EXHIBIT 10.1 


 


 


EQUITY PURCHASE AGREEMENT


 


 


BY AND BETWEEN


 


 


EL CAPITAN PRECIOUS METALS, INC. 


 


AND


 


 


SOUTHRIDGE PARTNERS II, LP 


 


 


Dated


July 30, 2014


 






    	 



    	 



    

 


 


THIS EQUITY PURCHASE AGREEMENT
entered into as of the 30th day of July, 2014 (this “AGREEMENT”), by and between SOUTHRIDGE PARTNERS II, LP, Delaware
limited partnership (“INVESTOR”), and EL CAPITAN PRECIOUS METALS, INC., a Nevada corporation (the “COMPANY”).


 


WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to Investor, from time to
time as provided herein, and Investor shall purchase, up to One Million Nine Hundred Thousand Dollars ($1,900,000) of its Common
Stock (as defined below); and


 


NOW, THEREFORE, the parties
hereto agree as follows:


 


ARTICLE I


CERTAIN DEFINITIONS


 


Section 1.1
     DEFINED TERMS as used in this Agreement, the following terms shall have the following meanings
specified or indicated (such meanings to be equally applicable to both the singular and plural forms of the terms
defined)


 


“AGREEMENT” shall
have the meaning specified in the preamble hereof.


 


“CLAIM NOTICE”
shall have the meaning specified in Section 9.3(a).


 


“CLOSING” shall
mean one of the closings of a purchase and sale of shares of Common Stock pursuant to Section 2.3.


 


“CLOSING CERTIFICATE”
shall mean the closing certificate of the Company in the form of Exhibit B hereto.


 


“CLOSING DATE” shall mean,
with respect to a Closing, the sixth (6th) Trading Day following the Put Date related to such Closing, or such earlier date as
the Company and Investor shall agree, provided all conditions to such Closing have been satisfied on or before such Trading Day.


 


“CLOSING PRICE”
shall mean the closing bid price for the Company’s common stock on the Principal Market on a Trading Day as reported by Bloomberg
Finance L.P.


 


“COMMITMENT PERIOD”
shall mean the period commencing on the Effective Date, and ending on the earlier of (i) the date on which Investor shall have
purchased Put Shares pursuant to this Agreement for an aggregate Purchase Price of the Maximum Commitment Amount, or (ii) the date
occurring twenty four (24) months from the date of commencement of the Commitment Period.


 


“COMMON STOCK”
shall mean the Company’s common stock, $0.001 par value per share, and any shares of any other class of common stock whether now
or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon
liquidation of the Company).


 



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“COMMON STOCK EQUIVALENTS” shall
mean any securities that are convertible into or exchangeable for Common Stock or any options or other rights to subscribe for
or purchase Common Stock or any such convertible or exchangeable securities.


 


“COMPANY” shall
have the meaning specified in the preamble to this Agreement.


 


“CONDITION SATISFACTION
DATE” shall have the meaning specified in Section 7.2.


 


“DAMAGES” shall
mean any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys’ fees and disbursements
and costs and expenses of expert witnesses and investigation).


 


“DISPUTE PERIOD”
shall have the meaning specified in Section 9.3(a).


 


“DOLLAR VOLUME”
shall mean the product of (a) the Closing Price multiplied by (b) the trading volume on the Principal Market on a Trading Day.


 


“DTC” shall have
the meaning specified in Section 2.3.


 


“DWAC” shall
have the meaning specified in Section 2.3.


 


“EFFECTIVE DATE”
shall mean the Subscription Date.


 


“EXCHANGE ACT”
shall mean the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.


 


“EXCHANGE CAP”
shall have the meaning specified in Section 7.1(c).


 


“FAST” shall
have the meaning specified in Section 2.3.


 


“FINRA” shall
mean the Financial Industry Regulatory Authority, Inc.


 


“INDEMNIFIED PARTY”
shall have the meaning specified in Section 9.3(a).


 


“INDEMNIFYING PARTY”
shall have the meaning specified in Section 9.3(a).


 


“INDEMNITY NOTICE”
shall have the meaning specified in Section 9.3(b).


 



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“INVESTMENT AMOUNT”
shall mean the dollar amount to be invested by Investor to purchase Put Shares with respect to any Put as notified by the Company
to Investor in accordance with Section 2.2.


 


“INVESTOR” shall
have the meaning specified in the preamble to this Agreement.


 


“LEGEND” shall
have the meaning specified in Section 8.1.


 


“MARKET PRICE”
shall mean the average of the lowest two (2) Closing Prices during the Valuation Period.


 


“MATERIAL ADVERSE
EFFECT” shall mean any effect on the business, operations, properties, or financial condition of the Company that is material
and adverse to the Company and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations under this Agreement.


 


“MAXIMUM COMMITMENT
AMOUNT” shall mean One Million Nine Hundred Thousand Dollars ($1,900,000).


 


“MAXIMUM PUT AMOUNT”
shall mean the lesser of (i) Five Hundred Thousand Dollars ($500,000), or (ii) Two Hundred Fifty (250%) percent of the average
of the Dollar Volume for the twenty (20) Trading Days immediately preceding the Put Date.


 


“NEW PRICE” shall
have the meaning specified in Section 2.6.


 


“OLD PRICE” shall
have the meaning specified in Section 2.6.


 


“PERSON” shall
mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.


 


“PRINCIPAL MARKET”
shall mean any of the national exchanges (e.g., the New York Stock Exchange, The NASDAQ Stock Market), the OTC Bulletin Board or
OTC Markets, or other principal exchange or interdealer quotation system which is at the time the principal trading exchange or
market for the Common Stock.


 


“PURCHASE PRICE”
shall mean 94% of the Market Price on such date on which the Purchase Price is calculated in accordance with the terms and conditions
of this Agreement.


 


“PUT” shall mean
the right of the Company to require the Investor to purchase shares of Common Stock, subject to the terms and conditions of this
Agreement.


 



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“PUT DATE” shall
mean any Trading Day during the Commitment Period that a Put Notice is deemed delivered pursuant to Section 2.2(b).


 


“PUT NOTICE”
shall mean a written notice, substantially in the form of Exhibit A hereto, to Investor setting forth the Investment Amount with
respect to which the Company intends to require Investor to purchase shares of Common Stock pursuant to the terms of this Agreement.


 


“PUT SHARES”
shall mean all shares of Common Stock issued or issuable pursuant to a Put that has been exercised or may be exercised in accordance
with the terms and conditions of this Agreement.


 


“REGISTERED SECURITIES”
shall mean the (a) Put Shares, and (b) any securities issued or issuable with respect to any of the foregoing by way of exchange,
stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization
or otherwise.


 


“REGISTRATION STATEMENT” shall
mean the Company’s effective registration statement with file number 333-193208, any follow up registration statement, including
all amendments and supplements thereto.


 


“REGULATION D”
shall mean Regulation D promulgated under the Securities Act.


 


“REMAINING PUT SHARES”
shall have the meaning specified in Section 2.6.


 


“RULE 144” shall
mean Rule 144 under the Securities Act or any similar provision then in force under the Securities Act.


 


“SEC” shall mean
the Securities and Exchange Commission.


 


“SECURITIES ACT”
shall have the meaning specified in the recitals of this Agreement.


 


“SEC DOCUMENTS”
shall mean, as of a particular date, all reports and other documents filed by the Company pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the Company’s then most recently completed and reported fiscal year as of the time in question
(provided that if the date in question is within ninety days of the beginning of the Company’s fiscal year, the term shall include
all documents filed since the beginning of the preceding fiscal year).


 


“SHORT SALES”
shall mean all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed
to include the location and/or reservation of borrowable shares of Common Stock).


 



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“SUBSCRIPTION DATE” shall mean the
date on which this Agreement is executed and delivered by the Company and Investor.


 


“THIRD PARTY CLAIM”
shall have the meaning specified in Section 9.3(a).


 


“TRADING DAY” shall mean a day on
which the Principal Market shall be open for business.


 


“TRANSACTION DOCUMENTS”
shall mean this Agreement.


 


“TRANSFER AGENT”
shall mean the transfer agent for the Common Stock (and to any substitute or replacement transfer agent for the Common Stock upon
the Company’s appointment of any such substitute or replacement transfer agent).


 


“VALUATION EVENT”
shall mean an event in which the Company at any time during a Valuation Period takes any of the following actions:


 


(a)      subdivides
or combines the Common Stock;


 


(b)      pays a dividend in shares of Common
Stock or makes any other distribution of shares of Common Stock, except for dividends paid with respect to any series of preferred
stock authorized by the Company, whether existing now or in the future;


 


(c)      issues any options or other rights
to subscribe for or purchase shares of Common Stock other than pursuant to this Agreement and the price per share for which shares
of Common Stock may at any time thereafter be issuable pursuant to such options or other rights shall be less than the Closing
Price in effect immediately prior to such issuance;


 


(d)      issues any securities convertible
into or exchangeable for shares of Common Stock and the consideration per share for which shares of Common Stock may at any time
thereafter be issuable pursuant to the terms of such convertible or exchangeable securities shall be less than the Closing Price
in effect immediately prior to such issuance;


 


(e)      issues shares of Common Stock
otherwise than as provided in the foregoing subsections (a) through (d), at a price per share less, or for other consideration
lower, than the Closing Price in effect immediately prior to such issuance, or without consideration; or


 


(f)      makes a distribution of its assets
or evidences of indebtedness to the holders of Common Stock as a dividend in liquidation or by way of return of capital or other
than as a dividend payable out of earnings or surplus legally available for dividends under applicable law or any distribution
to such holders made in respect of the sale of all or substantially all of the Company’s assets (other than under the circumstances
provided for in the foregoing subsections (a) through (e).


 



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“VALUATION PERIOD”
shall mean the period of five (5) Trading Days immediately following the date on which the applicable Put Notice is deemed to be
delivered and during which the Purchase Price of the Common Stock is valued; provided, however, that if a Valuation Event occurs
during any Valuation Period, a new Valuation Period shall begin on the Trading Day immediately after the occurrence of such Valuation
Event and end on the fifth (5th) Trading Day thereafter.


 


 


ARTICLE II


PURCHASE AND SALE OF COMMON STOCK


 


Section 2.1       PUTS. Upon the terms and
conditions set forth herein (including, without limitation, the provisions of Article VII), on any Put Date the Company may exercise
a Put by the delivery of a Put Notice. The number of Put Shares that Investor shall purchase pursuant to such Put shall be determined
by dividing the Investment Amount specified in the Put Notice by the Purchase Price with respect to such Put Notice.


 


Section 2.2       MECHANICS.


 


(a)      PUT NOTICE. At any time and from
time to time during the Commitment Period, the Company may deliver a Put Notice to Investor, subject to the conditions set forth
in Section 7.2; provided, however, that the Investment Amount identified in the applicable Put Notice shall not be greater than
the Maximum Put Amount and, when taken together with any prior Put Notices, shall not exceed the Maximum Commitment.


 


(b)      DATE OF DELIVERY OF PUT NOTICE.
A Put Notice shall be deemed delivered on (i) the Trading Day it is received by facsimile, email or otherwise by Investor if such
notice is received on or prior to 12:00 noon New York time, or (ii) the immediately succeeding Trading Day if it is received by
facsimile, email or otherwise after 12:00 noon New York time on a Trading Day or at anytime on a day which is not a Trading Day.


 


Section 2.3      CLOSINGS. On or prior to
each Closing Date for any Put, (a) the Company shall deliver to the Investor one or more certificates, at Investor’s option, representing
the Put Shares purchased by Investor pursuant to Section 2.1 herein, issued in the name of Investor and (b) Investor shall deliver
the Investment Amount specified in the Put Notice by wire transfer of immediately available funds to an account designated by the
Company. In lieu of delivering physical certificates representing the Common Stock issuable in accordance with clause (a) of this
Section 2.3, and provided that the Transfer Agent then is participating in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer (“FAST”) program, upon request of Investor, but subject to the applicable provisions of
Article VIII hereof, the Company shall use its commercially reasonable efforts to cause the Transfer Agent to electronically transmit,
prior to the applicable Closing Date, the applicable Put Shares by crediting the account of the Investor’s prime broker with DTC
through its Deposit Withdrawal Agent Commission (“DWAC”) system, and provide proof satisfactory to the Investor of such
delivery. In addition, on or prior to such Closing Date, each of the Company and Investor shall deliver to each other all documents,
instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order
to implement and effect the transactions contemplated herein.


 






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Section 2.4      COVER. If the Company fails
for any reason, other than by reason of Investor’s failure to satisfy the conditions precedent to the Company’s obligation
to issue and sell Common Stock under Article VII of this Agreement, to take or cause to be taken all steps necessary on the part
of the Company to deliver the Put Shares on such Closing Date and the Investor purchases, in an open market transaction or otherwise,
shares of Common Stock (the “Covering Shares”) in order to make delivery in satisfaction of a sale of Common Stock by
the Investor (the “Sold Shares”), which delivery the Investor anticipated to make using the Put Shares (a “Buy-In”),
then the Company shall pay to such Investor, in addition to all other amounts contemplated in other provisions of the Transaction
Documents, and not in lieu thereof, the Buy-In Adjustment Amount (as defined below). The “Buy-In Adjustment Amount” is
the amount equal to the excess, if any, of (x) such Investor’s total purchase price (including brokerage commissions, if
any) for the Covering Shares over (y) the net proceeds (after brokerage commissions, if any) received by such Investor from the
sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount to such Investor in immediately available funds immediately
upon demand by such Investor. By way of illustration and not in limitation of the foregoing, if such Investor purchases Covering
Shares having a total purchase price (including brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of Common
Stock that it sold for net proceeds of $10,000, the Buy-In Adjustment Amount that the Company will be required to pay to such Investor
will be $1,000.


 


ARTICLE III


REPRESENTATIONS AND WARRANTIES OF INVESTOR


 


Investor represents and
warrants to the Company that:


 


Section 3.1      INTENT. Investor is entering
into this Agreement for its own account and Investor has no present arrangement (whether or not legally binding) at any time to
sell the Registered Securities to or through any person or entity; provided, however, that Investor reserves the right to dispose
of the Registered Securities at any time in accordance with federal and state securities laws applicable to such disposition.


 


Section 3.2      NO LEGAL ADVICE FROM THE
COMPANY. The Investor acknowledges that it has had the opportunity to review this Agreement and the transactions contemplated by
this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.


 






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Section 3.3      SOPHISTICATED INVESTOR.
Investor is a sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as defined
in Rule 501 of Regulation D), and Investor has such experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Registered Securities. Investor acknowledges that an investment in the Registered
Securities is speculative and involves a high degree of risk.


 


Section 3.4      AUTHORITY. (a) Investor
has the requisite power and authority to enter into and perform its obligations under this Agreement and the transactions contemplated
hereby in accordance with its terms; (b) the execution and delivery of this Agreement and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary action and no further consent or authorization of Investor
or its partners is required; and (c) this Agreement has been duly authorized and validly executed and delivered by Investor and
constitutes a valid and binding obligation of Investor enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application.


 


Section 3.5      NOT AN AFFILIATE. Investor
is not an officer, director or “affiliate” (as that term is defined in Rule 405 of the Securities Act) of the Company.


 


Section 3.6      ORGANIZATION AND STANDING.
Investor is a limited partnership duly organized, validly existing and in good standing under the laws of the Delaware and has
all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.
Investor is duly qualified and in good standing in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a material adverse
effect on Investor.


 


Section 3.7      ABSENCE OF CONFLICTS. The
execution and delivery of this Agreement and any other document or instrument contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, and compliance with the requirements hereof and thereof, will not (a) violate any
law, rule, regulation, order, writ, judgment, injunction, decree or award binding on Investor, (b) violate any provision of any
indenture, instrument or agreement to which Investor is a party or is subject, or by which Investor or any of its assets is bound,
or conflict with or constitute a material default thereunder, (c) result in the creation or imposition of any lien pursuant to
the terms of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed by Investor to any
third party, or (d) require the approval of any third-party (that has not been obtained) pursuant to any material contract, instrument,
agreement, relationship or legal obligation to which Investor is subject or to which any of its assets, operations or management
may be subject.


 






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Section 3.8      DISCLOSURE; ACCESS TO INFORMATION.
Investor had an opportunity to review copies of the SEC Documents filed on behalf of the Company and has had access to all publicly
available information with respect to the Company.


 


Section 3.9      MANNER OF SALE. Investor
acknowledges that it may be deemed to be an “underwriter” and any broker/dealers who act in connection with the sale
of the Registered Securities by Investor may be deemed to be “underwriters” within the meaning of Section 2(a)(11) of
the Securities Act, and any commissions received by them and profit on any resale of the Registered Securities as principal may
be deemed to be underwriting discounts and commissions under the Securities Act.


 


ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


The Company represents
and warrants to Investor that, except as disclosed in the SEC Documents:


 


Section 4.1      ORGANIZATION OF THE COMPANY.
The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Nevada and
has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure
so to qualify would not have a Material Adverse Effect.


 


Section 4.2      AUTHORITY. (a) The Company
has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue the
Put Shares; (b) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required; and (c) each of this Agreement and has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.


 


Section
4.3      CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of 300,000,000 shares of Common
Stock, $0.001 par value per share, of which 277,035,260 shares were issued and outstanding as of July 25, 2014, and 5,000,000
shares of preferred stock, $0.001 par value per share, of which no shares were issued and outstanding as of July 25, 2014.


 






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Except as otherwise disclosed
in the SEC Documents, there are no outstanding securities which are convertible into shares of Common Stock, whether such conversion
is currently exercisable or exercisable only upon some future date or the occurrence of some event in the future.


 


All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable.


 


Section 4.4      COMMON STOCK. The Company
is in full compliance with all reporting requirements of the Exchange Act, and the Company has maintained all requirements for
the continued listing or quotation of the Common Stock, and such Common Stock is currently listed or quoted on, the Principal Market.


 


Section 4.5      SEC DOCUMENTS. The Company
may make available to Investor true and complete copies of the SEC Documents (including, without limitation, proxy information
and solicitation materials). To the Company’s knowledge, the Company has not provided to Investor any information that, according
to applicable law, rule or regulation, should have been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act, and other federal laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form and substance in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes
thereto or (b) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and
the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).


 


Section 4.6      VALID ISSUANCES. When issued
and paid for as herein provided, the Put Shares shall be duly and validly issued, fully paid, and non-assessable. Neither the sales
of the Put Shares pursuant to this Agreement nor the Company’s performance of its obligations hereunder shall (a) result in the
creation or imposition of any liens, charges, claims or other encumbrances upon the Put Shares, or any of the assets of the Company,
or (b) entitle the holders of outstanding shares of Common Stock to preemptive or other rights to subscribe to or acquire the Common
Stock or other securities of the Company. The Put Shares shall not subject Investor to personal liability, in excess of the subscription
price by reason of the ownership thereof.


 



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Section 4.7      NO CONFLICTS. The execution,
delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated
hereby, including without limitation the issuance of the Put Shares, do not and will not (a) result in a violation of the Company’s
certificate of incorporation or byaws, each as amended, or (b) conflict with, or constitute a material default (or an event that
with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture, instrument or any “lock-up” or similar provision
of any underwriting or similar agreement to which the Company is a party, or (c) result in a violation of any federal, state or
local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable
to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse
Effect) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The business of the
Company is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required
under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or issue and sell the Common Stock in accordance with the terms hereof (other than any SEC, FINRA or state securities filings that
may be required to be made by the Company subsequent to any Closing, any registration statement that may be filed pursuant hereto);
provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy
of the relevant representations and agreements of Investor herein.


 


Section 4.8      NO MATERIAL ADVERSE CHANGE.
Since the date of filing of the Company’s most recent SEC Report, no event has occurred that would be reasonably likely to
have a Material Adverse Effect on the Company.


 


Section 4.9      LITIGATION AND OTHER PROCEEDINGS.
There are no lawsuits or proceedings pending or to the knowledge of the Company threatened, against the Company, nor has the Company
received any written or oral notice of any such action, suit, proceeding or investigation, which would have a Material Adverse
Effect. No judgment, order, writ, injunction or decree or award has been issued by or, so far as is known by the Company, requested
of any court, arbitrator or governmental agency which would have a Material Adverse Effect.


 


Section 4.10    DILUTION. The number of
shares of Common Stock issuable as Put Shares may increase substantially in certain circumstances, including, but not necessarily
limited to, the circumstance wherein the trading price of the Common Stock declines during the period between the Effective Date
and the end of the Commitment Period. The Company’s executive officers and directors have studied and fully understand the
nature of the transactions contemplated by this Agreement and recognize that they have a potential dilutive effect. The board of
directors of the Company has concluded in its good faith business judgment that such issuance is in the best interests of the Company.
The Company specifically acknowledges that, subject to Section 2.2(c), its obligation to issue the Put Shares is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the
Company.


 






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ARTICLE V


COVENANTS OF INVESTOR


 


Section 5.1      COMPLIANCE WITH LAW; TRADING
IN SECURITIES. Investor’s trading activities with respect to shares of the Common Stock will be in compliance with all applicable
state and federal securities laws, rules and regulations and the rules and regulations of FINRA and the Principal Market on which
the Common Stock is listed or quoted.


 


Section 5.2       SHORT SALES AND CONFIDENTIALITY.
Neither Investor nor any affiliate of the Investor acting on its behalf or pursuant to any understanding with it will execute
any Short Sales during the period from the date hereof to the end of the Commitment Period. For the purposes hereof, and in accordance
with Regulation SHO, the sale after delivery of a Put Notice of such number of shares of Common Stock reasonably expected to be
purchased under a Put Notice shall not be deemed a Short Sale.


 


Other than to other Persons party to this Agreement, Investor has
maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and
terms of this transaction).


 


ARTICLE VI


COVENANTS OF THE COMPANY


 


Section 6.1      RESERVATION OF COMMON STOCK.
The Company will, from time to time as needed in advance of a Closing Date, reserve and keep available until the consummation of
such Closing, free of preemptive rights sufficient shares of Common Stock for the purpose of enabling the Company to satisfy its
obligation to issue the Put Shares to be issued in connection therewith. The number of shares so reserved from time to time, as
theretofore increased or reduced as hereinafter provided, may be reduced by the number of shares actually delivered hereunder.


 


Section 6.2      LISTING OF COMMON STOCK.
If the Company applies to have the Common Stock traded on any other Principal Market, it shall include in such application the
Put Shares, and shall take such other action as is necessary or desirable in the reasonable opinion of Investor to cause the Common
Stock to be listed on such other Principal Market as promptly as possible. The Company shall use its commercially reasonable efforts
to continue the listing and trading of the Common Stock on the Principal Market (including, without limitation, maintaining sufficient
net tangible assets) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws
or rules of the FINRA and the Principal Market.


 






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Section 6.3      CERTAIN AGREEMENTS. So long
as this Agreement remains in effect, the Company covenants and agrees that it will not, without the prior written consent of the
Investor, enter into any other equity line of credit agreement with a third party during the Commitment Period having terms and
conditions substantially comparable to this Agreement. For the avoidance of doubt, nothing contained in the Transaction Documents
shall restrict, or require the Investor’s consent for, any agreement providing for the issuance or distribution of (or the issuance
or distribution of) any equity securities pursuant to any agreement or arrangement that is not commonly understood to be an “equity
line of credit.”


 


ARTICLE VII


CONDITIONS TO DELIVERY OF


PUT NOTICES AND CONDITIONS TO CLOSING


 


Section 7.1      CONDITIONS PRECEDENT TO
THE OBLIGATION OF THE COMPANY TO ISSUE AND SELL COMMON STOCK. The obligation hereunder of the Company to issue and sell the Put
Shares to Investor incident to each Closing is subject to the satisfaction, at or before each such Closing, of each of the conditions
set forth below.


 


(a)      ACCURACY OF INVESTOR’S REPRESENTATIONS
AND WARRANTIES. The representations and warranties of Investor shall be true and correct in all material respects as of the date
of this Agreement and as of the date of each such Closing as though made at each such time.


 


(b)      PERFORMANCE BY INVESTOR. Investor
shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by Investor at or prior to such Closing.


 


(c)      Principal
Market Regulation. The Company shall not issue any Put Shares, and the Investor shall not have the right to receive any
Put Shares, if the issuance of such shares would exceed the aggregate number of shares of Common Stock which the Company may issue
without breaching the Company’s obligations under the rules or regulations of the Principal Market (the “Exchange CAP”).


 


Section 7.2      CONDITIONS PRECEDENT TO THE
RIGHT OF THE COMPANY TO DELIVER A PUT NOTICE AND THE OBLIGATION OF INVESTOR TO PURCHASE PUT SHARES. The right of the Company to
deliver a Put Notice and the obligation of Investor hereunder to acquire and pay for the Put Shares incident to a Closing is subject
to the satisfaction, on (i) the date of delivery of such Put Notice and (ii) the applicable Closing Date (each a “CONDITION
SATISFACTION DATE”), of each of the following conditions:


 






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(a)      EFFECTIVE REGISTRATION STATEMENT.
The Registration Statement, and any amendment or supplement thereto, shall remain effective for the sale by the Company to Investor
of the Registered Securities subject to such Put Notice, and such Registration Statement shall remain effective on each Condition
Satisfaction Date and (i) neither the Company nor Investor shall have received notice that the SEC has issued or intends to issue
a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness
of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC’s concerns
have been addressed and Investor is reasonably satisfied that the SEC no longer is considering or intends to take such action),
and (ii) no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus
shall exist.


 


(b)      ACCURACY OF THE COMPANY’S REPRESENTATIONS
AND WARRANTIES. The representations and warranties of the Company shall be true and correct in all material respects as of each
Condition Satisfaction Date as though made at each such time (except for representations and warranties specifically made as of
a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including each
Condition Satisfaction Date, except for any conditions which have temporarily caused any representations or warranties herein to
be incorrect and which have been corrected with no continuing impairment to the Company or Investor.


 


(c)      PERFORMANCE BY THE COMPANY. The
Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company at or prior to each Condition Satisfaction Date.


 


(d)      NO INJUNCTION. No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or adopted by any court
or governmental authority of competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or materially
adversely affecting any of the transactions contemplated by this Agreement.


 


(e)      ADVERSE CHANGES. Since the date
of filing of the Company’s most recent SEC Document, no event that had or is reasonably likely to have a Material Adverse Effect
has occurred.


 


(f)      NO SUSPENSION OF TRADING IN OR DELISTING
OF COMMON STOCK. The trading of the Common Stock shall not have been suspended by the SEC, the Principal Market or the FINRA and
the Common Stock shall have been approved for listing or quotation on and shall not have been delisted from the Principal Market.


 






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(g)      TEN PERCENT LIMITATION. On each
Closing Date, the number of Put Shares then to be purchased by Investor shall not exceed the number of such shares that, when aggregated
with all other shares of Common Stock then owned by Investor beneficially or deemed beneficially owned by Investor, would result
in Investor owning more than 9.99% of all of such Common Stock as would be outstanding on such Closing Date, as determined in accordance
with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section, in the event that
the amount of Common Stock outstanding as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated
thereunder is greater on a Closing Date than on the date upon which the Put Notice associated with such Closing Date is given,
the amount of Common Stock outstanding on such Closing Date shall govern for purposes of determining whether Investor, when aggregating
all purchases of Common Stock made pursuant to this Agreement, would own more than 9.99% of the Common Stock following such Closing
Date.


 


(h)      PRINCIPAL
MARKET REGULATION. The Company shall not issue any Put Shares, and the Investor shall not have the right to receive any Put Shares,
if the issuance of such shares would exceed the Exchange Cap.


 


(i)      NO KNOWLEDGE. The Company shall
have no knowledge of any event more likely than not to have the effect of causing such Registration Statement to be suspended or
otherwise ineffective (which event is more likely than not to occur within the fifteen (15) Trading Days following the Trading
Day on which such Put Notice is deemed delivered).


 


(j)      NO VIOLATION OF SHAREHOLDER APPROVAL
REQUIREMENT. The issuance of shares of Common Stock with respect to the applicable Closing, if any, shall not violate the shareholder
approval requirements of the Principal Market.


 


(k)      NO VALUATION EVENT. No Valuation
Event shall have occurred since the corresponding Put Date. 


 


(l)      OTHER. On each Condition Satisfaction
Date, Investor shall have received a certificate in substantially the form and substance of Exhibit B hereto, executed by an executive
officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as at the date of each
such certificate.


 


ARTICLE VIII


LEGENDS


 


Section 8.1       NO STOCK LEGEND OR STOCK TRANSFER RESTRICTIONS.
No legend shall be placed on the share certificates representing the Put Shares.


 


Section 8.2     INVESTOR’S COMPLIANCE. Nothing
in this Article VIII shall affect in any way Investor’s obligations under any agreement to comply with all applicable securities
laws upon the sale of the Common Stock.


 






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ARTICLE IX


NOTICES; INDEMNIFICATION


 


Section 9.1       NOTICES. All notices, demands,
requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram,
facsimile, or email as a PDF, addressed as set forth below or to such other address as such party shall have specified most recently
by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall
be deemed effective (i) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, or email as a PDF, at the address or number designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such delivery (if delivered other than on a business
day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of
mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first occur.


 


The addresses
for such communications shall be:


 


If to the Company: 


 


El Capitan Precious Metals,
Inc.


8390 Via de Ventura, Suite F-110, #215


Scottsdale, Arizona 85258


Attn: John F. Stapleton, Chief Financial
Officer


Tel: (928) 515-1942


Fax: (928) 515-1943


Email: jstapleton@mriinc.com


 


 


If to Investor:


 


Southridge Partners II,
LP


90 Grove Street


Ridgefield,
Connecticut 06877


Tel: 203-431-8300


Fax: 203-431-8301


Email: info@southridgellc.com


 


Either party hereto may from time to time change
its address or facsimile number for notices under this Section 9.1 by giving at least ten (10) days’ prior written notice of such
changed address or facsimile number to the other party hereto.


 






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Section 9.2      INDEMNIFICATION. Each party
(an “Indemnifying Party”) agrees to indemnify and hold harmless the other party along with its officers, directors,
employees, and authorized agents, and each Person or entity, if any, who controls such party within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act (an “Indemnified Party”) from and against any Damages, joint or
several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or
relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement
on the part of Indemnifying Party contained in this Agreement, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any post-effective amendment thereof or supplement thereto, or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading,
(iii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained
in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the
light of the circumstances under which the statements therein were made, not misleading, or (iv) any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities
Act, the Exchange Act or any state securities law, as such Damages are incurred, except to the extent such Damages result primarily
from Indemnified Party’s failure to perform any covenant or agreement contained in this Agreement or Indemnified Party’s negligence,
recklessness or bad faith in performing its obligations under this Agreement; provided, however, that the foregoing indemnity agreement
shall not apply to any Damages of an Indemnified Party to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission made by an Indemnifying Party in reliance upon and
in conformity with written information furnished to the Indemnifying Party by the Indemnified Party expressly for use in the Registration
Statement, any post-effective amendment thereof or supplement thereto, or any preliminary prospectus or final prospectus (as amended
or supplemented).


 


Section 9.3      METHOD OF ASSERTING INDEMNIFICATION
CLAIMS. All claims for indemnification by any Indemnified Party (as defined below) under Section 9.2 shall be asserted and resolved
as follows:


 


(a)      In the event any claim or demand
in respect of which an Indemnified Party might seek indemnity under Section 9.2 is asserted against or sought to be collected from
such Indemnified Party by a person other than a party hereto or an affiliate thereof (a “THIRD PARTY CLAIM”), the Indemnified
Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis
for such Third Party Claim and for the Indemnified Party’s claim for indemnification that is being asserted under any provision
of Section 9.2 against an Indemnifying Party, together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim (a “CLAIM NOTICE”) with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives
notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect
to such Third Party Claim to the extent that the Indemnifying Party’s ability to defend has been prejudiced by such failure of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending
thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined
below) (the “DISPUTE PERIOD”) whether the Indemnifying Party disputes its liability or the amount of its liability to
the Indemnified Party under Section 9.2 and whether the Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.


 






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(i)      If
the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall have
the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the
consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary
damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full
pursuant to Section 9.2). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise
or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party,
at any time prior to the Indemnifying Party’s delivery of the notice referred to in the first sentence of this clause (i), file
any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control,
any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this clause (i), and except
as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may takeover the control of the defense or settlement of a Third Party Claim
at any time if it irrevocably waives its right to indemnity under Section 9.2 with respect to such Third Party Claim.


 


(ii)      If
the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend
the Third Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously
and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute
Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable
manner and in good faith or will be settled at the discretion of the Indemnified Party(with the consent of the Indemnifying Party,
which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and
its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions
of this clause (ii), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party
Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in clause (iii) below, the Indemnifying
Party will not be required to bear the costs and expenses of the Indemnified Party’s defense pursuant to this clause (ii) or of
the Indemnifying Party’s participation therein at the Indemnified Party’s request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation.
The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant
to this clause (ii), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.


 






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(iii)      If
the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to
the Indemnified Party with respect to the Third Party Claim under Section 9.2 or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with
respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability
of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall
be entitled to institute such legal action as it deems appropriate.


 


(b)      In the event any Indemnified Party
should have a claim under Section 9.2 against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified
Party shall deliver a written notification of a claim for indemnity under Section 9.2 specifying the nature of and basis for such
claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such
claim (an “INDEMNITY NOTICE”) with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party
to give the Indemnity Notice shall not impair such party’s rights hereunder except to the extent that the Indemnifying Party demonstrates
that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that it does not dispute
the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute
Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount
of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 9.2
and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved
within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems
appropriate.


 


(c)      The indemnity provisions contained
herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party
or others, and (ii) any liabilities the Indemnifying Party may be subject to.


 


ARTICLE X


MISCELLANEOUS


 


Section 10.1      GOVERNING LAW; JURISDICTION.
This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to the
principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States
Federal and state courts located in New York with respect to any dispute arising under this Agreement, the agreements entered into
in connection herewith or the transactions contemplated hereby or thereby.


 


Section 10.2      JURY TRIAL WAIVER. The
Company and the Investor hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any matter arising out of or in connection with the Transaction Documents.


 


Section 10.3      ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the Company and Investor and their respective successors. Neither this Agreement
nor any rights of Investor or the Company hereunder may be assigned by either party to any other person.


 






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Section 10.4      THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the Company and Investor and their respective successors, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.


 


Section 10.5      TERMINATION. The Company
may terminate this Agreement at any time by written notice to the Investor. Additionally, this Agreement shall terminate at the
end of Commitment Period or as otherwise provided herein (unless extended by the agreement of the Company and Investor); provided,
however, that the provisions of Articles V and VIII, and Sections 9.1, 9.2, 9.3 10.1, 10.2 and 10.4 shall survive the termination
of this Agreement for a period of eighteen (18) months.


 


Section 10.6      ENTIRE AGREEMENT, AMENDMENT;
NO WAIVER. This Agreement and the instruments referenced herein contain the entire understanding of the Company and Investor with
respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company
nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.


 


Section 10.7      FEES AND EXPENSES. Each
of the Company and Investor agrees to pay its own expenses in connection with the preparation of this Agreement and performance
of its obligations hereunder. The Company shall pay all stamp or other similar taxes and duties levied in connection with issuance
of the Put Shares pursuant hereto.


 


Section 10.8      COUNTERPARTS. This Agreement
may be executed in multiple counterparts, each of which may be executed by less than all of the parties and shall be deemed to
be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which
together shall constitute one and the same instrument. This Agreement may be delivered to the other parties hereto by facsimile
transmission or email of a copy of this Agreement bearing the signature of the parties so delivering this Agreement.


 


Section 10.9      SEVERABILITY. In the event
that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective
if it materially changes the economic benefit of this Agreement to any party.


 


Section 10.10    FURTHER ASSURANCES. Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.


 


Section 10.11    NO STRICT CONSTRUCTION.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party.


 






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Section 10.12    EQUITABLE RELIEF. The
Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement,
any remedy at law may prove to be inadequate relief to Investor. The Company therefore agrees that Investor shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.


 


Section 10.13    TITLE AND SUBTITLES. The
titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing
or interpreting this Agreement.


 


Section 10.14    REPORTING ENTITY FOR THE
COMMON STOCK. The reporting entity relied upon for the determination of the Closing Price and the VWAP for the Common Stock on
any given Trading Day for the purposes of this Agreement shall be Bloomberg Finance L.P. or any successor thereto. The written
mutual consent of Investor and the Company shall be required to employ any other reporting entity.


 


Section 10.15    PUBLICITY. The Company
and Investor shall consult with each other in issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such public statement
without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed, except that
no prior consent shall be required if such disclosure is required by law, in which such case the disclosing party shall provide
the other parties with prior notice of such public statement. Notwithstanding the foregoing, the Company shall not publicly disclose
the name of Investor without the prior written consent of such Investor, except to the extent required by law. Investor acknowledges
that this Agreement and all or part of the Transaction Documents may be deemed to be “material contracts” as that term
is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits
to reports or registration statements filed under the Securities Act or the Exchange Act. Investor further agrees that the status
of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.


 


[SIGNATURES ON FOLLOWING PAGE]


 






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[SIGNATURE PAGE]


 


IN WITNESS WHEREOF,
the parties hereto have caused this Equity Purchase Agreement to be executed by the undersigned, thereunto duly authorized, as
of the date first set forth above.


 








	 	SOUTHRIDGE PARTNERS
II, LP
	 	 
	 	By: Southridge Advisors LLC
	 	 
	 	 
	 	By:	/s/ Stephen Hicks
		 	Name:  Stephen Hicks
	 	 	Title:  Manager


 






	 	EL CAPITAN PRECIOUS METALS, INC.
	 	 
	 	 
	 	By:	/s/ John F. Stapleton
		 	Name: John F. Stapleton
	 	 	Title: Chief Financial Officer


 


 






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EXHIBITS


 


 


EXHIBIT A           Put Notice


 


EXHIBIT B           Closing Certificate


 






    	 



    	 



    

 


EXHIBIT A


 


 


FORM OF PUT NOTICE


 


 


TO:   SOUTHRIDGE PARTNERS II, LP


 


 


We refer to the Equity Purchase Agreement dated _________ __, 2014
(the ” Agreement”) entered into by El Capitan Precious Metals, Inc. (the “Company”) and you. Capitalized terms
defined in the Agreement shall, unless otherwise defined, have the same meaning when used herein.


 


We hereby:


 


		1.	Give you notice that we require you to purchase $_________ (the “Investment Amount”) in Put Shares; and



 


		2.	Certify that, as of the date hereof, to the best of our knowledge, the conditions set forth in Section 7.2 of the Agreement
are satisfied.



 


 


Date: _____________, 201__


 





	 	EL CAPITAN PRECIOUS METALS, INC.
	 	 
	 	 
	 	By:	
		 	Name: 
	 	 	Title: 


 


 






    	 



    	 



    

 


EXHIBIT B


 


 


FORM OF


 


CERTIFICATE OF THE CHIEF [EXECUTIVE/FINANCIAL]
OFFICER


 


OF


 


EL CAPITAN PRECIOUS METALS, INC. 


 


Pursuant to Section 7.2(l)
of that certain Equity Purchase Agreement dated _______ __, 2014 (the “Agreement”) by and between the Company and Southridge
Partners II, LP (the “Investor”), the undersigned, in his capacity as the Chief [Executive/Financial] Officer of El Capitan
Precious Metals, Inc. (the “Company”), and not in his individual capacity, hereby certifies, as of the date hereof (such
date, the “Condition Satisfaction Date”), the following:


 


1.     The representations and warranties
of the Company are true and correct in all material respects as of the Condition Satisfaction Date as though made on the Condition
Satisfaction Date (except for representations and warranties specifically made as of a particular date) with respect to all periods,
and as to all events and circumstances occurring or existing to and including the Condition Satisfaction Date, except for any conditions
which have temporarily caused any representations or warranties of the Company set forth in the Agreement to be incorrect and which
have been corrected with no continuing impairment to the Company or Investor; and


 


2.     All of the Company’s conditions
to Closing set forth in Section 7.2 of the Agreement have been satisfied as of the Condition Satisfaction Date.


 


Capitalized terms used
herein shall have the meanings set forth in the Agreement unless otherwise defined herein.


 


IN WITNESS WHEREOF, the
undersigned has hereunto affixed his hand as of the ___ day of ____________, 201__.





	 	
	 	 
	 	 
	 	By:	
		 	________________, Chief [Executive/Financial] Officer