EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is
entered into as of the 9th day of June, 1995, by and
between Alta Gold Co. a Nevada corporation
("Employer"), and Xxxxxx X. Xxxxx ("Executive").
For and in consideration of the mutual covenants
contained herein and of the mutual benefits to be
derived hereunder, the parties agree as follows:
1. EMPLOYMENT. Employer hereby employs
Executive to perform those duties generally
described in this Agreement, and Executive hereby
accepts and agrees to such employment on the terms
and conditions hereinafter set forth.
2. TERM. The term of this Agreement shall
commence on October 16, 1995, and end on October 15,
1998.
3. DUTIES. During the term of this Agreement,
Executive shall be employed by Employer and shall
occupy the office of President, Chairman and Chief
Executive Officer. Executive agrees to serve in
such offices or positions with Employer or any
subsidiary of Employer. Executive agrees to
continue to serve as a member of the Board of
Directors of Employer, and to serve as a director of
any subsidiary of Employer, for no additional
compensation subject to removal by the shareholders
of Employer.
Executive shall devote substantially all of his
working time and efforts to the business of Employer
and its subsidiaries and shall not during the term
of this Agreement be engaged in any other
substantial business activities which will
significantly interfere or conflict with the
reasonable performance of his duties hereunder.
However, this shall not be construed as preventing
Executive from developing mining properties located
in eastern Nevada in which he presently has an
interest. Should such development occur, it would
be accomplished in such a manner as not to interfere
with the duties detailed herein.
4. COMPENSATION. For all services rendered by
Executive, Employer shall pay to Executive a salary
of $220,500 per year while serving as President,
Chairman and Chief Executive Officer. All salary
payments shall be subject to withholding and other
applicable taxes. To compensate for cost of living
increases, the rate of salary shall be increased
annually effective January 1, 1996, and on each
anniversary thereafter, as the Board of Directors,
on the recommendation of its compensation committee
may determine or, in the absense of such
determination, in the amount of 7% over the
applicable salary rate during the preceding 12-month
period. In the event Executive resigns from his
position with Employer and not otherwise under the
circumstances set forth at paragraphs 15 or 16
herein, compensation payments to Executive shall be
limited to compensation for services rendered by
Executive.
5. EMPLOYMENT SIGNING BONUS. Upon the
implementation of this Employment Agreement the
Employer shall provide the option to Executive at
the end of each year of Employment to purchase
125,000 shares of common stock of Employer at a
market price of $.75 (seventy-five cents) for a
period of three years from date of option. A total
option of 375,000 shares. All options, including
the 500,000 share option granted on October 15,
1991, are exercisable for a period of ten years from
the date of grant.
Executive shall have the rights of a stockholder
with respect to the options which have not been
issued and/or exercised, including any cash
dividends declared thereon; any stock dividend,
stock split or other change in the common stock of
Employer; or any merger or sale of all or
substantially all of the assets or other acquisition
of Employer, and any and all new, substituted, or
additional securities to which Executive is
entitled.
Should Executive die during the term of this
contract, the remainder of the 375,000 shares from
this contract, together with any unexercised portion
of the 500,000 share option granted on October 15,
1991, shall be awarded to his estate and exercisable
for a period of ten years from the date of grant.
6. INCENTIVE COMPENSATION. Employer shall
provide Executive with incentive compensation in the
form of cash and stock bonuses not less often than
once each year during the term of this Agreement.
The amount of such bonuses shall be determined by
the Board of Directors of Employer or a compensation
committee thereof taking into consideration the
relative contribution by Executive to the business
of Employer, the economy in general, and such other
factors as the Board of Directors or compensation
committee deems relevant.
7. EMPLOYMENT BENEFITS. Employer shall
provide health and medical insurance for Executive
in a form and program to be chosen by Employer for
its full-time employees. Executive shall be
entitled to participate in any retirement, pension,
profit sharing, or other plan approved by the Board
of Directors.
8. WORKING FACILITIES. Employer shall provide
to Executive at Employer's principal executive
offices suitable executive offices and facilities
appropriate for his position and suitable for the
performance of his responsibilities.
9. VACATIONS. Executive shall be entitled
each year to paid vacation of at least 5 weeks.
Vacations shall be taken by Executive at a time and
with starting and ending dates mutually convenient
to Employer and Executive. Vacations or portions of
vacations not used in one employment year shall
carry over to the succeeding employment year, but
shall thereafter expire if not used within such
succeeding year.
10. EXPENSES. Employer will reimburse
Executive for expenses incurred in connection with
Employer's business, including expenses for travel,
lodging, meals, beverages, entertainment, and other
items upon Executive's periodic presentation of an
account of such expenses as required by Employer's
policies and procedures.
11. COVENANT NOT TO DISCLOSE PROPRIETARY
INFORMATION. For a period of three years after
termination of Executive's employment, Executive
agrees that he will not directly or indirectly use,
employ, publish, or otherwise disclose any
procedures, policies, practices, trade secrets,
computer software, formulas, client opportunities,
or other information of a proprietary nature in the
establishment, opening, or operation of a business,
or in connection with engaging in business with,
serving as an officer, director, employee or agent
of, or owning any equity interest (other than
ownership of ten percent or less of the outstanding
stock of any corporation listed on the New York or
American Stock Exchange or included in the National
Association of Security Dealers Automated Quotation
System) in any person, firm, corporation, or
business entity, that engages in mining activities
in the United States that are competitive with
Employer's mining activities. The parties intend
that this covenant not to disclose proprietary
information shall be construed as a series of
separate covenants. If in any judicial proceeding a
court shall refuse to enforce any of the separate
covenants deemed included in this paragraph, then
the unenforceable covenants shall be deemed
eliminated from these provisions for the purpose of
those proceedings to the extent necessary to permit
the remaining separate covenants to be enforced.
This covenant not to disclose proprietary
information shall not be construed as restricting
the Executive's right to own shares in any company
or limited partnership or business entity, provided
they do not perform services, or participate in any
way in the management of, a business entity which
competes in any manner outlined above.
This covenant shall survive the termination of
this Agreement.
12. NONDISCLOSURE OF INFORMATION. In further
consideration of employment and the continuation of
employment by Employer, Executive will not, directly
or indirectly, during or after the term of
employment disclose to any person not authorized by
Employer to receive or use such information, except
for the sole benefit of Employer, any of Employer's
confidential or proprietary data, information, or
techniques, or give to any person not authorized by
Employer to receive it any information that is not
generally known to anyone other than Employer or
that is designated by Employer as "Limited",
"Private", or "Confidential", or similarly
designated.
13. DISABILITY. If Executive is unable to
perform his services by reason of illness or
incapacity for a period of more than 9 consecutive
months, the compensation thereafter payable to him
during the second consecutive 9-month period shall
be one-half of the compensation provided for in
paragraph 4 hereof, and during the third consecutive
9-month period, one-fourth of the salary provided
for in paragraph 4; PROVIDED, however, that no such
compensation shall be payable after the termination
of this Agreement. During such 27-consecutive-month
period, Executive shall be entitled to receive
incentive compensation in the same proportion as
Executive's incentive compensation to his annual
salary set forth in paragraph 4 paid to Executive,
if any, for the fiscal year last preceding the date
such illness of incapacity commenced.
Notwithstanding the foregoing, if such illness or
incapacity does not cease to exist within such 27-
consecutive-month period, Executive shall not be
entitled to receive any further compensation nor any
payments set forth in paragraph 15 herein from
Employer and Employer may thereupon terminate this
Agreement.
14. TERMINATION FOR CAUSE. Except as set forth
in the foregoing paragraph, Employer may not
terminate this Agreement during its term without
cause ("Cause"). Employer, however, may terminate
this Agreement for Cause by showing that Executive
has materially breached its terms; that Executive,
in the determination of the Board of Directors has
been grossly negligent in the performance of his
duties; that he has substantially failed to meet
written standards established by Employer for the
performance of his duties; or that he has engaged in
material willful or gross misconduct in the
performance of his duties hereunder. If Employer
terminates this Agreement for Cause, all of
Employer's obligations hereunder shall terminate.
15. PAYMENTS FOR TERMINATION WITHOUT CAUSE. In
the event that Employer terminates this Agreement
without Cause and not as the direct result of a
change in control, as that phrase is defined in
paragraph 18 hereof, Executive shall be compensated
by Employer in a single lump sum payment, payable
within 30 days after termination of employment, of
the following amounts:
(a) The amount of his salary as provided
in paragraph 4; and
(b)Incentive compensation in the same
proportion as Executive's incentive compensation
to his annual salary set forth in paragraph 4,
paid to Executive, if any, for the fiscal year
last preceding the year during which his
employment terminates, but prorated to reflect
the number of full months of his employment
during the year of termination.
(c) The remaining amount of his Signing
Bonus. In addition, Executive's coverage under
the Employer's insured employee benefit plan, as
provided in paragraph 7, shall continue through
the term of this Agreement.
16. TERMINATION PAYMENT FOR CHANGE IN CONTROL.
If Executive resigns or is discharged by Employer
(or is deemed to be discharged pursuant to paragraph
18 below) as the direct and sole result of a change
in control, or in reasonable anticipation of a
change in control, then, in lieu of any payment
otherwise paid or payable to Executive under
paragraph 15 hereof, Employer shall pay to Executive
an amount equal to 2.9 times the average of the sum
of amounts payable to Executive for salary, bonus,
and profit sharing for the five fiscal years
immediately preceding the date of the change in
control or for such fewer fiscal years if Executive
has been employed by Employer for less than five
fiscal years, plus the remaining amount of the
Signing Bonus. Any amounts paid to Executive
pursuant to this paragraph 16, shall be subject to
any applicable federal, state, and local tax
withholdings and shall be payable in a lump sum to
Executive as soon as practicable after Executive's
resignation or discharge, but subject to the terms
of paragraph 17 herein.
17. TAX LIMITATION. If Employer reasonably
determines that the payment provided for in
paragraph 16 hereof (the "Termination Payment") will
likely result in a loss of a deduction to Employer
as provided under Section 280G of the Internal
Revenue Code of 1986, or any successor provision
thereto, and the imposition of the excise tax
payable to Executive as provided under Section 4999
to the Internal Revenue Code of 1986, or any
successor provision thereto, such Termination
Payment shall be reduced by the least amount
required to avoid such loss of deduction and
imposition of excise tax (collectively referred to
hereinafter as the "Tax Penalties"). Employer shall
make no Termination Payment to Executive prior to
determining whether the Tax Penalties will apply to
the Termination Payment. Employer shall make such
determination within a reasonable time after
Executive's resignation or discharge, but not to
exceed 30 days thereafter.
18. DEEMED TERMINATION OF EMPLOYMENT. For
purposes of paragraph 16 hereof, Executive shall be
deemed to have been discharged by Employer if
Executive voluntarily resigns before the end of the
term of this Agreement, but after a change in
control has occurred, provided the Executive could
not be discharged by Employer for Cause, has given
Employer at least 30 days prior written notice of
such resignation, and such resignation occurs after
any of the following:
(a) Executive is removed or released from
any of his titles, positions, or offices in
effect immediately prior to the occurrence of a
change in control, or Executive's duties and
responsibilities in such titles, positions, or
offices are materially changed;
(b) Executive's base salary in effect
immediately before the change in control is
reduced;
(c) Executive is removed from
participation in any of Employer's bonus or
profit sharing programs, or any such bonus or
profit sharing programs in which Executive was
or was entitled to participate in immediately
prior to the change in control are discontinued;
(d) Executive's office is based more than
50 miles from the location of the principal
office at which Executive was based immediately
prior to the occurrence of the change in
control; or
(e) Employer deprives Executive of or
otherwise reduces any material fringe benefit,
including perquisites, provided to Executive by
Employer immediately prior to the occurrence of
a change in control.
(f) Executive makes a determination in
good faith that as a result of the change in
control and a change in circumstances thereafter
and since the date of this Agreement
significantly affecting his position, he is
unable to carry out the authorities, powers,
functions or duties attached to his position and
the situation is not remedied within 30 days
after receipt by Employer of written notice from
the Executive of such determination.
19. DEFINITION OF CHANGE IN CONTROL. For
purposes of this Agreement, a "change in control"
will be deemed to have occurred on the first to
occur of the following events:
(a) As a result of a cash tender offer,
stock exchange offer or other takeover device,
any person, as that term is used in Section
13(d) and 14(b)(2) of the Securities Exchange
Act of 1934, is or becomes a beneficial owner,
directly or indirectly, of stock of Employer
representing thirty percent (30%) or more of the
total voting power of Employer's then
outstanding securities;
(b) Any material realignment of the Board
of Directors of Employer or change in officers
of Employer resulting from a concerted
shareholder action, including without limitation
a proxy flight, voting trusts or pooling
arrangements;
(c) Any sale by Employer of thirty percent
(30%) or more of its assets to a single
purchaser or to a group of associated
purchasers; or
(d) Any merger, consolidation, or other
reorganization of Employer with an entity, other
than its affiliates, whereby Employer is not the
surviving entity or the shareholders of Employer
otherwise fail to retain substantially the same
direct or indirect ownership in Employer or its
affiliates immediately after any such merger,
consolidation, or reorganization.
20. DEATH DURING EMPLOYMENT. If Executive dies
during the term of this Agreement, Employer shall
pay to the estate, trustee, or other legally
constituted third party designated by Executive in
six equal monthly installments commencing on the
first day of the month immediately following the
month in which Executive dies, an amount equal to
one year's salary provided for in paragraph 4 of
this Agreement, and payment of incentive
compensation in the same proportion as Executive's
incentive compensation to his annual salary set
forth in paragraph 4 paid to Executive for the
fiscal year last preceding the year in which
Executive dies, but prorated for the number of full
months of his employment during the year of his
death.
21. STOCK REGISTRATION PROVISIONS. During the
term of this Agreement, Executive shall have the
following rights and obligations with respect to
registration under the Securities Act of 1933 and
applicable blue sky laws of shares of common stock
("Shares") of Employer owned of record by Executive:
(a) COMPANY REGISTRATION. Employer shall
notify Executive, at least thirty (30) days
prior to the filing of any Registration
Statement on forms X-0, X-0, X-0, X-0 or any
successor forms under the Securities Act of 1933
covering any class of stock of the Employer and
will upon the written request of Executive
delivered at least fifteen (15) days prior to
such filing, include in any such Registration
Statement such information as may be required to
register such number of Executive's Shares as
Executive may request. Executive and Employer
shall each include customary representations,
warranties, indemnifications, and contribution
provisions in any underwriting agreement entered
into in connection with such registration.
If the managing underwriters for such
registration advise Employer in writing that in
their opinion the total amount of securities to
be included in such registration statement
exceeds the amount which should reasonably be
included in that offering to achieve the
Employer's financing goals, Employer may limit
the amount of stock to be included as follows:
(i) first, all securities Employer proposes to
sell may be included, (ii) second, the Shares of
common stock requested to be included in such
registration by all executives and employees
pursuant to registration rights may be reduced
and adjusted among participating executives and
employees on the basis of the amount of shares
owned of record by each employee, and (iii)
third, if applicable, other stocks requested to
be included in such registration may be
similarly and ratably adjusted with all
executives' and employees' stock pro rata
according to the amount of stock owned of record
by any proposed seller. All incremental
expenses of such registration will be allocated
pro rata according to the total number of shares
included therein. There shall be no limit on
the number of registrations so requested, but
each such request shall cover an amount of
Shares having a proposed offering price of not
less than one hundred thousand dollars
($100,000.00).
(b) REGISTRATION OF REQUEST. In addition,
Executive's Shares may be registered on not more
than two (2) separate occasions, in such amounts
as may be requested, in the following
circumstances: (i) within one year following
the death or the commencement of disability of
Executive or (ii) at any time in a reasonable
amount and for a bona fide business purpose with
the approval of a majority of the independent,
outside members of the Board of Directors of
Employer. Within thirty (30) days after the
receipt of a request for such registration by
Executive's estate or personal representative
pursuant to phrase (i) of the preceding sentence
or the approval by the independent outside
directors pursuant to phrase (ii) of the
preceding sentence, Employer will commence the
process of preparing for filing a Registration
Statement covering the Shares and use its best
efforts to cause such Registration Statement to
become effective. Employer and Executive shall
use commercially reasonable efforts to obtain an
underwriter to firmly underwrite any such
offering; in the event that no underwriter
reasonably acceptable to Employer is willing to
make a firm commitment, Employer shall have no
obligation to file the Registration Statement.
Employer may delay for up to ninety (90) days
the filing of such a Registration Statement if
the Board of Directors of Employer in good faith
and for a bona fide corporate purpose determines
that a filing at a requested time would be
adverse to Employer's interests. Employer shall
not be obligated to file any such Registration
Statement at any time during which it is
impossible or impracticable to include the
required financial statements. Employer and
Executive shall provide all information required
for inclusion in such Registration Statement and
any underwriting agreement entered into in
connection therewith shall contain the customary
representations, warranties, indemnifications,
and contribution provisions. All expenses of
such registration shall be allocated pro rata
according to the total number of shares included
therein.
(c) GENERAL. In connection with each of
the foregoing registrations and subject to the
provisions concerning expenses, Employer shall
also (i) use its best efforts to qualify the
Shares for public sale under the blue sky laws
of such jurisdictions as Executive may
reasonably request, (ii) provide such number of
preliminary and final prospectuses as Executive
may reasonably request, and (iii) keep the final
prospectus in any such registration current for
a reasonable period of time. In connection with
the indemnification and contribution to be
provided by Executive to any underwriter or
Employer pursuant to this paragraph 21, the
aggregate liability of Executive shall not
exceed the aggregate net proceeds received by
Executive from the sale of the registered
Shares, and, in connection with contribution,
shall also take into consideration the relative
fault of each contributing person.
22. NONTRANSFERABILITY. Neither Executive, his
spouse, his designated contingent beneficiary, nor
their estates shall have any right to anticipate,
encumber, or dispose of any payment due under this
Agreement. Such payments and other rights are
expressly declared nonassignable and nontransferable
except as specifically provided herein.
23. INDEMNIFICATION. Employer shall indemnify
executive and hold him harmless from liability for
acts or decisions made by him while performing
services for Employer to the greatest extent
permitted by applicable law. Employer shall use its
best efforts to obtain coverage for Executive under
any insurance policy now in force or hereafter
obtained during the term of this Agreement insuring
officers and directors of Employer against such
liability.
24. ASSIGNMENT. This Agreement may not be
assigned by either party without the prior written
consent of the other party.
25. ENTIRE AGREEMENT. This Agreement is and
shall be considered to be the only agreement or
understanding between the parties hereto and
supersedes and is controlling over any and all other
prior existing agreements between the parties with
respect to the employment of Executive by Employer.
All negotiations, commitments, and understandings
acceptable to both parties have been incorporated
herein. No letter, telegram, or communication
passing between the parties hereto covering any
matter during this contract period, or any plans or
periods thereafter, shall be deemed a part of this
Agreement; nor shall it have the effect of modifying
or adding to this Agreement unless it is distinctly
stated in such letter, telegram, or communication
that it is to constitute a part of this Agreement
and is to be attached as a rider to this Agreement
and is signed by the parties to this Agreement.
26. ENFORCEMENT. Executive acknowledges that
any remedy at law for breach of paragraphs 11 and 12
would be inadequate, acknowledges that Employer
would be irreparably damaged by an actual or
threatened breach thereof, and agrees that Employer
shall be entitled to an injunction restraining
Executive from any actual or threatened breach of
paragraphs 11 and 12 as well as any further
appropriate equitable relief without any bond or
other security being required. In addition to the
foregoing, each of the parties hereto shall be
entitled to any remedies available in equity or by
statute with respect to the breach of the terms of
this Agreement by the other party.
27. GOVERNING LAW. This Agreement shall be
governed by and interpreted in accordance with the
laws of the state of Nevada.
28. SEVERABILITY. If and to the extent that
any court of competent jurisdiction holds any
provision or any part thereof of this Agreement to
be invalid or unenforceable, such holding shall in
no way affect the validity of the remainder of this
Agreement.
29. WAIVER. No failure by any party to insist
upon the strict performance of any covenant, duty,
agreement, or condition of this Agreement or to
exercise any right or remedy consequent upon a
breach hereof shall constitute a waiver of any such
breach or of any other covenant, agreement, term, or
condition.
30. LITIGATION EXPENSES. In the event that it
shall be necessary or desirable for the Executive to
retain legal counsel and/or incur other costs and
expenses in connection with the enforcement of any
and all of his rights under this Agreement, he shall
be entitled to recover from the Employer reasonable
attorney's fees, costs, and expenses incurred by him
in connection with the enforcement of said rights.
Payment shall be made to the Executive by the
Employer at the time these attorney's fees, costs,
and expenses are incurred by the Executive. If,
however, the Executive does not prevail in such
enforcement actions, he shall repay any such
payments to the Employer.
AGREED AND ENTERED INTO as of the date first
above written.
EMPLOYER: ALTA GOLD CO.
By:
_______________________________
Compensation Committee Chairman
EXECUTIVE:
_______________________________
Xxxxxx X. Xxxxx