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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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
