Document:

a50192348ex10-4.htm

Exhibit 10.4

 

 

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of March 5, 2012 by and between PAPA JOHN’S INTERNATIONAL, INC., a Delaware corporation (the "Company"), and Andrew M. Varga, a resident of the Commonwealth of Kentucky ("Executive").

 

RECITALS

 

A.          The Executive is currently the Senior Vice President and Chief Marketing Officer of the Company.

 

B.           The Company desires to continue the employment of Executive, and Executive wishes to continue such employment as Senior Vice President and Chief Marketing Officer of the Company, to be governed by the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:

 

1.           Effective Date.  The terms and conditions of Executive's employment hereunder shall become effective upon March 5, 2012 (the "Effective Date").

 

2.           Employment.  Subject to all the terms and conditions of this Agreement, Executive's period of employment under this Agreement shall be the period commencing on the Effective Date and ending on  March 5, 2015 (the "Third Anniversary Date"), which term, unless otherwise agreed to by the parties, shall be extended on the Third Anniversary Date and on each anniversary of that date thereafter, for a period of one year (which term together with such extensions, if any, shall be hereinafter defined as the "Term"), unless the Executive's employment terminates earlier in accordance with Section 9 hereof.  Either party may elect not to renew the Agreement by providing written notice to the other party at least sixty (60) days prior to the expiration of the Term.  Thereafter, if Executive continues in the employ of the Company, the employment relationship shall continue to be at will, terminable by either Executive or the Company at any time and for any reason, with or without cause, and subject to such terms and conditions established by the Company from time to time.

 

3.            Position and Duties.     

 

(a)           Employment with the Company.  Executive shall be employed as the Senior Vice President and Chief Marketing Officer of the Company, and/or such other titles as the Company reasonably may designate, and shall perform such duties and responsibilities as the Company shall reasonably assign to Executive from time to time, including duties and responsibilities relating to the Company's wholly-owned and partially owned subsidiaries and other affiliates.

 

(b)           Performance of Duties and Responsibilities.  Executive shall serve the Company faithfully and to the best of Executive’s ability and shall devote full working time, attention and efforts to the business of the Company during Executive’s employment with the Company hereunder. While Executive is employed by the Company during the Term, Executive shall report to the Chief Executive Officer of the Company or to such other person as designated by the Chief Executive Officer or the Board of Directors of the Company (the "Board"). Executive hereby represents and confirms that Executive is under no contractual or legal commitments that would prevent Executive from fulfilling Executive’s duties and responsibilities as set forth in this Agreement. During Executive’s employment with the Company, Executive shall not accept other employment or engage in other material business activity, except as may be approved in writing by the Board. Executive may participate in charitable activities and personal investment activities to a reasonable extent, and Executive may serve as a director of business organizations as approved by the Board, so long as such activities and directorships do not interfere with the performance of Executive’s duties and responsibilities hereunder.

 

  

  

  

Exhibit 10.4

 

 

4.            Compensation.     

 

(a)           Base Salary. As of the Effective Date, the Company shall pay to Executive an annual base salary at the rate of Three Hundred Thirty Six Thousand Six Hundred Dollars ($336,600) per year, less deductions and withholdings, which base salary shall be paid in accordance with the Company's normal payroll policies and procedures. Executive's base salary shall be reviewed on an annual basis by the Compensation Committee of the Board, at the same time and in the same manner as compensation is reviewed by the Compensation Committee for other officers of the Company generally, to determine whether it should be increased.

 

(b)           Incentive Bonus and Equity Awards.  Executive shall be entitled to participate in such incentive-based compensation plans or equity-based compensation plans of the Company and its affiliates in effect from time to time for executives of the Company, and as approved by and at the discretion of the Compensation Committee.

 

In the event of a termination of Executive's Employment by the Company other than for Cause (as defined below), and contingent upon Executive's execution of a full release of claims in the manner set forth in Section 10(h), all options and other equity awards, other than performance-based awards (which shall be governed by the terms of the applicable award agreement)  granted under any stock option and stock incentive plans of the Company that are outstanding as of the date of termination shall be credited with an additional 6 months of Service (as defined in the Company’s 2011 Omnibus Incentive Plan, referred to herein as the “Plan”) for purposes of vesting in such award. Except as specifically set forth herein, all equity awards held by Executive shall continue to be governed by the applicable plan and award agreements, including with respect to Corporate Transactions (as defined in the Plan) and post-termination exercisability of awards.

 

 (c)           Benefits.  Executive shall be entitled to participate in all employee benefit plans and programs of the Company that are available to executive officers generally to the extent that Executive meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.

 

(d)           Expenses.  The Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by Executive in the performance of Executive’s duties and responsibilities hereunder, subject to the Company's normal policies and procedures for expenses, expense verification and documentation.

 

(e)           Vacations and Holidays.  Executive shall be entitled to such vacation and holiday benefits as provided to officers generally, as the Company establishes by policy from time to time.  Executive shall coordinate Executive’s vacation schedule with the Company so as not to impose an undue burden on the Company.

 

  

2

  

Exhibit 10.4

 

 

5.           Affiliated Entities.  As used in this Agreement, "Company" shall include the Company and each corporation, limited liability company, partnership, or other entity that is controlled by the Company, or is under common control with the Company (in each case "control" meaning the direct or indirect ownership of 50% or more of all outstanding equity interests), provided, however, that the Executive's title need not be identical for each of the affiliated entities nor the same as that for the Company.

 

6.           Confidential Information and Other Agreements. Executive agrees to abide by the terms of any and all agreements and obligations to the Company regarding confidentiality, including but not limited to any offer letter, Code of Ethics provision, policy, or the Executive’s November 22, 2011 Confidentiality, Non-Disparagement and Dispute Resolution Agreement, all the terms of which are reiterated and incorporated by reference herein, and any successor agreements of similar nature executed by Executive from time to time.

 

7.           Noncompetition Covenant. Executive agrees to abide by the terms of Executive’s September 16, 2009 Confidentiality and Non-Competition Agreement, which is reiterated and incorporated by reference herein, and any successor agreements of similar nature executed by Executive from time to time.

 

                 8.           Intellectual Property.     

 

(a)          Disclosure and Assignment.  As of the Effective Date, Executive hereby transfers and assigns to the Company (or its designee) all right, title, and interest of Executive in and to every idea, concept, invention, trade secret and improvement (whether patented, patentable or not) conceived or reduced to practice by Executive whether solely or in collaboration with others while Executive is employed by the Company, whether or not conceived or reduced to practice during the regular hours of Executive’s employment (collectively, “Creations") and all copyrighted or copyrightable matter created by Executive whether solely or in collaboration with others Executive he is employed by the Company that relates to the Company's business (collectively, "Works") whether or not created during the regular hours of Executive’s employment. Executive shall communicate promptly and disclose to the Company, in such form as the Company may request, all information, details, and data pertaining to each Work and Creation. Every copyrightable Work, regardless of whether copyright protection is sought or preserved by the Company, shall be a "work made for hire" as defined in 17 U.S.C. § 101, and the Company shall own all rights in and to such matter throughout the world, without the payment of any royalty or other consideration to Executive or anyone claiming through Executive.

 

(b)         Trademarks.  All right, title, and interest in and to any and all trademarks, trade names, service marks, and logos adopted, used, or considered for use by the Company during Executive's employment (whether or not developed by Executive) to identify the Company's business or other goods or services (collectively, the "Marks"), together with the goodwill appurtenant thereto, and all other materials, ideas, or other property conceived, created, developed, adopted, or improved by Executive solely or jointly during Executive's employment by the Company and relating to its business shall be owned exclusively by the Company. Executive shall not have, and will not claim to have, any right, title, or interest of any kind in or to the Marks or such other property.

 

(c)         Documentation.  Executive shall execute and deliver to the Company such formal transfers and assignments and such other documents as the Company may request to permit the Company (or its designee) to file and prosecute, defend and enforce such registration applications and other documents it deems useful to protect or enforce its rights hereunder.

 

  

3

  

Exhibit 10.4

 

 

9.           Termination of Employment.     

 

(a)           Executive's employment with the Company shall terminate immediately upon:

 

(i)  Executive's receipt of written notice from the Company of the termination of Executive’s employment;

 

(ii)  the Company's receipt of Executive's written or oral resignation from the Company;

(iii)   Executive's Disability (as defined in the Plan); or

(iv)  Executive's death.

 

(b)           The date upon which Executive's termination of employment with the Company occurs shall be the "Termination Date."

 

10.           Payments upon Termination of Employment.     

 

                (a)            If Executive's employment with the Company is terminated by reason of:

 

(i)  Executive's abandonment of Executive’s employment or Executive's resignation for any reason (whether or not such resignation is set forth in writing or otherwise communicated to the Company);

 

(ii)  termination of Executive's employment by the Company for Cause (as defined below); or

(iii)  termination of Executive's employment by the Company without Cause following expiration of the Term;

 

the Company shall pay to Executive his or her then-current base salary through the Termination Date and any and all other benefits to which Executive may be entitled under any applicable Company policy, plan or procedure (without duplication of benefits).

 

(b)           Except in the case of a Change in Control, which is governed by Section 10(c) below, if Executive's employment with the Company is terminated by the Company pursuant to Section 9(a)(i) effective prior to the expiration of the Term for any reason other than for Cause (as defined below), then the Company shall pay to Executive, subject to Section 10(h) of this Agreement and in addition to the consideration described in Section 4(b) above, the following amounts:

 

(i)    Executive’s then-current base salary through the Termination Date;

 

(ii)  pro rata portions of any quarterly and annual non-equity bonus payouts under any non-equity incentive-based compensation plans then in effect (provided that any applicable performance measures are achieved); and

 

(iii)  the amount of Executive’s then current base salary that Executive would have received from the Termination Date through the date that is nine months following such Termination Date.

 

Any amount payable to Executive pursuant to Section 10(b)(iii) shall be subject to deductions and withholdings and shall be paid to Executive by the Company in the same periodic installments in accordance with the Company's regular payroll practices commencing on the first normal payroll date of the Company following the expiration of all applicable rescission periods provided by law. Any amount payable to Executive pursuant to Section 10(b)(ii) shall be subject to deductions and withholdings and shall be paid to Executive by the Company in the same manner and at the same time that incentive bonus payments are made to current employees of the Company, but no earlier than the first normal payroll date of the Company following the expiration of all applicable rescission periods provided by law and no later than March 15th of the year following the year in which the Termination Date occurs.

 

  

4

  

Exhibit 10.4

 

 

(c)           If Executive's employment is terminated by the Company without Cause following a Change in Control as defined in this Agreement and before the end of the Term, or if the Executive's employment is terminated by the Executive for Good Reason following a Change in Control and before the end of the Term, then the Company shall pay to Executive, subject to Executive's compliance with Section 10(h) of this Agreement, the lesser of the total of Executive’s then current base salary and prorated non-equity incentive bonus payouts as referenced above through the end of the Term of the Agreement, or nine months of Executive’s current base salary.

 

(i)  A "Change of Control" shall mean that a “Corporate Transaction” as defined in the Plan has taken place during the Term.

 

        (ii)  A termination by Executive for "Good Reason" shall mean a termination based on:

 

      (A)  the assignment to Executive of different job responsibilities that results in a substantial decrease in the level of responsibility from those in effect immediately prior to the Change of Control;

 

      (B)  a material reduction by the Company or the surviving company in Executive's base pay as in effect immediately prior to the Change of Control;

 

      (C)  a material reduction by the Company or the surviving company in total benefits available to Executive under cash incentive and other employee benefit plans after the Change of Control compared to the total package of such benefits as in effect prior to the Change of Control;

 

      (D)  the requirement by the Company or the surviving company that Executive be based more than 50 miles from where Executive's office is located immediately prior to the Change of Control, except for required travel on company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of the Company prior to the Change of Control; or

 

      (E) the failure by the Company to obtain from any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company ("Successor") the assent to this Agreement contemplated by Section 13(g) hereof.

 

(d)            If Executive's employment with the Company is terminated effective prior to the expiration of the Term by reason of Executive's death or Disability, the Company shall pay to Executive or Executive’s beneficiary or estate, as the case may be, Executive’s then-current base salary through the Termination Date, any earned and unpaid quarterly non-equity incentive bonus for the fiscal quarter preceding the fiscal quarter in which the Termination Date occurs and a pro-rated portion of any quarterly and annual non-equity incentive bonus for the fiscal quarter in which the Termination Date occurs (provided that any applicable performance measures are achieved), based on the number of days during such fiscal quarter that Executive was employed by the Company, payable in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company but in no event no later than March 15th of the year following the calendar year in which the Termination Date occurs.

 

  

5

  

Exhibit 10.4

 

 

(e)           "Cause" hereunder shall mean:

 

(i)   gross negligence or willful misconduct in connection with the performance of duties;

 

(ii)   conviction of a criminal offense (other than minor traffic offenses) that is, or may reasonably be expected to be, injurious to the Company, its business, reputation, prospects, or otherwise;

(iii)  material breach of any term of any agreement between the Executive and the Company, including any employment, consulting or other services, confidentiality, intellectual property, non-competition or non-disparagement agreement;

(iv)    acts or omissions involving willful or intentional malfeasance or misconduct that is, or may reasonably be expected to be, injurious to the Company, its business, reputation, prospects, or otherwise; or

(v)    commission of any act of fraud or embezzlement against the Company. 

 

(f)           "Disability" hereunder shall have the same meaning as contained in the Company’s Plan.

 

(g)           Notwithstanding any other provision hereof, the Company shall not be obligated to make any payments under Section 10 of this Agreement unless Executive has signed a full release of claims against the Company, in a form and scope to be prescribed by the Company, all applicable consideration periods and rescission periods provided by law shall have expired, and Executive is in strict compliance with the terms of this Agreement and any other agreements between the Executive and the Company as of the dates of the payments.  Within five business days of the Termination Date, the Employer shall deliver to the Executive the release for the Executive to execute.  The Executive will forfeit all rights to accelerated vesting in equity pursuant to Section 4(b) and to the payments provided pursuant to Section 10(b)(ii) and (iii) unless the Executive executes and delivers to the Company the release within 30 days of delivery of the release by the Company to the Executive and such release has become irrevocable by virtue of the expiration of the revocation period without the release having been revoked (the first such date, the "Release Effective Date").   The Company shall have no obligation to provide the payments pursuant to Section 10(b)(ii) and (iii) prior to the Release Effective Date.  Payments will commence with next regular payroll date that occurs more than three business days after the Release Effective Date with any payment that would have been made but for the Release Effective Date not having occurred being made at that time.

 

(h)           To the extent the Executive would be subject to the additional 20% tax imposed on certain deferred compensation arrangements pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the "Code")("Section 409A"), as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such tax and preserve to the maximum extent possible the original intent and economic benefit to the Executive and the Company, and the parties shall promptly execute any amendment reasonably necessary to implement this Section 10(h).

 

(i) For purposes of Section 409A, the Executive's right to receive installment payments pursuant to this Agreement including, without limitation, each severance shall be treated as a right to receive a series of separate and distinct payments.

 

  

6

  

Exhibit 10.4

 

 

(ii) The Executive will be deemed to have a Termination Date for purposes of determining the timing of any payments or benefits hereunder that are classified as deferred compensation only upon a "separation from service" within the meaning of Section 409A.

 

(iii) Notwithstanding any other provision hereof, to the extent the Executive is a "specified employee" as defined in Section 409A of the Internal Revenue Code and the final regulations promulgated thereunder, and any portion of Executive's severance pay is not exempt from Section 409A of the Internal Revenue Code, but would otherwise be payable within the first six (6) months following the date of the Executive's date of termination, such severance pay will not be paid to the Executive until the first payroll date of the seventh (7th) month following the date of termination.

 

(iv) (A) 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 after the calendar year in which the expenses are incurred, (B) any right to reimbursement or in kind benefits will not be subject to liquidation or exchange for another benefit, and (C) the amount of the expenses eligible for reimbursement during any taxable year will not affect the amount of expenses eligible for reimbursement in any other taxable year.

 

(v) Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., "payment shall be made within thirty (30) days following the date of termination"), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

11.           Return of Property. Upon termination of Executive's employment with the Company, Executive shall deliver promptly to the Company all records, files, manuals, books, forms, documents, letters, memoranda, data, customer lists, tables, photographs, video tapes, audio tapes, computer disks and other computer storage media, and copies thereof, that are the property of the Company, or that relate in any way to the business, products, services, personnel, customers, prospective customers, suppliers, practices, or techniques of the Company, and all other property of the Company (such as, for example, computers, cellular telephones, pagers, credit cards, and keys), whether or not containing Confidential Information, that are in Executive's possession or under Executive's control.

 

12.            Remedies.  Executive acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by Executive of the provisions of Sections 6, 7, 8, and 11 hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages. Any such action shall only be brought in a court of competent jurisdiction in the Commonwealth of Kentucky, and the parties consent to the jurisdiction, venue and convenience of such courts.

 

13.           Miscellaneous.     

 

(a)           Governing Law. This Agreement shall be governed by, subject to, and construed in accordance with the laws of the Commonwealth of Kentucky without regard to conflict of law principles.

 

(b)           Dispute Resolution. The parties agree that to the extent permitted by law, any dispute arising between Executive and Company, including whether any provision of this Agreement has been breached, shall be resolved through confidential mediation or confidential binding arbitration. Any such dispute shall initially be submitted for resolution to a neutral mediator, mutually selected by the parties. If such dispute is not resolved to the satisfaction of the parties, or the parties cannot agree upon a mediator, then it shall be submitted for resolution by a neutral arbitrator, to be mutually selected by the parties from a list provided by the American Arbitration Association, with such resolution to be made pursuant to that organization’s then-current Employment (or other applicable) Arbitration Rules and Mediation Procedures. The parties agree that Company shall bear the costs of any mediation or arbitration arising under this Agreement, although each party shall be responsible for its own attorneys’ fees.  The parties agree to keep confidential both the fact that any mediation/arbitration has or will take place between them, all facts related thereto, and any resolution thereunder. Any resolution reached via mediation or award of an arbitrator shall be final and binding on the parties.

 

  

7

  

Exhibit 10.4

 

 

 (c)           Entire Agreement.  This Agreement contains the entire agreement of the parties relating to Executive's employment with the Company and supersedes all prior agreements and understandings with respect to such subject matter, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein.

 

(d)           No Violation of Other Agreements. Executive hereby represents and agrees that neither (i) Executive's entering into this Agreement, (ii) Executive's employment with the Company, nor (iii) Executive's carrying out the provisions of this Agreement, will violate any other agreement (oral, written or other) to which Executive is a party or by which Executive is bound.

 

(e)           Amendments. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by the parties hereto.

 

(f)           No Waiver. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

 

(g)           Assignment. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Executive, assign its rights and obligations under this Agreement (i) to any entity with which the Company may merge or consolidate, or (ii) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets. Upon Executive's written request, the Company will seek to have any Successor by agreement assent to the fulfillment by the Company of its obligations under this Agreement. After any assignment by the Company pursuant to this Section 13(g), the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the "Company" for purposes of all terms and conditions of this Agreement.

 

(h)           Counterparts.  This Agreement may be executed in any number of counterparts, and such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.

 

(i)           Severability.  To the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

 

(j)           Survival. The terms and conditions set forth in Sections 6, 7, 8, 9, 11, 12, and 13 of this Agreement, and any other provision that continues by its terms, shall survive expiration of the Term or termination of Executive's employment for any reason.

 

  

8

  

Exhibit 10.4

 

 

(k)           Captions and Headings. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.

 

(l)           Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and either delivered in person or sent by first class certified or registered mail, postage prepaid, if to the Company, to the Chief Executive Officer at the Company's principal place of business, and if to Executive, at Executive’s home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto.

 

  

9

  

Exhibit 10.4

 

 

IN WITNESS WHEREOF, Executive and the Company have executed this Agreement on this 5th day of March, 2012.

	  	
PAPA JOHN’S INTERNATIONAL, INC.

	  	  	  
	  	  	  
	  	
By:   /s/ Tony Thompson                                               

	  	  	  
	  	
Title:

	
Executive Vice President Global Operations

	  	  	
President, PJ Food Service                            

	  	  	  
	  	  	  
	  	  	  
	  	
  /s/ Andrew M. Varga                                                     

	  	
Andrew M. Varga

 

10Unassociated Document

Exhibit 4.1

 

Execution Version

 

STOCKHOLDERS’ AGREEMENT

This Stockholders’ Agreement (this “Agreement”) is made as of March 1, 2012, by and between URANIUM RESOURCES, INC., a Delaware corporation (the “Company”) and RESOURCE CAPITAL FUND V L.P., a Cayman Islands exempt limited partnership (along with its successors and assigns, “RCF”).

Recitals

A.           RCF and the Company have entered into an Investment Agreement dated as of March 1, 2012 (the “Investment Agreement”), whereby RCF has agreed to provide up to $35,000,000 in equity financing to the Company (the “Equity Investment”) in exchange for a number of shares of Common Stock, par value $0.001 of the Company (“Common Stock”) to be determined based on the trading prices of the Company’s Common Stock at specified dates (the “RCF Shares”).

B.           As a result of such issuances, RCF will be the owner of in excess of 5% of the Company’s Common Stock. 

C.           RCF and the Company desire to enter into this Agreement for the purpose of establishing (i) RCF’s pro-rata participation rights in new Equity Financing as long as RCF is a stockholder of the Company; (ii) the right of RCF to designate a person for election to the Board of Directors of the Company (the “Board of Directors”); (iii) RCF’s right to designate a non-director to attend the meetings of the Board of Directors; (iv) the right of RCF to have input on management of the Company post-Merger; (v) annual site visits paid for by the Company; and (vi) other terms consistent with RCF’s position as a significant stockholder of the Company.

Agreement

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

	
  

	
1.

	
Definitions.

“Affiliate” means, with respect to a Person, (i) any partner, director, officer, ten percent (10%) or more stockholder, manager, member, employee or managing agent of that Person or that Person’s Affiliates; and (ii) any other Person (A) that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, that Person; (B) that directly or indirectly owns or holds (legally or beneficially) 10% or more of any class of voting stock or partnership, membership or other voting interest of that Person; or (C) 10% or more of the voting stock or partnership, membership or other voting interest of which is directly or indirectly owned or held (legally or beneficially) by that Person.

“Equity Financing” means any sale or placement of any Common Stock, warrants to acquire Common Stock, or other Equity Interests of the Company.

 

  

  

  

“Equity Interests” means, with respect to any Person, all classes of capital stock of (or other ownership or profit interests in) such Person, all warrants, options, rights, interests or other securities for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person; all warrants, options, Indebtedness, rights, interests or other securities exercisable for or convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares of capital stock (or such other interests); and all other ownership or profit interests in such Person (including, without limitation, partnership, member, limited liability company or trust interests therein), whether voting or nonvoting, whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination, and whether or not such shares, warrants, options, rights or other interests are certificated or uncertificated.

“Indebtedness” means, for any Person, without duplication, all indebtedness and liabilities of such Person determined in accordance with GAAP.

“Instrument” means any contract, agreement, undertaking, indenture, mortgage, certificate, document or writing (whether formal agreement, letter or otherwise) under which any obligation, duty, covenant, agreement, affirmation, undertaking or liability is evidenced, assumed or undertaken, or any right or lien (or right or interest therein) is granted, authenticated, notarized, authorized or perfected, and any notice, registration, recordation, or filing associated with or required by any of the foregoing.

“Merger” means the acquisition by the Company of all the outstanding common stock and other equity interests of Neutron Energy Inc. through a merger of URI Merger Corporation, a newly created indirect wholly-owned subsidiary of the Company (the “Company Merger Sub”) into Neutron pursuant to an agreement and plan of merger among Neutron, the Company and the Company Merger Sub (the “Merger Agreement”).

“Partially Diluted Basis” means the number of shares of Common Stock of the Company calculated assuming the exercise or conversion of all securities held by RCF that are exercisable for or convertible into Common Stock and excluding the exercise or conversion of all securities held by any other Person that are exercisable for or convertible into Common Stock.

“Person” means an individual, partnership, corporation (including a business trust), joint venture, limited liability company or other entity, or a governmental authority.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of March 1, 2012, between the Company and RCF.

 

 

2.           Pro Rata Participation Right.  So long as RCF or any Affiliate owns or holds any shares of Common Stock of the Company, the Company hereby grants to RCF or such Affiliate the option and the right to participate (or to nominate any of RCF’s Affiliates (collectively, the “RCF Parties”) to participate) in any Equity Financing on a pro rata basis as determined by reference to the RCF Parties’ ownership of shares of Common Stock on a Partially Diluted basis on the date of such Equity Financing (its “Pro Rata Share”), at the same price and the same terms and conditions as offered to other investors in the Equity Financing.  The Company agrees to take any and all action, or to cause such action to be taken, as is necessary or appropriate to allow the RCF Parties to fully participate in any Equity Financing in accordance with the provisions of this Agreement and to maintain the RCF Parties’ pro rata ownership interest in the Company.

  

2

  

 

(a)           Notice.  In the event the Company proposes to undertake an Equity Financing, the Company shall first give RCF prior written notice of its intention, describing the type of Equity Interests, the consideration and the general terms and conditions upon which the Company proposes to issue the same.  The RCF Parties shall have ten (10) business days from the date of RCF’s receipt of any such notice to elect to purchase its Pro Rata Share of such Equity Interests for the consideration and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Interests to be purchased.

(b)           Sale of Securities.  In the event that no RCF Party exercises the above right within said ten (10) business day period, the Company shall have ninety (90) days thereafter to sell the Equity Interests respecting which such participation rights were not exercised, at a price and upon general terms no more favorable to the purchasers thereof than specified in the Company’s notice.  In the event the Company has not sold the Equity Interests within said ninety (90) day period, the Company shall not thereafter issue or sell any Equity Interests without first offering such securities to the RCF Parties pursuant to this Section 2.

(c)           Waiver of Participation Right .  The participation rights established by this Section 2 may be amended, or any provision or their application to any particular transaction may be waived (prospectively or retroactively) by the written consent of the Company and RCF.

(d)           Exclusions.  The participation rights established by this Section 2 shall not apply to the following:

(i)           issuances of Shares pursuant to arrangements currently in force; and

(ii)           equity compensation granted to the Company’s directors, officers, employees, consultants and agents in connection with bona fide compensation arrangements and the issue of Equity Interests pursuant to such arrangements.

	
  

	
3.

	
Board of Directors.

(a)           Director Nominees.  At all times while the RCF Parties own or hold shares of Company Common Stock which in the aggregate exceed five percent (5%) of all issued and outstanding shares of Company Common Stock, the Company’s Board of Directors agrees to nominate or appoint one (1) qualified individual identified by the RCF Parties to serve on the Board of Directors of the Company (a “Nominee”).  The initial appointment of a Nominee shall occur no later than the June 2012 annual meeting of the shareholders of the Company to be held no later than June 30, 2012, and thereafter such Nominee shall be included in management’s slate for election to the Board of Directors of the Company.  The Company and the management of the Company shall use commercially reasonable efforts to cause each Nominee to be elected to the Board of Directors of the Company.  For the avoidance of doubt, all qualified individuals nominated by the RCF Parties to serve on the Company’s Board of Directors shall be selected exclusively by the RCF Parties without consultation with or approval by the Company.  The right of the RCF Parties to have representation on the Company’s Board of Directors may be exercised at any time and from time to time.

  

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(b)           Observer Rights.  At all times while the RCF Parties own or hold shares of Company Common Stock which in the aggregate exceed five percent (5%) of all issued and outstanding shares of Company Common Stock, RCF shall have the right to designate, by written notice to the Company, a non-director representative who shall be entitled to attend all meetings of the Board of Directors of the Company in a non-voting, observer capacity (“Observer Rights”).  The Company shall provide such representative with copies of all notices, minutes, consents and other materials that it provides to its directors at the same time and in the same manner as provided to such directors. The right of RCF to have Observer Rights with respect to meetings of the Board of Directors of the Company may be exercised at any time and from time to time.

(c)           Use of Company Confidential Information.  RCF acknowledges that by virtue of its rights with respect to the appointment of a director nominee and its Observer Rights that RCF may receive Confidential Information (as defined below) of the Company.  RCF may disclose Confidential Information (i) to any representative exercising Observer Rights and to any partner, employee, agent, representative or Affiliate of RCF (each, a “Permitted Third Party”) (it being understood that the Permitted Third Party to whom such disclosure is made will first be informed of the confidential nature of such Confidential Information and will be instructed to maintain the confidentiality of such Confidential Information); (ii) to the extent required by any governmental authority or any law, statute, rule or regulation; (iii) in connection with the exercise of any remedies hereunder or any suit, action, claim, arbitration or proceeding relating to this Agreement or the enforcement of rights hereunder; (iv) subject to an agreement containing provisions substantially the same as those of this Section 3(c), to any assignee or any prospective assignee of RCF to which RCF may assign any of its rights or obligations under this Agreement; or (v) with the prior written consent of the Company.  RCF acknowledges and agrees that it is aware, and it shall advise each Permitted Third Party who receives Confidential Information, that it is receiving information of RCF that may include material non-public information and that applicable securities laws may impose restrictions on trading securities when in possession of such information and on communicating such information to any other person.  Any Nominee or any representative or Affiliate of RCF who attends a meeting of the Board of Directors of the Company (or who otherwise obtains Confidential Information) shall be permitted, and the Company hereby expressly acknowledges its authorization, to provide and disclose any and all Confidential Information to RCF and any other Permitted Third Party for the purpose of managing RCF’s investment in the Company.  “Confidential Information” means all confidential, proprietary and material non-public information received from the Company relating to the Company, its business or its properties. “Confidential Information” shall not include any information that (x) is in the possession of RCF or a Permitted Third Party prior to disclosure by the Company; (y) is in the public domain prior to disclosure to RCF or a Permitted Third Party; or (z) lawfully enters the public domain through no violation of this Section 3(c) after disclosure to RCF or any Permitted Third Party.

  

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4.           Consultation on Management of the Company.  Prior to the closing of the Merger, the Board of Directors and management of the Company shall consult with RCF in determining the business, operations and management of the Company, which consultation shall include meeting with RCF to solicit input, considering management personnel suggested by RCF, and permitting RCF to interview management or prospective management.

5.           Site Visits by RCF; Monthly Reports. 

(a)           Site Visits.  RCF shall be entitled to visit and inspect the properties and operations of the Company and to review the books and records therein, during normal business hours and upon reasonable notice.  At each such visit, the Company shall make available to RCF appropriate personnel, including accounting, legal and operations personnel, who are able to respond to questions by RCF.  The Company shall otherwise make reasonably available to RCF the Company’s outside accountants and counsel.  The reasonable expenses of one such site visit by an RCF representative (other than a representative who is serving as a director of the Company) during each calendar year, beginning in 2012, shall be paid for by the Company.

(b)           Monthly Reports.  As soon as practicable, but in any event no later than thirty (30) days after the end of each month, the Company shall provide to RCF a written report concerning the activities and operations of the Company and its subsidiaries, including with respect to the development and operations of the properties and uranium projects of the Company and its subsidiaries, together with supporting data and information, with such monthly reports to be delivered in form and substance reasonably acceptable to RCF.  The Company shall include in such monthly reports such additional data, reports and information regarding the condition or operations, financial or otherwise of the Company and its properties as RCF may reasonably request.

6.           RCF Review of Public Announcements.  If the Company will refer to RCF or any of its Affiliates in any public disclosure document, including any press release or any disclosure document to be filed with any governmental authority, and including, but not limited to, disclosures relating to the Merger and the financing by RCF, the Company shall provide RCF with a copy of such disclosure three days prior to release, and the Company shall use its good faith efforts to incorporate the comments provided by RCF into such disclosure.

7.           Representations and Warranties.  The Company represents and warrants (a) that it has not granted and is not a party to and it has no knowledge of any proxy, voting trust or other agreement that is inconsistent with or conflicts with the provisions of this Agreement, and the Company shall not grant any proxy or become party to any voting trust or other agreement that is inconsistent with or conflicts with the provisions of this Agreement, (b) that this Agreement does not violate, conflict with, result in a breach of or constitute a default under, any agreement, debenture, indenture, lease or other instrument to which the Company is a party, and (c) that no authorization or approval or other action by or consent of or filing with any governmental authority, the NASDAQ Capital Market or any other Person is required for, the Company’s due execution and delivery of this Agreement or for the due performance by the Company of its obligations hereunder.

  

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8.           Expenses.  Except as otherwise provided herein, all reasonable out-of-pocket expenses incurred by RCF in connection with performance of this Agreement and enforcement of its rights hereunder shall be reimbursed by the Company promptly upon presentation of appropriate documentation.

9.           Arbitration.  Any disputes between RCF and the Company relating to this Agreement shall be resolved by mandatory and binding arbitration pursuant to rules and procedures set forth in the Investment Agreement

10.           Amendment and Waiver. Except as otherwise provided in this Agreement, no modification, amendment or waiver of any provision of this Agreement shall be effective against the Company or RCF unless such modification, amendment or waiver is approved in writing by the Company and RCF.  The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

11.           Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained in it.

12.           Entire Agreement. Except as otherwise expressly set forth in this Agreement, the Investment Agreement, the Merger Agreement or the Registration Rights Agreement, this document embodies the complete agreement and understanding among the parties to this Agreement with respect to the subject matter of this Agreement and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter of this Agreement in any way, including the Letter of Intent and Term Sheet dated January 18, 2012.

13.           Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement shall bind and inure to the benefit of and be enforceable by RCF and RCF’s Affiliates and the Company and their respective successors and assigns; provided, however, that, the Company will not assign this Agreement without the prior written consent of RCF and RCF will not assign this Agreement, other than to an Affiliate, without the prior written consent of the Company; provided, further, that RCF has the right to assign this Agreement to any Affiliate of RCF without the written consent of the Company.

  

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14.           Counterparts. This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.

15.           Remedies. The Company and RCF shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor.  The parties to this Agreement agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that each of the Company and RCF may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

16.           Notices. Any notice provided for in this Agreement shall be in writing and shall be delivered to the addresses and by the means set forth in the Investment Agreement.

17.           Further Assurances.  The parties agree to execute and deliver all such further documents, agreements, certificates and instruments and to take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

18.           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, not including the conflict of laws and choice of law provisions thereof.

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IN WITNESS WHEREOF, the parties to this Stockholders’ Agreement have executed this Stockholders’ Agreement on the day and year first above written.

 

	  	
URANIUM RESOURCES INC.

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	  	
Donald C. Ewigleben

	  
	  	  	
President and Chief Executive Officer

	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	
RESOURCE CAPITAL FUND V L.P.

	  
	  	  	  	  
	  	
By:

	
Resource Capital Associates V L.P.,

	  
	  	  	
             General Partner

	  
	  	  	  	  
	  	
By:

	
RCA V GP Ltd., General Partner

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	  	
           Catherine J. Boggs

	  
	  	  	
            General Counsel

	  

 

 

 

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