9
EXHIBIT 10.7
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT (the "Agreement") is made and entered
into as of March 24, 2003 (the "Effective Date"), between Can-Cal Resources,
Ltd., a Nevada Corporation (the "Company"), whose principal place of business is
0000 Xxxxxx Xxxx Xxxx, Xxx Xxxxx, Xxxxxx, and Xxxxxxx X. Xxxxx, an individual
(the "Executive"), whose address is 00 Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxx, XX 00000.
R E C I T A L S
A. The Company is engaged in the exploration and development of mineral resource
properties.
B. The Executive wishes to provide management consulting services to the
Company, and the Company wishes to hire the Executive, subject to the terms and
conditions of this Agreement.
C. The Executive, by virtue of his employment with the Company, will become
familiar with and possessed with the manner, methods, trade secrets and other
confidential information pertaining to the Company's Business.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
and the exchange of good and valuable consideration, the exchange and receipt of
which hereby is acknowledged by all parties, the Company and the Executive do
hereby agree, as follows:
1. Recitals. The above recitals are true, correct and are herein
incorporated by reference.
2. Employment. The Company hereby employs the Executive to provide
management consulting services, initially, in the capacity of President of the
Company, and the Executive shall also be appointed Chief Executive Officer of
the Company (collectively, "Employment"), immediately following the filing, and
acceptance, of the Company's 2002 Form 10-KSB with the Securities and Exchange
Commission. The Executive hereby accepts such Employment, upon the terms and
conditions hereinafter set forth. Further, the Executive shall be named a
Director of the Company, following his appointment as Chief Executive Officer of
the Company.
3. Duration. The Employment shall be deemed to have commenced on the
Effective Date and shall continue until terminated pursuant to Section 6 hereof.
4. Duties During Employment Period. The Executive will:
a. Perform all the duties and exercise all the powers of his office
and such other functions within the Company as the Company's Board of Directors
(the "Board") may reasonably require to the best of his ability giving the
Company the full benefit of his knowledge, expertise and technical skill and
will comply with all lawful directions, given by or with the authority of the
Board.
b. Periodically travel to and work at those locations, including the
Company's Las Vegas, NV office, as may be reasonably required for the proper
fulfillment of his duties, provided that the Company shall not, without the
Executive's prior written consent, require the Executive to relocate to any
location other than the Executive's office in Lawrenceville, NJ.
5. Compensation and Other Benefits.
(a) Management Fee. The Executive shall be paid a Management Fee (the
"Fee"), payable monthly at a rate of $7,500 commencing with the Effective Date.
The Fee shall be reviewed by the Board, and adjusted at the Board's sole
discretion, on January 1, 2004, and annually thereafter, but any adjustment
shall not be less than the rate of inflation during the previous twelve-month
period, as measured by the U.S. Consumer Price Index.
(b) Bonus. The Executive shall be entitled to an annual discretionary
bonus, to be determined at the sole discretion of the Board. The bonus shall be
payable to the Executive not later than thirty (30) days after each fiscal year
end of the Company.
(c) Vacation. During each fiscal year of the Company, the Executive
shall be entitled to four (4) weeks of vacation time to be utilized, or accrued
and carried over and utilized in the following year; provided however, that the
Executive shall evidence reasonable judgment with regard to appropriate vacation
scheduling.
(d) Business Expense Reimbursement. The Executive shall be timely
reimbursed for all business-related travel and entertainment expenses, and the
Executive shall be entitled to receive proper and timely reimbursement for all
reasonable, out-of-pocket expenses incurred directly by the Executive,
including, but not limited to, telephone charges (land line and cellular) and
office-related expenses (other than rent), provided he reports same with proper
receipts.
(e) Shares. The Company shall grant to the Executive, as of the
Effective Date, an option to purchase 300,000 shares of Common Stock of the
Company, priced at the average closing price of the Company's Common Stock, as
quoted on the OTC BB, for the five trading days prior to the Effective Date. The
option shall have a three-year term from the Effective Date of this Agreement
6. Consequences of Termination of Employment.
a. Termination by the Company for Cause.
(1) Notwithstanding Section 2, the Company may terminate the
Employment for "Cause", as hereinafter defined, by giving written notice, which
shall have immediate effect. The Executive shall continue to receive the Fee
only for the period ending with the date of such termination as provided in this
Section 6(a). Any rights and benefits the Executive may have in respect of any
other compensation shall be determined in accordance with the terms of such
other compensation arrangements or such plans or programs.
(2) The term "Cause" shall mean any of the following: (A) gross
neglect or dereliction of the Executive's duties (excluding any period during
which the Executive is Disabled, as hereinafter defined) or any other grave
misconduct by the Executive or, if curable, the failure to cure such situation
within thirty (30) days after receipt of notice thereof authorized by a majority
of the directors of the Board; (B) the Executive engaging in conduct which he
knows or should have known would cause, and has in fact caused, demonstrable and
serious injury to the Company, monetary or otherwise, as evidenced by a written
determination authorized by two-thirds of the Board; or (C) the Executive's
conviction for a felony; excluding, however, a conviction involving the property
of the Company based upon the Executive's good faith conduct reasonably believed
to be in the best interests of the Company.
b. Termination by the Company Other than for Cause.
(1) The foregoing notwithstanding, the Company may terminate the
Executive's Employment for whatever reason it deems appropriate; provided,
however, that in the event such termination is not based on Cause, as provided
in Section 6(a) above, the Executive shall be provided with the termination
benefits as described in Section 7.
c. Termination by the Executive.
(1) The Executive shall have the right, at his sole discretion,
to terminate his Employment with the Company if any of the following
circumstances shall occur during the Executive's Employment, unless such
circumstances are fully corrected prior to the effective date of the notice of
termination given with respect thereof: (A) reduction in Fee; (B) assignment to
the Executive of duties and authorities that, in his good faith judgment, are
materially lesser in scope from those in effect from the date of this agreement;
(C) there is a change in control of the Company involving 25% or more of the
combined voting power of the then outstanding securities of the Company by any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934); or (D) failure by a successor company to assume the
obligations under the Agreement.
(2) In the event the Executive terminates his Employment on his
own volition, except as provided in Section 6(c)(1) of this Agreement, such
termination shall constitute a voluntary termination, and, in such event, the
Executive shall receive no further compensation.
7. Termination Benefits. In the event the Executive terminates this
Agreement pursuant to Section 6(c)(1) above, or the Company terminates this
Agreement for any reason other than for Cause, as defined in Section 6(a)(2)
above, then:
a. The Executive shall be entitled to receive from the Company for a
period of twelve (12) months from the effective date of the termination, all
amounts that otherwise would have been paid to the Executive as a Fee at the
monthly rate in effect immediately prior to such termination event (disregarding
any reduction in such Fee giving rise to a termination of the Executive's
Employment); and
b. The Executive shall be deemed fully vested in any stock options
granted under any stock option plans of the Company, including the options
granted pursuant to Section 5(e), and payouts under any Company Profit Sharing
Plans that would otherwise be forfeited upon the Executive's termination.
c. If the Executive shall die or become disabled after the termination
event, such death or disability shall not diminish or impair his (or his legal
representatives' or other successors') right to receive the payments and
benefits provided for in this Section 7.
d. The provisions of this Section 7 shall not be affected by the
commencement by the Executive of new employment after the termination.
8. Duties upon Termination. Upon the termination of this Agreement, for
whatever reason and howsoever arising or effected, the Executive shall forthwith
(and in any event not later than fourteen (14) days after such termination):
a. Deliver up to the Board all documents, statistics, accounts,
memoranda, papers, records and other items of whatsoever nature or description
which may be in his possession or control and relate in any way to the business
or affairs of the Company and no such documents or other items, nor any part of
copy thereof, shall be retained by him.
b. Resign from any office or appointment held by him with the Company
and transfer any share registered in his name as nominee for the Company and
should he fail to do so, the Company is hereby irrevocably authorized in his
name and on his behalf to sign and deliver every such resignation and transfer
9. Non-Disclosure of Confidential Information.
a. The Executive shall not at any time, either during or after the
termination of this Agreement:
(1) Disclose to any person not employed by the Company or any
person not engaged to render services to the Company (except with the prior
written consent of a majority of the members of the Board or an officer duly
authorized by the Board), any confidential information or trade secrets relating
to the Company or any of its business activities obtained by the Executive while
employed by the Company if such disclosure would cause demonstrable injury,
monetary or otherwise, to the Company or its business activities;
(2) Engage in conduct, or promote others to engage in conduct,
which would cause demonstrable injury, monetary or otherwise, to the Company or
its business activities
b. Not subject to the provisions of this section shall be any
information which the Executive can show (1) at the time of disclosure, is in
the public domain as evidenced by printed publication through no fault of the
Executive; (2) by written documentation was in his possession at the time of
disclosure and which was not acquired directly or indirectly from the Company;
or (3) by written documentation was acquired, after disclosure, from a third
party who did not receive it from the Company, and who had the right to disclose
the information without any obligation to hold such information confidential.
10. Covenant Not to Compete. The Executive acknowledges and recognizes the
highly competitive nature of Company's Business and further acknowledges and
recognizes that during the course of his Employment, the Executive will receive
specific knowledge of the Company's Business, access to trade secrets and
confidential information and participate in business and hiring decisions. The
Executive acknowledges that Company is without an adequate remedy at law in the
event this covenant is violated. The Executive further acknowledges that this
covenant not to compete is an independent covenant within this Agreement. This
covenant shall survive this Agreement and shall be treated as an independent
covenant for the purposes of enforcement. Accordingly, the Executive agrees to
the following:
a. That for a period of twelve (12) months after termination of the
Executive's Employment under this Agreement (the "Restricted Period"), the
Executive will not, individually or in conjunction with others, directly or
indirectly, engage in any activity competitive with the Company's business
within a geographical area which is within three (3) miles of any exploration or
operating mine site of the Company, other than on behalf of the Company and as
agreed by the Company or except without the written consent of the Company.
b. That during the Restricted Period, the Executive will not directly
or indirectly recruit or solicit any employee or agent of the Company to
discontinue such employment or agency relationship with the Company.
c. That during the Restricted Period, the Executive will not interfere
with, disrupt or attempt to disrupt any past, present or prospective
relationship, contractual or otherwise, between the Company and any of the
Company's clients, employees or agents.
d. The employment of the Executive in a similar position with another
company engaged in the same line of business shall not be prohibited by this
Covenant not to Compete, so long as the Executive does not breach this Section
10.
11. Remedies and Enforcement.
a. The Executive acknowledges and agrees that the Company's remedy at
law for a breach or threatened breach of any of the provisions of Sections 9 or
10 above would be inadequate and the breach shall be per se deemed as causing
irreparable harm to the Company. In recognition of this fact, in the event of a
breach by the Executive of any of the provisions of Sections 9 and 10 above, the
Executive agrees that, in addition to any remedy at law available to the
Company, including, but not limited to monetary damages, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available to the
Company.
b. If the Executive violates the restrictions set forth in this
Agreement, then the duration of the restrictions under Sections 9 or 10 above
shall be extended for an amount of time equal to the number of days that the
Executive violated the Agreement until the date that the Company obtains an
order enjoining the Executive from said violation.
c. In the event that, despite the express agreement of the Executive
and the Company, any provision stated herein shall be determined by any court or
other tribunal of competent jurisdiction to be unenforceable for any reason
whatsoever, the parties agree that the provision shall be interpreted to extend
only over the maximum period of time for which it may be enforceable; and/or
over the maximum extent in any and all other respects as to which it may be
enforceable, all as determined by such court or tribunal.
d. In the event that the Executive challenges this Agreement and an
injunction is issued staying the implementation of the restrictions imposed
herein, the time remaining on the restrictions shall be tolled until the
challenge is resolved by final adjudication, settlement or otherwise, except
that the time remaining on the restrictions shall not be tolled during any
period in which the Executive is unemployed. If a court finds in favor of the
Company, the restrictions will be imposed for the amount of time that remains on
the restrictions at the time they were tolled, or at the time of the court's
decision of the restrictions were not tolled, as the case may be.
e. The Executive further acknowledges and agrees that in the event of
a breach, or threatened breach of the provisions of Sections 9 and 10 above, the
Company will suffer immediate and irreparable harm which said harm is presumed
to occur, and that the Company shall be entitled to receive from a court of
competent jurisdiction, a temporary restraining order with or without notice to
the Executive, as well as the entry of a preliminary and permanent injunction.
Said right to an injunction shall be in addition to and not in limitation of any
other rights or remedies the Company may have for damages or otherwise.
f. It is further expressly understood and agreed that the provisions
of this Agreement shall apply whether this Agreement is terminated by the
Company or the Executive or upon its expiration or termination.
g. If the Executive breaches this provision and the Company seeks an
injunction or other legal remedy to interpret or enforce this covenant, then the
Executive agrees to pay all reasonable attorneys' fees and costs of the Company
both for the trial and any appeal.
h. Nothing herein contained shall be construed as prohibiting the
Company from pursuing any other remedies available to it for such breach or
threatened breach.
12. Agreement Renegotiation. The parties agree that the Agreement shall be
subject to renegotiation on the three-month anniversary of the Agreement's
Effective Date, based upon the good faith intention of the parties, subject to
the financial condition of the Company at the time, to replace the Agreement
with an Executive Employment Agreement, which would provide the Executive with:
(a) a monthly base salary, reflecting an increase in the monthly Fee then in
effect, (b) employee-related executive benefits, including health and medical
insurance, life and travel insurance, and an automobile lease allowance and
reimbursement of related maintenance and operating expenses, and (c) a grant of
stock options, as of the effective date of the Executive Employment Agreement.
Should the Agreement not be replaced with an Executive Employment Agreement on
the above noted three-month anniversary date, due to financial constraints of
the Company, the parties agree to continue, in good faith, to attempt to
renegotiate the Agreement on a monthly basis thereafter.
13. Indemnification.
a. The Company will defend, indemnify and hold the Executive harmless
from liabilities, suits, judgments, fines, penalties or disabilities, including
expenses associated directly therewith (e.g. legal fees, court costs,
investigative costs, witness fees, etc.) resulting from any reasonable actions
in good faith on behalf of the Company, to the fullest extent legally permitted,
and in conjunction therewith, shall assure that all required expenditures are
made by the company in a manner making it unnecessary for the Executive to incur
any out of pocket expenses; provided, however, that the Executive permits the
Company to select and supervise all personnel involved in such defense and that
the Executive waive any conflicts of interest that such personnel may have as a
result of also representing the Company or other Company personnel and agrees to
hold them harmless from any matters involving such representation, except such
as involve fraud or bad faith. The Company shall endeavor at all times to
maintain error and omission insurance covering the Executive and the other
officers and directors of the Company in amount of not less than One Million
Dollars.
b. If litigation is brought to enforce and interpret any provision in
this Agreement, and the Executive is the prevailing party, the Company agrees to
indemnify the Executive for his reasonable attorneys' fees and disbursements
incurred in conjunction with such litigation, and agrees to pay pre-judgment
interest on any money judgment obtained by him calculated at the prime rate
interest rate in effect at XX Xxxxxx Xxxxx of New York from time to time, from
the date that the payment(s) to him should have been made under this Agreement.
14. Covenants as Essential Elements of this Agreement; Survival of
Covenants. It is understood by and between the parties hereto that the foregoing
covenants by the Executive contained in Sections 9 and 10 of this Agreement
shall be construed to be agreements independent of any other element of the
Executive's relationship with the Company. The existence of any other claim or
cause of action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties, shall not
constitute a defense to the enforcement of the covenants in this Agreement
against the Executive.
15. Effect on Prior Agreements. This Agreement supersedes any and all prior
or written agreements in their entirety between the parties, which shall be void
and of no further force and effect after the date of this Agreement.
16. Notices. Any notice required or permitted to be given under the terms
of this Agreement shall be sufficient if in writing and if sent postage prepaid
by registered or certified mail, return receipt requested, by overnight
delivery, by courier; or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the introductory paragraph, or such other place as it may designate.
17. Waiver. Unless agreed in writing, the failure of either party, at any
time, to require performance by the other of any provisions hereunder shall not
affect its right thereafter to enforce the same, nor shall a waiver by either
party of any breach of any provision hereof be taken or held to be a waiver of
any other preceding or succeeding breach of any term or provision of this
Agreement. No extension of time for the performance of any obligation or act
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
18. Complete Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the contents hereof and supersedes
all prior agreements and understandings between the parties with respect to such
matters, whether written or oral. Neither this Agreement nor any term or
provision hereof may be changed, waived, discharged or amended in any manner
other than by an instrument in writing, signed by the party against which the
enforcement of the change, waiver, discharge or amendment is sought.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one agreement.
20. Binding Effect/Assignment. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns and
shall not be assignable by the Executive. The Company shall require any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and assets of the
Company, by written agreement expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had occurred.
21. Governing Law, Venue, Waiver of Jury Trial. This Agreement shall become
valid when executed and accepted by Company. The parties agree that it shall be
deemed made and entered into in the State of Nevada and shall be governed and
construed under and in accordance with the laws of the State of Nevada without
giving effect to any principles of conflicts of law.
22. Headings. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
23. Survival. Any termination of this Agreement shall not affect the
ongoing provisions of this Agreement, which shall survive such termination in
accordance with their terms.
24. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. If any court
determines that any provision of Sections 8 or 9 hereof is unenforceable because
of the duration or scope of such provision, such court shall have the power to
reduce the scope or duration of such provision, as the case may be, and, in its
reduced form, such provision shall then be enforceable.
25. Construction. This Agreement shall be construed within the fair meaning
of each of its terms and not against the party drafting the document.
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, UNDERSTAND ITS
TERMS AND CONDITIONS, HAVE HAD THE OPPORTUNITY TO CONSULT WITH INDEPENDENT
COUNSEL OF THEIR OWN CHOICE AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written:
CAN-CAL RESOURCES, LTD
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
XXXXXX X. XXXXX
CHAIRMAN, PRESIDENT & DIRECTOR
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
XXXXXXX X. XXXXX
