CONSULTING AGREEMENT
This
Consulting Agreement,
by and
between El Capitan Precious Metals, Inc., a Nevada corporation (the
“Company”),
and
Xxxxxxx X. Xxxxxxx (the “Consultant”)
is
entered into as of the 1st day of October, 2007 (the “Effective
Date”).
Now,
Therefore,
for
other good and valuable consideration, the receipt and sufficiency of which
is
hereby acknowledged, the Company and Consultant, each intending to be legally
bound, hereby agree as follows:
1. Consultant
Services.
During
the term of this Agreement, Consultant shall from time to time use its best
efforts to perform corporate advisory services for the Company, including
without limitation providing services relating to: (i) strategic advisory
services; (ii) corporate financial planning; (iii) market analysis; (iv)
introductions to potential investors; and (v) other consulting and advisory
services which may in the future be mutually agreed upon by the Company and
Consultant.
The
Company and Consultant hereby acknowledge and agree that: (i) Consultant is
not
a “broker” or “dealer” as defined under any applicable federal and/or state
securities laws; (ii) Consultant shall not engage in any acts for which he
is
required to be a broker-dealer; (iii) Consultant shall solely act to provide
advice to the Company with respect to capital raising and market analysis,
and
shall not engage in any sales efforts in connection with any investment by
any
person or entity in the Company; (iv) Consultant shall not participate in any
negotiation of the terms of any such investment; and (v) Consultant shall not
give any advice to anyone regarding the valuation of, potential return on,
or
the terms of any investment in, any securities of the Company, except as
authorized by the Company. Consultant makes no representations, warranties
or
guaranties of any specific results or success.
The
Company further acknowledges that the services of Consultant provided hereunder
are not exclusive to the Company, and, subject to the terms of Section 6 hereof,
nothing herein shall be construed to limit or restrict Consultant or his
affiliates in conducting such business with respect to others or in rendering
such advice to others. Consultant hereby acknowledges that the Company’s
engagement of Consultant is similarly not exclusive, and the Company is free
to
obtain similar services as provided by Consultant from third parties.
2. Term.
Subject
to earlier termination by the parties in accordance with the terms of Section
8
hereof, the term of this Agreement shall commence on the Effective Date and
continue until such time that the Company has paid Consultant an aggregate
Consulting Fee of $300,000 pursuant to the terms of Section 3 hereof (the
“Term”).
3. Compensation.
As
consideration for Consultant’s entry into this Agreement and performance of the
consulting services set forth herein, the Company shall pay Consultant the
following compensation (the “Consulting
Fee”):
(a) Base
Payment.
The
Company shall pay Consultant a one-time payment of $25,000, in cash, within
five
(5) days of the first date after the Effective Date upon which the Company’s
cash balance exceeds $250,000 in the aggregate (the “Base
Payment”);
and
(b) Monthly
Payment. The
Company shall pay Consultant up to an aggregate of $275,000, payable in monthly
installments during the Term, the amount of each such installment to be based
on
the Company’s cash availability as determined by the Company’s average daily
cash balance for the preceding month in accordance with the following schedule
(each a “Monthly
Payment”):
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Company’s
Average Daily Cash
Balance
for the Preceding Month
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Less
than $250,000
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$250,000
to $500,000
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$500,000
to$1,000,000
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Over
$1,000,000
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Monthly
payment amount
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$
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2,500
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$
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5,000
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$
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7,500
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$
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10,000
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4. Reimbursement.
All
third-party and out-of-pocket expenses incurred by the Consultant in performing
the consulting services shall be paid by the Company, or shall be reimbursed
by
the Company if paid by the Consultant on behalf of the Company, within ten
(10)
days of receipt of written notice by the Consultant, provided that the Company
must approve in advance all such expenses.
5. Confidentiality.
As a
condition to the Company’s obligations hereunder and Consultant’s continuing
relationship with the Company as a consultant and financial and investment
advisor, Consultant understands and agrees as follows:
(a) Consultant
acknowledges that he may have received, or may receive in the future, certain
confidential forward-looking statements and information, either written or
oral,
or other confidential or non-public information from the Company concerning
the
Company and its prospects, including without limitation all financial
statements, reports, memorandums, analyses, notes or other information that
are
based on, contain or reflect any information deemed confidential by the Company
(collectively, the “Confidential
Information”).
(b) Consultant
shall use the Confidential Information solely for the purpose of performing
the
services required to be performed by Consultant hereunder. Consultant shall
keep
all Confidential Information confidential, and shall not disclose any
Confidential Information without the prior written consent of the Company.
(c) Following
the completion of its engagement by the Company, Consultant shall promptly
return any Confidential Information in their respective possessions to the
Company, without retaining any copy thereof, and destroy all tangible forms
of
Confidential Information prepared by or for internal use which reflect, contain
or embody Confidential Information.
(d) Consultant
hereby acknowledges that he is aware that the securities laws of the United
States prohibit any person who has material non-public information concerning
the Company or a possible transaction involving the Company from purchasing
or
selling securities in reliance upon such information or from communicating
such
information to any other person or entity under circumstances in which it is
reasonably foreseeable that such person or entity is likely to purchase or
sell
such securities in reliance upon such information.
(e) For
the
purposes of this Agreement, the definition of “Confidential Information” shall
not include information which (i) had been made previously available to the
public by the Company; (ii) is or becomes generally available to the public,
unless the information being made available to the public results in a breach
of
this Agreement; (iii) prior to disclosure to Consultant, was already rightfully
in any such person’s possession; or (iv) is obtained by Consultant from a third
party who is lawfully in possession of such information, and not in violation of
any contractual, legal or fiduciary obligation to the Company, with respect
to
such information and who does not require Consultant to refrain from disclosing
such information to others.
2
6. Non-Solicitation
and Non-Competition.
Consultant agrees that, during the period from the Effective Date to the date
that is one
(1)
year beyond the Term, Consultant will not, without the prior written consent
of
the Company, directly or indirectly, on behalf of Consultant or any third party,
do or commit any of the following acts:
(a) Induce,
entice, hire or attempt to hire, employ or otherwise contract with any employee
or independent contractor of the Company; provided, that Consultant may contract
with independent contractors for matters that are not related to the business
activities of the Company.
(b) Induce,
or attempt to induce any employee or independent contractor of the Company
to
leave the employ or cease doing business with the Company.
(c) Induce,
or attempt to induce, any customer, supplier, vendor or any other person to
cease doing business with the Company.
(d) Induce
or
attempt to induce any individual to violate any agreement with the Company.
Consultant
further agrees that, from the Effective Date to the date that is one (1) year
beyond the Term, he will not, without the prior written consent of the Company,
directly or indirectly, render services, advice or assistance to any
corporation, person, organization or other entity which engages in the mining
business, or engage in any such activities in any capacity whatsoever,
including, without limitation, as an employee, independent contractor, officer,
director, manager, beneficial owner, partner, member or shareholder (other
than
being a shareholder of a corporation required to file periodic reports with
the
Securities and Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, where the shareholder’s total holdings are
less than three percent (3%)).
7. Status
of Consultant as Independent Contractor.
(a) Using
his
best efforts, Consultant shall devote such time to the performance of the
services described in this Agreement as may be necessary to satisfactorily
complete the such services.
(b) Consultant
shall be an independent contractor in the performance of this Agreement, and
shall not be deemed an employee of the Company for any purpose whatsoever.
Consultant shall not be entitled to participate in any benefit programs for
the
Company employees, including without limitation health benefits, life insurance,
pension or profit sharing plans and paid vacation and sick leave. Consultant
shall be solely responsible for the payment of his income taxes as required
by
any and all government agencies with respect to compensation paid to Consultant
by the Company, and shall comply with all regulations therefrom.
(c) Consultant
shall have no power to act as an agent of the Company or bind the Company in
any
respect.
8. Termination.
(a) Termination
by Company.
The
Company shall be entitled to terminate this Agreement with or without Cause
(as
defined herein) at any time with written notice to Consultant. In the event
termination is with Cause, the Company shall be required to pay Consultant
for
any accrued (in accordance with the schedule set forth in Section 3 hereof)
and
unpaid portion of the Consulting Fees and reimburse Consultant for any accrued
and unpaid expenses up to the date of termination. In the event termination
is
without Cause, the Company shall be required to continue to pay Consultant
the
Consulting Fee (in accordance with the schedule set forth in Section 3 hereof)
through the remainder of the Term. "Cause" means any of the following: (i)
failure of Consultant to perform the services hereunder; (ii) gross negligence
or willful misconduct of Consultant in connection with his duties or
responsibilities; (iii) fraudulent activity by Consultant; (iv) any action
of
Consultant exposing the Company to material adverse consequences, financial
or
otherwise; (v) Consultant’s indictment of any felony or a misdemeanor involving
moral turpitude (including entry of a nolo contendere plea); (vi) Consultant’s
misappropriation or embezzlement of the property of the Company or its
affiliates (whether or not a misdemeanor or felony); or (vii) Consultant’s death
or disability resulting in his inability to perform the services under this
Agreement.
(b) Termination
by Consultant. Consultant
shall be entitled to terminate this Agreement, for any reason or no reason,
upon
thirty (30) days written notice. In the event of Consultant’s termination of
this Agreement, Consultant shall be entitled to payment for any accrued (in
accordance with the schedule set forth in Section 3 hereof) and unpaid portion
of the Consulting Fees and reimbursement for any accrued and unpaid expenses
up
to the date of termination.
3
9. General
Provisions.
(a) Assignment.
Consultant may not assign or subcontract his rights or obligations under this
Agreement without the prior written consent of the Company. The Company may
assign its rights to any affiliated entity.
(b) Amendment.
This
Agreement may be modified or amended only by a written agreement signed by
both
the Company and Consultant.
(c) Governing
Law.
The laws
of Nevada will govern the validity, construction, and performance of this
Agreement, without regard to any choice of law or conflict of law rules and
regardless of the location of any arbitration under this Agreement.
(d) Construction.
Wherever possible, each provision of this Agreement will be interpreted so
that
it is valid under the applicable law. If any provision of this Agreement is
to
any extent invalid under the applicable law, that provision will still be
effective to the extent it remains valid. The remainder of this Agreement also
will continue to be valid, and the entire Agreement will continue to be valid
in
other jurisdictions.
(e) No
Waiver.
No
failure or delay by either the Company or Consultant in exercising or enforcing
any right or remedy under this Agreement will waive any provision of the
Agreement. Nor will any single or partial exercise by either the Company or
Consultant of any right or remedy under this Agreement preclude either of them
from otherwise or further exercising these rights or remedies, or any other
rights or remedies granted by any law or any related document.
(f) Captions.
The
headings in this Agreement are for convenience only and shall not affect this
Agreement’s interpretation.
(g) References.
Except
as otherwise required or indicated by the context, all references to Sections
in
this Agreement refer to Sections of this Agreement.
4
(h) Entire
Agreement.
This
Agreement supersedes all previous and contemporaneous oral negotiations,
commitments, writings, and understandings between the parties concerning the
matters in this Agreement. In the case of any conflict between the terms of
this
Agreement and any other agreement, writing or understanding, this Agreement
will
control.
(i) Notices.
Any
notice to be given shall be sufficiently given when received, and, if mailed,
shall be deemed received three (3) business days after the date of mailing
if
sent by certified mail, postage prepaid, to the address of the party set forth
below (or to such other address as the party shall designate by written
notice).
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If
to the Company, to:
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El
Capitan Precious Metals, Inc.
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0000
Xxxxxxxxx Xxx, Xxxxx 000
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Xxxx,
XX 00000
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Attention:
Chief Financial Officer
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Facsimile:
(000) 000-0000
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If
to Consultant, to:
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Xxxxxxx
X. Xxxxxxx
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Facsimile:
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(j) Severability.
The
invalidity or unenforceability of one or more provisions of this Agreement
shall
not affect the validity or enforceability of any of the other provisions, and
this Agreement shall be construed as if such invalid or unenforceable provisions
were omitted. If any provision is unenforceable because it is overbroad, the
parties agree that such provision shall be limited to the extent necessary
to
make it enforceable, it being the intent of the parties that provisions of
this
Agreement be enforced to the maximum extent possible.
(k) Counterparts.
This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement binding on all parties. Each party
shall
become bound by this Agreement immediately upon signing any counterpart,
independently of the signature of any other party. In making proof of this
Agreement, however, it will be necessary to produce only one copy signed by
the
party to be charged.
Signature
Page Follows
5
IN
WITNESS WHEREOF, the undersigned Consultant and the Company have executed this
Agreement effective as of the Effective Date.
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El
Capitan
Precious Metals, Inc.
a
Minnesota corporation
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| By: | /s/ Xxxxxxx X. Xxxxxxx | |
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Xxxxxxx X. Xxxxxxx |
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Its:
President
and CEO
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| By: | /s/ Xxxxxxx X. Xxxxxxx | |
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Xxxxxxx
X. Xxxxxxx
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