JOINT VENTURE AGREEMENT OF INFORM WORLDWIDE HOLDINGS, INC. AND SOAM ENERGY, L.L.C.
OF
INFORM
WORLDWIDE HOLDINGS, INC.
AND
XXXX
ENERGY, L.L.C.
THIS
JOINT VENTURE AGREEMENT
is made
and entered into this 7th day of November, 2006 by and between INFORM
WORLDWIDE HOLDINGS, INC. (OTCBB:IWWI),
a Florida corporation, having its principal place of business in Henderson,
Nevada (“IWWI”), and XXXX
ENERGY, L.L.C.,
a Texas
limited liability company, having its principal place of business in Xxxxx
County, Nevada (“Xxxx”). IWWI and Xxxx are hereinafter referred to collectively
as the “Parties” and individually as a “Party.”
RECITALS:
WHEREAS, Xxxx
is a
business entity engaged in the business of processing and selling coal, and
holds leasehold ownership interests in surface and subsurface coal in excess
of
3 million tons of recoverable coal fines, located in Xxxxxxxxxxxx County,
Pennsylvania (the "Banning 1 Lease”); and
WHEREAS,
IWWI desires to provide Xxxx with financing to fund the development, processing
and sale of coal located at the Banning 1 Lease site, the legal desciption
of
which is attached hereto as Exhibit
A;
and
WHEREAS,
the Parties desire to form the Joint Venture for the purpose of conducting
the
Joint Venture Business (as defined below), in accordance with the terms and
conditions of this Agreement;
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE
1
-NAME,
DURATION AND PLACE OF BUSINESS
1.1 -Name
of Joint Venture.
The
name of the Joint Venture shall be Banning 1 Partnership.
1.2 -Duration.
The
Joint Venture shall be deemed to have commenced on the date IWWI deposits its
initial contribution under this Agreement into the Joint Venture (the “effective
date”), and shall continue until the first of the following to occur:
(a) dissolution
of the Joint Venture by agreement of the Parties; or
(b) termination
of the Joint Venture under the provisions of this Agreement; or
(c) 30
years
from the effective date of this Agreement.
1.3 -Place
of Business.
The
Joint Venture’s principal place of business shall be 0000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, or at such other place as may from
time
to time be mutually agreed upon by the Parties.
ARTICLE
2
-PURPOSE
OF JOINT VENTURE
The
limited purpose of the Joint Venture is to develop, process and sell all surface
and subsurface coal located on the property subject to the Banning 1 Lease,
and
to engage in other activities as may be agreed upon from time to time by the
Parties (collectively, the “Joint Venture Business”).
ARTICLE
3
-CAPITALIZATION
OF JOINT VENTURE
3.1 -Initial
Capital Contributions.
The
parties have agreed that IWWI will make an initial cash contribution of
$10,000.00. The parties have also agreed that Xxxx will make an initial
contribution of leasehold rights to the Banning 1 Lease, which the parties
have
valued at $50,000.00 as of the date of this Agreement. Thus, the initial capital
contributions of the Parties and their initial corresponding interests in the
Joint Venture shall be as follows:
Contribution Interest
IWWI $10,000.00 50%
Xxxx $50,000.00 50%
3.2 -Additional
Capital Contributions.
In
addition to the initial capital contributions specified in Section 3.1, the
Parties agree to make additional capital contributions to the Joint Venture
as
follows:
(a) As
and
when expenses are incurred with respect to the Joint Venture Business, and
neither the revenues from Joint Venture operations nor the initial capital
contribution are sufficient to pay such expenses, the “Manager” (as defined
herein) may notify IWWI of such expenses, and IWWI will contribute the entire
amount required to cover such expenses. At the option of the Manager, a
reasonable estimate may be made in advance of incurring expenses. IWWI shall
remit to the Manager the full amount of the expenses (or the estimated expenses)
within ten (10) business days after receipt of such notice. The total of the
$10,000.00 initial capital contributed by IWWI plus all other amounts
contributed by IWWI pursuant hereto shall be deemed “Total Project Capital”. In
the event that IWWI fails to pay such expenses within said ten (10) day period,
then Xxxx shall have all the following options:
(i) To
advance the expenses of IWWI, which shall be considered a loan to IWWI due
on
demand and shall bear interest at the rate of ten percent (10%) per annum (or
the highest rate allowable by law, if lower than ten percent (10%) per annum)
until paid, and/or
(ii) To
institute legal action against IWWI, in which event IWWI shall be responsible
for all costs of said action, including the actual attorneys’ fees incurred,
and/or
(iii) To
foreclose on the lien of IWWI in accordance with then applicable provisions
of
Pennsylvania law, and/or
(iv) To
invest, upon thirty (30) days written notice, the funds required, and increase
its percentage of ownership in an amount relative to the increase in the amount
of capital contributed, and/or
(v) To
dissolve this Joint Venture.
(b) It
is
agreed that the revenues generated by the Joint Venture Business shall be used
to pay expenses of the Joint Venture Business before the Manager calls upon
IWWI
for the payment of such expenses. Notwithstanding anything herein to the
contrary, as long as IWWI is in default in the payment of expenses to the Joint
Venture, any distributions of cash relating to its interest in the Joint Venture
shall be withheld and offset against the amount in default or shall be applied
to any loan made by Xxxx pursuant to Section 3.2(a)(i) above.
(c) In
the
event that this Joint Venture is dissolved pursuant to Section 3.2(a), once
distributions are made pursuant to Section 6.2 and Section 4.2, if IWWI has
not
received repayment of its Total Project Capital in full, it will retain a lien
on the Banning 1 Lease, and will continue to receive 50% of the net profits
generated from the lease until their contributions are returned in
full.
(d) Each
of
the Parties shall be required to contribute to the Joint Venture its pro rata
share of any capital necessary to reimburse any other Party for expenses which
are reimbursable under Section 4.4, based on each Party’s interest in the Joint
Venture. Each Party has and is hereby granted a lien on the interest of each
of
the other Parties in the Joint Venture to secure the payment by each Party
of
its proportionate share of such expenses. Notwithstanding such lien, each Party
shall be personally liable for its proportionate share of expenses.
3.3 -No
Interest on Capital Contributions.
No
Party shall be entitled to receive interest on any amount contributed to the
capital of the Joint Venture.
3.4 -Withdrawal
of Capital.
Except
as provided in this Agreement, no Party may withdraw all or any part of its
capital from the Joint Venture.
3.5 -Right
to Receive Assets Other Than Cash.
Except
as otherwise provided in this Agreement, no Party shall have the right to demand
or receive assets other than cash as distributions under Section 4.2, upon
dissolution of the Joint Venture, or otherwise.
3.6 -Loans
to or From the Joint Venture.
Except
for as provided in Section 3.2(a)(i), no Party may loan or advance any money
to,
or borrow any money from, the Joint Venture without the mutual agreement of
all
of the Parties.
ARTICLE
4
-ALLOCATION
OF PROFITS AND LOSSES; CASH DISTRIBUTIONS
4.1 -Allocation
of Profits and Losses.
(a) The
parties shall shares losses as follows: First, one hundred percent (100%) should
be allocated to IWWI, to the extent of the Total Project Capital IWWI
contributes to the Joint Venture, and, thereafter, the net losses of the Joint
Venture shall be split evenly between the Parties in accordance with their
respective interests in the Joint Venture, pursuant to Section 704(b) of the
Internal Revenue Code of 1986, as amended, and the Regulations promulgated
thereunder.
(b) The
parties shall share profits as follows: First, one hundred percent (100%) should
be allocated to IWWI, to the extent of the Total Project Capital IWWI
contributes to the Joint Venture, and, thereafter, the net profits of the Joint
Venture shall be split evenly between the Parties in accordance with their
respective interests in the Joint Venture, pursuant to Section 704(b) of the
Internal Revenue Code of 1986, as amended, and the Regulations promulgated
thereunder.
4.2 -Cash
Distributions.
The
Joint Venture shall promptly distribute to the Parties all “Cash Available for
Distribution.” “Cash Available for Distribution” shall mean all cash received by
the Joint Venture from its regular business operations and from all other
sources (other than capital contributions), including, but not limited to,
sale
of the coal, proceeds of the sale or refinancing of the Banning 1 Lease, after
deducting therefrom all current Joint Venture expenses and a reasonable reserve
(to be determined in the sole and absolute discretion of the Manager) for future
and contingent obligations and liabilities. Distributions of Cash Available
for
Distribution shall be made to the Parties in accordance with their allocation
of
profits and losses in the Joint Venture, pursuant to Section 4.1.
4.3 Joint
Venture Expenses.
The
Joint Venture shall reimburse each of the Parties for all reasonable
out-of-pocket costs and expenses incurred in connection with the operations
of
the Joint Venture Business, provided that such costs and reimbursements shall
be
adequately accounted for to the Joint Venture. These expenses shall include
and
not be limited to reimbursement for any legal or other professional fees
incurred prior to the date of this Agreement or in connection with the
negotiation of this Agreement.
4.4 Tax
Status.
The
Parties intend for the Joint Venture to be treated as a partnership for federal
income tax purposes under Section 301.7701-3 of the Regulations. Neither the
Joint Venture nor any Party may make an election under Treas. Reg.
§301.7701-3(c) to treat the Joint Venture as an association taxable as a
corporation. To the extent Treas. Reg. §301.7701-3 does not govern the state and
local tax classification of the Joint Venture, the Partners shall take such
action as may be permitted or required under any state and/or local law
applicable to the Joint Venture to cause the Joint Venture to be taxable as,
and
in a manner consistent with, a partnership (or the functional equivalent thereof
under applicable law) for the state and/or local income tax purposes. In
addition, neither the Joint Venture nor any Party may make an election for
the
Joint Venture to be excluded from the application of the provisions of
subchapter K of chapter 1 of subtitle A of the Code or any similar provisions
of
applicable state law and no provision of this Agreement shall be construed
to
sanction or approve such an election.
ARTICLE
5
-RIGHTS,
POWERS AND OBLIGATIONS OF THE PARTIES
5.1 -Management
and Authority.
Xxxx
shall be the Manager. Except as otherwise provided herein, all decisions
relating to the ownership and management of the Joint Venture Business shall
be
made by the Manager. Except as provided herein, no Party other than the Manager
shall have any right to participate in the management of the Joint Venture
Business.
(a) The
following actions shall require the vote or consent of all of the
Parties:
(i) Sale,
transfer, exchange or other disposition of the Banning 1 Lease.
(ii) Material
modification or termination of the Banning 1 Lease.
(iii) Amendment
to this Joint Venture Agreement.
(b) IWWI,
in
its sole discretion, may refinance the Joint Venture, without obtaining the
consent of Xxxx.
The
signature of the Manager alone on any documents relating to the Joint Venture
Business which do not require the vote or consent of all of the Parties as
provided above shall be binding on the other Parties. In the event that the
signatures of the other Parties are required to consummate any transaction
relating to the Joint Venture Business which is undertaken by the Manager and
approved by all of the Parties as provided above (e.g., material modification
of
the lease), the other Parties agree to execute any documents reasonably
requested by Manager in a timely manner.
ARTICLE
6
-DISSOLUTION
6.1 -Events
Causing Dissolution.
The
Joint Venture shall be dissolved upon the occurrence of any of the following
events:
(a) The
sale
or other disposition of all or substantially all of the Joint Venture’s assets.
(b) The
mutual agreement of all of the Parties.
(c) The
filing of a voluntary proceeding by any of the Parties under the Federal
Bankruptcy Code, or the filing of an involuntary proceeding against any of
the
Parties under the Federal Bankruptcy Code which is not dismissed within thirty
(30) days.
(d) The
appointment of a receiver, custodian or trustee for any Party, or the
attachment, garnishment or other levy of execution against all or substantially
all of the assets of any Party, or against the interest in the Joint Venture
of
any Party, which is not released or discharged within thirty (30)
days.
(e) The
breach by any Party of any material covenant or agreement set forth in this
Agreement, including but not limited to the failure or refusal to make any
additional capital contributions when required, which is not cured within five
(5) business days after notice from the non-defaulting Party.
(f) The
inability of the Parties to reach mutual agreement with respect to any matter
herein which requires the mutual agreement of the Parties and which is not
resolvable by arbitration.
6.2 -Distribution
Upon Dissolution.
Upon
dissolution, the Joint Venture shall engage in no further business other than
that necessary to wind up the affairs of the Joint Venture and liquidate and
distribute the assets of the Joint Venture. The proceeds from the liquidation
of
Joint Venture assets shall be distributed in the following order of
priority:
(a) First,
to
the payment and discharge of all of the Joint Venture’s debts and liabilities to
persons other than the Parties, including the establishment of a reasonable
reserve for contingencies (which shall be distributed in accordance with this
Section 6.2 at such time as the Parties mutually agree, but in no event more
than one (1) year after the date of dissolution).
(b) Next,
to
the payment and discharge of the Joint Venture’s debts and liabilities to the
Parties, other than in respect of capital contributions.
(c) Next,
to
the Parties in accordance with the provisions of Section 4.2.
Upon
dissolution, the Parties shall execute and file such certificates or other
documents as may be required by law.
ARTICLE
7
-RESTRICTION
ON TRANSFER OF INTEREST IN JOINT VENTURE
7.1 -Transfer
Restrictions.
No
Party shall sell, assign, transfer or otherwise dispose of, or encumber or
otherwise pledge or hypothecate (any of the foregoing being referred to herein
as a “Transfer”), voluntarily or involuntarily, all or any portion of said
Party’s interest in the Joint Venture, except with the prior written consent of
all Parties or as expressly authorized by Section 7.3 of this
Agreement.
7.2 -Non-Compliance.
Any
Transfer or purported Transfer of an interest in the Joint Venture which is
not
in full compliance with the provisions of this Agreement, shall be void and
of
no effect whatsoever.
7.3 -Permitted
Transfers.
The
Transfer of any interest in the Joint Venture by an individual Party to an
inter
vivos trust of which such Party is the trustor, trustee and beneficiary, or
by
such trust to the Party, shall not be subject to the restrictions of this
Agreement. However, as a condition to any such Transfer, the trustee of such
trust shall agree in writing to be bound by all of the provisions of this
Agreement and to assume all of the obligations of the Party hereunder or in
connection with the Joint Venture.
ARTICLE
8
-RECORDS
AND ACCOUNTING
8.1 -Fiscal
Year.
The
Joint Venture’s fiscal year shall be the calendar year, unless changed by mutual
agreement of the Parties.
8.2 -Books
and Records; Income Tax Matters.
The
Joint Venture shall keep or cause to be kept true and accurate books of account.
The Joint Venture’s books shall be maintained at the principal office of the
Joint Venture, and each Party, or any Party’s authorized representative, shall
at all times have reasonable access thereto. The books and records of the Joint
Venture shall be maintained on a cash or accrual basis, as the Parties shall
mutually agree. As soon as reasonably practicable after the end of each fiscal
year, the Parties shall be furnished with a statement showing the amount of
such
Party’s capital account as of the end of such fiscal year, a copy of a balance
sheet of the Joint Venture as of the last day of such fiscal year and a
statement of income or loss of the Joint Venture for such fiscal year. Each
of
the Parties shall also be furnished with a copy of the Joint Venture’s federal
and state income tax returns, and K-1’s showing the allocation of profits and
losses of the Joint Venture to the respective Parties. The Manager shall have
the responsibility of performing the Joint Venture’s obligations under this
Section 8.2, at the expense of the Joint Venture. The Manager shall select
the
certified public accountants who shall prepare the income tax returns for the
Joint Venture. All other material accounting and tax decisions shall be made
by
mutual agreement of the Parties.
ARTICLE
9
-MISCELLANEOUS
9.1 -Notices.
All
notices or other communications required or permitted to be given pursuant
to
this Agreement shall be in writing, and shall be delivered either personally,
by
overnight delivery service or by U.S. certified mail, postage prepaid,
return-receipt requested and addressed to the Parties as follows:
|
To
IWWI:
|
Inform
Worldwide Holdings, Inc.
0000
X. Xxxxx Xxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxxxx,
XX 00000
|
|
To
Xxxx:
|
Xxxx
Energy, LLC
0000
X. Xxxxx Xxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxxxx,
XX 00000
|
In
the
event of an emergency only (that is, a notice or other communication which
requires an immediate response), notices may be sent by facsimile transmission
to the facsimile numbers set forth above, provided that such facsimile
transmission is (a) transmitted
on a business day; (b)
accompanied by a telephone call to the receiving party; and (c)
followed
up by the mailing or personal delivery of a “hard copy” of such
notice.
The
Parties may change their addresses for notice by giving notice of such change
in
accordance with this Section 9.1. Notices sent by overnight delivery service
shall be deemed received on the business day following the date of deposit
with
the delivery service. Mailed notices shall be deemed received upon the earlier
of the date of delivery shown on the return receipt, or the second business
day
after the date of mailing.
9.2 -Construction.
This
Agreement has been executed in and is to be performed in the State of
Pennsylvania, and this Agreement shall be interpreted in accordance with the
laws of the State of Pennsylvania.
9.3 -Benefit.
This
Agreement shall be binding upon and inure to the benefit of the Parties, and
their respective successors and assigns, subject to any restrictions on
assignment set forth herein.
9.4 -Amendments.
This
Agreement may not be amended, modified or altered except by a written instrument
executed by all of the Parties.
9.5 -Entire
Agreement.
No
Party has made any representations, warranties, covenants or promises relating
to the subject matter of this Agreement except as set forth herein, and any
prior agreements or understandings not specifically set forth herein shall
be of
no force or effect. This Agreement constitutes the entire agreement of the
Parties relative to the subject matter hereof.
9.6 -Invalidity.
If any
provision of this Agreement is declared by a court of competent jurisdiction
to
be invalid or unenforceable, the remaining provisions hereof shall nevertheless
be given full force and effect.
9.7 -Captions.
Captions are for convenience only and shall not be considered in interpreting
any of the provisions hereof. References to “Articles” or “Sections” in this
Agreement shall be deemed references to Articles or Sections of this Agreement.
All Exhibits referred to in this agreement are incorporated herein by
reference.
9.8 -Gender;
Number.
As used
herein, the masculine, feminine or neuter gender, and the singular or plural
number, shall each be deemed to include the others whenever the context so
indicates.
9.9 -Attorneys’
Fees.
Should
any Party be required to bring legal action (including arbitration) to enforce
its rights under this Agreement, the prevailing party in such action shall
be
entitled to recover from the losing party its reasonable attorneys’ fees and
costs in addition to any other relief to which it is entitled. Such recovery
of
attorneys’ fees shall include any attorneys’ fees incurred in connection with
any bankruptcy or reorganization proceeding, including stay litigation. The
parties further agree that any attorneys’ fees incurred in enforcing any
judgment are recoverable as a separate item, and that this provision is intended
to be severable from the other provisions of this Agreement, shall survive
the
judgment, and is not to be deemed merged into the judgment.
9.10 -Arbitration.
Any
controversy or claim arising out of or relating to this Agreement, or breach
thereof, shall be settled by binding arbitration in Xxxxx County, Nevada, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court of competent jurisdiction. The cost
of
arbitration shall be borne by the losing party, or, if there is no losing party,
as the arbitrator(s) shall determine. In consideration of each party’s agreement
to submit to arbitration any and all disputes that arise under this Agreement,
each party agrees that the arbitration provisions of this Agreement shall
constitute his/its exclusive remedy and each party expressly waives the right
to
pursue redress of any kind in any other forum. The parties further agree that
the arbitrator acting hereunder shall not be empowered to add to, subtract
from,
delete or in any other way modify the terms of this Agreement.
9.11 -Counterparts.
This
Agreement may be executed in one (1) or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one
(1)
and the same instrument.
9.12 -Waiver.
The
failure of any Party, at any time, to require timely performance by the other
Party of any provision of this Agreement shall not affect such Party’s rights
thereafter to enforce the same, nor shall the waiver by any Party of any
provision of this Agreement, whether or not agreed to in writing, be taken
or
held to be a waiver of the breach of any other provision or a waiver of any
subsequent breach of the same provision of this Agreement. No extension of
time
for the performance of any obligation or act hereunder shall be deemed to be
an
extension of time for the performance of any other obligation or act
hereunder.
9.13 -Additional
Acts.
The
Parties agree to perform such further acts and to execute, acknowledge and
deliver such documents as may be necessary to effectuate the provisions of
this
Agreement.
9.14 -Indemnifications.
(a) The
Joint
Venture shall indemnify, defend and hold harmless each of the Parties and their
respective heirs, agents, employees, representatives, successors and assigns
from and against any and all claims, demands, expenses, costs, damages, actions,
causes of action, judgments, and all other liabilities, including reasonable
attorneys’ fees, arising from actions (or omissions) undertaken on behalf of the
Joint Venture, so long as such acts (or omissions) were undertaken in good
faith, in a manner reasonably believed by the Parties taking the action (or
omission) to be in the best interests of the Joint Venture, and provided that
such acts (or omissions) were within the scope of such Party’s authority under
this Agreement.
(b) Each
of
the Parties shall indemnify, defend and hold harmless the Joint Venture and
the
other Parties, and their respective heirs, agents, employees, representatives,
successors and assigns from any and all claims, demands, expenses, costs,
damages, actions, causes of action, judgments, and all other liabilities,
including reasonable attorneys fees (i)
which
are personal liabilities or obligations of the indemnifying Party and unrelated
to the Joint Venture Business, or (ii)
which
are taken in bad faith, or not in a manner reasonably believed to be in the
best
interests of the Joint Venture, or beyond the scope of such Party’s authority
hereunder, or (iii)
which
result from the breach or inaccuracy of any of such indemnifying Party’s
representations or warranties herein, or (iv)
which
result from the breach of any covenant or agreement of the indemnifying Party
hereunder.
9.15 -Other
Activities.
The
Parties shall devote such time to the business of the Joint Venture as shall
be
reasonably necessary for the efficient performance of their respective
obligations and duties hereunder. Each Party may, without accountability to
the
Joint Venture or to the other Party, and without any consent whatsoever of
the
other Party, engage in other businesses or business ventures of any nature
and
description, whether or not competitive with the Joint Venture’s business,
independently or with others, including, without limitation, the acquisition
and
development of motion pictures. Neither the Joint Venture nor the Parties shall
have any right by virtue of this Agreement in or to such business or business
ventures or to the income or profits derived therefrom.
9.16 -Confidentiality.
Each
Party agrees that no public announcement or other communication with respect
to
this Agreement, or any of the terms, conditions or other facts with respect
to
the transactions described herein, including the status thereof, shall be made
without the prior consent of the other Parties, and that such matters will
be
kept in strictest confidence and not revealed to any other person, except that
each Party may permit access to a limited number of its respective employees,
agents, outside advisors, and lenders as shall be necessary to evaluate, proceed
with, and make determinations with respect to, the transactions described herein
or to operate and maintain a Property.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first set forth
above.
INFORM
WORLDWIDE HOLDINGS, INC.
By:
____/s/
Ash Mascarenhas______________
Ash
Xxxxxxxxxxx, Chief Operating Officer
XXXX
ENERGY, L.L.C.
By:
____/s/
Ash Mascarenhas______________
Ash
Xxxxxxxxxxx, Manager
