Attached files
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| 8-K/A - CAPITAL GOLD CORP | v178205_8ka.htm |
Exhibit 1.1
January
25, 2010
Managers
of Metal Recovery Solutions, LLC
900 South
Meadows Parkway
Suite
4811
Reno, NV
89521
Attention: Donald
Jacobs-CEO
Gentlemen:
Reference
is made to that certain letter of intent (the “LOI”) dated January
18, 2010 by and among Metal Recovery Solutions, LLC, a Nevada limited liability
company (the “Company”), Capital
Gold Corporation, a Delaware corporation (the “Purchaser”), and Oro
Recovery Solutions, LP, a Texas limited partnership (the “Consultant”). Terms
used but not defined in this letter agreement (the “Letter Agreement”)
shall have the meaning ascribed to them in the LOI.
Pursuant
to the LOI, Purchaser has made a non-binding commitment to invest $2,000,000 in
the aggregate in the Company, the first $500,000 of which is the subject of this
Letter Agreement (the “First
Tranche”).
By this
letter, the Parties hereby acknowledge and agree that:
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1.
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Purchaser
shall promptly fund the First Tranche in immediately available
funds;
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2.
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On
and after the earlier of (i) February 26, 2010 and (ii) the execution of
the Investment Agreement, the First Tranche shall automatically convert
into an equity interest in the Company, which shall equal 25% of all of
the issued and outstanding equity of the Company on a fully diluted basis
(the “Equity
Stake”). The Company agrees to take all such further actions and
execute all such further documents or instruments as the Purchaser
requests for the Purchaser to perfect the Equity
Stake;
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3.
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If,
prior to February 26, 2010 (the date contemplated for the execution of the
Investment Agreement) and prior to the conversion of the First Tranche
into the Equity Stake, the Parties fail to execute and deliver to each
other a definitive stock purchase agreement and shareholder agreement or
similar agreements with respect to the investment in the Company by the
Purchaser as contemplated by the LOI (the “Investment
Agreement”), for value received, the Company hereby promises to pay
to the order of the Purchaser the entire First Tranche (the “Repayment”)
in accordance with the Repayment Schedule set forth on Appendix A (the
“Repayment
Schedule”);
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4.
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The
unpaid balance will bear a simple interest rate of 3% per
annum;
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Exhibit 1.1
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5.
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In
order to secure the Repayment, the Company hereby assigns and pledges to
the Purchaser, on a first-priority basis, a continuing security interest
in and lien upon (the “Security
Interest”): (i) all payments to the Company under the Company’s
Consulting / Services Agreement with Anglo Gold Ashanti (Colorado), dated
September 29, 2009. (the “Anglo Agreement”) or any successor agreement
thereto and (ii) the trailer and other equipment that the Company will
purchase with the proceeds from the First Tranche, such proceeds
(collectively, the “Collateral”).
Should the Company be deemed to be in default by not meeting the payment
schedule as outlined in Appendix A, Purchaser has the right to convert the
Collateral for its own use in order to satisfy the Repayment. The Company
shall not take any action that will interfere with the Purchaser’s rights
to the Collateral. The Company shall take all such further actions and
execute all such further documents or instruments as the Purchaser
requests for the Purchaser to perfect and maintain its security interest
in the Collateral and hereby consents to the preparation and filing by the
Purchaser of any documents or instruments the Purchaser deems prudent to
perfect and maintain its interest in the Collateral. The Security Interest
shall continue until the complete satisfaction of any
Repayment;
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6.
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Purchaser
acknowledges that a reasonable demand for Repayment during the Repayment
Period (as defined in Appendix A )is as outlined in Appendix A and is one
that will afford the Company the continuing use of that portion of the
proceeds under the executory Anglo Agreement that will permit the Company
to fulfill its obligations thereunder, thereby entitling the Company to
further payments thereunder;
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7.
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The
Company will at all times keep accurate and complete records of the
Collateral and will immediately inform the Purchaser of any default in
payment or performance by the Company or claims made by others in regard
to, the Anglo Agreement or the Collateral, and shall not change the terms
thereof (or terminate or permit the impairment of any of its rights
thereunder) without the prior written consent the Purchaser;
and
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8.
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The
Purchaser retains the right to have all or part of any Repayment to be
credited to work performed, under the terms of contract(s) between the
Company and the Purchaser that are not yet executed, at the Purchaser’s El
Chanate Mine.
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This
Letter shall be governed by the laws of the State of New York without regard to
the principles of conflict of laws.
The Company acknowledges and agrees
that its actual or threatened breach of this Letter would result in irreparable
damage to the Purchaser and that money damages would not provide an adequate
remedy to the Purchaser. Accordingly, the Company agree that, in the
event of any such breach, the Purchaser shall have, in addition to any and all
remedies of law, the right to have the provisions of this Letter specifically
enforced and to obtain injunctive and other equitable relief to enforce the
provisions of this Letter.
Exhibit 1.1
This Letter may only be amended,
modified or terminated by a written instrument signed by each signatory
hereto.
No press
releases shall be issued, nor shall the terms of this Letter Agreement be
disclosed to any third party, other than the Consultant, without the mutual
consent of the Purchaser and the Company, subject to the public reporting
obligations and duties of the Purchaser, as such may be determined by counsel to
the Purchaser, as the case may be, under applicable law.
This Letter shall be binding upon the
Purchaser, the Company and their legal representatives, successors and permitted
assigns. In no event may the Company assign any rights or obligations
under this Letter without the Purchaser’s prior written consent and any
purported assignment without such consent shall be null and void. The
rights of the Company under this Letter shall be freely assignable by
it.
| Very truly yours, | |||
| CAPITAL GOLD CORPORATION | |||
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By:
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| Name: | John Brownlie | ||
| Title: | President | ||
Agreed to and Accepted
by:
Metal
Recovery Solutions, LLC
By:_________________________
Name: Donald
P. Jacobs
Manager
___________
Thom Seal
Manager
Appendix A - Repayment
Schedule
Repayment
will be made from actual cash collections from Anglo Gold Ashanti (Colorado) for
services rendered at the Cripple Creek and Victor mine in Cripple Creek
Colorado. The period outlined below is the authorized “Repayment
Period”. The Repayment Period can be extended only in a writing executed by the
Company and the Purchaser.
Payments
to Purchaser will be made subsequent to Company paying all reasonable
contractually and legally obligated direct project costs to employees, vendors,
suppliers etc.
Company
may pre-pay all outstanding balances, including accrued interest, at any time
during the Repayment Period without prejudice or penalty.
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Cash
Collection Date (EST)
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Collections from Anglo
Gold
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Payment
to Purchaser
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April
-10
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$252,000
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$80,000
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June
-10
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$189,000
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$80,000
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July
-10
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$189,000
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$80,000
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August
-10
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$189,000
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$80,000
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Sept
-10
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$189,000
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$80,000
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Oct
-10
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$267,000
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$115,000
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TOTAL
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$1,275,000
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$515,000
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