EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 15th day of November, 1997, effective the first
day of the term hereof, between PEGASUS GOLD CORPORATION, a Nevada corporation
with its principal office in Spokane, Washington, herein referred to as the
"Corporation", PEGASUS GOLD INC., a British Columbia corporation with its
principal in office Spokane, Washington, herein referred to as "Pegasus," and
XXXXXXX X. XXXXX of Xxxxxx Lake, Idaho, herein referred to as the "Employee."
In consideration of the mutual covenants and benefits as herein set forth, the
parties hereto agree as follows:
SECTION ONE
EMPLOYMENT
The Corporation hereby employs the Employee as its Senior Vice President and
Chief Operating Officer and the Employee hereby accepts such employment and
agrees to devote all of his efforts for the benefit of the Corporation and to
faithfully, industriously and, to the best of his ability, experience and
talents, perform all of his required and assigned duties. Employee shall
perform the duties of Senior Vice President and Chief Operating Officer subject
to the general supervision of and pursuant to the orders, advice and direction
of the President and Chief Executive Officer of the Corporation.
Employee shall also render such other reasonable and unrelated services and
duties as may be assigned to him from time to time by the President and Chief
Executive of the Corporation and accepted by the Employee.
Employee further agrees to remain in the employ of the Corporation for a period
of twenty-four months from the date hereof.
Employee further agrees to relocate, as necessary and at the Corporation's
expense, to any new corporate headquarters location, regardless of where
situated.
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SECTION TWO
TERM OF EMPLOYMENT
The term of employment under this Agreement shall commence November 15, 1997 and
shall continue thereafter until terminated as hereinafter provided.
SECTION THREE
COMPENSATION
The Corporation shall pay Employee, and the Employee shall accept from the
Corporation, compensation at the minimum rate of U.S.$265,000.00 per year,
prorated and payable semi-monthly or on such other basis as the parties may
hereafter agree. Such minimum compensation may be adjusted for merit or other
raises as from time to time determined by the President or the Board of
Directors or any Committee thereof having such authority. Employee shall be
entitled to vacation periods in line with the policies of the Corporation
applicable to exempt employees; provided, however, that the Employee shall be
entitled to a minimum paid vacation of four (4) weeks in any calendar year.
SECTION FOUR
OTHER BENEFITS
In addition to the compensation as provided in the previous Section Three
hereof, Corporation shall at its expense provide for Employee the following
additional benefits:
1. An allowance of not to exceed Five Hundred Fifty Dollars ($550.00) per
month to acquire and operate a current model automobile for business and
personal use. Said allowance may be adjusted if the cost to acquire and
operate increases.
2. Insurance on the life of Employee in an amount not less than two (2) times
his annual salary compensation, with proceeds thereof upon Employee's death
to be payable to Employee's named beneficiary less the amount of the last
annual premium paid therefor.
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3. Participation in all of Corporation's benefit plans, including medical,
dental, vision, 401(k), pension, disability, bonuses (current target amount
is 50 percent of annual base salary) and any and all other plans that may
be made available to employees; medical, dental and vision insurance shall
be effective on the first day of the term hereof.
4. Monthly parking allowance in accordance with corporate policy.
5. Assistance in annual tax preparation and estate planning.
6. Payment of dues in professional associations as may be required to maintain
Employee's membership in those associations and the privilege of attending
appropriate seminars, conferences and educational programs as may be
necessary.
7. Family membership in an athletic club and payment of dues for such
membership.
8. Reimbursement for all expenses incurred in connection with the performance
of services to the Corporation, including entertainment and travel and
other expenses incidental to the duties undertaken hereunder; provided,
however, that such expenses shall be reasonable and necessary and that
Employee shall submit bills and vouchers supporting requests for
reimbursements in accord with Corporation's policies.
9. 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.
10. Such directors and officers liability insurance as may be available to
adequately provide both insurance coverage and reimbursement of legal costs
for any actions brought against the Employee for any of his activities in
the employment of the Corporation.
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SECTION FIVE
TERMINATION
This Agreement will terminate or may be terminated for any one of the following
reasons:
1. Voluntarily and without cause, subject to Sections Two and Six (2), upon at
least three (3) months prior written notice of termination by Corporation
to the Employee or by the Employee to the Corporation; or
2. By the Corporation for cause as hereinafter defined in Section Ten; or
3. Upon the death or disability of Employee; or
4. Upon a Change of Control; or
5. Upon retirement.
SECTION SIX
SEVERANCE COMPENSATION
1. TERMINATION BY EMPLOYEE OR BY CORPORATION WITH CAUSE. If Employee shall
voluntarily terminate his employment under this Agreement pursuant to
Section 5(1) or if the employment of the Employee is terminated by the
Corporation for cause, then all compensation and benefits as heretofore
provided in Sections 3 and 4 shall terminate immediately upon the effective
date of termination and no special severance compensation will be paid.
2. TERMINATION BY CORPORATION WITHOUT CAUSE. If, on or after the effective
date of this Agreement, but prior to May 1, 1998, the Corporation shall
terminate this Agreement for any reason except cause as defined in Section
Ten, then upon the effective date of termination the Corporation shall pay
Employee an amount equal to twelve (12) months' salary; after April 30,
1998, if the Corporation shall terminate this Agreement for any reason
except cause as defined in Section Ten, then upon the effective date of
termination the Corporation shall pay to Employee an amount equal to
twenty-four (24) months' salary. The amount shall be paid in one lump sum
on the date the Employee's services terminate. All Employee benefits
provided to the Employee shall be continued as if the Employee were still
an employee of the Corporation for a period of one (1) year
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from the date of termination, or, when equal or better benefits are
provided by a new employer, whichever shall first occur. In the event
Employee has existing stock options on the date of termination, they will
be honored in accordance with the terms of said options.
3. TERMINATION BY DEATH OR DISABILITY. If Employee dies or becomes disabled
before his employment is otherwise terminated, the Corporation shall
immediately pay an amount of compensation equal to six (6) months' salary
as if Employee had been terminated without cause and all employee benefits
theretofore provided to Employee shall be continued for a period of one (1)
year from the date of death or disability as if Employee was still an
employee of the Corporation. If such termination is due to Employee's
death, payment shall be made in one lump sum to his beneficiary, to be
named in writing by Employee on signing this Agreement, which designation
may be changed at any time by written notice signed by Employee and
delivered to the Secretary of the Corporation; if no named beneficiary
survives Employee, the entire amount shall be paid to his estate. If such
termination is due to Employee's disability, payment shall be made in one
lump sum to Employee. Said compensation shall be in addition to that
payable from any insurance coverage providing compensation upon Death or
Disability. "Disability" in this Agreement shall mean a condition of
physical or mental illness causing Employee to be totally incapable of
performing full-time duties.
4. TERMINATION FOLLOWING CHANGE OF CONTROL
(a) For purposes of this Agreement, a Change in Control shall be deemed to
have occurred if (A) 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, 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 Corporation
representing 25% or more of the combined voting power of the
Corporation's then outstanding securities entitled to vote in the
election of directors of the Corporation; or (B) 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 Corporation's
stockholders 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
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thereof; or (C), upon a sale of all or substantially all of the assets of
the Corporation.
(b) 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 Employee's employment (unless such termination is because of
Employee's death or disability, by the Corporation for cause or by
Employee other than for "Good Reason") Employee shall 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 two and one half
(2-1/2) times Employee's then current annual base salary. In
addition, all benefits then applicable to Employee shall be continued
for a period of twenty-four (24) months.
(c) Employee shall be entitled to terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean,
without Employee's express written consent, any of the following:
(i) the assignment to Employee of any duties inconsistent with
Employee's status as Senior Vice President and Chief Operating
Officer of the Corporation, or Employee's removal from such
position, or a substantial alteration in the nature or status
of Employee's responsibilities from those in effect immediately
prior to the Change in Control;
(ii) a reduction by the Corporation in Employee's annual base salary
as in effect on the date hereof or as the same may have been
increased from time to time or a failure by the Corporation to
increase Employee's salary at a rate commensurate with that of
other key executives of the Corporation;
(iii) the relocation of the office of the Corporation where Employee
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 Corporation's requiring Employee to be
based more than fifty (50) miles away from the CIC Location
(except for required travel on the Corporation's business to an
extent substantially consistent with Employee's business travel
obligations just prior to the Change in Control);
(iv) the failure by the Corporation to continue to provide Employee
with benefits at least as favorable as those enjoyed by
Employee under
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any of the Corporation's life insurance, medical, health and
accident, disability, deferred compensation, pension, or
savings plans in which Employee was participating at the time
of the Change in Control, the taking of any action by the
Corporation which would directly or indirectly materially
reduce any of such benefits or deprive Employee of any material
fringe benefit enjoyed by Employee at the time of the Change in
Control, or the failure by the Corporation to provide Employee
with the number of paid vacation days to which Employee is
entitled on the basis of years of service with the Corporation
in accordance with the Corporation's normal vacation policy in
effect at the time of the Change in Control; or
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement or, if the business of the Corporation for which
Employee'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 Employee with the same or a
comparable position, duties, salary and benefits as provided to
Employee by the Corporation immediately prior to the Change in
Control.
(d) In the event of termination of Employee by reason of either a Change
in Control or for "Good Reason" as herein defined then, in addition to
the severance payment as provided in paragraph 4(b) hereof, Employee
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 Employee's residence in the amount
of the original purchase price, plus major improvements, or the
net realized therefrom; 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 Employee to
accept new employment.
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5. LIMITATION ON PAYMENTS. Payments under this Section Six shall not exceed
2.99 times "base amount" of salary as defined in Section 280 (G) of the
Internal Revenue Code of 1986, as amended.
SECTION SEVEN
NON-TRANSFERABILITY
This is a personal agreement. None of Employee'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 EIGHT
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 arbitration, 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 NINE
ARBITRATION
In the event of any dispute between the parties relating to or arising out of
this Agreement, the parties shall first attempt to resolve the dispute by
negotiating in good faith. If the dispute is not resolved within 60 days after
the commencement of negotiations in accordance with the immediately preceding
sentence, then either party shall have the right to submit the dispute to
binding arbitration administered in accordance with the Rules of the American
Arbitration Association. Any arbitrator shall be required to follow Washington
State law and precedent and shall be required to
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issue detailed findings of fact and conclusions of law. The arbitrator shall
award reasonable attorney's fees and costs to the prevailing party. Judgment on
the arbitration award may be entered in any court having jurisdiction in the
United States. If the arbitration award is challenged in a court of law, the
court shall apply the same standard of review that a Washington State appellate
court applies to the review of a decision by a Washington State trial court.
SECTION TEN
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
Corporation, its successors or assigns, and to Employee, and his personal
representatives, heirs, executors and administrators.
SECTION ELEVEN
DEFINITION OF CAUSE
Cause to terminate the Employee's employment shall mean (a) the willful and
continued failure by the Employee to substantially perform his duties, after
demand for substantial performance is delivered by the Corporation that
specifically identifies the manner in which the Corporation believes the
Employee has not substantially performed his duties, or (b) the willful
engagement by the Employee in misconduct which is materially injurious to the
Corporation, monetarily or otherwise, or (c) the willful violation by the
Employee of the provisions of this Employment Agreement.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for cause unless there shall have been delivered to the Employee a
copy of a notice of termination from the Corporation and, after reasonable
written notice, Employee and his counsel have been given an opportunity to be
heard by the Board of Directors of the Corporation and thereafter a resolution
has been duly adopted by the Directors of the Corporation then in office to the
effect that, in the good faith opinion of such Directors, the Employee was
guilty of conduct set forth above, which resolution shall set forth in
particular detail the facts and circumstances claimed to provide a basis for
termination of employment under the provisions so indicated.
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SECTION TWELVE
DIRECTORSHIPS
The Employee shall be entitled to accept positions as director of other
corporations, whether such corporations are engaged in the mining industry or
not, provided any such directorship is first approved by the Corporation, which
approval shall not be unreasonably withheld.
SECTION THIRTEEN
REPRESENTATIONS
The Corporation and Pegasus jointly and severally represent and warrant to the
Employee, with the intent that Employee shall rely on such representations and
warranties in entering into this Agreement, as follows:
1. The common shares of Pegasus are listed for trading on the Toronto Stock
Exchange, Montreal Exchange and American Stock Exchange.
2. The financial statements, reports, and other information provided by the
Corporation, Pegasus and their respective officers and employees, both
orally and in writing, constitute complete and accurate disclosures of the
status of the affairs of Pegasus and the Corporation and the Corporation
and Pegasus do not know of any other information which, if disclosed to the
Employee, might reasonably be expected to cause the Employee to refrain
from accepting employment with the Corporation or affect the value of
Pegasus' shares.
SECTION FOURTEEN
CONFIDENTIALITY
Employee 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 Corporation. For the purpose of this provision,
"Confidential Information" means information known to the Employee as a
consequence of his employment by Corporation and not generally known in the
industry in which the Corporation is engaged or not otherwise available to third
parties from sources unrelated to or controlled by Corporation.
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SECTION FIFTEEN
SUPERSEDING EFFECT
This Agreement replaces and supersedes the Employment Agreement dated as of the
1st of May, 1997 among the parties relating to Employee's employment.
IN WITNESS WHEREOF, the parties have executed this Agreement at Spokane,
Washington as of the day and year first above written.
PEGASUS GOLD CORPORATION
By
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Its President and Chief Executive Officer
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PEGASUS GOLD INC.
By
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Its President and Chief Executive Officer
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EMPLOYEE:
By
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Name: Xxxxxxx X. Xxxxx
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Address: 0000 Xxxxx Xxxxxx Xxxx Xxxx
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Xxxx, Xxxxx: Hayden Lake, ID
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Zip Code: 83835
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Telephone Number: 208/000-0000
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SS#: ###-##-####
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DESIGNATION OF BENEFICIARY
On this 15th day of November, 1997, Employee hereby designates Xxxxxx X. Xxxxx,
his wife, as his beneficiary for purposes of receiving, upon his death,
compensation and benefits under Section Six, Paragraph 3, hereof.
By
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Xxxxxxx X. Xxxxx
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