CONSULTANT AGREEMENT FOR SERVICE ON BOARD OF DIRECTORS
THIS AGREEMENT is made and entered into effective as of April 15, 2005
(the "Effective Date"), by and between Tornado Gold International Corp., a
Nevada corporation, ("Company") and Xxxx X. Xxxxxx, an individual ("Director").
1. Term.
(a) This Agreement shall continue for a period of one (1) year
from the Effective Date and shall continue thereafter for as long as Director
serves on the Board of Directors of Company.
(b) Notwithstanding the foregoing and provided that Director has
neither voluntarily resigned nor been terminated for "cause" as defined in
Section 3(b) of this Agreement, Company agrees to use its best efforts to
reelect Director to the Board at the 2005 Annual Meeting of the Shareholders.
2. Position and Responsibilities.
(a) Position. Company hereby retains Director to serve on the
Board of Directors. Director shall perform such duties and responsibilities as
are normally related to such position in accordance with Company's bylaws and
applicable law, including those services described on Exhibit A, (the
"Services"), and Director hereby agrees to use his best efforts to provide the
Services. Director shall not allow any other person or entity to perform any of
the Services for or instead of Director. Director shall comply with the
statutes, rules, regulations and orders of any governmental or
quasi-governmental authority, which are applicable to the performance of the
Services, and Company's rules, regulations, and practices as they may from
time-to-time be adopted or modified.
(b) Other Activities. Director may be employed by another
company, may serve on other Boards of Directors or Advisory Boards, and may
engage in any other business activity (whether or not pursued for pecuniary
advantage), as long as such outside activities do not violate Director's
obligations under this Agreement or Director's fiduciary obligations to the
shareholders, except as set forth in Exhibit B. The ownership of any interest in
an entity, by itself, shall not constitute a violation of this duty. Except as
set forth in Exhibit B, Director represents that, to the best of his knowledge,
Director has no outstanding agreement or obligation that is in conflict with any
of the provisions of this Agreement, and Director agrees to use his best efforts
to avoid or minimize any such conflict and agrees not to enter into any
agreement or obligation that could create such a conflict, without the approval
of the Chief Executive Officer or a majority of the Board of Directors. If, at
any time, Director is required to make any disclosure or take any action that
may conflict with any of the provisions of this Agreement, Director will
promptly notify the Chief Executive Officer or the Board of such obligation,
prior to making such disclosure or taking such action.
(c) No Conflict. Except as set forth in Section 2(b) and Exhibit
B, Director will not engage in any activity that creates an actual conflict of
interest with Company, regardless of whether such activity is prohibited by
Company's conflict of interest guidelines or this Agreement, and Director agrees
to notify the Board of Directors before engaging in any activity that creates a
potential conflict of interest with Company. Specifically and except as set
forth in Section 2(b) and Exhibit B of this Agreement, Director shall not engage
in any activity that is in direct competition with the Company or serve in any
capacity (including, but not limited to, as an employee, consultant, advisor or
director) in any company or entity that competes directly with the Company, as
reasonably determined by a majority of Company's disinterested board members,
without the approval of the Chief Executive Officer.
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3. Compensation and Benefits.
(a) Director's Fee. In consideration of the services to be
rendered under this Agreement, Company shall pay Director a fee at the rate of
__________ Dollars ($____________) per year, all of which shall be paid in
accordance with Company's regularly established practices regarding the payment
of Directors' fees, but in no event later than 12 months after the Effective
Date of this Agreement and each of its subsequent anniversaries, if any.
(b) Stock and Stock Options. Company acknowledges that Director
is an owner of Common Stock, and that the rights attributable to these
securities (the "Securities") shall not be affected by the execution of this
Agreement. In addition, in consideration of the services to be rendered under
this Agreement, Company agrees to grant Director the following shares and stock
options subject to the approval of the Board of Directors (the "Options"):
(1) An option to purchase 125,000 shares of Company's Common Stock at an
exercise price of $1.00 per share (noting that the fair market value of
Company's Common Stock on the Effective Date is $1.05 per share), all of
which shall vest on December 15, 2005. The Options shall expire 3 years
from the date of vesting.
(2) An option to purchase an additional 125,000 shares of the Company's
Common Stock shall be granted when the Company acquires a project with a
drill-indicated resource1 of at least 1.5 million ounces of gold or
gold-equivalent2 and if financing can be arranged. The exercise price of
these Options will be $1.00 per share, and will vest on the date such
Options are granted.
(3) A grant of 125,000 shares of the Company's Common Stock ("Shares") shall
be issued to Director in the event that a positive feasibility study is
completed by the Company, a successor company or joint venture partner
on a Company project on at least 1 million ounces of gold or gold
equivalent.3
In the event (i) of a merger, change in control or sale of Company or (ii)
Director either is terminated as a board member or is not reelected, where the
Director has not engaged in conduct during his tenure on the board which would
constitute "cause" for such termination, as determined by a majority vote of the
disinterested board members, the Shares immediately shall become fully vested
immediately. "Cause" means a determination by a majority of the disinterested
board members that the Director has been engaged in any of the following: (i)
malfeasance in office; (ii) gross misconduct or neglect; (iii) false or
fraudulent misrepresentation inducing Director's appointment; (iv) willful
conversion of corporate funds; (v) material breach of an obligation to make full
disclosure; (vi) gross incompetence; (vii) gross inefficiency; (viii) acts of
moral turpitude; or (ix) repeated failure to participate (either by telephone or
in person) in board meetings on a regular basis despite having received proper
notice of the meetings at least 48 hours in advance thereof.
The Options shall be subject to the terms and conditions of Company's 2005 Stock
Option Plan (the "Plan") and Company's standard Stock Option Agreement, as
modified by this Agreement. During the term of this Agreement, Director may be
granted additional stock options or other equity rights, as determined by
Company's Compensation Committee, in its sole discretion.
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(c) Contingent Compensation.
(1) In the event that a Company property is sold to an unaffiliated third
party while Director remains in service with the Company, Director shall
receive a total of 1.5% of the value paid by that third party (the
"Commission"). The Company shall have the option to pay Director the
Commission in cash or stock. If payment is in stock, the per share value
of the stock shall be determined by taking the preceding five (5) day
average of the ask and bid of the Company's stock as quoted on the
Over-the-Counter Bulletin Board or other quotation medium or exchange.
If the Company's stock is not listed or quoted on any such medium or
exchange, the per share value shall be determined by a majority of the
disinterested directors in their sole and absolute discretion.
(2) In the event that the Company puts a property into production (i.e., the
Company begins earning revenue from the subject property) while Director
remains in service with the Company, Director shall receive 5% of the
Net Proceeds Interest in the property. "Net Proceeds Interest" means the
value received by the Company from the sale of product from the subject
property and processing facility less the operating costs of the mine
and processing facility, but before amortizing the investment.
(d) Expenses. The Company shall reimburse Director for all
reasonable business expenses incurred in the performance of his duties hereunder
in accordance with Company's expense reimbursement guidelines.
(e) Indemnification. Company will indemnify and defend Director
against any liability incurred in the performance of the Services to the fullest
extent authorized in Company's Articles of Incorporation, as amended, bylaws, as
amended, and applicable law. Director shall be entitled to the protection of any
insurance policies the Company maintains for the benefit of its Directors and
Officers against all costs, charges and expenses in connection with any action,
suit or proceeding to which he may be made a party by reason of his affiliation
with Company, its subsidiaries, or affiliates. Company has not purchased
Director's and Officer's liability insurance.
(f) Records. Director shall have reasonable access to books and
records of Company, as necessary to enable Director to fulfill his obligations
as a Director of Company.
4. Termination.
(a) Right to Terminate. At any time, Director may be removed as
provided in Company's Articles of Incorporation, as amended, bylaws, as amended,
and applicable law. Director may resign as provided in Company's Articles of
Incorporation, as amended, bylaws, as amended, and applicable law.
Notwithstanding anything to the contrary contained in or arising from this
Agreement or any statements, policies, or practices of Company, neither Director
nor Company shall be required to provide any advance notice or any reason or
cause for termination of Director's status, except as provided in Company's
Articles of Incorporation, as amended, Company's bylaws, as amended, and
applicable law.
(b) Effect of Termination as Director. Upon a termination of
Director's status as a Director, this Agreement will terminate; Company shall
pay to Director all compensation and benefits to which Director is entitled up
through the date of termination. Thereafter, all of Company's obligations under
this Agreement shall cease, except as provided in Sections 1(b), 3(b), 3(c),
3(d), 3(e) and 5.
5. Termination Obligations.
(a) Director agrees that all property, including, without
limitation, all equipment, tangible proprietary information, documents, records,
notes, contracts, and computer-generated materials provided to or prepared by
Director incident to the Services belong to Company and shall be promptly
returned at the request of Company.
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(b) Upon termination of this Agreement, Director shall be deemed
to have resigned from all offices then held with Company, unless Director
continues to serve as a director if elected as a director by the shareholders of
Company as provided in Company's Articles of Incorporation, as amended,
Company's bylaws, as amended, and applicable law. Director agrees that following
any termination of this Agreement, he shall cooperate with Company in the
winding up or transferring to other directors of any pending work and shall also
cooperate with Company (to the extent allowed by law, and at Company's expense)
in the defense of any action brought by any third party against Company that
relates to the Services.
(c) The Company and Director agree that their obligations under
this Section, as well as Sections 1(b), 3(b), 3(c), 3(d), 3(e), 4(b) and 7,
shall survive the termination of this Agreement.
6. Nondisclosure Obligations. Director shall maintain in confidence and
shall not, directly or indirectly, disclose or use, either during or after the
term of this Agreement, any Proprietary Information (as defined below),
confidential information, or trade secrets belonging to Company, whether or not
it is in written or permanent form, except to the extent necessary to perform
the Services, as required by a lawful government order or subpoena, or as
authorized in writing by Company. These nondisclosure obligations also apply to
Proprietary Information belonging to customers and suppliers of Company, and
other third parties, learned by Director as a result of performing the Services.
"Proprietary Information" means all information pertaining in any manner to the
business of Company, unless (i) the information is or becomes publicly known
through lawful means; (ii) the information was part of Director's general
knowledge prior to his relationship with Company; or (iii) the information is
disclosed to Director without restriction by a third party who rightfully
possesses the information and did not learn of it from Company.
7. Dispute Resolution.
(a) Jurisdiction and Venue. The parties agree that any suit,
action, or proceeding between Director (and his attorneys, successors, and
assigns) and Company (and its affiliates, shareholders, directors, officers,
employees, members, agents, successors, attorneys, and assigns) relating to the
Services or the termination of those Services shall be brought in either the
United States District Court for the District of Nevada or in a Nevada state
court in the County of Washoe and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive, to the fullest extent
permitted by law, any objection the party may have to the laying of venue for
any such suit, action or proceeding brought in such court. If any one or more
provisions of this Section shall for any reason be held invalid or
unenforceable, it is the specific intent of the parties that such provisions
shall be modified to the minimum extent necessary to make it or its application
valid and enforceable.
(b) Attorneys' Fees. Should any litigation, arbitration or other
proceeding be commenced between the parties concerning the rights or obligations
of the parties under this Agreement, the party prevailing in such proceeding
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its attorneys' fees in such proceeding. This amount
shall be determined by the court in such proceeding or in a separate action
brought for that purpose. In addition to any amount received as attorneys' fees,
the prevailing party also shall be entitled to receive from the party held to be
liable, an amount equal to the attorneys' fees and costs incurred in enforcing
any judgment against such party. This Section is severable from the other
provisions of this Agreement and survives any judgment and is not deemed merged
into any judgment.
8. Entire Agreement. This Agreement is intended to be the final,
complete, and exclusive statement of the terms of Director's relationship solely
with respect to his position as Director of the Company. This Agreement entirely
supercedes and may not be contradicted by evidence of any prior or
contemporaneous statements or agreements pertaining to Director's relationship
with Company. Agreements related to Director's ownership of the Securities are
not affected by this Agreement.
9. Amendments; Waivers. This Agreement may not be amended except by a
writing signed by Director and by a duly authorized representative of the
Company other than Director. Failure to exercise any right under this Agreement
shall not constitute a waiver of such right.
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10. Assignment. Director agrees that Director will not assign any rights
or obligations under this Agreement, with the exception of Director's ability to
assign rights with respect to the Securities. Nothing in this Agreement shall
prevent the consolidation, merger or sale of Company or a sale of all or
substantially all of its assets.
11. Severability. If any provision of this Agreement shall be held by a
court or arbitrator to be invalid, unenforceable, or void, such provision shall
be enforced to fullest extent permitted by law, and the remainder of this
Agreement shall remain in full force and effect. In the event that the time
period or scope of any provision is declared by a court or arbitrator of
competent jurisdiction to exceed the maximum time period or scope that such
court or arbitrator deems enforceable, then such court or arbitrator shall
reduce the time period or scope to the maximum time period or scope permitted by
law.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
13. Interpretation. This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against any party.
Captions are used for reference purposes only and should be ignored in the
interpretation of the Agreement.
14. Binding Agreement. Each party represents and warrants to the other
that the person(s) signing this Agreement below has authority to bind the party
to this Agreement and that this Agreement will legally bind both Company and
Director. This Agreement will be binding upon and benefit the parties and their
heirs, administrators, executors, successors and permitted assigns. To the
extent that the practices, policies, or procedures of Company, now or in the
future, are inconsistent with the terms of this Agreement, the provisions of
this Agreement shall control. Any subsequent change in Director's duties or
compensation will not affect the validity or scope of the remainder of this
Agreement.
15. Director Acknowledgment. Director acknowledges Director has had the
opportunity to consult legal counsel concerning this Agreement, that Director
has read and understands the Agreement, that Director is fully aware of its
legal effect, and that Director has entered into it freely based on his own
judgment and not on any representations or promises other than those contained
in this Agreement.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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17. Date of Agreement. The parties have duly executed this Agreement as
of the date first written above.
Tornado Gold International Corp., Director:
a Nevada corporation:
By: /s/ Xxxx X. Xxxxxx /s/ Xxxx X. Xxxxxx
---------------------------- -------------------------------
Name: Xxxx X. Xxxxxx Xxxx X. Xxxxxx
Title: CEO and President
1 "Drill-indicated resource" means a deposit that has been investigated and
measured through industry-standard geologic and engineering methods, but that
has not had a positive feasibility study performed.
2 For purposes of this reference only, "gold equivalent" means the value of gold
and other metals expressed as gold ounces at the price of gold and the other
metals at the time of acquisition.
3 For purposes of this reference only, "gold equivalent" means the value of gold
and other metals expressed as gold ounces at the price of gold and the other
metals at the time of feasibility.
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EXHIBIT A
DESCRIPTION OF SERVICES
Responsibilities as Director. Director shall have all responsibilities
of a Director of the Company imposed by Nevada or applicable law, the Articles
of Incorporation, as amended, and Bylaws, as amended, of Company. These
responsibilities shall include, but shall not be limited to, the following:
1. Attendance. Use best efforts to attend scheduled meetings of Company's Board
of Directors;
2. Act as a Fiduciary. Represent the shareholders and the interests of Company
as a fiduciary; and
3. Participation. Participate as a full voting member of Company's Board of
Directors in setting overall objectives, approving plans and programs of
operation, formulating general policies, offering advice and counsel, serving on
Board Committees, and reviewing management performance.
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EXHIBIT B
AUTHORIZED ACTIVITIES
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