EMPLOYMENT AGREEMENT
Exhibit
99
AGREEMENT
made as of the 8th day of August, 2007 by and between, Atlas Mining Company,
an
Idaho corporation with its principal offices at 000 X. Xxxxxx Xxx., Xxxxxx,
Xxxxx 00000, (the "Company"), and Xxxx X. Xxxxxxxxxx, whose address
is 0000 Xxxxxx Xxxxxxx, Xxxxxx, Xxxxxxxx, 00000, (the "Executive").
W
I T N E
S E T H:
WHEREAS,
the Company desires to obtain the benefit of the services of Executive, and
Executive desires to render such services, on the terms and conditions
hereinafter set forth:
NOW,
THEREFORE, the parties hereto, in consideration of the premises and mutual
covenants herein contained, hereby agree as follows:
Upon
the
execution of this Agreement, all prior employment agreements, whether written
or
oral, between Executive and the Company are terminated and have no further
force
or effect.
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1.
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Subject
to the terms and conditions hereinafter set forth, the Company hereby
employs the Executive, and the Executive hereby agrees to and enters
into
the employ of the Company, or of any parent, subsidiary, or affiliate
of
the Company as the Company shall from time to time select, for an
employment term commencing as of the 8th day of July, 2007 and continuing
for a period of three (3) years from such date (the "Term of
Employment"). At the end of the Term of Employment, this
Agreement shall automatically be renewed for additional one-year
periods
(“Extended Term of Employment”), unless either party provides at least 120
days written notice of its decision to terminate this
Agreement.
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2.
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During
the Term of Employment, the Executive shall devote such time, effort
and
attention to the business and affairs of the Company as Vice President,
Corporate Development and Strategy, and Corporate Secretary as the
Executive and the Board of Directors shall mutually
agree.
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3.
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For
all services to be rendered by the Executive in any capacity during
the
Term of Employment and any Extended Term of Employment, including,
without
limitation, services as an executive, officer, director or member
of a
committee of the Company or its subsidiaries, divisions, and affiliates,
the Executive shall be paid an annual base salary of two hundred
thousand
and no /100 dollars ($200,000.00).
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(a). Such
salary will be earned and paid in regular installments in accordance with the
Company’s usual payment practices, but not less frequently than
semi-monthly. Such payments will be subject to such deductions by the
Company as the Company is from time to time required to make pursuant to law,
government regulations, or order, or by agreement with or consent of
Executive. The Company’s Board of Directors shall review Executive’s
annual base salary at least annually and may increase (but not decrease) the
Executive’s annual base salary in its sole discretion. Once
increased, such base salary shall not be decreased, and shall thereafter be
treated as his base salary hereunder.
(b). Executive
and his family members shall be entitled to participate in all group life
insurance, medical and hospitalization plans and pension and profit sharing
plans as are presently offered by the Company or which may hereafter during
the
Term of Employment be offered by the Company generally to its operating
executives.
(c). Executive
shall be entitled to work from Denver, Colorado and maintain residence in
Denver, Colorado or such other location of his choosing. The Company
shall reimburse Executive for all reasonable costs and expenses to travel to
the
Company’s headquarters or other locations for business purposes.
(d). Executive
shall be entitled to vacation in accordance with Company policy for executive
employees.
(e). Executive
shall be eligible to receive an annual bonus of up to 50% of Executive’s base
salary.
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4.
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In
addition to the foregoing salary, the Company hereby grants the
Executive:
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4.1
an
option to purchase up to 1,250,000 shares of the Company’s common stock at an
option exercise price equal to the closing price of the Company’s common stock
on the date of this Agreement (August 8, 2007), and may be exercised as
follows:
(a) 500,000
shares shall vest and become exercisable as of August 8, 2007;
(b) 500,000
shares shall vest and become exercisable on August 8, 2008, and;
(c) 250,000
shares shall vest and become exercisable on August 8, 2009.
The
Board
may elect to include these options into a formal option plan in the
future.
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4.2
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a
stock award of 250,000 shares of Company common stock (the “Shares”)
subject to the following
restrictions:
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(a)
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100,000
of the Shares shall vest on August 8, 2007 and be subject to no
restrictions;
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(b)
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100,000
of the Shares shall vest on August 8, 2008;
and
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(c)
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50,000
of the Shares shall vest on August 8,
2009.
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As
soon as reasonably practicable after
the Shares become vested as described above, the Company shall register
Executive as the owner of the Shares and subject to applicable withholding
of
taxes, deliver one or more unlegended, freely-transferable stock certificates
in
respect of the Shares.
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5.
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The
Executive shall be entitled to reimbursement by the Company for reasonable
expenses actually incurred by him on its behalf in the course of
his
employment by the Company, upon the presentation by the Executive,
from
time to time, of an itemized account of such expenditures, together
with
said vouchers and other receipts as the Company may
require.
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6.
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The
Company will maintain a key man life insurance policy on the Executive
of
which the beneficiary rights will be to the
Company.
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7.
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The
rights of the Executive or any other person to the payment of compensation
or other benefits under this Agreement shall not be assigned, transferred,
anticipated, conveyed, pledged, or encumbered except by will or the
laws
of descent and distribution; nor shall any such right or interest
be in
any manner subject to levy, attachment, execution, garnishment or
any
other seizure under legal, equitable, or other process for payment
of
debts, judgments, alimony, or separate maintenance, or reached or
transferred by operation of law in the event of bankruptcy, insolvency,
or
otherwise.
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8.
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In
the event of theft or fraud against the Company by Executive, the
Board of
Directors may at it discretion immediately terminate this
Agreement. In the case of theft or fraud against the Company by
Executive, any and all unexercised stock options and Shares shall
expire
upon termination of this Agreement and the Board of Directors may
determine if any severance pay or additional benefits will be extended
to
Executive. In the event of termination of this Agreement for
any reason, other than for theft or fraud against the Company by
the
Executive, the Executive shall be entitled to severance compensation
and
benefits as provided below.
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a.
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The
Executive shall be entitled to immediate severance compensation equal
to
two (2) years of Executive’s base
salary.
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b.
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The
Executive will be eligible to continue to participate in the employee
health insurance plans (to the extent permissible therein) for a
period of
two (2) years from the date of termination of this
Agreement. Cost of such participation for the Executive and
eligible dependents shall be born by the Company. The Executive
will have the option to continue this coverage for an additional
six
months or as the law will allow by paying the full monthly
premiums.
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c.
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The
Company shall vest all unvested equity, meaning Shares or other restricted
stock, restricted stock units, stock options or other
equity. The Executive shall have the right to exercise any
stock warrants or options granted prior to termination of this Agreement
for a period of 24 months from the date of termination of this
Agreement.
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The
Company shall tender all payments in lump sum and vest all equity
as
stated in this section within 15 days of the date of termination
of this
Agreement.
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9.
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Automatically,
upon a Change of Control the Company shall pay to Executive two (2)
times
Executive’s annual base salary. The Company shall also
automatically vest any and all unvested equity, meaning Shares or
other
restricted stock, restricted stock units, stock options or other
equity. Executive shall have 24 months from the date of the Change
of Control to exercise any stock options. The Company shall
tender all payments in lump sum and vest all equity as stated in
this
paragraph within 15 days of the closing date of the Change of
Control.
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“Change
of Control” shall mean:
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(i)
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the
acquisition by any individual, entity or group (within the meaning
of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or
more of either (a) the then-outstanding shares of common stock of
Atlas
Mining Company (the “Outstanding Company Common Stock”) or (b) the
combined voting power of the then-outstanding voting securities of
Atlas
Mining Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”); provided, however, that,
for purposes of this Section (I)(A), the following acquisitions shall
not
constitute a Change of Control: (w) any acquisition directly from
Atlas
Mining Company other than an acquisition by virtue of exercise of
a
conversion privilege, unless the security being so converted was
itself
acquired directly from Atlas Mining Company, (x) any acquisition
by the
Atlas Mining Company, (y) any acquisition by any employee benefit
plan (or
related trust) sponsored or maintained by Atlas Mining Company or
any
Affiliated Company or (z) any acquisition by any corporation pursuant
to a
transaction that complies with clauses (a), (b) and (c) of paragraph
(ii)
below; or
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(ii)
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consummation
of a reorganization, merger, statutory share exchange or consolidation
or
similar corporate transaction involving Atlas Mining Company or the
acquisition of assets or stock of another entity by the Atlas Mining
Company (each, a “Business Combination”), in each case unless, following
such Business Combination, (a) all or substantially all of the individuals
and entities that were the beneficial owners of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of the then outstanding
shares
of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that, as
a
result of such transaction, owns the Company or all or substantially
all
of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding
Company
Common Stock and the Outstanding Company Voting Securities, as the
case
may be, and (b) no Person (excluding any corporation resulting from
such
Business Combination or any employee benefit plan (or related trust)
of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, twenty percent (20%) or
more
of, respectively, the then-outstanding shares of common stock of
the
corporation resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior
to the
Business Combination, and (c) at least a majority of the members
of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board
of
Directors of Atlas Mining Company, providing for such Business
Combination; or
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(iii)
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a
sale or disposition of all or substantially all of the operating
assets of
the Company to an unrelated party;
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(iv)
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termination
of the employment of Xxxxxx X. Xxxxxx;
or
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(iv) approval
by the shareholders of the Company of a complete liquidation or dissolution
of
the Company
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10.
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Nothing
contained herein shall in any way affect or interfere with the Executive’s
rights or privileges under any qualified deferred compensation,
retirement, pension, profit sharing, bonus, insurance, hospitalization,
or
other employee benefit plan, program or arrangement, now in effect
or
hereafter adopted, in which the Executive is entitled to share or
participate as an employee of the
Company.
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11.
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11.1
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Anything
in this Agreement to the contrary notwithstanding, in the event that
the
Executive receives any amount or benefit (collectively, the “Covered
Payments”) (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose
actions
result in a change of ownership or effective control covered by Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
“Code”)
or any person affiliated with the Company or such person) that is
or
becomes subject to the excise tax imposed by or under Section 4999
of the
Code (or any similar tax that may hereafter be imposed) and/or any
interest or penalties with respect to such excise tax (such excise
tax,
together with such interest and penalties, is hereinafter collectively
referred to as the “Excise Tax”) by reason of the application of Section
280G(b)(2) of the Code, the Company shall pay to the Executive an
additional amount (the “Tax Reimbursement Payment”) such that after
payment by the Executive of all taxes (including, without limitation,
any
interest or penalties and any Excise Tax imposed on or attributable
to the
Tax Reimbursement Payment itself), the Executive retains an amount
of the
Tax Reimbursement Payment equal to the sum of (i) the amount of the
Excise
Tax imposed upon the Covered Payments, and (ii) without duplication,
an
amount equal to the product of (A) any deductions disallowed for
federal,
state or local income tax purposes because of the inclusion of the
Tax
Reimbursement Payment in Executive’s adjusted gross income, and (B) the
highest applicable marginal rate of federal, state or local income
taxation, respectively, for the calendar year in which the Tax
Reimbursement Payment is made or is to be made. The intent of this
paragraph 11.1 is that after the Executive pays federal, state and
local
income taxes and any payroll taxes, the Executive will be in the
same
position as if the Executive were not subject to the Excise Tax under
Section 4999 of the Code and did not receive the extra payments pursuant
to this paragraph 11.1, and this paragraph 11.1 shall be interpreted
accordingly.
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11.2.
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Except
as otherwise provided in subparagraph 11.1 above, for purposes of
determining whether any of the Covered Payments will be subject to
the
Excise Tax and the amount of such Excise Tax, such Covered Payments
will
be treated as “parachute payments” (within the meaning of Section
280G(b)(2) of the Code) and such payments in excess of the Code Section
280(G)(b)(3) “base amount” shall be treated as subject to the Excise Tax,
unless, and except to the extent that, the Company’s independent certified
public accountants or legal counsel (reasonably acceptable to the
Executive) appointed by such public accountants (or, if the public
accountants decline such appointment and decline appointing such
legal
counsel, such independent certified public accountants as promptly
mutually agreed on in good faith by the Company and the Executive)
(the
“Accountant”), deliver a written opinion to the Executive, reasonably
satisfactory to the Executive’s legal counsel, that, in the event such
reporting position is contested by the Internal Revenue Service,
there
will be a more likely than not chance of success with respect to
a claim
that the Covered Payments (in whole or in part) do not constitute
“parachute payments,” represent reasonable compensation for services
actually rendered (within the meaning of Section 280G(b)(4) of the
Code)
in excess of the “base amount” allocable to such reasonable compensation,
or such “parachute payments” are otherwise not subject to such Excise Tax
(with appropriate legal authority, detailed analysis and explanation
provided therein by the Accountant); and the value of any Covered
Payments
which are non-cash benefits or deferred payments or benefits shall
be
determined by the Accountant in accordance with the principles of
Section
280G of the Code.
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11.3.
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For
purposes of determining the amount of the Tax Reimbursement Payment,
the
Executive shall be deemed to pay federal, state and/or local income
taxes
at the highest applicable marginal rate of income taxation for the
calendar year in which the Tax Reimbursement Payment is made or is
to be
made, and to have otherwise allowable deductions for federal, state
and
local income tax purposes at least equal to those disallowed due
to the
including of the Tax Reimbursement Payment in the Executive’s adjusted
gross income.
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11.4.
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The
Tax Reimbursement Payment, or any portion thereof, payable by the
Company
shall be paid not later than the fifth day following the determination
by
the Accountant, and any payment made after such fifth day shall bear
interest at the rate provided in Code Section 1274(b)(2)(B) to the
extent
and for the period after such fifth day that Executive has an obligation
to make payment or estimated payment of the Excise Tax. The Company
shall use its best efforts to cause the Accountant to deliver promptly
the
initial determination required hereunder with respect to Covered
Payments
paid or payable in any calendar year; if the Accountant’s determination is
not delivered within ninety (90) days after Covered Payments are
paid or
distributed, the Company shall pay the Executive the Tax Reimbursement
Payment set forth in an opinion from counsel recognized as knowledgeable
in the relevant areas selected by Executive, and reasonably acceptable
to
the Company, within five days after delivery of such opinion. The
Company may withhold from the Tax Reimbursement Payment and deposit
into
applicable taxing authorities such amounts as they are required to
withhold by applicable law. To the extent that the Executive is
required to pay estimated or other taxes on amounts received by the
Executive beyond any withheld amounts, the Executive shall promptly
make
such payments. The amount of such payment shall be subject to later
adjustment in accordance with the determination of the Accountant
as
provided herein
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12.
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The
Company makes no representations, guaranty, warranty, or other assurance
of any kind to the Executive or any other person regarding the federal,
state or local tax consequences of this Agreement or any payments
hereunder, and the Company does not agree to indemnify the Executive
or
any other person for any federal, state or local taxes of any kind
with
respect to payments hereunder, except as provided in paragraph 11
of this
Agreement
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13.
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This
Agreement shall be binding upon and inure to the benefit of the Company,
its successors and assigns, and the Executive and his heirs, executors,
administrators and legal
representatives.
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14.
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The
Executive will not, at any time during the Term of Employment, or
for a
period of one year after the termination of this Agreement, directly
or
indirectly disclose or furnish to any other person, firm, or corporation
any non-public information relating to the Company or its parent,
subsidiaries, or affiliates with respect to technology of the Company’s
products, methods of obtaining business, advertising products, customers
or suppliers, or any confidential or proprietary information acquired
by
the Executive during the course of his employment by the Company
or its
parent, subsidiaries, or
affiliates.
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15.
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This
Agreement constitutes the entire agreement between the parties hereto
relating to the subject matter set forth herein and supersedes any
prior
oral and/or written agreements, understandings, negotiations, or
discussions of the parties. There are no warranties,
representations or agreements between the parties in connection with
the
subject matter hereof, except as set forth or referred to
herein. No supplement, modification, waiver, or termination of
this Agreement or any provision hereof shall be binding unless executed
in
writing by the parties to be bound thereby. Waiver of any of
the provisions of this Agreement shall not constitute a waiver of
any
other provision (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise specifically
provided.
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16.
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The
failure of either party at any time to require performance by the
other of
any provision hereof shall not affect in any way the full right to
require
such performance at any time thereafter, nor shall the waiver by
either
party of the breach of any provision hereof be taken or be held to
be a
waiver of the provision itself.
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17.
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Any
notice or other communication required or permitted to be given under
or
in connection with this Agreement shall be in writing, delivered
in person
or by public telegram, or by mailing same, certified or registered
mail,
postage prepaid, in an envelope addressed to the party to whom notice
is
to be given, at the address given at the beginning of this Agreement,
and
shall be effective upon receipt thereof. Each party shall be
entitled to specify a different address by giving notice as aforesaid
to
the other party.
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18.
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The
invalidity or unenforceability of any paragraph, term, or provision
hereof
shall in no way affect the validity or enforceability of the remaining
paragraphs, terms, or provisions hereof. In addition, in any
such event, the parties agree that it is their intention and agreement
that any such paragraph, term or provision which is held or determined
to
be unenforceable as written shall nonetheless be in force and binding
to
the fullest extent permitted by law as though such paragraph, term
or
provision had been written in such a manner and to such an extent
as to be
enforceable under the circumstance. Without limiting the
foregoing, with respect to any restrictive covenant contained herein,
if
it is determined that any such provision is excessive as to duration
or
scope, it is intended that it nevertheless shall be enforced for
such
shorter duration, or with such narrower scope, as will render it
enforceable.
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19.
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All
of the terms and provisions of this Agreement shall be binding upon
and
shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, transferees, successors, and
assigns.
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20. This
Agreement shall be governed and construed under the laws of the State of
Idaho.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be entered
into as of the date and year hereinabove first set forth.
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For
Atlas Mining Company:
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/s/
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Xxxxxx
X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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Chief
Executive Officer and President
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Executive:
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/s/
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Xxxx
Xxxxxxxxxx
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Xxxx
Xxxxxxxxxx
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