EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
10.4
This
EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made effective this January
1, 2009, by and between CAPITAL GOLD CORPORATION, a Delaware corporation
(“Employer”), and XXXXXXX X. XXXXXXXX, a New York resident
(“Executive”).
WHEREAS,
Executive agrees to be employed by Employer for the period and upon and subject
to the terms herein provided; and
WHEREAS,
Employer agrees to employ Executive for the period and upon and subject to the
terms herein provided;
THEREFORE,
in consideration of the foregoing and of the mutual promises, covenants and
agreements contained herein, the legal sufficiency of which is hereby
acknowledged, and intending to be legally bound, Employer and Executive
agree:
1. Employment. Upon
and subject to the terms provided herein, Employer agrees to employ Executive,
and Executive hereby agrees to be employed by Employer, as Employer’s President
and Treasurer, or other substantially similar positions.
2. Term of
Employment. Subject to the terms set forth in this Agreement,
Employer agrees to employ Executive and Executive hereby agrees to be employed
by Employer for a period (the “Employment Period”) commencing from the date
hereof and ending on December 31 2011. The Employment Period shall
automatically renew for successive one-year periods unless either party provides
the other party with written notice of its intent not to renew at least thirty
(30) days prior to the expiration of the then current Employment
Period.
3. Compensation.
(a) Base Salary. As
compensation for the services rendered pursuant to this Agreement, Employer
agrees to pay Executive a base salary at an annual rate of not less than
$287,500, payable in installments in accordance with Employer’s standard payroll
practices, subject to such payroll and withholding deductions as are required by
law or authorized by Executive. The amount of the base salary shall
be reviewed periodically and may be increased at the sole discretion of
Employer.
(b) Bonus. Executive
shall be eligible for any annual incentive bonus opportunity offered by Employer
to employees at Executive’s level. In the event of any conflict
between this Agreement and any incentive bonus plan adopted by Employer for its
officers and employees, this Agreement shall control. The amount of
this bonus, as well as the criteria necessary to earn a bonus, may be changed at
any time by Employer and shall be within the sole discretion of
Employer. All bonuses paid pursuant to this Agreement will be subject
to applicable withholdings and deductions and will be paid no earlier than
fifteen (15) days and no later than ninety (90) days after Employer’s fiscal
year end for which the bonus is earned (but in no event later than the March 15
of the calendar year after the calendar year in which the bonus is
earned).
If
Executive’s employment terminates, voluntarily or involuntarily, prior to the
last day of the fiscal year for which the bonus applies, Executive acknowledges
that he is not entitled to any bonus not yet paid at the time of the termination
because any such unpaid bonus will not be earned, vested, due, or
owing. Executive hereby expressly forfeits and waives any such unpaid
bonus. In the event that Executive’s engagement terminates without cause
pursuant to Section 4(e) or by Executive for breach pursuant to Section 4(f)
prior to the last day of the fiscal year for which the bonus applies, Executive
will be entitled to a bonus pro rated for the period from the beginning of that
fiscal year to the date of termination and payable no later than 60 days
following Executive’s termination.
(c) Vacation. For each
full twelve (12) months of employment, Executive shall be entitled to receive
four (4) weeks paid vacation. One (1) week of paid vacation may be
carried forward from one calendar year to the next calendar year only (the
“Carried Forward Vacation”). If applicable, Executive’s first week of
vacation each calendar year shall be deemed the Carried Forward
Vacation.
(d) Benefits. Executive
shall be entitled to participate in the employee benefits plans offered to all
employees of Employer. Employer shall not be required to establish or
continue any benefit plans or take any action to cause Executive to be eligible
for any such benefits on a basis more favorable than that applicable to all its
employees generally.
(e) Stock
Options. Executive will be eligible to participate in any
stock option or other equity compensation plan adopted by Employer during the
term of this Agreement and applicable to other employees at Executive’s level
(the “Equity Plan”). The number of options, vesting schedule,
exercise price, and all other terms and conditions of the stock options shall be
set forth in an option agreement pursuant to the applicable plan and shall be
commensurate with Executive’s position, as determined by the Committee of
Employer’s Board of Directors charged with administering the Equity Plan, in its
sole discretion. Employer may, consistent with its obligations under
such a plan or plans, amend or discontinue any or all stock option plans at any
time.
(f) Expense
Reimbursement. Employer shall reimburse Executive for all
reasonable and documented travel, entertainment and other business expenses
actually and properly incurred by him in relation to Employer’s business, as
they are incurred. No such expense reimbursement shall be allowed
with regard to such expenses that exceed $5,000 unless such expenses have been
pre-approved by Employer in writing.
(g) Office and
Duties. Executive shall report to the President and Chief
Executive Officer or such other supervisor as designated by the President and
Chief Executive Officer of Employer. Executive shall perform such
tasks commensurate with this position as may from time to time be assigned by
Employer. Executive shall devote all business time, labor, skill,
undivided attention and best ability to the performance of Executive’s duties
hereunder in a manner which will faithfully and diligently further the business
and interests of Employer. During the term of employment, Executive
shall not directly or indirectly pursue any other business activity without the
prior written consent of Executive’s supervisor, with the exception of passive
personal investments not in breach of any other term or provision
hereof. Executive
- 2
-
agrees to
travel to whatever extent is reasonably necessary in the conduct of Employer’s
business, at Employer’s expense and pursuant to Employer’s standard policies and
procedures.
4. Termination of
Employment. Notwithstanding any other provision of this
Agreement, Executive’s employment may be terminated as follows:
(a) Expiration. This
Agreement may be terminated upon expiration of the term
hereof. Following termination pursuant to this Section 4(a),
Employer’s only obligation to Executive shall be to pay to Executive all accrued
base salary, all accrued vacation time and any reasonable and necessary business
expenses incurred by Executive in connection with his duties, all to the date of
termination and payable in a lump sum, less applicable deductions and
withholdings, as soon as administratively practicable following Executive’s
termination.
(b) Termination for
Cause. This Agreement may be terminated by Employer for
Cause. For purposes of this Agreement, “Cause” justifying the
termination of this Agreement by Employer is defined as: (1) failure or refusal
to perform the services required hereunder; (2) a material breach by Executive
of any of the terms of this Agreement; or (3) Executive’s conviction of a crime
that either results in imprisonment or involves embezzlement, dishonesty, or
activities injurious to Employer or its reputation. Whether Cause
exists under this Agreement shall be determined by the Employer in its
reasonable discretion. Following termination pursuant to this Section
4(b), Employer’s only obligation to Executive shall be to pay to Executive all
accrued base salary, all accrued vacation time and any reasonable and necessary
business expenses incurred by Executive in connection with his duties, all to
the date of termination and payable in a lump sum, less applicable deductions
and withholdings, as soon as administratively practicable following Executive’s
termination.
(c) Disability. This
Agreement may be terminated by Employer upon at least thirty (30) days’ written
notice if Executive is prevented by illness, accident or other disability
(mental or physical) from performing the essential functions of the position for
one or more periods cumulatively totaling three (3) months during any
consecutive twelve (12) month period. In the event this Agreement is
terminated pursuant to this Section 4(c), Employer shall pay to Executive
all accrued base salary, all accrued vacation time and any reasonable and
necessary business expenses incurred by Executive in connection with his duties,
all to the date of termination and payable in a lump sum, less applicable
deductions and withholdings. In addition, Employer shall pay to
Executive severance payments in an amount equal to one (1) month of Executive’s
base salary, payable in a lump sum, less applicable deductions and withholdings,
as soon as administratively practicable (but in no event later than 60 days)
following Executive’s termination (“Disability Severance
Payments”). Severance payments made by Employer to Executive pursuant
to this Section 4(c) are conditioned on the Executive signing a
Confidential Severance Agreement and Release substantially in the form attached
hereto as Exhibit A.
(d) Death. This
Agreement shall be automatically terminated in the event of Executive’s death
during the term of employment. In the event this Agreement terminates
upon Executive’s death, Employer shall pay Executive’s estate or beneficiary, as
applicable, all accrued base salary, all accrued vacation time and any
reasonable and necessary business
- 3
-
expenses
incurred by Executive in connection with his duties, all to the date of
termination and all payable in a lump sum, less applicable deductions and
withholdings, as soon as administratively practicable (but in no event later
than 60 days) following Executive’s termination.
(e) Without
Cause. This Agreement may be terminated by Employer without
Cause by giving notice at least thirty (30) days prior to the effective
termination date; provided that Employer pays
Executive each of the following:
(i) Provided
at least one year has elapsed since the date of Executive’s original employment
with Employer regardless of the date of this agreement, Employer shall pay
Executive severance payments (the “Cash Severance Payments”) in an amount equal
to the greater of Executive’s base annual salary in effect upon the date of
termination or the balance of base salary remaining in the then current term of
the Agreement. Subject to Section 4(i)(i) of the Agreement, such Cash
Severance Payments shall be paid in equal monthly installments to Executive
beginning in the month following Executive’s termination. In
addition, Employer shall pay to Executive all accrued base salary, all accrued
vacation time and any reasonable and necessary business expenses incurred by
Executive in connection with his duties, all to the date of termination and
payable in a lump sum, less applicable deductions and withholdings, as soon as
administratively practicable (but in no event later than 60 days) following
Executive’s termination.
(ii) If
and when the Company adopts a health insurance plan for its employees and
Executive is covered under such plan, provided that Executive timely elects
continuation coverage under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended (“COBRA”), Employer shall pay, on Executive’s behalf, the
portion of premiums of Executive’s group health insurance, including coverage
for Executive’s eligible dependents, that Employer paid immediately prior to
Executive’s separation of employment with Employer (“COBRA Payments”) for a
period of twelve (12) months (“COBRA Period”). Employer will pay such
COBRA Payments for Executive’s eligible dependents only for coverage for which
those dependents were enrolled immediately prior to the date of Executive’s
separation of employment. Executive will continue to be required to
pay that portion of the premium of Executive’s health coverage, including
coverage for Executive’s eligible dependents, that Executive was required to pay
as an active employee immediately prior to the date of Executive’s separation of
employment. For the balance of the period that Executive is entitled
to coverage under COBRA after the COBRA Period, if any, Executive shall be
entitled to maintain coverage for Executive and Executive’s eligible dependents
at Executive’s sole expense.
(iii) The
Cash Severance Payments and the COBRA Payments (if any) shall be paid so long as
Executive is not in breach of any term of this Agreement, including, without
limitation, Sections 5, 6, and 7 hereof. The Cash Severance Payments
and COBRA Payments (if any) made by Employer to, or on behalf of, Executive
pursuant to this Section 4(e) are conditioned on the Executive signing a
Severance Agreement and Release substantially in the form attached hereto as
Exhibit A.
- 4
-
(f) Material
Breach. This Agreement may be terminated by Executive for a
material breach by Employer of any of the terms of this Agreement, upon thirty
(30) days’ written notice specifying the breach, and failure of Employer to
either (i) cure or diligently commence to cure the breach within the 30-day
notice period, or (ii) dispute in good faith the existence of the material
breach. Following termination pursuant to this Section 4(f),
Employer shall pay to Executive Cash Severance Payments (as defined and
calculated in section 4(e)(i)). Subject to Section 4(i)(i) of the
Agreement, such severance payments shall be paid in equal monthly installments
to Executive beginning in the month following Executive’s
termination. Such severance payments shall be paid so long as
Executive is not in breach of any term of this Agreement, including, without
limitation, Sections 5, 6, and 7 hereof. In addition, Employer shall
pay to Executive all accrued base salary, all accrued vacation time and any
reasonable and necessary business expenses incurred by Executive in connection
with his duties, all to the date of termination and payable in a lump sum, less
applicable deductions and withholdings, as soon as administratively practicable
(but in no event later than 60 days) following Executive’s
termination. Severance payments made by Employer to Executive
pursuant to this Section 4(f) are conditioned on the Executive signing a
Confidential Severance Agreement and Release substantially in the form attached
hereto as Exhibit A.
(g) Resignation. This
Agreement may be terminated by Executive for any reason or no reason at all by
giving notice to Employer of Executive’s resignation at least sixty (60) days
prior to the effective resignation date. Following termination
pursuant to this Section 4(g), Employer’s only obligation to Executive shall be
to pay to Executive all accrued base salary, all accrued vacation time and any
reasonable and necessary business expenses incurred by Executive in connection
with his duties, all to the date of termination and payable in a lump sum, less
applicable deductions and withholdings.
(h) Termination Upon a Change of
Control. In the event of a Termination Upon a Change of
Control as defined in the Agreement Regarding Change In Control (“Change In
Control Agreement”) attached hereto as Exhibit B,
Employer’s obligation to Executive shall be as set forth in the Change In
Control Agreement.
(i) Section 409A.
(i) Anything
in this Agreement to the contrary notwithstanding, if on the date of termination
of Executive’s employment with Employer,
(A) Executive
would not have a separation from service within the meaning of Section
409A(a)(2)(A)(i) (“Separation From Service”) of the Internal Revenue Code of
1986, as amended (the “Code”), and as a result of such termination of employment
would receive any payment that, absent the application of this
Section 4(i)(i)(A), would be subject to additional tax imposed pursuant to
Section 409A(a) of the Code, then such payment shall instead be payable on the
date that is the earliest of (1) Executive’s Separation From Service, (2) the
date the Executive becomes disabled (within the meaning of Section 409A(a)(2)(C)
of the Code), (3) the Executive’s death, or (4) such other date as
will not result in such payment being subject to such additional tax; and
if
- 5
-
(B) Executive
is a specified employee within the meaning of Section 409A(a)(2)(B)(i) of the
Code and would receive any payment sooner than six months after Executive’s
Separation From Service that, absent the application of this Section 4(i)(i)(B),
would be subject to additional tax imposed pursuant to Section 409A(a) of the
Code as a result of such status as a specified employee, then such payment shall
instead be payable on the date that is the earliest of (1) six months after
Executive’s Separation From Service, (2) the Executive’s death, or
(3) such other date as will not result in such payment being subject to
such additional tax.
(ii) It
is the intention of the parties that payments or benefits payable under this
Agreement not be subject to the additional tax imposed pursuant to Section 409A
of the Code. To the extent such potential payments or benefits could
become subject to such Section, the parties shall cooperate to amend this
Agreement with the goal of giving Executive the economic benefits described
herein in a manner that does not result in such tax being imposed.
(iii) In
the event that a payment or benefit payable under this Agreement is subject to
the additional tax imposed by Section 409A of the Code, and Executive has not
been uncooperative in any attempts of the Employer to amend this Agreement to
avoid such additional tax, Employer shall (at Executive’s option) pay directly,
or reimburse Executive for such additional tax and any interest and penalty
related thereto (the “409A Amounts”) within 10 days of Executive’s submission to
Employer of the taxing authority’s determination of amounts due (which
determination must be submitted by Executive to Employer within 30 days of
receipt by Executive), and in the case of Executive’s payment, evidence of such
payment. At the same time as Employer’s payment or reimbursement,
Employer shall pay Executive a gross-up amount to cover income, excise, and
other applicable taxes on the 409A Amounts and on the gross-up amount (before
this further gross-up). For purposes of calculating the gross-up
amounts for taxes, the Executive shall be deemed to be taxed at the highest
marginal rate under all applicable local, state, federal, and foreign tax laws
for which the payment is made.
5. Proprietary
Information.
(a) Executive
represents and warrants to Employer that (i) Executive is not subject to any
limitation or agreement restricting employment by Employer or performance of
Executive’s duties hereunder, and (ii) neither Executive nor any third party has
any right or claim to Executive’s work produced on behalf of Employer or using
the property, personnel, or facilities of Employer. Executive shall
not misappropriate proprietary rights of Employer or any third
party.
(b) Executive
further agrees not to make, use, disclose to any third party, or permit to be
made, used, or disclosed, any records, plans, papers, articles, notes,
memoranda, reports, lists, records, drawings, sketches, specifications, software
programs, data, or other materials of any nature relating to any matter within
the scope of the business of Employer or concerning any of its dealings or
affairs (“Materials”), whether or not developed, in whole or in part, by
Executive and whether or not embodying Confidential Information (defined below),
otherwise than for the benefit of Employer. Executive shall not,
after the termination of employment, use, disclose, or permit to be used or
disclosed, any such Materials, it being agreed that all such Materials shall
be
- 6
-
and
remain the sole and exclusive property of Employer. Immediately upon
the termination of employment, Executive shall deliver all such Materials, and
all copies thereof, to Employer, at its designated office.
6. Non-Competition;
Non-Solicitation; Anti-Raiding; Non-Disparagement. Without the
prior written approval of the President or Chief Executive Officer of Employer,
Executive shall not, directly or indirectly, during his employment and until the
end of one (1) year after termination of employment (however such termination
occurs, including, without limitation, termination pursuant to Section 4(a),
4(b), 4(c), 4(e), 4(f), or 4(g)):
(a) Engage
in a “Competing Business’’ in the “Territory”, as those terms are defined below,
whether as a sole proprietor, partner, corporate officer, employee, director,
shareholder, consultant, agent, independent contractor, trustee, or in any other
manner by which Executive holds any beneficial interest in a Competing Business,
derives any income from any interest in a Competing Business, or provides any
service or assistance to a Competing Business. “Competing Business”
shall mean any business that mines or produces minerals which is competitive
with the business of Employer or any of its Affiliates (defined below), as
conducted or under development at any time during the term of
employment. “Affiliates” shall mean any entity controlled by or under
common control with Employer or any joint venture, partnership or other similar
entity to which Employer is a party. “Territory” shall mean anywhere
within a 50 mile radius of Caborca in the state of Sonora,
Mexico. The provisions of this Section 6 will not restrict
Executive from owning less than five percent of the outstanding stock of a
publicly-traded corporation engaged in a Competing Business;
(b) Acquire,
lease or otherwise obtain or control any beneficial, direct or indirect interest
in mineral rights, or other rights or lands necessary to develop, any mineral
property in which Employer or any of its Affiliates at the time of termination
as a beneficial interest or is actively seeking to acquire, or that is within a
distance of five (5) kilometers from any point on the outer perimeter of any
such property in which Employer or any of its affiliates has a beneficial
interest or that it is seeking to acquire;
(c) Conduct
any exploration or production activities or otherwise work on or in respect of
any mineral property within a distance of five (5) kilometers from any point on
the outer perimeter of any mineral property in which Employer or any of its
affiliates then has a beneficial interest or is actively seeking to
acquire;
(d) (i) Contact
or solicit, or direct or assist others to contact or solicit, for the purpose of
promoting any person’s or entity’s attempt to compete with Employer or any of
its Affiliates, in any business carried on by Employer or any of its Affiliates
during the period in which Executive was an employee of Employer, any suppliers,
independent contractors, vendors, or other business associates of Employer or
any of its Affiliates that were existing or identified prospective suppliers,
independent contractors, vendors, or business associates during such period, or
(ii) otherwise interfere in any way in the relationships between Employer
or any of its Affiliates and their suppliers, independent contractors, vendors,
and business associates;
- 7
-
(e) (i) Solicit,
offer employment to, otherwise attempt to hire, or assist in the hiring of any
employee or officer of Employer or any of its Affiliates; (ii) encourage,
induce, assist or assist others in inducing any such person to terminate his or
her employment with Employer or any of its Affiliates; or (iii) in any way
interfere with the relationship between Employer or any of its Affiliates and
their employees; or
(f) Make
any public statement or perform or do any other act prejudicial or injurious to
the reputation or goodwill of Employer or any of its Affiliates or otherwise
interfere with the business of Employer or any of its Affiliates.
7. Confidentiality.
(a) The
term “Confidential Information” shall include, but not be limited to, the whole
or any portion or phase of (i) any confidential, or proprietary or trade secret,
technical, business, marketing or financial information, whether pertaining to
(1) Employer or its Affiliates, (2) its or their suppliers, or (3) any third
party which Employer or its Affiliates is under an obligation to keep
confidential including, but not limited to, methods, know-how, techniques,
systems, processes, software programs, works of authorship, supplier lists,
projects, plans, and proposals, and (ii) any software programs and programming
prepared for Employer’s benefit whether or not developed, in whole or in part by
Executive. For purposes of this Agreement, “Confidential Information”
shall include, but shall not be limited to, strategies, analysis, concepts,
ideas, or plans; operating techniques; demographic and trade area information;
prospective site locations know-how; improvements; discoveries, developments;
designs, techniques, procedures; methods; machinery, devices; drawings;
specifications; forecasts; new products; research data, reports, or records;
marketing or business development plans, strategies, analysis, concepts or
ideas; contracts; general financial information about or proprietary to
Employer, including, but not limited to, unpublished financial statements,
budgets, projections, licenses, and costs; pricing; personnel information; and
any and all other trade secrets, trade dress, or proprietary information, and
all concepts or ideas in or reasonably related to Employer’s
business. All such Confidential Information is extremely valuable and
is intended to be kept secret to Employer; is the sole and exclusive property of
Employer or its Affiliates; and, is subject to the restrictive covenants set
forth herein. The term Confidential Information shall not include any
information generally available to the public or publicly disclosed by Employer
(other than by the act or omission of Executive), information disclosed to
Executive by a third party under no duty of confidentiality to Employer or its
Affiliates, or information required by law or court order to be disclosed by
Executive.
(b) Executive
shall not, without Employer’s prior written approval, use, disclose, or reveal
to any person or entity any of Employer’s Confidential Information, except as
required in the ordinary course of performing duties
hereunder. Executive shall not use or attempt to use any Confidential
Information in any manner which has the possibility of injuring or causing loss,
whether directly or indirectly, to Employer or any of its
Affiliates.
(c) In
the event that Executive’s employment with Employer is terminated for any reason
whatsoever, he shall return to Employer, promptly upon Employer’s written
request therefore, any documents, photographs, tapes, discs, memory devices, and
other property
- 8
-
containing
Confidential Information which were received by him during his employment,
without retaining copies thereof.
8. Acknowledgments. Executive
acknowledges that the covenants contained in Sections 5, 6, and 7, including
those related to duration, geographic scope, and the scope of prohibited
conduct, are reasonable and necessary to protect the legitimate interests of
Employer. He further acknowledges that the covenants contained in
Sections 5, 6, and 7 are designed, intended, and necessary to protect, and are
reasonably related to the protection of, Employer’s trade secrets, to which he
will be exposed and with which he will be entrusted. Specifically,
without limitation, Executive is entrusted with trade secrets regarding: the
strategic planning initiatives; business development plans; budgets; financial
information; management training; future business plans; and operational
strategies and procedures. Executive understands that any breach of
Sections 5 or 7 will also constitute a misappropriation of Employer’s
proprietary rights, and may constitute a theft of Employer’s trade secrets under
applicable local, state, and federal statutes, and will result in a claim for
injunctive relief, damages, and/or criminal sanctions and penalties against
Executive by Employer, and possibly others.
9. Forfeiture of Severance
Payments. If Executive breaches Sections 5, 6, or 7 of this
Agreement during the term that severance payments are made pursuant to Section
4(c), 4(e), or 4(f) of this Agreement, Executive shall pay back to Employer all
severance payments received through the date of such breach; provided, however,
that Executive shall be permitted to retain $10,000 (or, if the severance
payments received up to the date of the breach are less than
$10,000, then the total severance payments received up to the date
of the breach), which shall be deemed consideration for Executive's release
and waiver of any claims, causes of action, and demands of any kind arising
under the Age Discrimination in Employment Act, and the Older Workers
Benefit Protection Act, referenced in the Severance Agreement and Release
substantially in the form attached hereto as Exhibit B.
Nothing contained in this Section 9 shall be construed as prohibiting Employer
from pursuing any other remedies available to it in the event of the breach of
Sections 5, 6, or 7, including the equitable remedies set forth in Section
12.
10. Forfeiture of Profits
Related to Option Exercises. If Executive breaches Section 5,
6, or 7 of this Agreement, Employer shall have the right to repurchase any or
all shares of common stock of Employer purchased by the Executive upon the
exercise of options within the twelve (12)-month period immediately preceding
the breach at the exercise price of the option (the “Repurchase Amount”), or if
the Executive no longer holds such shares of common stock purchased on exercise
of options, the Executive shall pay to Employer an amount (the “Profit Amount”)
equal to the gross profits that Executive received or to be received on the sale
of such shares calculated as the aggregate sale price of such shares of common
stock less the exercise price. Employer may exercise this right
within 90 days of its discovery of a breach, by a written notice (“Forfeiture
Notice”) to Executive and, as the case may be: (i) if Executive has the shares,
Executive shall immediately deliver them to Employer and, thereafter, Employer
shall pay the Repurchase Amount to Executive within thirty (30) days by
certified or bank check or by wired funds; and (ii) If Executive no longer has
the shares, Executive shall pay the Profit Amount to Employer within thirty (30)
days of the date of the Forfeiture Notice. If the Executive has
transferred such shares in a transaction which is not a sale (including, for
example, a gift to a
- 9
-
family
member or entity), the Profit Amount payable by Executive to Employer shall be
an amount equal to the difference between the value of such shares on the date
of the Forfeiture Notice and the exercise price. Nothing contained in
this Section 10 shall be construed as prohibiting Employer from pursuing any
other remedies available to it in the event of the breach of Sections 5, 6, or
7, including the equitable remedies set forth in Section 12.
11. Non-exclusivity of
Rights. Amounts that are vested benefits or that Executive is
otherwise entitled to receive under any plan, policy or program of, or contract
or agreement with Employer at or subsequent to termination of employment
(however such termination occurs, including, without limitation, termination
pursuant to Section 4(a), 4(b), 4(c), 4(e), 4(f), 4(g), or 4(h)) shall be
payable in accordance with such plan, policy or program of, or any contract or
agreement except as explicitly modified by this Agreement.
12. Equitable
Remedies. The services to be rendered by Executive and the
Confidential Information entrusted to Executive as a result of his employment by
Employer are of a unique and special character, and any breach of Sections 5, 6,
or 7 will cause Employer immediate and irreparable injury and damage, for which
monetary relief would be inadequate or difficult to
quantify. Employer will be entitled to, in addition to all other
remedies available to it, injunctive relief and specific performance to prevent
a breach and to secure the enforcement of Sections 5, 6, or
7. Executive acknowledges that injunctive relief may be granted
immediately upon the commencement of any such action without notice to Executive
and in addition may recover monetary damages. In the event a court
requires posting of a bond, the parties agree to a maximum $5,000
bond. Executive further acknowledges that his duties under this
Agreement shall survive termination of his employment, whether the termination
is voluntary or involuntary, rightful or wrongful, and shall continue until
Employer consents in writing to the release of Executive’s obligations under
this Agreement. The parties further agree that the provisions of
Sections 5, 6, and 7 are separate from and independent of the remainder of this
Agreement and that these provisions are specifically enforceable by Employer
notwithstanding any claim made by Executive against Employer.
13. Attorney’s
Fees. In the event Executive breaches, or threatens to breach,
any provision of this Agreement, Executive acknowledges that he shall be solely
and fully responsible for all fees and costs, including without limitation, all
attorney’s fees and costs, incurred by Employer in enforcing this Agreement if
Employer is the prevailing party in any litigation.
14. Entire Agreement;
Amendments. This Agreement (including all exhibits) constitute
the entire understanding between the parties with respect to the subject matter
herein and therein, and they supersede any prior or contemporaneous
understandings or agreements. This Agreement may be amended,
supplemented, or terminated only by a written instrument duly executed by each
of the parties.
15. Headings. The
headings in this Agreement are for convenience of reference only and shall not
affect its interpretation. References to Sections are to Sections
hereof.
- 10
-
16. Gender;
Number. Words of gender may be read as masculine, feminine, or
neuter, as required by context. Words of number may be read as
singular or plural, as required by context.
17. Severability. The
covenants in this Agreement shall be construed as independent of one another,
and as obligations distinct from one another and any other contract between
Executive and Employer. If any provision of this Agreement is held
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability shall not affect any other provisions hereof. It is
the intention of the parties that in the event any provision is held illegal,
invalid, or unenforceable, that such provision be limited so as to effect the
intent of the parties to the fullest extent permitted by applicable
law. Any claim by Executive against Employer shall not constitute a
defense to enforcement by Employer of this Agreement.
18. Survival. The
provisions of Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 17, 18, 19, 20, 21,
22 and 23 shall survive the termination of this Agreement.
18. Notices. All
notices, demands, waivers, consents, approvals, or other communications required
hereunder shall be in writing and shall be deemed to have been given if
delivered personally, if sent by facsimile with confirmation of receipt, if sent
by certified or registered mail, postage prepaid, return receipt requested, or
if sent by same day or overnight courier service to the following
addresses:
If to Employer, to:
Capital Gold Corporation
00 Xxxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx
Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile:
(000) 000-0000
If to Executive, to:
Xxxxxxx X. Xxxxxxxx
Notice of
any change in any such address shall also be given in the manner set forth
above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice.
19. Waiver. The
failure of any party to insist upon strict performance of any of the terms or
conditions of this Agreement shall not constitute a waiver of any of such
party’s rights hereunder.
- 11
-
20. Assignment. Other
than as provided below, neither party may assign any rights or delegate any of
obligations hereunder without the prior written consent of the other party, and
such purported assignment or delegation shall be void; provided that Employer
may assign the Agreement to any entity that purchases the stock or assets of, or
merges with, Employer or any Affiliate. This Agreement binds, inures
to the benefit of, and is enforceable by the successors and permitted assigns of
the parties and does not confer any rights on any other persons or
entities.
21. Governing
Law. This Agreement shall be construed and enforced in
accordance with New York law except for any New York conflict-of-law principle
that might require the application of the laws of another
jurisdiction.
22. Submission to Jurisdiction:
Service: Waivers. With respect to any claim arising out of
this Agreement, each party hereto (a) irrevocably submits, for itself and its
property, to the jurisdiction of the state court located in the City and County
of New York, New York, the federal court located in New York, New York, and
appellate courts therefrom, (b) agrees that the venue for any suit, action or
proceeding arising out of or relating to this Agreement shall be exclusive to
and limited to such courts, and (c) irrevocably waives any objection it may have
at any time to the laying of venue of any suit, action or proceeding arising out
of or relating to this Agreement brought in any such court, irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum and further irrevocably waives the right
to object, with respect to such claim, suit, action or proceeding brought in any
such court that such court does not have jurisdiction over it. Each
party irrevocably consents to the service of process in any suit, action or
proceeding in any of the aforesaid courts by the mailing of copies of process to
the other party or parties hereto, by certified or registered mail at the
address specified in Section 19.
23. Counterparts. This
Agreement may be executed in counterparts, which together shall constitute a
single instrument.
[SIGNATURE
PAGE FOLLOWS]
- 12
-
IN WITNESS WHEREOF, the parties have
executed this Agreement effective as of the date first above
written.
EMPLOYER:
CAPITAL
GOLD CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx
X. Xxxxxxxxx, Executive Vice President
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
- 13
-
EXHIBIT
A
FORM
OF
SEVERANCE
AGREEMENT AND RELEASE
This
SEVERANCE AGREEMENT AND RELEASE (this “Agreement”) is made between (i)
____________________ (“Employee”) and (ii) CAPITAL GOLD CORPORATION, a
Delaware corporation (the “Company”). Employee and the Company are
referred to collectively as the “Parties” and individually as a
“Party.”
RECITALS
WHEREAS,
Employee’s employment with the Company ended effective ___________;
WHEREAS,
the Parties wish to resolve fully and finally any potential disputes regarding
Employee’s employment with the Company and any other potential disputes between
the Parties; and
WHEREAS,
in order to accomplish this end, the Parties are willing to enter into this
Agreement.
NOW
THEREFORE, in consideration of the mutual promises and undertakings contained
herein, the sufficiency of which is acknowledged by the Parties, the Parties to
this Agreement agree as follows:
TERMS
1. Separation and Effective
Date. Employee’s employment with the Company ended on
_________________________. This Agreement shall become effective (the
“Effective Date”) on the eighth day after Employee’s execution of this
Agreement, provided that employee has not revoked Employee’s acceptance pursuant
to Section 6(g) below.
2. Severance
Payments.
(a) After
the expiration of the Effective Date, and on the express condition that Employee
has not revoked this Agreement, the Company will pay Employee severance payments
in an amount and in the manner set forth in Section 4 of Employee’s Employment
Agreement effective January 1, 2009 (the “Employment Agreement”), less
applicable withholdings and deductions (“Severance Payments”). The
Severance Payments will be mailed to Employee or direct deposited to an account
designated by Employee.
(b) Reporting
of and withholding on any Severance Payment under this Section 2 for tax
purposes shall be at the discretion of the Company in conformance with
applicable tax laws. If a claim is made against the Company for any
additional tax or withholding in connection with or arising out of the Severance
Payments pursuant to Section 2(a), Employee shall pay any such
claim
within thirty (30) days of being notified by the Company and agrees to indemnify
the Company and hold it harmless against such claims, including but not limited
to any taxes, attorneys’ fees, penalties or interest, which are or become due
from the Company.
3. General
Release.
(a) Employee,
for himself and for his affiliates, successors, heirs, subrogees, assigns,
principals, agents, partners, employees, associates, attorneys, and
representatives, voluntarily, knowingly and intentionally releases and
discharges the Company and its predecessors, successors, parents, subsidiaries,
affiliates, and assigns and each of their respective officers, directors,
principals, shareholders, agents, attorneys, board members, and employees from
any and all claims, actions, liabilities, demands, rights, damages, costs,
expenses, and attorneys’ fees (including but not limited to any claim of
entitlement for attorneys’ fees under any contract, statute, or rule of law
allowing a prevailing party or plaintiff to recover attorneys’ fees), of every
kind and description from the beginning of time through the Effective Date (the
“Released Claims”).
(b) The
Released Claims include but are not be limited to those which arise out of,
relate to, or are based upon: (i) Employee’s employment with the Company or the
termination thereof; (ii) statements, acts, or omissions by the Parties
whether in their individual or representative capacities; (iii) express or
implied agreements between the Parties (except as provided herein) and claims
under any severance plan; (iv) any stock or stock option grant, agreement,
or plan; (v) all federal, state, and municipal statutes, ordinances, and
regulations, including, but not limited to, claims of discrimination based on
race, national origin, sex, disability, whistleblower status, public policy, or
any other characteristic of Employee under the Age Discrimination in Employment
Act, the Older Workers Benefit Protection Act, the Americans with Disabilities
Act, the Fair Labor Standards Act, the Equal Pay Act, Title VII of the Civil
Rights Act of 1964 (as amended), the Employee Retirement Income Security Act of
1974, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining
Notification Act, or any other federal, state, or municipal law prohibiting
discrimination or termination for any reason; (vi) state and federal common
law; and (vii) any claim which was or could have been raised by Employee,
including any claim that this Agreement was fraudulently induced.
4. Unknown
Facts. This Agreement includes claims of every nature and
kind, known or unknown, suspected or unsuspected. Employee hereby
acknowledges that he may hereafter discover facts different from, or in addition
to, those which he now knows or believes to be true with respect to this
Agreement, and he agrees that this Agreement and the release contained herein
shall be and remain effective in all respects, notwithstanding such different or
additional facts or the discovery thereof.
5. No Admission of
Liability. The Parties agree that nothing contained herein,
and no action taken by any Party hereto with regard to this Agreement, shall be
construed as an admission by any Party of liability or of any fact that might
give rise to liability for any purpose whatsoever.
A-2
6. Warranties. Employee
warrants and represents as follows:
a. He
has read this Agreement, and he agrees to the conditions and obligations set
forth in it.
b. He
voluntarily executes this Agreement after having been advised to consult with
legal counsel and after having had opportunity to consult with legal counsel and
without being pressured or influenced by any statement or representation or
omission of any person acting on behalf of the Company including, without
limitation, the officers, directors, board members, committee members,
employees, agents, and attorneys for the Company.
c. He
has no knowledge of the existence of any lawsuit, charge, or proceeding against
the Company or any of its officers, directors, board members, committee members,
employees, or agents arising out of or otherwise connected with any of the
matters herein released.
d. Prior
to Employee’s execution of this Agreement, he has not used or disclosed any
information in a manner that would be a violation of Sections 7 or 8 set
forth below if such use or disclosure were to be made after the execution of
this Agreement.
e. He
has full and complete legal capacity to enter into this Agreement.
f. He
has had at least twenty-one (21) days in which to consider the terms of this
Agreement. In the event that Employee executes this Agreement in less
time, it is with the full understanding that he had the full twenty-one (21)
days if he so desired and that he was not pressured by the Company or any of its
representatives or agents to take less time to consider the
Agreement. In such event, Employee expressly intends such execution
to be a waiver of any right he had to review the Agreement for a full twenty-one
(21) days.
g. He
understands that this Agreement waives any claim he may have under the Age
Discrimination in Employment Act. Employee may revoke this Agreement
for up to seven days following its execution, and this Agreement shall not
become enforceable and effective until seven days after such
execution. If Employee chooses to revoke this Agreement, he must
provide written notice to the President and Chief Executive Officer of the
Company by hand delivery and by facsimile within seven calendar days of
Employee’s execution of this Agreement. If Employee does not revoke
within the seven-day period, the right to revoke is lost.
h. He
admits, acknowledges, and agrees that he is not otherwise entitled to the
Severance Payments set forth in Section 2, and that such Severance Payments
are good and sufficient consideration for this Agreement. He admits,
acknowledges, and agrees that he has been fully and finally paid or provided all
wages, compensation, vacation, expenses (including, but not limited to,
relocation and travel expenses), bonuses, stock, stock options, or other
benefits from the Company which are or could be due to Employee from the
Company.
A-3
i. He
has not taken any action or made any statement adverse to the Company’s
interests prior to signing this Agreement.
7. Confidential
Information. Except as herein provided, all discussions
regarding this Agreement, including, but not limited to, the amount of
consideration, offers, counteroffers or other terms or conditions of the
negotiations, shall be kept confidential by Employee from all persons and
entities other than the Parties to this Agreement. Employee may
disclose the amount received in consideration of the Agreement only if necessary
(i) for the limited purpose of making disclosures required by law to agents
of the local, state, or federal governments; (ii) for the purpose of
enforcing any term of this Agreement; or (iii) in response to compulsory
process, and only then after giving the Company ten days advance notice of the
compulsory process and affording the Company the opportunity to obtain any
necessary or appropriate protective orders. Otherwise, in response to
inquiries about this matter, Employee shall state, “My employment with the
Company has ended,” and nothing more. Employee hereby expressly
acknowledges that any breach of this Section 7 shall result in a claim for
injunctive relief, damages and/or criminal sanctions and penalties against
Employee by the Company, and possibly others.
8. Non-Disparagement. Employee
agrees not to make to any person any statement that disparages the Company or
reflects negatively on the Company, including, but not limited to, statements
regarding the Company’s financial condition, employment practices, or its
officers, directors, board members, employees, affiliates, attorneys, customers,
or vendors.
9. Return of Company Property
and Information. Employee represents and warrants that, prior
to his execution of this Agreement, he will return to the Company any and all
property, documents, and files, including any documents (in any recorded media,
such as papers, computer disks, copies, photographs, maps, transparencies, and
microfiche) that relate in any way to the Company or the Company’s business
whether or not developed, produced, or conceived, in whole or in part, by
Employee during the term of his employment with the Company. Employee
agrees that, to the extent that he possesses any files, data, or information
relating in any way to the Company or the Company’s business on any personal
computer, he will delete those files, data, or information (and will retain no
copies in any form). Employee also will return any Company tools,
equipment, calling cards, credit cards, access cards or keys, any keys to any
filing cabinets, vehicles, vehicle keys, and all other Company property in any
form prior to the date he executes this Agreement. Employee hereby
expressly acknowledges that the foregoing steps are necessary to protect the
Company’s proprietary interests in its trade secrets, confidential information,
and copyrights, and that Employee is not entitled to use, disclose, or otherwise
benefit from the Company’s proprietary interests. Employee
understands that any breach of this Section 9 will also constitute a
misappropriation of the Company’s proprietary rights, and may constitute a theft
of the Company’s trade secrets under applicable local, state, and federal
statutes, and will result in a claim for injunctive relief, damages, and/or
criminal sanctions and penalties against Employee by the Company, and possibly
others.
10. Severability. If
any provision of this Agreement is held illegal, invalid, or unenforceable, such
holding shall not affect any other provisions hereof. In the event
any provision is held illegal, invalid, or unenforceable, such provision shall
be limited so as to effect
A-4
the
intent of the Parties to the fullest extent permitted by applicable
law. Any claim by Employee against the Company shall not constitute a
defense to enforcement by the Company.
11. Assignment. The
Company may assign its rights under this Agreement. Employee cannot
assign his rights under this Agreement without the written consent of the
Company.
12. Enforcement. The
releases contained herein do not release any claims for enforcement of the
terms, conditions, or warranties contained in this Agreement. The
Parties shall be free to pursue any remedies available to them to enforce this
Agreement.
13. Survival of Employment
Agreement Terms and Agreement Regarding Change In
Control. This Agreement in no way affects or alters the
surviving provisions set forth in Section 18 of the Employment Agreement, or the
Agreement Regarding Change In Control effective January 1, 2009 between the
Employer and the Employee (“CC Agreement”). Those provisions and the
CC Agreement are hereby incorporated by reference and serve as part of the
consideration for this Agreement. Employee agrees to continue to
abide by the surviving provisions set forth in Section 18 of the Employment
Agreement to the extent that those provisions impose any obligation upon
Employee.
14. Entire
Agreement. This Agreement, the surviving provisions set forth
in Section 18 of the Employment Agreement and the CC Agreement constitute the
entire agreement between the Parties with respect to the subject matter
contained herein. This Agreement supersedes any and all prior oral or
written promises or agreements between the Parties, except as otherwise provided
herein. Employee acknowledges that he has not relied on any promise,
representation, or statement other than those set forth in this
Agreement. This Agreement cannot be modified except in writing signed
by all Parties.
15. Venue and Applicable
Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of New York, without regard to its
conflicts of law provisions. Venue and jurisdiction shall be in the
federal or state courts in New York, New York.
16. Counterparts. This
Agreement may be executed in counterparts, which together shall constitute a
single instrument.
[SIGNATURE
PAGE FOLLOWS]
A-5
IN
WITNESS WHEREOF, the Parties have executed this Agreement on the dates written
below.
|
EMPLOYEE:
|
|||
|
Name
|
Date
|
||
|
THE
COMPANY:
|
|||
|
CAPITAL
GOLD CORPORATION
|
|||
| By: |
|
||
|
Name:
|
Date
|
||
|
Title:
|
A-6
EXHIBIT
B
AGREEMENT
REGARDING
CHANGE
IN CONTROL
THIS
AGREEMENT (“Agreement”), is made and entered into as of the 1st day of
January, 2009 (the “Effective Date”) by and between Capital Gold Corporation
(the “Company”) and Xxxxxxx X. Xxxxxxxx (the “Executive”)
WITNESSETH
THAT:
WHEREAS, the Company considers it
essential to the best interests of its stockholders to xxxxxx the continuous
engagement of key management personnel, and the Board of Directors of the
Company (the “Board”) recognizes that, as is the case with many publicly held
corporations, a change in control might occur and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Board has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company’s management, including the
Executive, to their engagement without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change in control of
the Company;
NOW, THEREFORE, to induce the Executive
to remain engaged by the Company and in consideration of the premises and mutual
covenants set forth herein, IT IS HEREBY AGREED by and between the parties as
follows:
1. AGREEMENT
TERM. The initial “Agreement Term” shall begin on the Effective Date
and shall continue through December 31, 2011. As of December 31,
2011, and as of each December 31 thereafter, the Agreement Term shall extend
automatically for a one year period unless the Company gives notice to the
Executive prior to the date of such extension that the Agreement Term will not
be extended. Notwithstanding the foregoing, if a Change in Control
(as defined in Section 7 below), occurs during the Agreement Term, the Agreement
Term shall continue through and terminate on the first anniversary of the date
on which the Change in Control occurs.
2. ENTITLEMENT
TO CHANGE IN CONTROL BENEFITS. The Executive shall be entitled to the
Change in Control Benefits described in Section 3 hereof if the Executive’s
engagement by the Company is terminated during the Agreement Term but after a
Change in Control (i) by the Company for any reason other than Permanent
Disability or Cause, (ii) by the Executive for Good Reason or (iii) by the
Executive for any reason during the 30-day period commencing on the first date
which is six months after the date of the Change in Control. For
purposes of this Agreement:
(a) A
termination of the Executive’s engagement shall be treated as a termination by
reason of “Permanent Disability” only if, due to a mental or physical
disability, the Executive is absent from the performance of services for the
Company for a period of at least twelve consecutive months and fails to return
to the performance of services within 30 days after receipt of a written demand
by the Company to do so.
(b) The
term “Cause” shall mean the willful engaging by the Executive in illegal conduct
or gross misconduct which is demonstrably and materially injurious to the
Company. For purposes of this Agreement, no act, or failure to act,
on the Executive’s part shall be deemed “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive’s action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until the Company delivers
to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the Executive was guilty of conduct set forth above and specifying the
particulars thereof in detail.
(c) The
term “Good Reason” shall mean the occurrence of any of the following
circumstances without the Executive’s express written consent:
(i) a significant adverse change in the
nature, scope or status of the Executive’s position, authorities or services
from those in effect immediately prior to the Change in Control, including,
without limitation, if the Executive was, immediately prior to the Change in
Control, an executive officer of a public company, the Executive ceasing to be
an executive officer of a public company;
(ii) the failure by the Company to pay
the Executive any portion of the Executive’s current compensation, or to pay the
Executive any portion of any installment of deferred compensation under any
deferred compensation program of the Company, within seven days of the date such
compensation is due;
(iii) a reduction in the Executive’s
annual base compensation (or a material change in the frequency of payment) as
in effect immediately prior to the Change in Control as the same may be
increased from time to time;
(iv) the
failure by the Company to award the Executive an annual bonus in any year which
is at least equal to the annual bonus awarded to the Executive for the year
immediately preceding the year of the Change in Control;
(v) the
failure by the Company to award the Executive equity-based incentive
compensation (such as stock options, shares of restricted stock, or other
equity-based compensation) on a periodic basis consistent with the Company’s
practices with respect to timing, value and terms prior to the Change in
Control;
B-2
(vi) the
failure of the Company to award the Executive incentive compensation of any
nature based on attained milestones when such milestones are
attained.
(vii) the
failure of the Company to obtain a satisfactory agreement from any successor to
the Company to assume and agree to perform this Agreement as contemplated by
Section 14.
For
purposes of any determination regarding the existence of Good Reason, any good
faith determination by the Executive that Good Reason exists shall be
conclusive.
3.
CHANGE IN CONTROL BENEFITS. In the event of a termination of
engagement entitling the Executive to benefits in accordance with Section 2, the
Executive shall receive the following:
(a) The
Executive shall be entitled to a lump sum payment in cash no later than twenty
(20) business days after the Executive’s date of termination equal to the sum
of:
(i) an
amount equal to three times the Executive’s base salary in effect on the date of
the Change in Control or, or if greater, as in effect immediately prior to the
date of termination; plus
(ii) an
amount equal to three times the Executive’s bonus award for the year immediately
preceding the year of the Change in Control.
The amount payable under this paragraph
(d) shall be inclusive of the amounts, if any, to which the Executive would
otherwise be entitled or by law and shall be in addition to (and not inclusive
of) any amount payable under any written agreement(s) directly between the
Executive and the Company or any of its subsidiaries.
(b) All
unvested Company options shall immediately become vested, and any exercise must
occur no later than March 15 of the calendar year after the date of
termination.
(c) The
Company shall provide the Executive with and, at the Executive’s option,
directly pay for or reimburse the Executive for outplacement services and tax
and financial counseling suitable to the Executive’s position, from providers
selected by the Executive for services through the end of the second taxable
year of Executive after the taxable year of Executive’s separation from service
(within the meaning of Section 409A(a)(2)(A)(i) of the Code) with the Company,
or, if earlier, the date on which the Executive becomes employed by another
employer. In the event the Executive has paid for any such services,
the Employer shall reimburse the Executive for such payments within 10 days of
submission to the Employer of a copy of the provider’s invoice for services and
evidence of payment. Any request for reimbursement for such expenses
shall be submitted no later than 30 days before the end of the third taxable
year of the Executive following the taxable year of the Executive in which the
separation from service occurred.
B-3
4. MITIGATION. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other engagement or otherwise. The
Company shall not be entitled to set off against the amounts payable to the
Executive under this Agreement any amounts owed to the Company by the Executive,
any amounts earned by the Executive in other engagement after the Executive’s
termination of engagement with the Company, or any amounts which might have been
earned by the Executive in other engagement had the Executive sought such other
engagement.
5. MAKE-WHOLE
PAYMENTS. If any payment or benefit to which the Executive (or any
person on account of the Executive) is entitled, whether under this Agreement or
otherwise, in connection with a Change in Control or the Executive’s termination
of engagement (a “Payment”) constitutes a “parachute payment” within the meaning
of section 280G of the Code, and as a result thereof the Executive is subject to
a tax under section 4999 of the Code, or any successor thereto, (an “Excise
Tax”), the Company shall pay to the Executive an additional amount (the
“Make-Whole Amount”) which is intended to make the Executive whole for such
Excise Tax. The Make-Whole Amount shall be equal to (i) the amount of
the Excise Tax, plus (ii) the aggregate amount of any interest, penalties, fines
or additions to any tax which are imposed in connection with the imposition of
such Excise Tax, plus (iii) all income, excise and other applicable taxes
imposed on the Executive under the laws of any Federal, state or local
government or taxing authority by reason of the payments required under clauses
(i) and (ii) and this clause (iii).
(a) For
purposes of determining the Make-Whole Amount, the Executive shall be deemed to
be taxed at the highest marginal rate under all applicable local, state, federal
and foreign income tax laws for the year in which the Make-Whole Amount is
paid. The Make-Whole Amount payable with respect to an Excise Tax
shall be paid by the Company coincident with the Payment with respect to which
such Excise Tax relates.
(b) All
calculations under this Section 5 shall be made initially by the Company and the
Company shall provide prompt written notice thereof to the Executive to enable
the Executive to timely file all applicable tax returns. Upon request
of the Executive, the Company shall provide the Executive with sufficient tax
and compensation data to enable the Executive or the Executive’s tax advisor to
independently make the calculations described in subparagraph (a) above and the
Company shall, at the Executive’s option, pay the Executive’s advisor directly
or reimburse the Executive for reasonable fees and expenses incurred for any
such verification. Any payment or reimbursement shall be made within
10 days of submission of the service provider’s invoice to the Employer, and in
the case of reimbursement, evidence of payment. Executive shall be
submit a copy of the service provider’s invoice for such services to the
Employer within 60 days of its receipt by the Executive.
(c) If
the Executive gives written notice to the Company of any objection to the
results of the Company’s calculations within 60 days of the Executive’s receipt
of written notice thereof, the dispute shall be referred for determination to
independent tax counsel selected by the Company and reasonably acceptable to the
Executive (“Tax Counsel”). The Company shall pay all fees and
expenses of such Tax Counsel. Pending such determination by Tax
Counsel, the Company shall pay the Executive the Make-Whole Amount as determined
by it in good faith.
B-4
The
Company shall pay the Executive any additional amount determined by Tax Counsel
to be due under this Section 5 (together with interest thereon at a rate equal
to 120% of the Federal short-term rate determined under section 1274(d) of the
Code) within 10 days after such determination.
(d) The
determination by Tax Counsel shall be conclusive and binding upon all parties
unless the Internal Revenue Service, a court of competent jurisdiction, or such
other duly empowered governmental body or agency (a “Tax Authority”) determines
that the Executive owes a greater or lesser amount of Excise Tax with respect to
any Payment than the amount determined by Tax Counsel.
(e) If
a Taxing Authority makes a claim against the Executive which, if successful,
would require the Company to make a payment under this Section 5, the Executive
agrees to contest the claim with counsel reasonably satisfactory to the Company,
on request of the Company subject to the following conditions:
(i) The Executive shall notify the
Company of any such claim within 10 days of becoming aware
thereof. In the event that the Company desires the claim to be
contested, it shall promptly (but in no event more than 30 days after the notice
from the Executive or such shorter time as the Taxing Authority may specify for
responding to such claim) request the Executive to contest the
claim. The Executive shall not make any payment of any tax which is
the subject of the claim before the Executive has given the notice or during the
30-day period thereafter unless the Executive receives written instructions from
the Company to make such payment together with an advance of funds sufficient to
make the requested payment plus any amounts payable under this Section 5
determined as if such advance were an Excise Tax, in which case the Executive
will act promptly in accordance with such instructions.
(ii) If the Company so requests, the
Executive will contest the claim by either paying the tax claimed and suing for
a refund in the appropriate court or contesting the claim in the United States
Tax Court or other appropriate court, as directed by the Company; PROVIDED,
HOWEVER, that any request by the Company for the Executive to pay the tax shall
be accompanied by an advance from the Company to the Executive of funds
sufficient to make the requested payment plus any amounts payable under this
Section 5 determined as if such advance were an Excise Tax. If
directed by the Company in writing the Executive will take all action necessary
to compromise or settle the claim, but in no event will the Executive compromise
or settle the claim or cease to contest the claim without the written consent of
the Company; PROVIDED, HOWEVER, that the Executive may take any such action if
the Executive waives in writing the Executive’s right to a payment under this
Section 5 for any amounts payable in connection with such claim. The
Executive agrees to cooperate in good faith with the Company in contesting the
claim and to comply with any reasonable request from the Company concerning the
contest of the claim, including the pursuit of administrative remedies, the
appropriate forum for any judicial proceedings, and the legal basis for
contesting the claim. Upon request of the Company, the Executive
shall take appropriate appeals of any judgment or decision that would require
the Company make a payment under this Section 5. Provided that
Executive is in compliance with the provisions this section, the Company shall
be liable for and indemnify the Executive against any loss in connection with,
and all costs and expenses,
B-5
including
attorneys’ fees, which may be incurred as a result of, contesting the claim, and
shall provide to the Executive within 30 days after each written request
therefor by the Executive cash advances or reimbursement for all such costs and
expenses actually incurred or reasonably expected to be incurred by the
Executive as a result of contesting the claim.
(f) Should
a Tax Authority finally determine that an additional Excise Tax is owed, then
the Company shall pay an additional Make-Whole Amount to the Executive in a
manner consistent with this Section 5 with respect to any additional Excise Tax
and any assessed interest, fines, or penalties. If any Excise Tax as
calculated by the Company or Tax Counsel, as the case may be, is finally
determined by a Tax Authority to exceed the amount required to be paid under
applicable law, then the Executive shall repay such excess to the Company within
30 days of such determination; provided that such repayment shall be reduced by
the amount of any taxes paid by the Executive on such excess which is not offset
by the tax benefit attributable to the repayment.
6. TERMINATION
DURING POTENTIAL CHANGE IN CONTROL. If a Potential Change in Control
(as defined in Section 8) occurs during the Agreement Term, and the Company
terminates the Executive’s engagement for reasons other than Permanent
Disability or Cause during such Potential Change in Control, the Executive shall
be entitled to receive the benefits that the Executive would have received under
Section 3, such benefits to be calculated based upon the Executive’s
compensation prior to the actual termination of engagement but paid within 20
business days of the date of such termination.
7. CHANGE
IN CONTROL. For purposes of this Agreement, a “Change in Control”
shall be deemed to have occurred on the earliest of the following
dates:
(a) the
date any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company’s then outstanding securities, excluding any Person who becomes
such a Beneficial Owner in connection with a transaction described in clause (i)
of paragraph (c) below; or
(b) the
date on which the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company’s stockholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; or
(c) the
date on which there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other corporation or
other entity, other than (i) a merger or consolidation (A) immediately following
which the individuals who comprise the Board immediately prior thereto
constitute at least a majority of the board of directors of the Company, the
entity surviving such merger or consolidation or, if the
Company
B-6
or the
entity surviving such merger or consolidation is then a subsidiary, the ultimate
parent thereof and (B) which results in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company, at least
50% of the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the Company’s
then outstanding securities; or
(d) the
date on which the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company, in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Notwithstanding
the foregoing, a “Change in Control” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
For
purposes of this Agreement: “Affiliate” shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act; “Beneficial Owner” shall
have the meaning set forth in Rule 13d-3 under the Exchange Act; “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended from time to time;
and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company.
8. POTENTIAL
CHANGE IN CONTROL. A “Potential Change in Control” shall exist during
any period in which the circumstances described in paragraphs (a), (b), (c) or
(d), below, exist (provided, however, that a Potential Change in Control shall
cease to exist not later than the occurrence of a Change in
Control):
B-7
(a) The
Company enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control, provided that a Potential Change in Control
described in this paragraph (a) shall cease to exist upon the expiration or
other termination of all such agreements;
(b) Any
Person (without regard to the exclusions set forth in subsections (i) through
(iv) of such definition) publicly announces an intention to take or to consider
taking actions the consummation of which would constitute a Change in Control;
provided that a Potential Change in Control described in this paragraph (b)
shall cease to exist upon the withdrawal of such intention, or upon a
determination by the Board that there is no reasonable chance that such actions
would be consummated;
(c) Any
Person becomes the Beneficial Owner, directly or indirectly, of securities of
the Company representing 20% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the Company’s then
outstanding securities; or
(d) The
Board adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control exists; provided that a Potential Change in Control
described in this paragraph (d) shall cease to exist upon a determination by the
Board that the reasons that gave rise to the resolution providing for the
existence of a Potential Change in Control have expired or no longer
exist.
9. NONALIENATION. The
interests of the Executive under this Agreement are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Executive or the Executive’s
beneficiary.
10. AMENDMENT. This
Agreement may be amended or canceled only by mutual agreement of the parties in
writing without the consent of any other person. So long as the
Executive lives, no person, other than the parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
11. APPLICABLE
LAW. The provisions of this Agreement shall be construed in
accordance with the laws of the State of New York, without regard to the
conflict of law provisions of any state.
12. SEVERABILITY. The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable
provision were omitted (but only to the extent that such provision cannot be
appropriately reformed or modified).
13. WAIVER
OF BREACH. No waiver by any party hereto of a breach of any provision
of this Agreement by any other party, or of compliance with any condition or
provision of this Agreement to be performed by such other party, will operate or
be construed as a waiver of any subsequent breach by such other party of any
similar or dissimilar provisions and conditions at the same or any prior or
subsequent time. The failure of any party hereto to
take
B-8
any
action by reason of such breach will not deprive such party of the right to take
action at any time while such breach continues.
14. SUCCESSORS,
ASSUMPTION OF CONTRACT. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the
Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no succession had
taken place. This Agreement is personal to the Executive and may not
be assigned by the Executive without the written consent of the
Company. However, to the extent that rights or benefits under this
Agreement otherwise survive the Executive’s death, the Executive’s heirs and
estate shall succeed to such rights and benefits pursuant to the Executive’s
will or the laws of descent and distribution; provided that the Executive shall
have the right at any time and from time to time, by notice delivered to the
Company, to designate or to change the beneficiary or beneficiaries with respect
to such benefits.
15. NOTICES. Notices
and all other communications provided for in this Agreement shall be in writing
and shall be delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid (provided that international mail
shall be sent via overnight or two-day delivery), or sent by facsimile or
prepaid overnight courier to the parties at the addresses set forth
below. Such notices, demands, claims and other communications shall
be deemed given:
(a) in
the case of delivery by overnight service with guaranteed next day delivery, the
next day or the day designated for delivery;
(b) in
the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
(c) in
the case of facsimile, the date upon which the transmitting party received
confirmation of receipt by facsimile, telephone or otherwise;
provided,
however, that in no event shall any such communications be deemed to be given
later than the date they are actually received. Communications that
are to be delivered by the U.S. mail or by overnight service or
two-day delivery service are to be delivered to the addresses set forth
below:
to the
Company:
Capital
Gold Corporation
00 Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
B-9
with a
copy (which shall not constitute notice) to:
Chief
Financial Officer
Capital
Gold Corporation
00 Xxxxxx
Xxxxxx
00xx
Xxxxx
Xxx Xxxx,
XX 00000
or to the
Executive:
Xxxxxxx
X. Xxxxxxxx
Each
party, by written notice furnished to the other party, may modify the applicable
delivery address, except that notice of change of address shall be effective
only upon receipt.
16. LEGAL
AND ENFORCEMENT COSTS. The provisions of this Section 16 shall apply
if it becomes necessary or desirable for the Executive to retain legal counsel
or incur other costs and expenses in connection with enforcing any and all
rights under this Agreement or any other compensation plan maintained by the
Company:
(a) The
Executive shall be entitled to recover from the Company reasonable attorneys’
fees, costs and expenses incurred in connection with such enforcement or
defense.
(b) Payments
required under this Section 16 shall be made by the Company to the Executive (or
directly to the Executive’s attorney) promptly following submission to the
Company of appropriate documentation evidencing the incurrence of such
attorneys’ fees, costs, and expenses.
(c) The
Executive shall be entitled to select legal counsel; provided, however, that
such right of selection shall not affect the requirement that any costs and
expenses reimbursable under this Section 16 be reasonable.
(d) The
Executive’s rights to payments under this Section 16 shall not be affected by
the final outcome of any dispute with the Company.
17. SURVIVAL
OF AGREEMENT. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of the Executive’s engagement with the
Company.
18. ENTIRE
AGREEMENT. Except as otherwise provided herein, this Agreement
constitutes the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior or contemporaneous agreements, between
the parties relating to the subject matter hereof; provided, however, that
nothing in this Agreement shall be construed to limit any policy or agreement
that is otherwise applicable relating to confidentiality, rights to
inventions,
B-10
copyrightable
material, business and/or technical information, trade secrets, solicitation of
employees, interference with relationships with other businesses, competition,
and other similar policies or agreement for the protection of the business and
operations of the Company and the subsidiaries.
19. COUNTERPARTS. This
Agreement may be executed in two or more counterparts, any one of which shall be
deemed the original without reference to the others.
IN
WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has
caused these presents to be executed in its name and on its behalf, and its
corporate seal to be hereunto affixed on this 21st day of
January, 2009, all as of the Effective Date.
/s/
Xxxxxxx X. Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx
CAPITAL
GOLD CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx
X. Xxxxxxxxx,
Executive
Vice President
ATTEST:
/s/
Xxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx
Xxxxxxx, CFO
B-11
