EL CAPITAN PROJECT REPRESENTATION AGREEMENT JUNE 21, 2006
This
Agreement is made and entered into this 21st day of June, 2006 between El
Capitan Precious Metals,
Inc., with its principal office located at 00000 X. 00xx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000, a mineral exploration company (hereinafter called "ECPN"),
Gold and Minerals Co., Inc., X.X. Xxx 0000, Xxxxxxxxxx, XX 00000, a mineral
exploration company (hereinafter called "G&M''), and Xxxxxxx X. Xxxxxxx
(doing business as Xxxxxxx Associates), a Sole Proprietor with its principal
office located at 000 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000 (hereinafter
celled "Xxxxxxx"). This agreement supersedes all previous agreements between
ECPN and Xxxxxxx.
WHEREAS,
ECPN has an 40% ownership position, and, through a management agreement,
transaction control over the remaining; 60% held by G&M, in
the
El
Capitan Project located in New Mexico, and desires to enter into a transaction
to sell some, or all of the project to a third party.
WHEREAS,
ECPN intends to utilize Xxxxxxx in the role of directing the Metallurgical
Qualified Person in the efforts to develop an accurate, repeatable and reliable
means of detecting and reporting the grade of precious and platinum-group metals
contained in the El Capitan deposit, or as otherwise directed by Dr. Xxxxx
Xxxxx. In
this
role, Xxxxxxx will report
to
Dr. Xxxxx Xxxxx.
WHEREAS,
ECPN intends to utilize Xxxxxxx as the primary representative of ECPN in the
sale of the El Capitan Project
to all
viable third party mineral companies. In this role, Xxxxxxx will report to
the
President and C.E.O. of ECPN.
WHEREAS,
Xxxxxxx is familiar with the precious metals industry and has experience in
mineral project transactions.
NOW
THEREFORE, the parties hereby agree
that
ECPN
appoints Xxxxxxx as the
primary representative under the terms, and conditions herein to solicit
transaction proposals for ECPN's consideration:
DEFINITIONS
Consulting
Time Charge
-
Consulting time
will
be
invoiced at $125 per hour in 15-minute increments. All
consulting time
charges
above $5,000.00 will be approved via email communications by the President
of
ECPN prior to incurring the expenses.
Current Owners
- ECPN
(40%)
and
G&M
(60%) control
100%
of
the E1
Capitan Project. Through a management agreement with G&M, ECPN has authority
to enter into transaction agreements for the sale of the El Capitan Project
on
behalf of G&M.
El
Capital Project
- The
assets
and
rights held or controlled by ECPN and O&M related to the El Capitan
polymetallic mineral deposit located at the western end of Capitan Mountain,
near Capitan, New Mexico.
El
Capitan Project Marketing Agreement - Page 1 of
5
EL
CAPITAN PROJECT REPRESENTATION AGREEMENT
JUNE
21, 2006
Other
Companies
- Any
other
entity that may
become aware of the availability of the El Capitan project
and
may
choose to provide a transaction proposal. An entity becomes an Other Company
for
purposes of this Agreement if
any
communication
regarding the El Capitan Project occurs between ECPN or its representatives
and
that
entity after
the
execution data on this Agreement and before a date six months after the
termination date of this Agreement (see TERMINATION on page 3). EPCN agrees
to
notify Xxxxxxx in writing
whenever
communications with an entity qualify it as an Other Company.
Prospect
Company
-
Entities that are placed on a target list for marketing of the El Capitan
project. The list may be modified by mutual written consent of the parties
to
this Agreement. Xxxxxxx may incur T&E Expenses, Consulting Time Charges, and
Travel Time Charges related to the marketing efforts towards these companies.
The initial list of Prospect Companies is:
| · |
Xxxxxxx
Gold Corporation - Toronto, Ontario and Salt Lake City, UT
|
| · |
Newmont
Mining Corporation - Denver,
Colorado
|
| · |
Kennecott
Exploration Company (RTZ) - Salt Lake City, UT
|
| · |
AngloPlatinum
(Angle American - UK) - South Africa
|
| · |
Freeport
XxXxXxx Xxxxxx & Xxxx - Xxx Xxxxxxx, XX
|
| · |
Agnico-Eagle
Mines Limited - Toronto, Ontario
|
| · |
Xxxxxxx
Xxxx Xxxxxxxxxxx - Xxxxxxx, Xxxxxxx
|
| · |
Goldcorp,
Inc. - Vancouver, British Columbia
|
| · |
Glamis
Gold Ltd, - Reno, NV
|
| · |
Meridian
Gold, Inc, - Reno, NV
|
| · |
Stillwater
Mining Company - Billings, MT
|
| · |
Impala
Platinum - South Africa
|
| · |
Xxxxxx
Dodge Corporation - Phoenix, AZ
|
Success
Payment
- The
payments due to Xxxxxxx upon completion of a transaction involving either the
El
Capitan Project or ECPN or G&M with any Transaction Counterparty. The total
of all Success Payments made to Xxxxxxx shall to calculated as the greater
of:
a) One-quarter
of one percent (0.25%) of the Total Transaction Value
b) $250,000
The
total
of all
Success
Payments to Xxxxxxx shall not exceed three million dollars
($3,000,000.00)
The
Success Payment shall be deemed to be earned upon the closing of a transaction
involving either the El Capitan Project or ECPN with
any
Transaction
Counterparty. The payment for success shall be made in accordance with the
percentage and frequency of the Transaction Payments. ECPN will make
payments
to
Xxxxxxx
within 10
business
days
of
the
time
that a
Transaction
Payment
is deemed to have been completed.
Transaction
Counterparty
- The
entity purchasing an interest in either the El Capitan Project, G&M, or ECPN
with the intention of controlling or participating in the development of the
El
Capitan Project.
El
Capitan Project Marketing Agreement - Page 2 of
5
Total
Transaction Value
- The
apparent value established, implied, or received by the transaction for 100%
of
the El Capitan Project, Total Transaction Value will include the following
types
of value components received by Current Owners:
|
a)
|
Cash,
Stock, or Other Financial Instrument Payments - The apparent value
will be
equal to the valuation applied to the entire El Capitan Project.
For
example, a sale of 50% of the El Capitan Project for $500 million
would
result in a Total Transaction Value component of $1 billion. Acquisition
of all or part of ECPN or G&M by a Transaction Counterparty would also
constitute a sale of the El Capitan Project. If more than on purchase
is
made, for example, if one suitor purchases 25 percent of the El Capitan
Project and a second suitor, at the same or later time, purchases
an
additional 30 percent, the total of all cumulative success payments
remains at three million
dollars.
|
|
b)
|
Royalties
- Any royalties paid to the Current Owners by the Transaction Counterparty
will be included as a component of the Total Transaction
Value.
|
| c) |
Carried
Interest Investment - Investments made by the Transaction Counterparty
in
the El Capitan Project on behalf of the Current Owners will be included
as
a component of the Total Transaction Value. For
example, if the Current Owners retained 50% ownership in the El
Capitan
Project through
the transaction, and the buyer subsequently spends $100 million to
develop
(exploration, permitting, construction, etc.) the El Capitan project,
without requiring a pro-rata contribution by the Current Owners,
and if
there is no pro-rata dilution of the Current Owners’ position, then 50% of
the $100 million development investment would become a component
of the
Total Transaction Value.
|
Transaction
Payment -
A
Transaction Payment will be deemed to have occurred upon the receipt of
financial payment related directly to the sale of the El Capitan project to
the
Current Owners. For
example,
a Transaction Payment will have been completed when:
|
a)
|
Cash,
Stock, or Other Financial Instrument Payment is received by the Current
Owners for purchase of a share of the El Capitan
Project or, if
the sale is inclusive of the El Capitan Project,
purchase
of a controlling share of ECPN or
G&M.
|
|
b)
|
Royalty
payment is received by the Current Owners resulting from the
sale of
the El Capitan Project.
|
|
c)
|
A
Carried Interest Investment is made in the El Capitan Project on
behalf of
the Current Owners by the Transaction Counterparty. A decision by
the
Current Owners to invest in the El Capitan Project on a pro-rata
basis
reflecting their ownership, using
funds raised from a third party through the sale of equity or the
acquisition of debt, does not constitute a Carried Interest Investment
unless such funds are provided by the Transaction Counterparty or
an
entity related to the Transaction
Counterparty.
|
El
Capitan Project Marketing Agreement - Page 3 of
5
Travel
&
Entertainment Expenses
-
reasonable costs incurred by Xxxxxxx associated with travel on behalf of ECPN
shall be reimbursed in full by ECPN. All travel will be approved via email
communications by the President of ECPN prior to incurring the
expenses.
Travel
Time Charge
-
door-to-door travel time will be invoiced at $125 per hour in 15-minute
increments. For example, on a trip from Cleveland to Vancouver, Travel Time
will
be incurred beginning
when Xxxxxxx leaves the offices of Xxxxxxx Associates and ends when he arrives
at the destination hotel or office, when working outside of the Cleveland area
for ECPN's account, actual Travel Time will be invoiced, up to a maximum of
8
hours per
day.
In
the case that Xxxxxxx is away from his office for an entire day for ECPN's
account, and if total Consulting Time Charges do not total at least 8 hours
for
that day, then additional Travel Time Charges will be invoiced to bring the
total hours invoiced for that day to 8.
TERMS
AND CONDITIONS
|
1.
|
GENERAL
AUTHORITY. During the term of and subject to the provisions and conditions
of this Agreement, ECPN authorizes Xxxxxxx, on an exclusive basis,
to
solicit proposals for ECPN's El Capitan
Project.
|
|
2.
|
INVOICING.
Xxxxxxx shall generally invoice ECPN up to twice a month for Consulting
Time Charges, Travel Time Charges, and Travel & Entertainment
Expenses. Xxxxxxx will obtain written approval from the President
of ECPN
via email prior to incurring total charges in excess of $10,000 for
a
billing period. ECPN shall pay the invoice on a NET 15-Day basis
from the
date of the
invoice.
|
|
3.
|
TRANSACTION
RELATED OMMISSION PAYMENTS. Any Success Payment shall be due within
10
business days of the receipt or completion of a Transaction
Payment.
|
|
4.
|
NO
IMPLIED WAIVERS.
In the
event of breach or misunderstanding of any provision of this Agreement,
the remaining provisions shall not be
affected.
|
|
5.
|
INTERPRETATION
OF AGREEMENT. This Agreement shall be interpreted in
accordance with, and in performance ,governed, as applicable by the
laws
of the State of Nevada and includes the entire agreement between
the
parties on the subject ratter, If any of its provisions shall contravene
or be invalid under
the laws of any state, country, or jurisdiction whore used, then
it is agreed that such contravention or invalidity shall not invalidate
the whole Agreement, but
it
shall be
construed
as if not containing the particular provision or provisions which
is
invalid in the said particular state, country, or jurisdiction, and
the
rights and obligations of the parties shall be construed and enforced
accordingly.
|
|
6.
|
NO
ASSIGNMENT. This Agreement may he assigned by ECPN in whole or in
part,
either directly or indirectly, by operation of law or otherwise,
only with
the written consent of Xxxxxxx being first
obtained.
|
El
Capitan Project Marketing Agreement - Page 4 of
5
|
7.
|
|
8.
|
TERMINATION.
This agreement shall have an initial term of twenty-four months.
Either
party may subsequently terminate this Agreement by delivering at
least
thirty (30) days prior written notice of intention to terminate to
the
other party.
|
If
a
purchase agreement, letter of intent, or other binding or non-binding formal
communication occurs between ECPN and a Prospect Company, or an Other Company,
regarding an eventual transaction resulting in a material change of control
of
either the E1 Capitan
project or ECPN or G&M
within 24 months of the termination date of this Agreement, that
transaction
will trigger the terms of the Success Payment upon closing, regardless of when
that closing ultimately occurs.
Signatures
| El Capitan Precious Metals, Inc. | ||
| By: /s/ Xxxxxxx X. Xxxxxxx | Date: 6/21/06 | |
|
Xxxxxxx
X. Xxxxxxx
|
||
|
President/CEO,
El Capitan Precious Metals, Inc
|
||
| Gold and Minerals, Inc. | ||
| By: /s/ Xxxxx X. Xxxxxxxx | Date: 6/21/06 | |
|
Xxxxx
Xxxxxxxx
|
||
|
Title: President
and Chief Executive Officer
|
||
| Xxxxxxx Associates | ||
| By: /s/ X.X. Xxxxxxx | Date: 6/21/06 | |
|
Xxxxxxx
X. Xxxxxxx
|
||
|
Title Principal
|
El
Capitan Project Marketing Agreement - Page 5 of
5
.
