Exhibit 6.5
NET PROFITS INTEREST AGREEMENT AND CONSENT
This Net Profits Interest Agreement and Consent ("NPI Agreement") is
made and entered into to be effective the 20th day of November, 1995, by and
between XXXXXXX MINING COMPANY (the "Company"), THE SUNDAY SCHOOL BOARD OF THE
SOUTHERN BAPTIST CONVENTION, a Tennessee non-profit corporation, by its
authorized agent K. XXXXX XXXXX ("Xxxxx") and XXXXXXX X. XXXXX ("White").
WITNESSETH:
WHEREAS, Xxxxx purchased 250,000 shares of restricted preferred stock
and a Net Profits Interest by payment to the Company of $375,000 all as set
forth in a separate agreement of even date herewith (the "Agreement"); and
WHEREAS, the Company desires to issue to White the 5% Net Profits
Interest, as set forth in this NPI Agreement, and has paid $25,000 as a
finder's fee to White and Xxxxx acknowledges and consents to such payment and
issuance to White as set forth herein; and
WHEREAS, this NPI Agreement, together with the Agreement, supersedes
and replaces that certain letter agreement between the parries dated September
1, 1995; and
WHEREAS, American Consolidated Mining Co. ("American") has agreed to
lease (or otherwise convey) certain real and personal property at Gold Hill,
Utah to the Company as the site for the construction by the Company of a milling
facility to process approximately 500 tons per day (the "Mill") all as set forth
in a separate agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto hereby agree that the foregoing recitals
are incorporated into this NPI Agreement by this reference and further agree as
follows:
1. Issuance of Net Profits Interest. The Company hereby issues to White a Net
Profits Interest as defined and described in this NPI Agreement ("Net Profits
Interest"). White acknowledges the prior receipt of $25,000 which, together
with the Net Profits Interest, constitutes complete payment of White's finder's
fee in connection with the Xxxxx investment in the Company.
2. Payment of Net Profits Interest. Except as provided in paragraph 3, the
Company hereby agrees 10 pay TO White 5% of Net Profits (the "Net Profit
Interest") for all ores and minerals mined or otherwise recovered and removed
from the Company's mining claims, (as such are presently constituted), that are
milled in the Mill and thereafter sold by or for the account of the Company
after processing, smelting or refining ("Ores and Minerals"). "Net Profits"
means the amount actually received by the Company from the sale of Ores and
Minerals less, but only to the extent actually incurred and born by the Company
(and its subsidiaries, if any): (1) charges and costs, if any, for mining,[1]
extraction, milling, [2] treatment,
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[1] Mining costs shall mean costs and expenses accrued or incurred in accordance
with generally accepted accounting principals by the Company in exploring for,
developing, mining, extracting, removing, and transporting to the Mill Ores and
Minerals. Such costs and expenses shall include, without limitation, those
incurred for labor, machinery operation, fuel explosives and other materials,
exploration drilling, developmental or ore delineation drilling, a reasonable
allowance for depreciation and amortization of mining equipment and machinery
(regardless
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processing, or other beneficiation, including but not limited to crushing and
screening; (2) charges and costs, if any, for exploration and development; (3)
charges and costs, if any. for transportation to places where Ores and Minerals
are milled, treated, processed or otherwise beneficiated, smelted, refined and
sold; (4) charges, costs and penalties, if any, for smelting, refining and
marketing; (5) operating costs of the Company, including general and
administrative expenses, [3] relative to and not otherwise covered by the
foregoing described items; (6) depreciation; (7) sales, use, gross receipts,
severance and other taxes, if any, payable with respect to severance,
production, removal, sale or disposition of Ores and Minerals, but excluding any
taxes on net income; and (8) real and personal property taxes.
The Net Profits Interest shall be paid by the Company to White on or before the
45th day after the last day of the Company's fiscal quarter in which the Company
receives payment for sale of the Ores and Minerals. The Company agrees to keep
full, true, and accurate records and books of account of all transactions
connected with its business and particularly with respect to its calculation of
the Net Profits Interest. White shall have the right to examine and inspect such
of the records and books of account of the Company at any reasonable time during
normal business hours as are reasonably necessary to verify the accuracy of
payments made or payable by the Company.
3. Termination of Net Profits Interest. The Company shall pay to White the 5%
Net Profits Interest as described in paragraph 2 above until such time as the
Company shall have paid to White the aggregate amount of $300,000 (whether from
Net Profits Interest payments or otherwise) at which time the payment
obligations of the Company shall cease. The Company agrees to use its best
efforts to continue to operate the Mill until it shall have paid to White the
aggregate amount of $300,000 (whether from Net Profits Interest payments or
otherwise) which best efforts shall not require continued operations if the Mill
is operating at a loss or the Company is otherwise financially unable to
continue operation of the Mill; provided further that at any time after the
Company has paid to White the aggregate amount of $300,000, at which time the
payment obligations of the Company shall cease, the Company may terminate the
operation of the Mill for any reason or may continue to operate the Mill in its
sole discretion without any liability to White; provided further that if the
Company terminates the operation of the Mill at any time prior to the payment to
White of $300,000, the Net Profits Interest shall then be transferred and
attach to any other mill then owned and operated by the Company to the extent
that the Company has at that time an unallocated interest in the net profits of
such other mill in the amount of at least 5% and such payment obligations shall
then continue until the aggregate amount paid to White with respect to both the
Xxxx and the other mill totals $300,000 at which time the payment obligations
of the Company shall cease.
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of when acquired), a reasonable allowance for depletion and a reasonable
allowance for future costs anticipated to be incurred by the Company in
reclaiming the property in accordance with applicable laws and regulations. The
Company agrees that exploration and development costs shall not exceed $4.00
per ton and reclamation costs shall not exceed $1.50 per ton.
[2] Milling costs shall mean costs and expenses incurred by the Company in
milling or processing Ores and Minerals at the Mill. The Company shall be
entitled to a reasonable allowance for depreciation of Mill facilities and
equipment
[3] General and administrative costs shall mean costs and expenses incurred by
the Company and properly allocable to the production of Ores and Minerals from
the mining claims of the Company. General and administrative costs shall also
include interest costs incurred in any bona fide financing transaction directly
related to the development, operation, or commercialization of the mining claims
of the Company with a view to process the mined material through the Mill, or in
connection with the construction or operation of the Xxxx, The Company agrees
that general and administration costs shall not exceed $4.50 per ton.
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4. Incorporation by Reference. The provisions of paragraphs 4 through 6 and 8
through 9 of the Agreement are incorporated herein by this reference,
XXXXXXX MINING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx 11/21/95
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Xxxxxxx X. Xxxxxxx, President Date
THE SUNDAY SCHOOL BOARD OF
THE SOUTHERN BAPTIST CONVENTION
c/o K. Xxxxx Xxxxx & Associates, Inc.
0000 Xxxx Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
By: /s/ K. Xxxxx Xxxxx 11-15-95
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K. Xxxxx Xxxxx, Authorized Agent Date
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx 12/18/95
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Xxxxxxx X. Xxxxx
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