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Exhibit 10.5
EXCLUSIVE AGENCY AGREEMENT
THIS AGREEMENT (this "Agreement") is made effective as of the
21st day of
October, 2004 (the "Effective Date"), by and between El Capitan
Precious Metals,
Inc., a Nevada corporation having its principal office at 10876
East Tierra,
Scottsdale, Arizona 85261 (hereinafter referred to as "El
Capitan"), and AFC
Trade Services Corporation, LLC, a Delaware limited liability
company having
offices at 17770 North Pacesetter Way, Suite 200, Scottsdale
Arizona 85255
(hereinafter referred to as "Representative").
Recitals
A. El Capitan wishes to sell iron ore to buyers based in
Asia.
B. Representative possesses expertise in the marketing and sale
of iron
ore to buyers based in Asia.
C. El Capitan desires to engage Representative to act as El
Capitan's
representative in connection with the solicitation and sale of
iron ore to
buyers based in Asia, and Representative desires to be engaged
for such purpose,
upon the terms and conditions set forth herein. El Capitan
further wishes to
compensate Representative for services provided to El Capitan
prior to the date
hereof.
NOW THEREFORE in consideration of the foregoing recitals, the
covenants
contained herein and other good and valuable consideration, the
receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as
follows:
1. APPOINTMENT
Subject to the terms and conditions of this Agreement, El
Capitan
appoints Representative as El Capitan's exclusive representative
for the
solicitation and sale of iron ore to buyers based in Asia.
2. COMPENSATION
As sole compensation and payment in full for the services
rendered by
Representative under this Agreement, El Capitan shall provide
compensation as
provided in this Section 2, subject to the terms and conditions
of this
Agreement:
a) As promptly following the Effective Date as can be arranged
with El
Capitan's transfer agent, El Capitan shall deliver to
Representative a
certificate representing 1,536,859 restricted shares of El
Capitan's Common
Stock (the "Shares").
b) On the Effective Date, El Capitan shall provide a
nonrefundable
commission advance to Representative in the amount of $100,000.
Such amount
shall be applied against El Capitan's obligation to pay
commissions as provided
in Section 2(c) - (h) below.
c) El Capitan shall pay Representative a commission of two
dollars
(USD2.00) per metric ton of iron ore for which El Capitan has
received payment
from a buyer in Asia as a result of Representative's efforts. If
the customer
has made partial payment, El Capitan shall pay a prorated
commission to
Representative, with the balance of the commission due when full
payment is
received by El Capitan. No commission on a sale is earned by or
due to
Representative until El Capitan has received payment from the
customer. The
commission obligation described in this subparagraph 2(c) shall
survive the
expiration of this Agreement.
<PAGE>
d) Commissions are due and payable within 10 business days
following
completion of the calendar month in which El Capitan's customer
has paid El
Capitan, and shall be accompanied by a statement reasonably
detailing the
commission calculation.
e) There shall be deducted from any sums due Representative an
amount
equal to commissions previously paid or credited on allowances
or refunds paid
or credited to the customer for any reason by El Capitan,
including without
limitation the customer's bankruptcy, insolvency or any other
reason. The
foregoing amounts shall be refunded by Representative if no
further commissions
are due.
f) All orders obtained by Representative are subject to approval
by El
Capitan, and El Capitan reserves the right, in its sole
discretion, with or
without notice or cause, to accept, reject, or cancel any order
or portion
thereof submitted by Representative, or having accepted any such
order, El
Capitan may decline to fill the same without any liability for
any commissions
thereon. All sales quotations made by Representative to
customers or prospective
customers must be made expressly subject to El Capitan's
approval, and El
Capitan shall be under no obligation to sell any iron ore until
it delivers
written acceptance of an order to the customer. Representative
agrees that any
failure to supply any iron ore, making only partial shipment,
delayed shipment,
or no shipment at all, for any reason whatsoever, against any
order solicited by
Representative, shall not render El Capitan liable or
responsible in any way to
Representative.
g) Representative shall not solicit orders from persons,
corporations or
other entities outside Asia. Representative understands that no
commissions or
other compensation will be paid on sales outside Asia.
h) Notwithstanding the provisions of this Article 2, El Capitan
shall not
be required to pay to Representative any commission whatsoever
in the event
payment of such fee is illegal, or shall become illegal.
However, in this event,
the parties will attempt, in good faith, to amend this Agreement
so as to
conform to the then current law.
3. REPRESENTATIVE'S RELATIONSHIP AND CONDUCT OF BUSINESS
a) Representative shall render expert advice and assistance to
El Capitan
and utilize its best efforts to secure purchasers of iron ore
based in Asia,
including maintaining active communications with El Capitan and
supplying timely
information to allow El Capitan to adjust to changing market
conditions.
Representative will provide El Capitan information reasonably
available and
necessary with regard to each prospective purchaser.
b) Representative shall provide assistance in closing sales
transactions
and shall assist in the maintenance and continuation of customer
relationships
following the execution of purchase agreements for iron ore.
c) Representative shall have no authority, actual or implied, to
bind or
commit El Capitan in any way. Representative's authority under
this Agreement is
limited to soliciting orders for the purchase of iron ore by
buyers based in
Asia at the prices and on the terms of sale established by El
Capitan.
d) Representative shall conduct all of its business in its own
name and
pay all expenses and disbursements incurred by Representative in
the performance
of all duties hereunder.
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<PAGE>
e) Representative shall conduct its business in accordance with
the
highest professional ethics, and shall be truthful, accurate and
not misleading
in any communications to El Capitan, customers or others about
or regarding El
Capitan, the iron ore, and El Capitan's business or
personnel.
f) Representative is an independent contractor. Nothing in this
Agreement
shall be constructed to constitute Representative as the
partner, employee or
agent of El Capitan; each party shall at all times remain
independent and
responsible only for its own actions. Representative shall not
undertake any
action on behalf of El Capitan except as contemplated herein
without El
Capitan's express prior written authorization.
g) During the term of this Agreement (including any renewals or
extensions
thereof) and for a period of one year after termination,
Representative agrees
that it shall not participate, directly or indirectly, in other
contractual or
business relationships that are or may become competitive with
the efforts of El
Capitan or Representative to sell iron ore as contemplated
hereunder. As part of
the obligation provided by the preceding sentence,
Representative agrees that
Representative shall not, either directly or indirectly,
solicit, attempt to
solicit, take away, attempt to take away, or otherwise interfere
with El
Capitan's relationship with any existing customer (or
prospective customer under
active consideration by El Capitan) as of the date hereof or any
person that
becomes a customer or prospective customer of El Capitan during
the term of this
Agreement (including any renewals or extensions thereof).
4. COMPLIANCE WITH LAW.
a) Representative agrees that in carrying out its duties and
responsibilities under this Agreement, it will neither
undertake, nor cause nor
permit to be undertaken, any activity which either (i) is
illegal under any
laws, decrees, rules or regulations in effect in the United
States or any
country in Asia in which Representative does business on behalf
of El Capitan,
or (ii) would have the effect of causing El Capitan to be in
violation of any
laws, decrees, rules or regulations in effect in the United
States or in any
country in Asia in which Representative does business on behalf
of El Capitan.
b) Representative agrees that, in connection with this
Agreement, it will
not, directly or indirectly, give, offer, promise, authorize, or
tolerate to be
given, offered or promised, anything of value to an official or
employee of the
government of any country in Asia in which Representative does
business on
behalf of El Capitan or of any subdivision thereof with the
intent to (i)
influence any official act or decision of such official or
employee, or (ii)
induce such official or employee to use its influence to affect
or influence any
act or decision of the government of any country in Asia in
which Representative
does business on behalf of El Capitan or of any subdivision
thereof.
c) Representative agrees that, in connection with this
Agreement, it will
not directly or indirectly give, offer, promise, authorize, or
tolerate to be
given, offered or promised anything of value to another person
knowing or having
reason to know that such thing of value is to be given, offered
or promised to
an official or employee of the government of any country in Asia
in which
Representative does business on behalf of El Capitan or of any
subdivision
thereof with the intent to (i) influence any official act or
decision of such
official or employee, or (ii) induce such official or employee
to use its
influence to affect or influence any act or decision of the
government of any
country in Asia in which Representative does business on behalf
of El Capitan or
of any subdivision thereof.
d) Representative further agrees and warrants that no owner,
shareholder
(direct or beneficial), officer, director, employee or
representative of
Representative is an official of any government, as that term is
used in this
paragraph, nor will Representative employ such an official.
Representative shall
immediately inform El Capitan of any material change in the
ownership or control
of Representative.
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<PAGE>
e) For the purpose of this Article 4, the term "official or
employee of
the government of any country in Asia in which Representative
does business on
behalf of El Capitan" shall include any political party or any
official thereof
or any candidate for fo
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