<PAGE>

                              EMPLOYMENT AGREEMENT

This Employment Agreement made as of this 19th day of December, 2002.

B E T W E E N

                                      COLIN K. BENNER

                                      (hereinafter called the "Executive")

                                                              OF THE FIRST PART
                                      -and-

                                      BREAKWATER RESOURCES LTD.

                                      (hereinafter called the "Corporation")

                                                             OF THE SECOND PART

          THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements hereinafter contained the parties do hereby
respectively covenant and agree as follows: ARTICLE 1

                                   EMPLOYMENT

1.1     EMPLOYMENT

The Corporation agrees to continue to employ the Executive and the Executive
accepts continued employment with the Corporation on a full-time basis as
President and Chief Executive Officer under the terms and upon the conditions
provided for in this Agreement The Corporation agrees to take all reasonable
steps to cause the Executive to be appointed or elected a director of the
Corporation during the term of this Agreement.

1.2     RESPONSIBILITIES AND DUTIES

The Executive agrees to perform the duties and accept the responsibilities which
are usual and customary for a President and Chief Executive Officer, as well as
such other duties as may be determined by the board of directors of the
Corporation (the "Board of Directors") from time to time consistent with the
office held by the Executive. The Executive shall devote his full time and
attention using his best efforts to apply his skill and experience to perform
his duties hereunder and to promote the interests of the businesses and projects
of the Corporation; provided that the Executive shall not be precluded from
pursuing other business interests or holding positions in other companies which
do not interfere with the Executive's ability to carry out his responsibilities
hereunder and do not otherwise contravene the requirements of this Agreement or
as shall otherwise be approved or consented to by the Board of Directors.

<PAGE>

                                                                              2.

1.3     INDEMNITY & INSURANCE

The Corporation agrees to indemnify the Executive against all costs, charges and
expenses reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding, to the extent permitted by law. The
Corporation agrees to obtain directors' and officers' liability insurance for
the benefit of the Executive, provided that such insurance may be obtained at a
reasonable cost, as determined by the Board of Directors acting reasonably.

                                   ARTICLE 2

                                      TERM
2.1     TERM

The term of the Executive's employment pursuant to this Agreement (the "Term")
shall begin on December 19, 2002 (the "Commencement Date") and shall end on
December 31, 2006 (the "Termination Date"), provided that the Term shall be
automatically renewed for further successive two-year terms after the
Termination Date unless the employment of the Executive shall be terminated
earlier in accordance with the provisions of this Agreement.

                                   ARTICLE 3

                            COMPENSATION AND BENEFITS
3.1     BASE SALARY

The Corporation agrees to pay the Executive a base salary at the rate of
$500,000.00 per annum (the base salary of the Executive in effect from time to
time being the "Base Salary"), payable in accordance with the normal practice of
the Corporation with respect to such payments from time to time. The Corporation
shall deduct from the Executive's salary any applicable taxes and source
deductions that the Corporation is authorized or required by law to withhold or
make. Notwithstanding the foregoing, the Executive agrees to accept the amount
of $400,000.00 per annum as salary (and to defer the receipt of the difference
between the Base Salary and the amount of $400,000.00) until the Executive and
the Board of Directors mutually agree that the financial affairs of the
Corporation have improved such that the salary of the Executive should
thereafter be paid at the amount of the Base Salary. The difference between the
Base Salary to which the Executive is entitled from time to time and the amount
of salary actually paid to the Executive shall be accrued and such difference
(such difference on any particular date being the "Deferred Amount") shall be
due and payable to the Executive in a lump sum on the date which is the earlier
of:

        (a)     the date on which the Executive and the Board of Directors
                mutually agree that the salary of the Executive should be paid
                at the amount of the Base Salary;

        (b)     the date on which a Control Change (as defined in Article 5
                hereof) occurs; and

        (c)     the date on which the Executive ceases to be an employee of the
                Corporation for any reason whatsoever.

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                                                                              3.

3.2     SHARE INCENTIVE PLAN

The Executive shall be entitled to participate in the Corporation's share
incentive plan (the "Share Incentive Plan") which entitles the Executive to
receive options and also to purchase shares pursuant to the terms of the Share
Incentive Plan. Notwithstanding section 3.08 and section 3.09 of the Share
Incentive Plan, if the employment of the Executive is terminated by the
Corporation for any reason other than cause or for any of the reasons set out in
subsection 3.08(b) of the Share Incentive Plan or if the Executive is entitled
to a payment pursuant to section 5.2 or 5.3 hereof, the Executive shall be
entitled to immediately receive:

        (a)     all Shares (as defined in the Share Incentive Plan) held for the
                account of the Executive in safekeeping for the Executive; and

        (b)     all of the Participant's Contributions (as defined in the Share
                Incentive Plan) and all of the Corporation's Contributions (as
                defined in the Share Incentive Plan) then held in trust for the
                Executive, which shall be paid immediately to the Executive;

and the Executive shall automatically cease to be a Participant (as defined in
the Share Incentive Plan) in the Share Incentive Plan.

Notwithstanding subsection 4.03(d) and section 4.05 of the Share Incentive Plan,
all options granted to the Executive under the Share Incentive Plan but not yet
vested in, and fully-exercisable by, the Executive shall automatically vest, and
be fully exercisable, on the date of the termination by the Corporation of the
employment of the Executive and the Executive shall be entitled to exercise all
of his options for a period of one year after the date of such termination of
employment.

If the employment of the Executive is terminated for cause, all rights to
participate in the Share Incentive Plan, including grants of any further options
under the Share Incentive Plan, shall automatically terminate, subject to the
express rights of the Executive provided for in the Share Incentive Plan.

The Executive recognizes that the rights granted to the Executive under the
Share Incentive Plan are subject to the receipt of all required regulatory
approvals from applicable exchanges and security commissions and, accordingly,
the Share Incentive Plan may be modified from time to time to meet regulatory
requirements. The Executive further recognizes that to the extent that the
rights of the Executive under, and the provisions of, the Share Incentive Plan
are modified by this Agreement, such modifications are subject to the receipt of
all required regulatory approvals and compliance with all applicable laws.

3.3     BENEFITS

The Executive shall be entitled to participate in all employee benefit and
pension programs made generally available to senior management of the
Corporation from time to time in accordance with the terms and conditions of
such plans. The Executive shall be entitled to participate in any group life
insurance program maintained by the Corporation, provided that the Executive
meets all necessary medical requirements for participation in such programs.

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                                                                              4.

3.4     BUSINESS EXPENSES

The Executive shall be reimbursed for all reasonable expenses incurred by him in
connection with the conduct of the business of the Corporation. Such expenses
shall be reimbursed within 30 days following presentation of sufficient evidence
of such expenditures provided such expenditures are consistent with the policies
and directives of the Board of Directors from time to time.

3.5     VACATION

The Executive shall be entitled to vacation in each calendar year in accordance
with the policy of the Corporation in force from time to time in respect of
vacations

3.6     REVIEW

The Compensation Committee of the Board of Directors will review annually the
compensation of the Executive, including base salary and benefit package. At its
sole discretion the Compensation Committee of the Board of Directors may
increase but not decrease the base salary of the Executive after such review,
which increased amount shall then become the Base Salary.

                                   ARTICLE 4

                                   TERMINATION

4.1     TERMINATION BY THE CORPORATION WITHOUT CAUSE

The Corporation shall be entitled to terminate the Executive's employment at any
time without cause by paying the Executive the Deferred Amount and giving the
Executive 30 months prior written notice of the termination of the Executive's
employment or, in lieu of such notice, by paying the Executive the Deferred
Amount together with the Base Salary for 30 months in a lump sum, less statutory
deductions, unless the Corporation and the Executive agree to some other manner
of payment.

In the event of termination by the Corporation of the Executive's employment
without cause, the Executive shall be immediately relieved of all of his
responsibilities and duties as an officer, director and employee of the
Corporation effective as of the date of termination of the Executive's
employment. The rights and benefits of the Executive under employee benefit
plans and programs of the Corporation shall, unless prohibited by the relevant
plan or program, be continued from the date of termination until the date which
is the earlier of (a) the date on which the Executive accepts full-time
employment elsewhere, either as an employee or as a self-employed consultant or
(b) 30 months from the date of termination of the Executive's employment
provided that if any such benefit or program cannot be continued for such 30
month period under the terms of the plan for such benefit or program, the
Executive shall be entitled to receive a cash payment equal to the value (being
the cost to the Executive of replacing such benefit or program) of such benefit
or program for such period, which shall be paid on the date on which the
Executive ceases to be eligible to receive such benefit, as set forth in clause
(a) or (b) above to a maximum of $50,000. The Executive's rights under the Share
Incentive Plan shall

<PAGE>

                                                                              5.

be determined in accordance with the terms of such plan and any options granted
thereunder to the Executive, except as specifically provided herein to the
contrary.

For greater certainty, if at any time during the term of this Agreement the
business of the Corporation is transferred to a successor corporation by way of
sale, amalgamation, merger or reorganization and this Agreement is not assumed
by the successor corporation by virtue of the assignment thereof by the
Corporation pursuant to section 9.l0 hereof, this Agreement is not assumed by
the successor corporation by operation of law or otherwise or the Executive is
not offered employment with such successor corporation on substantially the same
terms as contained in this Agreement, the Corporation shall be deemed to have
terminated the employment of the Executive without cause pursuant to this
section 4.l and the Executive shall be entitled to the notice and/or payments in
lieu thereof provided for in this section 4.1 and the rights provided in section
3.2 hereof.

4.2     TERMINATION BY THE CORPORATION FOR CAUSE

The Corporation shall be entitled to terminate the Executive's employment at any
time for cause without notice and without any payment in lieu of notice, by
notice in writing from the Corporation to the Executive. In the event of
termination of the Executive's employment for cause, the Corporation shall
immediately pay the Executive the Deferred Amount, the Corporation's other
obligations hereunder shall immediately cease and terminate and the Executive
shall be immediately relieved of all of his responsibilities and duties as an
officer, director and employee of the Corporation, and in such event there will
be no continued base salary payments by the Corporation to the Executive and any
rights and benefits of the Executive under employee benefit plans and programs
of the Corporation will immediately terminate (except for entitlements under the
Share Incentive Plan which may continue in such circumstances under the specific
terms of such plan). For purposes of this section 4.2 "cause" shall mean,
without limitation, any cause recognized at common law.

4.3     TERMINATION UPON DEATH AND DESIGNATION OF BENEFICIARY

The employment of the Executive shall terminate automatically upon his death.
Upon the termination of his employment because of death, the Executive or his
estate shall be immediately paid the Deferred Amount but shall not be entitled
to any further payments of base salary or benefits. If the Executive dies prior
to the satisfaction of all of the obligations of the Corporation under this
Agreement, any remaining amount payable to the Executive by the Corporation
shall be paid to the person or persons (the "Beneficiary") previously designated
by the Executive to the Corporation for such purposes. Any such designation of a
Beneficiary shall be made in writing, signed by the Executive and dated and
filed with the Secretary of the Corporation. In the event that no such
designation is made, all such remaining amounts shall be paid by the Corporation
to the estate of the Executive. If the Executive has exercised the option
pursuant to section 5.4 hereof to defer a payment, or any part thereof, to be
made to or for the benefit of the Executive, the Beneficiary or the estate of
the Executive, as the case may be, shall have the further option to require
payment in full of any such remaining amounts to the Beneficiary or the estate,
as the case may be, by giving notice to that effect to the Corporation.

<PAGE>

                                                                              6.

4.4     RESIGNATION OF EXECUTIVE

The Executive agrees that if he resigns at any time during the term of this
Agreement he shall provide the Corporation with at least one month's written
notice, unless otherwise agreed to between the Executive and the Corporation.
The Executive agrees to co-operate with the Board of Directors in announcing his
resignation in order to minimize the effect of his resignation on the
Corporation and to ensure an orderly transition of duties and responsibilities
to his successor. Upon giving notice of his resignation, the Executive shall be
entitled to immediately be paid the Deferred Amount and to receive his base
salary and benefits throughout the notice period. Upon expiry of the notice
period, the Executive agrees that he shall be entitled to no further
remuneration by the Corporation in respect of his employment hereunder (except
for the payment of the Deferred Amount to the extent not previously paid),
except for the exercise of any options and other rights which may have accrued
to him under the terms of the Share Incentive Plan as referred to in section 3.2
above. At the sole discretion of the Board of Directors the Executive will
receive his pro rata share of any bonus he would have received in respect of the
fiscal year during which he resigns as if he had remained employed by the
Corporation for the full fiscal year, such pro rata share of his bonus to be
paid after the end of the fiscal year in question.

4.5     EFFECT OF TERMINATION

The Corporation and the Executive agree that, upon termination of the employment
of the Executive for any reason whatsoever, the Deferred Amount shall become
immediately due and be payable to the Executive and the Executive shall
thereupon be deemed to have immediately resigned any position the Executive may
have as an officer, director or employee of the Corporation together with any
office, position or directorship which the Executive may hold with any of the
Corporation's affiliates or related entities unless otherwise agreed in writing
between the Executive and the applicable affiliate or entity. In such event, the
Executive shall, at the request of the Corporation, forthwith execute any and
all documents appropriate to evidence such resignations. The Executive shall not
be entitled to any payments in respect of such resignations in addition to those
provided for herein.

4.6     SURVIVAL OF TERMS

It is expressly agreed that notwithstanding the termination of the Executive's
employment by the Corporation for any reason or cause or in any circumstances
whatsoever, such termination shall be without prejudice to the rights and
obligations of the Executive and the Corporation respectively in relation to the
time up to and including the date of termination and the provisions of Articles
3, 4, 5, 6 and 7 of this Agreement, all of which shall remain and continue in
full force and effect.

<PAGE>

                                                                              7.
                                   ARTICLE 5

                                CHANGE OF CONTROL

5.1     DEFINITIONS

In section 3.1 hereof and in this Article 5 the following words and terms with
the initial letter or letters thereof capitalized shall have the following
meanings:

        (a)     "Control Change" means the occurrence of both

                (i)     the acquisition by any means whatsoever of securities
                        (for the purposes of this definition "Convertible
                        Securities") convertible into, exchangeable or
                        exercisable for or representing the right to acquire
                        shares of the Corporation and/or the acquisition of
                        shares of the Corporation (other than an acquisition by
                        Dundee Bancorp Inc. or an associate or affiliate of
                        Dundee Bancorp Inc.) as a result of which a person, a
                        group of persons or persons acting jointly or in concert
                        or persons associated or affiliated, within the meaning
                        of the Securities Act (Ontario), with any such person,
                        group of persons or any of such persons acting jointly
                        or in concert (collectively for the purposes of this
                        definition the "Acquirors") beneficially own shares of
                        the Corporation and Convertible Securities such that,
                        assuming only the conversion, exchange or exercise of
                        Convertible Securities beneficially owned by the
                        Acquirors, the right to cast more than 30% of the votes
                        attached to all of the shares of the Corporation that
                        may be cast to elect directors of the Corporation is
                        held by the Acquirors, and

                (ii)    the exercise of the voting power attached to such shares
                        of the Corporation by Acquirors with the result that
                        Incumbent Directors cease to constitute a majority of
                        the Board of Directors;

        (b)     "Expiry Date" means the date which is twelve months after the
                date of the occurrence of a Control Change; and

        (c)     "Incumbent Director" means any director of the Corporation who
                was a director of the Corporation immediately prior to a Control
                Change and any successor to an Incumbent Director who was
                recommended or elected or appointed to succeed any Incumbent
                Director by the affirmative vote of the Board of Directors when
                that affirmative vote includes the affirmative vote of a
                majority of the Incumbent Directors who are then directors of
                the Corporation or with the consent of the then directors of the
                Corporation.

5.2     RIGHTS UPON OCCURRENCE OF CONTROL CHANGE

If a Control Change occurs, the Executive shall be immediately paid the Deferred
Amount and shall be entitled to elect to terminate his employment with the
Corporation unilaterally by giving a notice to such effect to the Corporation
and to receive a payment (in addition to the Deferred

<PAGE>

                                                                              8.

Payment) from the Corporation in an amount equal to the aggregate of (a) 250% of
the Base Salary applicable at the date of the notice of election to terminate
given to the Corporation by the Executive in accordance with section 9.6 hereof
and (b) 250% of the average of the annual bonus, if any, paid to the Executive
in respect of each of the three financial years of the Corporation ended
immediately prior to the date of the notice of election to terminate given to
the Corporation by the Executive in accordance with section 9.6 hereof. All
termination rights of the Executive provided for in this section 5.2 are
conditional upon the Executive electing to exercise such rights by notice given
to the Corporation on or before the Expiry Date and are exercisable only if the
Executive does not resign from his employment with the Corporation (other than
at the request of the Corporation) and does not actively seek alternative
employment, in each case for at least six months following the date of the
Control Change. If a Control Change occurs within six months after the
Corporation has given the Executive prior written notice of the termination of
the employment of the Executive or has terminated the Executive's employment by
paying the Executive the Deferred Amount together with the Base Salary for 30
months in a lump sum, in either case in accordance with section 4.1 hereof, the
Corporation shall pay on the effective date of the Control Change the amount
provided in clause (b) above determined as if the Executive had given the notice
of election to terminate on the effective date of the Control Change.

5.3     RIGHTS UPON DISMISSAL WITHOUT CAUSE

If the Corporation terminates the Executive's employment without cause after a
Control Change and on or before the Expiry Date, the Executive shall be entitled
to payment by the Corporation of the Deferred Amount together with a payment in
an amount equal to the aggregate of (a) 250% of the Base Salary and (b) 250% of
the average of the annual bonus, if any, paid to the Executive in respect of
each of the three financial years of the Corporation ended immediately prior to
the date of the notice of termination of employment and (c) any payment required
in lieu of benefits. Base Salary in this section 5.3 shall be the Base Salary
that is applicable immediately prior to the date of the notice of termination of
employment. The Corporation shall not dismiss the Executive for any reason
unless such dismissal is specifically approved by the Board of Directors.

5.4     PAYMENTS UNDER THIS AGREEMENT

Any payment to be made by the Corporation pursuant to the terms of this Article
5 shall be made by the Corporation in cash in a lump sum within five business
days of the giving of notice by the Executive pursuant to section 5.2 hereof, or
within five business days of the dismissal from employment of the Executive as
referred to in section 5.3 hereof, as the case may be. Any payment to be made
under section 5.2 or 5.3 hereof shall be calculated, in the case of section 5.2
hereof, at the date of the Executive giving notice pursuant to section 5.2
hereof and, in the case of section 5.3 hereof, at the date of dismissal.
Notwithstanding the foregoing provisions of this section 5.4, at the option of
the Executive a payment, or any part thereof as shall be specified by the
Executive, to be made to the Executive may be deferred to such date or dates as
shall be designated in writing by the Executive. Any payment so deferred shall
bear simple interest at a rate of 6% per annum calculated from the date payment
of the amount otherwise should have been made until the date of payment in full.
The Corporation shall list the items making up a

<PAGE>

                                                                              9.

payment calculated as provided for in section 5.2 hereof and shall support the
calculation of such amount.

5.5     PAYMENTS IN LIEU OF ALL OTHER DAMAGE CLAIMS

All payments provided for herein shall be in lieu of all other notice or damage
claims as regards dismissal or termination of the employment of the Executive
with the Corporation after a Control Change and on or before the Expiry Date.
The arrangements provided for herein shall not be considered in any judicial
determination of appropriate damages at common law for dismissal without cause,
other than as otherwise provided for in this Agreement. At the request of either
the Corporation or the Executive, the parties hereto shall exchange mutual
signed releases of liability conforming to the substantive provisions of this
Agreement.

5.6     BENEFIT PLANS

In the event that the Executive is entitled to a payment pursuant to section 5.2
or 5.3 hereof, the rights and benefits of the Executive under all employee
benefit plans and programs of the Corporation shall, unless prohibited by the
relevant plan, be continued from the date of termination until the date which is
the earlier of (a) the date on which the Executive accepts full-time employment
elsewhere, either as an employee or as a self-employed consultant or (b) 30
months from the date of termination of the Executive's employment. If any such
benefit or program cannot be continued for such 30 month period under the terms
of the plan for such benefit or program, the Corporation will make alternate
arrangements for equivalent benefits or programs and will pay the full cost of
such continuation for the relevant time period under clause (a) or (b) above to
a maximum of $50,000. The Executive's rights under the Share Incentive Plan
shall be determined in accordance with the terms of such plan and any options
granted thereunder to the Executive, except as specifically provided herein to
the contrary.

                                   ARTICLE 6

                                NON-SOLICITATION

6.1     NON-SOLICITATION

The Executive agrees that for a period of one year following the termination of
the Executive's employment with the Corporation for any reason whatsoever, the
Executive will not, whether as principal, agent, employee, employer, director,
officer, shareholder or in any other individual or representative capacity,
solicit or entice away or attempt to retain in any way whatsoever any of the
employees or customers of the Corporation.

                                   ARTICLE 7

                            CONFIDENTIAL INFORMATION

7.1     CONFIDENTIAL INFORMATION

The Executive agrees to abide by and behave in accordance with any policy
adopted, from time to time, by the Corporation with respect to confidential
information or insider trading and,

<PAGE>

                                                                             10.

without limitation, agrees not to disclose either while in the Corporation's
employ or at any time thereafter to any person not employed by the Corporation
or not engaged to render services to the Corporation, any trade secrets or
confidential information of or relating to the Corporation or its businesses
obtained by the Executive while in the employ of the Corporation; provided,
however, that this provision shall not preclude the Executive from the use or
disclosure of information known generally to the public (other than that which
the Executive may have disclosed in breach of this Agreement) or of information
required to be disclosed by law or court order applicable to the Executive or
information authorized to be disclosed by the Board of Directors.

7.2     RETURN OF ALL DOCUMENTS

The Executive also agrees that upon leaving the Corporation's employment, the
Executive will not take, without the prior written consent of the Board of
Directors, any property of the Corporation which shall include, without
limitation, any drawing, blueprint, specification, report, notes, files or other
materials or documents belonging or relating to the Corporation.

                                   ARTICLE 8

                               WAIVER OF DEFENCES

8.1     WAIVER OF DEFENCES

The Executive acknowledges and agrees that

        (a)     all restrictions in Articles 6 and 7 of this Agreement are
                reasonable and valid and all defences to the strict enforcement
                thereof by the Corporation are hereby waived by the Executive;

        (b)     a violation of any of the provisions of Article 6 or 7 of this
                Agreement will result in immediate and irreparable harm and
                damage to the Corporation; and

        (c)     in the event of any violation by the Executive of any provision
                of Articles 6 or 7 of this Agreement the Corporation shall, in
                addition to any other right to relief be entitled to equitable
                relief by way of temporary or permanent injunction and to such
                other relief as any court or competent jurisdiction may deem
                just and proper.

                                   ARTICLE 9

                                     GENERAL

9.1     CURRENCY

Unless otherwise specified herein all dollar amounts refer to Canadian dollars.

9.2     GOVERNING LAW

<PAGE>

                                                                             11.

This Agreement shall be governed and construed in accordance with the laws of
the Province of Ontario.

9.3     SEVERABILITY

If any provision of this Agreement is declared void or unenforceable, such
provision shall be deemed severed from this Agreement to the extent of the
particular circumstances giving rise to such declaration and such provision as
it applies to other persons and circumstances and the remaining terms and
conditions of this Agreement shall remain in full force and effect.

9.4     INDEPENDENT LEGAL ADVICE

The Executive hereby accepts and agrees to the terms and conditions of this
Agreement having been offered the opportunity to seek independent legal advice
and has done so or refused to do so of the Executive's own volition.

9.5     ARBITRATION

All disputes arising between the Executive and the Corporation in respect to the
provisions, the subject matter, the interpretation or effect of this Agreement
or as to any specific provision contained herein shall be referred to
arbitration, and shall be settled by arbitration by a single arbitrator pursuant
to the provisions of the Arbitration Act (Ontario). The determination of such
arbitrator shall be binding upon both the Executive and the Corporation pursuant
to the provisions of the said Arbitration Act. The fees and expenses of such
arbitrator shall be shared equally by the Executive and the Corporation. If the
parties are unable to agree on the appointment of a single arbitrator, such
single arbitrator shall be appointed by a judge of the Ontario Superior Court of
Justice upon application of either party hereto pursuant to the provisions of
the said Arbitration Act.

9.6     NOTICES

Any notice required or permitted to be given hereunder shall be in writing and
shall be effectively given if (i) delivered personally or (ii) sent by
telecopier, on any business day addressed, in the case of notice to the
Executive, as follows:

69 Walker Avenue
Toronto, Ontario
M4V 1G3

and in the case of notice to the Corporation, addressed as follows:

Breakwater Resources Ltd.
Suite 950
95 Wellington Street West
Toronto Ontario
MSJ 2N7

Attention:  Chairman

<PAGE>

                                                                             12.

or at such other address as the parties to whom such written notice is to be
given shall have last notified to the party giving the same in the manner
provided in this section. Any notice delivered to the party to whom it is
addressed as hereinbefore provided shall be deemed to have been given and
received on the day it is so personally delivered at such address or if sent by
registered mail on the 3rd business day after the date of mailing.

9.7     PRIOR AGREEMENTS

This Agreement constitutes the entire agreement between the parties hereto with
respect to the employment of the Executive and any and all previous agreements,
or arrangements, written or oral, express or implied, between the parties hereto
or on their behalf relating to the employment of the Executive by the
Corporation or any of its affiliates are hereby terminated and cancelled and
each of the parties hereto hereby releases and forever discharges the other of
them from all manner of actions, causes of action, claims and demands whatsoever
under or in respect of any such prior agreements or arrangements.

9.8     AMENDMENTS AND WAIVERS

No amendments to this Agreement shall be valid or binding unless set forth in
writing and duly executed by the parties hereto. No waiver of any breach of any
term or provision of this Agreement shall be effective or binding unless made in
writing and signed by the party purporting to give the same and, unless
otherwise provided in the written waiver, shall be limited to the specific
breach waived.

9.9     AFFILIATE

In this Agreement any reference to an affiliate of the Corporation means a
corporation which is an affiliate within the meaning of the Business
Corporations Act (Ontario).

<PAGE>

                                                                             13.

9.10    ASSIGNMENT

The benefits and obligations of this Agreement may not be assigned by either
party to any other person except as provided herein. The Corporation may assign
this Agreement to any successor corporation, whether a successor by way of sale,
amalgamation merger or reorganization. This Agreement shall enure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns, including, in the case of the Executive, his heirs, executors and
administrators.

        IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto

                                             BREAKWATER RESOURCES LTD.

                                                  "Garth A.C. MacRae" (signed)

                                             By:
                                                  ------------------------------
                                                  Authorized officer

                                                  "Donald K. Charter" (signed)

                                             By:
                                                  ------------------------------
                                                  Authorized officer

SIGNED, SEALED AND                        )
DELIVERED in the presence of:             )
                                          )
                                          )
"Richelle Plantinga" (signed)             ) "Colin K. Benner" (signed)
----------------------------------------- ) ------------------------------------
                                          ) COLIN K. BENNER
                                          )