Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made and entered into by and between
Tower Hill Mines (US) LLC (hereafter “Company”), and Karl Hanneman (hereafter
“Executive”). Company and Executive shall be collectively referred to as “the
Parties.”

 

1.                                 Effective Date and Commencement of
Employment.

 

(a)                                  This Agreement shall be effective on
March 12, 2013 (“Effective Date”).

Executive’s employment commenced on May 17, 2010 (the “Employment Commencement
Date”).

 

(b)                                   The period commencing on the Employment
Commencement Date and ending at the close of business on the date that this
Agreement and Executive’s employment is terminated (“the Termination Date”)
shall constitute the “Employment Period.”

 

(c)                                      Notwithstanding any other provision of
this Agreement, this Agreement may be terminated at any time during the
Employment Period in accordance with Section 6.

 

2.                                   Position.  During the Employment Period (as
defined in Section 1 hereof), the Company shall be Executive’s employer, and
Executive shall serve as General Manager, reporting directly to the Vice
President responsible for Alaska (“VP”). Executive shall hold all other
positions as deemed necessary by the Board. On the Termination Date, Executive
shall be deemed to have resigned from all positions held with all affiliates of
the Company, including ITH.

 

3.                                   Duties and Responsibilities of Executive.

 

(a)                                     During the Employment Period (as defined
in Section 1 hereof) and except as set forth below, Executive shall devote his
full time and attention during normal business hours to the business of the
Company and its affiliates, including ITH, will act in the best interests of the
Company and its affiliates, including ITH, and will perform with due care his
duties and responsibilities.

 

(b)                          Executive’s duties will include those normally
incidental to the position of General Manager to include the duties set forth in
Exhibit A), as well as such additional duties consistent therewith as may be
assigned to him by the VP, the CEO or the Board.  If, in its sole and complete
discretion, the VP, CEO or the Board changes Executive’s title and/or
Executive’s reporting responsibilities, the VP, CEO or the Board may make such
changes, and such changes shall thereafter apply for purposes of this Agreement,
subject only to the provisions of Section 7(c) hereof.

 

(c)                                       Executive agrees to cooperate fully
with the VP, the CEO and the Board and not engage directly or indirectly in any
activity that materially interferes with the performance of Executive’s duties
hereunder.  During the Employment Period, Executive will not hold outside
employment, or perform substantial personal services for parties unrelated to
the Company, without the advance written approval of the Board; provided, that
it shall not be a violation of this Agreement for Executive to (i) serve on any
corporate, civic, or charitable boards or committees (except for boards or
committees of any business organization that competes with the Company

 

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or its affiliates, including ITH, in any business in which they are regularly
engaged), so long as such service does not materially interfere with the
performance of Executive’s duties and responsibilities under this Agreement, as
the Board in its reasonable discretion shall determine, (ii) manage personal
investments, or (iii) take vacation days and reasonable absences due to injury
or illness as permitted by the general policies of the Company.

 

(d)         Executive represents and covenants to the Company that he is not
subject or a party to any employment agreement, non-competition covenant,
non-solicitation agreement, nondisclosure agreement, or any other agreement,
covenant, understanding, or restriction that would prohibit Executive from
executing this Agreement and fully performing his duties and responsibilities
hereunder.

 

(e)                                     Executive acknowledges and agrees that
Executive owes the Company and its affiliates, including ITH, a duty of loyalty
and that any obligations described in this Agreement are in addition to, and not
in lieu of, any obligations Executive owes the Company as a matter of law.

 

4.                                    Compensation.

 

(a)                             Base Salary.  Commencing on the Employment
Commencement Date, and during the Employment Period, the Company shall pay to
Executive an annual base salary of $225,000 (the “Base Salary”), payable in
conformity with the Company’s customary payroll practices for executive
salaries.  For all purposes of this Agreement, Executive’s Base Salary shall
include any portion thereof which Executive elects to defer under any
nonqualified plan or arrangement.

 

(b)                            Annual Performance Bonus.  Executive shall be
eligible for an annual discretionary performance bonus with respect to each full
calendar year during the Employment Period (the “Annual Performance Bonus”),
beginning with the calendar year 2013, which shall, if earned, consist of a cash
payment targeted at 100% of Base Salary.  The VP will, on an annual basis (at or
near the beginning of each full calendar year in such Employment Period)
establish performance objectives for Executive for the upcoming year, and will
communicate such objectives to Executive.  The amount, if any, of the Annual
Performance Bonus will be determined by the Board, or the Compensation Committee
if designated this task by the Board, acting in its sole and complete discretion
but based on the VP’s recommendation, based on annual performance objectives.  A
bonus determination will be made by the Board typically within 90 calendar days
of the end of each calendar year and the Annual Performance Bonus, if any, will
be paid within 120 days of the end of the calendar year for which the Annual
Performance Bonus is awarded.  Executive must be employed by the Company at the
time of payment of the Annual Performance Bonus to be entitled to payment of the
Annual Performance Bonus, except as provided in Sections 7(a), 7(b). and 7(c).

 

(c)                              Equity Awards.  Subject to the approval of the
Board and/or the Compensation Committee, as applicable, and subject to all terms
and conditions of the 2006 Incentive Stock Option Plan of ITH (“2006 Plan”)
reapproved in 2012 by the stockholders, the Company granted to Executive on
August 19, 2010 the Company granted executive, an option to purchase up to
50,000 ITH common shares at a price per share of 6.57 which vested on the date
of the grant and expired on August 19, 2012.  The Company granted Executive an
option purchase up to 250,000 ITH common shares on April 24, 2010 at a

 

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price of 7.34 per share which vested on April 24, 2012 and which have now
expired.  The Company granted Executive an option to purchase up to 200,000 ITH
common shares on August 24, 2012 at a price of 3.17 per share which have vested
as follows: 1/3 vested on August 24, 2012; 1/3 will vest on August 24, 2013 and
the balance will vest on August 24, 2014.  These options will expire on
August 24, 2017.

 

In addition, Executive shall be eligible to receive future equity incentive
awards as determined in the sole discretion of the Board or the Compensation
Committee, as applicable.

 

5.                              Benefits.  Subject to the terms and conditions
of this Agreement, Executive shall be entitled to the following benefits during
the Employment Period:

 

(a)                                      Reimbursement of Business Expenses and
Travel.  The Company agrees to promptly reimburse Executive for reasonable
business-related expenses, including travel expenses, incurred in the
performance of Executive’s duties under this Agreement in accordance with
Company policies.  Executive understands and agrees that his position may entail
frequent and significant travel to places outside of Alaska.

 

(b)                                      Benefit Plans and Programs.  To the
extent permitted by applicable law, Executive (and where applicable, his
plan-eligible dependents) will be eligible to participate in all benefit plans
and programs, including improvements or modifications of the same, then being
actively maintained by the Company for the benefit of its executive employees
(or for an employee population which includes its executive employees), subject
in any event to the eligibility requirements and other terms and conditions of
those plans and programs, including, without limitation, 401(k) plan, medical
and dental insurance, life insurance and disability insurance.  The Company will
not, however, by reason of this Section 5(b), have any obligation to institute,
maintain, or refrain from changing, amending, or discontinuing any such benefit
plan or program.

 

(c)                                      Disability Insurance.  The Company
shall maintain a disability insurance policy that will pay, upon Executive’s
termination due to Disability (as defined below), no less than 60% of the
Executive’s then-current Base Salary for the shorter of (i) two years, or
(ii) the duration of such Disability.

 

6.                                 Termination of Agreement and Employment.

 

(a)                                     Automatic Termination in the Event of
Death.  This Agreement shall automatically terminate in the event of the
Executive’s death.

 

(b)                                     Company’s Right to Terminate.  At any
time during the Employment Period, the Company shall have the right to terminate
this Agreement with the Company for any of the following reasons:

 

(1)                             Upon Executive’s Disability (as defined below);

 

(2)                              For Cause (as defined in Section 7); or

 

(3)                              For any other reason whatsoever, in the sole
and complete discretion of

 

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the Company.

 

(c)                                       Executive’s Right to Terminate.  At
any time during the Employment Period, Executive will have the right to
terminate this Agreement with the Company for:

 

(1)                             Good Reason (as defined in Section 7); or

 

(2)                            For any other reason whatsoever, in the sole and
complete discretion of

Executive.

 

(d)                                     “Disability.”   For purposes of this
Agreement, “Disability’’ means that Executive has sustained sickness or injury
that renders Executive incapable, with reasonable accommodation, of performing
the duties and services required of Executive hereunder for a period of 90
consecutive calendar days or a total of 120 calendar days during any 12-month
period; provided, however, that any termination based on Disability will be made
in accordance with applicable law, including the Americans with Disabilities
Act, as amended.

 

(e)                                      “Notices.”   Any termination of this
Agreement with the Company by the Company under Section 6(b) or by Executive
under Section 6(c) shall be communicated by a Notice of Termination to the other
party.  A “Notice of Termination” means a written notice that (1) indicates the
specific termination provision in this Agreement relied upon and (2) if the
termination is by the Company for Cause or by Executive for Good Reason, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive’s employment under the provision so
indicated. The Notice of Termination must specify Executive’s Termination Date. 
The Termination Date may be as early as 14 calendar days after such Notice is
given but no later than 60 calendar days after such Notice is given, unless
otherwise agreed to by the Parties in writing or unless the termination is For
Cause, in which case the Termination Date may be immediate.

 

(f)                               The termination of this Agreement shall also
result in the contemporaneous termination of Executive’s employment.

 

7.                                    Severance Payments.

 

(a)                              Termination by the Company pursuant to
Section 6(b)(3).  If the Company terminates this Agreement during the Employment
Period pursuant to Section 6(b)(3) hereof, then, except as set forth in
Section 7(c), the Company shall pay Executive the following severance, in a lump
sum, subject to all applicable withholdings, on the 60th day after the
Termination Date, provided that Executive has executed, not revoked, and any
period to revoke has lapsed, a full general release in favor of the Company and
its affiliates, including but not limited to ITH:

 

(1)                              One year’s Base Salary; and

 

(2)                              The portion, if any, of his Annual Performance
Bonus for the year in which the termination occurs based on the degree of
achievement of the relevant performance targets established for such year
through the date of termination, using pro-rated performance targets where
necessary to

 

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account for the shortened performance period.

 

(b)                              Termination by Executive for Good Reason.  If
Executive terminates this Agreement during the Employment Period pursuant to
Section 6(c)(1) hereof, then, except as set forth in Section 7(c), the Company
shall pay Executive the following severance, in a lump sum, subject to all
applicable withholdings, within on the 60th day after the Termination Date,
provided that Executive has executed, not revoked,  and any period to revoke has
lapsed, a full general release in favor of the Company and its affiliates,
including but not limited to ITH:

 

(1)                             One year’s Base Salary; and

 

(2)                             The portion, if any, of his Annual Performance
Bonus for the year in which the termination occurs based on the degree of
achievement of the relevant performance targets established for such year
through the date of termination, using pro-rated performance targets where
necessary to account for the shortened performance period.

 

(c)                             Termination by Executive for Good Reason after a
Change in Control.  If a Change in Control occurs and within six months of the
Change in Control (i) Executive is terminated pursuant to Section 6(b)(3) hereof
or (ii) Executive terminates this Agreement during the Employment Period
pursuant to Section 6(c)(l) hereof, then Section 7(a) and 7(b) will not apply,
but instead pursuant to this Section 7(c), the Company shall pay Executive the
following severance, in a lump sum, subject to all applicable withholdings, on
the 60th day after the Termination Date, provided that Executive has executed,
not revoked, and any period to revoke has lapsed, a full general release in
favor of the Company and its affiliates, including but not limited to ITH:

 

(1)                             One year’s Base Salary; and

 

(2)                             One year’s Annual Performance Bonus at target.

 

In addition, immediately prior to the termination of Executive’s employment in a
situation entitling him to severance under this Section 7(c), Executive shall
become 100% vested in all of the rights and interests then held by Executive
under the Company’s stock and other equity plans (to the extent not theretofore
vested), including without limitation any stock options, restricted stock,
restricted stock units, performance units, and/or performance shares.

 

(d)                             Additional Benefits.  If the Company is required
to pay Executive severance by, and subject to, Section 7(a) or 7(b) or 7(c), or
if Executive is terminated pursuant to Section

6(b)(l) then:

 

(1)                              Such severance shall be paid in addition to any
other payments the Company may make to Executive (including, without limitation,
salary, fringe benefits, and expense reimbursements) in discharge of the
Company’s obligations to Executive under this Agreement with respect to periods
ending coincident with or prior to the Termination Date.

 

(2)                             The Company shall reimburse Executive for COBRA
continuation

 

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coverage for twelve full months (or for the lesser duration of such COBRA
coverage) beginning with the month following the month in which the Termination
Date occurs, such that employee’s cost of such COBRA coverage shall equal the
cost, if any, that Executive would pay (on behalf of himself and his spouse and
dependents, as applicable) under the Company’s group health plan had Executive
not terminated; provided, that if group health coverage under another group
health plan becomes available thereafter to Executive, Executive’s spouse, or
Executive’s dependents (as applicable), the Company’s reimbursement obligations
under this paragraph will cease with respect to each person to whom such
coverage becomes available.  Executive shall notify the Company immediately upon
group health coverage becoming available to Executive, Executive’s spouse, or
Executive’s dependents.

 

(3)                             Payments under Sections 7(a) or 7(b) or 7(c), or
payment under the disability insurance policy pursuant to Section 5(c), shall be
in lieu of any severance benefits otherwise due to Executive under any severance
pay plan or program maintained by the Company that covers its employees and/or
its executives.

 

(e)                              “Cause” means the occurrence or existence,
prior to occurrence of circumstances constituting Good Reason, of any of the
following events during the Employment Period:

 

(1)                               Executive’s gross negligence or material
mismanagement in performing, or material failure or inability (excluding as a
result of death or Disability) to perform, Executive’s duties and
responsibilities as described herein or as lawfully directed by the Board;

 

(2)                             Executive’s having committed any act of willful
misconduct or material dishonesty (including but not limited to theft,
misappropriation, embezzlement, forgery, fraud, falsification of records, or
misrepresentation) against the Company or any of its affiliates, including but
not limited to ITH, or any act that results in, or could reasonably be expected
to result in, material injury to the reputation, business or business
relationships of the Company or any of its affiliates, including but not limited
to ITH;

 

(3)                              Executive’s material breach of this Agreement,
any fiduciary duty owed by Executive to the Company or its affiliates (including
but not limited to ITH), or any written workplace policies applicable to
Executive (including but not limited to the Company’s code of conduct and policy
on workplace harassment) whether adopted on or after the date of this Agreement;

 

(4)                              Executive’s having been convicted of, or having
entered a plea bargain, a plea of nolo contendere or settlement admitting guilt
for, any felony, any crime of moral turpitude, or any other crime that could
reasonably be expected to have a material adverse impact on the Company’s or any
of its affiliates’ reputations (including but not limited to ITH’s reputation);
or

 

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(5)                             Executive’s having committed any material
violation of any federal law regulating securities (without having relied on the
advice of the Company’s attorney) or having been the subject of any final order,
judicial or administrative, obtained or issued by the Securities and Exchange
Commission, for any securities violation involving fraud, including, for
example, any such order consented to by Executive in which findings of facts or
any legal conclusions establishing liability are neither admitted  nor denied.

 

(f)                                “Good Reason” means the occurrence, prior to
occurrence of circumstances constituting Cause, of any of the following events
during the Employment Period without Executive’s consent:

 

(1)                           Any material breach by the Company of this
Agreement;

 

(2)                            Any requirement by the Company that Executive
relocate outside of the Fairbanks, Alaska metropolitan area;

 

(3)                            Failure of any successor to assume this Agreement
not later than the date as of which it acquires substantially all of the assets
or businesses of the Company;

 

(4)                              Any material reduction in Executive’s title,
responsibilities, or duties or the Board directs Executive to report to someone
other than the VP and/or the CEO; or

 

(5)                              The assignment to Executive of any duties
materially inconsistent with his duties as General Manager;

 

provided however, that no Good Reason shall have occurred unless Executive
provides  the Board written notice of the initial occurrence of the event or
condition described in (1) through  (5) immediately above within 90 days of the
initial occurrence of such event or condition, the event or condition is not
remedied  or cured within 30 days of the Board’s receipt of such written notice,
and Executive actually terminates his employment with the Company within 120
days of the initial occurrence of such  event or condition.

 

(g)                                   “Change of Control” means (i)  any person
or group of affiliated or associated persons acquires more than 50% of the
voting power of the Company; (ii) the consummation of a sale of all or
substantially all of the assets of the Company;  (iii) the liquidation or
dissolution of the Company; (iv) a majority of the members  of the Board are
replaced  during any 12-month period by Board members whose nomination or
election was not approved by the members  of the Board at the beginning of such
period (the “Incumbent Board”)  (provided  that any subsequent members of the
Board whose nomination or election was previously approved by the Incumbent
Board shall thereafter be also deemed to be a member of the Incumbent Board); or
(v) the consummation of any merger, consolidation, or reorganization involving
the Company in which, immediately after giving effect to such merger,
consolidation or reorganization, less than 51% of the total voting power of
outstanding stock of the surviving or resulting entity is then “beneficially
owned” (within the meaning of Rule 13d-3 under the Securities Exchange Act of

 

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1934, as amended) in the aggregate by the stockholders of the Company
immediately prior to such merger, consolidation or reorganization.
Notwithstanding the foregoing, in no event shall a Change of Control be deemed
to occur in the event of a sale of Company securities or debt as part of a bona
fide capital raising transaction or internal corporate reorganization.

 

8.                                  Parachute Payment.

 

(a)                                      Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined  that any payment
or distribution by the Company to or for the benefit of Executive (whether paid
or payable or distributed  or distributable pursuant to the terms of this
Agreement or otherwise)   (a “Payment”) including, by example and not by way of
limitation, acceleration (by the Company or otherwise) of the date of vesting or
payment under any plan, program, arrangement or agreement  of the Company, would
be subject to the excise tax imposed by Code Section 4999 or any interest or
penalties with respect to such excise tax (such excise tax together  with any
such interest and penalties, shall be referred to as the “Excise Tax”), then
there shall be made a calculation under which such Payments provided to
Executive are reduced to the extent necessary so that no portion thereof shall
be subject to the Excise Tax (the “4999  Limit”).   A comparison shall then be
made between (i) Executive’s Net After-Tax Benefit (as defined below) assuming
application of the 4999 Limit; and (ii) Executive’s Net After-Tax Benefit
without application of the 4999 Limit.  If (ii) exceeds (i), then no limit on
the Payments shall be imposed by this Section 8. Otherwise, the amount payable
to Executive shall be reduced so that no such Payment is subject to the Excise
Tax.  “Net After-Tax Benefit” shall mean the sum of (x) all payments that
Executive receives or is entitled to receive that are in the nature of
compensation and contingent  on a change in the ownership  or effective control
of the Company or in the ownership  of a substantial portion of the assets of
the Company within the meaning of Code Section 280G(b)(2) (either, a
“Section 280G Transaction”), less (y) the amount of federal, state, local and
employment taxes and Excise Tax (if any) imposed with respect to such payments.

 

(b)                             In the event that a reduction in Payments is
required pursuant to this Section 8, then, except as provided below with respect
to Payments that consist of health and welfare benefits, the reduction in
Payments shall be implemented by determining the “Parachute Payment Ratio” (as
defined below) for each Payment and then reducing the Payments in order
beginning with the Payment with the highest Parachute Payment Ratio.  For
Payments with the same Parachute Payment Ratio, such Payments shall be reduced
based on the time of payment of such Payments, with amounts being paid furthest
in the future being reduced first.  For Payments with the same Parachute Payment
Ratio and the same time of payment, such Payments shall be reduced on a pro-rata
basis (but not below zero) prior to reducing Payments next in order for
reduction.   For purposes of this Section, “Parachute Payment Ratio” shall mean
a fraction, the numerator of which is the value of the applicable Payment as
determined for purposes of Code Section 280G, and the denominator of which is
the financial present value of such Parachute Payment, determined at the date
such payment is treated as made for purposes of Code Section 280G (the
“Valuation Date”).   In determining the denominator for purposes of the
preceding sentence (i) present values shall be determined using the same
discount rate that applies for purposes of discounting payments under Code
Section 280G; (ii) the financial value of payments shall be determined generally
under Q&A 12, 13 and 14 of Treasury Regulation 1.280G-l; and (iii) other
reasonable valuation assumptions as determined by the Company shall be used.
Notwithstanding the foregoing, Payments that consist of health and welfare
benefits shall be reduced after all other Payments, with health and welfare
Payments being made furthest in the future being reduced first.  Upon any
assertion by the

 

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Internal Revenue Service that any such Payment is subject to the Excise Tax,
Executive shall be obligated to return to the Company any portion of the Payment
determined by the Professional Services Firm to be necessary to appropriately
reduce the Payment so as to avoid any such Excise Tax.

 

(c)                               All determinations required to be made under
this Section 8, including whether and when a Payment is cut back pursuant to
Section 8(c) and the amount of such cut-back, and the assumptions to be utilized
in arriving at such determination, shall be made by a professional services firm
designated by the Board that is experienced in performing calculations under
Section 280G (the “Professional Services Firm”) which shall provide detailed
supporting calculations both to the Company and Executive.  If the Professional
Services Firm is serving as accountant or auditor for the individual, entity or
group effecting the Section 280G Transaction, the Board shall appoint another
qualified professional services firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Professional
Services Firm hereunder).  All fees and expenses of the Professional Services
Firm shall be borne solely by the Company.

 

9.                                   Conflicts of Interest.  Executive agrees
that he shall promptly disclose to the Board any conflict of interest involving
Executive upon Executive becoming aware of such conflict. Executive’s ownership
of an interest not in excess of one percent in a business organization that
competes with the Company or its affiliates (including but not limited to ITH)
shall not be deemed to constitute a conflict of interest.

 

10.                           Confidentiality.  The Company agrees to provide
Executive valuable Confidential Information of the Company and its affiliates
(including but not limited to ITH) and of third parties who have supplied such
information to the Company.  In consideration of such Confidential Information
and other valuable consideration provided hereunder, Executive agrees to comply
with this Section 10.

 

(a)                                  “Confidential  Information” means, without
limitation and regardless of whether such information or materials are expressly
identified as confidential or proprietary, (i) any and all non-public,
confidential or proprietary information or work product of the Company or its
affiliates (including but not limited to ITH), (ii) any information that gives
the Company or its affiliates (including but not limited to ITH) a competitive
business advantage or the opportunity of obtaining such advantage, (iii) any
information the disclosure or improper use of which is reasonably expected to be
detrimental to the interests of the Company or its affiliates (including but not
limited to ITH), (iv) any trade secrets of the Company or its affiliates
(including but not limited to ITH), and (v) any other information of or
regarding the Company or any of its affiliates (including but not limited to
ITH), or its or their past, present or future, direct or indirect, potential or
actual officers, directors, employees, owners, or business partners, including
but not limited to information regarding any of their businesses, operations,
assets, liabilities, properties, systems, methods, models, processes, results,
performance, investments, investors, financial affairs, future plans, business
prospects, acquisition or investment opportunities, strategies, business
partners, business relationships, contracts, contractual relationships,
organizational or personnel matters, policies or procedures, management or
compensation matters, compliance or regulatory matters, as well as any
technical, seismic, industry, market or other data, studies or research, or any
forecasts, projections, valuations, derivations or other analyses,

 

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performed, generated, collected, gathered, synthesized, purchased or owned by,
or otherwise in the possession of, the Company or its affiliates (including but
not limited to ITH)or which Executive has learned of through his employment with
the Company.  Confidential Information also includes any non-public,
confidential or proprietary information about or belonging to any third party
that has been entrusted to the Company or its affiliates (including but not
limited to ITH).  Notwithstanding the foregoing, Confidential Information does
not include any information which is or becomes generally known by the public
other than as a result of Executive’s actions or inactions.

 

(b)                             Protection.  In return for the Company’s promise
to provide Executive with Confidential Information, Executive promises (i) to
keep the Confidential Information, and all documentation, materials and
information relating thereto, strictly confidential, (ii) not to use the
Confidential Information for any purpose other than as required in connection
with fulfilling his duties as General Manager for the benefit of the Company,
and (iii) to return to the Company all documents containing Confidential
Information in Executive’s possession upon separation from the Company for any
reason.

 

(c)                               Value and Security.  Executive understands and
agrees that all Confidential Information, and every portion thereof, constitutes
the valuable intellectual property of the Company, its affiliates (including but
not limited to ITH), and/or third parties, and Executive further acknowledges
the importance of maintaining the security and confidentiality of the
Confidential Information and of not misusing the Confidential Information.

 

(d)                              Disclosure Required By Law.  If Executive is
legally required to disclose any Confidential Information, Executive shall
promptly notify the Company in writing of such request or requirement so that
the Company and/or its affiliates (including but not limited to ITH) may seek an
appropriate protective order or other relief.  Executive agrees to cooperate
with and not to oppose any effort by the Company and/or its affiliates
(including but not limited to ITH) to resist or narrow such request or to seek a
protective order or other appropriate remedy.  In any case, Executive will
(i) disclose only that portion of the Confidential

Information that, according to the advice of Executive’s counsel, is required to
be disclosed (and Executive’s  disclosure of Confidential Information to
Executive’s counsel in connection with obtaining such advice shall not be a
violation of this Agreement), (ii) use reasonable efforts (at the expense of the
Company) to obtain assurances that such Confidential Information will be treated
confidentially, and (iii) promptly notify the Company and/or its affiliates
(including but not limited to ITH) in writing of the items of Confidential
Information so disclosed.

 

(e)                                Third-Party Confidentiality Agreements.  To
the extent that the Company or its affiliates (including but not limited to ITH)
possesses any Confidential Information which is subject to any confidentiality
agreements with, or obligations to, third parties, Executive will comply with
all such agreements or obligations in full.  The immediately preceding sentence
shall apply only if the Company or any affiliate (including but not limited to
ITH) has provided Executive with a copy of such agreements, and Executive may
disclose such agreements and any related Confidential Information to Company’s
attorneys and rely on their advice regarding compliance therewith.

 

11.                         Agreement Not to Compete.  The Executive
acknowledges that, in the course of the performance of the Executive’s duties
and obligations under this Agreement, the Executive will

 

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acquire access to Confidential Information and the Executive further
acknowledges that if the Executive were to compete against the Company or any of
its affiliates (including but not limited to ITH), or be employed or in any way
involved with a person or company that was in competition with the Company or
any of its affiliates (including but not limited to ITH) following

the termination of the Executive’s employment with the Company, the Company and
its affiliates (including but not limited to ITH) would suffer irreparable
damages.  Accordingly, the Executive will not, at any time or in any manner,
during the Executive’s Employment Period or at any time within one (1) year
following the termination of Executive’s employment for whatever reason, and
notwithstanding any alleged breach of this Agreement:

 

(a)                              directly or indirectly engage in any business
involving the acquisition, exploration, development or operation of any mineral
property which is competitive or in conflict with the business of the Company or
any of its affiliates (including but not limited to ITH);

 

(b)                              accept employment or office with or render
services or advice to any other company, firm or individual, whether a
competitor or otherwise, engaged in the acquisition, exploration, development or
operation of mineral property which is competitive or in conflict with the
business of the Company or any of its affiliates (including but not limited to
ITH);

 

(c)                               solicit or induce any director, officer or
employee of the Company or of any its affiliates (including but not limited to
ITH) to end their association with the Company or any of its affiliates
(including but not limited to ITH); or

 

(d)                             directly or indirectly, on the Executive’s own
behalf or on behalf of others, solicit, divert or appropriate to or in favor of
any person, entity or corporation, any maturing business opportunity or any
business of the Company or of any of its affiliates (including but not limited
to ITH); or

 

(e)                               directly or indirectly take any other action
inconsistent with the fiduciary relationship of a senior officer to his company,
without the prior written consent of the Board, which consent may be withheld in
the Board’s sole discretion.

 

(f)                                For this purpose of this Section 11, mineral
property which is competitive or in conflict with the business of the Company or
any of its affiliates (including but not limited to ITH) means one:

 

(1)                             which is primarily prospective for gold, and

 

(2)                             any part of which lies within a horizontal
distance of twenty-five (25) kilometers from the outer boundaries of any mineral
property in which the Company or any of its affiliates (including but not
limited to ITH) holds, or has the right to acquire, an interest.

 

12.                           Withholdings.  The Company may withhold and deduct
from any payments made or to be made pursuant to this Agreement (a) all federal,
state, local and other taxes as may be required pursuant to any law or
governmental regulation or ruling, and (b) any deductions consented to in
writing by Executive.

 

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13.                           Severability.  It is the desire of the Parties
hereto that this Agreement be enforced to the maximum extent permitted by law,
and should any provision contained herein be held unenforceable by a court of
competent jurisdiction or arbitrator (pursuant to Section 15), the Parties
hereby agree and consent that such provision shall be reformed to create a valid
and enforceable provision to the maximum extent permitted by law; provided,
however, if such provision cannot be reformed, it shall be deemed ineffective
and deleted from this Agreement without affecting any other provision of this
Agreement.

 

14.                          Title and Headings; Construction.  Titles and
headings to Sections hereof are for the purpose of reference only and shall in
no way limit, define or otherwise affect the provisions hereof.  Any and all
Exhibits referred to in this Agreement are, by such reference, incorporated
herein and made a part hereof for all purposes.  The words “herein”, “hereof’,
“hereunder” and other compounds of the word “here” shall refer to the entire
Agreement and not to any particular provision hereof.  This Agreement shall be
deemed drafted equally by both the Parties. Its language shall be construed as a
whole and according to its fair meaning. Any presumption or principle that the
language is to be construed against any Party shall not apply.

 

15.                           Arbitration; Injunctive Relief; Attorneys’ Fees.

 

(a)                                      Subject to Section 15(b), any dispute,
controversy or claim between Executive and the Company arising out of or
relating to this Agreement, Executive’s  employment with Company, or the
termination of either (other than with respect to claims arising exclusively
under one or more of the Company’s employee benefit plans subject to ERISA) will
be finally settled by arbitration in Denver, Colorado before, and in accordance
with the rules for the resolution of employment disputes then in effect at the
American Arbitration Association.  The arbitrator’s award shall be final and
binding on both Parties.

 

(b)                                    Notwithstanding Section 15(a), an
application for emergency or temporary injunctive reliefby either party shall
not be subject to arbitration under this Section 15; provided, however, that the
remainder of any such dispute (beyond the application for emergency or temporary
injunctive relief) shall be subject to arbitration under this Section 15. 
Executive acknowledges that Executive’s violation of Sections 9 and/or 10 and/or
11 of this Agreement will cause irreparable harm to the Company and its
affiliates (including but not limited to ITH), Executive agrees not to contest
that Executive’s violation of Sections 9 and/or 10 and/or 11 of this Agreement
will cause irreparable harm to the Company and its affiliates (including but not
limited to ITH), and Executive agrees that the Company shall be entitled as a
matter of right to specific performance of Executive’s obligations under
Sections 9 and 10 and 11 and an injunction, from any court of competent
jurisdiction, restraining any violation or further violation of such agreements
by Executive or others acting on his/her behalf, without any showing of
irreparable harm and without any showing that the Company and its affiliates
(including but not limited to ITH) does not have an adequate remedy at law.  The
right of the Company and its affiliates (including but not limited to ITH) to
injunctive relief shall be cumulative and in addition to any other remedies
provided by law or equity.

 

(c)                                       Each side shall share equally the cost
of the arbitrator and bear its own costs and attorneys’ fees incurred in
connection with any arbitration, unless a statutory claim authorizing the award
of attorneys’ fees is at issue, in which event the arbitrator may award a
reasonable

 

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attorneys’ fee in accordance with the jurisprudence of that statute.

 

(d)                             Nothing in this Section 15 shall prohibit a
party to this Agreement from (i) instituting litigation to enforce any
arbitration award or (ii) joining another party to this Agreement in a
litigation initiated by a person which is not a party to this Agreement.

 

16.                          Governing Law. THIS AGREEMENTWILLBE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.  THE EXCLUSNE VENUE FOR THE
RESOLUTION OF ANY DISPUTE RELATING TO THIS AGREEMENT OR EXECUTNE’S EMPLOYMENT
(THAT IS NOT SUBJECT TO ARBITRATION UNDER SECTION 15 FOR ANY REASON) SHALL BE IN
THE STATE AND FEDERAL COURTS LOCATED IN DENVER, COLORADO AND THE PARTIES HEREBY
EXPRESSLY CONSENT TO THE JURISDICTION OF THOSE COURTS.

 

17.                          Entire Agreement and Amendment.  This Agreement
contains the entire agreement of the Parties with respect to Executive’s
employment and the other matters covered herein (except to the extent that other
agreements are specifically referenced herein); moreover, this Agreement
supersedes all prior and contemporaneous agreements and understandings, oral or
written, between the Parties hereto concerning the subject matter hereof and
thereof.  This Agreement may be amended, waived or terminated only by a written
instrument executed by both Parties hereto.

 

18.                           Survival of Certain Provisions.  Wherever
appropriate to the intention of the Parties hereto, the respective rights and
obligations of said Parties, including, but not limited to, the rights and
obligations set forth in Sections 6 through 16 hereof, shall survive any
termination or expiration of this Agreement for any reason.

 

19.                          Waiver of Breach.  No waiver by either pay hereto
of a breach of any provision of this Agreement by the other party, or of
compliance with any condition or provision of this Agreement to be performed by
such other party, will operate or be construed as a waiver of any subsequent
breach by such other party or any similar or dissimilar provision or condition
at the same or any subsequent time.  The failure of either party hereto to take
any action by reason of any breach will not deprive such party of the right to
take action at any time while such breach continues.

 

20.                            Assignment.  Neither this Agreement nor any
rights or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by the Company, except that the Company shall assign
this Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the equity, assets or businesses of the Company, if
such successor expressly agrees to assume the obligations of the Company
hereunder.

 

21.                           Notices.  Notices provided for in this Agreement
shall be in writing and shall be deemed to have been duly received (a) when
delivered in person or sent by facsimile transmission, (b) on the first business
day after such notice is sent by air express overnight courier service, or
(c) on the third business day following deposit in the United States mail,
registered or certified mail, return receipt requested, postage prepaid and
addressed, to the following address, as applicable:

 

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(a)                             If to Company, addressed to:   Suite 350-9635
Maroon Circle, Englewood, Colorado  80112; Attention: Donald Ewigleben with a
copy for informational purposes only to:  International Tower Hill Mines Ltd.,
Suite 2300-1177 West Hastings Street Vancouver British Columbia Canada, V6E 2K3.

 

(b)                             If to Executive,  addressed  to the address set
forth below Executive’s name on the execution page hereof; or to such other
address as either party may have furnished to the other party in writing in
accordance with this Section 21.

 

22.                             Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a copy hereof containing
multiple signature pages, each signed by one party, but together signed by both
Parties hereto.

 

23.                            Definitions. The Parties agree that as used in
this Agreement the following terms shall have the following meanings: an
“affiliate” of a person shall mean any person  directly or indirectly
controlling, controlled  by, or under common  control with, such person; the
terms “controlling, controlled  by, or under common control with” shall mean the
possession, directly or indirectly,  of the power to direct or influence or
cause the direction  or influence of management or policies (whether through
ownership of securities or other ownership interest  or right, by contract or
otherwise)  of a person; the term “person” shall mean a natural person,
partnership (general or limited), limited liability Company, trust, estate,
association, corporation, custodian, nominee, or any other individual or entity
in its own or any representative capacity, in each case, whether domestic or
foreign.

 

24.                            Internal Revenue Code Section 409A.

 

(a)                             If at the time of the Executive’s separation
from service, (i) the Executive is a specified employee (within  the meaning of
Section  409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
using the identification methodology selected  by the Company from time to
time), and (ii) the Company makes a good faith determination that an amount
payable hereunder  constitutes deferred  compensation (within the meaning  of
Section 409A of the Code), the payment  of which is required to be delayed
pursuant  to the six-month delay rule set forth in Section 409A of the Code in
order to avoid additional  taxes or interest under Section 409A of the Code,
then the Company will not pay such amount on the otherwise scheduled  payment
date but will instead pay it in a lump sum on the first to occur of (x) the
first business day after such six-month period, (y) Executive’s death, or
(z) such other date as will not cause such payment  to be subject to tax or
interest under Code Section 409A.

 

(b)                             It is the intention of the Parties that payments
or benefits payable under this Agreement not be subject to the additional tax or
interest imposed pursuant to Code Section 409A. To the extent such potential
payments or benefits could become subject to Code Section 409A, the Parties
shall cooperate to amend this Agreement with the goal of giving the Executive
the economic benefits described herein in a manner that does not result in such
tax being imposed. The Executive shall, at the request of the Company, take any
action (or refrain from taking any action), required to comply with any
correction procedure promulgated pursuant to Code Section 409A.   In no event
shall the Company be liable to Executive for any taxes,

 

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penalties, or interest that may be due as a result of the application of Code
Section 409A.

 

(c)                              With respect to payments under this Agreement,
for purposes of Code Section

409A, each severance payment will be considered one of a series of separate
payments, and each such payment shall be a separately identifiable and
determinable amount.

 

(d)                             For purposes of determining the timing of any
payment of severance compensation, the Executive will be deemed to have a
termination of employment only upon a “separation from service” within the
meaning of Code Section 409A.

 

(e)                               Any amount that the Executive is entitled to
be reimbursed under this Agreement will be reimbursed to the Executive as
promptly as practical, and in any event not later than the last day of the
calendar year following the year in which the expenses were incurred.

 

(f)                                Executive’s termination of his employment for
Good Reason is intended to be a separation from service for good reason as
described in Treas. Reg. § 1.409A-1(n)(2) and this Agreement shall be
interpreted and construed accordingly.

 

(g)                               For purposes of this Agreement, each payment
of severance compensation is intended to be excepted from Code Section 409A to
the maximum extent provided under Code Section 409A as follows: (i) each payment
that is scheduled to be made following Executive’s termination of employment and
within the applicable 2 1/2 month period specified in Treas. Reg. §
1.409A(b)(4) is intended to be excepted under the short-term deferral exception
as specified in Treas. Reg.§ 1.409A-1(b)(4) and (ii) each payment that is not
otherwise excepted under the short-term deferral exception is intended to be
excepted under the involuntary separation pay exception as specified in Treas.
Reg. § 1.409A-1(b)(9)(iii) or the exception for limited payments described in
Treas. Reg. § 1.409A-1(b)(9)(v)(D). The Executive shall have no right to
designate the date of any payment of severance compensation to be made
hereunder.

 

25.                        Employment at Will.  Executive agrees that by signing
below he agrees that he is an employee at will and just as he is free to
terminate his employment at any time, for any reason, the Company is also free
to terminate his employment at any time, for any reason.

 

SIGNATURE PAGE FOLLOWS

 

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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement to be
effective for all purposes as of the Effective Date.

 

 

 

EXECUTIVE:

 

 

 

 

Dated: March 12, 2013

/s/ Karl Hanneman

 

Karl Hanneman

 

 

 

 

 

THE COMPANY:

 

 

Dated: March 12, 2013

/s/ Donald C. Ewigleben

 

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Exhibit “A”

 

Description of Duties and Responsibilities of Employee

 

Without limiting the provisions of section 3 of the Agreement, Employee has the
following specific duties and responsibilities:

 

·                To provide leadership in the supervision and management of
project staff;

 

·                Developing and maintaining safe operating standards for
workplace

 

·                Work closely with the VP, to create and implement plans for
compiling all necessary environmental baseline information;

 

·                Creating and implementing legal, regulatory and public
strategies for permitting;

 

·                Creating and implementing plans for the completion of the
exploration, engineering, pre feasibility studies and project documentation
necessary to support permitting for the Livengood Project;

 

·                To assist in the successfully complete a comprehensive
feasibility study on the Livengood deposit, to be completed during the second
quarter of2013;

 

·                To analyze viable lower capital alternatives to the recommended
alternative contained in the feasibility study;

 

·                 To assistance in the development and maintenance of an
electronic database on technical project information

 

·                 To assist in the company’s solid reputation among the local
and regional stakeholders;

 

·                 To execute a well-crafted exploration program to ensure the
orderly development of the Project;

 

·                 Other duties as assigned by the VP; and

 

·                 Otherwise carrying out the duties normally associated with the
position of the General   Manager, Alaska managing project activities.

 

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