EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of July 29, 1996, ("Effective Date"). The parties to
this Agreement ("Parties") are PEGASUS GOLD INC., a British Columbia company
with its principal office in Spokane, Washington ("Pegasus"), PEGASUS GOLD
CORPORATION, a Nevada corporation with its principal office in Spokane,
Washington (the "Corporation") (collectively "Company"), and XXXXXX X. NENNECKER
of Spokane, Washington ("Executive").
RECITALS
A. Executive is presently the President and Chief Executive Officer of
Pegasus and the Corporation. The Parties desire to define and set
forth the current duties and responsibilities of Executive in all his
capacities with Company.
B. In consideration of Executive's agreement to remain in the employ of
Company, Company desires to further induce Executive to continue
active participation in the business of Company.
In consideration of the mutual promises, covenants, agreements and undertakings
contained in this Agreement, the Parties hereby contract and agree as follows:
AGREEMENT
SECTION 1. EMPLOYMENT
1.1 SPECIFIC SERVICES. Company employs Executive as its President and
Chief Executive Officer and Executive hereby accepts such employment
and agrees to devote all of his efforts for the benefit of Company and
to faithfully, industriously and, to the best of his ability,
experience and talents, perform all of his required and assigned
duties. Executive shall perform the duties of President and Chief
Executive Officer subject to the general supervision of and pursuant
to the orders, advice and direction of Pegasus' Board of Directors
(the "Board").
1.2 ADDITIONAL SERVICES. Executive shall also render such other
reasonable and unrelated services and duties as may be assigned to him
from time to time by the Board and accepted by Executive.
SECTION 2. TERM OF EMPLOYMENT
The term of employment of Executive commenced December 1, 1992 pursuant to an
Employment Agreement dated as of January 29, 1993 and will continue under the
provisions of this Agreement as of the Effective Date until terminated as
provided in SECTION 5.
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SECTION 3. COMPENSATION
3.1. SALARY. Unless and until Executive's employment with Company is
terminated pursuant to SECTION 5, Company will pay Executive, and
Executive will accept from Company, compensation at a minimum annual
base salary, before all customary and proper payroll deductions, of
(currently) US$350,000.00, prorated and payable semi-monthly or on
such other basis as Parties may hereafter agree. Such minimum
compensation may be adjusted for merit or other reasons as determined
by the Board, or any Committee thereof having such authority.
3.2 VACATION. Executive will be entitled to vacation periods in line with
the policies of Company applicable to exempt employees; PROVIDED,
HOWEVER, that Executive shall be entitled to a minimum paid vacation
of five (5) weeks in any calendar year. If Executive does not use all
vacation days in any calendar year, Executive will be permitted to
carry over those vacation days into subsequent years, consistent with
Company policy.
3.3 DEFINITION OF ANNUAL SALARY. For purposes of this Agreement, the term
Annual Salary for any year means Executive's annual base salary,
before all customary and proper payroll deductions, plus 100 percent
of his target bonus for such year, as such amounts are established by
resolution of the Board, or any Committee thereof having such
authority.
SECTION 4. OTHER BENEFITS
4.1 GENERAL. In addition to the compensation as provided in SECTION 3
hereof and unless and until Executive's employment with Company is
terminated pursuant to SECTION 5, Company will at its expense provide
Executive with the following additional benefits:
(i) Availability and use of a Company automobile of a value of
approximately US$30,000.00;
(ii) Disability Insurance sufficient to provide disability benefits in
an amount commensurate with Executive's salary and position, and
not materially inconsistent with other Company disability plans,
premiums for which are paid by the Company. For purposes of this
Agreement, "disability" means a condition of physical or mental
illness or impairment that renders Executive to be totally
incapable of performing full-time duties, which condition, as
diagnosed by a licensed medical doctor, is expected to continue
rendering Executive so incapable for the reasonably foreseeable
future.
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(iii) Participation in all other of Company's benefit plans, including
medical, dental, vision, 401(k), pension, bonuses and any and all
other plans that may be made available to employees;
(iv) Parking in the building where Company's offices are located or, if
such parking is not available, near Company's offices;
(v) Assistance in annual tax preparation and estate planning;
(vi) Payment of dues in professional associations as may be required to
maintain Executive's membership in those associations and the
privilege of attending appropriate seminars, conferences and
educational programs as may be necessary;
(vii) Membership in one (1) country club and one (1) athletic club and
payment of dues for such memberships;
(viii) Reimbursement for all expenses incurred in connection with the
performance of services to Company, including entertainment and
travel and other expenses incidental to the duties undertaken
hereunder; PROVIDED, HOWEVER, that such expenses will be
reasonable and necessary and that Executive shall submit bills
and vouchers supporting requests for reimbursements in accordance
with Company's policies;
(ix) Appropriate office and staff assistance in Spokane, Washington,
which it is agreed shall be the place of principal employment
during the term of this Agreement;
(x) Such directors and officers liability insurance as may be
available to adequately provide both insurance coverage and
reimbursement of legal cost for any actions brought against
Executive for any of his activities for and on behalf of and
while in the employment of, Company; and
(xi) An option to acquire 40,000 shares of Pegasus' common stock
(which option has already been granted) and any additional
options which from time to time may be granted.
4.2 LIFE INSURANCE. The Company shall purchase an insurance policy on the
life of Executive in an amount not less than three (3) times his
Annual Salary (as this term is defined in Section 3.3), with the
beneficiary to be designated by Executive. In the event Employee
terminates his employment with the Company for any reason other than
death, the policy (along with all obligations for subsequent premium
payments, notifications and the like) shall be assigned to Executive
at the time of his termination at no cost to Executive, but with no
further obligation on the Company with respect to the policy. To the
extent such policy premium payments are considered compensation to
Executive, his salary
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shall be "grossed up" to reimburse him for such personal income taxes
as may be due on the value of such premium payments.
SECTION 5. TERMINATION
Executive's employment with Company may be terminated as follows:
(i) By mutual agreement of the Parties;
(ii) Voluntarily by Executive (including retirement and including Good
Reason outside of a Change of Control, but other than for Good
Reason pursuant to a Change of Control, as those terms are
defined in SECTION 6.4), subject to the provisions of SECTION 6.1
and upon at least three (3) months prior written notice of
termination by Executive to Company;
(iii) By Company without cause, subject to the provisions of SECTIONS
6.2 and 6.4 and upon at least three (3) months prior written
notice of termination by Company to Executive;
(iv) By Company for cause as that term is defined in SECTION 10, subject
to the provisions of SECTION 6.1;
(v) Immediately upon the death or disability of Executive, subject to
the provisions of SECTION 6.3; or
(vi) Immediately for Good Reason upon a Change of Control, subject to
the provisions of SECTION 6.4.
SECTION 6. SEVERANCE COMPENSATION
6.1. TERMINATION OF EXECUTIVE OR BY COMPANY FOR CAUSE. If Executive shall
voluntarily terminate his employment under this Agreement pursuant to
clause (i) of SECTION 5.1, or if the employment of Executive is
terminated by Company for cause (as defined in SECTION 10), then all
compensation and benefits as heretofore provided in SECTIONS 3 AND 4
will terminate immediately upon the effective date of such termination
and Executive will not be entitled to, and will not receive, any
special severance compensation from Company.
6.2. TERMINATION BY COMPANY WITHOUT CAUSE. If Company shall terminate
Executive's employment for any reason except cause (as defined in
SECTION 10) then, on the effective date for such termination, Company
will pay Executive, in one lump sum cash payment, an amount equal to
three (3) times Executive's Annual Salary (as defined in SECTION 3.3).
Additionally, Company will continue to provide Executive with the same
level of employee benefits, as if Executive were still an employee of
Company, for a period of two (2) years from the effective date of
Executive's employment termination or until better benefits are
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provided to Executive by a new employer, whichever occurs first. All
outstanding stock options respecting Company stock held by Executive
at the effective date of termination will become immediately
exercisable at such time, regardless of any other vesting provision,
and may continue to be held and exercised by Executive in accordance
with the remaining terms of such options. Company also will provide
Executive with employment search assistance, by a firm mutually
acceptable to Company and the Executive, to secure comparable
employment, and will pay the cost of such assistance in an amount not
to exceed US$25,000.00.
6.3 TERMINATION BY DEATH OR DISABILITY. If Executive dies or becomes
disabled before his employment is otherwise terminated, in addition to
payments otherwise provided through insurances under Section 4.1 (ii)
and 4.2, Company will immediately pay an amount of compensation equal
to six (6) months' Annual Salary (as defined in SECTION 3.3) as if
Executive had been terminated without cause and all employee benefits
theretofore provided to Executive will be continued for a period of
one (1) year from the date of death or disability as if Executive was
still an employee of Company. If such termination is due to
Executive's death, payment will be made in one lump sum to his
beneficiary, to be named in writing by Executive upon signing this
Agreement, which designation may be changed at any time by written
notice signed by Executive and delivered to the Secretary of Company;
if no named beneficiary survives Executive, the entire amount will be
paid to his estate. If such termination is due to Executive's
disability, payment will be made in one lump sum to Executive.
6.3.1. CONSTRUCTIVE TERMINATION BY THIRD PARTIES In the event Executive is
taken hostage or otherwise wrongfully imprisoned or restrained,
against his will and beyond his control, by a third party, all salary
and benefits under this Agreement shall continue until such time as
Company may reasonably make the determination that Executive is
unlikely to return to his position. At that time, Company may elect
to make payment to Executive's designated beneficiary in accordance
with SECTION 6.3 hereof.
6.4 TERMINATION FOLLOWING CHANGE OF CONTROL.
6.4.1. "CHANGE OF CONTROL." For purposes of this Agreement, a Change in
Control will be deemed to have occurred if either:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, or any
syndicate or group deemed to be a person under Section 14(d)(2)
of the Exchange Act of 1934 (the "Exchange Act"), other than
Pegasus is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange
Act), directly or indirectly, of securities of the Pegasus, or of
the Corporation, representing 25 percent or more of the combined
voting power of the then outstanding securities entitled to
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vote in the election of directors of Pegasus, or of the
Corporation, as the case may be; or
(ii) during any period of two (2) consecutive years (not including any
period prior to the Effective Date of this Agreement),
individuals who at the beginning of such period constituted the
Board and any new directors, whose election by the Board or
nomination for election by the shareholders of Pegasus, or of the
Corporation, as the case may be, was approved by a vote of at
least three quarters (3/4) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof.
6.4.2. SEVERANCE PAYMENT. Irrespective of any other provisions in this
Agreement regarding termination, if either of the events described above
constituting a Change in Control shall have occurred, upon the subsequent
termination of Executive's employment (unless such termination is because of
Executive's death or disability, by the Company for cause or by Executive other
than for Good Reason (as that term is defined in SECTION 6.4.3 below)) Executive
will be entitled to and will receive no later than the fifth (5th) day following
the date of termination a lump sum severance payment equal to three (3) times
Executive's then current Annual Salary (as defined in SECTION 3.3). In
addition, all benefits then applicable to Executive shall be continued for a
period of thirty-six (36) months.
6.4.3. "GOOD REASON." For purposes of this Agreement, the term "Good Reason"
means, without Executive's express written consent, any of the following:
(i) the assignment to Executive of any duties inconsistent with
Executive's status as President and Chief Executive Officer of
Company, or Executive's removal from such position, or a
substantial alteration in the nature or status of Executive's
responsibilities from those in effect immediately prior to the
Change in Control;
(ii) a reduction by Company in Executive's Annual Salary as in effect
on the date hereof or as the same may have been increased from
time to time or a failure by Company to increase Executive's
salary at a rate commensurate with that of other key executives
of Company;
(iii) the relocation of the office of Company where Executive is
employed at the time of the Change in Control (the "CIC
Location") to a location more than fifty (50) miles away from the
CIC Location or the Company's requiring Executive to be based
more than fifty (50) miles away from the CIC Location (except for
required travel on the Company's business to an extent
substantially consistent with Executive's business travel
obligations just prior to the Change in Control);
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(iv) the failure by Company to continue to provide Executive with
benefits at least as favorable as those enjoyed by Executive
under any of Company's life insurance, medical, health and
accident, disability, deferred compensation, pension, or savings
plans in which Executive was participating at the time of the
Change in Control, the taking of any action by Company which
would directly or indirectly materially reduce any of such
benefits or deprive Executive of any material fringe benefit
enjoyed by Executive at the time of the Change in Control, or the
failure by Company to provide Executive with the number of paid
vacation days to which Executive has been entitled at the time of
the Change in Control; or
(v) the failure of Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement or,
if the business of Company for which Executive's services are
principally performed is sold at any time after a Change in
Control, the purchaser of such business shall fail to agree to
provide Executive with the same or a comparable position, duties,
salary and benefits as provided to Executive by Company
immediately prior to the Change in Control.
6.4.4. ADDITIONAL BENEFITS. In the event of termination of Executive's
employment upon a Change in Control (as defined in SECTION 6.4.1), either by
Company without cause or by Executive for Good Reason (as defined in SECTION
6.4.3), and in addition to the severance payment provided in SECTION 6.4.2.,
Executive shall be entitled to the following:
(i) Employment search assistance to secure other comparable
employment, for a period not to exceed one (1) year or until such
comparable employment is found, whichever is the sooner, with the
fees for such assistance paid by the Corporation;
(ii) Protection for the sale of Executive's residence in an amount
equal to the difference between (A) the sales price net of all
selling expenses and (B) the sum of the original purchase price,
plus major improvements; and
(iii) Payment of the cost of a one time move to a new location in the
event such a move becomes necessary in order for Executive to
accept new employment.
6.4.5. ADDITIONAL PAYMENTS. If as a result of the payment to Executive of
any benefit under SECTION 6.4, Executive shall be obligated to pay any excise
tax under Section 4999 of the Internal Revenue Code, or any successor provision
or similar provision of federal, state or local tax law relating to changes in
control, Company will pay to Executive within ten (10) days after a written
demand therefor, the amount of such excise tax, plus the amount of all federal,
state and local income taxes payable on such excise tax and on such income tax,
applying Executive's marginal income tax rates. If Company has made such
payments and subsequently Executive shall become entitled
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to a refund of any excise tax, or income tax payable with respect to such excise
tax (or income tax on such income tax), Executive will pay, within ten (10) days
after receipt of such refund, the amount of such refund to Company, together
with interest at six percent (6%) per annum from the date of receipt of such
refund.
SECTION 7. NON-TRANSFERABILITY
This is a personal agreement. None of Executive's rights, benefits or interests
hereunder may be subject to sale, anticipation, alienation, assignment,
encumbrance, charge, pledge, hypothecation, transfer, or set-off in respect of
any claim, debt or obligation or to execution, attachment, levy or similar
process, or to assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no effect.
SECTION 8. CHOICE OF LAW
It is the intention of the parties hereto that this Agreement and the
performance hereunder and all suits and special proceedings hereunder be
construed in accordance with and under and pursuant to the laws of the State of
Washington and that in any action, special proceeding or other proceeding that
may be brought arising out of, in connection with, or by reason of this
Agreement, the laws of the State of Washington shall be applicable and shall
govern, to the exclusion of the law of any other forum, without regard to the
jurisdiction in which any action or special proceeding may be instituted.
SECTION 9. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of Company,
its successors or assigns, and to Executive, and his personal representatives,
heirs, executors and administrators.
SECTION 10. DEFINITION OF CAUSE.
10.1. DEFINITION OF CAUSE. For purposes of this Agreement, the term
"cause," when used as a basis for Company to terminate the Executive's
employment means (i) the willful and continued failure by Executive to
substantially perform his duties, after demand for substantial
performance is delivered by Company that specifically identifies the
manner in which the Company believes Executive has not substantially
performed his duties, (ii) the willful engagement by Executive in
misconduct that is materially injurious to Company, monetarily or
otherwise, or (iii) the willful violation by Executive of the
provisions of this Agreement.
10.2 NOTICE OF TERMINATION. Notwithstanding the foregoing, Executive will
not be deemed to have been terminated for cause unless there shall
have been delivered to Executive a copy of a notice of termination
from Company and, after reasonable written notice, Executive and his
counsel have been given
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an opportunity to be heard by the Board and thereafter a resolution is
duly adopted by the directors of Pegasus then in office to the effect
that, in the good faith opinion of such directors, the Executive was
guilty of conduct set forth above, which resolution shall set forth in
detail the facts and circumstances claimed to provide a basis for
termination of employment under the provisions so indicated.
SECTION 11. DIRECTORSHIPS
Executive shall be entitled to accept positions as director of other
corporations, whether such corporations are engaged in the mining industry or
not, provided Executive's proposed service as such director is first approved by
Company, which approval shall not be unreasonably withheld.
SECTION 12. REPRESENTATIONS
Pegasus and the Corporation jointly and severally represent and warrant to the
Executive, with the intent that Executive shall rely on such representations and
warranties in entering into this Agreement, as follows:
(i) The common shares of Pegasus are listed for trading on the
Toronto Stock Exchange, Montreal Exchange and American Stock
Exchange; and
(ii) The financial statements, reports, and other information provided
by Company and their respective officers and employees, both
orally and in writing, constitute fair and accurate disclosures
of the status of the affairs of Company, and Company do not know
of any other information which, if disclosed to the Executive,
might reasonably be expected to cause Executive to refrain from
accepting employment with Company or affect the value of Pegasus'
shares.
SECTION 13. CONFIDENTIALITY
Executive agrees that, except as required for the performance of his duties,
obligations and responsibilities hereunder, he will not at any time during the
term of this Agreement or thereafter divulge to any person, firm or corporation
any Confidential Information received by him during the course of his employment
and all such Confidential Information shall be kept confidential and deemed to
be the property of Company. For the purpose of this provision, the term
"Confidential Information" means information known to Executive as a consequence
of his employment by Company and not generally known in the industry in which
Company is engaged or not otherwise available to third parties from sources
unrelated to or controlled by Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement at Spokane,
Washington as of the day and year first above written.
PEGASUS GOLD INC.
By /S/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman of the Board
By /S/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, Vice President,
General Counsel and Secretary
PEGASUS GOLD CORPORATION
By /S/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, Vice President,
General Counsel and Secretary
EXECUTIVE:
By /S/ Xxxxxx X. Nennecker
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Name: Xxxxxx X. Nennecker
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Address: 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
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Xxxx, Xxxxx: Xxxxxxx, Xxxxxxxxxx 00000
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Telephone Number: 509/000-0000
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SS#: ###-##-####
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DESIGNATION OF BENEFICIARY
On this 9th day of August, 1996, Executive hereby designates Xxxxx Nennecker,
his wife, as his beneficiary for purposes of receiving, upon his death,
compensation and benefits under SECTION 6.3, hereof.
By /S/ XXXXXX X. NENNECKER
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Xxxxxx X. Nennecker
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