Item
1.01. Entry into a Material Definitive Agreement.
On
March 27, 2023, NEXT-ChemX Corporation (the “Company”) entered into a Contractual Partnership Agreement (“Agreement”)
with the UK AIM listed company Clontarf Energy plc (“Clontarf”) defining a Texas domiciled partnership (“Partnership”)
to be known as the “Clontarf NEXT-ChemX JV. The purpose of the Partnership will be to provide the Company and Clontarf (together
the “Partners”) with a form of cooperation enabling them to negotiate with “Pública Nacional Estratégica
Yacimientos de Litio Bolivianos” (the ‘National Strategic Public Company of Bolivian Lithium Deposits’ or “YLB”)
to mine and extract lithium. Once agreement is reached with YBL, the lithium exploitation rights will be exploited through a newly formed
corporate joint venture organized in Bolivia by the Partners on a 50/50 basis (subject to certain dilution provisions set out below)
(“JVCo”). The Partnership will manage the exclusive right to deploy the Company’s ion-Targeting Direct Extraction (“iTDE”)
technology for lithium extraction in Bolivia through defined phases expected to lead to the formation of the JVCo and dissolution of
the Partnership in a third phase. The Agreement also contains certain obligations between the partners, including the issuance of shares
in their respective companies to each other, as set out below.
The
Agreement sets out the plan of cooperation by defining an initial phase in which the Company undertakes to complete a pilot system to
test its iTDE technology on specific Bolivian brines (“Initial Phase”). Following a successful demonstration of the technology
before representatives from YLB and having obtained an understanding with YLB of the terms under which the Partnership may deploy a commercial
pilot plant in Bolivia, the second phase of cooperation will commence (“Second Phase”). During the Second Phase, the Partnership
will undertake to finance and deploy a commercial pilot plant designed and developed by the Company in Bolivia to begin the extraction
lithium for an agreed to demonstrate the commercial and ecological profile of the iTDE technology. If the Bolivian pilot plant proves
successful, the Second Phase is expected to lead to the execution of a licensing, extraction and exploitation agreement between JVCo
and YLB (and / or third parties working with YLB) to commence the path to the commercial exploitation of one or more Bolivian lithium
deposits (“Exploitation Agreement”). As an inducement to YLB to conclude the Exploitation Agreement, the Partners may agree
to grant YLB (or the third parties) an equity interest in JVCo, diluting the Partners’ interests equally. During the final phase
of cooperation, the Partnership will be wound up and the Agreement terminated, being replaced by the JVCo, with any further obligations
between the Partners being governed, as necessary, by a shareholders’ agreement.
The
iTDE technology will be and remain at all times the property of the Company. Nothing in the Agreement nor the subsequent relationship
with the JVCo will either transfer the iTDE technology to the Partnership, the JVCo or to any third party, or give any ownership rights
of any development or improvement of the said technology to any such persons. The iTDE systems deployed in Bolivia will remain the property
of the Company. The iTDE systems deployed will be managed by the Company directly under a separate agreement (“iTDE Maintenance
Contract”) with the key extraction units of the iTDE system deployed being owned by the Company. The iTDE Maintenance Contract
expenses will be remunerated such as to pay the “at cost” price of the activities carried out and materials supplied as well
as reasonable administration fees. It is not intended that NCX derive material profits from the iTDE Maintenance Contract. NCX shall
give a general accounting of the expenses and costs but is not required to make full disclosure of the work, chemicals, processes, timing,
material sources, or other information pertinent to the iTDE Technology.
Entry
into force and Termination.
The
Partnership Agreement will enter into force 3 working days following: (i) the Company demonstrating to Clontarf that it has cash of more
than $500,000 available to cover operations and commitments, (ii) payment by Clontarf to NCX of US$500,000 to secure for the Partners’
cooperation the exclusive rights to use the iTDE Technology on the territory of Bolivia to extract lithium from Bolivian brines (“Exclusivity
Fee”), and (iii) the issuance by Clontarf to the Company of 192,500,000 Clontarf shares in certificated form immediately and an
additional 192,500,000 Clontarf shares in certificated form under an agreement subjecting the said shares to a “locked in period”
restricting the trading of the share for a period of 12-months from issuance. Certificates for such locked-in shares shall be held by
Clontarf until released.
The
Partnership Agreement will terminate with the unanimous consent of all Partners, or on the occurrence of one of the following events:
(i) following the formation of JVCo; or (ii) in the event that the JVCo is not formed, within three (3) years from the entry into force
of the Partnership Agreement; or (iii) in the event of the involuntary withdrawal of a Partner (as described below).
The
events that will result in the dissolution of the Partnership due to the involuntary withdrawal of a Partner are (without limitation):
liquidation or insolvency of a Partner; Partner incompetence; breach of fiduciary duties by a Partner; criminal conviction of a Partner;
expulsion of a Partner; operation of law against a Partner; or any act or omission of a Partner that can reasonably be expected to bring
the business or societal reputation of the Partnership into disrepute.
Management
Operation and Control
The
management, operation and control of the Partnership and its business will be decided by the unanimous vote of the Partners at a meeting
fixed by giving reasonable notice and may be held in person or electronically. All decisions affecting the Partnership can be made at
such meeting, provided however: (a) the Company shall have the right to decide on any issues that relate to the iTDE Technology and its
process systems including: their use, implementation and demonstration; the manner of their deployment and any operational issues relating
thereto, provided however, this shall be done in the interest of furthering the Partnership’s purpose within the constraints of
the extraction system; and the Company shall also decide on all matters relating to the pursuit, maintenance, defense and enforcement
of the iTDE Technology; and (b) Clontarf shall have the right to make any decisions regarding the negotiations with YLB, third parties
dealing with YLB and the terms of the arrangement with YLB, provided however, any benefits derived from the Exploitation Agreements will
vest in the Partnership or JVCo with the Partners treated equally.
Each
Partner will appoint, compensate and reimburse a manager (“Manager”) granting them authority to make decisions on behalf
of and to bind the Partners they represent to any and all decisions made in management of the Partnership. Decisions taken by the Managers
shall always be unanimous. Managers shall have the right do and perform all acts as may be necessary or appropriate to the conduct of
the Partnership’s business, including the specific list contained in the Agreement, however, without Partner approval, the Managers
are excluded from decisions to:
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(a) |
Issue
additional Partnership interests relating to funding the Bolivian pilot plant; |
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(b) |
Sell
or otherwise dispose of all or substantially all of the Partnership property or any Partnership property, other than in the ordinary
course of business; |
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(c) |
Hypothecate
any Partnership property to the extent that the secured indebtedness from such hypothecation would exceed $10,000; |
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(d) |
Incur
or refinance any indebtedness for money borrowed by the Partnership, whether secured or unsecured and including any indebtedness
for money borrowed from a Partner if, after such financing, the aggregate indebtedness of the Partnership would exceed $100,000; |
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(e) |
Incur
any liability or make any single expenditure or series of related expenditures in an amount exceeding $50,000; |
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(f) |
Construct
any capital improvements, repairs, alterations or changes involving an amount in excess of $50,000; |
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(g) |
Lend
money to or guaranty or become surety for the obligations of any Person; |
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(h) |
Compromise
or settle any claim against or inuring to the benefit of the Partnership involving an amount in controversy in excess of $50,000;
|
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(i) |
Cause
the Partnership to commence a voluntary case as debtor under the United States Bankruptcy Code; |
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(j) |
Take
any action which, pursuant to this Agreement, specifically requires the consent or approval of Partners; or |
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(k) |
Enter
into any agreement, arrangement or understanding, written or oral, to do any of the above. |
The
following list of actions by the Managers also requires the unanimous consent of all Partners:
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(a) |
assigning
check signing authority; |
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(b) |
committing
the Partnership to new liabilities or obligations totaling over $5,000.00; |
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(c) |
incurring
single expenditures or any series of related expenditures that exceed $5,000.00; |
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(d) |
selling
or encumbering of any Partnership asset whose fair market value exceeds $10,000.00; |
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(e) |
hiring
any employee; |
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(f) |
firing
of any employee except in the case of gross misconduct that exposes the Partnership to possible liability; |
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(g) |
waiving
or releasing any Partnership claim except for full consideration; and |
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(h) |
endangering
the ownership or possession of Partnership property. |
Neither
Managers, Partners, nor any persons appointing or controlling them shall have an exclusive duty to act on behalf of the Partnership.
Each may have other business interests and may engage in other activities in addition to those relating to the Partnership, provided
that they shall not incur any liability to the Partnership or to any of the Partners as a result of engaging in any other business or
venture.
No
Partner will be liable to the Partnership, or to any other Partner, for any mistake or error in judgment or for any act or omission done
in good faith and believed to be within the scope of authority conferred or implied by this Agreement or the Partnership.
Managers
shall have liability for any loss or damage caused to the Partnership or the Partners that is the result of gross negligence, fraud,
deceit, willful misconduct, or intentional breach of this Agreement. Managers shall be indemnified for any loss in connection with their
activities in connection with the establishment, management or operations of the Partnership provided however the indemnification shall
in no event cause the Partners to incur any liability beyond their total agreed contributions to capital and any undistributed profits
of the Partnership, nor shall it result in any liability of the Partners to any third party.
Managers
may resign or be replaced at any time.
Decisions
regarding the distribution of profits, the allocation of losses, and the requirement for contributions as well as all other financial
matters will be decided by a unanimous vote of the Partners, provided however, in the absence of a decision, any net profits and losses
of the Partnership, for both accounting and tax purposes, will accrue to and be borne by the Partners in proportion to their respective
contributions to the capital of the Partnership.
No
Partner will be required to make a capital contribution. During the Initial Phase, each of the Partners will be responsible for organizing
and paying for all their work and costs, provided however, corporate organization and compliance costs will be made by the Partnership.
During subsequent phases, the Partners must agree to any capital contributions. Any advance of money to the Partnership must be unanimously
agreed and will be deemed a debt owed by the Partnership to the financing Partner and will not operate a change in the ownership proportions
of the Partners; provided however, when financing the cost of the Bolivian Pilot Plant (based on the budget provided by the Company),
any amounts required exceeding $100,000, should be made by funding to the capital of the Partnership and may operate to change the ownership
if the Partnership in the following manner:
Each
Partner will have equal opportunity cover the required financing by making contributions to the capital of the Partnership in proportion
to that Partner’s share of the Partnership, however, in the event that a Partner is unwilling or unable to meet such additional
required contribution within a reasonable period, then the remaining Partner may contribute that proportion remaining unfunded.
In
this event, the additional capital contribution of such Partner will be made against an increase in the ownership percentage in the Partnership
by the contributing Partner proportionally, provided however, such increase will not decrease the other Partner’s interest to below
25% of either the Partnership or JVCo.
Any
debt liability to any Partner will be repaid by the Partnership with interest at rates and times to be determined by a majority of the
Partners within the limits of what is required or permitted under Texas law.
No
Partner will be compensated for services rendered to the Partnership, except for (a) the reimbursement of expenses directly related to
the creation, payment of any taxes required and the continued existence of the Partnership, (b) expenses defined under the iTDE Maintenance
Contract; and (c) all agreed travel by any Bolivian officials or YLB representatives requested to visit the US to attend the trials of
the iTDE Technology and negotiations, to include the cost of visas, travel, lodging and entertainment.
Accounts
will be maintained in US GAAP. Following the fiscal year end on December 31, the Partnership will produce audited financial statements
and an annual report to the Partners on its activities. Partners have the right at their expense to require an additional audit by auditors
acceptable to both partners not more than once per fiscal year.
Certain
obligations of the Partners to each other and to the Partnership
As
an inducement to enter into the Partnership, the Company will issue to Clontarf a certain number of fully paid restricted shares of common
stock of the Company representing the US dollar value of $500,000 at the issuance price fixed at the next completed equity raising that
is closed and reported to the SEC; such shares will be issued at the earlier of the closing of the next equity raising carried out by
the Company or 12 months from the date of the Agreement
The
Company undertakes to use the Exclusivity Fee, duly supplemented by other funds available to it as required, towards the completion of
the construction and testing of its pilot plant able to commercially test brines supplied from Bolivia (without any guarantee of result)
and to provide the Partnership at its expense with the results of the analysis of reasonable quantities of such Bolivian brines to enable
the evaluation of the extraction kinetics.
In
consideration of the payment of the Exclusivity Fee, NCX agrees to grant to the Partnership and JVCo an exclusive license to use iTDE
technology (as may be amended or improved) in the country of Bolivia for the recovery of lithium from brine solutions for the duration
of the Agreement and, provided JVCo is formed and vested with the right to exploit lithium extraction rights in Bolivia, to JVCo. This
license shall be subject to the condition that the Partnership and later JVCo execute a iTDE Maintenance Contract that will enable the
Company to manage the ongoing configuration and system management of the iTDE systems deployed as required to operate the iTDE Technology
effectively. The license shall be non-transferrable, with no right to sub-license. This license shall be at no cost and royalty free.
All terms and conditions of this license grant shall be set forth and controlled by a separate License Agreement to be entered into by
the Parties.
For
as long as the Partnership or the JVCo remain operational, and provided a transaction is concluded within two years from the date of
the Agreement, Clontarf will be entitled to a 15% contributing interest in the Company’s component of the agreed structure in the
event of any successful transaction between the Company and two specific named companies. The entitlement of Clontarf to any fees shall
be limited to any participation by the Company in the ownership of the equity of any joint ventures or other forms of corporate cooperation
between the Company and those two entities. Such entitlement shall exclude any participation in any iTDE Maintenance Contract or any
similar tolling, servicing or maintenance arrangement under which NCX shall manage the iTDE Systems deployed. The Company undertakes
to negotiate with the two agreed entities in good faith to maximize the benefit of participation in the ventures with these companies
but not to the detriment of the terms of any iTDE Maintenance Contract or any similar tolling, servicing or maintenance arrangement.
As
an inducement to enter into the Partnership, Clontarf will issue to the Company the following Clontarf fully paid ordinary shares under
the following conditions:
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(a) |
if,
in the opinion of Clontarf, acting reasonable, the processing of brines from Bolivia through the Company’s pilot plant system
is successful (i.e. with reasonably adequate purities, recoveries and costs) and leads to the commencement of Phase Two, then Clontarf
will issue 250,000,000 shares in certificated form (half of which will not be freely tradeable and remain locked under a specific
documented lock in agreement and held by Clontarf for 12 months from the date of issue); and |
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|
|
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(b) |
upon
the entry into a construction and processing contract or other arrangement between JVCo and YLB in respect of the processing of Bolivian
brines utilizing the Company’s processing technology, 250,000,000 Shares in certificate form (half of which will be locked
in for 12 months from the date of issue as shall be documented in a specific lock in agreement and the certificates for such locked
in shares shall be held by Clontarf for the said locked in period. |
Governing
Law and Dispute Resolution
The
Agreement is construed in accordance with and exclusively governed by the laws of the State of Texas. Disputes arising from or relating
to the Agreement, that are unresolved by negotiation or mediation, may be referred to arbitration by a single arbitrator to be agreed
upon by all the Partners, or in default of agreement thereon, at the request of either Partner to the American Arbitration Association
to make such nomination. Arbitration will be carried out in Austin, Texas in accordance with the Rules of the American Arbitration Association,
and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Notwithstanding this
arbitration provision, the Partners submit to the jurisdiction of the courts of the State of Texas for the enforcement of this Agreement
or any arbitration award or decision arising from this Agreement.
Other
terms and conditions
This
description of the terms and conditions of the Agreement is qualified in its entirety and supplemented by the written terms and conditions
of the Agreement itself that is attached hereto as Exhibit 1.1.
As
a cost and under separate arrangement, the Company is required to transfer half of the shares received from Clontarf to remunerate certain
non-related third parties for their introduction of Clontarf to the Company and to remunerate their efforts in the negotiation and finalization
of the Agreement.