EXHIBIT 10.02
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is made and entered into effective
as of the 1st day of March, 1997 by and between Xxxxxxx Gold Group, Inc., a
Delaware corporation ("Xxxxxxx"), and Desert Minerals, Inc., a Delaware
corporation ("DMI").
RECITALS:
WHEREAS, Xxxxxxx controls certain tracts of land located in the Amargosa
Valley in the upper Mohave Desert in California (the "Tracts"); and
WHEREAS, the sands located on the Tracts are believed to contain precious
minerals, and Xxxxxxx is interesting in confirming whether or not such sands
contain precious minerals and if so, whether or not such precious minerals can
be extracted from such sands; and
WHEREAS, DMI has rights to a certain proprietary, low-toxicity microfine
precious metals extraction technology (the "Technology") and a "pilot" plant
capable of utilizing the Technology (the "Pilot Plant"), and the Technology and
the Pilot Plant are believed to be capable of separating any precious minerals
contained in the sands mined from the Tracts from such sands; and
WHEREAS, both the Technology and the Pilot Plant are in a developmental
stage, and both the Technology and the Pilot Plant will require additional
financing and will involve additional costs and expenses; and
WHEREAS, if the Technology and the Pilot Plant are successfully developed,
DMI intends to construct a much larger plant for commercially exploiting the
Technology (the "Definitive Plant"); and
WHEREAS, Xxxxxxx desires to engage DMI to utilize the Technology and the
Pilot Plant in an effort to confirm whether or not precious minerals contained
in the sands located on the Tracts can be separated from such sands, and Xxxxxxx
desires to engage DMI to utilize the Technology and the Definitive Plant to
commercially exploit the precious minerals contained in the sands located on the
Tracts, if precious minerals are confirmed to be contained in the sands located
on the Tracts, the Technology and the Pilot Plant are successfully developed and
are capable of extracting precious metals from such sands, and the Definitive
Plant is constructed; and
WHEREAS, Xxxxxxx is willing to provide a portion of the additional financing
and to bear a portion of the costs and expenses in connection with the
development of the Technology and the Pilot Plant; and
WHEREAS, DMI is willing to be engaged by Xxxxxxx to utilize the Technology
and the Pilot Plant in an effort to confirm whether or not any precious mineral
contained in the sands located on the Tracts can be extracted from such sands,
and DMI is willing to be engaged by Xxxxxxx to utilize the Technology and the
Definitive Plant to commercially exploit the precious minerals contained in the
sands located on the Tracts, if Xxxxxxx so desires and once the Technology and
the Pilot Plant are successfully developed and are proven capable of extracting
precious metals from such sands, and the Definitive Plant is constructed; and
WHEREAS, Xxxxxxx and DMI are willing to undertake all of the foregoing upon
the terms, provisions and conditions set forth hereinafter;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
AGREEMENTS:
l. Engagement. Subject to the terms, provisions and conditions hereinafter
stated, Xxxxxxx hereby engages DMI to utilize the Technology and the Pilot Plant
in an effort to confirm whether or not any precious mineral contained in the
sands located on the Tracts can be extracted from such sands, and DMI hereby
accepts such engagement. The preceding engagement shall be subject to the
following terms and conditions, in addition to all other terms, provisions and
conditions set forth herein:
(a) In DMI's efforts to confirm whether or not any precious
mineral contained in the sands located on the Tracts can be
extracted from such sands, DMI shall be obligated to process
such sand at the Pilot Plant but only in such quantities as
are reasonable in view of the capacity of the Pilot Plant and
DMI's obligations to its other customers and other persons
with whom it has contracted.
(b) Upon receipt at the Pilot Plant from Xxxxxxx of a quantity of
sand complying with the restriction set forth above, DMI shall
proceed as promptly as is reasonably possible to process such
sand using the Technology to confirm whether or not any
precious mineral contained in the sands located on the Tracts
can be extracted from such sands. In this connection, as soon
as is reasonably possible after such sand is received at the
Pilot Plant, DMI shall inform Xxxxxxx as to date by which the
related processing is expected to be completed. If at any
time DMI realizes that it will not be able to complete the
processing by the date previously indicated to Xxxxxxx, DMI
shall immediately notify Xxxxxxx, and DMI and Xxxxxxx shall
reasonably discuss the possibility of extending the date for
completion if legitimate reasons for the delay exist.
(c) As promptly as is reasonably possible after the completion of
the processing of any sand pursuant to this Agreement, DMI
shall deliver its report as to whether or not any precious
mineral contained in the sands located on the Tracts can be
extracted from such sands. Such report shall be in such form
and containing such information as Xxxxxxx shall reasonably
request. Xxxxxxx shall have the right for 10 days to review
the report and communicate to DMI its tentative comments on
any matter in which it regards the report or the processing to
be deficient in its reasonable discretion. DMI and Xxxxxxx
shall then reasonably cooperate with each other in an effort
to cure any such deficiencies and to modify the report or the
processing. Notwithstanding the preceding, DMI shall endeavor
to cure any matter in which Xxxxxxx believes the initial
report or processing to be deficient within a reasonable
period of time after Xxxxxxx has communicated to DMI such
deficiencies. Once DMI believes that the deficiencies have
been cure, it shall notify Xxxxxxx to such effect, and Xxxxxxx
shall have the right to review the modified report and
processing. If the modified report or processing is still
deficient to Xxxxxxx in its reasonable discretion, Xxxxxxx
shall have the right to notify DMI as to the remaining
deficiencies and to permit DMI the opportunity to cure such
deficiencies to the reasonable satisfaction of Xxxxxxx within
a reasonable period of time. This procedure of notice, review,
report of deficiencies and attempt to cure shall be followed
until an acceptable report or processing or both are
finalized. If either DMI or Xxxxxxx believes that they will
be unable to agree upon the final report and processing, then
either DMI or Xxxxxxx shall be entitled to submit the issue to
arbitration in accordance with Section 18 hereof.
2. Non-Exclusivity. Xxxxxxx hereby recognizes that during the term of this
Agreement, DMI will be engaged by persons other than Xxxxxxx in much the same
capacity in which Xxxxxxx is engaging DMI hereunder. Furthermore, Xxxxxxx hereby
consents to DMI's engagement by all such other persons, and Xxxxxxx hereby
recognizes that DMI's engagement hereunder is not exclusive.
3 Standard of Performance. In providing services pursuant to this Agreement,
DMI shall use reasonable and its best efforts, shall render such services in a
competent manner of the highest caliber, and cooperate with Xxxxxxx and to take
all suggestions of Xxxxxxx under serious considerations. However, Xxxxxxx hereby
acknowledges that the Technology and the Pilot Plant are new and unproven.
Accordingly, Xxxxxxx hereby acknowledges that DMI is not making any
representation, warranty or guarantee as to the results of the Technology and
the Pilot Plant or any other matter relating to this Agreement.
4. Payment for Services. In consideration of the services to be provided by
DMI to Xxxxxxx hereunder, Xxxxxxx agrees to pay to DMI a fee equal to the sum of
(a) all direct costs incurred by DMI during the course of processing Xxxxxxx'x
sands (without any allocation for any overhead amounts), plus (b) 10% of the
amount of (a) immediately preceding. All fees that become due to DMI pursuant to
this Agreement for any services rendered by DMI shall be due and payable to DMI
within 30 days after the final report of the related services is approved and
accepted by Xxxxxxx pursuant to the above, such approval and acceptance being
deemed given and made for purposes of this Section 4 only on the 10th day after
the initial report of the related services is delivered unless Xxxxxxx has
communicated to DMI its deficiency comments on any tentative results prior to
such 10th day, in which case only actual approval and acceptance shall commence
the aforementioned 30-day period. Moreover, Xxxxxxx may, at DMI's discretion,
pay for the fee provided for by this Section 4 through the payment of costs,
expenses or capital expenditures incurred by DMI, and if Xxxxxxx pays any fee
through this method, the fee owed by Xxxxxxx shall be credited with the amount
of the DMI costs, expenses or capital expenditures paid by Xxxxxxx.
5. Term. The term of this Agreement shall begin on the effective date hereof
and shall continue for two years thereafter unless this Agreement is terminated
earlier in accordance with the provisions of Section 6 below.
6. Termination Upon Certain Events.
(a) Notwithstanding anything else contained herein, Xxxxxxx may
terminate this Agreement and be relieved of any further
liability hereunder (except for obligations provided for in
Section 4(a) above concerning accrued but unpaid fees and the
obligations provided for in Section 7 below) at any time after
notice is given to DMI after and regarding the following
events:
(i) DMI's failure to provide the services required of it hereunder
up to the standards set forth in Section 3 hereof, provided,
however, that DMI has failed to cure such failure within 30
days after the notice required by this Section 6(a) has been
given; or
(ii) DMI's other material breach of this Agreement, provided,
however, that DMI has failed to cure such breach within 30
days after the notice required by this Section 6(a) has been
given.
(b) Notwithstanding anything else contained herein, DMI may
terminate this Agreement and be relieved of any further
liability hereunder (except obligations provided for in
Sections 7 and 8 below) at any time after notice is given to
Xxxxxxx after and regarding the following events:
(i) Xxxxxxx'x failure to pay amounts that become due under Section
4(a), provided, however, that Xxxxxxx has failed to cure such
failure within 30 days after the notice required by this
Section 6(b) has been given; or
(ii) Xxxxxxx'x other material breach of this Agreement, provided,
however, that Xxxxxxx has failed to cure such breach within 30
days after the notice required by this Section 6(b) has been
given.
(c) Notwithstanding anything else contained herein, either party
may immediately terminate this Agreement and be relieved of
any further liability hereunder (except for obligations
provided for in Section 4(a) above concerning accrued but
unpaid fees and the obligations provided for in Sections 7 and
8 below) at any time after notice is given to the other party
after the other party's dissolution, insolvency, filing of a
voluntary bankruptcy petition, filing against it an
involuntary bankruptcy petition, rendering of a material
judgment against it, assignment for the benefit of creditors,
or admission in writing of its inability to pay its debts as
they become due.
(d) This Agreement shall automatically terminate upon the
execution and delivery of an agreement pertaining to the
Definitive Plant by DMI and Xxxxxxx.
7. Confidentiality.
Each party hereto (the "Recipient" for purposes of this Section 7) hereby
recognizes and acknowledges that it will receive information from, or will
develop information on the behalf of, the other party hereto (the "Disclosing
Party" for purposes of this Section 7) pertaining to the Disclosing Party and
its business or its properties that is confidential and proprietary. All such
information is referred to hereinafter as the "Information". Each party as the
Recipient hereby agrees to maintain on a confidential basis all Information, and
each party as the Recipient hereby agrees that it will not, without the prior
express written consent of the other party as the Disclosing Party, use for its
or anyone else's benefit or disclose to any other person any Information, except
in connection with such Recipient's work on behalf of such Disclosing Party.
Each party as the Recipient hereby acknowledges that, as between the other party
as the Disclosing Party and such Recipient, such Disclosing Party has the
complete, sole and full right, title and interest in and to the Information, and
that such Recipient has no rights, expressed or implied, with respect to the
foregoing other than those expressly provided for to the contrary in a writing
signed by both such Disclosing Party and such Recipient. Each party as the
Recipient further agrees that it will, immediately upon the request of the other
party as the Disclosing Party, return to such Disclosing Party all written
Information and all writings regarding oral Information whether such writings
were authorized or not. Each party as the Recipient hereby agrees that the
confidentiality agreement provided for hereby shall last with respect to any
Information for ten years after such Information is disclosed by the other party
as the Disclosing Party to such Recipient or developed by such Recipient on
behalf of such Disclosing Party, as the case may be.
8. Property of Xxxxxxx. DMI acknowledges that the services to be provided by
it pursuant to this Agreement are on a "for hire" basis. Accordingly, DMI
acknowledges that all right, title, interest and ownership in and to all
tangible or intangible property created by DMI pursuant to this Agreement shall
vest in Xxxxxxx, and DMI hereby assigns and conveys to Xxxxxxx all right, title,
interest and ownership in and to all such tangible or intangible property. DMI
agrees to take such further action as Xxxxxxx may reasonably request with regard
to the perfection of its ownership in such tangible or intangible property. DMI
agrees that, upon the termination of DMI's engagement with Xxxxxxx, DMI shall
immediately surrender to Xxxxxxx all property, equipment, funds, lists, books,
records, and other materials of Xxxxxxx or any affiliate thereof in the
possession of or provided to DMI.
9. Definitive Plant. In the event that the Technology meets Xxxxxxx'x
expectations, Xxxxxxx and DMI each agree to negotiate in good faith the form,
terms, provisions and conditions of an agreement pertaining to the Definitive
Plant with a view to the execution and delivery of the same.
10. Law Governing. THIS AGREEMENT HAS BEEN ENTERED INTO IN THE STATE OF TEXAS
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS.
11. Notices. Any notice or request herein required or permitted to be given
to any party hereunder shall be given in writing and shall be personally
delivered or sent to such party by prepaid mail at the address set forth below
the signature of such party hereto or at such other address as such party may
designate by written communication to the other party to this Agreement. Each
notice given in accordance with this paragraph shall be deemed to have been
given, if personally delivered, on the date personally delivered, or, if mailed,
on the third day following the day on which it is deposited in the United States
mail, certified or registered mail, return receipt requested, with postage
prepaid.
12. Headings. The headings of the paragraphs of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.
13. Severability. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.
14. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, whether written or
oral, relating to the subject matter hereof.
15. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of each party hereto and its successors and assigns, but neither
this Agreement nor any rights hereunder may be assigned by any party hereto
without the consent in writing of the other party.
16. Remedies. No remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies by any party hereto shall
not constitute a waiver of the right to pursue other available remedies.
17. Independent Contractor. DMI and Xxxxxxx are independent contracting
parties, and nothing in this Agreement shall make either party the agent or
legal representative of the other for any purpose whatsoever, nor does it grant
either party any authority to assume or to create any obligations on behalf of
or in the name of the other.
18. Arbitration. All disputes arising out of this Agreement shall be
submitted by either party hereto to arbitration in Houston, Texas pursuant to
the rules of the American Arbitration Association, Commercial Division, as such
party's sole remedy in this regard.
IN WITNESS WHEREOF, the undersigned have set their hands hereunto as of the
first date written above.
"XXXXXXX""
XXXXXXX GOLD GROUP, INC.
/s/ Xxxx X. Xxxxxx
BY:_________________________________
Xxxx X. Xxxxxx
NAME:_______________________________
Vice President
TITLE:______________________________
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
ADDRESS:____________________________
"DMI"
DESERT MINERALS, INC.
/s/ Xxxx X. Xxxxxx
BY:_________________________________
Xxxx X. Xxxxxx
NAME:_______________________________
Vice President
TITLE:______________________________
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
ADDRESS:____________________________
