EXHIBIT 10(cc)
Mr. Lee Furlong
President
International Precious Metals, Inc.
4625 South Ash Avenue, Suite J-1
Tempe, AZ 85282
RE: Preliminary Agreement -- International Precious Metals, Inc.
("International") with Auric Metallurgical Laboratories, LLC ("Auric")
Dear Mr. Furlong:
This preliminary letter of understanding will follow up and supersede the
preliminary letter of understanding sent to your office via fax on June 6, 1997.
This replacement letter of understanding is based upon and required by
your explanatory letter of additional terms sent to my office on June 6, 1997
and my client's representation of your follow-up discussions of this date.
By way of recitals, my client understands and acknowledges your firm's
concern to preliminary test the "Fire Assay Procedure" ("the Technology")
upon actual ore samples mined or processed by your firm, before making an
irrevocable commitment to purchase the Technology as earlier outlined. My
client, Auric, is primarily concerned that in showing and demonstrating the
Technology to your firm that they do not in any manner surrender their
exclusive rights and interest in what Auric considers to be its unique
proprietary process. As a result, Auric wants you to be fully satisfied
before proceeding with the purchase obligation; concomitantly, your firm
needs to fully appreciate the concern of Auric in protecting the
confidentiality of its proprietary technology. This revised preliminary
letter of understanding is prepared to address both these concerns while
outlining the purchase terms.
As earlier outlined in the preliminary intent letter of June 6, 1997 from our
office, International is willing to purchase the rights to use the Technology
for its own refining and processing activities in perpetuity for the
consideration of Seven Hundred Fifty Thousand Dollars U.S. ($750,000.00),
subject to initial testing and review as described below.
Preliminary Letter of Intent
Auric/International
June 9, 1997
Page 2
Auric acknowledges receipt and sufficiency of a wire transfer of the initial
payment of the foregoing purchase price in the sum of $75,000.00 as
transferred by International to Auric on June 6, 1997. Auric agrees that if
the purchase of the Technology is rejected by International after the initial
testing described below and in accordance with the other terms and provisions
of this Letter of Understanding, then Auric will remit to International the
full amount of the initial tender ($75,000.00) without deduction or interest.
This Agreement would then be of no further force or effect. If the Technology
is accepted by International at the completion of the initial testing, then
International agrees to immediately execute and deliver to the representative
of Auric the purchase money note evidencing the balance of the purchase
obligation of $675,000.00 payable in nine (9) consecutive equal monthly
installments of $75,000.00 each for nine months commencing July 9, 1997,
without interest. A copy of the actual note to be entered is attached hereto
and incorporated by this reference.
It is agreed and understood between Auric and International that one
or more representatives of Auric will present themselves at the principal
place of business for International on June 12 to 13, 1997 for the purposes
of demonstrating and testing the Technology with ore supplied by
International. International represents it will make a decision not later
than the end of business on June 13, 1997 whether to purchase the Technology
and enter the above referenced Note for the balance of the purchase
obligation, if it elects to acquire the Technology. International further
represents that it will not reject the Technology, unless it is manifestly
apparent that it could not be used to fire assay ores of substantially the
same nature and mineral content as the samples previously supplied to Auric
by International for testing.
If the purchase of the Technology is rejected by International in
accordance with the terms outlined in the preceding paragraph, then
International agrees that it will not in any manner use, employ, simulate,
reverse engineer or attempt to duplicate the Technology as demonstrated and
tested; or, create any similar technology derived from or inspired by the
Technology. Specifically, and not in limitation of the foregoing
undertaking, International agrees that it will return any schematic, drawing,
or description of the Technology as made or recorded on any medium (e.g.
paper, computer entry, tape, video tape). No employee, agent or any person
acting under the direction of Authority or control of International will
discuss the concept or details of the Technology or the testing with any
third party.
International further agrees and understands that if it elects to
purchase the Technology, as described above, it is acquiring for the purchase
price a limited license right in perpetuity to use the Technology , without
further consideration, for its own metallurgical processing, including any
wholly owned subsidiary or division, but it is not granted any right to become
a reseller or distributor of the Technology to third parties.
Preliminary Letter of Intent
Auric/International
June 9, 1997
Page 3
International further agrees that it will use all practical means available
to it to protect and safeguard the Technology, if acquired, from any third
party knowledge or use. It is further understood that Auric may and will
continue to utilize and license the Technology as it sees fit.
The foregoing constitutes a binding agreement between the
undersigned parties, until or unless superseded by a more definitive final
agreement as executed by both parties hereto. Should any action become
necessary to enforce any term or provision of this Agreement either party may
be entitled to seek both injunctive relief and damages. The prevailing party
would also be entitled to reasonable attorney fees and costs of court. Each
person signing below represents that he is fully authorized to enter into
this Agreement pursuant to the governing board for either Auric or
International, respectively.
Accepted and Approved: Accepted and Approved:
Auric Metallurgical Laboratories International Precious Metals, Inc.
A Utah Limited Liability Co. An Arizona Corporation
- -------------------------------- --------------------------------
By Alan Cottle By Lee Furlong
Its Manager Its President
FOR VALUE RECEIVED, the undersigned promise(s) to pay to Auric Metallurgical Laboratories, LLC
------------------------------------------
or order Six Hundred Seventy-Five Thousand &00/100 ------------ DOLLARS, ($575,000.00).
-------------------------------------------------------------------------------------------
together with interest from date at the rate of ZERO per cent (0%) per annum on the unpaid balance payable
as follows, viz:
Entire Note Balance payable in nine consecutive equal monthly payments
of Seventy-Five Thousand Dollars ($75,000.00/month) commencing July 9,
1997 and payable on such monthly date thereafter until paid in full.
in lawful money of the United States of America, negotiable and payable at the office of Auric Metallurgical
--------------------
Laboratories, a Utah Limited Liability co. at 3260 W. Directors Row, SLC, Ut 84104
- ----------------------------------------------------------------------------------
without defalcation or discount. All payments hereinabove provided for shall be applied first on accrued
interest and balance to reduction of principal. Any installments of principal and interest not paid when
due shall, at the option of the legal holder hereof, bear interest thereafter at the rate of 12% per
annum until paid. --------
In case of default in the payment of any installment of principal or interest as herein
stipulated, then it shall be optional with the legal holder of this note to declare the entire principal
sum hereof due and payable; and proceedings may at once be instituted for the recovery of the same by law,
with accrued interest and costs, including reasonable attorney's fees.
The makers and endorsers severally waive presentment, protest and demand; and waive notice of
protest, demand and of dishonor and non-payment of this note, and expressly agree that this note, or any
payment thereunder, may be extended from time to time without in any way effecting the liability of the
makers and endorsers thereof.
This note and the interest thereon is secured by a first mortgage on PAYEES
interest in the "FIRE ASSAY PROCEDURE"
THIS IS A PURCHASE MONEY NOTE EVIDENCING MAKERS PURCHASE OF THE ABOVE TECHNOLOGY
BY SEPARATE WRITING. NO PENALTY FOR EARLY PAYMENT. THE UNDERSIGNED HAS BEEN
DULY AUTHORIZED TO ENTER THIS NOTE BY RESOLUTION OF THE MAKER'S BOARD OF
DIRECTORS.
International Precious Metals, Inc.
-----------------------------------
/s/ VLR "Lee" Furlong
-----------------------------------
By VLR "Lee" Furlong its President
- --------------------------------------------------------------------------------------------------------------