EMPLOYMENT AGREEMENT
EXHIBIT
10.1
This
Employment Agreement,
between
Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”),
and
Xxxxxxx X. Xxxx (the “Executive”)
is
entered into as of May 29, 2008 (the “Effective
Date”).
INTRODUCTION
A. The
Company desires to continue employing Executive, and Executive desires to
continue being employed by the Company as the Company’s Chief Executive Officer
pursuant to the terms of this Agreement.
AGREEMENT
Now,
Therefore,
the
parties hereby agree as follows:
1. Employment.
Subject
to all of the terms of this Agreement, the Company hereby agrees to employ
Executive, and Executive hereby accepts such employment and agrees to serve
the
Company with undivided loyalty and to the best of his ability. Executive shall
report to and take direction from the Company’s Board of Directors.
2. Term.
Unless
terminated earlier by either party with 30-day written notice of termination
to
the other party, Executive’s employment shall commence on the Effective Date and
shall continue for a period of three years from the Effective Date (the
“Initial
Term”).
Notwithstanding the foregoing, Executive
understands that nothing in this agreement is intended to modify Executive’s
at-will employment with the Company and the Company makes no guarantee, or
express or implied contract, of definite or continued employment with the
Company. This agreement will renew automatically for one or more additional
one
year periods (each, an “Additional
Term”
and,
together with the Initial Term, the “Term”)
unless
terminated at any time by either party upon 30-day written notice.
3. Duties.
The
Executive shall serve as the Company’s Chief Executive Officer and shall
perform, subject to the direction of the Company’s Directors (the “Board”),
duties as may be from time to time directed by Board. The Executive shall devote
substantially all of his business time, attention and energies to the business
and affairs of the Company and shall use his best efforts to advance the best
interests of the Company and shall not during the Term be actively engaged
in
any other business activity, whether or not such business activity is pursued
for gain, profit or other pecuniary advantage, that will interfere with the
performance by the Executive of his duties hereunder or the Executive’s
availability to perform such duties or that will adversely affect, or negatively
reflect upon, the Company.
4. Compensation.
(a) Base
Salary.
In
consideration for Executive’s services under this Agreement, the Company hereby
agrees to pay Executive a base salary of $5,000 per month during the Term (the
“Base
Salary”).
(b) Benefits.
During
the Term, Executive shall be entitled to up to $75,000 annually in lieu of
any
employee benefits (the “Benefit Allowance”).
The
Benefit Allowance will be payable monthly and Executive may use the Benefit
Allowance in his discretion.
(c) Reimbursement.
The
Company shall reimburse Executive for reasonable out-of-pocket business expenses
incurred by Executive (“Expenses”)
on the
Company’s behalf. Notwithstanding the foregoing, Executive must properly account
to the Company all such expenses in accordance with the rules and regulations
of
the Internal Revenue Service under the Internal Revenue Code of 1986, as
amended, and in accordance with any standard policies of the Company relating
to
reimbursement of business expenses as such policies exist or may be implemented
in the future.
(d) Bonus.
At the
sole discretion of the Compensation Committee of the Board, Executive
may
receive an annual bonus based upon his performance on behalf of the Company
during any calendar year payable within 90 days following the end of such
calendar year.
(e) Stock
Options.
On the
Effective Date, the Company shall grant Executive a stock option (the
“Option”)
to
purchase 2,000,000 shares of the Company’s common stock at an exercise price
equal to the fair market value of the common stock on the date of grant. The
other terms of the Option are set forth in the stock option agreement between
the Company and Executive on the date hereof (the “Stock
Option Agreement”).
5. Confidentiality.
Except
as specifically permitted by an authorized officer of the Company or by written
Company policies, Executive will not, either during or after his employment
by
the Company, use Confidential Information (as defined below) for any purpose
other than the business of the Company or disclose it to any person who is
not
also an executive of the Company unless authorized by the Board. When
Executive’s employment with the Company ends, Executive will promptly deliver to
the Company all records and any compositions, articles, devices, apparatuses
and
other items that disclose, describe, or embody Confidential Information,
including all copies, reproductions, and specimens of the Confidential
Information in Executive’s possession, regardless of who prepared them and will
promptly deliver any other property of the Company in Executive’s possession,
whether or not Confidential Information. As used in this Section 5,
“Confidential Information” means information that is not generally known and
that is proprietary to the Company or that the Company is obligated to treat
as
proprietary, including information known by Executive prior to the Effective
Date. Any information that Executive reasonably considers Confidential
Information, or that the Company treats as Confidential Information, will be
presumed to be Confidential Information (whether the Executive or others
originated it and regardless of how the Executive obtained it).
6. Non-Solicitation
and Non-Competition.
Executive agrees that, during the Term and for a
period
of time (the “Restricted
Period”,
as
determined below) following the termination of Executive’s employment with the
Company for any or no reason, Executive will not, without the prior written
consent of the Company, directly or indirectly, do or commit any of the
following acts:
(a) Induce,
entice, hire or attempt to hire, employ or otherwise contract with any employee
or independent contractor of the Company; provided, that Executive may contract
with independent contractors for matters that are not related to the business
activities of the Company.
(b) Induce,
or attempt to induce any employee or independent contractor of the Company
to
leave the employ or cease doing business with the Company.
(c) Induce,
or attempt to induce, any customer, supplier, vendor or any other person to
cease doing business with the Company.
(d) Induce
or
attempt to induce any individual to violate any agreement with the Company.
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Executive
further agrees that, during the Term and the Restricted Period, he will not,
without the prior written consent of the Company, directly or indirectly, render
services, advice or assistance to any corporation, person, organization or
other
entity which engages in the mining business, as an employee, independent
contractor, officer, director, manager, beneficial owner, partner, member
shareholder (other than being a shareholder of a corporation required to file
periodic reports with the Securities and Exchange Commission under Section
13 or
15(d) of the Securities Exchange Act of 1934, as amended, where the
shareholder’s total holdings are less than three percent (3%)). The covenants
and provisions set forth in Section 5 and Section 6 of this Agreement will
survive the termination of this Agreement. If Executive’s employment with the
Company is terminated within one (1) year of the Effective Date, then the
Restricted Period is three (3) months. If Executive’s employment with the
Company is terminated on or following the one (1) year anniversary of the
Effective Date, but prior to the two (2) year anniversary of the Effective
Date,
then the Restricted Period is six (6) months. If Executive’s employment with the
Company is terminated on or following the two (2) year anniversary of the
Effective Date, but prior to the three (3) year anniversary of the Effective
Date, then the Restricted Period is nine (9) months. If Executive’s employment
with the Company is terminated on or following the three (3) year anniversary
of
the Effective Date, then the Restricted Period is one (1) year.
7. Termination
For Cause.
Notwithstanding any provision of this Agreement to the contrary, Executive’s
employment hereunder shall be terminated upon Executive’s death and may also be
terminated by written notice to Executive from the Board for Cause, effective
upon the date of delivery of such notice. Any of the following actions by
Executive
shall
constitute “Cause”:
(a) Executive’s
commission of embezzlement, theft or other dishonest or fraudulent acts of
a
material nature;
(b) Material
misconduct by Executive
in respect of the duties or obligations of Executive under this
agreement,
including, without limitation, insubordination with respect to directions
received by Executive from
the
Board;
(c) Executive’s
conviction of any felony or a misdemeanor involving a crime of moral turpitude
(including entry of a nolo contendere plea);
(d) Executive’s
willful malfeasance or gross negligence which has a material adverse effect
on
the Company or its business or any affiliate of the Company, including, but
not
limited to, any officer, director, Executive
or
shareholder of the Company, provided that the Company gives notice thereof
identifying the conduct alleged and, if such action is capable of cure, gives
Executive 10 business days to cure;
(e) Persistent
inattention or failure by Executive to discharge his duties and responsibilities
due to alcohol or drug abuse, provided that the Company gives notice thereof
identifying the conduct alleged, and, if such action is capable of cure, gives
Executive
10
business days to cure;
(f) A
material breach by Executive of any provision of this agreement that is not
cured by Executive within 10 business days after written notice thereof is
given
to Executive by the Company.
Any
determination of Cause will be made by the Board. With respect to any such
determination, the Board will act fairly and in good faith and will give
Executive and his counsel an opportunity to appear and be heard at a meeting
with the Board and present evidence on Executive’s behalf.
3
8. Compensation
Following Termination.
If
Executive’s employment is terminated within one year of the Effective Date by
the Company for any reason other than because of Executive’s death or for Cause,
then the Company (or its successor, as applicable) shall pay Executive his
accrued compensation through the date of such termination and pay to Executive
$56,250 in cash (subject to applicable withholdings) to be paid as directed
by
Executive. If Executive’s employment is terminated on or following the one year
anniversary of the Effective Date, but prior to the two year anniversary of
the
Effective Date by the Company for any reason other than because of Executive’s
death or for Cause, then the Company (or its successor, as applicable) shall
pay
Executive his accrued compensation through the date of such termination and
pay
to Executive $112,500 in cash (subject to applicable withholdings) to be paid
as
directed by Executive. If Executive’s employment is terminated on or following
the two year anniversary of the Effective Date, but prior to the three year
anniversary of the Effective Date by the Company for any reason other than
because of Executive’s death or for Cause, then the Company (or its successor,
as applicable) shall pay Executive his accrued compensation through the date
of
such termination and pay to Executive $168,750 in cash (subject to applicable
withholdings) to be paid as directed by Executive. If Executive’s employment is
terminated on or following the three year anniversary of the Effective Date,
for
any reason other than because of Executive’s death or for Cause, then the
Company (or its successor, as applicable) shall pay Executive his accrued
compensation through the date of such termination and pay to Executive $225,000
in cash (subject to applicable withholdings) to be paid as directed by
Executive.
9. Dispute
Resolution.
Any
dispute arising out of or related to Executive’s employment with the Company or
this Agreement or any breach or alleged breach hereof shall be exclusively
decided by binding arbitration before a single arbitrator in a mutually
convenient location pursuant to and in accordance with the rules of the American
Arbitration Association. The arbitrator shall have the power and authority
to
issue temporary and permanent awards of injunctive and equitable relief.
Attorney’s fees in each case shall be paid to the prevailing party by the
non-prevailing party. Executive irrevocably waives Executive’s right, if any, to
have any disputes between Executive and the Company arising out of or related
to
Executive’s employment with the Company or this Agreement decided in any
jurisdiction or venue other than by binding arbitration pursuant to the terms
hereof. The promises by the Company and Executive to arbitrate, which the
parties agree can be a less expensive and quicker way to resolve disputes than
litigating them in court or before other agencies or tribunals, constitutes
adequate, reasonable and sufficient mutual consideration for the enforcement
of
this Agreement.
10. General
Provisions.
(a) Successors
and Assigns.
This
Agreement is binding on and inures to the benefit of the Company’s successors
and assigns, all of which are included in the term the “Company” as it is used
in this Agreement; provided,
however,
that
the Company may assign this Agreement only in connection with a merger,
consolidation, assignment, sale or other disposition of substantially all of
its
assets or business.
(b) Amendment.
This
Agreement may be modified or amended only by a written agreement signed by
both
the Company and Executive.
(c) Governing
Law.
The laws
of Minnesota will govern the validity, construction, and performance of this
Agreement, without regard to any choice of law or conflict of law rules and
regardless of the location of any arbitration under this Agreement.
(d) Construction.
Wherever possible, each provision of this Agreement will be interpreted so
that
it is valid under the applicable law. If any provision of this Agreement is
to
any extent invalid under the applicable law, that provision will still be
effective to the extent it remains valid. The remainder of this Agreement also
will continue to be valid, and the entire Agreement will continue to be valid
in
other jurisdictions.
4
(e) No
Waiver.
No
failure or delay by either the Company or Executive in exercising or enforcing
any right or remedy under this Agreement will waive any provision of the
Agreement. Nor will any single or partial exercise by either the Company or
Executive of any right or remedy under this Agreement preclude either of them
from otherwise or further exercising these rights or remedies, or any other
rights or remedies granted by any law or any related document.
(f) Entire
Agreement.
This
Agreement together with the Stock Option Agreement supersedes all previous
and
contemporaneous oral negotiations, commitments, writings, and understandings
between the parties concerning the matters in this Agreement. In the case of
any
conflict between the terms of this Agreement and any other agreement, writing
or
understanding, this Agreement will control.
(g) Notices.
All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be hand delivered or sent by registered or
certified first class mail, postage prepaid, and shall be effective upon
delivery if hand delivered, or three days after mailing if mailed to the
addresses stated below. These addresses may be changed at any time by like
notice:
If
to the Company:
|
900
IDS Center, 00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000
|
If
to Executive:
|
Xxxxxxx
X. Xxxx
|
(h) Counterparts.
This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement binding on all parties. Each party
shall
become bound by this Agreement immediately upon signing any counterpart,
independently of the signature of any other party. In making proof of this
Agreement, however, it will be necessary to produce only one copy signed by
the
party to be charged. Signatures
delivered electronically or via facsimile shall be valid and binding to the
same
extent as original signatures.
Signature
Page Follows
5
IN
WITNESS WHEREOF, the undersigned Executive and the Company have executed this
Agreement effective as of the Effective Date.
a
Minnesota corporation
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By
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/s/ Xxxx X. Xxxxx
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Xxxx
X. Xxxxx
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Its:
CFO
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/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
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Signature
Page of Employment Agreement between
Wits
Basin Precious Minerals Inc. and Xxxxxxx X. Xxxx