Exhibit 10.K
JOINT VENTURE AGREEMENT
between
XXXXX, INC. USA
and
GOLD CITY INC.
Dated as of September 11, 2005
This JOINT VENTURE AGREEMENT is entered into this day of September,
2005 between:
XXXXX, INC. USA, a public company incorporated in the State of
Delaware, United States of America and having its executive office at 00 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, Xxxxxx Xxxxxx of America (hereinafter called
"Xxxxx") and
Gold City inc., a company incorporated in the State of Nevada, and
having its executive office at Hingham, Massachusetts, United States of America
(hereinafter called "Gold City")
WITNESSETH
WHEREAS, Xxxxx has developed a new chemical process to extract and recover gold
from gold bearing ore, tailings and electronic waste ("E-waste"), (hereinafter
called the "Xxxxx Gold Process" which term shall include any trade secrets,
know-how or proprietary information, whether or not reduced to writing,
including, but not limited to, inventions whether or not patentable, patent
applications, licenses, software, programs, prototypes, designs, analysis codes,
discoveries, techniques, methods, ideas, concepts, data, engineering and
manufacturing information, procedures, specifications, diagrams, drawings,
schematics, blueprints and parts lists);
And WHEREAS, Gold City has agreed to pay $10 million to Xxxxx for fifty percent
of all revenues generated from a joint venture to be formed covering defined
projects listed in Section 3.01 (b) below; and
WHEREAS, Xxxxx desires to participate with Gold City in such joint
venture; and
WHEREAS, the parties hereto desire to more fully describe the terms,
conditions and agreements upon which they will form a joint venture to exploit
the Xxxxx Gold Process and mineral extraction technologies. NOW, THEREFORE, it
is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions
"Ghana Production Plant" means the production plant to be constructed
and operated by Xxxxx in Ghana for the purpose of supporting the private or
Ghanaian initiative for commercial capabilities in support of the Strategic
Abatement of Mercury and Poverty ("STAMP") program in Ghana.
"Xxxxx restricted common stock" means commons tock of Xxxxx, par value
$0.01 per share, that is not registered with the United States Securities
Exchange Commission and whose transfer is restricted by the rules and
regulations of the SEC, particularly Rule 144.
"Governmental Authority" includes, without limitation, any federal,
state, municipal or other governmental department, commission, board, bureau,
agency, instrumentality, or central bank or comparable agency, domestic or
foreign.
"US Production Plant" means the production plant to be constructed and
operated by Xxxxx in the United States.
ARTICLE II: THE JOINT VENTURE SECTION 2.01
Formation of Joint Venture
--------------------------
(a) Formation. In consideration of the mutual covenants herein
contained and for other good and valuable consideration, receipt whereof is
hereby acknowledged, the parties hereto hereby agree to form a joint venture
(hereinafter called the "Joint Venture" which term shall include any corporation
or trust entity into which the Joint Venture should hereafter be formed) for the
purpose of commercially exploiting for profit the Xxxxx Gold Process on projects
as described herein.
(b) Terms of Joint Venture: Gold City will provide up to $10 million
dollars to Xxxxx in exchange for up to a total of 5 million shares of Xxxxx
restricted stock and for up to a total of 50 percent of all profits generated by
Xxxxx'x US Production Plant and other projects that are financed with the funds.
In the event that Gold City does not provide Xxxxx with the entire $10 million,
on or before, December 31, 2007, it will receive a lower number of shares of
Xxxxx common stock and reduced profit participation, in accordance with the
following schedule:
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Amount (in millions) Contributed to Xxxxx through Joint Venture
$0.5 to $2.0 >$2.0 to $5 >$5 to $7.5 >$7.5 to $10
------------ ----------- ----------- ------------
Shares of Xxxxx
stock To Gold City 1 million* 2.5 million* 3.5 million* 5* million
Amount of JV profits
to Gold City (%) 15% 30% 40% 50%
* Stock earned before December 31, 2006 shall be issued as follows: 50% of
earned stock shall be issued before May 31, 2007 and the remaining balance
before July 1, 2007. All additional shares earned shall be issued on
January 3, 2008.
As of the date of this Agreement, Gold City has already paid over $300,000.00 of
its joint venture funding to Xxxxx. Gold City anticipates that it will raise the
balance of the funds through a private placement of its own shares and/or
through other capital markets.
Xxxxx may, in lieu of all or a portion of its share of profits and
other entitlements (whether by way of dividends, distributions or by other
means) from the Joint Venture elect to receive a royalty for the use of the
Xxxxx Gold Process by the Joint Venture. Both parties must agree to the amount
of the royalty payable from time to time provided, that, such royalty shall not
exceed 10% of the profits of the Joint Venture distributed from time to time
from the earnings received from each of its projects and shall be deducted from,
and shall not exceed, all of Xxxxx'x share of profits and other entitlements
(whether by way of dividends, distributions or by other means) from the Joint
Venture. Such royalty shall be paid to Xxxxx on the dates that profits from the
Joint Venture are distributed to the parties.
(c). Loans to Xxxxx Inc.:
Gold City agrees to loan, at the option of Xxxxx, up to $500,000.00 at
8% per annum during the first 9 months after execution of this agreement to
allow for the delay in starting Gold City's private placement. Gold City shall
make a good faith effort to secure loans from investors which in turn will be
loaned to Xxxxx for its activities. All moneys advanced to Xxxxx shall be under
a promissory note to Gold City which at the option of Gold City can be
discharged upon issuance of Xxxxx Rule 144 restricted stock, to Gold City, its
assign or designees, in an amount equal to the principal plus interest and at a
discount of 10% at the closing price of Xxxxx'x common shares on the date of
election or can be discharged upon payment by Xxxxx of an amount equal to
principal plus interest.
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(d) Expansion of Xxxxx processing license to Gold City:
As additional consideration to Gold City for the Joint Venture, Xxxxx grants to
Gold City the non-exclusive mineral extraction and recovery technology license
(License) to the countries of South America, Australia, Asia and Africa under
the same terms as the "License Agreement Between Gold City Inc. and Xxxxx Inc."
dated March 28, 2003. Accordingly, Gold City now has non-exclusive Licenses to
use the Xxxxx technology in the countries of USA, Canada, Mexico, Ghana (under
License dated January 23, 2004), Asia, Australia, South America and Africa. All
prior, present and future Licenses, if any, granted to Gold City, including the
March 28, 2003 and January 23, 2004 Licenses are hereby granted in perpetuity.
Article III. DUTIES AND OBLIGATIONS OF XXXXX
SECTION 3.01 Duties and Obligations of Xxxxx.
(a) Operator. Xxxxx is designated as Operator for all Joint Venture
operations. Xxxxx in this capacity is responsible for all funds management,
financial decisions, processing, management, and shall have full control of all
such Joint Venture Operations.
(b) Joint Venture Projects. In addition to being the Operator, Xxxxx
shall be responsible for the pursuit of the following Joint Venture projects and
any others financed by the funds provided by Gold City under this agreement:
1. US production plant- extraction and recovery of precious and
base metals from E-waste and gold ore.
2. Either a privately or institutional funded program for small
scale miners in Ghana.
3. Purchase of one or more large scale gold mining concessions
in Ghana.
4. Operation of mining sites in Arizona and/or California
and/or Nevada and/or New Mexico or other Us locations to produce gold
concentrate for processing in the United States.
5. Other projects as agreed between the parties and financed by
Gold City funds under this Agreement.
(c) Other Discoveries, Developments and Technologies. Xxxxx shall
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provide to the Joint Venture all other discoveries, developments and
technologies of Xxxxx relating to mineral extraction and/or processing that may
be used for the benefit of the Joint Venture.
(d) Xxxxx to Provide Personnel. Xxxxx shall provide to the Joint
Venture and maintain at all times sufficient qualified personnel and experts
thoroughly familiar and experienced with the Xxxxx Gold Process and its
application to enable the Joint Venture to use and apply the Xxxxx Gold Process
in commercial production on all Joint Venture projects.
(e) Future Improvements, etc. Xxxxx agrees to make available to the
Joint Venture all future improvements, refinements and developments of the Xxxxx
Gold Process and to apply these for the benefit of the Joint Venture.
ARTICLE IV. Representations and Warranties of Xxxxx
(a) Litigation. There are no proceedings or investigations pending
or, so far as the officers of Xxxxx know, threatened before any court or
arbitrator or before or by any Governmental Authority which, in any one case or
in the aggregate, if determined adversely to the interests of Xxxxx, would have
a material adverse effect on the business, properties, condition (financial or
otherwise) or operations, present or prospective, of Xxxxx.
(b) No Conflicts. There is no statute, regulation, rule, order or
judgment, no charter, by-law or preference stock provision of Xxxxx, and no
provision of any mortgage, indenture, contract or agreement binding on Xxxxx or
affecting its property, which would prohibit, conflict with or in any way
prevent Xxxxx'x execution, delivery, or carrying out of the terms of this
Agreement.
(c) No Default. Xxxxx is not in default under or with respect to any
obligation in any respect which could be materially adverse to the business,
operations, property or financial condition of Xxxxx, or which could materially
adversely affect the ability of Xxxxx to perform its obligations hereunder.
(e) Compliance with Law. Other than with respect to the tardiness of
certain filings with the Securities Exchange Commission, Xxxxx is not in
violation of any statute, rule or regulation of any Governmental Authority
(including, without limitation, any statute, rule or regulation relating to
employment practices or to environmental, occupational and health standards and
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controls) the violation of which, considered in the aggregate, would materially
adversely affect the business, operations or properties of Xxxxx. (g) Title to
Properties. Gold City has good and marketable title to its material properties
and assets.
(f) Binding Agreement. This Agreement constitutes the valid and
legally binding obligations of Xxxxx, enforceable against Xxxxx in accordance
with its terms.
ARTICLE V:
SECTION 5.01 Representations and Warranties of Gold City.
(a) Good Standing and Power. Gold City is duly organized and existing,
and Gold City and its directors are in good standing, under the laws of its
jurisdiction of incorporation, and Gold City has the corporate power to carry on
its business as now being conducted and is duly qualified to do business and is
in good standing in each jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business makes
such qualification necessary.
(b) Corporate Authority. Gold City has full corporate power and
authority to enter into this Agreement and to incur and perform the obligations
provided for in this Agreement, all of which have been duly authorized by all
proper and necessary corporate action. No consent or approval of stockholders
of, or lenders to, Gold City and no consent, approval, filing or registration
with any Governmental Authority is required to be obtained or made by Gold City
as a condition to the validity or enforceability of any of this Agreement or the
performance by Gold City of its obligations hereunder.
(c) Binding Agreement. This Agreement constitutes the valid and
legally binding obligations of Gold City enforceable against Gold City in
accordance with its terms.
(d) Litigation. There are no proceedings or investigations pending or,
so far as the officers of Gold City know, threatened before any court or
arbitrator or before or by any Governmental Authority which, in any one case or
in the aggregate, if determined adversely to the interests of Gold City, would
have a material adverse effect on the business, properties, condition (financial
or otherwise) or operations, present or prospective, of Gold City.
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(e) No Conflicts. There is no statute, regulation, rule, order or
judgment, no charter, by-law or preference stock provision of Gold City, and no
provision of any mortgage, indenture, contract or agreement binding on Gold City
or affecting its property, which would prohibit, conflict with or in any way
prevent Gold City's execution, delivery, or carrying out of the terms of this
Agreement.
(f) No Default. Gold City is not in default under or with respect to
any obligation in any respect which could be materially adverse to the business,
operations, property or financial condition of Gold City, or which could
materially adversely affect the ability of Gold City to perform its obligations
hereunder.
(g) Title to Properties. Gold City has good and marketable title to
its material properties and assets.
(h) Compliance with Law. Gold City is not in violation of any statute,
rule or regulation of any Governmental Authority (including, without limitation,
any statute, rule or regulation relating to employment practices or to
environmental, occupational and health standards and controls) the violation of
which, considered in the aggregate, would materially adversely affect the
business, operations or properties of Gold City.
ARTICLE VI ACCOUNTING, REPORTING AND FINANCIAL POLICIES
SECTION 6.01 Records and Books. Xxxxx shall maintain the books and
records of the Joint venture which shall reflect generally accepted
international accounting procedures and practices and shall take into
consideration the reporting requirements imposed by law upon the Joint Venture
and each of the parties.
SECTION 6.02 Periodic Reports. The Joint Venture shall furnish to each
party the following:
(a) annual financial reports, including profit/loss statement,
balance sheet and cash flow report; and
(b) quarterly financial reports, including profit/loss
statement, balance sheet and cash flow report.
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A party requesting financial reports or information in addition to the financial
reports described above shall reimburse the Joint Venture for any costs the
Joint Venture incurs in preparing such financial reports.
SECTION 6.03 Annual Audit. The parties shall cause the books of the
Joint Venture to be audited at the end of each fiscal year by the accountants of
the Joint Venture. The expense of the audit shall be borne by the Joint Venture.
SECTION 6.04 Accountants. A firm of independent public accountants
mutually agreeable to Xxxxx and Gold City shall be retained for the Joint
Venture until changed by mutual agreement of Xxxxx and Gold City.
ARTICLE VII- TERM
Section 7.01 Term. This Agreement shall continue in full force and
effect unless both parties agree to terminate the agreement.
Section 7.02 Relationship of the Parties. It is not the purpose or
intention of this Agreement to create a partnership, mining partnership,
commercial partnership, or any other partnership relation between the Parties.
Rather, the relationship of the Parties under this Agreement shall be that of
tenants in common. Each Party shall be responsible only for its obligations and
liabilities as set forth in this Agreement. Nothing contained in this Agreement
shall be deemed to constitute any Party the partner of the other, or except as
otherwise expressly provided, to constitute either Party the agent or legal
representative of the other, or to create any fiduciary relationship between
them. No Party shall have any authority to act for or to assume any obligation
or responsibility on behalf of the other Party except as expressly provided in
this Agreement. Each of the Parties agrees to indemnify and hold harmless the
other Party, its directors, officers, and employees from and against any and all
losses, claims, damages, and liabilities arising out of any act or any
assumption of any obligation of liability by the first-mentioned Party, or any
of its directors, officers, agents, or employees, done or undertaken, or
apparently done or undertaken, on behalf of the other Party, except pursuant to
the authority expressly granted herein or otherwise agreed to by the Parties.
Section 7.03 Distribution of Costs and Revenues. All costs,
expenses and liabilities accruing or resulting from Joint Operations in, on, or
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for the benefit of the Joint Venture, shall be paid by Xxxxx from funds received
from Gold City under terms of this agreement. Said expenditures shall be used in
the determination of the profits of the Joint Venture.
VIII. DEFAULT
In the event of any default by any Party or Operator in the
performance of any of its obligations under this Agreement, the non-defaulting
Party may give to the defaulting Party written notice of the default. If the
default is not cured within 60 days after receipt of the notice, or if the
defaulting Party has not within that time begun action to cure the same and does
not thereafter diligently prosecute such action to completion, the
non-defaulting Party may bring an action in a court of competent jurisdiction
for any and all damages of whatsoever nature incurred by it as a result of the
default. If the defaulting Party disagrees that a default occurred, it shall so
advise the non-defaulting Party in writing within 30 days after receipt of the
notice of default. The Parties shall attempt to resolve the dispute by mutual
agreement, but if they are unable to do so within 60 days after the notice of
default, the issue of default shall be submitted to a court of competent
jurisdiction. The defaulting Party shall not be deemed to be in default unless
it is so adjudged by such court and until all appeals from said decision have
either been exhausted or waived. If the defaulting Party is found to be in
default by the court, it shall have 60 days after the date on which all appeals
have been exhausted or waived in which to either cure the default, begin action
to diligently cure the same, or pay damages awarded by such court to the
non-defaulting Party.
IX. ARBITRATION
Section 9.01 Matters to be Arbitrated. Any controversy among the
Parties concerning the Joint Venture or this Agreement shall be settled by
arbitration in accordance with this Article.
Section 9.02 Procedure for Arbitration. Matters subject to
arbitration shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in effect at the time
of arbitration. The judgment of the arbitrators as to such matters shall be
binding upon the Parties. In the event of a conflict between the Commercial
Arbitration Rules and this Article IX, this Article IX shall control. The
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Parties agree that the Federal Rules of Civil Procedure, insofar as they relate
to discovery, shall apply to arbitration proceedings conducted pursuant to this
Article IX.
Each Party to the dispute shall select one disinterested arbitrator
and, if an even number of arbitrators is selected, the arbitrators so selected
shall select an additional arbitrator. Within 20 days after all arbitrators have
been selected, each party to the dispute shall submit to the arbitrators a
written statement of its position as to the matter being arbitrated. The
arbitrators shall resolve the dispute by choosing, between or among the
statements of position submitted by the parties to the dispute, that position
which the majority of the arbitrators deem to be correct. All arbitrators
selected shall be knowledgeable in the mining and accounting fields and shall
have knowledge concerning general mining, operating and accounting practices in
the vicinity of the Property and of the rates and charges for services of the
type being performed by Operator in the Area of Interest. All costs, expenses
and fees for arbitration shall be borne by the parties to the dispute as may be
ordered by the arbitrators.
ARTICLE X MISCELLANEOUS
SECTION 10.01 Inspection. All of the parties hereto shall have the
right, through employees or agents of its selection, to visit and inspect the
properties of the Joint Venture and examine the books of account and records of
the Joint Venture and discuss the affairs, finances and accounts of the Joint
Venture with its officers and employees, all at such reasonable times and as
often as it may desire.
SECTION 10.02 Assignment. This Agreement, and all rights and
obligations hereunder, are personal as to the parties hereto and shall not be
assigned by any party to any third party, whether by consent, operation of law
or otherwise, without the prior written consent thereto by the other party
SECTION 10.03 Waiver. The waiver, expressed or implied, by any party
hereto of any right hereunder or of any failure to perform or breach hereof by
another party hereto shall not constitute or be deemed a waiver of any other
right hereunder or of any other failure to perform or breach hereof by any such
other party hereto, whether of a similar or dissimilar nature thereto.
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SECTION 10.04 Implementation of This Agreement. The Parties agree to
compel, or use their best efforts to compel, compliance by the Joint Venture and
its Directors, managers, members, consultants, agents, employees, and
subcontractors with the terms and conditions of this Agreement. The parties
shall also do or cause to be done any and all acts and things necessary or
desirable for implementation of the understandings of the parties set forth
herein, including, but not limited to casting their votes as stockholders or
unit holders of the Joint Venture and causing, or using their best efforts to
cause, their nominees to the Board of Directors, or any similar body or
committee of the Joint Venture to implement such understandings and agreements.
SECTION 10.05 Confidentiality. The parties hereto agree to permit
Xxxxx to take such reasonable precautions as may be necessary or appropriate to
preserve and protect the secrecy of the Xxxxx Gold Process and agree to execute
such reasonable secrecy agreement as Xxxxx may hereafter request.
SECTION 10.06 Expenses. Each of the parties agrees to pay its own
out-of-pocket charges and expenses incurred by it (including the fees and
expenses of its counsel) in connection with the negotiation, preparation and
execution of this Agreement.
Section 10.07 Notices. Any notice, election, payment or other
correspondence required or permitted under this Agreement shall be made in
writing and shall be sufficiently delivered if delivered personally to the Party
to whom directed, or deposited in the United States certified or registered
mail, or sent by Western Union telegram or mailgram, with all necessary postage
or charges fully prepaid, return receipt requested (or in the case of a telegram
or mailgram, confirmation of delivery), and addressed to the Party to whom
directed at its below specified address, to wit:
If to Xxxxx Inc.
Xxxxx Inc.,
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Mr. Xxxxxx Xxxxx
If to Gold City Inc.
Gold City Inc.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Such notice, election, payment or other correspondence shall be deemed to have
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been properly given upon receipt by the Party to whom directed. A Party may
change its address for the purpose of notices or communications under this
Agreement by furnishing notice of the change to the other Party in compliance
with this Article X.
Section 10.08. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF MASSACHUSETTS.
Section 10.09 Construction. The headings used in this Agreement are
for convenience only and shall not be taken or construed to define or limit any
of the terms or provisions of this Agreement. Unless otherwise provided or
unless the context shall otherwise require, words importing the singular shall
include the plural, words importing the masculine gender shall include the
feminine gender, and vice versa.
Section 10.10 Waiver. The failure or omission by either Party to
enforce any provision of this Agreement shall not be considered to be a waiver
of that provision or of the default of another Party of its obligations under
that provision or under any other provision of this Agreement.
Section 10.11 Severability. It is understood and agreed by the Parties
that if any part, term or provision of this Agreement is held by a court of
competent jurisdiction to be illegal or unenforceable or both, the Parties
desire that the court of competent jurisdiction reform that part, term or
provision in such a manner as to approximate the intent of the Parties as
expressed in this Agreement, and the validity of the remaining portions or
provisions shall not be affected.
Section 10.12 Further Assurances. The Parties shall execute such further
agreements, conveyances and other documents as may be reasonably requested by
either Party to effectuate the intent and any provisions of this Agreement.
Section 10.13 Successors and Assigns. Subject to the provisions of Section 10.02
above, the terms, conditions, covenants and agreements contained in this
Agreement shall extend to, be binding upon, and inure to the benefit of the
successors and assigns of the Parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreenet to be
duly executed the date herinabove first written.
For: XXXXX, INC.
By: /s/ Xxxxxx X. Xxxxx 9/11/05
------------------------------
Name: Xxxxxx X. Xxxxx
Title: President-Xxxxx inc.
For: Gold City Inc.
By: /s/ Xxxxxxx Xxxxxxxx 9/11/05
------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President-Gold City inc.
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