Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 2nd day of April, 1996, effective the first
day of the term hereof, between Golden Queen Mining Company Inc., herein
referred to as the "Corporation", Castle Group Inc., herein referred to as
"CGI," and Xxxxxx X. Xxxxxxx, 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 President and Chief
Executive Officer and CGI hereby employs the Employee and the Employee hereby
accepts such employment and agrees to devote all of his efforts for the
benefit of the Corporation and CGI 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 his duties subject to the general
supervision of and pursuant to the orders, advice and direction of the
President of the CGI and the Board of Directors of the Corporation.
SECTION TWO
TERM OF EMPLOYMENT
The term of employment by the Corporation under this Agreement shall commence
on December 1, 1995 and shall continue thereafter for a period of three years
until terminated as hereinafter provided. The term of employment by CGI under
this Agreement shall commence on December 1, 1995 and shall continue
thereafter until May 31, 1996 or until earlier terminated as hereinafter
provided.
SECTION THREE
COMPENSATION
CGI shall pay Employee, and the Employee shall accept from CGI, compensation
at the minimum annual rate of U.S.$200,000 during his employment with CGI,
prorated and payable semi-monthly or on such other basis as the parties may
hereafter agree Corporation shall reimburse CGI for all such payments to
Employee. If CGI fails to make the salary payments described above,
Corporation shall be obligated to make the payments to Employee directly.
When Employee's employment with CGI is terminated, Corporation shall pay
Employee, and Employee shall accept from Corporation, compensation at the
minimum annual rate of U.S. $200,000 until November 30, 1996 and U.S.$
220,000 for the second year of his employment, 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 Board of Directors of Corporation or any Committee
thereof having such authority. Employee shall be entitled to a minimum paid
vacation of four (4) weeks in any calendar year. Employee shall also be
entitled to an annual cash bonus which will be set by the Board of Directors
of the Corporation and based upon the Employee's performance and the
financial condition of the Corporation.
SECTION FOUR
OTHER BENEFITS
In addition to the compensation as provided in the previous Section Three
hereof, CGI shall at its expense provide for Employee the following
additional benefits:
1. An allowance of not to exceed Three Hundred Dollars ($300.00) per month
to acquire and operate a current model automobile for business and
personal use.
2. Participation in all of CGI's benefit plans, including life insurance,
medical, dental, vision, 401(k), pension, disability, 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.
3. Such directors and officers liability insurance as is available to the
other officers and directors of CGI.
CGI shall provide the benefits described in 1, 2 and 3 above only until the
Corporation establishes similar benefit plans to those described above and
Employee has been enrolled in those plans or May 31, 1996, whichever is
earlier, at which time CGI's obligation to provide such benefits to Employee
shall cease.
In addition to the compensation as provided above, Corporation shall at its
expense provide for Employee the following additional benefits:
1. Assistance in annual tax preparation and estate planning.
2. 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.
3. 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.
4. Corporation hereby grants. to Employee, effective December 1, 1995 an
option ("First Option") to acquire 680,000 shares of Corporation's
common stock, at a strike price equal to C$1.35 per share which was the
closing price of the Corporation's shares on the Toronto Stock Exchange
on December 1, 1995. The First Option may be exercised as to these
680,000 shares (herein referred to as the "First Shares") as follows:
i. Beginning on the date of grant of the First Option, the First
Option may be exercised to the extent of one-third (1/3) of the
First Shares covered hereby;
ii. Beginning on the date one year from the date of grant of the First
Option, the Option may be exercised as to two-thirds (2/3) of the
First Shares covered hereby;
iii. Beginning on the date two years from the date of grant of the First
Option, the First Option may be exercised as to all of the First
Shares covered hereby.
Corporation hereby grants to Employee, effective February 21, 1996 an option
("Second Option") to acquire 130,000 shares ("Second Shares") of
Corporation's common stock at a strike price equal to C$1.51 per share which
was the closing price of the Corporation's shares on the Toronto Stock
Exchange on February 21, 1996. The Second Option may be exercised as to the
Second Shares as follows:
i. Beginning on the date of the grant of the Second Option, the Second
Option may be exercised to the extent of one-third (1/3) of the
Second Shares covered hereby;
ii. Beginning on the date one year from the date of grant of the Second
Option, the Second Option may be exercised as to two-thirds of the
Second Shares covered hereby:
iii. Beginning on the date two years from the date of grant of the
Second Option, the Second Option may be exercised as to all of the
Second Shares covered hereby.
The Corporation agrees to grant to Employee an option ("Third Option") to
acquire an additional 190,000 shares ("Third Shares") of Corporation's common
stock at a strike price equal to the closing price of the Corporation's
shares on the Toronto Stock Exchange on the date the Third Option is granted.
Corporation agrees to issue to Employee the Third Option on the date that all
of the following events have occurred.
A. The Corporation's Stock Option Plan (Plan) has been amended to increase
the number of shares available for issuance under the Plan so that the
Third Shares are available for issuance.
B. The amended Plan has been approved by the shareholders of the
Corporation.
C. The amended Plan has been approved by the relevant Stock Exchanges.
The Third Option may be exercised as to the Third Shares as follows:
i. Beginning on the date of grant of the Third Option, the Third
Option may be exercised to the extent of one-third (1/3) of the
Third Shares covered hereby;
ii. Beginning on the date one year from the date of grant of the Third
Option, the Third Option may be exercised as to one-third (1/3) of
the Third Shares covered hereby;
iii. Beginning on the date two years from the date of grant of the Third
Option, the Third Option may be exercised as to all of the Third
Shares covered hereby.
The First Option, Second Option and Third Option shall be referred to as the
Options.
If Employee elects to exercise his Options, he must exercise all of the First
Option which has vested at the time of exercise before he may exercise his
Second Option. Likewise, he shall exercise all of the Second Option which has
vested at the time of exercise before he may exercise his Third Option.
Corporation agreed to grant Employee 1,000,000 Options at a strike price
equal to the closing price of the Corporation's shares on the Toronto Stock
Exchange on December 1, 1995. On December 1, 1995, Corporation had only
680,000 shares available for grant under its Plan. To compensate employee for
the increase in the price of the Corporation's shares since December 1, 1995,
Corporation agrees that, after Employee exercises his Second or Third Options
and pays the Corporation the funds for the Second or Third Shares,
Corporation will pay Employee for each share purchased the difference between
the strike price of C$1.51 for the Second Shares or the applicable strike
price for the Third Shares, as the case may be, and C$1.35.
Subject to the terms of this Agreement, the Options are granted to Employee
pursuant to the terms of the Plan. The above will constitute a valid and
binding stock option agreement between the Corporation and Employee.
SECTION FIVE
TERMINATION
After Corporation has established the benefit programs described in Section
Four above and Employee has been enrolled in those plans but not later than
May 31, 1996, CGI may terminate Employee. Thereafter, CGI shall have no
obligation to make the salary payments under Section Three or provide
benefits under Section Four, such payments and benefits then being provided
by Corporation. Under these circumstances CGI shall not owe Employee any
severance compensation.
This Agreement will terminate or may be terminated by Employee or Corporation
for any one of the following reasons:
1. Voluntarily and without cause, subject to Sections Two and Six, upon at
least six (6) 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 a Change of Control; or
4. 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 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 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 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 was still an employee of the Corporation
for a period of one (1) year from the date of termination or equal or
better benefits are provided by a new employer, whichever shall first
occur. In the event Employee has existing stock options, they will be
honored and all such options will vest immediately and may be exercised
by Employee at any time within three months following the date of his
termination. Corporation shall also provide to Employee employment
search assistance by a firm mutually acceptable to Corporation and
Employee, Employee's choice to secure comparable employment, the cost of
which shall not exceed $25,000.00.
3. Termination Following Change of Control
(a) For purposes of this Agreement, a Change in Control shall be deemed
to have occurred if 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 The foregoing shall
not apply to any beneficial ownership exceeding 25% held by
Ventures Trident L.P., Ventures Trident 11 L.P., or any general
partner or affiliated parties thereof;
(b) Irrespective of any other provisions in this Agreement regarding
termination, if the event described above constituting a Change in
Control shall have occurred, upon the subsequent termination of
Employee's employment (unless such termination is 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
thirtieth (30th) day following the date of termination a lump sum
severance payment equal to two (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. In the event Employee has existing stock options, they will
be honored and all such options will vest immediately and may be
exercised by Employee at any time within three months following the
date of his termination.
(c) After a Change in Control, 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 President and Chief Executive 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) after establishment of Corporations benefit plans under
Section Four, the failure by the Corporation to continue to
provide Employee with benefits at least as favorable as those
enjoyed by Employee under 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, after a Change in Control, 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
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 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
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 TEN
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.
SECTION ELEVEN
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 TWELVE
REPRESENTATIONS
The Corporation represents and warrants 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 Corporation are listed for trading on the Vancouver
Stock Exchange and the Toronto Stock Exchange.
2. The financial statements, reports, and other information provided by the
Corporation and its respective officers and employees, both orally and
in writing, constitute complete and accurate disclosures of the status
of the affairs of the Corporation and the Corporation does 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 the Corporation's
shares
SECTION THIRTEEN
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.
IN WITNESS WHEREOF, the parties have executed this Agreement at Spokane,
Washington as of the day and year first above written.
Golden Queen Mining Company Inc.
By s/ Xxxx X. Xxxxxx
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Its Chairman of the Board
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Castle Group Inc.
By s/ Xxxxxxxxxxx M.T. Xxxxxxxx
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It President and Chief Executive Officer
EMPLOYEE
By s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Address: South 0000 Xxxxx Xxxxx Xxxxx
Xxxx, Xxxxx: Xxxxxxxx, XX
Zip Code: 99037
Telephone Number: 000-000-0000
SS#: ###-##-####
DESIGNATION OF BENEFICIARY
On this 2nd day of April, 1996, Employee hereby designates Xxxxx Xxxxxxx, his
Spouse, as his beneficiary for purposes of receiving, upon his death,
compensation and benefits under Section Six, Paragraph 3, hereof.
By s/ Xxxxxx X. Xxxxxxx
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