Unassociated Document


    CONSULTING
      AGREEMENT

     

    This
      Consulting Agreement,
      by and
      between El Capitan Precious Metals, Inc., a Nevada corporation (the
“Company”),
      and
      Charles C. Mottley (the “Consultant”)
      is
      entered into as of the 1st day of October, 2007 (the “Effective
      Date”).

     

    Now,
      Therefore,
      for
      other good and valuable consideration, the receipt and sufficiency of which
      is
      hereby acknowledged, the Company and Consultant, each intending to be legally
      bound, hereby agree as follows:

     

    1.  Consultant
      Services.
      During
      the term of this Agreement, Consultant shall from time to time use its best
      efforts to perform corporate advisory services for the Company, including
      without limitation providing services relating to: (i) strategic advisory
      services; (ii) corporate financial planning; (iii) market analysis; (iv)
      introductions to potential investors; and (v) other consulting and advisory
      services which may in the future be mutually agreed upon by the Company and
      Consultant. 

     

    The
      Company and Consultant hereby acknowledge and agree that: (i) Consultant is
      not
      a “broker” or “dealer” as defined under any applicable federal and/or state
      securities laws; (ii) Consultant shall not engage in any acts for which he
      is
      required to be a broker-dealer; (iii) Consultant shall solely act to provide
      advice to the Company with respect to capital raising and market analysis,
      and
      shall not engage in any sales efforts in connection with any investment by
      any
      person or entity in the Company; (iv) Consultant shall not participate in any
      negotiation of the terms of any such investment; and (v) Consultant shall not
      give any advice to anyone regarding the valuation of, potential return on,
      or
      the terms of any investment in, any securities of the Company, except as
      authorized by the Company. Consultant makes no representations, warranties
      or
      guaranties of any specific results or success.

     

    The
      Company further acknowledges that the services of Consultant provided hereunder
      are not exclusive to the Company, and, subject to the terms of Section 6 hereof,
      nothing herein shall be construed to limit or restrict Consultant or his
      affiliates in conducting such business with respect to others or in rendering
      such advice to others. Consultant hereby acknowledges that the Company’s
      engagement of Consultant is similarly not exclusive, and the Company is free
      to
      obtain similar services as provided by Consultant from third parties.


     

    2.  Term.
      Subject
      to earlier termination by the parties in accordance with the terms of Section
      8
      hereof, the term of this Agreement shall commence on the Effective Date and
      continue until such time that the Company has paid Consultant an aggregate
      Consulting Fee of $300,000 pursuant to the terms of Section 3 hereof (the
“Term”).

     

    3.  Compensation.
      As
      consideration for Consultant’s entry into this Agreement and performance of the
      consulting services set forth herein, the Company shall pay Consultant the
      following compensation (the “Consulting
      Fee”):

     

    (a)  Base
      Payment.
      The
      Company shall pay Consultant a one-time payment of $25,000, in cash, within
      five
      (5) days of the first date after the Effective Date upon which the Company’s
      cash balance exceeds $250,000 in the aggregate (the “Base
      Payment”);
      and

     

    (b)  Monthly
      Payment. The
      Company shall pay Consultant up to an aggregate of $275,000, payable in monthly
      installments during the Term, the amount of each such installment to be based
      on
      the Company’s cash availability as determined by the Company’s average daily
      cash balance for the preceding month in accordance with the following schedule
      (each a “Monthly
      Payment”):

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

      
        	 	 	 	
                Company’s
                  Average Daily Cash 

                Balance
                  for the Preceding Month 

              
	 	 	 	
                Less
                  than $250,000 

              	 	 	
                $250,000
                  to $500,000 

              	 	 	
                $500,000
                  to$1,000,000 

              	 	 	
                Over 

                $1,000,000

              	 
	
                 

                Monthly
                  payment amount

              	 	
                
                

                $

              	
                
                

                2,500

              	 	
                
                

                $

              	
                
                

                5,000

              	 	
                
                

                $

              	
                
                

                7,500

              	 	
                
                

                $

              	
                
                

                10,000

              	 


      

    

     

    4.  Reimbursement.
      All
      third-party and out-of-pocket expenses incurred by the Consultant in performing
      the consulting services shall be paid by the Company, or shall be reimbursed
      by
      the Company if paid by the Consultant on behalf of the Company, within ten
      (10)
      days of receipt of written notice by the Consultant, provided that the Company
      must approve in advance all such expenses.

     

    5.  Confidentiality.
      As a
      condition to the Company’s obligations hereunder and Consultant’s continuing
      relationship with the Company as a consultant and financial and investment
      advisor, Consultant understands and agrees as follows:

     

    (a)  Consultant
      acknowledges that he may have received, or may receive in the future, certain
      confidential forward-looking statements and information, either written or
      oral,
      or other confidential or non-public information from the Company concerning
      the
      Company and its prospects, including without limitation all financial
      statements, reports, memorandums, analyses, notes or other information that
      are
      based on, contain or reflect any information deemed confidential by the Company
      (collectively, the “Confidential
      Information”).

     

    (b)  Consultant
      shall use the Confidential Information solely for the purpose of performing
      the
      services required to be performed by Consultant hereunder. Consultant shall
      keep
      all Confidential Information confidential, and shall not disclose any
      Confidential Information without the prior written consent of the Company.
      

     

    (c)  Following
      the completion of its engagement by the Company, Consultant shall promptly
      return any Confidential Information in their respective possessions to the
      Company, without retaining any copy thereof, and destroy all tangible forms
      of
      Confidential Information prepared by or for internal use which reflect, contain
      or embody Confidential Information.

     

    (d)  Consultant
      hereby acknowledges that he is aware that the securities laws of the United
      States prohibit any person who has material non-public information concerning
      the Company or a possible transaction involving the Company from purchasing
      or
      selling securities in reliance upon such information or from communicating
      such
      information to any other person or entity under circumstances in which it is
      reasonably foreseeable that such person or entity is likely to purchase or
      sell
      such securities in reliance upon such information.

     

    (e)  For
      the
      purposes of this Agreement, the definition of “Confidential Information” shall
      not include information which (i) had been made previously available to the
      public by the Company; (ii) is or becomes generally available to the public,
      unless the information being made available to the public results in a breach
      of
      this Agreement; (iii) prior to disclosure to Consultant, was already rightfully
      in any such person’s possession; or (iv) is obtained by Consultant from a third
      party who is lawfully in possession of such information, and not in violation of
      any contractual, legal or fiduciary obligation to the Company, with respect
      to
      such information and who does not require Consultant to refrain from disclosing
      such information to others.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    6.  Non-Solicitation
      and Non-Competition.
      Consultant agrees that, during the period from the Effective Date to the date
      that is one
      (1)
      year beyond the Term, Consultant will not, without the prior written consent
      of
      the Company, directly or indirectly, on behalf of Consultant or any third party,
      do or commit any of the following acts: 

     

    (a)  Induce,
      entice, hire or attempt to hire, employ or otherwise contract with any employee
      or independent contractor of the Company; provided, that Consultant may contract
      with independent contractors for matters that are not related to the business
      activities of the Company. 

     

    (b)  Induce,
      or attempt to induce any employee or independent contractor of the Company
      to
      leave the employ or cease doing business with the Company. 

     

    (c)  Induce,
      or attempt to induce, any customer, supplier, vendor or any other person to
      cease doing business with the Company. 

     

    (d)  Induce
      or
      attempt to induce any individual to violate any agreement with the Company.
      

    Consultant
      further agrees that, from the Effective Date to the date that is one (1) year
      beyond the Term, he will not, without the prior written consent of the Company,
      directly or indirectly, render services, advice or assistance to any
      corporation, person, organization or other entity which engages in the mining
      business, or engage in any such activities in any capacity whatsoever,
      including, without limitation, as an employee, independent contractor, officer,
      director, manager, beneficial owner, partner, member or shareholder (other
      than
      being a shareholder of a corporation required to file periodic reports with
      the
      Securities and Exchange Commission under Section 13 or 15(d) of the Securities
      Exchange Act of 1934, as amended, where the shareholder’s total holdings are
      less than three percent (3%)).

     

    7.  Status
      of Consultant as Independent Contractor.

     

    (a)  Using
      his
      best efforts, Consultant shall devote such time to the performance of the
      services described in this Agreement as may be necessary to satisfactorily
      complete the such services.

     

    (b)  Consultant
      shall be an independent contractor in the performance of this Agreement, and
      shall not be deemed an employee of the Company for any purpose whatsoever.
      Consultant shall not be entitled to participate in any benefit programs for
      the
      Company employees, including without limitation health benefits, life insurance,
      pension or profit sharing plans and paid vacation and sick leave. Consultant
      shall be solely responsible for the payment of his income taxes as required
      by
      any and all government agencies with respect to compensation paid to Consultant
      by the Company, and shall comply with all regulations therefrom.

     

    (c)  Consultant
      shall have no power to act as an agent of the Company or bind the Company in
      any
      respect.

     

    8.  Termination.
      

     

    (a)  Termination
      by Company.
      The
      Company shall be entitled to terminate this Agreement with or without Cause
      (as
      defined herein) at any time with written notice to Consultant. In the event
      termination is with Cause, the Company shall be required to pay Consultant
      for
      any accrued (in accordance with the schedule set forth in Section 3 hereof)
      and
      unpaid portion of the Consulting Fees and reimburse Consultant for any accrued
      and unpaid expenses up to the date of termination. In the event termination
      is
      without Cause, the Company shall be required to continue to pay Consultant
      the
      Consulting Fee (in accordance with the schedule set forth in Section 3 hereof)
      through the remainder of the Term. "Cause" means any of the following: (i)
      failure of Consultant to perform the services hereunder; (ii) gross negligence
      or willful misconduct of Consultant in connection with his duties or
      responsibilities; (iii) fraudulent activity by Consultant; (iv) any action
      of
      Consultant exposing the Company to material adverse consequences, financial
      or
      otherwise; (v) Consultant’s indictment of any felony or a misdemeanor involving
      moral turpitude (including entry of a nolo contendere plea); (vi) Consultant’s
      misappropriation or embezzlement of the property of the Company or its
      affiliates (whether or not a misdemeanor or felony); or (vii) Consultant’s death
      or disability resulting in his inability to perform the services under this
      Agreement. 

     

    (b)  Termination
      by Consultant. Consultant
      shall be entitled to terminate this Agreement, for any reason or no reason,
      upon
      thirty (30) days written notice. In the event of Consultant’s termination of
      this Agreement, Consultant shall be entitled to payment for any accrued (in
      accordance with the schedule set forth in Section 3 hereof) and unpaid portion
      of the Consulting Fees and reimbursement for any accrued and unpaid expenses
      up
      to the date of termination.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    9.  General
      Provisions.

     

    (a)  Assignment.
      Consultant may not assign or subcontract his rights or obligations under this
      Agreement without the prior written consent of the Company. The Company may
      assign its rights to any affiliated entity.

     

    (b)  Amendment.
      This
      Agreement may be modified or amended only by a written agreement signed by
      both
      the Company and Consultant.

     

    (c)  Governing
      Law.
      The laws
      of Nevada will govern the validity, construction, and performance of this
      Agreement, without regard to any choice of law or conflict of law rules and
      regardless of the location of any arbitration under this Agreement.


     

    (d)  Construction.
      Wherever possible, each provision of this Agreement will be interpreted so
      that
      it is valid under the applicable law. If any provision of this Agreement is
      to
      any extent invalid under the applicable law, that provision will still be
      effective to the extent it remains valid. The remainder of this Agreement also
      will continue to be valid, and the entire Agreement will continue to be valid
      in
      other jurisdictions. 

     

    (e)  No
      Waiver.
      No
      failure or delay by either the Company or Consultant in exercising or enforcing
      any right or remedy under this Agreement will waive any provision of the
      Agreement. Nor will any single or partial exercise by either the Company or
      Consultant of any right or remedy under this Agreement preclude either of them
      from otherwise or further exercising these rights or remedies, or any other
      rights or remedies granted by any law or any related document. 

     

    (f)  Captions.
      The
      headings in this Agreement are for convenience only and shall not affect this
      Agreement’s interpretation.

     

    (g)  References.
      Except
      as otherwise required or indicated by the context, all references to Sections
      in
      this Agreement refer to Sections of this Agreement.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (h)  Entire
      Agreement.
      This
      Agreement supersedes all previous and contemporaneous oral negotiations,
      commitments, writings, and understandings between the parties concerning the
      matters in this Agreement. In the case of any conflict between the terms of
      this
      Agreement and any other agreement, writing or understanding, this Agreement
      will
      control. 

     

    (i)  Notices.
      Any
      notice to be given shall be sufficiently given when received, and, if mailed,
      shall be deemed received three (3) business days after the date of mailing
      if
      sent by certified mail, postage prepaid, to the address of the party set forth
      below (or to such other address as the party shall designate by written
      notice).

    

      
        	
                If
                  to the Company, to:

              	
                El
                  Capitan Precious Metals, Inc.

              	 
	
                 

              	
                1325
                  Airmotive Way, Suite 276

              	 
	
              	
                Reno,
                  NV 89502

              	 
	
                 

              	
                
                  Attention: 
                    Chief Financial Officer

                

              	 
	
                 

              	
                
                  Facsimile:  
                    (775) 201-0168

                

              	 
	 	 	 
	
                If
                  to Consultant, to:

              	
                Charles
                  C. Mottley

              	 
	 	 	 
	 	 	 


      

      
        	
                 

              	
                Facsimile:
                  

              	 	 


      

    

     

    (j)  Severability.
      The
      invalidity or unenforceability of one or more provisions of this Agreement
      shall
      not affect the validity or enforceability of any of the other provisions, and
      this Agreement shall be construed as if such invalid or unenforceable provisions
      were omitted. If any provision is unenforceable because it is overbroad, the
      parties agree that such provision shall be limited to the extent necessary
      to
      make it enforceable, it being the intent of the parties that provisions of
      this
      Agreement be enforced to the maximum extent possible.

     

    (k)  Counterparts.
      This
      Agreement may be executed in any number of counterparts, all of which taken
      together shall constitute one agreement binding on all parties. Each party
      shall
      become bound by this Agreement immediately upon signing any counterpart,
      independently of the signature of any other party. In making proof of this
      Agreement, however, it will be necessary to produce only one copy signed by
      the
      party to be charged.

     

    Signature
      Page Follows

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the undersigned Consultant and the Company have executed this
      Agreement effective as of the Effective Date.

     

    
      	 	 	 
	 	
              El
                Capitan
                Precious Metals, Inc.

              a
                Minnesota corporation

            
	 
 	 
 	 
 
	
            	By:  	 /s/
              Kenneth P. Pavlich
	 	
              
      
Kenneth
              P.
              Pavlich
	 	
              Its:
                President
                and CEO 

            


    

     

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	
            	By:  	/s/ Charles
              C. Mottley
	 	
              

              Charles
                C. Mottley