EXHIBIT 10.33
LETTER OF ENGAGEMENT
AND WORK AUTHORIZATION
May 6, 2002
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Chairman, President and CEO
AZCO MINING, INC.
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇:
This letter (the "Agreement") confirms the terms and conditions of the
engagement of Investor Relations International ("IRl"), by Azco Mining, Inc.
(the "Company") to render certain investor relations and financial
communication services to the Company which are referred to herein.
1. SERVICES. ▇▇▇ agrees to perform investor relations services (also
referred to as the "Program") for the Company which are ordinarily and
customarily performed by an investor relations firm on behalf of a corporate
client. These services include, but are not limited to, (a) review of the
financial and non-financial portions of quarterly and annual reports sent to
security holders by the Company, exclusive of any current, quarterly or annual
reports filed with U.S. Securities and Exchange Commission and/or other
regulatory agencies; (b) drafting and distribution of financial and general
press releases; (c) drafting and distribution of collateral material to the
Company's shareholders and the investing public; (d) the introduction of the
Company to the private and professional investment community, including, but
not limited to private investors, independent money managers, buy and sell-side
analysts, and brokerage houses; (e) the development of financial media articles
regarding the Company; (f) ensuring that the investor relations section of the
Company's web site is updated on a regular basis; and (g) overall consulting
relating to the Company's investor relations activities.
2. NON-EXCLUSIVE RELATIONSHIP; NO GUARANTEE. Commencing on May 7, 2002
(the "Commencement Date"), IRI will act as a non-exclusive agent of the Company
and shall use its best efforts in the performance of its services described
above. Nothing in this Agreement shall be construed as limiting IRI's right to
represent other clients, except that IRI agrees not to represent any other
person or entity which is in direct competition with the Company unless IRI
first obtains the Company's written consent, which shall not be unreasonably
withheld.
3. FEES. The Company shall pay to IRI for its services a standard fee of
$8,000 per month. The initial monthly payment shall be due upon execution of
this Agreement; thereafter, the standard fee shall be due and payable within 5
business days upon receipt of invoice. In addition, if ▇▇▇ is assigned the
additional responsibility for seeking new financing arrangements for the
Company, and if IRI is successful in that effort, the Company agrees to pay IRI
a special finder's fee, upon closing for the financing, equal to the following
formula:
- 5% for the first $1 million in proceeds;
- 4% for the next $1 million;
- 3% for the next $1 million;
- 2% for the next $1 million;
- 1% of each additional $1 million.
For example, based on the above finder's fee formula, a $2 million financing
would require a fee of $90,000 - in other words, 5% of the first $1 million
($50,000) and 4% of the second $1 million ($40,000).
4. EXPENSES. In addition to any fees that may be payable hereunder, the
Company agrees to reimburse IRI for all reasonable out of pocket expenses
incurred by it in the performance of services on behalf of the Company. Such
out of pocket expenses shall include, but are not limited to, costs of
long-distance telephone charges, facsimile services, mileage/travel, messenger
services, printing, copying, postage, and other such ancillary services.
However, it is understood by IRI that any single expense in excess of $500.00
will be approved, in advance by the Company in writing. Any disputed expense
must be made known to IRI in writing within 30 days of receipt. Out of pocket
expenses will be billed on or about the fifteenth of each month and will be due
and payable with 10 days of receipt.
To offset these advances in its behalf, the Company would agree to place the
sum of $5,000 on deposit with IRI at the outset of the Program. This sum will
remain with I RI credited to the Company against expenses incurred, on a
permanent basis, throughout the Program and is fully refundable should the
Company terminate the Program. Meanwhile, after the end of each month, IRI will
invoice the Company for reimbursement of the specific itemized amounts of
out-of-pocket expenses incurred during that month.
5. EQUITY PARTICIPATION.
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(a) WARRANT. As an inducement for IRI to enter into this Agreement,
the Company agrees to grant to IRI or its successor or designatee within 5
business days of the date of this Agreement a warrant (the "Warrant') to
purchase 50,000 shares of THE Company's common stock (the "Shares") at an
exercise price of $2.50 per share. Such number of shares of common stock and
the related exercise price shall be subject to customary protection adjustment
provisions for IRI. The Warrant shall be immediately exercisable in whole or in
part and shall expire on April 6, 2007. Termination of IRI's engagement
hereunder shall not effect the Warrant or the provisions of this Section 5
which shall survive such termination. The Company shall include the Shares with
any of the Company's securities it determines to register for its own account
at any time, subject only, in an underwritten public offering, to such
customary limitations which such underwriter may impose based upon its
determination that marketing factors require a limitation on the number of
shares to be underwritten (the "Piggy Back Rights"). The Piggy Back Rights
shall not apply from time to time, if, at the time such holder desires to sell
any of the Shares, the holder of the Shares (together with its affiliates) is
able to sell all such Shares remaining pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended. The Piggy Back Rights shall continue
until all the Shares are registered and sold.
(b) NET ISSUE EXERCISE. In lieu of exercising this Warrant, IRI may
elect to receive Shares equal to the value of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant at the principal office of
the Company together WITH notice of such election, in which event the Company
shall issue to IRI a number of Shares computed using the following formula:
X=Y(A-B)
--------
A
Where X = the number of the Shares to be issued to the
Holder.
Y = the number of the Shares purchasable under this
Warrant.
A = the fair market value of one Share on the date of
determination.
B = the per share Exercise Price (as adjusted to
the date of such calculation).
6. TERM AND TERMINATION OF THE ENGAGEMENT. IRI's engagement hereunder may
be terminated by either the Company or IRI upon 30 day written notice; PROVIDED
FURTHER, HOWEVER, that IRI will be entitled to (i) its pro-rata fee for month
after May 2002, and (ii) the number of Shares granted to IRI on a pro-rata basis
as specified in Section 5 of this Agreement, if terminated during or after the
month of May 2002; and PROVIDED further, that the provisions of this Section 6
and Sections 4, 5 and 7 hereof shall survive such termination. Additionally,
following the twelfth full month of Program activities, the Company shall hold a
performance evaluation to determine IRI's going forward involvement with the
Company.
7. INDEMNITY
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(a) INDEMNIFICATION BY THE COMPANY. In connection with ▇▇▇'s
engagement hereunder, including modifications or future additions to this
engagement and the related activities prior to this date, the Company agrees
that it will indemnify, hold harmless and defend IRI and its affiliates, any
director, officer, agent or employee of IRI or any of its affiliates and each
other person, if any, controlling IRI or any of its affiliates and each of
their successors against and in respect of any and all losses, damages, claims,
obligations, demands, actions, suits, proceedings, assessments, liabilities,
judgments, recoveries and deficiencies, costs and expenses (including, without
limitation, reasonable attorneys' fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting any litigation,
claim, proceeding or demand), all on an after-tax basis, less any amounts
actually paid as insurance reimbursement, of any kind or character
(collectively, a "Loss"), (i) related to, arising out of or result from (A)
oral or written information provided by the Company, the Company's employees or
the Company's other agents, for use by IRI in connection with IRI's performance
of services under this Agreement; (B) actions, at the Company's request or
consent, that are undertaken by IN which lead to a Loss, or (C) any breach of,
or failure by the Company to fully perform, or any inaccuracy in, any of the
representations, warranties, covenants or agreements of the Company in this
Agreement or (ii) otherwise related to or arising out of the engagement of IRI
pursuant to this Agreement or any transaction or conduct in connection
therewith except that this clause (ii) and clause (i) (B) relating to actions
by IRI, shall not apply with respect to any Losses that are finally judicially
determined to have resulted primarily from IRI's bad faith or gross negligence.
(b) INDEMNIFICATION BY ▇▇▇. In connection with ▇▇▇'s engagement
hereunder, including modifications or future additions to this engagement and
the related activities prior to this date, I RI agrees that it will indemnify,
hold harmless and defend the Company and its affiliates, any director, officer,
agent or employee of the Company or any of its affiliates and each other person,
if any, controlling the Company or any of its affiliates and each of their
successors against and in respect of any and all losses, damages, claims,
obligations, demands, actions, suits, proceedings, assessments, liabilities,
judgments, recoveries and deficiencies, costs and expenses (including, without
limitation, reasonable attorneys' fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting any litigation,
claim, proceeding or demand), all on an after-tax basis, less any amounts
actually paid as insurance reimbursement, of any kind or character
(collectively, a "Company Loss"), (i) related to, arising out of or result from
(A) oral or written information provided by IRI, IRI's employees or its other
agents, for use by IRI in connection with IRI's performance of services under
this Agreement; (B) other action or failure to act by IRI, its employees or its
other agents of IRI or (C) any breach of, or failure by IRI to fully perform, or
any inaccuracy in, any of the representations, warranties, covenants or
agreements of IRI in this Agreement or (ii) otherwise related to or arising out
of the engagement of IRI pursuant to this Agreement or any transaction or
conduct in connection therewith except that this clause (ii) and clause (i)(B)
relating to actions by IRI, shall not apply with respect to Company Losses that
are finally judicially determined to have resulted primarily from the Company's
bad faith or gross negligence.
(c) NOTICE OF CLAIM. Whenever a party learns of or discovers any
matter which may give rise to a claim for indemnification (the "Claim") against
a party under this Section 7 (the "Indemnity Obligor"), as the indemnified party
(the "Indemnified Party"), ▇▇▇▇ give notice to the Indemnity Obligor of the
Claim. With respect to Claims which are the subject of actions, suits, or
proceedings threatened or asserted in writing by any third party (a "Third Party
Claim"), the Indemnified Party shall, within 15 days following receipt of such
Third Party Claim, promptly notify the Indemnity Obligor in writing of any Claim
for recovery, specifying in reasonable detail the nature of the Claim and the
amount of the liability estimated to arise therefrom. If the Indemnified Party
does not so notify the Indemnity Obligor within 15 days of its discovery of a
Third Party Claim, such Claim shall be barred only to the extent that the
Indemnity Obligor is prejudiced by such failure to notify. The Indemnified Party
shall provide to the Indemnity Obligor as promptly as practicable thereafter all
information and documentation reasonably requested by the Indemnity Obligor to
verify the Claim asserted.
(d) DEFENSE. If the facts relating to a Loss or Company Loss arise
out of a Third Party Claim, or if there is any claim against a third party
available by virtue of the circumstances of the Loss or Company Loss, the
Indemnity Obligor shall, by giving written notice to the Indemnified Party
within 15 days following its receipt of the notice of such claim, assume the
defense or the prosecution thereof, including the employment of counsel or
accountants, reasonably satisfactory to the Indemnified Party, at its cost and
expense; PROVIDED, HOWEVER, that during the interim the Indemnified Party shall
use its best efforts to take all action (not including settlement) reasonably
necessary to protect against further damage or loss with respect to the Loss or
Company Loss. The Indemnified Party shall have the right to employ counsel
separate from counsel employed by the Indemnity Obligor in any such action and
to participate therein, but the fees and expenses of such counsel shall be at
the Indemnified Party's own expense, unless (a) the employment thereof has been
specifically authorized by the Indemnity Obligor, (b) such Indemnified Party has
been advised by counsel reasonably satisfactory to the Indemnity Obligor that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnity Obligor and in the reasonable
judgment of such counsel it is advisable for such Indemnified Party to employ
separate counsel, or (c) the Indemnity Obligor has failed to assume the defense
of such action and employ counsel reasonably satisfactory to the Indemnified
Party. Whether or not the Indemnity Obligor defends or prosecutes such claim,
all the parties hereto shall cooperate in the defense or prosecution thereof and
shall furnish such records, information and testimony and shall attend such
conferences, discovery proceedings and trial as may be reasonably requested in
connection therewith. The Indemnity Obligor shall not be liable for any
settlement of any such claim effected without its prior written consent. In the
event of payment by the Indemnity Obligor to the Indemnified Party in connection
with any Loss or Company Loss arising out of a Third Party Claim, the Indemnity
Obligor shall be subrogated to and shall stand in the place of the Indemnified
Party as to any events or circumstances in respect of which the Indemnified
Party may have any right or claim against such third party relating to such
indemnified matter. The Indemnified Party shall cooperate with the Indemnity
Obligor in prosecuting any subrogated claim. The Indemnity Obligor will take no
action in connection with any claim that would adversely affect the Indemnified
Party without the consent of the Indemnified Party.
(e) DURATION OF OBLIGATIONS. The Indemnity Obligor's
indemnification obligations under this Agreement shall survive the termination
of this Agreement.
8. ACKNOWLEDGMENTS AND REPRESENTATIONS.
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(a) The Company recognizes and confirms that in performing its
duties pursuant to this Agreement, I RI will be using and relying upon data,
material and other information furnished by the Company, its employees and
representatives (the "Information"). The Company hereby agrees and represents
that all Information furnished to IRI in connection with this Agreement shall be
accurate and complete in all material respects at the time furnished, and that
if such Information, in whole or part, becomes materially inaccurate, misleading
or incomplete during the term of IRI's engagement hereunder, the Company shall
so advise IRI in writing and correct any such inaccuracy or omission. IRI
assumes no responsibility for the accuracy and completeness of such Information.
In rendering its services hereunder, IRI shall be entitled to use and rely upon
the Information without independent verification thereof. To the extent
consistent with legal requirements, all Information, unless publicly available
or otherwise available to IRI without restriction or breach of any
confidentiality agreement, will be held by IRI in confidence and will not be
disclosed to anyone other than IRI's agents and advisors without the Company's
prior written approval or used for any purpose other than those referred to in
this Agreement.
(b) The Company understands and agrees that in furnishing the
Company with advice and other services as provided in this Agreement, neither
IRI nor any officer, director or agent thereof shall be liable to the Company,
its affiliates or its creditors for errors of judgment or anything except bad
faith or gross negligence in the performance of its duties under the terms of
this Agreement.
(c) The Company acknowledges that IRI has been retained solely as
an advisor to the Company, and not as an advisor to or agent of any other
person, and that the Company's engagement of IRI is not intended to confer
rights upon any persons not a party hereto (including shareholders, employees or
creditors of the Company) as against IRI, IRI's affiliates or their respective
directors, officers, agents and employees.
(d) The Company represents and warrants to IRI that it will not
cause, or knowingly permit (a) any action to be taken which violates or (b) a
failure to act, the effect of which violates, any federal or state securities
law.
(e) IRI represents and warrants to the Company that it will not
cause, or knowingly permit (a) any action to be taken which violates or (b) a
failure to act, the effect of which violates, any federal or state securities
law.
9. NOTICES. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by hand or fax
or mailed by overnight courier or first class certified or registered mail,
return receipt requested, postage prepaid and properly addressed as follows:
If to IRI, at Investor Relations International, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Managing Partner. If to
the Company, at Azco Mining, ▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Chairman, President and CEO.
Any party may change its address for purposes of this provision by
giving the other party written notice of the new address in the manner set
forth above. Notice will be conclusively deemed to have been given when
personally delivered, or if given by mail, on the second day after being sent
by overnight courier or on the third day after being sent by first class,
registered or certified mail, or if given by fax, when confirmation of
transmission is indicated by the sender's fax machine.
10. ARBITRATION. All controversies, disputes or claims arising out of or
relating to this Agreement shall be resolved by binding arbitration. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. All arbitrators shall possess
such experience in, and knowledge of, the subject area of the controversy or
claim so as to qualify as an "expert" with respect to such subject matter. The
governing law for the purposes of any arbitration arising hereunder shall be as
set forth in Section 11 hereof. The prevailing party shall be entitled to
receive its reasonable attorney's fees and all costs relating to the
arbitration. Any award rendered by arbitration shall be final and binding on
the parties, and judgment thereon may be entered in any court of competent
jurisdiction.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of California, without regard to the
conflicts of laws provisions thereof, and may not be amended or modified except
in writing signed by both parties.
12. SUCCESSORS. This Agreement and all rights and obligations thereunder
shall be binding upon and inure to the benefit of each party's successors, but
may not be assigned without the prior written consent of the other party, which
shall not be unreasonably withheld or delayed.
13. SEVERABILITV. If any provision of this Agreement shall be held or
made invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby and,
to this extent, the provisions of this Agreement shall be deemed severable.
14. AUTHORIZATION. The Company represents and warrants that it has all
requisite power and authority, and has received all necessary authorizations, to
enter into and carry out the terms and provisions of this Agreement.
Please confirm that the foregoing correctly sets forth our Agreement
by signing the enclosed letter in the space provided and returning them to us
for execution, whereupon we will send you a fully executed original letter which
shall constitute a binding Agreement as of the date first above written. We look
forward to working with you on this assignment.
Very truly yours,
Investor Relations International
By:
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▇▇▇▇▇ ▇▇▇▇▇▇
Managing Partner
Agreed to and accepted as of the date above.
AZCO MINING,INC.
By:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Chairman, President and CEO