JOINT VENTURE AGREEMENT
THIS AGREEMENT is made effective as of the 30th of April, 1998, by and
between XXXXXXX MINING CO., a Nevada corporation, a wholly owned subsidiary of
Health Care Centers of America, Inc., [hereinafter designated "PMC"], and HIDDEN
SPLENDOR SMELTING CO, a Nevada corporation, [hereinafter designated as "HSS"].
The parties shall collectively be referred to as "Participants".
RECITALS
A. PMC presently owns well in excess of 500,000 tons of ore inventory
[including various precious metals and rare earths] situated in Skull Valley,
Arizona.
B. The Participants are desirous of processing approximately 500,000
tons of the aforereferenced ore inventory [hereinafter designated as "the
inventory"] located in Skull Valley, Arizona.
C. PMC and HSS have agreed to a joint venture [JV] whereby HSS has the
right to acquire a twenty percent (20%) interest in the net revenues realized as
a result of the sale of the processed inventory.
D. PMC and HSS now wish to formalize the Agreement which will govern
the parties' respective rights and obligations to the JV and provide for the
processing of the inventory in accordance with the terms of this Agreement
E. The name of the JV shall be Xxxxxxx Splendor JV.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, PMC and HSS agree as follows:
ARTICLE I
REPRESENTATIONS. WARRANTIES. AND COVENANTS
------------------------------------------
1.1 CAPACITY OF PARTIES. Each of the parties represents and warrants
as follows:
(a) that it is a corporation duly organized and in good standing
in its jurisdiction of formation and that it is qualified to do business and is
in good standing in those jurisdictions where necessary in order to carry out
the purposes of this Agreement; (b) that it has the capacity to enter into and
perform this Agreement and all transactions contemplated herein and that all
corporate and other actions required to authorize it to enter into and perform
this Agreement have been properly taken; (c) that it will not breach any other
agreement or arrangement by entering into or performing this Agreement; and, (d)
that this Agreement has been duly executed and delivered by it and is valid and
binding upon it in accordance with its terms.
1.2 TITLE OF ASSETS. PMC and HSS make the following representations and
warranties to each other as of the Effective Date hereof.
(a) To the best of its knowledge and belief, PMC represents that
with respect to the subject inventory:
i) PMC is in exclusive possession and ownership of the
subject inventory;
ii) the subject inventory is free and clear of all defects,
liens, and encumbrances, created by, through, or under
PMC.
(b) To the best of its knowledge and belief, HSS represents
that with respect to the inventory:
(i) that HSS has satisfied itself that PMC owns the entire
and undivided title and interest in and to same;
(ii) that PMC has supplied HSS with assay reports, which assay
reports were prepared by an independent registered
assayer;
1.3 INDEMNITY. The Participants agree to comply with valid
and applicable local, state, and federal laws and regulations governing its
operations hereunder.
Each Participant agrees to indemnify and save the other
Participant harmless from any and all actions, claims, or liability for injury
to or death of persons, for damage to property or for conditions resulting from
either of the Participant's acts or omissions, together with any and all costs,
expenses, and fees, including attorneys' fees incurred by the other Participant
incidental thereto.
Each Participant hereby agrees to indemnify and hold the
other Participant harmless from any and all losses, claims, liabilities, and
causes of action regarding any environmental liability or adverse environmental
condition which may arise from or exist with respect to the inventory and which
results from any occurrence on the processing property for which such
environmental liability or adverse environmental condition is determined to
exist subsequent to the Effective Date hereof.
1.4 DISCLOSURES. Each of the parties represents and warrants
that it is unaware of any material facts or circumstances which have not been
disclosed in this Agreement and which should be disclosed to the other parties
in order to prevent the representations in this Article I from being materially
misleading.
1.5 ACKNOWLEDGEMENT OF PUBLIC COMPANY STATUS. PMC andHSS
hereby acknowledge that PMC is a one hundred percent (100%) owned subsidiary of
Health Care Centers of America, Inc. (HCCA). HCCA is a publicly traded stock,
which is subject to the rules and regulations of the United States Securities
and Exchange Commission (SEC). HSS agrees to fully cooperate with the
accountants, attorneys and agents of PMC/HCCA in order to assure complete
compliance with all SEC rules, regulations, administrative orders, etc. Further,
HSS agrees to fully cooperate with PMC/HCCA regarding compliance with any state
statutes, regulations, rules, etc. governing the operation of PMC/HCCA and the
JV created by this Agreement.
ARTICLE II
----------
GRANT OF RIGHTS
---------------
2.1 GRANT OF RIGHTS. PMC hereby grants to HSS the exclusive
right, pursuant to the teens of this Agreement, to earn an undivided twenty
percent (20%) interest in the net revenues received as a result of the sale of
the processed inventory. In return, PISS shall provide, among other things, the
proper permits for the processing [including smelting operations, etc.]of the
ore inventory, assistance with the processing operations and the necessary
machinery, equipment, laboratory facilities and structures for the initial
period of the processing operations.The "initial period" for purposes of this
Agreement is hereby defined as nine (9) months from the Effective Date of the
Agreement.
2.2 PMC'S RIGHTS DURING THE TENURE OF THE AGREEMENT. PMC
shall have the unrestricted right to sample all material relative to the
processing of the inventory, as long as said sampling does not unduly interfere
with the processing of the inventory, including but not limited to, the
following:
(a) Sampling each and every load at the pit site;
(b) Sampling each and every load delivered to the processing
site;
(c) Sampling from the attendant lease site;
(d) Sampling from the end product created after the ore has
been processed. Any and all other samplings may be taken as may be desired by
PMC or required by PMC accountants or by Securities and Exchange Commission
(SEC) regulations, etc. PMC shall, at all times, have the right to have its
representatives and/or agents at any and all stages of the processing of the
inventory and the sale of the end product.
ARTICLE III
-----------
PURPOSES AND TERM
-----------------
3.1 PURPOSES. The JV is created for the following purposes and for no
others, and shall serve as the exclusive means by which the Participants, or
either of them, accomplish such purposes:
(a) to engage in the processing of the inventory as
previously described herein;
(b) to engage in the marketing of the inventory in the
manner and to the extent described herein; and,
(c) to perform any other activity necessary, appropriate, or
incidental to any of the foregoing and any other activity expressly provided for
herein.
3.2 TERM. The term of this Agreement shall be eight (8) years from the
Effective Date and for so long as it takes to process and sell the inventory
which is the subject matter of this Agreement, unless the Agreement is earlier
terminated as herein provided.
ARTICLE IV
----------
RELATIONSHIP OF THE PARTICIPANTS
--------------------------------
4.1 PARTNERSHIP. Nothing contained in this Agreement shall be deemed to
constitute either Participant, the partner of the other, nor, except as
otherwise herein expressly provided, to constitute either Participant the agent
or legal representative of the other, nor to create any fiduciary relationship
between them. It is not the intention of the Participants to create, nor shall
this Agreement be construed to create, any mining, commercial, or other
partnership. Neither Participant shall have any authority to act for or to
assume any obligation or responsibility on behalf of the other Participant,
except as otherwise expressly provided herein. The rights, duties, obligations,
and liabilities of the Participants shall be several and not joint or
collective. Each Participant shall be responsible only for its obligations as
herein set out and shall be liable only for its share of the costs and expenses
as provided herein, it being the express purpose and intention of the
Participants that their ownership of assets and the rights acquired hereunder
shall be as expressed in this Agreement. Each Participant shall indemnify,
defend, and hold harmless the other Participant, its directors, officers,
employees, agents, and attorneys from and against any and all losses, claims,
damages, and liabilities arising out of any act or any assumption of liability
by the indemnifying Participant, or any of its directors, officers, employees,
agents, and attorneys done or undertaken, or apparently done or undertaken, on
behalf of the other Participant, except pursuant to the authority expressly
gamed herein or as otherwise agreed in writing between the Participants.
4.2 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this
Agreement, each Participant shall have the right independently to engage in and
receive full benefits from other business activities, whether or not competitive
with the JV, without consulting the other.
4.3 TERMINATION. In the event of any default by either of the
Participants in the performance of its obligations hereunder, the non-defaulting
party shall give the defaulting party written notice specifying the default. If
the default is not cured within forty-five (45) days after the defaulting party
has received the notice, or if the defaulting party has not within that time
begun action to cure the default and does not thereafter diligently prosecute
such action to completion, the non-defaulting party may terminate this venture
by delivering to the defualting party written notice of such termination.
4.4 CONTINUING OBLIGATIONS. On termination of this Agreement, the
Participants shall remain liable for continuing obligations hereunder until
final settlement of all accounts and for any liability, whether it accrues
before or after termination.
4.5 RIGHT TO DATA AFTER TERMINATION. After termination of this
Agreement, each Participant shall be entitled to copies of all information
acquired hereunder before the effective date of termination not previously
furnished to it.
ARTICLE V
INTERESTS OF PARTICIPANTS
5.1 PARTICIPATING,INTERESTS. The Participants shall have the following
participating interests in the JV (subject to the terms of Paragraph 6.2):
PMC - 80%
HSS - 20%
5.2 OBLIGATIONS OF PARTICIPATING INTERESTS, The obligations of the
Participating Interests are as follows:
(a) HSS shall satisfy all attendant expenses during the initial
refining, smelting, and processing of the subject inventory, inclusive of the
provision of all equipment necessary for same. PMC shall, to the extent it
exists, provide for the use of any equipment already owned by PMC and readily
available.
PMC shall satisfy all attendant expenses relative to its sampling
of the inventory.
(b) HSS shall maintain accurate and current records of all
information related to the processing of the inventory; these records shall
include, but not be limited to: transportation costs, processing costs, cost of
equipment and machinery, the amount of inventory processed per each calendar
month during the effectiveness of this Agreement, and those items as otherwise
provided for in this Agreement, etc. Upon five (5) days notice from PMC of its
request for the above records, HSS shall provide same.
(c) Regardless of anything to the contrary, HSS shall provide
unaudited quarterly financial reports to PMC within forty- five (45) days of the
end of each calendar quarter relating to the operation of the JV.
(d) In addition to the above, HSS shall, at the end of each
calendar year, provide PMC's independent auditors with all financial or other
information reasonably required by PMC's independent certified public
accountants so that they can conduct and prepare an independent audit.
(e) HSS shall provide any additional financial and other
information as is reasonably required by PMC's auditors (whether they be agents
of PMC or independent auditors) so that PMC will be able to comply with all SEC
reporting requirements and those reporting requirements required by any state
having jurisdiction over the parties or subject matter of this agreement. HSS
shall fully cooperate with PMC, its agents or independent auditors in the
acquisition of this information.
ARTICLE VI
----------
DISTRIBUTIONS
-------------
6.1 NET REVENUE. For the purposes of this Agreement, "net revenue"
for any period means the amount of money received from the sale of the processed
inventory produced by the venture after deductions for all processing related
expenses. Except for expenses incurred during the initial period of the
processing operations [which expenses are the sole responsibility of HSS], the
expenses related to the processing of the ore inventory and the sale of the
finished product shall be paid by the JV from revenues generated by the JV. Said
expenses shall be deducted from the gross revenues generated by the JV, the net
revenues shall be distributed in accordance with the terms of this Agreement.
With respect to any mill tailings or other residue remaining after
processing of the inventory, which is owned by PMC and is the subject matter of
this agreement , it is hereby agreed that they shall remain the property of the
JV and shall be reprocessed so long as it is economically viable for the JV,
which viability shall be determined by the agreement of the parties. If the
parties do not agree as to the economic viability of further processing of the
tailings or other residue, then same shall be the sole property of PMC, free of
all interests of HSS.
6.2 DISTRIBUTIONS DURING AGREEMENT, PERIOD. The net revenues shall
be distributed as following during the Agreement period:
(a) Eighty percent (80%) of the net revenues shall be accorded to
and paid to PMC.
(b) The remaining twenty percent (20%) of the net revenues shall
be accorded to and paid to HSS.
ARTICLE VII
-----------
MARKETING OF PRODUCTION
-----------------------
7.1 PMC shall have responsibility for the sale and marketing of
all products generated from the processing of the inventory in accordance with
the provisions of this Agreement, including without limitation, the following:
(a) PMC shall sell and market, on behalf of the Participants, the
products. And, for that purpose shall have general authority over the day-to-day
affairs of the sale and marketing.
(b) PMC shall manage and administer all such contracts, including
keeping good relations with customers, provide customers with various
information and notifications related to the product, furnish, upon request,
certificates of origin and generally follow the requirements and the concepts
that are set forth in the existing and future sales contracts.
(c) PMC shall ascertain that the sales, the sales contracts, the
transport and delivery of products comply with the various laws and regulations
of the state and countries where the product is delivered.
(d) PMC shall handle and supervise the transport of products
either by air, railway or trucking, or any other means. The JV shall provide
appropriate insurance coverage.
(e) PMC, on behalf of and in the name of the JV, shall invoice
customers for the product delivered and obtain payment of it from customers and
take any measure to obtain such payment.
(f) PMC shall procure from experts and consultants such special
marketing, financial, legal, and other professional services as may be necessary
or desirable in connection with the smelting, sale, and marketing of the
products.
(g) PMC shall rent, purchase, or acquire, such machinery,
equipment, material, supplies, and other facilities as PMC may deem advisable or
necessary for the sale and marketing of the products.
(h) PMC shall keep and maintain books of accounts and such other
records pertaining to the sale and the marketing of the products. PMC shall
provide HSS access to said books and records.
(i) PMC, through the JV, shall be responsible for crediting the
accounts of each of the Participants, less the appropriate processing, marketing
and sales expenses, in proportion to their respective participating interests
with all amounts received in payment of any sales of products.
(j) PMC, through the JV, shall tender to HSS, in accordance with
HSS's instructions, HSS's portion of the distribution of the net revenues by the
thirtieth (30th) of each month. Said proportionate distribution shall be from
the revenues received during the immediately preceding month from sales of the
finished product of the processed inventory.
11
ARTICLE VIII
------------
TRANSFER OF INTEREST
--------------------
8.1 The rights of either party hereunder may not be assigned, in
whole or in part.
ARTICLE IX
----------
DISPUTES
--------
9.1 If any dispute or conflict, whether contractual or not in
nature, arises out of or in connection with the JV, this Agreement, or any
exhibit or the breach, termination, validity, performance, or interpretation
thereof, either Participant may give notice to the other Participant to convene
a meeting to resolve the dispute. The Participants shall meet within forty-five
(45) days from the date of the notice convening the meeting and shall use their
best efforts to achieve a negotiated settlement to the dispute.
9.2 The Participants to a dispute may, but need not, refer a
dispute to the court for purposes of attempting a conciliation or mediation
thereof, m which event the rules and practices of the Court relating to
conciliation or mediation shall apply.
9.3 Nothing in this Article IX shall prevent the Participants to a
dispute from applying to a court of competent jurisdiction for the appropriate
remedy to any dispute.
ARTICLE X
---------
GENERAL PROVISIONS,
-------------------
10.1 NOTICES. Any notice, payment, or other communication
hereunder shall be given in writing and delivered by hand, by registered air
mail, by telegram, by telex, or telefax, or by overnight courier. Any such
notice shall be given to each of the Participants at their following addresses:
If the notice is to PMC, to:
12
Xxxxxxx Mining Co.
000 X. Xxxxxxxxx Xxx. Xxxxx 00X
Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
If the notice is to, HHS, to:
Hidden Splendor Smelting Co.
00 X. Xxxxxxx Xx. Xxxxx 000
Xxxx, XX 00000
Attention: Xxxxx Xxx Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
Or to any other addresses that any Participant may at any time
designate by written notice to the other Participant.
All notices shall be effective and shall be deemed delivered (i)
if by hand, on the date of delivery if delivered during normal business hours,
and, if not delivered during normal business hours, on the next business day
following delivery, (ii) if by electronic communication, on the next business
day following receipt of the electronic communication, and (iii) if solely by
mail, on the next business day after actual receipt.
10.2 WAIVER. The failure of a Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power,
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the Participant's right thereafter to enforce any
provision or exercise any right.
10.3 MODIFICATION. No modification of this Agreement shall be
valid unless made in writing and duly executed by the Participants.
10.4 FORCE MAJEURE. Except for the obligation to make payments
when due hereunder, the obligations of a Participant shall be suspended to the
extent and for the period that performance is prevented by any cause, whether
foreseeable or unforeseeable, beyond its reasonable control, including, without
limitation, labor disputes (unless employee demands are reasonable or within the
power of the participant to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit, or other authorization;
curtailment or suspension of activities to remedy or avoid an actual or alleged,
present or prospective violation of federal, state, or local environmental
standards; acts of war or conditions arising out of or attributable to war,
whether declared or undeclared; riot, civil strife insurrection or rebellion;
fire, explosion, earthquake, storm, flood, sink holes, drought, or other adverse
weather i condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment or by contractors' or subcontractors'
shortage of, or inability to obtain, labor, transportation, materials,
machinery, equipment, supplies, utilities or services; accidents, breakdown of
equipment, machinery or facilities; or any other cause whether similar or
dissimilar to the foregoing. The affected Participant shall promptly give notice
to the other Participant of the I suspension of performance, stating therein the
nature of the suspension, the reasons therefor, and i the expected duration
thereof.
10.5 GOVERNING LAW: LANGUAGE. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Nevada.
10.6 HEADINGS. The headings inserted in this Agreement are
inserted only for convenience and in no way define, limit, or describe the scope
or intent of this Agreement or affect its terms and provisions.
10.7 NO IMPLIED COVENANTS. There are no implied covenants
contained in this Agreement other than those of good faith and fair dealing.
10.8 MONETARY AMOUNTS. All monetary amounts expressed in this
Agreement shall mean U.S. dollars, unless otherwise expressly provided.
10.9 INTERPRETATION. In the event that a court of competent
jurisdiction determines that any teen, part, or provision of this Agreement in
unenforceable, illegal, or in conflict with any laws to which this Agreement is
subject, the parties intent that the court reform that term, part of provision
within the limits permissible under the law in such manner as to approximate
most closely the intent of the parties to this Agreement; provided that, if the
court cannot make such reformation, then that term, part, or provision shall be
considered severed from this Agreement. The remaining I portions of this
Agreement shall not be affected, and this Agreement shall be construed and
enforced as if it did not contain that term, part, or provision.
10.10 FURTHER ASSURANCES. Each of the Participants shall take from
time to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
10.11 ENTIRE AGREEMENT: SUCCESSORS. This Agreement contains the
entire understanding of the Participants and supersedes all prior agreements and
understandings between the Participants relating to the subject matter hereof.
This Agreement shall be binding upon and inure to the benefit of the respective
successors of the Participants. In the event of any conflict between this
Agreement and any exhibit attached hereto, the terms of this Agreement shall be
controlling.
10.12 COUNTERPARTS. This Agreement may be executed in one or more
original counterparts, all of which shall constitute one and the same
instrument. (sic) is not, in PMC's sole discretion, sufficient, then this
agreement shall be null and void.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ATTEST: XXXXXXX MINING CO., a Nevada
Corporation, a wholly owned subsidiary of
Health Care Centers of America, Inc.
By By /s/Xxxxxxx Xxxxxxx
------------------ ------------------
XXXXXXX X. XXXXXXXX Xxxxxxx Xxxxxxx
Title Secretary Title President
ATTEST: HIDDEN SPLENDOR SMELTING CO.
a Nevada Corporation.
By By /s/ Xxxxx Xxxx Xxxxxx
------------------------ ---------------------
Xxxxx Xxxx Xxxxxx
Title: Secretary Title: President
