EXHIBIT 10.14
EXECUTIVE COMPENSATION AGREEMENT
This Agreement is made as of November 1, 2004 between Gryphon Gold Corporation,
a Nevada corporation having an office at 1153 Bergen Parkway, Suite M290
Evergreen, Colorado USA 80439 (the "Company") and Thomas Sitar, of Vancouver
British Columbia, Canada (the "Contractor" or "Mr. Sitar").
THIS AGREEMENT WITNESSES:
1. Definitions - In this Agreement, the following terms shall have the
meanings ascribed below:
(a) "Base Capital Stock" means the securities of the Company ordinarily
(and apart from rights accruing under special circumstances) having the right to
vote at elections of directors of the Company.
(b) "Base Compensation" means the Contractor's base annual compensation as
set out in Section 3 of this Agreement.
(c) "Board" means the board of directors of the Company.
(d) "Cause" means:
(i) a willful act or omission by the Contractor that constitutes
misconduct or fraud and which is injurious to the Company; or
(ii) a conviction of, or a plea of guilty or no contest to an
indictable offence;
provided that no act or omission by the Contractor shall be considered willful
unless committed without good faith and without a reasonable belief that the act
or omission was in the Company's best interest.
(e) "Change of Control" means:
(i) a change in the composition of the Board, as a result of which
fewer than one-half of the incumbent directors are directors who had
been directors of the Company 12 months prior to such change, with the
exception of any such change in the composition of the Board made with
the approval of the Board as it was constituted immediately prior to
such change; or
(ii) the acquisition or aggregation of securities by any Person
pursuant to which such Person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
Base Capital Stock, except that any change in the relative beneficial
ownership of the Company's securities by any person resulting solely
from a reduction in the aggregate number of outstanding shares of Base
Capital Stock, and any decrease thereafter in such Person's ownership
of securities shall be disregarded until such Person increases in any
manner, directly or indirectly, his, her or its beneficial ownership of
any securities of the Company.
(f) "Continuation Period" means the period commencing on the date when the
termination of the Contractor's employment is effective and ending on the date
twelve (12) months after such date.
(g) "Disability" means any disability with respect to the Contractor
pursuant to which the Contractor becomes eligible to receive long term
disability benefits under the Company's long term disability insurance plan or,
if there is no such plan, under any federal, provincial or other governmental
long term disability plan.
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(h) "Contractor Benefit Plans" means such medical, dental, eye care,
disability, life and other health insurance benefit plans maintained, in whole
or in part, by the Company on behalf of Contractors generally or executive
Contractors over a certain grade level.
(i) "Contractor Option Plans" means such stock option, stock appreciation
rights, restricted stock, phantom stock or similar plans or agreements
maintained, in whole or in part, by the Company on behalf of either Contractors
generally or executive Contractors over a certain level.
(j) "Executive Compensation Programs" means, any compensation programs
maintained, in whole or in part, by the Company on behalf of executive
Contractors over a certain level, including without limitation bonus or
incentive programs tied to the performance of the Company. Executive
Compensation Programs will be administered by the Compensation committee which
will have at least one non management Director on the committee.
(k) "Good Reason" means a material reduction in the authority or
responsibility of the Contractor, one or more reductions, in the cumulative
amount of 5 percent or more, in the Base Compensation of the Contractor or any
notification to the Contractor that his or her principal place of work will be
relocated by a distance of 80 kilometers or more.
(l) "Person" means any individual, partnership, unincorporated organization
or association, trust, body corporate, government or government agency or
authority, trustee, executor, administrator or other legal representative or
other legal entity whatsoever.
(m) "Term" means the time period from the effective date of this Agreement
until the employment of the Contractor is terminated pursuant to Section 8.
2. Duties and Scope of Employment - The Company agrees to employ the
Contractor as its Chief Financial Officer (CFO) for the Term. The Contractor
shall report to the Company's Chief Executive Officer (CEO). During the Term,
the Contractor shall devote his or her full business efforts and time to the
Company and its affiliates and subsidiaries. The Contractor shall not render
services to any other for profit corporation or entity without the knowledge of
the Company. Nothing in this Agreement shall preclude the Contractor from
engaging in appropriate professional, educational, civic, charitable or
religious activities or from devoting a reasonable amount of time to private
investments that do not interfere or conflict with his or her responsibilities
to the Company.
3. Base Compensation - During the Term, the Company agrees to pay the
Contractor as compensation for services a base compensation of $US120,000 per
annum or such higher amount as the Company may determine from time to time. The
Contractor's Base Compensation of $US120,000 annually shall be payable monthly
at $US10,000 per month. Should the Companies compensation committee determine
management should receive an increase in the base compensation then the base
rate would be adjusted.
4. (a) Signing arrangements and benefits - On signing of this agreement Mr.
Sitar will:
>> Purchase 200,000 common stock shares in the company at the price of
$US0.35 per share for a total price of $US70,000.
>> Sign a promissory note for $US105,000 less any accrued fees to-date,
for the purchase of 300,000 shares in the company at the price of
$US0.35 per share. The note will carry an interest cost of 2% per annum
and be repayable within two years. Until such time as the balance
outstanding under the promissory note is repaid, 50% of Mr. Sitar's
monthly Base Compensation and 75% of any bonus declared will be applied
against the outstanding balance.
>> As CFO Mr. Sitar will receive the same benefits, compensation and
option grants as Directors of the company are entitled to.
(b) Contractor Benefits - During the Term, the Contractor shall be eligible
for all Contractor Benefit Plans, Contractor Option Plans and Executive
Compensation Programs, subject in each case to the generally
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applicable terms and conditions of the plan or program in question and to the
determinations of any person(s) or committee administering such plan or program.
5. Business Expenses - During the Term, the Contractor shall be authorized
to incur necessary and reasonable travel, entertainment and other business
expenses in connection with the Contractor's duties as a Contractor of the
Company. The Company shall reimburse the Contractor for such expenses upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the Company's generally applicable policies.
6. Change of Control - If a Change of Control occurs during the Term, then
the Contractor shall become fully vested in all awards heretofore or hereafter
granted to the Contractor under all Contractor Option Plans and Executive
Compensation Programs, regardless of any provision in such plans or agreements
that do not provide for full vesting.
7. Term of Employment - The Company agrees to continue the Contractor's
employment, and the Contractor agrees to remain in the employment of the
Company, from the effective date hereof until the date when the Contractor's
employment terminates pursuant to Section 8 (Termination of Employment) below.
8. Termination of Employment - Subject to Section 9 (Rights Upon
Termination) of this Agreement, the employment of the Contractor may be
terminated as follows:
(a) upon death, without any requirement for notice;
(b) for Cause, such termination to be effective forthwith upon written
notice by the Company to the Contractor;
(c) due to Disability, such termination to be effective thirty (30) days
after written notice to the Contractor, provided that in the event the
Contractor resumes performance of substantially all duties prior to the
expiration of the thirty (30) day notice period, the notice of termination shall
automatically be deemed to have been revoked; or
(d) for any reason other than death, Cause or Disability, such termination
to be effective thirty (30) days after written notice by the Company to the
Contractor or by the Contractor to the Company.
9. Rights Upon Termination - Upon the termination of the Contractor's
employment pursuant to Section 8 (Termination of Employment) of this Agreement,
the Contractor shall be entitled to the following compensation, benefits and
reimbursements:
(a) Basic Entitlements - For the period preceding the effective date of the
termination as set out in Section 8 (Termination of Employment) of this
Agreement, the Contractor shall be entitled to the compensation, benefits and
reimbursements described in Sections 3 (Base Compensation), 4 (Contractor
Benefits) and 5 (Business Expenses).
(b) Termination or Deemed Termination Upon a Change in Control - If, within
twelve (12) months after the occurrence of a Change of Control, either:
(i) the Contractor voluntarily resigns his or her employment; or
(ii) the Company terminates the Contractor's employment for any reason
other than Cause or Disability;
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then the Contractor shall be entitled to the following payments and benefits:
(iii) an amount equal to the Base Compensation, payable in one lump sum
within five (5) business days from the termination of the Contractor's
employment unless the Company and the Contractor agree otherwise in
writing;
(iv) an amount equal to any bonus earned under any Executive
Compensation Programs in the year in which the Change of Control
occurred, payable in one lump sum within five (5) business days from
the termination of the Contractor's employment unless the Company and
the Contractor agree otherwise in writing; and
(v) during the Continuation Period, the Contractor (and, where
applicable, the Contractor's dependents) shall be entitled to continue
participation in all Contractor Benefit Plans maintained by the
Company, including without limitation life, disability and health
insurance programs, as if the Contractor were still an Contractor of
the Company. Where applicable, the Contractor's salary for purposes of
such plans shall be deemed to be equal to the Base Compensation and to
the extent that the Company finds it impossible to cover the Contractor
under its Contractor Benefit Plans during the Continuation Period, the
Company shall provide the Contractor with individual policies which
offer at least the same level of coverage and which impose not more
than the same costs on the Contractor. The foregoing notwithstanding,
in the event the Contractor becomes eligible for comparable coverage to
that set out in the Contractor Benefit Plans in connection with new
employment during the Continuation Period, the coverage provided by the
Company under this Paragraph (v) shall terminate immediately.
(c) Involuntary Termination Without Cause - If the Company terminates the
Contractor's employment for any reason other than Cause, Disability or death and
Subsection 9(b) does not apply, then the Contractor shall be entitled to the
following payments and benefits:
(i) the payment described in Paragraph 9(b)(iii) and
(ii) the benefits described in Paragraph 9(b)(v) for the Continuation
Period, provided that the Continuation Period shall be twelve (12)
months in the event the Company terminates the Contractor's employment
for bona fide performance-related reasons (as determined by the Board )
and provided further that the Company shall not be required to grant
any new awards to the Contractor.
(d) Termination Due to Death - If, during the Term, the Contractor's
employment is terminated as a result of the death of the Contractor, then to the
extent possible the Company shall maintain coverage for the Contractor's
dependents under the Contractor Benefit Plans maintained by the Company,
including without limitation health insurance programs, for a period of six (6)
months as if the Contractor were still an Contractor of the Company. The
foregoing notwithstanding, in the event the Contractor's dependents become or
are eligible for comparable coverage to that set out in the Contractor Benefit
Plans, the coverage provided by the Company under this Subsection (d) shall
terminate immediately.
(e) Subject to applicable legislation, the payments provided for in this
Section 9 shall fully discharge all responsibilities of the Company to the
Contractor upon the termination of the employment of the Contractor pursuant to
Section 8 (Termination of Employment). In the case of Subsections 9(b) and (c)
above, the Contractor shall not be required to mitigate the amount of any
payment contemplated thereby (whether by seeking new employment or in any other
manner) and, except as expressly provided in Paragraph 9(b)(v) and the
corresponding provision in Subsections 9(c) (d), no payment or entitlement under
this Section 9 shall be reduced by earnings that the Contractor may receive from
any other source.
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10. Non-Competition
(a) The Contractor agrees with the Company not to, at any time during the
Term and for a period of 1 year thereafter, either directly, indirectly,
individually, in partnership, jointly or in conjunction with any Person or as
principal, agent, shareholder, officer, Contractor or in any other manner
whatsoever, solicit or endeavor to entice away from the Company any other
Contractor, employee or agent of the Company.
(b) The Company acknowledges and agrees that the Contractor is entitled to
accept positions on the Board of Directors and Advisory Boards of other
companies so long as such companies are not competitors of the Company and the
performance of duties on behalf of such companies does not adversely impact on
or affect the Contractor's functioning as an Contractor of the Company.
11. Miscellaneous Provisions - The following miscellaneous provisions shall
apply to this Agreement:
(a) Company's Successors - The Company shall require any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets, by an agreement in substance and form satisfactory to the
Contractor, to assume this Agreement and to agree expressly to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform it in the absence of a succession. The Company's failure to
obtain such agreement prior to the effectiveness of a succession shall be a
breach of this Agreement and shall entitle the Contractor to all of the
compensation, benefits and reimbursements to which he or she would have been
entitled hereunder if the Company had involuntarily terminated his or her
employment without Cause immediately after such succession becomes effective.
For all purposes under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets which executes and delivers
the assumption agreement described in this Subsection 11(a) or which becomes
bound by this Agreement by operation of law.
(b) No Assignment - The rights of any person to payments or benefits under
this Agreement shall not be made subject to option or assignment, either by
voluntary or involuntary assignment or by operation of law, including without
limitation by bankruptcy, garnishment, attachment or other creditor's process,
and any action in violation of this Subsection 11(b) shall be void.
(c) Notice - Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by registered or certified mail, return
receipt requested and postage prepaid. In the case of the Contractor, mailed
notices shall be addressed to the Contractor at the most recent home address
provided by the Contractor to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its President.
(d) Waiver - No provision of this Agreement shall be modified, waived or
discharged (including without limitation the notice periods set out in Section
8) unless the modification, waiver or discharge is agreed to in writing and
signed by the Contractor and by an authorized officer of the Company (other than
the Contractor). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(e) Whole Agreement - This Agreement (together with any additional
agreements relating to non-competition, confidentiality and inventions, stock
options and Company plans and programs relating to Contractors) constitutes the
entire agreement between the parties, there being no other agreements,
representations or understandings (oral or written, express or implied) which
are not expressly set forth herein. This Agreement supersedes all prior written
agreements between the Contractor and the Company.
(f) No Setoff; Withholding Taxes - With the exception of taxes and other
legally required deductions, Contractor contributions to benefit and other plans
and other deductions approved in writing by the Contractor,
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the Company shall have no right of setoff or counterclaim, with respect to any
claim, debt or obligation, against any payments to the Contractor under this
Agreement.
(g) Severability - The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(h) Choice of Law - The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the British
Columbia and the parties attorney to the courts of B.C.
(i) Arbitration - Except as otherwise provided in this Agreement, any
controversy or claim arising out of or relating to this Agreement, or the breach
of this Agreement, shall be finally settled by arbitration in Vancouver, B.C. in
accordance with the Commercial Arbitration Act of British Columbia.
(j) Contractor's Successors - This Agreement and all rights of the
Contractor hereunder shall enure to the benefit of and be binding on the
Contractor's heirs and legal personal representatives.
IN WITNESS WHEREOF each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.
Gryphon Gold Corporation
/s/ Albert Matter /s/ Thomas Sitar
- -------------------------------- --------------------------------------------
Albert Matter Name: Thomas Sitar - Chief Financial Officer
Chairman Home Address:
Gryphon Gold Corporation 4613 West 8th Avenue
Vancouver, BC
V6R 2A6
ENTITLEMENT MATRIX
<Table>
<Caption>
Events Entitlement
- ------------------------------------------------- ---------------------------------------------------------------------------
1. Change of Control of the Company Contractor becomes fully vested in all awards granted under all Contractor
Option Plans. Contractor Option Plans are differentiated from Executive
Compensation Plans.
2. Termination for Cause Contractor is entitled to all compensation, benefits and reimbursements
for the period to the effective date of the termination.
3. Termination or Deemed Termination Upon a Contractor is entitled to:
Change in Control (entitlement occurs if,
within 12 months from the Change of a) the compensation, benefits and reimbursements described in
Control, either Contractor voluntarily Paragraph 2 above;
resigns or the Contractor is terminated)
b) a severance payment equal to 12 months pay;
c) an amount equal to the prior year's bonus under any Executive
Compensation Programs; and
d) all benefits under any Contractor Benefit Plans for 12 months, unless
similar benefits are obtained under new employment.
4. Termination For Any Reason Other Than Cause Contractor is entitled to:
Where Termination Does Not Constitute a
Termination or Deemed Termination Upon a a) the compensation, benefits and reimbursements described in
Change in Control Paragraph 3(a), (b) and (d) above; and
b) Vesting under Contractor Option Plans for a period of 12 months,
reduced to 6 months if the termination is for performance related
reasons.
5. Death Contractor's survivors are entitled to:
a) the compensation, benefits and reimbursements described in
Paragraph 2 above; and
b) coverage for dependents under the Contractor Benefit Plans for the
shorter of 6 months or replacement of the benefit coverage.
</Table>