Exhibit 10.a
MINING JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT is made as of the 27 day of January, 1999 by
and between South American Minerals, Inc., a Nevada corporation ("SAMM") and
Cuyuni River Venture #1, LLC, a Delaware limited liability company ("Cuyuni" or
the "Company"), (hereinafter collectively referred to as the "Parties" or the
"Participants").
WHEREAS, SAMM is a professional mineral mining company that now performs
mining for gold and diamonds, respectively, and
WHEREAS, the Parties wish to form an unincorporated joint venture ("Joint
Venture"), for the principal purpose of new mining within a specified area of
interest described in Schedule I ("TERRITORY"), for gold, diamonds and other
mineral deposits which by value are believed to contain predominantly gold
(referred to herein as "Gold Deposits"); and
WHEREAS, the Parties wish to cooperate with each other as described herein
to increase business opportunities for each Participant and for their mutual
benefit; and
WHEREAS, the Parties wish to provide terms for the sharing of Gold
Deposits discovered as hereinafter set forth; and
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the Parties agree as follows:
ARTICLE 1
REPRESENTATIONS AND WARRANTIES
1.1 Representations and Warranties. Each of the Participants represents and
warrants as follows:
(a) that it has the legal capacity and authority to enter into and perform this
Agreement and all transactions contemplated herein; and
(b) that by entering into this Agreement it will not breach any other agreement.
ARTICLE 2
NAME, PURPOSES AND TITLE TO ASSETS
2.1 General. The Participants enter into this Agreement for the purposes
stated below, and agree that all of their rights and all of the activities
contemplated herein shall be subject to and governed by this Agreement.
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2.2 Name, Registration and Qualification. The name of this Joint Venture shall
be the Cuyuni Mining Joint Venture. The Manager (as hereinafter identified
and defined) shall accomplish any registration or qualification on behalf
of the Joint Venture as may be required by applicable laws and shall
comply with all government regulations.
2.3 Purposes. This Agreement is entered into for the following purposes, and
shall serve as the exclusive means by which the Participants, or any of
them, accomplish such purposes:
(a) to conduct water based dredge mining activities within the TERRITORY,
with the principal emphasis on discovering Gold Deposits;
(b) to provide for the sharing of proceeds (in accordance with Exhibit A
annexed) from Gold Deposits discovered hereunder; and
(c) to perform any other activity necessary, appropriate, or incidental to
any of the foregoing
2.4 Title to Assets.
A. Equipment: All of the equipment consisting of one dredge, one ▇▇▇▇▇▇,
and ancillary equipment (the "Equipment") to be utilized for the mining
activities in the Mining Area by the Joint Venture ("Schedule I") shall be owned
by the Joint Venture.
B. License/Permit: All rights to the licensed property shall belong to
SAMM or its subsidiary to be utilized by the Joint Venture as specified herein
for the benefit of the Participants.
(c) The Joint Venture shall be responsible for the maintenance and repair
of the Equipment for the term hereof.
ARTICLE 3
RELATIONSHIP OF THE PARTICIPANTS
3.1 No Partnership. Nothing contained in this Agreement shall be deemed to
constitute any Party the partner of the other, nor, except as otherwise
herein expressly provided, to constitute any Party the agent or legal
representative of the other, nor to create any fiduciary relationship
between them. It is not the intention of the Parties to create, nor shall
this Agreement be construed to create, any mining, commercial or other
general partnership. No Party shall have any authority to act for or to
assume any obligation or responsibility on behalf of another Party, except
as expressly provided herein. The rights, duties, obligations and
liabilities of the Parties shall be several and not joint or collective.
Each Party 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.
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3.2 U.S. Tax Elections and Allocations. The Parties hereto agree that the
Joint venture shall not be treated as a partnership for federal income tax
purposes. Pursuant to Treas. Reg. (S)1.761-2(b), each Party elects to have
the Joint Venture excluded from Chapter 1 of Subchapter K of this Internal
Revenue Code of 1986. Each Party independently shall be entitled to claim
for itself all applicable tax benefits, write-offs, and deductions with
respect to all and any costs that it has incurred.
3.3 Implied Covenants. There are no implied covenants contained in this
Agreement to her than those of good faith and fair dealing.
ARTICLE 4
CONTRIBUTIONS BY PARTICIPANTS
4.1 Contributions of Participants. The respective contributions of the
Participants shall be as follows:
SAMM: Subject to the terms and/or assignment of the grant of
concession from the government of Guyana, SAMM shall arrange for the
rights or the permit to mine the specified concession area (the "Mining
Area" as more fully described in Exhibit A), and shall arrange for all
necessary personnel to conduct the mining operation within the Mining Area
for the benefit of the Participants. SAMM acknowledges that the funds
provided by Cuyuni (specified below) shall be sufficient to purchase all
the equipment, prepare the site and cover all other costs necessary for
the commencement of operations.
Cuyuni: (a) shall purchase 75,000 restricted shares of Common Stock
of SAMM for $75,000 (which funds will be segregated by SAMM, to be
contributed for its participation in the Joint Venture and used for the
purchase of the Equipment); (b) shall contribute $225,000 to the Joint
Venture for a 25% interest in the Joint Venture and shall be used to
complete the Equipment purchase and as capital to commence operations.
Neither Cuyuni nor any of its Members shall be required to make any
additional cash and/or property contributions to the Joint Venture.
ARTICLE 5
INTERESTS OF PARTICIPANTS; DEFAULTS AND REMEDIES
5.1 Participating Interests. Subject to the provisions of Article 4, the
Participants shall have the following participating interests in the net
proceeds derived from the Gold Deposits retrieved in the mining activities
and other assets that may be acquired by the Joint Venture:
SAMM - 75%
Cuyuni - 25%
5.2 Net Profit Sharing. The participants shall share the net proceeds derived
by the Joint Venture from the Gold Deposits after deduction of any royalty
payable under the license, deduction of other expenses directly related to
the dredge mining activities, reserve for local taxes, current operating
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expenses and reasonable reserve fund for operations. Such sharing shall be
on the above-mentioned basis at least quarterly, or earlier if
practicable.
5.3 No Further Contributions. Cuyuni shall not be responsible for any further
contributions to capital and any monthly or quarterly loss shall not
result in a call for contribution by Cuyuni; it shall be dealt with solely
by the Manager and adjusted from future distribution allocations.
5.4 Minimum Distribution Option. In the event that, due to insufficient Joint
Venture production income, (pre-Guyana corporate and withholding tax)
amounts allocable for and distributed to the Company aggregate less than
$125,000 in any continuous 12-month period during the first 2 years
immediately following commencement of Joint Venture operations (commencing
calendar year 1999) pursuant to the terms hereof, SAMM at its option shall
either (a) advance the difference in cash; or (b) offer the Company a
substitute licensed property with appropriate geological data. In the
event of an advance by SAMM, such amount shall be repayable by the Joint
Venture to SAMM from future annual net profits provided such annual net
profits of the Joint Venture exceed an aggregate of $1,000,000, at the
rate of 10% of the excess over $1,000,000.
5.5 Equipment Maintenance and Improvements. Cost of operations shall include
maintenance of the dredges, ▇▇▇▇▇▇ and other equipment to keep in good
order and make improvements when necessary. Technology and maintenance
shall be deducted before determination of any distribution.
ARTICLE 6
MANAGER
6.1 Appointment. The Manager shall be SAMM or its designated affiliate.
The Manager shall report to Cuyuni or Cuyuni's representative, monthly as
to results and status of operations.
6.2 Powers and Duties of Manager. Subject to the terms and provisions of this
Agreement, the Manager, on behalf of the Joint Venture, shall have the
following powers and duties which shall be discharged in accordance with
adopted budgets and programs:
(a) The Manager shall manage, direct and control mining activities.
(b) The Managers shall implement the decisions of the Participants
and shall make all expenditures necessary to carry out adopted budgets and
programs.
(c) The Manager shall: (i) purchase, rent or otherwise acquire the
use of all material, supplies, equipment, water, utility and
transportation services required for mining activities, such purchases and
acquisitions to be made on the best terms reasonably available, taking
into account all of the circumstances; and (ii) keep the Mining Assets,
dredges and ▇▇▇▇▇▇ free and clear of all liens and encumbrances, except
(a) those existing at the time of, or created concurrent with, the
acquisition of such assets, or (b) mechanic's, supplier's, tax or
materialmen's liens which the
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Manager shall cause to be released or discharged in a diligent manner, or
(c) liens and encumbrances specifically approved by the Participants.
(d) The Manager shall conduct or produce such title examinations and
cure such title defects as may be advisable in the reasonable judgment of
the Manager, and shall do all other acts reasonably necessary to maintain
the assets and properties of the Joint Venture.
(e) The Manager shall prosecute and defend all litigation or
administrative proceedings arising out of mining activities and shall
promptly advise Participants of the institution or threat of any action by
a third party. Any Participant may elect to participate and be represented
by its own counsel at its own cost in any such litigation.
(f) The Manager shall arrange, at reasonable costs and coverages,
for insurance, if available, for the benefit of the Participants and shall
apprise the Participants of the extent of such coverage.
(g) The Manager may sell Gold Deposits in the ordinary course of
business, except that other properties of the joint venture or any
Participant may be transferred, released, abandoned or surrendered only
upon unanimous consent of the Participants or Participant as the case may
be. Notwithstanding the foregoing, without prior authorization from the
Parties, the Manager shall not: (i) dispose of property or assets of the
joint venture in any one transaction having a value in excess of $10,000;
(ii) begin a liquidation of the Joint Venture; (iii) dispose of all or a
substantial part of the Assets necessary to achieve the purposes of the
Joint Venture; or (iv) transfer any confidential information to third
parties except as required by law or pursuant to relevant license
agreements.
(h) The Manager shall have the right to carry out its
responsibilities hereunder through agents, employees, affiliates or
independent contractors.
(i) The Manager shall keep and maintain all required accounting and
financial records in accordance with generally accepted accounting
practices in the mining industry, and provide to the Participants such
accounting information as may be reasonably needed by such Participants to
evaluate the enterprise and in connection with their disclosure
requirements.
(j) The Manager shall keep the Participants advised of all mining
activities by submitting in writing to the Participants:
(i) Regular progress reports which shall include statements of income
and expenditures
(ii) periodic summaries of data acquired or produced through mining
activities;
(iii) a report within twenty (20) days after completion of each month,
which shall include comparisons between actual and budgeted
expenditures and comparisons between the objectives and results of
operations; and
(iv) (iv) such other reports and comparisons of such expenditures to an
adopted budget as the Participants may reasonable request. At all
reasonable times the Manager shall provide the Participants or the
representative of any Participant access to and the right to inspect
and copy
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all administrative, geologic, operations, technical, accounting and
financial records, and other information acquired in Mining
Activities which the Participant shall keep confidential to the
extent practicable. In addition, the Manager shall allow the
non-managing Participant, at the latter's sole risk and expense, and
subject to reasonable safety regulations, to inspect the assets,
properties and mining activities at all reasonable times, so long as
the inspecting Participant does not unreasonable interfere with
mining activities.
(k) The Manager shall undertake all other activities reasonable
necessary to fulfill the purposes of the Agreement.
6.3 Standard of Care. The Manager shall conduct all mining activities in a
good, workmanlike and efficient manner, in substantial accordance with all
applicable laws, sound mining and other applicable industry standards and
practices, and in accordance with the terms and provisions of concessions,
leases, licenses, permits, options and other agreements pertaining to the
joint venture, assets and properties. The Manager shall not be liable to
the non-managing Participant for any act or omission resulting in damage
or loss except to the extent caused by or attributable to the Manager's
willful misconduct or gross negligence.
6.4 Transactions With Manager's Affiliates. If the Manager engages any of its
affiliates to provide services hereunder, it shall do so on terms no less
favorable to the Joint venture than would be available from a qualified
unrelated person in an arm's length transaction.
ARTICLE 7
TERM, WITHDRAWAL AND TERMINATION OF AGREEMENT
7.1 Term. The initial term of this Agreement shall be ten (10) years, after
which it will terminate unless the Parties mutually agree to extend this
Agreement. If it is determined by an independent geological report that
there is sufficient mining opportunity to continue commercial production,
then the Company shall have the right to extend the agreement on the same
terms and conditions for a similar period as permitted by the license as
the same may be executed. In addition, this Agreement may be terminated by
mutual agreement of the Participants at any time during its initial term
or any extended term.
7.2 Continuing Obligations. Upon termination of this Agreement, the
Participants shall remain liable, continuing obligations hereunder until
final settlement of all accounts, and for any liability, whether it
accrues before or after termination, if it arises out of mining activities
conducted by Joint Venture during the term of the Agreement.
7.3 Disposition of Assets upon Termination. Promptly after termination under
Section 7.1, the Manager shall take all action necessary to wind up the
activities of the Joint Venture, and all costs and expenses incurred in
connection with the termination of the Joint Venture shall be expenses
chargeable to the Joint Venture. Any non-cash assets of the Joint Venture
shall be liquidated to cash and proceeds from liquidation shall first be
paid, applied, or distributed in satisfaction of the liabilities of the
Joint Venture to third parties and then shall be applied to satisfy any
debts,
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obligations, or liabilities owned to the Participants. Before distributing
any funds or assets to Participants, the Manager shall have the right to
segregate amounts which, in the Managers, reasonable judgment, are
necessary to discharge continuing obligations or liabilities. Thereafter,
any remaining cash and all other assets, excluding the equipment, shall be
distributed (non cash assets in undivided interests unless otherwise
mutually agreed) to the Participants, first in the ratio and to extent of
their respective capital accounts and then in proportion to their
respective Participating Interests, subject to any dilution, reduction, or
termination of such Participating Interests as may have occurred pursuant
to the terms of this Agreement.
7.4 Right to Date 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 to the extent not
previously furnished to it and to the extent it is entitled to it.
7.5 Continuing Authority. On termination of this Agreement under this Article
7, after consultation with the Company the Manager shall have the power
and authority to do all things on behalf of the Participants which are
reasonable necessary or convenient to (a) wind up mining activities or (b)
complete any transaction and satisfy any obligation, unfinished or
unsatisfied, at the time of such termination or withdrawal if the
transaction or obligation arises out of mining activities prior to such
termination. The Manager shall have the power and authority to take any
other reasonable action in any matter with respect to which the former
Participants continue to have, or appear to have, a common interest or a
common liability.
ARTICLE 8
TRANSFER OF INTEREST
8.1 Transfer of Interest. No Participant shall have the right to transfer to
any third party all or any part of its interest in or to this Agreement,
the Joint Venture, its Participating Interest, the Properties or any other
Assets, without the consent and prior approval of the other Participant,
which shall not be unreasonably withheld, except that a Party may, without
such consent, make such a transfer to an affiliate possessing the
requisite financial capacity and mining experience to perform hereunder
and which assumes the transferring Party's obligation hereunder.
ARTICLE 9
CONFIDENTIALITY AND RELEASES
9.1 General. All nonpublic information obtained in connection with the
performance of this Agreement shall be the exclusive property of the Joint
Venture and shall not be disclosed, except as provided in Section 9.2, to
any third party or the public without the prior written consent of the
other Participant, which consent shall not be unreasonably withheld.
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9.2 Exceptions. The consent required by Section 9.1 shall not apply to a
disclosure:
(a) To an affiliate, consultant, contractor, subcontractor or
licensor which has a bona fide need to be informed;
(b) To any third party to whom the disclosing Party contemplates a
transfer, with the prior consent of the other Party, of all or any part of
its interest in or to this Agreement, its participating interest, or the
assets; or
(c) which the disclosing party is required by applicable law or regulation or
the rules of any applicable stock exchange to disclose; provided that in
any case to which this Section 9.2 is applicable, the disclosing party
shall give written notice to the other party prior to the making of any
such disclosure. As to any disclosure pursuant to Section 9.2(a) or (b),
only such confidential information as such third party shall have a
legitimate business need to know shall be disclosed and such third party
shall first agree in writing to protect the confidential information from
further disclosure to the same extent as the Parties are obligated under
this article 9;
d) if required pursuant the terms of the relevant license agreement.
9.3 Duration of Confidentiality. The provisions of this Article 9 shall apply
during the term of this Agreement and shall continue to apply to any
Participant who transfers its participating interest in the Joint Venture
or in any property, for two years following the date of such occurrence.
9.4 Releases. There shall be no public release by any Participant of any
material nonpublic information concerning the properties, the mining
Activities or the Joint Venture without the prior consent of the other
Participant (such consent not to be unreasonably withheld) unless counsel
for a Participant advises that such information is required by a lawful
authority or other regulatory body having jurisdiction in which case the
Participant making such required disclosure shall first deliver a copy
thereof to the other Participant and allow it twenty-four (24) hours to
comment on the nature and extent of such required disclosure.
ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. All notices, payments and other required communications
("Notices") to the Parties shall be in writing, and shall be addressed
respectively as follows:
South American Minerals, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇ ▇▇▇)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
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Cuyuni River Venture #1 LLC, c/o ▇▇▇▇▇▇-▇▇▇▇ Securities, Inc., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attn: Management Committees, with copies to each member of the Management
Committee at the address designated in the Offering Memorandum under
"Management", annexed hereto.
All notices shall be given (i) by personal delivery to the Participant, or
(ii) by facsimile communication, with a confirmation sent by registered or
certified mail return receipt requested, (iii) by registered or certified
mail return receipt requested or (iv) by express mail or other overnight
delivery service. A Party may change its address by written Notice to the
other Party.
10.2 Waiver. The failure of a Party 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 other provision of
this Agreement or limit such Party's right thereafter to enforce such
provision or exercise such right, power or remedy on any subsequent
occasion.
10.3 Modification. No amendment or modification of this Agreement shall be
valid unless made in writing and duly executed by the Parties.
10.4 Force Majeure. Except for the obligation to make payments when due
hereunder, the obligations of a Party 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. The affected
Party shall promptly give notice to the other Party of the suspension of
performance, stating therein the nature of the suspension, the reasons
therefor, and the expected duration thereof and this Agreement shall be
extended by the total period of such delays or suspension. The affected
Party shall resume performance as soon as reasonably possible.
10.5 Disputes. Except as otherwise provided in this Agreement, in the event the
Parties have a dispute hereunder, they shall meet, within thirty (30) days
from the receipt of a written request for a meeting from any Party, for
the purpose of resolving in good faith such dispute. If such dispute is
not resolved within thirty (30) days after such meeting, the Parties shall
appoint a mediator and attempt to resolve such dispute through mediation
for at least sixty (60) days from such appointment. If the dispute remains
unresolved beyond such sixty (60) days, the Parties shall hereby consent
to the jurisdiction and venue of the State or Federal Courts in New York,
NY for the resolution of such dispute.
10.6 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
10.7 Further Assurances. Each of the Participants agree to take from time to
time such actions and execute such additional instruments as may be
reasonably necessary or appropriate to implement and carry out the intent
and purpose of this Agreement, including, but not limited to, those
actions necessary to conduct business as contemplated herein in foreign
jurisdictions.
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10.8 Survival of Terms and Conditions. Continuing rights and obligations of the
Parties as defined herein shall survive the termination of this Agreement.
10.9 Interpretation. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles
refer to sections and articles of this Agreement unless otherwise stated.
Unless the context otherwise requires, words used herein importing the
singular include the plural and vice versa.
10.10 Entire Agreement; Successors and Assigns. This Agreement contains the
entire Parties relating to the subject matter hereof. This Agreement shall
be binding upon and inure to the benefit of the respective successors and
permitted assigns of the Parties, but nothing contained in this Agreement
shall be deemed to create any rights in persons or entities that not
Parties to this Agreement or their successors or permitted assigns. In the
event of any conflict between this Agreement and any Exhibit attached
hereto, the terms of this Agreement shall control.
IN WITNESS WHEREOF this Agreement has been executed by the Parties
hereto effective as of the day and year first above written.
Consented to:
NORTH AMERICAN RESOURCES, INC. LTD. SOUTH AMERICAN MINERALS, INC.
by by /s/
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President Pres.
CUYUNI RIVER VENTURE #1, LLC
by /s/
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Manager
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