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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 11th day of November, 1997,
by and between Turtleback Mountain Gold Co., Inc., an Arizona
corporation, hereinafter called "Company," and
Xxxx X. Xxxxxx of East Williston, New York, hereinafter called
"Xxxxxx."
W I T N E S S E T H :
That in consideration of the mutual promises of the parties
hereinafter set forth and the mutual benefits they will gain by the
performance thereof, the Company and Xxxxxx, intending to be legally
bound hereby, agree as follows:
1. Authority; Duties. The Company hereby employs Xxxxxx, and
Xxxxxx hereby agrees to employment by the Company, as its President
and Chief Executive Officer, to serve at the pleasure of the Board of
Directors of the Company. Xxxxxx shall have complete control and
sole authority of the management of the Company, its business and
financing programs, all acquisitions, mergers, joint ventures, and
sales of assets, subject to the authority of the Company's Board of
Directors. Xxxxxx shall be primarily responsible for directing and
managing the day-to-day business of the Company, its mining
operations and such other business opportunities directly related to
the mining and gold industries as Xxxxxx may determine to be
beneficial to the Company, subject to the authority of the Company's
Board of Directors and, to the extent required by applicable law, its
shareholders. Xxxxxx shall also perform such other services from
time to time, consistent with his position as President and Chief
Executive Officer, as determined by the Board of Directors of the
Company. Xxxxxx shall be authorized, in the name and on behalf of
the Company:
(a) to hire, direct and discharge all officers of the
Company, management and supervisory personnel, and all labor and
employees for the Company's operations and, within the business plan
budget, to engage, direct and terminate the services of engineers,
consultants and professional personnel;
(b) to conduct the Company's operations in a good and
efficient manner, in accordance with sound mining practices and in
accordance with the terms and provisions of any leases, licenses, or
other agreements pertaining to the Company's properties, except for
work which in Xxxxxx'x judgment can best be conducted by third
parties. In such cases, Xxxxxx shall arrange for the performance of
such work, within the business plan budget, under a contract or
contracts; and
(c) to review, make recommendations for and, if they are
acceptable to Xxxxxx, approve all operating budgets prepared by
management and to make any expenditures within such budgets as Xxxxxx
deems necessary to carry on the business of the Company following the
Board of Director's approval of the annual budget.
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2. Other Commitments; Corporate Opportunities. So long as
this Agreement continues in effect, Xxxxxx shall devote at least
eighty percent (80%) of his business time and energies to the
business and affairs of the Company and use his best efforts, skills
and abilities to, promote its interest, it being understood by the
parties hereto that Xxxxxx has other business interests including
majority control either directly or indirectly of other companies,
including companies that own precious metals claims and other mineral
deposits which could be deemed conflict-of-interests, that will
require his attention. Subject to the foregoing, Xxxxxx shall offer
the Company all opportunities to acquire and develop gold mining
claims and precious metal deposits before acquiring them for himself
or for other companies unless: (a)(i) in the reasonable opinion of
Xxxxxx, the Company is unable to make the required investments or
other commitments for such an opportunity, (ii) Xxxxxx prepares and
circulates to each member of the to be formed Board's Advisory
Committee a written memorandum describing the opportunity and the
reasons that the Company is unable to make the required investments
or other commitments, and (iii) within 10 days after receipt by the
Board's Advisory Committee of such memorandum, no member of the
Committee requests a meeting to vote with respect to Xxxxxx'x
recommendations; or (b) such opportunities are specific claims and
properties as described under Exhibit I hereof.
3. Effective Date; Term. This Agreement, and each of the
provisions contained herein shall become effective as of November
11, 1997, (the "Effective Date"), and shall expire November 10,
2000;
provided, however, the precious metals claims and properties, in
which Xxxxxx has an interest at the effective date of this Agreement
and which are scheduled on Exhibit 1 to this Agreement, are excluded
from the corporate opportunity obligation imposed by paragraph 2, and
the non-compete obligation imposed by paragraph 16, of this
Employment Agreement.
4. Salary. For the services and duties described herein,
Xxxxxx shall be compensated at a base salary of $95,000 for the first
year, a base salary of $115,000 for the second year and a base salary
of $140,000 for the third year, such salary to be payable in equal
monthly installments. In addition to the base salary, Xxxxxx shall
be entitled to receive a cost of living increase using as a guide the
percentage of increase in the consumer price index ("CPI") for New
York City-Northern New Jersey, as published by the Department of
Labor's Bureau of Labor Statistics as of each anniversary of the
Effective Date of this Agreement as compared to the CPI as of the
Effective Date; the percentage of increase to be and applied to the
base salary prospectively for the next twelve (12) months of the term
of this Agreement. Xxxxxx'x base salary rate may be increased upon
review and decision by the Board of Directors of the Company.
5. Cash Bonus. As additional consideration for his
commitment to render future services to the Company, the Company
shall pay Xxxxxx a cash bonus equal to 3% of the Company's Net Pre-
Tax Operating Profit as referred to in paragraph 7. Such payment
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shall be made annually within ten days after the issuance of the
Company's annual financial statements, as certified by its
independent certified public accountants.
6. Joint Ventures. For each joint venture arranged by Xxxxxx
on behalf of the Company or affiliated companies, Xxxxxx or his
Assignee(s) shall receive, subject to applicable securities and other
laws, an equity ownership equal to 3% of the Company's equity
ownership therein or in such other entity formed by the Company for
the purposes of entering into a joint venture. Xxxxxx'x equity
ownership interest in the joint venture will not require Xxxxxx to
provide any exploration, development or operational capital to the
joint venture; provided, however, Xxxxxx'x equity ownership in each
such joint venture will entitle him to participate in and receive his
share of any stock, capital, or other financial consideration derived
from a sale, merger, or other corporate transaction involving the
joint venture or the joint venture's properties, assets and
partnership at the time a transaction is consummated. Xxxxxx shall
also receive from the Company a bonus payment equal to 3% of what
would be the Company's Net Pre-Tax Operating Profit (less any income
distribution received by Xxxxxx during that period as a result of
his 3% equity ownership) from the joint venture, paid once each
quarter in cash or in kind whichever Xxxxxx may elect, based upon the
preceding quarter's financial statement within ten (10) days after
the issuance of the quarterly financial statements to the partners of
the joint venture. Xxxxxx'x or his Assignee(s)' equity ownership in
the joint venture and entitlement to payments from the Company under
this paragraph 6 shall continue for the life of the joint venture and
beyond the life of this Agreement and beyond the life of Xxxxxx.
7. Net Pre-Tax Operating Profit. (a) For purposes of
calculating Xxxxxx'x cash bonus pursuant to paragraph 5 of this
Agreement, the Company shall instruct its independent certified
public accountants to determine and report in writing to the Company
and to Xxxxxx (within ten days after such determination) the
Company's Net Pre-Tax Operating Profit for each year in accordance
with generally accepted accounting principles and by adding back to
the Company's net income all amounts charged as amortization,
depreciation, management fees (unless the management services are
engaged by Xxxxxx and not by the Board), consulting fees (as agreed
by Xxxxxx and the Board), and taxes (federal, state and local), and
licensing fees (as agreed by Xxxxxx and the Board). For purposes of
calculating any bonus payable pursuant to paragraph 5, Net Pre-Tax
Operating Profit from joint ventures shall be excluded from the
Company's Net Pre-Tax Operating Profit; (b) For purposes of
calculating Xxxxxx'x bonus (payable in cash or in kind, as Xxxxxx
elects) from joint ventures pursuant to paragraph 6 of this
Agreement, such bonus will be based on what would be the Company's
Net Pre-Tax Operating Profit from the joint venture.
8. Vacations; Life Insurance. Xxxxxx shall receive paid
vacations and other fringe benefits as are granted to executives of
Maxam Gold Corporation, (a Utah corporation). Upon completion of
raising the initial $1,000,000 equity (excluding the equity raised
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through the exercise of the Company's outstanding A and B Warrants)
for the Company, the Company will pay the premium necessary (but not
in excess of $25,000) per year to (a) purchase a $1,000,000 one-year
term life insurance policy on Xxxxxx'x life, renewable each year
thereafter, with Xxxxxx having the right to designate the
beneficiaries thereunder; or, (b) apply an amount equal to such
premium each year to purchase mutual fund shares or a tax-deferred
annuity in Xxxxxx'x name, whichever Xxxxxx may elect.
9. Expenses. Xxxxxx is authorized to incur ordinary and
necessary expenses for promoting the business of the Company
commensurate with his executive position as President and Chief
Executive Officer of the Company. The Company will pay or reimburse
Xxxxxx upon his presentation of receipts for or other reliable
evidence of such expenses under an accountable plan, as described in
section 62 of the Internal Revenue Code and the regulations
thereunder.
10. Renewal. This Agreement shall continue after the
expiration of its initial term for periods of three (3) years each,
unless not later than three (3) months prior to the beginning of each
new period either party shall give the other party written notice by
certified mail, return receipt requested, that he or it does not wish
to renew this Agreement beyond the then current expiration date.
Xxxxxx'x annual base salary rate for each renewal period shall be the
annual base salary rate in effect for the immediately preceding
period, plus the applicable CPI cost of living increase as provided
in paragraph 4. All other provisions in this Agreement, including
provisions for compensation, bonuses and fringe benefits hereunder
shall continue in effect. Xxxxxx'x salary may be increased beyond
this annual amount subject to review and decision by the Board of
Directors of the Company for discretionary merit increases.
11. Termination.
(a) Subject to the Americans with
Disabilities Act and other applicable laws, if during the term of
this Agreement, Xxxxxx is prevented from performing his duties of
employment by reason of illness or any other incapacity for a
consecutive period of more than six (6) months, Xxxxxx may request a
temporary leave of absence from his duties as President of the
Company, for a period not to exceed an additional nine (9) months,
during which he is entitled to receive full compensation and all of
his fringe benefits. Xxxxxx may also select his temporary
replacement during such leave of absence to serve as acting President
and acting Chief Executive Officer, subject to approval by the Board
of Directors of the Company, which approval shall not be unreasonably
withheld. Subject to the Family and Medical Leave Act and other
applicable law, Xxxxxx may request reinstatement to his position as
President and Chief Executive Officer of the Company when he is able
to resume his duties, thereby relieving the person who was his
temporary replacement of his authority and duties.
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(b) Upon Xxxxxx'x death, this Agreement
shall terminate; however, the Company shall continue to compensate
Xxxxxx'x estate through the end of the Company's fiscal year in which
his death occurs but for not less than six (6) months following his
death, even if such payments continue beyond the fiscal year-end, the
first payment to begin thirty (30) days following such death and to
continue thereafter in equal monthly payments at the monthly
equivalent rate of Xxxxxx'x annual base salary at the time of his
death. The Company shall continue to pay Xxxxxx'x family medical and
hospital insurance benefits to his spouse, if she is living, for the
same period as it compensates Xxxxxx'x estate. Xxxxxx'x estate shall
also be entitled to receive the cash and bonuses payable under
paragraph 5 for the full year in which he died.
(c) If this Agreement is terminated by the Company for
reasons other than "cause" (as defined in paragraph 13 hereof),
Xxxxxx will be entitled to receive a lump sum payment equal to the
greater of (i) $5,000,000 or (ii) one percent (1% ) of the Company's
net worth as of the preceding year's end, plus the balance of any
salary and bonus owed to Xxxxxx pursuant to this Agreement, without
rendering any additional service to the Company and without any
reduction for amounts that may be received by Xxxxxx from any other
employer. For this purpose "Net Worth" means book value of the
Company as determined by the Company's independent certified public
accountants in accordance with generally accepted accounting
principles applied consistently with previous years.
(d) Anything herein to the contrary notwithstanding, the
payments made to Xxxxxx hereunder, if he elects to terminate this
Agreement for "good reason" as described in paragraph 13 hereof,
shall not exceed an amount equal to 300% of the "base amount" of his
compensation as determined in accordance with Section 280G of the
Internal Revenue Code of 1986, as amended, less $1.00.
12. Mergers, Acquisitions, Changes in Control. If the
Company is acquired by another company, through a merger, exchange of
stock, sale of assets or otherwise, Xxxxxx shall continue to be
compensated by the Company or by the acquiring company under the
terms and conditions set forth in this Agreement. If, however, as a
result of such acquisition there is a change in control of the
Company to which Xxxxxx objects, the provisions of paragraph 11(d)
shall apply. As used herein, change in control shall include a
change in the majority of the Company's Board of Directors, the
election of additional directors rendering the incumbent directors a
minority, or a change in the ownership of a majority of the
outstanding Shares.
13. Termination for Cause or for Good Reason. Anything herein
contained to the contrary notwithstanding, the Company may terminate
this Agreement and all of its obligations hereunder for cause. As
used herein, for "cause" shall mean Xxxxxx'x conviction of a felony
or actions by Xxxxxx constituting willful misconduct, gross
negligence or gross insubordination, bad faith or dishonesty
adversely affecting the Company or its business or assets, taken as a
whole or any intentional breach of any material provisions of this
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Agreement. Xxxxxx may terminate this Agreement and all of his
obligations hereunder for "good reason." As used herein, "good
reason" shall mean any intentional breach by the Company of any of
the material provisions of this Agreement or a change in control of
the Company to which Xxxxxx objects, as provided in paragraph 12
hereof.
14. Representation and Warranty by Xxxxxx. Xxxxxx hereby
represents and warrants that the execution, delivery and performance
of this Agreement by Xxxxxx does not and will not conflict with or
result in a breach of any of the terms or provisions of, or
constitute a default under, any agreement or instrument to which
Xxxxxx is a party or by which he is bound.
15. Confidentiality. Xxxxxx shall maintain the
confidentiality of all trade secrets and material
non-public information of the Company.
16. Non-Compete. During the term of this Agreement and not
more than one year (or if a court of competent jurisdiction
determines that a one year period is unenforceable, than six months)
after this Agreement is terminated or it expires, Xxxxxx shall not,
directly or indirectly, own, manage, operate, join, control,
participate in or finance the ownership, management, operation or
control of, or be connected in any manner with any person, firm,
association, partnership, corporation or other entity that competes
in any manner with the Company in acquiring and developing precious
metals in Maricopa, Yuma and La Paz Counties in the State of Arizona
(except to the extent permitted by paragraph 3 hereof) and shall not
recruit, hire or employ any individual who within six (6) months of
such termination or expiration was an employee of the Company.
Xxxxxx acknowledges that the foregoing prohibitions are fair and
reasonable, are of the essence of this Agreement and that if
violated, the Company would suffer irreparable injury for which money
damages would be insufficient. Accordingly, the Company may enforce
such prohibitions by injunctive or other equitable relief without
being required to post a bond or other undertaking. Should any court
of competent jurisdiction determine that any covenants in this
paragraph are unreasonable as to scope, duration, or territory, the
covenants shall be enforceable with respect to such scope, duration,
and territory as the court determines to be reasonable, but in any
case not to exceed one year.
17. Binding Agreement. This Agreement shall extend to and be
binding upon Xxxxxx, his heirs, and distributees, and upon the
Company, its successors and assigns, and the term "Company" as used
herein shall include such successors and assigns.
18. Governing Law. The terms and conditions of this
Agreement shall be governed by the appropriate laws of the State of
Arizona, without giving effect to such state's statutes or decisions
relating to conflicts of law.
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19. Notices. All notices shall be in writing and sent by
certified mail return receipt requested, addressed to the address of
the respective parties shown below, or to such changed address as
such party may have fixed by notice:
If to the Company: If to Xxxxxx:
Turtleback Mountain Gold Co., Inc. Xx. Xxxx X. Xxxxxx
000 Xxx xx Xxx Xx. 00 Xxxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000 X. Xxxxxxxxx, XX 00000
20. Invalidity. The invalidity or unenforceability of any
provision hereof or part thereof shall in no way affect the validity
or enforceability of any other provision.
21. Entire Agreement. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and
the parties hereto have made no agreements, representations or
warranties relating to the subject matter of this instrument which
are not set forth herein.
22. Amendments; Changes. This Agreement may not on behalf of
or in respect to the Company or Xxxxxx be changed, modified,
released, discharged, or otherwise terminated in whole or in part
except by an instrument in writing signed by a duly authorized
representative of the Company and by Xxxxxx.
WHEREFORE, the parties hereto have signed this Employment
Agreement as of the date first above written.
TURTLEBACK MOUNTAIN GOLD CO., INC.
By: /s/ Xxxx X. Xxxxxx,
Chairman of the Board of Directors
By: /s/ Xxxx X. Xxxxxx,
President and Chief Executive Officer
Witnessed:
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