Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


THIS AGREEMENT
made and entered into as of the 1st day of August, 2005 by and between Golden
Cycle Gold Corporation, a Colorado corporation, (hereinafter referred to as the
“Company”), and Donald L. Gustafson, (hereinafter referred to as “Mr. Gustafson”).


 


WHEREAS, Mr.
Gustafson has been Vice President, Exploration of the Company since August 1,
2004, and a consultant of the Company since February, 2000, and


 


WHEREAS, the
Company is desirous of the continuation of Mr. Gustafson’s services with the
Company and is desirous of obtaining those services on a continuing basis with
Mr. Gustafson working for the Company half of his available work time during
the year.


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, the parties hereto agree as follows:


 


1.  TERM OF AGREEMENT.  The term of this Agreement shall commence on
the date hereof and terminate one year from the date hereof (the “Term”).  Both parties agree that either party can
terminate the contract by providing the other party two months notice in
writing.


 


2.  DUTIES AND PERFORMANCE.  (a) 
During the term of this Agreement, Mr. Gustafson shall be employed as “Vice
President, Exploration” and shall use his best efforts to advance the interests
and business of the Corporation, supervise its employees as assigned and devote
one half (approximately 120 working days during the year) of his working time
and attention to the business of the Corporation.


 


3.  BASE SALARY.  The Company shall pay to Mr. Gustafson base
salary at the rate of $54,000 per annum payable in such installments as shall
accord with the normal pay practices of the Company.


 


4.  BENEFITS.  (a) 
when eligible under non-discriminatory standards, Mr. Gustafson shall be
entitled to participate during the Term in any employee benefit plans
maintained by the Company available to employees of the Corporation.


 


(b)  the Company shall reimburse
Mr. Gustafson in accordance with the Company’s policy applicable to employees
then in effect, for travel and other normal business expenses incurred in the
pursuit of Company business.


 


(c)  the Company shall use all
reasonable efforts to obtain, and subsequently, maintain in full force and
effect during the Term a $50,000 Term Life Insurance Policies on the life of
Mr. Gustafson, provided that this subsection shall not relate to policies of
which the Company is the beneficiary.


 





















 


5.  TERMINATION OF AGREEMENT.  (a) 
the Company shall be entitled to terminate this agreement in any of the
following circumstances:


 


(i)  For “cause” by reason of the
occurrence of any of the following: 
(A)  willful misfeasance or gross
negligence by Mr. Gustafson in the conduct of Mr. Gustafson’s duties including
the failure of Mr. Gustafson to follow lawful orders of Company Officers
assigned responsibility to direct and supervise his services for the Company,
(B)  a material breach by Mr. Gustafson
of this Agreement, (C)  the commission of
acts of dishonesty or moral turpitude by Mr. Gustafson that are detrimental to
the Company and/or its affiliates, or (D) 
the conviction of, or nolo contendere plea by, Mr. Gustafson in
respect of any felony.


 


(ii)  Mental or physical
incapacity or inability of Mr. Gustafson to perform his duties for a consecutive
period of ninety (90) days during the Term; or


 


(iii)  Upon not less than two
months’ notice to Mr. Gustafson, in writing, of the Company’s intent to
terminate this contract.


 


(b)  In the event of termination
pursuant to the terms of this section, the obligations of the Company to
provide benefits other than those already vested as provided herein shall cease
upon such termination.


 


6.  COVENANT NOT TO COMPETE.  (a) 
Mr. Gustafson acknowledges that in the course of his employment
hereunder and his employment by the Company, he has and will become privy to
various economic and trade secrets and relationships of the Company and its
affiliates.  Therefore, in consideration
of this Agreement, Mr. Gustafson hereby agrees that he will not, directly or
indirectly, except for the benefit of the Company or its affiliates:


 


(i)  during the term of this
Agreement and thereafter, on behalf of himself or any other person:


 


(A)  solicit, entice, persuade or
induce any employee of the Company or any affiliate, or any other person, who
is under contract with or rendering services or supplying products to the
Company or any affiliate, or any such individual or entity who held any such
status during the two-year period preceding termination of this Agreement, (w)
to terminate his or its employment by, or contractual relationship with, the
Company or any affiliate or (x) to refrain from extending or renewing the same
(upon the same or new terms) or (y) to refrain from rendering services to the
Company or any affiliate, or (z) to become employed by or to enter into
contractual relations with persons other than the Company; or


 


(B)  authorize or knowingly
approve or assist in the taking of any such actions by any person other than
the Company.


 





















 


(ii)  (A)  subject to the exception contained in Section
6(a) (ii) (B), for a period ending two years after termination of this
Agreement, directly or indirectly, whether as employee, consultant, officer,
director, partner, shareholder or otherwise compete with the business of the Company.


 


(B)  this subsection 6(a)(ii)
shall not restrict Mr. Gustafson from participating in mining other than in
competition with the Company.


 


7.  CONFIDENTIALITY.  During the term of this Agreement and
thereafter, Mr. Gustafson will keep secret and will not, without the express
written consent of the Company:


 


(a)  knowingly divulge or communicate to any third
person, or use for the benefit of Mr. Gustafson or any third person, any trade
secrets or privileged, proprietary or confidential information used or owned by
the Company or any affiliate or disclosed to or learned by him in the course of
his employment by the Company including, without limitation information
concerning the Cripple Creek & Victor Gold Mining Company; or


 


(b)  retain for the benefit of himself or any
third person any document or paper used or owned by the Company or any
affiliate or coming into his possession in the course of his employment
hereunder or make or cause to be made any copy, abstract, or summary thereof,
except documents evidencing Mr. Gustafson’s rights, privileges, duties and
obligations, including this document.


 


	
   

  	
  SIGNATURES

  
	
   

  	
   

  	
   

  
	
   

  	
  GOLDEN CYCLE GOLD CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ R. Herbert Hampton

  	
   

  	
   

  	
  August 8, 2005

  	
   

  
	
  R. Herbert Hampton, President & CEO

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED TO ON THIS 10th DAY OF AUGUST, 2005.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Donald L. Gustafson

  	
   

  	
   

  	
   

  
	
  Donald L. Gustafson