SECOND AMENDED ENGAGEMENT AGREEMENT
Exhibit
10.13
SECOND
AMENDED
AGREEMENT
effective as of the 1st
day of
May, 2007 between Capital Gold Corporation, a Delaware Corporation having an
office at 00 Xxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000 (hereinafter referred to as the “CORPORATION”), and
Xxxxxxxxxxx X. Xxxxxxx, an individual residing at 0000 Xxxxxxx Xxxx, Xxxxxxx,
XX
00000 (hereinafter referred to as “XXXXXXX”).
This
agreement (the “Agreement”) amends, supersedes and replaces the engagement
agreement by and between the CORPORATION and XXXXXXX originally dated March
1,
2006 as subsequently amended and superseded on September 1, 2006.
IN
CONSIDERATION OF the
premises and mutual covenants and conditions herein contained, the CORPORATION
and XXXXXXX hereby agree as follows:
1. Engagement.
The
CORPORATION agrees to engage XXXXXXX, and XXXXXXX agrees to serve the
CORPORATION as the Chief Financial Officer for the CORPORATION upon the terms
and conditions hereafter set forth. The duties of XXXXXXX shall be consistent
with his position as Chief Financial Officer, and shall be those duties
customarily performed by an executive of his experience.
2. Term.
This
Agreement becomes effective upon execution by all parties and shall expire
on
August 31, 2009 (the Engagement Period”). Subject to the provisions of Article 7
herein, the Engagement 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 Engagement Period.
3. Compensation
And Other Benefits.
(a) Base
Fee.
For his
services to the CORPORATION during the TERM, the CORPORATION shall pay XXXXXXX
a
fee at the annual rate of One Hundred Seventy-Five Thousand ($175,000) Dollars
(The “Annual Fee”) payable in equal monthly installments.
(b) Bonus.
XXXXXXX
shall be eligible for any annual incentive bonus opportunity offered by the
CORPORATION to executive officers of the CORPORATION. In the event of any
conflict between this Agreement and any incentive bonus plan adopted by the
CORPORATION 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 the CORPORATION and shall be within the sole discretion
of the CORPORATION. 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 the CORPORATION’s
fiscal year end for which the bonus is earned. If XXXXXXX’x engagement
terminates, voluntarily or involuntarily, prior to the last day of the fiscal
year for which the bonus applies, XXXXXXX 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. XXXXXXX hereby expressly
forfeits and waives any such unpaid bonus.
(c) As
an
independent contractor, XXXXXXX will not participate in the CORPORATION’S Group
Medical program or 401K pension program.
4. Independent
Contractor.
Nothing
herein shall be construed to create an employer-employee relationship between
the CORPORATION and XXXXXXX. XXXXXXX is an independent contractor and not an
employee of the CORPORATION or any of its subsidiaries or affiliates. The
consideration set forth in Article 3 shall be the sole consideration due XXXXXXX
for the services rendered hereunder. It is understood that the CORPORATION
will
not withhold any amounts for payment of taxes from the compensation of XXXXXXX
hereunder. XXXXXXX will not represent to be or hold himself out as an employee
of the CORPORATION.
5. Services.
XXXXXXX
agrees to serve the CORPORATION faithfully and to the best of his ability,
and
shall devote eighty-five percent (85%) of his business time, attention and
energies to the business of the CORPORATION during the regular business hours
and at any other time during the week as reasonably requested by the CORPORATION
and/or required by the demands of his position. XXXXXXX agrees to spend a
minimum of two days per month in the New York offices of the CORPORATION. All
services required to be rendered by XXXXXXX may be rendered for the benefit
of
any of the CORPORATION’S affiliates or subsidiaries, but no liability shall
attach to such affiliate or subsidiary for the payment of any compensation
hereunder.
6. Expenses.
During
the period of his engagement, XXXXXXX will be reimbursed for his reasonable
and
necessary expenses incurred by him pursuant to his engagement hereunder, such
expenses to include necessary travel and related costs incurred on behalf of
the
CORPORATION and in commuting to and from the CORPORATION’s offices in New York
as well as lodging expenses while in New York, NY, if necessary, upon submission
of appropriate receipts or vouchers therefore.
7.
Termination.
(a) Termination
for Cause.
The
CORPORATION may discharge XXXXXXX for cause at any time as provided herein.
For
purposes hereof, “cause” shall mean the willful engaging by XXXXXXX in illegal
conduct or gross misconduct which is demonstrably and materially injurious
to
the CORPORATION. For purposes of this Agreement, no act, or failure to act,
on
XXXXXXX’x part shall be deemed "willful" unless done, or omitted to be done, by
XXXXXXX not in good faith and without reasonable belief that XXXXXXX'x action
or
omission was in the best interest of the CORPORATION. Notwithstanding the
foregoing, XXXXXXX shall not be deemed to have been terminated for Cause unless
and until the CORPORATION delivers to XXXXXXX 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 XXXXXXX and an opportunity for XXXXXXX,
together with counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, XXXXXXX was guilty of conduct set forth above and
specifying the particulars thereof in detail.
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(b) Without
Cause.
This
Agreement may be terminated by the CORPORATION without Cause at any time, such
termination to be effective thirty (30) days after XXXXXXX’x receipt of written
notice from the CORPORATION.
(c) Death
or Disability.
This
Agreement shall terminate upon the death or disability of XXXXXXX. For purposes
of this subsection (c), “disability” shall mean the inability of
XXXXXXX
effectively to substantially provide the services hereunder by reason of any
medically
determinable physical or mental impairment which can be expected to result
in
death
or
which has lasted or can be expected to last for a continuous period of not
less
than
twelve
(12) months.
(d) Resignation.
XXXXXXX
shall have the right to terminate this Agreement upon not less than sixty (60)
days prior written notice of termination.
(e) Change
of Control.
The
Agreement can be terminated Upon a Change of Control as defined in the Agreement
Regarding Change In Control (“Change In Control Agreement”) attached hereto as
Exhibit A.
8. Effect
of Termination.
(a) In
the
event that this Agreement is terminated for "cause" pursuant
to
subsection 7(a), the CORPORATION shall pay XXXXXXX, at the time of such
termination, only the fees due and payable to him through the date of the
termination of this Agreement.
(b) In
the
event that this Agreement is terminated without cause pursuant
to
subsection 7(b), the CORPORATION shall pay XXXXXXX a cash termination payment
equal to XXXXXXX’x Annual Fee in effect upon the date of termination, payable in
equal monthly installments beginning in the month following XXXXXXX’x
termination. Such termination payments shall cease immediately in the event
that
XXXXXXX violates any provision of Articles 9 and/or 10 herein. In addition,
the
CORPORATION shall pay XXXXXXX any reasonable and necessary business expenses
incurred by XXXXXXX in connection with his duties, all to the date of
termination and payable in a lump sum, less any applicable deductions and
withholdings, as soon as administratively practicable following XXXXXXX’x
termination.
(c) In
the
event this Agreement is terminated at his election pursuant to subsection 7(d)
or due to XXXXXXX’x death or disability pursuant to 7(c), the CORPORATION shall
pay to XXXXXXX, at the time of such termination, the fees otherwise due and
payable to him through the last day of the month in which such termination
occurs.
(d) In
the
event of a Termination Upon a Change of Control as defined in the Change In
Control Agreement, the CORPORATION’s obligation to XXXXXXX shall be as set forth
in the Change In Control Agreement.
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9. Trade
Secrets And Non-Disclosure.
XXXXXXX
hereby acknowledges that certain trade secrets of the CORPORATION are valuable,
special and unique assets of the CORPORATION’S business. Such trade secrets
include but are not limited to its customer lists and the sources of its
materials and products. XXXXXXX hereby covenants that he will not, during or
after the term of his engagement, disclose any of the foregoing secrets or
any
part thereof to any firm, person or corporation or any entity for any reason
or
purpose whatsoever. In the event of a breach or threatened breach by XXXXXXX
of
the provisions of this Paragraph, the CORPORATION shall be entitled to proceed
in any court for an injunction restraining XXXXXXX from disclosing, in whole
or
in part, any of the aforesaid trade secrets, or from rendering such service
to
any person, firm, corporation, association or any entity to whom such trade
secrets, in whole or in part, have been disclosed, or are threatened to be
disclosed. Nothing herein contained shall be construed as prohibiting the
CORPORATION from pursuing any other remedies for such breach or threatened
breach, including the recovery of damages from XXXXXXX and/or from proceeding
pursuant to the arbitration provisions of this Agreement.
10. Non-Compete.
Without
the prior written approval of the CORPORATION’S Chief Executive Officer or
President, Xxxxxxx shall not, directly or indirectly, during the term of this
agreement and until the end of twelve (12) months after termination:
(a) Engage
in
a “Competing Business’’ in the “Territory”, as those terms are defined below.
“Competing Business” shall mean any business that mines or produces minerals
which is competitive with the CORPORATION’S or any of its Affiliates, as
conducted or under development at any time during the term of this agreement
“Territory” shall mean anywhere in Mexico.
(b) Make
any
public statement or perform or do any other act prejudicial or injurious to
the
reputation or goodwill of the CORPORATION or any of its Affiliates or otherwise
interfere with the CORPORATION’S business or that of any of its
Affiliates.
11. Notices.
Any
notice or other communication pursuant to this Agreement shall be in writing
and
shall be sent by telecopy or by certified or registered mail addressed to the
respective parties as follows:
|
(i)
|
If
to the CORPORATION, to:
|
Capital
Gold Corporation
00
Xxxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Tel.
No.:
(000) 000-0000
Fax
No..:
(000) 000-0000
Attention:
VP of Corporate Development
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|
(ii)
|
If
to XXXXXXX, to:
|
Xxxxxxxxxxx
X. Xxxxxxx
0000
Xxxxxxx Xxxx
Xxxxxxx,
XX 00000
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
or
to
such other address as the parties shall have designated by notice to the other
parties given in accordance with this section. Any notice or other communication
shall be deemed to have been duly given if personally delivered or mailed via
registered or certified mail, postage prepaid, return receipt requested, or,
if
sent by telecopy, when confirmed.
12. Modification.
No
modification or waiver of this Agreement or any provision hereof shall be
binding upon the party against whom enforcement of such modification or waiver
is sought unless it is made in writing and signed by or on behalf of both
parties hereto.
13. Miscellaneous.
(a) This
Agreement shall be subject to and construed in accordance with the laws of
the
State of New York.
(b) The
waiver by either party of a breach of any provision of this
Agreement
by the other party shall not operate and be construed as a waiver or a
continuing waiver by that party of the same or any subsequent breach of any
provision of this Agreement by the other party.
(c) If
any
provisions of this Agreement or the application thereof to any
person
or
circumstance shall be determined by any court of competent jurisdiction to
be
invalid or unenforceable to any extent, the remainder hereof, or the application
of such provision to persons or circumstances other than those as to which
it is
so determined to be invalid or unenforceable, shall not be affected thereby,
and
each provision hereof shall be valid and shall be enforced to the fullest extent
permitted by law.
(d) This
Agreement shall be binding on and inure to the benefit of the
parties
hereto and their respective heirs, executors and administrators, successors
and
assigns.
(e) This
Agreement shall not be assignable in whole or in part by
either
party,
except that the CORPORATION may assign this Agreement to and it shall be
binding
upon any subsidiary or affiliate of the CORPORATION or any person, firm or
corporation with which the CORPORATION may be merged or consolidated or which
may acquire all or substantially all of the assets of the
CORPORATION.
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IN WITNESS
WHEREOF, this Agreement has been signed by the parties hereto as of the date
first above written.
CAPITAL
GOLD CORPORATION
|
By:
|
s/Xxxxxxx Xxxxxxxx |
| Xxxxxxx Xxxxxxxx, CEO |
| By: | s/ Xxxxxxxxxxx X. Xxxxxxx |
| Xxxxxxxxxxx X. Xxxxxxx, CFO |
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EXHIBIT
A
AGREEMENT
REGARDING
CHANGE
IN CONTROL
THIS
AGREEMENT (“Agreement”), is made and entered into effective as of the
1st
day of
May, 2007 (the “Effective Date”) by and between Capital Gold Corporation (the
“Company”) and Xxxxxxxxxxx X. Xxxxxxx (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 August 31, 2009. As of August 31, 2009, and as of each August
31 thereafter, the Agreement Term shall extend automatically to the next
anniversary thereof 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:
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(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;
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(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
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 fee 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 (a) 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) The
exercise price of all of the Company options owned by the Executive shall
decrease to $0.01 per share.
(c) The
Company shall provide the Executive with outplacement services and tax and
financial counseling suitable to the Executive’s position through the first
anniversary of the date of the Executive’s termination of engagement, or, if
earlier, the date on which the Executive becomes employed by another
employer.
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.
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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 Internal Revenue Code of 1986, as amended (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 reimburse the Executive for reasonable fees and expenses incurred
for any such verification.
(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. 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)
promptly 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.
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(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,
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.
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(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 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
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(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):
(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;
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(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;
(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 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.
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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
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with
a
copy (which shall not constitute notice) to:
or
to the
Executive:
Xxxxxxxxxxx
X. Xxxxxxx
0000
Xxxxxxx Xxxx
Xxxxxxx,
XX 00000
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, 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.
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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 ___ day of May, 2007, all as
of
the Effective Date.
|
By:
|
s/Xxxxxxx
Xxxxxxxx
|
Xxxxxxx
X. Xxxxxxxx, President
ATTEST:
s/
Xxxxxxx X.
Xxxxxxxxx
Xxxxxxx
X. Xxxxxxxxx, Vice President
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