
of its obligations as provided in the present Agreement. The Party
that is not able to fulfill its obligations as a result of such events
must make all efforts to resume the performance of its obligations in
the shortest time possible.
8. TERMINATION OF THE AGREEMENT
8.1. The present Agreement and the Joint activity governed thereby shall
act from the moment of its signing till the end of the term of
acting of the license on the Area, if another term shall not be
established by an agreement of the Parties.
8.2. The Agreement can be terminated ahead of time only by the mutual
agreement of the Parties or in the case foreseen in point 8.3 of
the present Agreement.
8.3. The Agreement shall be terminated in the case of non-fulfillment by
CIGMA its obligations on paying up of a contribution according to
point 2.5 of the present Agreement without any additional agreement,
if another agreement shall not be established by the Parties.
8.4. If the present Agreement is terminated, the Parties must follow the
guidelines below:
8.4.1. The License not transferred to the new company remain the
property of that Party, to which the same was issued.
8.4.2. Any monetary funds, contributed by CIGMA as payments, shall
not be reimbursable.
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8.4.3 Any geological information obtained through the use of CIGMA
provided funding shall be the joint property of CIGMA
and GEOS. The intellectual property which is containing in
this geological information belongs to the owner of the
license.
9. BOARD OF THE PARTIES
9.1. All the decisions of fundamental importance, related to conduct of the
Joint Activity, shall be taken jointly by Parties.
9.2. The Board meetings shall be held in December to approve the Annual
Budget and in April to approve the scope of planned field work,
as well as on as-needed basis. The Parties may meet or conduct the
meeting of the Board of Parties via telephone, E-mail or any other
connection available. The Board shall be deemed to have a quorum only
if both representatives of the Parties are present.
9.3. The following matters shall, without limitation, constitute the
exclusive authority of Board of the Parties:
a) principal directions, goals and objectives of the Joint
Activity;
b) approval of the Joint Activity Budgets;
c) provision and valuation of the contributions to and
distribution of interests in the Joint Activity;
d) approval of the Joint Activity structure;
e) other matters relating to the conduct of the Joint Activity.
9.4. Decisions will be taken by voting of the Parties on the Board of
Parties. Each Party will have one vote per each percent of the
ownership interest. Decision on approval or disapproval of issues,
referable by Board of Parties, will be taken by simple majority from
the general number of votes belonging to all the Parties present at
the corresponding Board.
9.5. Decision on the matters, enumerated in items a) through d) of this
point 9.3. shall be approved by the Parties unanimously.
10. MISCELLANEOUS
10.1. If any provision of this Agreement is held invalid or illegal in any
respect, this shall in no way affect the validity and legality of
the remaining provisions.
10.2. The applicable law shall be the law of the Russian Federation.
10.3. All the disputes and disagreements which can appear between the
Parties on the questions of interpretation and fulfillment of the
present Agreement, the Parties shall try to solve by the way of
negotiations. Any dispute, disagreement or complaint which cannot be
solved by peaceful way, must be solved in the court of justice of the
region where the Area is situated - in the Arbitration tribunal of
Tomsk Region.
10.4. Parties may not sell, transfer, mortgage or encumber their rights
under the present Agreement or their interest in the jointly
owned property without prior written consent of the other Party. The
remaining Party shall have right of first refusal with respect to the
transfer of ownership interest that shall be on the terms not less
favorable than those of the third party offer.
10.5. The commission fees of banks must be taken into account in
transferring by CIGMA necessary sums at the expense of GEOS and
included into the total sum of monetary funds to be transferred.
10.6. The exchange of the signed counterparts of the agreement can be by
facsimile or e-mail. The Agreement delivered to the other party
via fax or e-mail has the legal force of the original if it is signed
by duly authorized representatives of the Parties and acts before the
Parties shall exchange the originals of the signed documents.
10.7. All correspondence and negotiations relating to this Agreement or
Joint Activity shall be in Russian and English by way of
telephone, e-mail or other available means of communication.
10.8. Any changes and additions to this Agreement shall be valid only if
made in writing and signed by duly authorized representatives of
the Parties.
10.9. The signing of the present Agreement by the Parties means the stoppage
of action of the Agreement on joint activity signed by the
Parties on June 17, 2005.
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10.10. This agreement is executed in 4 counterparts, each having juridical
force:
- 2 counterparts in Russian;
- 2 counterparts in English.
In case of occurrence of disagreements in occasion of interpretation between
agreements in Russian and English languages, advantage will have the agreement
in Russian.
11. ADDRESSES AND SIGNATURES OF THE PARTIES:
SCIENCE-INDUSTRIAL CORPORATION <> LTD.
Legal address: Russia, 649000 Republic of Altay, Xxxxx-Xxxxxxx, 00
Xxxxxx-Xxxxxxx xxx.
Bank Details: XX XXXXXX XXXXX BANK, NEW YORK
New York, USA SWIFT CODE: XXXXXX00
account No 400 921 413 f/o GAZPROMBANK, SWIFT CODE: XXXXXXXX
in favor of TOMSK BRANCH, SWIFT CODE: XXXXXXXX000
account 40702840900007002427 in favor of Science-industrial Corporation
<>, Tomsk, Russia.
CIGMA METALS CORPORATION
Address: 1 Xxxxx place, Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx 0000.
Bank Details: Xxxxxx Bank International Corp. New York, N.Y., USA.
SWIFT: HATRUS33 for the account of: BMO - Bank of Montreal Vancouver Xxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxxxxxx, X.X. Xxxxxx X0X 0X0 for client's account: CIGMA
METALS CORPORATION account number: 0000-0000-000.
XXXX XXXXX XXXXXXXXX XXXXXXX
PRESIDENT DIRECTOR
CIGMA METALS CORPORATION SCIENCE-INDUSTRIAL CORPORATION <> LTD
/S/ "XXXX XXXXX" /S/ "XXXXXXXXX XXXXXXX"
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