EXHIBIT 10.6
CLARIFICATION AGREEMENT
THIS CLARIFICATION AGREEMENT (the "Agreement") is entered into
effective as of June 18, 1996, by and between Newgold, Inc., a Nevada
corporation ("Newgold") and A. Xxxxx Xxxxxxx ("Xxxxxxx"), an individual on the
one hand and Xxxxxx Xxxxxx ("Mackay"), an individual residing in the State of
California, and Gold Bug, a California general partnership ("Gold Bug") on the
other hand.
RECITALS
WHEREAS, as of August 1995, Xxxxxxx owned 100 shares of
Newgold and was the sole shareholder;
WHEREAS, during August 1995, Newgold was at risk of loosing its main
asset, the Relief Canyon Mine, located in Lovelock, Nevada ("Relief Canyon
Mine") unless it could receive an additional infusion of capital of
approximately $50,000;
WHEREAS, during August 1995, Mackay and Newgold entered into
negotiations for the infusion of such needed capital and the acquisition of all
rights and assets of the Washington Gulch Mine located in Montana ("Washington
Gulch Mine");
WHEREAS, as of August 1995, the parties agreed that the value of the
Washington Gulch Mine was approximately $385,000 and that the value of Newgold
was approximately $500,000;
WHEREAS, on August 31, 1995, Newgold granted Mackay a one-year option
to purchase 40% of Newgold and 40% of Riverfront Development, Inc., a California
corporation ("Riverfront"), for the aggregate consideration of a $50,000 down
payment and all right, title, and interest to the Washington Gulch Mine,
attached hereto as Exhibit "A" (the "Option");
WHEREAS, as of August 31, 1995, a 40% ownership of Newgold by Mackay
would equate to 56.143602333 shares of Common Stock of Newgold. If such changes
were issued, Newgold would have had approximately 156 shares outstanding;
WHEREAS, from August 31, 1995 through December 31, 1995, Mackay did
arrange for additional financing and provided a de minimous amount of consulting
services to Newgold;
WHEREAS, on January 1, 1996, Newgold, Mackay and Gold Bug agreed to
amend the Option to reflect the changes that occurred between August 31, 1995
and January 1, 1996, to convert the $50,000 Option payment into a promissory
note and to reflect Mackay's exercise of the Option to purchase 40% of Newgold;
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WHEREAS, on January 1, 1996, Newgold, Mackay and Gold Bug amended the
Option pursuant to the terms of the First Amendment to the Option to Purchase
Newgold, Inc. (attached as Exhibit "B") (the "Amendment") as follows:
a. The Option was exercised, with respect to
approximately a 35% interest in Newgold only, in
exchange for the contribution of all assets and
rights in the Washington Gulch Mine;
x. Xxxxxx would arrange for debt financing of up to
$350,000;
x. Xxxxxx would provide consulting services to
Newgold;
b. The $50,000 option payment would be converted to
debt to be repaid to Mackay upon the closing of
future financings; and
x. Xxxxxx would receive 3.8 million shares of Common
Stock of Newgold (56.143602333 shares prior to the
Stock Split referenced below);
WHEREAS, the Amendment failed to reference the conversion of the
$50,000 Option payment into debt owed to Mackay, and the parties hereto intend
to clarify that this was part of the agreement relating to the Amendment;
WHEREAS, the parties to the Amendment estimated that after a stock
split and future capitalization of Newgold, Newgold would have approximately
10,560,000 shares of Common Stock issued and outstanding and that the issuance
of 3,800,000 shares to Mackay would equal approximately 36% of the issued and
outstanding shares of Newgold, the amended position of Mackay;
WHEREAS, the parties recognize that Mackay performed a diminimous
amount of services in accordance with the terms and conditions of the Option and
the Amendment.
WHEREAS, the Company effected a 67,683.58-for-1 stock split of its
issued and outstanding Common Stock (the "Stock Split") as of June 15, 1996;
WHEREAS, the parties recognize that the 56.143602333 shares of Common
Stock held by Mackay upon exercise of the Option were uncertificated, but
Newgold recognizes that they were outstanding as of the date of the Amendment;
WHEREAS, after the Stock Split, Xxxxxxx owned approximately 6,768,358
shares of Common Stock of Newgold and Mackay owned approximately 3,800,000
shares of Common Stock of Newgold; and
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WHEREAS, certain issues relating to the background, interpretation and
satisfaction of the Option and the Amendment have occurred,and it is the purpose
of this Agreement to clarify and resolve any and all such issues.
NOW, THEREFORE, for valuable and adequate consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual promises
contained herein, the parties hereto agree as follows:
1. Clarification. The parties agree that the above recitals
fairly reflect the transactions of the parties, are hereby
incorporated by reference and shall be made a part of this
Agreement.
2. Standing of Parties. The parties hereby agree that, as of the date
of this Agreement, the transfer of all assets and liabilities of the Washington
Gulch Mine to Newgold has been completed, all shares of stock have been issued
to Mackay and Gold Bug, and all terms and conditions of the Option and the
Agreement have been performed in full.
3. Attorneys' Fees. Each party will bear his or its own costs including
attorneys' fees in connection with this Agreement. If any party or parties
commence any legal proceedings against any other party with respect to any of
the terms and conditions of the Option, the Amendment or their Agreement, the
non-prevailing party or parties will pay the prevailing party or parties all
expenses of those proceedings, including reasonable attorneys' fees and any and
all included costs thereto.
4. Binding Effect. This Agreement will be binding upon and
inure to the benefit of the successors and assigns of the
respective parties.
5. Construction. This Agreement will not be construed
against the party preparing it but will be construed as if prepared
by all parties.
6. California Law. This Agreement shall be deemed to be
made under, and shall be construed in accordance with, the laws of
the State of California, without giving effect to principles of
conflicts of law.
7. Counterparts. This Agreement may be executed in several
counterparts with the same effect as if all parties signed one
document. Each counterpart shall be treated as an original and all
such counterparts will constitute one agreement.
8. Entire Agreement and Amendment. This Agreement,
including the Exhibits hereto, constitutes the entire agreement by
and among the parties hereto and supersedes any and all other
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agreements, written or oral, between the parties. The parties expressly
understand that this Agreement may not be altered, amended, modified or
otherwise changed in any respect or particular whatsoever except by a writing
duly executed by an authorized representative of each of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date set forth below.
DATED: ___________, 1997 NEWGOLD, INC.
By:
A. Xxxxx Xxxxxxx
President
A. XXXXX XXXXXXX
DATED: ___________, 1997
A. Xxxxx Xxxxxxx, individually
GOLD BUG
DATED: ___________, 1997
Xxxxxx Xxxxxx, partner
XXXXXX XXXXXX
DATED: ___________, 1997
Xxxxxx Xxxxxx, individually
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