Employment Agreement

 

This Employment Agreement (this “Agreement”) dated as of November 1, 2015 (the
“Effective Date”), is entered into by and between Star Mountain Resources, Inc.,
a Nevada corporation (the “Company”), and Wayne E. Rich (the “Executive”).

 

WHEREAS, the Company recognizes that the Executive’s talents and abilities are
unique, and are integral to the success of the Company, and thus wishes to
secure the ongoing services of the Executive on the terms and conditions set
forth herein;

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants set
forth below, the Company and the Executive agree as follows:

 

  1. Employment: The Company hereby agrees to employ the Executive as the Chief
Financial Officer and Vice President of Finance (“CFO”) of the Company on
completion of the Company’s 10-Q filing for the quarter ended September 30, 2015
and in no event later than November 13, 2015, and the Executive hereby accepts
such employment, on the terms and conditions set forth below.         2.
Compensation and Related Matters:

  

  a. Base Salary. For the first three months after the Effective Date, the
Company shall pay the Executive a base salary at the rate of not less than
$120,000 per year (the “Initial Base Salary”). On or before February 1, 2016,
the Company shall increase the Executive’s base salary to an annual rate that is
competitive with that paid other CFOs of comparably sized companies in the
mining industry (the “Base Salary”). The Executive’s Initial Base Salary and
Base Salary shall be paid in accordance with the Company’s normal payroll
practice or, if no such practice is established, in equal installments at the
end of each month. If the Executive’s Initial Base Salary or Base Salary is
increased by the Company, such increased Initial Base Salary or Base Salary, as
the case may be, shall then constitute the Initial Base Salary or Base Salary
for all purposes of this agreement. During the Initial Base Salary period,
should any other Company executive be paid a base salary greater than $120,000
per year or $10,000 per month, then the Executive’s Initial Base Salary shall be
immediately adjusted to an equal amount.           If by February 1, 2016, the
end of the Initial Base Salary period, the Company has not yet raised sufficient
funding to allow the Executive’s Initial Base Salary to be increased pursuant to
this clause and after taking into consideration the Company’s financial position
and prospects (as reasonably determined by the Company’s Board of Directors
acting in good faith) then the Executive and Company agree that they will
negotiate in good faith a transition plan and timeline for increasing the
Executive’s base salary to a rate that is competitive with that paid other CFOs
of comparably sized companies in the mining industry; provided that this
transition plan shall be no less favorable than that negotiated with any of the
Company’s other executives. For further clarification, if the Company’s Board of
Directors determines the Company has not yet secured sufficient funding by
February 1, 2016 to increase the Executive’s base pay to the full Base Salary
amount, the Board’s decision must apply equally to all of the Company’s
executives.

 

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  b. Eligibility for Other Forms of Compensation. The Executive shall be
eligible for grants of equity or other long-term incentive compensation as
determined by the Board of Director in its reasonable discretion and on the same
basis as other senior executives of the Company.

  

Notwithstanding any provision to the contrary, any grants of equity or other
forms of long-term incentive compensation to the Executive shall immediately
vest in full upon either a “Change in Control” (as defined below), the
termination of the Executive’s services as CFO by the Company other than for
“Cause” (as defined below) or the termination by the Executive of his employment
with the Company for “Good Reason” (as defined below).

 

For purposes of this Agreement, “Change in Control” shall mean the occurrence,
subsequent to the Effective Date, of any of the following: (A) by a transaction
or series of transactions, any “person” or “group” (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 35% of the
combined voting power of the Company’s then outstanding securities (provided
such person or group was not a beneficial owner of more than 35% of the combined
voting power of the Company’s then outstanding securities as of the Effective
Date); (B) as a result of any merger, consolidation, combination or sale or
issuance of securities of the Company, or as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
as of the Effective Date cease to constitute a majority of the Board of
Directors of the Company (the “Board”); (C) by a transaction or series of
transactions, the authority of the Board over any activities of the Company
becomes subject to the consent, agreement or cooperation of a third party other
than shareholders of the Company.

 

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For purposes of this Agreement, “Cause” shall mean (A) the Executive’s
conviction by a court of competent jurisdiction as to which no further appeal
can be taken of a felony (other than a violation based on operation of a
vehicle) or entering the plea of nolo contendere to such crime by the Executive;
(B) the Executive’s commission of a crime involving fraud or intentional
dishonesty, which results in the Executive’s substantial personal enrichment and
material adverse effect to the Company; (C) the Executive becoming subject to
any securities related sanctions related to the Company other than those based
on an act of the Company itself for which the Executive is charged solely as a
result of his position with the Company; (D) willful and continued failure to
perform substantially his duties with the Company (other than any such failure
resulting from incapacity due to a Disability) after a demand in writing for
substantial performance is delivered by the Board of Directors, which demand
specifically identifies the manner in which the Board of Directors believes that
the Executive has not substantially performed his duties, or (E) repeated and
willful failure to follow the written directives of the Board of Directors in
connection with his employment hereunder.

 

For purposes of this Agreement, “Good Reason” shall mean (i) a substantial
diminution in the Executive’s title, duties or responsibilities; (ii) any
direction or requirement that the Executive engage in conduct that could
reasonably be construed to violate local, state or federal law; (iii) a
reduction in the Executive’s Initial Base Salary or Base Salary or the failure
to pay the Initial Base Salary or Base Salary due pursuant to this Agreement in
a timely manner; (iv) the Company’s material breach of any provision of this
Agreement or any other agreement between the Company and the Executive; or (v)
the Company requiring the Executive to be based somewhere other than the Denver,
Colorado metropolitan area.

 

  c. Annual Bonus: For each full fiscal year of the Company that begins and ends
during the Employment Period, and for the portion of the fiscal year of the
Company that begins in 2015 (“Fiscal Year 2015”), the Executive shall be
eligible to earn an annual cash bonus (“Annual Bonus”) in such amount as shall
be determined by the Compensation Committee of the Board (the “Compensation
Committee”) (or the Board if there is no Compensation Committee) based on the
achievement by the Company of performance goals established by the Compensation
Committee (or the Board if there is no Compensation Committee) for each such
fiscal year (or portion of Fiscal Year 2015), which may, for example, include
targets related to the earnings before interest, taxes, depreciation and
amortization (“EBITDA”), financial reporting, financial controls, acquisitions,
leases, permitting, etc. of the Company. The Compensation Committee (or the
Board if there is no Compensation Committee) shall establish objective criteria
to be used to determine the extent to which performance goals have been
satisfied. These criteria shall be established within 60 days of the Effective
Date.

 

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    The Executive shall also be eligible for additional grants of equity or
other long-term incentive compensation, in the Compensation Committee’s
discretion, on the same basis as other senior executives of the Company.        
d. Vacation: The Executive shall be entitled to four weeks of vacation per
fiscal year. Up to three weeks of vacation not taken during the applicable
fiscal year shall be carried over to the next following fiscal year. Vacation
shall accrue to the Executive at rate of not less than one week per quarter in
advance.         e. Expenses: The Company will reimburse the Executive for all
reasonable out-of-pocket expenses incurred directly by Executive in performing
Executive’s duties and obligations under this Agreement. Employer shall
reimburse Employee for such expenses on a monthly basis, upon submission by
Employee of receipts, vouchers or other documents which identify the business
purpose of the expense and identify any people in attendance at a meeting and
such other information or procedures as may be adopted by the Company from time
to time. Executive shall obtain prior written approval from the Company’s
president or chief executive officer prior to incurring any expense until such
time as a formal written employee expense policy has been approved by the
Company.         f. Welfare, Pension and Incentive Benefit Plans: During the
Employment Period, the Executive (and his eligible spouse and dependents) shall
be entitled to participate in all the welfare benefit plans and programs
maintained by the Company from time to time for the benefit of its senior
executives including, without limitation, all medical, hospitalization, dental,
disability, accidental death and dismemberment and travel accident insurance
plans and programs. In addition, during the Employment Period, the Executive
shall be eligible to participate in all pension, retirement, savings and other
employee benefit plans and programs maintained from time to time by the Company
for the benefit of its senior executives.         g. Professional Development.
Subject to the prior written approval of the Company’s president or chief
executive officer, the Company will reimburse the Executive for education and
professional development expenses related to courses or programs selected by the
Executive in the natural resources sector up to $10,000 per calendar year. The
Executive may take such courses during normal business hours and will not be
required to utilize vacation time.

 

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  3. Responsibilities: As the CFO, the Executive will have the responsibilities
of a chief financial officer and shall also assist the Company’s President and
Chief Executive Officer in developing the Company’s strategic direction,
identifying and pursuing acquisition targets, personnel hiring, budget
preparation, development of an annual operating plan and periodic long range
plans, overseeing all portfolio companies’ operations, finances, budgets and
strategic direction, compliance with all regulatory requirements, and developing
and implementing the Company’s business plan. The CFO shall report directly to
the Company’s President and Chief Executive Officer. With the approval of the
President and Chief Executive Officer, finance and accounting staff may be hired
by the Executive.         4. At-Will Employment; Severance: The Executive’s
employment with the Company is on an at-will basis. If terminated by the Company
for any reason other than Cause, including a Change in Control, or if terminated
by the Executive for Good Reason, the Company shall provide severance to the
Executive, payable in accordance with the Company’s normal payroll practice, of
Executive’s Base Salary for 12 months following Executive’s termination, accrued
vacation, and any reimbursement of all business and professional development
expenses incurred but not yet reimbursed. In addition the Company shall
reimburse the Executive for COBRA payments by the Executive for 12 months
following termination by the Company for any reason other than Cause or
termination by the Executive for Good Reason.         5. Location: The Executive
will be based in the Denver, Colorado, metropolitan area. During the Employment
Period, the Company shall provide the Executive with an office and appropriate
equipment and support staff.         6. Representations and Warranties: The
Company represents and warrants to the Executive that this Agreement has been
duly authorized, executed and delivered by the Company and, assuming the due
execution by the Executive, constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms.

 

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  7. Indemnity: The Company agrees that if the Executive is made a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a “Proceeding”) by reason of the fact
that the Executive is or was a trustee, director, member, agent or officer of
the Company or any predecessor to the Company or any of their affiliates or is
or was serving at the request of the Company, any predecessor to the Company or
any of their affiliates as a trustee, director, officer, member, employee or
agent of another corporation or a partnership, joint venture, limited liability
company, trust or other enterprise, including, without limitation, service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is alleged action in an official capacity as a trustee, director, officer,
member, employee or agent while serving as a trustee, director, officer, member,
employee or agent, the Executive shall be indemnified and held harmless by the
Company to the fullest extent authorized by Colorado law, as the same exists or
may hereafter be amended, against all Expenses incurred or suffered by the
Executive in connection therewith, and such indemnification shall continue as to
the Executive even if the Executive has ceased to be an officer, director,
trustee or agent, or is no longer employed by the Company and shall inure to the
benefit of his heirs, executors and administrators.

 

  a. Expenses. As used in this Section 7, the term “Expenses” shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements, and costs, attorneys’ fees, accountants’ fees, and
disbursements and costs of attachment or similar bonds, investigations, and any
expenses of establishing a right to indemnification under this Agreement.      
  b. Enforcement. If a claim or request under this Section 7 is not paid by the
Company or on its behalf, within 30 days after a written claim or request has
been received by the Company, the Executive may at any time thereafter bring
suit against the Company to recover the unpaid amount of the claim or request
and if successful in whole or in part, the Executive shall be entitled to be
paid also the expenses of prosecuting such suit. All obligations for
indemnification hereunder shall be subject to, and paid in accordance with,
applicable Colorado law.         c. Advances of Expenses. Expenses incurred by
the Executive in connection with any Proceeding shall be paid by the Company in
advance upon request of the Executive that the Company pay such Expenses, but
only in the event that the Executive shall have delivered in writing to the
Company (i) an undertaking to reimburse the Company for Expenses with respect to
which the Executive is not entitled to indemnification and (ii) a statement of
his good faith belief that the standard of conduct necessary for indemnification
by the Company has been met.         d. Insurance. The Company will maintain a
Director’s and Officer’s Insurance Policy (“D&O Policy”), with such coverage
limits and terms as reasonably approved by the Board, naming the Executive as a
covered party in an amount deemed mutually sufficient to the Company and the
Executive. The Company will use its best commercial efforts to have this D&O
Policy in place within 30 days of the Effective Date. If at any time a D&O
Policy is not in place, the Executive, in his sole discretion, may elect not to
sign the Company’s filings with the Securities and Exchange Commission or any
similar regulatory agency as the Company’s chief accounting or financial officer
and such refusal shall not be Cause for termination of the Executive’s
employment.

  

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  8. Survival of Certain Provisions: The representations, warranties and
covenants and indemnity provisions contained in Sections 2, 4, 6 and 7 of this
Agreement and the Company’s obligation to pay the Executive any compensation
earned pursuant hereto shall remain operative and in full force and effect
regardless of any completion or termination of this Agreement and shall be
binding upon, and shall inure to the benefit of, any successors, assigns, heirs
and personal representatives of the Company, the indemnified parties and any
such person.         9. Notices: Any notice given with respect to this Agreement
shall be in writing and shall be mailed or delivered (a) if to the Company, at
its offices at 605 W. Knox Rd, #202, Tempe, AZ 85284, and (b) if to the
Executive, at 11074 Grayledge Circle, Highlands Ranch, CO 80130, in either case
with a copy to the Company’s legal counsel, Legal & Compliance, LLC 330 Clematis
Street, Suite 217, West Palm Beach, FL 33401.         10. Counterparts: This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.         11. Third Party Beneficiaries: This Agreement has been
and is made solely for the benefit of the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement.         12. Validity: The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.         13. Dispute Resolution: If
a dispute arises out of or relating to this Agreement or the breach of this
Agreement, and if the dispute cannot be settled through direct discussions, the
parties agree to first endeavor to settle the dispute in an amicable manner by
mediation. Mediation shall consist of an informal, nonbinding conference or
conferences between the parties and the mediator jointly, and at the discretion
of the mediator, then in separate caucuses in which the mediator will seek to
guide the parties to a resolution of the case. Each party shall pick a mediator
selector and the two mediator selectors shall then pick and appoint a mediator.
The Company will pay all mediation related costs, including, without limitation,
the Executive’s costs and reasonable fees, including attorneys’ fees, incurred
in selecting a mediator and obtaining counsel for purposes of the mediation.

 

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  14. Choice of Law, Jurisdiction and Venue: This Agreement shall be governed
by, construed, and enforced in accordance with the laws of the State of
Colorado. Any and all actions, suits, or judicial proceedings upon any claim
arising from or relating to this Agreement, shall be instituted and maintained
in the State or Federal courts sitting in the City and County of Denver,
Colorado. Each party waives the right to change of venue.         15.
Miscellaneous: No provisions of this Agreement may be amended, modified, or
waived unless such amendment or modification is agreed to in writing signed by
the Executive and by a duly authorized officer or a director of the Company, and
such waiver is set forth in writing and signed by the party to be charged. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive the Executive’s termination of
employment and the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations.         16. Section
Headings: The section headings in this Agreement are for convenience of
reference only, and they form no part of this Agreement and shall not affect its
interpretation.

  

The parties have executed this Agreement as of the Effective Date, as defined
above.

  

Wayne E. Rich   Star Mountain Resources, Inc.         /s/ Wayne E.Rich   By: /s/
Mark Osterberg       Mark Osterberg       President and Chief Operating Officer

 

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