CONFIDENTIAL Letter of Engagement
Sepember
1, 2008
CONFIDENTIAL
This letter (the “Agreement”) confirms
that XXXXXXX COMPANY will act as the advisor to MEXORO MINERALS LTD., or its
successors and assigns or designees, (together with its subsidiaries and
affiliates, assigns or designees, the “Company”) for a period of twelve months,
in connection with one or a series of potential transactions (each a “Potential
Transaction”) on the terms and conditions set forth below.
1.
Services to be
Rendered. XXXXXXX COMPANY agrees,
on the terms and conditions set forth herein, and subject to performance by the
Company of all its obligations hereunder and the completeness and accuracy, in
all material respects, of the representations and warranties of the Company set
forth herein, to act as investor relationship advisor to the Company, and in
that regard, the Company will provide:
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(i)
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Investor
packages of corporate documents;
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(ii)
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Copies
of all filing of the last twelve
month;
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(iii)
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Copies
of all published news of the last twelve
month;
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(iv)
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Weekly
updates from the Company;
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(v)
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Monthly
update on all ongoing projects; and
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(vi)
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Immediate
updates on all relevant business
issues;
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(vii)
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Assist
the Company in identifying and contacting possible parties to a Potential
Transaction;
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(viii)
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Market
a Potential Transaction to investors and other interested
parties;
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Compensation. For
XXXXXXX COMPANY’S services hereunder, the Company agrees to pay XXXXXXX COMPANY
upon execution of this Agreement, a non-refundable monthly retainer fee of
€20,000 to be paid in restricted shares of Company’s common stock payable in
advance on a quarterly basis (the “Retainer Fee”). The conversion
rate at which such Retainer Fee will be converted into shares of the Company’s
common stock shall be equal to the weighted average share price for shares of
the Company’s common stock for the 20 trading day period ending on the first
business day of the month in which such payment is due on the over the counter
bulletin board market operated by the Financial Industry Regulatory Authority
(FINRA), The exchange rate to be used shall be the noon-buying rate for cable
transfers in Euros as certified for customs purposes by the Federal Reserve Bank
of New York on the first business day of the month in which such payment is
due.
In
addition to the monthly Retainer Fee, XXXXXXX COMPANY will receive 1,000,000
warrants to purchase shares of the Company’s common stock (200,000 warrants for
an execution price of USD 0.65, vesting on signing, 200,000 warrants for an
execution price of USD 1.30 vesting after 90 days, 200,000 warrants for an
execution price of USD 2.00 per share vesting after 120 days, 200,000 warrants
for an execution price of USD 2.75 per share vesting after 180 days and 200,000
warrants for an execution price of USD 3.50 per share vesting after 210
days)(the “Warrants”). The Warrants will expire on November 30, 2012. XXXXXXX
COMPANY will be entitled to additional compensation upon the consummation of a
Potential Transaction, as outlined below.
Equity: In
the event the Potential Transaction involves a placement of equity or
equity-linked securities to investors (the “XXXXXXX Equity Investors”)
introduced and solely indentified by XXXXXXX COMPANY (the “Securities”), the
Company agrees to pay XXXXXXX COMPANY a placement fee (the “Equity Placement
Fee”) equal to seven percent (7%) of the Securities placed with the XXXXXXX
Equity Investors, payable in full, in cash. XXXXXXX COMPANY may also accept
freely tradable shares of Company’s common stock as payment with a
minimum discount of 25% of the price at which the Securities were placed. The
Equity Placement Fee is due and payable upon the closing of the sale of any of
the Securities, including the receipt of the investment. The minimum fee payable
in connection with any Potential Transaction shall be $10,000. If the placement
of the Securities takes the form of an underwritten public equity offering and
in the event Paramount Gold and Silver waives its right of first refusal, then
XXXXXXX COMPANY shall have the right of first refusal to participate therein as
a managing underwriter with a minimum of 50% economic participation, provided
that XXXXXXX COMPANY provides the Company with terms and conditions consistent
with industry norms. In the event that XXXXXXX COMPANY acts the
managing underwriter, its sole compensation in connection with that placement
will be those agreed upon in an Underwriting Agreement and the Equity Placement
Fee will not apply.
Debt: In
the event the Potential Transaction involves a placement of debt to investors
(the “XXXXXXX Debt Investors”) introduced and solely indentified by XXXXXXX
COMPANY, the Company agrees to pay XXXXXXX COMPANY a placement fee (the “Debt
Placement Fee”) equal to four percent (4%) of the gross proceeds received under
the debt facility from the XXXXXXX Debt Investors, payable in full, in cash,
upon the closing of the debt facility provided that the minimum fee payable in
connection with any such Potential Transaction shall be $25,000.
Merger/Acquisition:
In the event the Potential Transaction takes the form or either: a) control by a
third party of, or a material interest in, the securities, assets or business of
the Company or any of its affiliates, including, without limitation, a sale or
exchange of capital stock or assets, a lease of assets with or without a
purchase option, a merger or consolidation, a leveraged buy-out or
recapitalization, the formation of a joint venture, a minority investment or
partnership, or any similar transaction; or b) the acquisition of any party
(each a “Target”), in one transaction or a series of transactions, by merger,
consolidation, reorganization or other business combination, or by a purchase of
more than 50% of the stock, assets or business of a Target introduced and solely
indentified by XXXXXXX COMPANY, XXXXXXX COMPANY will receive from The Company a
transaction fee (the “Transaction Fee”) equal to four percent (4%) of the
aggregate consideration. Also provided that the minimum Transaction Fee in
connection with a Potential Transaction shall be $25,000. For purposes hereof,
the “aggregate consideration” in connection with a Potential Transaction is
defined as the sum of: (i) the aggregate amount of consideration received by the
Company (or Target) and/or its shareholders, option holders and warrant holders
from the Acquirer (or the Company) in such Transaction (net of any consideration
received by the Company (or Target) upon the exercise of any options or warrants
issued prior to the day hereof) and (ii) the amount of indebtedness of the
Company (or Target) or any of its affiliates paid or assumed directly or
indirectly by the Acquirer (or the Company) and (iii) if the Acquirer (or the
Company) acquired capital stock of the Company (or the Target) in a Potential
Transaction resulting in a change of control, but acquired less than all of such
capital stock, the value of the capital stock remaining outstanding immediately
after consummation of the Potential Transaction. The value of any
securities or other non-cash consideration shall be the fair market value
thereof on the date paid, as agreed by XXXXXXX COMPANY and the
Company.
3. Expenses. In
addition to any fees that may be payable hereunder and regardless of whether or
not any Potential Transaction is consummated, the Company shall reimburse
XXXXXXX COMPANY from time to time, upon request (but not less frequently than
monthly) for travel and other out-of-pocket expenses incurred in connection with
XXXXXXX COMPANY’s engagement hereunder. All expense greater than
€1,000 shall
need pre-approval.
4. Information. The Company will
furnish XXXXXXX COMPANY such information with respect to the Company and access
to such Company personnel and representatives, including the Company’s auditors
and counsel, as XXXXXXX COMPANY may request in order to permit XXXXXXX COMPANY
to advise the Company and to assist the Company in preparing materials for use
in connection with the Potential Transaction (collectively, the “Confidential
Information”). The Company will be solely responsible for the
contents of the Confidential Information and other information provided to
potential Investors in respect of a Potential Transaction. The Company
represents and warrants to XXXXXXX COMPANY that the Confidential Information
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
agrees to advise XXXXXXX COMPANY promptly upon the Company becoming aware of the
occurrence of any event or change in circumstance that results or might
reasonably be expected to result in the Confidential Information containing any
untrue statement of a material fact or omitting to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company agrees that,
provided that such disclosure does not violate the securities federal laws of
the United States or any other jurisdiction, it will authorize XXXXXXX COMPANY
to provide the Confidential Information to potential investors to bid for a
Potential Transaction.
5. Termination and
Survival. This Agreement
shall terminate on the twelve-month anniversary of the execution thereof,
subject to the extension thereafter as may be agreed in writing by the parties,
but either party hereto may terminate this Agreement at any time upon 30 days’
prior written notice. Notwithstanding the foregoing, it is understood
that the provisions of paragraphs 2 (to the extent fees are payable prior to
termination), 3 (to the extent expenses have been incurred prior to
termination), 4 (the second and third sentences only), 5, 6, 7, 8, 9, 10 and 11
of this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of XXXXXXX COMPANY by any
Indemnified Person (as defined hereafter), (ii) the consummation of any
Potential Transaction introduced and solely indentified by XXXXXXX COMPANY and
as defined in paragraph 2 or (iii) any termination of this Agreement. In
addition, if within 12 months following the termination of this Agreement any
Potential Transaction introduced and solely indentified by XXXXXXX COMPANY is
consummated by the Company or any of its affiliates enter into an agreement
regarding a Potential Transaction introduced and solely indentified by XXXXXXX
COMPANY which at any time thereafter results in a Potential Transaction, the
Company shall pay the Transaction Fee as provided for in paragraph
2.
6. Confidentiality
of Advice.
Except as otherwise provided in this paragraph, any written or other advice
rendered by XXXXXXX COMPANY pursuant to its engagement hereunder is solely for
the use and benefit of the Company and shall not be publicly
disclosed in whole or in part, in any manner or summarized, excerpted from or
otherwise publicly referred to or made available to third parties, other than
representatives and agents of the Company who also shall not disclose such
information, in each case, without the Company’s prior approval, unless such
disclosure is required by law. In addition, XXXXXXX COMPANY may not
be otherwise publicly referred to without its prior written consent unless such
disclosure is required by law.
7.
Obligations
Limited. XXXXXXX COMPANY shall have no obligation to make any independent
appraisals of assets or liabilities or any independent verification of the
accuracy or completeness of any information provided it in the course of this
engagement and shall have no liability in regard thereto.
8.
Third Party
Beneficiaries. This Agreement is made solely for the benefit of the
Company, XXXXXXX COMPANY and other Indemnified Persons, and their respective
successors, assigns, heirs and personal representatives, and no other person
shall acquire or have any right under or by virtue of this
Agreement.
9.
Representations
and Warranties. The Company represents and warrants that this Agreement
has been duly authorized, executed and delivered by its authorized signatories,
and constitutes a legal, valid and binding obligation of each
party.
10. Indemnification.
In connection with and as part of the engagement contemplated herein, the
parties have entered into a separate indemnification agreement (the
"Indemnification Agreement"), which sets forth certain other agreements between
the parties hereto. In the event of any conflict between this Agreement and the
Indemnification Agreement, the terms and provisions of the Indemnification
Agreement shall control and this Agreement shall be deemed to be amended and
modified accordingly.
11.
Miscellaneous. The
Agreement shall be governed by and construed in accordance with the laws of New
York and the place of jurisdiction shall be New York County, New York, without
regard to its principles of conflicts of laws. XXXXXXX COMPANY hereby agrees,
and the Company hereby agrees on its own behalf and, to the extent permitted by
applicable law, on behalf of its security holders, to waive any right to trial
by jury with respect to any claim, counterclaim or action arising out of the
engagement, XXXXXXX COMPANY’s performance thereof or the
Agreement. The parties hereto consent to the venue of and submit to
the jurisdiction of the Federal and State courts located in New York County, New
York.
We are delighted to work with you on
this assignment. Please confirm that the foregoing correctly sets forth our
agreement and our mutual intent to be bound by and to perform the terms hereof
by signing and returning to us the enclosed duplicate of this
Agreement.
XXXXXXX
COMPANY
Name:
Title:
Accepted
and Agreed to by the Company
as of the
date hereof:
Name:
Title:
INDEMNIFICATION
AGREEMENT
In connection with the engagement of
XXXXXXX COMPANY by MEXORO MINERALS LTD. (the “Company") pursuant to a letter
agreement, dated July 1st, 2008,
between the Company and XXXXXXX COMPANY (the "Engagement Agreement"), XXXXXXX
COMPANY and the Company hereby agree as set forth herein. For purposes of the
remainder of this Indemnification Agreement, unless the context otherwise
requires, "XXXXXXX COMPANY " shall include XXXXXXX COMPANY , any affiliated
entity, and each of their respective officers, directors, employees, partners
and controlling persons within the meaning of the federal U.S. securities laws
and the successors, assigns, heirs and personal representatives of the foregoing
persons (collectively, the “Indemnified Persons”).
The Company will indemnify XXXXXXX
COMPANY against any losses, claims, damages, liabilities, costs and expenses
(including, without limitation, any legal or other expenses incurred in
connection with investigating, preparing to defend or defending against any
action, claim, suit or proceeding, whether commenced or threatened and whether
or not XXXXXXX COMPANY is a party thereto, or in appearing or preparing for
appearance as a witness), based upon, relating to or arising out of or in
connection with advice or services rendered or to be rendered pursuant to the
Engagement Agreement, the transaction contemplated thereby or XXXXXXX COMPANY’s
actions or inactions in connection with any such advice, services or transaction
(including, but not limited to, any liability arising out of (i) any
misstatement or alleged misstatement of a material fact in any Confidential
Information (including any "Confidential Information" (as defined in the
Engagement Agreement)) and (ii) any omission or alleged omission
from any Confidential Information (including any "Confidential
Information" (as defined in the Engagement Agreement")), including, without
limitation of a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading), except to the
extent that any such loss, claim, damage, liability, cost or expense results
solely from the gross negligence or bad faith of XXXXXXX COMPANY in performing
the services which are the subject of the Engagement Agreement. If
for any reason the foregoing indemnification is unavailable to XXXXXXX COMPANY
or insufficient to hold it harmless, then the Company shall contribute to the
amount paid or payable by XXXXXXX COMPANY as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect the relative
benefits received by the Company and its stockholders on the one hand and
XXXXXXX COMPANY on the other hand, or, if such allocation is not permitted
by
applicable
law, not only such relative benefits but also the relative fault of the Company
and XXXXXXX COMPANY , as well as any relevant equitable considerations;
provided, however, that, to the extent permitted by applicable law, XXXXXXX
COMPANY shall not be responsible for amounts which in the aggregate are in
excess of the amount of all fees actually received from the Company in
connection with the engagement. Relative benefits to XXXXXXX COMPANY , on the
one hand, and the Company and its stockholders, on the other hand, with respect
to the engagement shall be deemed to be in the same proportion as (i) the total
value paid or proposed to be paid or received or proposed to be received by the
Company or its stockholders, as the case may be, pursuant to the Potential
Transaction, whether or not consummated, contemplated by the engagement bears to
(ii) all fees paid to XXXXXXX COMPANY by the Company in connection with the
engagement. XXXXXXX COMPANY shall not have any liability to the Company in
connection with the engagement, except to the extent of its gross negligence or
willful misconduct. XXXXXXX COMPANY shall notify the Company in a timely manner
of any action, claim, suit or proceeding, whether commenced or threatened, and
XXXXXXX COMPANY shall cooperate with the Company in its defense of such actions,
claims, suits or proceedings.
The Company also agrees to promptly
upon demand reimburse XXXXXXX COMPANY for its legal and other expenses
reasonably incurred by it in connection with investigating, preparing to defend
or defending any lawsuits, investigations, claims or other proceedings in
connection with any matter referred in to or otherwise contemplated by the
Engagement Agreement; provided, however, that in the event a final judicial
determination is made to the effect that XXXXXXX COMPANY is not entitled to
indemnification hereunder, XXXXXXX COMPANY will remit to the Company any amounts
that have been so reimbursed.
The Company shall not be liable for any
settlement of any action, claim, suit or proceeding (or for any related losses,
damages, liabilities, costs or expenses) if such settlement is effectuated
without its written consent, which shall not be unreasonably
withheld. The Company further agrees that it will not settle or
compromise or consent to the entry of any judgment in any pending or threatened
action, claim, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not XXXXXXX COMPANY is a party
therein) unless the Company has obtained an unconditional release of XXXXXXX
COMPANY , from all liability arising there from. The reimbursement,
indemnity and contribution obligations of The Company set forth in this
Indemnification Agreement shall be in addition to any liability which The
Company may otherwise have to XXXXXXX COMPANY .
Both parties represent and warrant that
this Indemnification Agreement has been duly authorized, executed and delivered
by each party and constitutes the legal, valid and binding obligation of both
parties.
Any Indemnified Persons that are
not signatories to this Indemnification Agreement shall be deemed to be third
party beneficiaries of this Agreement.
This
Indemnification Agreement shall be governed by and construed in accordance with
the laws of New York and the place of jurisdiction shall be New York County, New
York, without regard to its principles of conflicts of laws. XXXXXXX COMPANY
hereby agrees, and the Company hereby agrees on its own behalf and, to the
extent permitted by applicable law, on behalf of its security holders, to waive
any right to trial by jury with respect to any claim, counterclaim or action
arising out of the engagement, XXXXXXX COMPANY’s performance thereof or the
Agreement. The parties hereto consent to the venue of and submit to
the jurisdiction of the Federal and State courts located in New York County, New
York.
This Indemnification Agreement shall
survive any termination of the Engagement Letter.
Entered
into on the 1st day of
September, 2008.
………………………… ……………………………….
XXXXXXX
COMPANY MEXORO
MINERALS LTD.
Service
Covered by monthly Retainer Fees
Monthly
Report
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a)
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Overview
on Boards, Threads and Blogs about the
Company
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Including but not limited to:
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ð Arando,
Bluebull, FTOR, Bullstocks, Consors, Gatrixx, Lycos,
Wallstreet:Online (Germany)
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ð ADVFN,
Citybull, Motley Fool, Sharetrades
(UK)
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ð Allstocks,
Bobz, Investor to Investor, Pennypicks, RagingBull, Stockposts,
Yahoo (USA)
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b) Overview
on most discussed topics
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c) Analysis
on investor’s feedback
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d) Priority
list with most asked questions
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e) Overview
on Company’s press coverage
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f)
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Overview
on Company’s analyst coverage
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g)
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Analysis
on Company’s stock performance
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h)
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Monitoring
of Company’s corporate sector
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i)
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Collecting
background information for Company’s equity
story
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j)
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Screening
researches published on Company’s pier
group
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k)
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24
hours service package for investors
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