EX. 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 22nd day of May 1997
BETWEEN:
ARCTIC PRECIOUS METALS, INC.
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(Fax No. ▇▇▇-▇▇▇-▇▇▇▇)
(hereinafter called "Arctic")
OF THE FIRST PART
- and -
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(hereinafter called the "Employee")
OF THE SECOND PART
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ROYAL OAK MINES INC.
BCE Place, Suite 2500
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(Fax No. ▇▇▇-▇▇▇-▇▇▇▇)
(hereinafter called "Royal Oak")
OF THE THIRD PART
WHEREAS Arctic and the Employee wish to enter into a written agreement to
record the terms and conditions of the Employee's continued employment with
Arctic.
AND WHEREAS Arctic's parent company, Royal Oak, has agreed to assume certain
obligations herein and to guarantee the performance by Arctic of its
obligations to the Employee hereunder;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
set out, the parties agree as follows:
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1. EMPLOYMENT
Employee commenced employment with Arctic on February 27, 1995 and hereby
accepts continued employment with Arctic from and after May 22, 1997 on the
terms and subject to the conditions herein set forth.
2. DUTIES
Subject to instructions which may be received from time to time by the
Employee from the Chief Executive Officer of Arctic, the Employee is
hereafter engaged by Arctic as Executive Vice-President and Chief Operating
Officer and in such other executive capacities as may be determined by the
Chief Executive Officer of Arctic from time to time; and, in furtherance of
his duties, the Employee shall do the following:
(a) serve Arctic faithfully;
(b) observe all policies of Arctic and perform all services associated
with his position to the best of his ability;
(c) devote substantially all of his working time and attention to the
business of Arctic, except to the extent otherwise permitted by the Chief
Executive Officer;
(d) carry out all lawful instructions given to him by the Chief
Executive Officer; and
(e) endeavour to further the best interests of Arctic.
The Employee will be based in Kirkland, Washington but may from time to time
be called upon and hereby agrees to perform services elsewhere.
3. TERM
The term of this Agreement shall commence May 22, 1997 and continue
thereafter indefinitely unless earlier terminated in accordance with the
provisions of this Agreement.
4. ANNUAL SALARY AND BONUS
In consideration for services rendered hereunder, Arctic shall pay to the
Employee the following:
(a) Salary: Employee's salary shall be US$200,000 per annum. Arctic
agrees to review the salary at least every twelve (12)months and may make
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adjustments, in its discretion, based on changes in market pay rates
for jobs similar to the Employee's, cost of living and such other
factors as Arctic deems relevant.
(b) Bonus: Employee will be eligible for an annual bonus award to a
maximum value of 50 percent of the salary unless Arctic, in its discretion,
determines to pay a higher maximum value. The amount of the bonus is based on
achievement of predetermined annual performance objectives set for the
Employee by the Chief Executive Officer of Arctic and communicated to the
Employee at the beginning of the year.
5. OTHER BENEFITS
In addition to the annual salary and bonus award provided in paragraph 4 of
this Agreement, Arctic shall provide the following benefits to the Employee:
(a) Fringe Benefits
Arctic shall furnish to the Employee at Arctic's expense such insurance
(including, without limitation, medical, dental, vision, hospitalization,
life and disability insurance), pension, and other benefits as are provided
to senior executives by Arctic including participation in the Company's
supplementary executive retirement plan and/or split dollar life insurance
program.
(b) Stock Options
The Employee shall be entitled upon execution of this Agreement to receive
65,000 new options to purchase shares of Arctic's parent company, Royal Oak,
which options are exercisable following shareholder approval on a one-third
(1/3) basis per year commencing on the first anniversary of the date of this
Agreement and valid for a term of seven years with the price of those options
fixed at US $2.50. The terms of the option shall be stipulated by Royal Oak
in a separate Stock Option Agreement to be executed by Royal Oak and the
Employee prior to any options being exercised thereunder. The Employee shall
also be eligible for future grants of stock options for shares in Royal Oak
on terms applicable to other senior officers of Arctic.
(c) Business Expenses
Arctic agrees to reimburse the Employee quarterly for all ordinary and
necessary business expenses incurred by the Employee in the performance of
his duties under this Agreement and the Employee shall provide vouchers and
statements in respect of all such expenses in a timely manner.
(d) Membership
Arctic agrees to provide the employee with one reasonably priced business
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club membership for the purposes of personal and family use and for
entertaining. All meals and sundry expenses for personal use will be to the
account of the employee, with Arctic responsible for and paying all
reasonable expenses incurred by the Employee for the purpose of entertaining
clients and business associates.
(e) Vacation
The Employee shall be entitled to four weeks of paid vacation during each
full calendar year in which he is employed by Arctic pursuant to this
Agreement, the timing of such vacation being mutually agreed upon between the
Employee and Arctic. Vacation entitlement is non-cumulative and must be taken
in the year in which it is earned unless otherwise agreed to in writing by
the Chief Executive Officer.
(f) Demand Loan
The Employee will be eligible to borrow from Arctic an aggregate maximum
amount of US $90,000.00 interest free for the purpose of financing a home.
Repayment of such loan in the amount of US $15,000.00 per year shall be
guaranteed by the Employee and security, in the form of a second mortgage on
the said home, shall be provided by the Employee to secure repayment of the
loan to Arctic. The terms of the loan shall be stipulated by Arctic in a
separate written Loan Agreement to be executed by the Employee and Arctic
prior to any advances being made thereunder and shall include a requirement
for repayment of any amount then outstanding within 120 days of cessation of
the Employee's employment hereunder for any reason whatsoever.
6. TERMINATION AND COMPENSATION AT TERMINATION
Notwithstanding anything herein contained to the contrary, this Agreement
shall terminate in the following manner and the Employee shall be compensated
as indicated:
(a) Termination by Arctic for Cause
This Agreement and the employment of the Employee may be terminated effective
immediately for cause by the giving of written notice of dismissal by Arctic
to the Employee. As used herein, "cause" includes, but shall not be limited
to, competing with or publicly denigrating the business of Arctic,
unauthorized disclosure or use of Confidential Information in breach of
paragraph 7 herein, repetition of conduct subject and subsequent to
progressive discipline, gross misconduct or gross negligence by the Employee
in the performance of his duties hereunder, the commission by the Employee of
an act of theft, dishonesty, embezzlement or vandalism against Arctic, its
parent Royal Oak or any of their respective related, associated or subsidiary
companies, or the conviction of the Employee for
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any indictable criminal offence or a felony or criminal offense of moral
turpitude.
If this Agreement is terminated by Arctic for cause, the Employee shall
continue to accrue and receive his salary and benefits through to the date of
termination indicated in the notice of dismissal only. No additional
compensation or payment shall or need be made by Arctic to the Employee.
(b) Termination by Arctic Without Cause
This Agreement and the employment of the Employee hereunder may be terminated
by Arctic effective at any time without cause by giving the Employee at least
24 months' prior written notice of termination. In the event such notice is
given, the employment of the Employee shall terminate on the date specified
in the said notice. In lieu of notice, Arctic may, in its discretion,
terminate the employment of the Employee immediately by making payments to
the Employee of all salary and bonus, equal to the salary and bonus received
by the Employee with respect to the last completed fiscal year of Arctic
prior to such notice and continuing (if possible, and in accordance with
applicable statutory provisions, or if not, paying the present value of) all
benefits which would have accrued to the benefit of the Employee to the date
of termination had the period of notice of termination required by this
Agreement been given. The parties hereto acknowledge that this Agreement and
the period of notice referred to herein are fair and reasonable in all the
circumstances.
The Employee hereby acknowledges and agrees that, should Arctic or its parent
company, Royal Oak, subsequently take over or otherwise acquire control of
additional properties and/or projects which substantially increases the
duties and responsibilities of the position of Executive Vice-President and
Chief Operating Officer herein assumed, then any reassignment of the Employee
by Arctic to the position of Chief Operating Officer of North American
Operations or some like position, at a salary and benefits comparable to
those held by the Employee prior to any such takeover or acquisition, will
not constitute or be deemed to constitute constructive dismissal or
termination of the employment of the Employee hereunder.
(c) Termination of Change of Control
For purposes of this Agreement, "Change in Control" means any one or more of
the following:
(i) the acquisition by any person or group of related persons or
persons acting jointly or in concert of more than 30% of the issued and
outstanding common shares of Arctic or its parent company Royal Oak
(calculated on a non-diluted basis), whether acquired in a single transaction
or a series of transactions, whether or not one or more of those transactions
occurred before the date hereof;
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(ii) the election to the Board of Directors of Arctic or its parent
company Royal Oak of persons employed by or representing any one person or
group of related persons or persons acting jointly or in concert and
constituting 40 percent or more of the Board.
Should a Change of Control occur, the Employee's employment with Arctic or
any successor corporation shall be hereby guaranteed to age 62 in such senior
management or consulting capacity as may be determined by Arctic or its
successor corporation at a salary and bonus equal to the salary and bonus
received by the Employee with respect to the last completed fiscal year of
Arctic, and benefits (on a fully vested basis) comparable to those accorded
the Employee prior to such Change of Control.
Should the Employee elect to pursue such guaranteed employment to age 62, he
hereby agrees to fully and capably perform all duties assigned to him by
Arctic or its successor corporation and waives any subsequent right to or
claim for constructive dismissal during the course of such employment and
compensation on termination after age 62 beyond the minimum required by law.
Conversely, should the Employee elect to reject such guarantee of employment
to age 62 and to terminate his employment with Arctic or its successor
corporation within the period for election specified below, then the Employee
shall be entitled to the compensation and benefit package outlined in
subparagraph (b) above and shall be further given the right to immediately
exercise all approved outstanding options, subject to confirmation of
Exchange approval as specified in each Stock Option Agreement.
The Employee shall have three (3) months from the date of any Change of
Control to make the election whether to pursue or reject the aforesaid
guarantee of employment.
The parties hereto acknowledge that this Agreement and the compensation
packages proposed in lieu of notice in subparagraphs (b) and (c) herein are
fair and reasonable in all the circumstances.
(d) Termination by the Employee
This Agreement and the employment of the Employee hereunder may be terminated
by the Employee upon at least three (3) months' prior written notice to
Arctic given at any time. If the Employee so terminates this Agreement and
his employment hereunder, he shall continue to accrue and will receive his
annual salary and benefits (excluding bonus entitlement) through the date
specified in his notice of termination and no more. Upon receipt of such
notice, Arctic may, in its discretion, immediately terminate the employment
of the Employee by making payment to the Employee of all salary and continue
(if possible, and in accordance with applicable statutory provisions, or if
not possible, paying the present value
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of) all benefits which would have accrued to the benefit of the Employee to
the date of termination specified in his notice of termination.
(e) Termination by Mutual Agreement
This Agreement and the employment of the Employee hereunder may be terminated
by mutual agreement in writing of the parties hereto. The Employee shall
continue to accrue and receive his annual salary and benefits through to the
date of termination settled upon pursuant to such mutual agreement.
The fact of termination of the Employee's employment in accordance with
subparagraphs (d) and (e) herein and the terms of such termination shall be
maintained as confidential by the Employee and shall not be disclosed to
anyone other than Employee's legal and financial advisors until the Employee
is so authorized by the Chief Executive Officer of Arctic.
(f) Termination by Death
The Agreement and the employment of the Employee hereunder shall be
terminated by the death of the Employee. All compensation to the Employee
shall cease at his death.
(g) Termination by Permanent Disability
For the purpose of this Agreement, "Permanent Disability" means:
the Employee is unable to perform any and every duty of his employment,
and such disability may reasonably be expected to exceed a period of six
months.
If the Employee's employment is terminated due to Permanent Disability, the
following compensation shall be paid:
1. salary shall stop at the end of the month in which termination occurs;
2. all employee benefits, except Arctic sponsored medical, accidental and
life insurance, shall cease with termination. The medical insurance (with
premium waiver for accidental and life insurance) shall continue for the
Employee and his dependents for two (2) years under the same cost sharing
arrangement as between Arctic and its other employees. Accidental and life
coverage shall continue for as long as the Employee remains disabled under
the disability plan. The Employee will be given the option, consistent with
then existing legislation, to convert medical coverage upon cessation thereof
to an individual policy;
3. the bonus payable under paragraph 4 (b) of this Agreement will be payable
at year end on a pro rata basis based on the period of employment as a
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percentage of the full year.
If the parties cannot mutually agree upon whether the Employee has a
Permanent Disability or when the Employee became Permanently Disabled for the
purposes of this Agreement, then Arctic and the Employee shall each appoint
one doctor of medicine licensed to practice in the State of Washington and
the two doctors so appointed shall determine if the Employee has a Permanent
Disability, and the time at which he became so Permanently Disabled for the
purposes of this Agreement. If the two doctors so appointed cannot agree
upon whether the Employee is or when the Employee became Permanently
Disabled, they shall appoint a third doctor of medicine licensed to practice
in the State of Washington and the decision of the majority shall be binding
on both parties hereto and shall not be subject to appeal.
7. CONFIDENTIAL INFORMATION AND TRADE SECRETS
The Employee acknowledges that he has a fiduciary obligation to Arctic and
that, in the course of providing services hereunder, he will be entrusted
with confidential information and trade secrets ("Confidential Information")
concerning the present and contemplated projects, services and techniques
involved and used by Arctic, its parent company Royal Oak and their
respective associated, related and subsidiary companies in connection with
their respective businesses, the disclosure of any of which to competitors of
Arctic, Royal Oak or the general public would be highly detrimental to the
best interests of Arctic and not compensable by damages. The Employee
further acknowledges that the right to maintain all such Confidential
Information as confidential constitutes a proprietary right which Arctic, its
parent company Royal Oak and their respective associated, related and
subsidiary companies are entitled to protect by way of injunctive relief in
addition to other remedies available to each on breach of such
confidentiality.
The Employee further acknowledges that the restrictions and prohibitions set
out herein are reasonable and proper based on the nature of the business of
Arctic, its parent company Royal Oak and their respective associated, related
and subsidiary companies, which businesses as of the date hereof are to a
significant extent carried on in Canada and the United States. Accordingly,
the Employee agrees that:
(a) he will not, during the term of this Agreement or at any time
thereafter, disclose any of such Confidential Information to any person or
use any of such Confidential Information for any purpose other than those of
Arctic and Royal Oak; and
(b) he will not, during the term of this Agreement or at any time
thereafter, disclose any information concerning the business of Arctic, its
parent company Royal Oak or their respective associated, related and
subsidiary companies which could adversely affect the image or reputation of
any of them.
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The Employee agrees that the provisions of this paragraph 7 will, in their
entirety, survive termination of this Agreement by any party for any reason
and in any manner whatsoever.
8. PERFORMANCE GUARANTEE
In consideration of the Employee agreeing to transfer to and continue his
employment with Arctic, Royal Oak hereby guarantees to the Employee the full
performance of Arctic of each and every obligation hereunder assumed by
Arctic and further indemnifies and agrees to hold harmless the Employee from
and against any and all loss, damage, injury and expense (including recovery
of all legal fees and disbursements) incurred by the Employee as a result of
any breach by Arctic of its obligations hereunder or in enforcing and
securing to the Employee all of his rights and entitlement hereunder.
9. NOTICES
Wherever this Agreement requires or permits any consent, approval, notice,
request or demand from any party to another, the consent, approval, notice,
request or demand (including, without limitation, telecopied communications)
must be in writing to be effective and shall be deemed to have been given on
the earlier of receipt or five business days after it is enclosed in any
envelope, addressed to the party to be notified at the address first above
written (or such other addresses as may be designated by written notice from
time to time), properly stamped, sealed and deposited in the mail system, in
the case of Arctic, to the attention of the Chief Executive Officer and in
the case of Royal Oak to the attention of Mr. W. J. V. Sheridan, Secretary.
Any consent, approval, notice, request or demand aforesaid if delivered or
telecopied shall be deemed to have been given on the day of such delivery or
telecopied transmission. Any such delivery shall be sufficient, if left with
any person at the above address of the Employee in the case of the Employee,
and with the receptionist at the above addresses of Arctic and Royal Oak in
the case of Arctic and Royal Oak respectively.
10. ENTIRE AND BINDING AGREEMENT
The provisions contained herein and in any Stock Option Agreement or Loan
Agreement created in accordance with paragraphs 5 (b) and (f) herein
constitute the entire Agreement between the parties and supersede all
previous communications, representations, understandings and agreements,
whether oral or written, between the parties with respect to the subject
matter hereof.
Subject to the provisions hereof, this Agreement shall be binding upon and
shall enure to the benefit of the parties hereto and upon their respective
heirs, legal representatives, successors and permitted assigns.
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11. AMENDMENTS
No alteration or amendment to this Agreement will take effect unless the same
is in writing duly executed by each of the parties in the same manner as this
Agreement.
12. WAIVERS
One or more consents to or waivers of any breach of the terms or provisions
of this Agreement by any party shall not be construed as a consent or waiver
of a subsequent breach of the same term or provision, nor shall it be
considered a consent to or waiver of any other then existing or subsequent
breach of a different term or provision. The consent or waiver by any party
to or of any act by any other party requiring such consent or waiver shall be
deemed not to waive or render unnecessary consent to or waiver of any
subsequent similar act. No custom or practice of any party shall constitute
a waiver of any other party's right to insist upon strict compliance with the
terms and provisions hereof.
15. SEVERABILITY
If any term or provision of this Agreement shall be or shall become illegal
or unenforceable, the remaining terms and provisions shall nevertheless be
valid, binding, and subsisting.
16. INTERPRETATION
For purposes of this Agreement, "person" includes any body corporate,
government or any subdivision or department thereof, trust, unincorporated
association, joint venture and/or partnership.
17. HEADINGS
Headings are for convenience of reference only and shall not affect the
interpretation of this Agreement.
18. ASSIGNMENT
Neither the rights nor obligations under this Agreement shall be assigned or
otherwise disposed of without the prior written consent of the non-assigning
party, except that Arctic may assign this Agreement to any successor or
related corporation without such consent.
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19. APPLICABLE LAW
Whether pursuant to court proceedings or otherwise, the rights and
obligations of the parties under and pursuant to this Agreement shall be
construed under and governed by the laws of State of Washington and the
parties hereby agree to submit to the exclusive jurisdiction of its courts.
IN WITNESS WHEREOF this Agreement is executed by the parties as of the date
first above written.
ARCTIC PRECIOUS METALS, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇ c/s
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(authorized signing officer)
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
/s/ Illegible /s/ ▇▇▇▇▇▇ ▇▇▇▇ I/S
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Witness ▇▇▇▇▇▇ ▇▇▇▇
Notary Public for
the state of Washington
ROYAL OAK MINES INC
By: /s/ ▇. ▇. ▇▇▇▇▇ I/S
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(authorized signing officer)
ARCTIC PRECIOUS METALS, INC.
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Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
August 1, 1997
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Dear ▇▇. ▇▇▇▇:
By written agreement made the 22nd day of May, 1997, the Company agreed to
lend to you the maximum aggregate sum of Ninety Thousand US Dollars
(US$90,000.00) on an interest free basis for the purpose of financing a home
in the Washington Area.
Prior thereto, you had borrowed from Arctic Precious Metals, Inc., upon
commencement of your employment therewith, the sum of Twenty-five Thousand US
Dollars (US$25,000.00) for such a purpose. Seventeen Thousand US Dollars
(US$17,000.00) presently remains outstanding on the said loan, which
indebtedness is secured by a written loan agreement made between you and the
Company on the 26th day of June, 1995. You elected not to move from your
residence (municipally identified as ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SE).
You have, however, now advised the Company that, pursuant to the terms and
conditions of paragraph 5(f) of your Employment Agreement made the 22nd day
of May, 1997, you wish to borrow the further sum of Seventy-three Thousand US
Dollars (US$73,000.00) for purposes of a home equity loan - which sum takes
you to the maximum aggregate amount specified in your Employment Agreement
aforesaid. You have proposed a second mortgage on your residence as security
for the full indebtedness of Ninety Thousand US Dollars (US$90,000.00).
In consideration of your past performance and ongoing commitment as Chief
Operating Officer of the Company and for other good and valuable
consideration (the sufficiency and receipt of which are hereby acknowledged),
the Company is pleased to grant your request and agrees to amend the first
sentence of paragraph 5(f) of your Employment Agreement to read as follows:
"The Employee will be eligible to borrow from Arctic, during the course
of his employment therewith, an aggregate maximum amount of Ninety Thousand
US Dollars
(US$90,000.00), interest free, by way of a home equity loan secured against
his principal residence at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (the "Home")."
In addition, for and in reliance on the aforesaid consideration, we propose a
further amendment to paragraph 5(f) of your Employment Agreement to add,
after the first two sentences thereof, the words:
"Any amounts repaid by the Employee may be borrowed again from time to
time by way of a home equity loan secured against the Home, provided that the
principal amount of the loan outstanding at any one time shall not exceed the
aggregate maximum amount of US$90,000.00."
The remainder of paragraph 5(f) and of all the other terms and conditions set
forth in your Employment Agreement shall remain in full force and effect
without variation.
If your concur in the amendments outlined above, please execute this document
in the space provided below.
Yours truly,
ARCTIC PRECIOUS METALS, INC.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman & President
I, ▇▇▇▇▇▇ ▇▇▇▇, hereby agree to and accept to be bound by the preceding
amendments to paragraph 5(f) of my Employment Agreement made the 22nd day of
May, 1997.
Dated the 5th day of August, 1997.
Witness:
/s/ Illegible /s/ ▇▇▇▇▇▇ ▇▇▇▇
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