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Exhibit 10.1
SECOND AMENDMENT TO EXECUTIVE
EMPLOYMENT AGREEMENT
WHEREAS,
effective May 1, 2006, CAPITAL GOLD CORPORATION, a Delaware
corporation (“Employer”), and JOHN BROWNLIE, a
Colorado resident (“Executive”), entered into an
Executive Employment Agreement (the
“Agreement”);
WHEREAS,
effective August 29, 2007, Section 3(a) of the Agreement was
amended; and
WHEREAS,
on
November
13 ,
2007, the Company’s Board of Directors, including all members
of the Board’s Compensation Committee, determined to amend
the Agreement, inter alia, to reflect the Executive’s
promotion to Chief Operating Officer on February 7, 2007, and to
provide Executive with the same benefits and protections provided
to the other executive officers of the Company in the event of a
change in control of the Company ;
NOW,
THEREFORE, to effectuate the foregoing changes, Employer and
Executive agree:
1.
Section
1 of the Agreement is amended and, as amended, reads as
follows:
“1.
Employment .
Upon and subject to the terms provided herein, Employer agrees to
employ Executive, and Executive hereby agrees to be employed by
Employer, as Employer’s Chief Operating Officer, or other
substantially similar position. Executive shall report to the
President and Chief Executive Officer or such other supervisor as
designated by the President and Chief Executive Officer of
Employer. Executive shall perform such tasks commensurate with this
position as may from time to time be assigned by Employer. In this
regard, unless and until Executive is notified otherwise by
Employer, Executive’s duties shall include, among other
things, serving as the President of Minera Santa Rita, S.A. de
C.V., a subsidiary of Employer incorporated in Mexico. Executive
shall devote all business time, labor, skill, undivided attention
and best ability to the performance of Executive’s duties
hereunder in a manner which will faithfully and diligently further
the business and interests of Employer. During the term of
employment, Executive shall not directly or indirectly pursue any
other business activity without the prior written consent of
Executive’s supervisor, with the exception of passive
personal investments not in breach of any other term or provision
hereof. Executive agrees to travel to whatever extent is reasonably
necessary in the conduct of Employer’s business, at
Employer’s expense and pursuant to Employer’s standard
policies and procedures.”
2.
Section
4 of the Agreement is amended by amending subsection (e)(1)
thereof and by adding a new subsection (i) thereto. As
amended, Subsections (e)(1) and (i) of Section 4 of the
Agreement read as following:
“4.
Termination of Employment .
Notwithstanding any other provision of this Agreement,
Executive’s employment may be terminated as
follows:
…
(e)
Without Cause. This
Agreement may be terminated by Employer without Cause at any time,
such termination to be effective thirty (30) days after
Executive’s receipt of written notice from Employer;
provided
that Employer
pays Executive each of the following:
(1)
Employer
shall pay Executive severance payments in an amount equal to
Executive’s base salary for twelve (12) months (the
“Cash Severance Payments”). Such Cash Severance
Payments shall be paid in equal monthly installments to
Executive beginning
in the month following Executive’s termination
.
In any event, Employer shall pay to Executive all accrued base
salary, all accrued vacation time and any reasonable and
necessary business expenses incurred by Executive in
connection with his duties, all to the date of termination and
payable in a lump sum ,
less applicable deductions and withholdings ,
as soon as administratively practicable following
Executive’s termination.
…
(i)
Termination Upon a Change of Control .
In the event of a Termination Upon a Change of Control as defined
in the Agreement Regarding Change In Control (“Change In
Control Agreement”) attached hereto as
Exhibit A ,
Employer’s obligation to Executive shall be as set forth in
the Change In Control Agreement.”
3.
All
other terms of the Agreement remain the same.
IN
WITNESS WHEREOF, the parties have executed this amendment to
the Agreement effective November 13, 2007.
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EMPLOYER
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CAPITAL
GOLD CORPORATION
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By: |
/s/ Gifford
A. Dieterle |
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Gifford A. Dieterle, President |
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EXECUTIVE: |
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/s/ John
Brownlie |
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John Brownlie |
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EXHIBIT A
AGREEMENT REGARDING
CHANGE IN CONTROL
THIS
AGREEMENT (“Agreement”), is made and entered into
as of the
13 day
of November, 2007 (the “Effective Date”) by and between
Capital Gold Corporation (the “Company”) and John
Brownlie (the “Executive”)
WITNESSETH
THAT:
WHEREAS,
the Company considers it essential to the best interests of
its stockholders to foster the continuous engagement of key
management personnel, and the Board of Directors of the
Company (the “Board”) recognizes that, as is the
case with many publicly held corporations, a change in control
might occur and that such possibility, and the uncertainty and
questions which it may raise among management, may result in
the departure or distraction of management personnel to the
detriment of the Company and its stockholders;
and
WHEREAS,
the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company’s management,
including the Executive, to their engagement without
distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in
control of the Company;
NOW,
THEREFORE, to induce the Executive to remain engaged by the
Company and in consideration of the premises and mutual
covenants set forth herein, IT IS HEREBY AGREED by and between
the parties as follows:
1.
AGREEMENT
TERM. The initial “Agreement Term” shall begin on
the Effective Date and shall continue through December 31,
2009. As of December 31, 2009, and as of each December 31
thereafter, the Agreement Term shall extend automatically to
the third anniversary thereof unless the Company gives notice
to the Executive prior to the date of such extension that the
Agreement Term will not be extended. Notwithstanding the
foregoing, if a Change in Control (as defined in Section 7
below), occurs during the Agreement Term, the Agreement Term
shall continue through and terminate on the second anniversary
of the date on which the Change in Control
occurs.
2.
ENTITLEMENT
TO CHANGE IN CONTROL BENEFITS. The Executive shall be entitled
to the Change in Control Benefits described in Section 3
hereof if the Executive’s engagement by the Company is
terminated during the Agreement Term but after a Change in
Control (i) by the Company for any reason other than Permanent
Disability or Cause, (ii) by the Executive for Good Reason or
(iii) by the Executive for any reason during the 30-day period
commencing on the first date which is six months after the
date of the Change in Control. For purposes of this
Agreement:
(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;
(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.
3.
CHANGE
IN CONTROL BENEFITS. In the event of a termination of
engagement entitling the Executive to benefits in accordance
with Section 2, the Executive shall receive the
following:
(a)
The
Executive shall be entitled to a lump sum payment in cash no
later than twenty 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)
The
exercise price of all of the Company options owned by the
Executive shall decrease to $0.01 per share.
(c)
The
Company shall provide the Executive with outplacement services
and tax and financial counseling suitable to the
Executive’s position through the third anniversary of
the date of the Executive’s termination of engagement,
or, if earlier, the date on which the Executive becomes
employed by another employer.
4.
MITIGATION.
The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
engagement or otherwise. The Company shall not be entitled to
set off against the amounts payable to the Executive under
this Agreement any amounts owed to the Company by the
Executive, any amounts earned by the Executive in other
engagement after the Executive’s termination of
engagement with the Company, or any amounts which might have
been earned by the Executive in other engagement had the
Executive sought such other engagement.
5.
MAKE-WHOLE
PAYMENTS. If any payment or benefit to which the Executive (or
any person on account of the Executive) is entitled, whether
under this Agreement or otherwise, in connection with a Change
in Control or the Executive’s termination of engagement
(a “Payment”) constitutes a “parachute
payment” within the meaning of section 280G of the
Internal Revenue Code of 1986, as amended (the
“Code”), and as a result thereof the Executive is
subject to a tax under section 4999 of the Code, or any
successor thereto, (an “Excise Tax”), the Company
shall pay to the Executive an additional amount (the
“Make-Whole Amount”) which is intended to make the
Executive whole for such Excise Tax. The Make-Whole Amount
shall be equal to (i) the amount of the Excise Tax, plus (ii)
the aggregate amount of any interest, penalties, fines or
additions to any tax which are imposed in connection with the
imposition of such Excise Tax, plus (iii) all income, excise
and other applicable taxes imposed on the Executive under the
laws of any Federal, state or local government or taxing
authority by reason of the payments required under clauses (i)
and (ii) and this clause (iii).
(a)
For
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