AMENDED AND RESTATED ENGAGEMENT AGREEMENT
EXHIBIT
10.1
AMENDED
AND RESTATED
AGREEMENT
effective as of the 1st day of
January, 2009 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 “Company”), and Xxxx Xxxxxxxx
(hereinafter referred to as “Xxxxxxxx”).
This
agreement (the “Agreement”) amends and restates the Engagement Agreement by and
between the Company and Xxxxxxxx originally effective on October 1,
2008.
IN
CONSIDERATION OF the premises and mutual covenants and conditions herein
contained, the Company and Xxxxxxxx hereby agree as follows:
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as the
criteria necessary to earn a bonus, may be changed at any time by the Company
and shall be within the sole discretion of the Company. All bonuses
paid pursuant to this Agreement will be subject to applicable withholdings and
deductions, if applicable, and will be paid no earlier than fifteen (15) days
and no later than ninety (90) days after the Company’s fiscal year end for which
the bonus is earned (but in no event later than the March 15 of the calendar
year after the calendar year in which the bonus is earned). If
Xxxxxxxx’x engagement terminates, voluntarily or by the Company for Cause, prior
to the last day of the fiscal year for which the bonus applies, Xxxxxxxx
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. Xxxxxxxx hereby expressly forfeits and waives any such
unpaid bonus. In the event that Xxxxxxxx’x engagement
terminates without cause pursuant to Section 7(b) or by Xxxxxxxx for breach
pursuant to Section 7(e) prior to the last day of the fiscal year for which the
bonus applies, Xxxxxxxx will be entitled to a bonus pro rated for the period
from the beginning of that fiscal year to the date of termination and payable no
later than 60 days following Xxxxxxxx’x termination.
(c) As
an independent contractor, Xxxxxxxx will not participate in the Company’s Group
Medical program or 401K pension program.
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imprisonment
or involves embezzlement, dishonesty, or activities injurious to the Company or
its reputation. Whether Cause exists under this Agreement shall be
determined by the Company in its reasonable discretion.
(c) Death or
Disability. This Agreement shall terminate upon the death or
disability of Xxxxxxxx. For purposes of this subsection (c),
“disability” shall mean the inability of Xxxxxxxx
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.
(i) Anything
in this Agreement to the contrary notwithstanding, if on the date of termination
of Xxxxxxxx’x engagement with Company,
(A) Xxxxxxxx
would not have a separation from service within the meaning of Section
409A(a)(2)(A)(i) (“Separation From Service”) of the Internal Revenue Code of
1986, as amended (the “Code”), and as a result of such termination of engagement
would receive any payment that, absent the application of this
Section 7(g)(i)(A), would be subject to additional tax imposed pursuant to
Section 409A(a) of the Code, then such payment shall instead be payable on the
date that is the earliest of (1) Xxxxxxxx’x Separation From Service, (2) the
date Xxxxxxxx becomes disabled (within the meaning of Section 409A(a)(2)(C) of
the Code), (3) Xxxxxxxx’x death, or (4) such other date as will not
result in such payment being subject to such additional tax; and if
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(B) Xxxxxxxx
is a specified employee within the meaning of Section 409A(a)(2)(B)(i) of the
Code and would receive any payment sooner than six months after Xxxxxxxx’x
Separation From Service that, absent the application of this Section 7(g)(i)(B),
would be subject to additional tax imposed pursuant to Section 409A(a) of the
Code as a result of such status as a specified employee, then such payment shall
instead be payable on the date that is the earliest of (1) six months after
Xxxxxxxx’x Separation From Service, (2) Xxxxxxxx’x death, or (3) such
other date as will not result in such payment being subject to such additional
tax.
(ii) It
is the intention of the parties that payments or benefits payable under this
Agreement not be subject to the additional tax imposed pursuant to Section 409A
of the Code. To the extent such potential payments or benefits could
become subject to such Section, the parties shall cooperate to amend this
Agreement with the goal of giving Xxxxxxxx the economic benefits described
herein in a manner that does not result in such tax being imposed.
(iii) In
the event that a payment or benefit payable under this Agreement is subject to
the additional tax imposed by Section 409A of the Code, and Xxxxxxxx has not
been uncooperative in any attempts of the Company to amend this Agreement to
avoid such additional tax, Company shall (at Xxxxxxxx’x option) pay directly, or
reimburse Xxxxxxxx for such additional tax and any interest and penalty related
thereto (the “409A Amounts”) within 10 days of Xxxxxxxx’x submission to Company
of the taxing authority’s determination of amounts due (which determination must
be submitted by Xxxxxxxx to Company within 30 days of receipt by Xxxxxxxx), and
in the case of Xxxxxxxx’x payment, evidence of such payment. At the
same time as Company’s payment or reimbursement, Company shall pay Brownlie a
gross-up amount to cover income, excise, and other applicable taxes on the 409A
Amounts and on the gross-up amount (before this further
gross-up). For purposes of calculating the gross-up amounts for
taxes, Xxxxxxxx shall be deemed to be taxed at the highest marginal rate under
all applicable local, state, federal, and foreign tax laws for which the payment
is made.
(a) In
the event that this Agreement is terminated for "cause" pursuant to
subsection 7(a), the Company shall pay Xxxxxxxx, at the time of such
termination, only the fees and any reasonable and necessary business expenses
incurred by him in connection with his services (less any applicable
withholdings and deductions), all 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), subject to
Section 7(g)(i) of the Agreement, the Company shall pay Xxxxxxxx a cash
termination payment equal to the greater of Xxxxxxxx’x Annual Fee in effect upon
the date of termination or the balance of Annual Fees remaining in the then
current term of the Agreement, payable in equal monthly installments beginning
in the month following Xxxxxxxx’x termination. Such termination payments shall
cease immediately in the event that Xxxxxxxx violates any provision of Sections
9 and/or 10 herein. In addition, the Company shall pay Xxxxxxxx
any reasonable and necessary business expenses incurred by Xxxxxxxx in
connection with his duties, all to the date of termination and payable in a lump
sum, less any applicable
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holdings
and deductions, as soon as administratively practicable (but in no event later
than 60 days) following Xxxxxxxx’x termination.
(c) In
the event this Agreement is terminated at his election pursuant to subsection
7(d) or due to Xxxxxxxx’x death or disability pursuant to subsection 7(c), the
Company shall pay to Xxxxxxxx, the same amount as provided for in subsection
8(a) above, in the same manner as provided for therein.
(d)
In the event this Agreement is terminated for material breach by Xxxxxxxx
pursuant to subsection 7(e), the Company shall pay to Xxxxxxxx
termination payments in an amount equal to cash
termination payments calculated pursuant to Section 8(b). Subject to
Section 7(g)(i) of the Agreement, such termination payments shall be paid in
equal monthly installments to Xxxxxxxx beginning in the month following
Xxxxxxxx’x termination. Such termination payments shall be paid so
long as Xxxxxxxx is not in breach of any term of this Agreement, including,
without limitation, Sections 9 and 10 hereof. In addition, the
Company shall pay to Xxxxxxxx all accrued fees and any reasonable and necessary
business expenses incurred by Xxxxxxxx in connection with his duties, all to the
date of termination and payable in a lump sum, less applicable holdings and
deductions, as soon as administratively practicable (but in no event later than
60 days) following Xxxxxxxx’x termination.
(e) In
the event of a Termination Upon a Change of Control as defined in the Change In
Control Agreement, the Company’s obligation to Xxxxxxxx shall be as set forth in
the Change In Control Agreement.
(a) The
term “Confidential Information” shall include, but not be limited to, the whole
or any portion or phase of (i) any confidential, or proprietary or trade secret,
technical, business, marketing or financial information, whether pertaining to
(1) the Company or its Affiliates, (2) its or their suppliers, or (3) any third
party which the Company or its Affiliates is under an obligation to keep
confidential including, but not limited to, methods, know-how, techniques,
systems, processes, software programs, works of authorship, supplier lists,
projects, plans, and proposals, and (ii) any software programs and programming
prepared for the Company’s benefit whether or not developed, in whole or in part
by Xxxxxxxx. For purposes of this Agreement, “Confidential
Information” shall include, but shall not be limited to, strategies, analysis,
concepts, ideas, or plans; operating techniques; demographic and trade area
information; prospective site locations know-how; improvements; discoveries,
developments; designs, techniques, procedures; methods; machinery, devices;
drawings; specifications; forecasts; new products; research data, reports, or
records; marketing or business development plans, strategies, analysis, concepts
or ideas; contracts; general financial information about or proprietary to the
Company, including, but not limited to, unpublished financial statements,
budgets, projections, licenses, and costs; pricing; personnel information; and
any and all other trade secrets, trade dress, or proprietary information, and
all concepts or ideas in or reasonably related to the Company’s
business. All such Confidential Information is extremely valuable and
is intended to be kept secret to the Company; is the sole and exclusive property
of the Company or its Affiliates; and, is subject to the restrictive covenants
set forth herein. The term Confidential
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Information
shall not include any information generally available to the public or publicly
disclosed by the Company (other than by the act or omission of Xxxxxxxx),
information disclosed to Xxxxxxxx by a third party under no duty of
confidentiality to the Company or its Affiliates, or information required by law
or court order to be disclosed by Xxxxxxxx.
(b) Xxxxxxxx
shall not, without the Company’s prior written approval, use, disclose, or
reveal to any person or entity any of the Company’s Confidential Information,
except as required in the ordinary course of performing duties
hereunder. Xxxxxxxx shall not use or attempt to use any Confidential
Information in any manner which has the possibility of injuring or causing loss,
whether directly or indirectly, to the Company or any of its
Affiliates.
(c) In
the event that Xxxxxxxx’x engagement with the Company is terminated for any
reason whatsoever, he shall return to the Company, promptly upon the Company’s
written request therefore, any documents, photographs, tapes, discs, memory
devices, and other property containing Confidential Information which were
received by him during his engagement, without retaining copies
thereof.
(a) Engage in a “Competing
Business’’ in the “Territory”, as those terms are defined below, whether as a
sole proprietor, partner, corporate officer, employee, director, shareholder,
consultant, agent, independent contractor, trustee, or in any other manner by
which Xxxxxxxx holds any beneficial interest in a Competing Business, derives
any income from any interest in a Competing Business, or provides any service or
assistance to a Competing Business. “Competing Business” shall mean any business
that mines or produces minerals which is competitive with the business of the
Company or any of its Affiliates (defined below), as conducted or under
development at any time during the term of engagement. “Affiliates”
shall mean any entity controlled by or under common control with the Company or
any joint venture, partnership or other similar entity to which the Company is a
party. “Territory” shall mean anywhere in the state of Sonora,
Mexico. The provisions of this Section 10 will not restrict
Xxxxxxxx from owning less than five percent of the outstanding stock of a
publicly-traded corporation engaged in a Competing Business;
(b) Acquire, lease or
otherwise obtain or control any beneficial, direct or indirect interest in
mineral rights, or other rights or lands necessary to develop, any mineral
property in which the Company or any of its Affiliates at the time of
termination as a beneficial interest or is actively seeking to acquire, or that
is within a distance of five (5) kilometers from any point on the outer
perimeter of any such property in which the Company or any of its affiliates has
a beneficial interest or that it is seeking to acquire;
(c) Conduct
any exploration or production activities or otherwise work on or in respect of
any mineral property within a distance of five (5) kilometers from any point on
the outer
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perimeter
of any mineral property in which the Company or any of its affiliates then has a
beneficial interest or is actively seeking to acquire;
(d) (i) Contact
or solicit, or direct or assist others to contact or solicit, for the purpose of
promoting any person’s or entity’s attempt to compete with the Company or any of
its Affiliates, in any business carried on by the Company or any of its
Affiliates during the period in which Xxxxxxxx was a consultant of the Company,
any suppliers, independent contractors, vendors, or other business associates of
the Company or any of its Affiliates that were existing or identified
prospective suppliers, independent contractors, vendors, or business associates
during such period, or (ii) otherwise interfere in any way in the
relationships between the Company or any of its Affiliates and their suppliers,
independent contractors, vendors, and business associates;
(e) (i) Solicit, offer
engagement to, otherwise attempt to hire, or assist in the hiring of any
employee or officer of the Company or any of its Affiliates;
(ii) encourage, induce, assist or assist others in inducing any such person
to terminate his or her engagement with the Company or any of its Affiliates; or
(iii) in any way interfere with the relationship between the Company or any
of its Affiliates and their employees; or
(f) Make any public
statement or perform or do any other act prejudicial or injurious to the
reputation or goodwill of the Company or any of its Affiliates or otherwise
interfere with the business of the Company or any of its
Affiliates.
12.
Forfeiture of
Termination
Payments. If Xxxxxxxx breaches Sections 9 or 10 of this
Agreement during the term that termination payments are made pursuant to
Sections 8(b), 8(c) or 8(d) of this Agreement, Xxxxxxxx shall pay back to the
Company all termination payments received to date. Nothing contained
in this Section 12 shall be construed as prohibiting the Company from pursuing
any other remedies available to it in the event of the breach of Sections 9 or
10, including the equitable remedies set forth in Section 15.
13.
Forfeiture of Profits
Related to Option Exercises. If Xxxxxxxx breaches Section 9 or
10 of this Agreement, the Company shall have the right to repurchase any or all
shares of common stock of the Company purchased by Xxxxxxxx upon the exercise of
options within the twelve
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(12)-month
period immediately preceding the breach at the exercise price of the option (the
“Repurchase Amount”), or if Xxxxxxxx no longer holds such shares of common stock
purchased on exercise of options, Xxxxxxxx shall pay to the Company an
amount (the “Profit Amount”) equal to the gross profits that Xxxxxxxx
received or to be received on the sale of such shares calculated as the
aggregate sale price of such shares of common stock less the exercise
price. The Company may exercise this right within 90 days of its
discovery of a breach, by a written notice (“Forfeiture Notice”) to Executive
and, as the case may be: (i) if Executive has the shares, Executive shall
immediately deliver them to the Company and, thereafter, the Company shall pay
the Repurchase Amount to Executive within thirty (30) days by certified or bank
check or by wired funds; and (ii) If Executive no longer has the shares,
Executive shall pay the Profit Amount to the Company within thirty (30) days of
the date of the Forfeiture Notice. If the Executive has transferred
such shares in a transaction which is not a sale (including, for example, a gift
to a family member or entity), the Profit Amount payable by Executive to the
Company shall be an amount equal to the difference between the value of such
shares on the date of the Forfeiture Notice and the exercise price. Nothing
contained in this Section 13 shall be construed as prohibiting the Company from
pursuing any other remedies available to it in the event of the breach of
Sections 9 or 10, including the equitable remedies set forth in Section
15.
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(i)
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If
to the Company, to:
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Capital
Gold Corporation
00 Xxxxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Tel. No.:
(000) 000-0000
Fax No..:
(000) 000-0000
Attention:
President
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(ii)
|
If
to Xxxxxxxx, to:
|
Xxxx
Xxxxxxxx
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Notice of
any change in any such address shall also be given in the manner set forth
above. Whenever the giving of notice is required, the giving of such notice may
be waived by the party entitled to receive such notice.
25. Governing Law. This
Agreement shall be construed and enforced in accordance with New York law except
for any New York conflict-of-law principle that might require the application of
the laws of another jurisdiction.
26. Submission to Jurisdiction:
Service: Waivers. With respect to any claim arising out of
this Agreement, each party hereto (a) irrevocably submits, for itself and its
property, to the jurisdiction of the state court located in the City and County
of New York, New York, the federal court located in New York, New York, and
appellate courts therefrom, (b) agrees that the venue for any suit, action or
proceeding arising out of or relating to this Agreement shall be exclusive to
and limited to such courts, and (c) irrevocably waives any objection it may have
at any time to the laying of venue of any suit, action or proceeding arising out
of or relating to this Agreement brought in any such court, irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum and further irrevocably waives the right
to object, with respect to such claim, suit, action or proceeding brought in any
such court that such court does not have jurisdiction over it. Each party
irrevocably consents to the service of process in any suit, action or proceeding
in any of the aforesaid courts by the mailing of copies of process to the other
party or parties hereto, by certified or registered mail at the address
specified in Section 22.
CAPITAL
GOLD CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx
Xxxxxxxx, President
/s/ Xxxx Xxxxxxxx
Xxxx
Xxxxxxxx
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EXHIBIT
A
AGREEMENT
REGARDING
CHANGE
IN CONTROL
THIS
AGREEMENT (“Agreement”), is made and entered into as of the 1st day
of January, 2009 (the “Effective Date”) by and between Capital Gold Corporation
(the “Company”) and Xxxx Xxxxxxxx (the “Executive”)
WITNESSETH
THAT:
(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.
(a) The
Executive shall be entitled to a lump sum payment in cash no later than twenty
(20) business days after the Executive’s date of termination equal to the sum
of:
(i) an
amount equal to three times the Executive’s base salary in effect on the date of
the Change in Control or, or if greater, as in effect immediately prior to the
date of termination; plus
(ii) an
amount equal to three times the Executive’s bonus award for the year immediately
preceding the year of the Change in Control.
The amount payable under this paragraph
(d) shall be inclusive of the amounts, if any, to which the Executive would
otherwise be entitled or by law and shall be in addition to (and not inclusive
of) any amount payable under any written agreement(s) directly between the
Executive and the Company or any of its subsidiaries.
(b) All
unvested Company options shall immediately become vested, and any exercise must
occur no later than March 15 of the calendar year after the date of
termination.
(c) The
Company shall provide the Executive with and, at the Executive’s option,
directly pay for or reimburse the Executive for outplacement services and tax
and financial counseling suitable to the Executive’s position, from providers
selected by the Executive for services through the end of the second taxable
year of Executive after the taxable year of Executive’s separation from service
(within the meaning of Section 409A(a)(2)(A)(i) of the Code) with the Company,
or, if earlier, the date on which the Executive becomes employed by another
employer. In the event the Executive has paid for any such services,
the Company shall reimburse the Executive for such payments within 10 days of
submission to the Company of a copy of the provider’s invoice for services and
evidence of payment. Any request for reimbursement for such expenses
shall be submitted no later than 30 days before the end of the third taxable
year of the Executive following the taxable year of the Executive in which the
separation from service occurred.
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(a) For
purposes of determining the Make-Whole Amount, the Executive shall be deemed to
be taxed at the highest marginal rate under all applicable local, state, federal
and foreign income tax laws for the year in which the Make-Whole Amount is
paid. The Make-Whole Amount payable with respect to an Excise Tax
shall be paid by the Company coincident with the Payment with respect to which
such Excise Tax relates.
(b) All
calculations under this Section 5 shall be made initially by the Company and the
Company shall provide prompt written notice thereof to the Executive to enable
the Executive to timely file all applicable tax returns. Upon request
of the Executive, the Company shall provide the Executive with sufficient tax
and compensation data to enable the Executive or the Executive’s tax advisor to
independently make the calculations described in subparagraph (a) above and the
Company shall, at the Executive’s option, pay the Executive’s advisor directly
or reimburse the Executive for reasonable fees and expenses incurred for any
such verification. Any payment or reimbursement shall be made within
10 days of submission of the service provider’s invoice to the Company, and in
the case of reimbursement, evidence of payment. Executive shall be
submit a copy of the service provider’s invoice for such services to the Company
within 60 days of its receipt by the Executive.
(c) If
the Executive gives written notice to the Company of any objection to the
results of the Company’s calculations within 60 days of the Executive’s receipt
of written notice thereof, the dispute shall be referred for determination to
independent tax counsel selected by the Company and reasonably acceptable to the
Executive (“Tax Counsel”). The Company shall pay all fees and
expenses of such Tax Counsel. Pending such determination by Tax
Counsel, the Company shall pay the Executive the Make-Whole Amount as determined
by it in good faith.
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The
Company shall pay the Executive any additional amount determined by Tax Counsel
to be due under this Section 5 (together with interest thereon at a rate equal
to 120% of the Federal short-term rate determined under section 1274(d) of the
Code) within 10 days after such determination.
(d) The
determination by Tax Counsel shall be conclusive and binding upon all parties
unless the Internal Revenue Service, a court of competent jurisdiction, or such
other duly empowered governmental body or agency (a “Tax Authority”) determines
that the Executive owes a greater or lesser amount of Excise Tax with respect to
any Payment than the amount determined by Tax Counsel.
(e) If
a Taxing Authority makes a claim against the Executive which, if successful,
would require the Company to make a payment under this Section 5, the Executive
agrees to contest the claim with counsel reasonably satisfactory to the Company,
on request of the Company subject to the following conditions:
(i) The
Executive shall notify the Company of any such claim within 10 days of becoming
aware thereof. In the event that the Company desires the claim to be
contested, it shall promptly (but in no event more than 30 days after the notice
from the Executive or such shorter time as the Taxing Authority may specify for
responding to such claim) request the Executive to contest the
claim. The Executive shall not make any payment of any tax which is
the subject of the claim before the Executive has given the notice or during the
30-day period thereafter unless the Executive receives written instructions from
the Company to make such payment together with an advance of funds sufficient to
make the requested payment plus any amounts payable under this Section 5
determined as if such advance were an Excise Tax, in which case the Executive
will act promptly in accordance with such instructions.
(ii) If
the Company so requests, the Executive will contest the claim by either paying
the tax claimed and suing for a refund in the appropriate court or contesting
the claim in the United States Tax Court or other appropriate court, as directed
by the Company; PROVIDED, HOWEVER, that any request by the Company for the
Executive to pay the tax shall be accompanied by an advance from the Company to
the Executive of funds sufficient to make the requested payment plus any amounts
payable under this Section 5 determined as if such advance were an Excise
Tax. If directed by the Company in writing the Executive will take
all action necessary to compromise or settle the claim, but in no event will the
Executive compromise or settle the claim or cease to contest the claim without
the written consent of the Company; PROVIDED, HOWEVER, that the Executive may
take any such action if the Executive waives in writing the Executive’s right to
a payment under this Section 5 for any amounts payable in connection with such
claim. The Executive agrees to cooperate in good faith with the
Company in contesting the claim and to comply with any reasonable request from
the Company concerning the contest of the claim, including the pursuit of
administrative remedies, the appropriate forum for any judicial proceedings, and
the legal basis for contesting the claim. Upon request of the
Company, the Executive shall take appropriate appeals of any judgment or
decision that would require the Company make a payment under this Section
5. Provided that Executive is in compliance with the provisions this
section, the Company shall be liable for and indemnify the Executive against any
loss in connection with, and all costs and expenses,
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including
attorneys’ fees, which may be incurred as a result of, contesting the claim, and
shall provide to the Executive within 30 days after each written request
therefor by the Executive cash advances or reimbursement for all such costs and
expenses actually incurred or reasonably expected to be incurred by the
Executive as a result of contesting the claim.
(f) Should
a Tax Authority finally determine that an additional Excise Tax is owed, then
the Company shall pay an additional Make-Whole Amount to the Executive in a
manner consistent with this Section 5 with respect to any additional Excise Tax
and any assessed interest, fines, or penalties. If any Excise Tax as
calculated by the Company or Tax Counsel, as the case may be, is finally
determined by a Tax Authority to exceed the amount required to be paid under
applicable law, then the Executive shall repay such excess to the Company within
30 days of such determination; provided that such repayment shall be reduced by
the amount of any taxes paid by the Executive on such excess which is not offset
by the tax benefit attributable to the repayment.
(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
A-6
or the
entity surviving such merger or consolidation is then a subsidiary, the ultimate
parent thereof and (B) which results in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company, at least
50% of the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the Company’s
then outstanding securities; or
(d) the
date on which the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company, in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Notwithstanding
the foregoing, a “Change in Control” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
For
purposes of this Agreement: “Affiliate” shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act; “Beneficial Owner” shall
have the meaning set forth in Rule 13d-3 under the Exchange Act; “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended from time to time;
and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company.
A-7
(a) The
Company enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control, provided that a Potential Change in Control
described in this paragraph (a) shall cease to exist upon the expiration or
other termination of all such agreements;
(b) Any
Person (without regard to the exclusions set forth in subsections (i) through
(iv) of such definition) publicly announces an intention to take or to consider
taking actions the consummation of which would constitute a Change in Control;
provided that a Potential Change in Control described in this paragraph (b)
shall cease to exist upon the withdrawal of such intention, or upon a
determination by the Board that there is no reasonable chance that such actions
would be consummated;
(c) Any
Person becomes the Beneficial Owner, directly or indirectly, of securities of
the Company representing 20% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the Company’s then
outstanding securities; or
(d) The
Board adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control exists; provided that a Potential Change in Control
described in this paragraph (d) shall cease to exist upon a determination by the
Board that the reasons that gave rise to the resolution providing for the
existence of a Potential Change in Control have expired or no longer
exist.
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.
A-8
any
action by reason of such breach will not deprive such party of the right to take
action at any time while such breach continues.
(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
A-9
with a
copy (which shall not constitute notice) to:
Chief
Financial Officer
Capital
Gold Corporation
00 Xxxxxx
Xxxxxx
00xx
Xxxxx
Xxx Xxxx,
XX 00000
or to the
Executive:
Xxxx
Xxxxxxxx
Each
party, by written notice furnished to the other party, may modify the applicable
delivery address, except that notice of change of address shall be effective
only upon receipt.
(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.
A-10
copyrightable
material, business and/or technical information, trade secrets, solicitation of
employees, interference with relationships with other businesses, competition,
and other similar policies or agreement for the protection of the business and
operations of the Company and the subsidiaries.
/s/ Xxxx
Xxxxxxxx
Xxxx
Xxxxxxxx
CAPITAL
GOLD CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx, President
ATTEST:
/s/
Xxxxxxxxxxx X. Xxxxxxx
Xxxxxxxxxxx
Xxxxxxx, CFO
A-11