Document:

EX-10.4

 Exhibit 10.4 

EMPLOYMENT AGREEMENT 
 THIS
AGREEMENT dated for reference the 12th day of August , 2013. 
 BETWEEN: 

MERCER INTERNATIONAL INC., a corporation organized under the laws of the State of Washington
and having an office at Suite 1120, 700 West Pender Street, Vancouver, BC V6C 1G8 
 (hereinafter
referred to as the “Corporation”) 
 OF THE FIRST PART 

AND: 

DAVID URE 

(hereinafter referred to as the “Executive”) 

OF THE SECOND PART 

(the Corporation and the Executive being hereinafter singularly also referred to as a “Party” and
collectively referred to as the “Parties” as the context so requires) 
 WHEREAS: 

 

	A.	 The Corporation is engaged in the business (the “Business”) of producing pulp and generating and selling surplus “green” energy
to regional utilities through the operations of its three NBSK pulp mills, two of which are located in Germany and one in Western Canada, which have a consolidated annual production capacity of approximately 1.5 million ADMTs of NBSK pulp and
300 MW of electrical generation; 

  

	B.	 The Corporation recognizes that the Executive has acquired special skills and experience in the pulp industry and desires to employ the Executive
as the Senior Vice President, Finance of the Corporation as of the Effective Date; and 

  

	C.	 Both the Corporation and the Executive wish formally to agree to the terms and conditions of the Executive’s employment with the Corporation
and the terms and conditions that will, in certain circumstances hereinafter set forth, govern in the event of a termination of the employment of the Executive by the Corporation. 

NOW THEREFORE in consideration of the premises hereof and of the mutual covenants and agreements hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby covenant and agree as follows: 

 ARTICLE I 

RECITALS 
  

	1.1	 Recitals. The parties hereby represent and warrant that the above recitals are true and correct. 

ARTICLE II 

INTERPRETATION 
  

	2.1	 Headings. The headings of the Articles, Sections and subsections herein are inserted for convenience of reference only and shall not affect
the meaning or construction hereof. 

  

	2.2	 Definitions. For the purposes of this Agreement, the following terms shall have the following meanings, respectively: 

 

	 	(a)	 “Accrued Benefits” has the meaning ascribed to such term in Section 4.1(b)(iv) hereof; 

 

	 	(b)	 “Agreement” means this Employment Agreement and all schedules and amendments hereto; 

 

	 	(c)	 “Annual Bonus” has the meaning ascribed to such term in Section 3.6(a) hereof; 

 

	 	(d)	 “Base Salary” has the meaning ascribed to such term in Section 3.6(a) hereof; 

 

	 	(e)	 “Board” means the board of Directors of the Corporation; 

 

	 	(f)	 “Business” has the meaning ascribed to such term in the recitals. 

 

	 	(g)	 “Change of Control” means the occurrence of any of the following events: 

 

	 	(i)	 The receipt by the Corporation of a Schedule 13D or other statement filed under Section 13(d) of the Exchange Act indicating that any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act): (a) has become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 50% of the Common Shares; or (b) has sole and/or shared voting, or dispositive, power over more than 50% of the Common Shares; or 

  
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	 	(ii)	 A change in the composition of the Board occurring within a two-year period prior to such change, as a result of which fewer than a majority of the
Directors are Incumbent Directors. “Incumbent Directors” shall mean Directors who are either: (a) Directors of the Corporation as of the Effective Date; or (b) elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the Directors who had been Directors two (2) years prior to such change and who were still in office at the time of such election or nomination; or 

 

	 	(iii)	 The consummation of a merger, amalgamation or consolidation of the Corporation with or into another entity or any other corporate reorganization,
if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, amalgamation, consolidation or reorganization are owned by persons who were not shareholders of the
Corporation immediately prior to such merger, amalgamation, consolidation or reorganization; or 

  

	 	(iv)	 The consummation of a sale, transfer or disposition by the Corporation of all or substantially all of the assets of the Corporation; or

  

	 	(v)	 The commencement of any proceeding by or against the Corporation seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of the Corporation or its debts, under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or for the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property; or 

 

	 	(vi)	 The approval by the shareholders of the Corporation of a plan of complete liquidation or dissolution of the Corporation. 

Notwithstanding the foregoing, in the case of the occurrence of any of the events set forth in subsection 2.2(g)(i) –
(iv), a Change of Control shall not be deemed to occur unless such transaction constitutes a change in ownership of the Corporation or a change in effective control of the Corporation, and in the case of the occurrence of any of the events set forth
in subsection 2.2(g)(v), a Change of Control shall be deemed to occur immediately prior to the occurrence of any such events. An event shall not constitute a Change of Control if its sole purpose is to change the jurisdiction of the
Corporation’s organization or to create a holding company, partnership or trust that will be owned in substantially the same proportions by the persons who held the Corporation’s securities immediately before such event. Additionally, a
Change of Control will not be deemed to have occurred, with respect to the Executive, if the Executive is part of a purchasing group that consummates the Change of Control event; 

  
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	 	(h)	 “Common Shares” means the issued and outstanding shares of common stock of the Corporation; 

 

	 	(i)	 “Compensation Committee” means the independent committee of the Board, consisting of two or more Directors not employed by the
Corporation and each of whom is a Disinterested Director (as defined in the Incentive Plan), which is responsible for making any and all decisions to grant awards under the Incentive Plan to officers of the Corporation, and in the event the
Corporation does not have a Compensation Committee all references herein to Compensation Committee shall be deemed to refer to the Board as a whole; 

  

	 	(j)	 “Competing Business” has the meaning ascribed thereto in Section 6.1(a) hereof. 

 

	 	(k)	 “Confidential Information” has the meaning ascribed thereto in Section 5.1(a) hereof. 

 

	 	(l)	 “Date of Termination” means the date of termination of the Executive’s employment with the Corporation; 

 

	 	(m)	 “Directors” means the directors of the Corporation, and “Director” means any one of them. 

 

	 	(n)	 “Disability” shall mean the Executive’s failure to substantially perform his duties for the Corporation on a full-time basis for six
(6) consecutive months, or for an aggregate of a six (6) month period within any consecutive twelve (12) months, as a result of physical or mental incapacity; provided however, in the event the Corporation temporarily replaces the
Executive, or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability to perform such duties due to physical or mental incapacity which is, or is reasonably expected to become, a
Disability, then the Executive’s employment shall not be deemed terminated by the Corporation and the Executive shall not be able to resign with Good Reason as a result thereof; 

 

	 	(o)	 “Disability Termination” has the meaning ascribed thereto in Section 4.1 hereof; 

 

	 	(p)	 “Effective Date” means the later of the date first above written or the date the Executive commences employment with the Corporation
pursuant to the terms hereof; 

  

	 	(q)	 “Exchange Act” means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, as the same may be
amended, modified or restated and any successor or replacement thereto; 

  
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	 	(r)	 “Good Reason” means, without the written consent of the Executive, the occurrence of any of the following events: 

 

	 	(i)	 Any material reduction or diminution (except temporarily during any period of physical or mental incapacity or disability of the Executive) in the
Executive’s titles, status or positions, any material reduction or diminution in the Executive’s authority, duties or responsibilities with the Corporation (including any position or duties as a Director of the Corporation and the failure
to re-elect the Executive as a Director and to the Board); 

  

	 	(ii)	 A breach by the Corporation of any material provision of this Agreement, including, but not limited to, a breach of the obligations of the
Corporation under Sections 3.6, 9.1 and 10.7 (other than a general reduction in the Executive’s Base Salary that affects all similarly situated senior officers of the Corporation in substantially the same proportions) or any failure to timely
pay any part of the Executive’s compensation hereunder, including, without limitation, the Executive’s Base Salary, Annual Bonus and any other bonuses payable to him or to materially provide, in the aggregate, the level of benefits
contemplated herein; 

  

	 	(iii)	 The failure of the Corporation to obtain and deliver to the Executive a written agreement, in the form satisfactory to the Executive acting
reasonably, to be entered into with any successor, assignee or transferee of the Corporation to assume and agree to perform this Agreement in accordance with Section 6.10 hereof, other than in the case of a Permitted Assignment; and

  

	 	(iv)	 Any failure by the Corporation to provide the Executive with the number of paid vacation days to which he is entitled, as set forth herein;

 provided that, “Good Reason” shall only be deemed to have occurred if, no later than
thirty (30) days following the initial existence of the circumstances providing grounds for termination for Good Reason, the Executive provides a written notice to the Corporation containing reasonable details of such circumstances and within
thirty (30) days following the delivery of such notice to the Corporation, the Corporation has failed to cure such circumstances; 
  

	 	(s)	 “Incumbent Directors” has the meaning ascribed thereto in Section 2.2(g)(ii); 

 

	 	(t)	 “Incentive Plan” means the 2010 Stock Incentive Plan of the Corporation, as the same may be amended, modified or restated and any
replacement or successor thereto; 

  
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	 	(u)	 “Intellectual Property Rights” has the meaning ascribed thereto in Section 7.2 hereof. 

 

	 	(v)	 “Inventions” has the meaning ascribed thereto in Section 7.1 hereof. 

 

	 	(w)	 “Just Cause” has the meaning commonly ascribed to the phrase “cause” or “just cause” for termination at common law
and, without limiting the foregoing, includes the occurrence of any of the following events: 

  

	 	(i)	 Serious misconduct or default of the Executive directly related to the performance of his duties for the Corporation which results from a willful
act or omission or from gross negligence and which is materially injurious to the operations, financial condition or business reputation of the Corporation; 

  

	 	(ii)	 Failure by the Executive to comply with any valid and legal directive of the Board; 

 

	 	(iii)	 Failure and continued failure by the Executive to substantially perform his duties under this Agreement (other than any such failure resulting from
his incapacity due to physical or mental disability or impairment); 

  

	 	(iv)	 Violation by the Executive of a material policy of the Corporation; 

 

	 	(v)	 The Executive’s embezzlement, misappropriation or fraud, whether or not related to the Executive’s employment with the Company;

  

	 	(vi)	 Theft, fraud, dishonesty or misconduct of the Executive involving the property, business or affairs of the Corporation or in the carrying out of
the duties of his employment; 

  

	 	(vii)	 Any material failure by the Executive to comply with the Corporation’s written policies or rules, as they may be in effect from time to time
during the Term; or 

  

	 	(viii)	 Any other material breach of this Agreement by the Executive. 

For purposes of this Agreement, no act, or failure to act, by the Executive shall be “willful” unless it is done, or
omitted to be done, in bad faith and without a reasonable belief that the act or omission was in the best interests of the Corporation; 
  

	 	(x)	 “Party” has the meaning ascribed to such term in the recitals hereto; 

 

	 	(y)	 “Permitted Assignment” means an assignment by the Corporation of the rights and obligations of the Corporation contained in this
Agreement to a wholly-owned subsidiary of the Corporation, provided that the Corporation is not, as a result of such assignment, relieved of its liabilities, obligations and duties under this Agreement; 

  
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	 	(z)	 “Prime Rate” means the rate of interest expressed as a rate per annum that the Royal Bank of Canada, at its main branch in Vancouver,
British Columbia, establishes and announces from time to time as the reference rate of interest that it will charge for Canadian dollar demand loans to its customers in Canada and which it refers to as its “prime rate”;

  

	 	(aa)	 “Prorated Bonus” has the meaning ascribed to such term in Section 4.1(c) hereof; and 

 

	 	(bb)	 “Statements” has the meaning ascribed thereto in Section 6.2 hereof. 

ARTICLE III 
 TERMS AND
CONDITIONS OF EMPLOYMENT 
  

	3.1	 Employment. The Corporation does hereby employ the Executive as its Senior Vice President, Finance, and the Executive hereby accepts such
employment by the Corporation, as of the Effective Date, all upon and subject to the terms and conditions of this Agreement. The Executive agrees to serve, at no additional remuneration, in such other executive capacities and to assume such
responsibilities and perform such duties consonant with his position as an executive of the Corporation as the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Corporation may require and assign to
him from time to time, including with subsidiaries of the Corporation. 

  

	3.2	 Duties and Functions. The Executive shall be responsible to and shall report to the CEO and the CFO of the Corporation. The CEO and CFO may
vary the conditions, duties and services provided by the Executive from time to time according to the operational and other needs of the business of the Corporation, provided that his duties will reasonably reflect the responsibilities conferred by
this Agreement. The Corporation expects the Executive to produce timely and good quality work, acting in a competent, truthworthy and loyal manner. The Executive agrees to carryout, using his reasonable best efforts and in a manner that will promote
the interests of the business of the Corporation, such duties and functions as the CEO and CFO may request from time to time, including, but not limited to, the duties and functions set forth in Schedule “A” hereto. 

 

	3.3	 Orders of Board. The Executive shall always act in accordance with any reasonable decision of and obey and carry out all lawful and
reasonable orders given to him by the CEO, the CFO and/or the Board. 

  

	3.4	 Time and Energy. Unless prevented by ill health, or physical or mental disability or impairment, the Executive shall, during the term
hereof, devote substantially all of his business time, care and attention to the business of the Corporation in order to properly discharge his duties hereunder and shall not, without the prior written consent of the Board, which may be withheld by
the Board in its discretion, engage in any other business, profession or occupation, or become an officer, director, employee, contractor for service, agent or representative of any other corporation, partnership, firm, person, organization or
enterprise. 

  
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	3.5	 Faithful Service; Conflict of Interest. The Executive shall well and faithfully serve the Corporation and use his reasonable efforts to
promote the interests thereof and shall not use for his own purposes, or for any purposes other than those of the Corporation, any non-public information he may acquire with respect to the business, affairs and operations of the Corporation. The
Executive will refrain from any situation in which the Executive’s personal interests conflicts, or may appear to conflict, with the executive’s duties with the Corporation. The Executive acknowledges that in case of any doubt in this
respect, the Executive will inform the Board and obtain written authorization. 

  

	3.6	 Compensation. During the term of this Agreement, and any extension thereof, the Corporation shall pay and provide the Executive the
following: 

  

	 	(a)	 Base Salary. As compensation for his services to the Corporation, the Executive shall receive a base salary (the “Base Salary”)
and in addition to the Base Salary shall be eligible to receive in respect of each calendar year (or portion thereof) additional variable cash compensation, in an amount determined in accordance with any bonus, profit sharing or short term incentive
compensation program which may be established by the Board either for the Executive or for senior officers of the Corporation (the “Annual Bonus”). As of the Effective Date, the Executive’s annualized Base Salary shall be $275,000.
During the term of this Agreement the Board shall review the Executive’s Base Salary and Annual Bonus then in effect at least annually to ensure that such amounts are competitive with awards granted to similarly situated executives of publicly
held companies comparable to the Corporation and shall increase such amounts as the Board may approve. The Board shall not reduce the Executive’s Base Salary except as set forth herein. The Board may reduce the Executive’s Base Salary
provided such reduction in the Executive’s Base Salary does not exceed an aggregate total of ten percent (10%) of the Executive’s Base Salary in effect as of the Effective Date and which reduction applies, in equal percentages, to all
senior officers of the Corporation. The Executive’s Base Salary and Annual Bonus shall be payable in accordance with the Corporation’s normal payroll practices or on such other basis as mutually agreed between the Corporation and the
Executive and shall be subject to deductions in respect of statutory remittances, including, without limitation, deductions for income tax, pension plan premiums and employment insurance premiums. The Base Salary may be increased from time to time
in the sole discretion of the Board or Compensation Committee. 

  

	 	(b)	 Incentive Plan. The Executive shall be entitled to participate in the Incentive Plan in accordance with the terms thereof as in effect from
time to time. The Corporation agrees to grant to the Executive awards under the Incentive Plan in such amount as determined by the Compensation Committee based on and commensurate with the Executive’s performance and position with the
Corporation. 

  
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	 	(c)	 Employee Benefits. The Executive shall, to the extent eligible, be entitled to participate at a level commensurate with his position in all
of the Corporation’s employee benefit, welfare and retirement plans and programs, as well as equity plans, employee incentive plans and bonus plans, provided by the Corporation to its senior officers in accordance with the terms thereof as in
effect from time to time. The Corporation reserves the right to amend or cancel any such plans at any time in its sole discretion, subject to the terms of such plans and applicable law. 

 

	 	(d)	 Automobile. The Executive shall be entitled to the lease and use of an automobile pursuant to the Corporation’s policy on automobiles
for executives as may be in effect from time to time. 

  

	 	(e)	 Fringe Benefits and Perquisites. The Executive shall be entitled to participate in any fringe benefits or perquisites which other senior
officers of the Corporation are entitled to receive, subject to the terms and conditions of such fringe benefits or perquisites. 

  

	 	(f)	 Business and Entertainment Expenses. Upon submission of appropriate documentation in accordance with its policies in effect from time to
time, the Corporation shall pay or reimburse the Executive for all reasonable business expenses which the Executive incurs in the performance of his duties under this Agreement, including, but not limited to, travel, entertainment, professional dues
and subscriptions, and all dues, fees, and expenses associated with membership in various professional, business, and civic associations and societies in which the Executive participates in accordance with the Corporation’s policies in effect
from time to time. 

  

	 	(g)	 Vacation. The Executive is entitled to twenty (20) days of paid vacation per year, prorated for any partial year of employment. The
timing of the vacation will be subject to the Corporation’s business needs at the time. 

  

	3.7	 Term. Subject to the terms of Article IV hereof, this Agreement shall remain in effect for a period of twenty-four (24) months from the
Effective Date. In the event that the Corporation does not deliver written notice to the Executive, not later than twelve (12) months prior to the expiration of the original term, that the Corporation does not wish to renew this Agreement, the
term hereof shall renew automatically for an additional period of twelve (12) months from the expiration of the original term. Thereafter, it shall automatically renew for successive periods of twelve (12) months unless the Corporation
provides written notice to the Executive that it does not wish to renew the term of this Agreement at least 360 days prior to the expiry of the applicable term hereof. 

  
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	3.8	 Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or
any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Corporation which is subject to recovery under any law, government regulation or stock exchange listing
requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Corporation and pursuant to any such law,
government regulation or stock exchange listing requirement). 

 ARTICLE IV 

OBLIGATIONS OF THE CORPORATION UPON TERMINATION 
  

	4.1	 Death or Disability. The Corporation may terminate the Executive’s employment in the event the Executive has been unable to perform his
material duties hereunder because of Disability by giving the Executive notice of such termination while such Disability continues (a “Disability Termination”), which shall set forth the Date of Termination. The Executive’s employment
shall automatically terminate on the Executive’s death, which shall be the Date of Termination for purposes of this Agreement. In the event the Executive’s employment with the Corporation terminates during the Term by reason of the
Executive’s death or as a result of a Disability Termination, then upon and immediately effective on the Date of Termination: 

  

	 	(a)	 notwithstanding the terms of the Incentive Plan or any applicable award agreements, all outstanding unvested options or equity awards granted by
the Corporation to the Executive during the Term shall become fully and immediately exercisable; 

  

	 	(b)	 the Corporation shall promptly pay and provide the Executive (or in the event of the Executive’s death, the Executive’s estate):

  

	 	(i)	 any unpaid Base Salary and any outstanding and accrued regular and special vacation pay through the Date of Termination; 

 

	 	(ii)	 any unpaid Annual Bonus and other bonuses accrued with respect to the fiscal year ending on or preceding the Date of Termination;

  

	 	(iii)	 reimbursement for any unreimbursed expenses incurred through to the Date of Termination; 

 

	 	(iv)	 all other payments, benefits or fringe benefits to which the Executive may be entitled subject to and in accordance with the terms of any
applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant, and amounts which may become due under this Agreement (the payments referred to herein in subsections 4.1(b)(i) to 4.1(b)(iv) shall,
collectively, be referred to as “Accrued Benefits”); and 

  
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	 	(v)	 any unpaid amounts payable under the Incentive Plan with respect to the fiscal year ending on or preceding the Date of Termination; and

  

	 	(c)	 the Corporation shall pay to the Executive (or in the event of the Executive’s death, the Executive’s estate) at the time other senior
executives are paid under any cash bonus or short term incentive plan, a pro rata Annual Bonus equal to the amount the Executive would have received if his employment continued (without any discretionary cutback) multiplied by a fraction
where the numerator is the number of days in each respective bonus period prior to the Executive’s termination and the denominator is the number of days in the bonus period (the “Prorated Bonus”). 

 

	4.2	 Termination for Just Cause. The Corporation may immediately terminate this Agreement and the Executive’s employment with the
Corporation at any time for Just Cause, without notice or pay in lieu of notice of any other form of compensation, severance pay or damages. In the event that the Executive’s employment with the Corporation is terminated during the term of this
Agreement by the Corporation for Just Cause, the Executive shall not be entitled to any additional payments or benefits hereunder (including, without limitation, any payments under the Incentive Plan), other than the Accrued Benefits (including, but
not limited to, any then vested options or equity grants granted by the Corporation to the Executive) and the Prorated Bonus which the Corporation shall pay or provide to the Executive immediately upon the Date of Termination. 

 

	4.3	 Termination by Executive for Good Reason; Termination by Corporation Other Than for Just Cause. The Executive may terminate his employment
with the Corporation for Good Reason at any time within ninety (90) days after the initial existence of the circumstances providing grounds for Good Reason by written notice to the Corporation. If the Executive does not terminate his employment
for Good Reason within ninety (90) days after initial occurrence of the applicable grounds, then the Executive shall be deemed to have waived his right to terminate for Good Reason with respect to such grounds. If the Executive terminates his
employment with the Corporation for “Good Reason” or the Executive is terminated by the Corporation other than for “Just Cause”, then the Corporation shall pay or provide the Executive with the following: 

 

	 	(a)	 any Accrued Benefits; 

  

	 	(b)	 any unpaid amounts payable under the Incentive Plan with respect to the fiscal year ending on or preceding the Date of Termination;

  

	 	(c)	 subject to (d) below, a severance amount equal to one (1) times the sum of: (A) the Executive’s then Base Salary; and
(B) the higher of (x) the Executive’s then current Annual Bonus and (y) the highest variable pay and average incentive bonus over the last two (2) years received by the Executive from the Corporation for the two
(2) fiscal years last ending prior to such termination, which severance amount is payable in substantially equal installments over twelve (12) months in accordance with the Corporation’s standard payroll practice; provided, however,
that in the event of a Change of Control following such termination, the unpaid portion of such severance amount, if any, shall be paid to the Executive in full in a single lump sum cash payment immediately following such Change of Control;

  
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	 	(d)	 if such termination occurs in contemplation of, at the time of, or within twelve (12) months after a Change of Control, the Executive shall
instead be entitled to a lump sum cash payment immediately following such termination equal to one and a half (1.5) times the sum of: (A) the Executive’s then Base Salary; and (B) the higher of (x) the Executive’s
then current Annual Bonus and (y) the highest variable pay and average incentive bonus over the last two (2) years received by the Executive for the two (2) fiscal years last ending prior to such termination; and

  

	 	(e)	 notwithstanding the terms of the Incentive Plan or any applicable award agreements, all unvested options or equity awards granted by the
Corporation to the Executive during the Term shall become fully and immediately exercisable on the Date of Termination. 

For greater certainty, if such termination occurs in contemplation of, at the time of, or within twelve (12) months after
a Change of Control, the Executive shall be entitled to the payments set out in Subsection 4.3(d) hereof and will not be entitled to any payments or other amounts under Subsection 4.3(c) hereof and any amounts paid by the Corporation to the
Executive pursuant to Subsection 4.3(c) shall be set off from and credited as payments made by the Corporation to the Executive pursuant to Subsection 4.3(d) hereof. 
  

	4.4	 Termination by Executive Without Good Reason. The Executive may terminate his employment at any time without Good Reason by not less than
ninety (90) days’ written notice to the Corporation, which the Corporation may waive in whole or in part. In the event that the Executive’s employment with the Corporation is terminated during the term of this Agreement by the
Executive without Good Reason, the Executive shall not be entitled to any additional payments or benefits hereunder (including, without limitation, any payments under the Incentive Plan), other than Accrued Benefits (including, but not limited to,
any then vested options or equity grants granted by the Corporation to the Executive) and the Prorated Bonus, in each case earned by the Executive up to the Date of Termination and all of which the Corporation shall pay or provide to the Executive
immediately upon the Date of Termination. 

  

	4.5	 Change of Control Vesting Acceleration. Notwithstanding the terms of the Incentive Plan or any applicable award agreements, in the event of
a “Change of Control”, immediately effective the date of such Change of Control, all unvested options or equity awards granted by the Corporation to the Executive during the Term shall become fully and immediately exercisable.

  
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	4.6	 Executive to Provide Release. Subject to the Corporation’s making the payments under Sections 4.1 or 4.3 herein, the Executive or his
estate, as applicable, shall execute and deliver to the Corporation a full and final release of the Corporation, in the form provided by the Corporation, in respect of the Executive’s employment under this Agreement and otherwise.

  

	4.7	 Return of Property. All documents and materials in any form or medium and including, but not limited to, files, forms, brochures, books,
correspondence, memoranda, manuals and lists, money, securities and all other similar items pertaining to the business of the Corporation that may come into the possession and control of the Executive, will at all times remain the property of the
Corporation and, on termination of the Executive’s employment for any reason, the Executive will promptly deliver to the Corporation all property of the Corporation in possession of the Executive or directly or indirectly under the control of
the Executive. 

 ARTICLE V 

CONFIDENTIALITY 
  

	5.1	 The Executive acknowledges that: 

  

	 	(a)	 the Executive may, during the course of employment with the Corporation, acquire information which is confidential in nature or of great value to
the Corporation and its subsidiaries including, without limitation, matters or subjects concerning corporate assets, cost and pricing data, customer listing, financial reports, formulae, inventions, know-how, marketing strategies, products or
devices, profit plans, research and development projects and findings, computer programs, suppliers, and trade secrets, whether in the form of records, files, correspondence, notes, data, information, or any other form, including copies or excerpts
thereof (collectively, the “Confidential Information”); the disclosure of any of which to competitors, customers, clients or suppliers of the Corporation, unauthorized personnel of the Corporation or to third parties would be highly
detrimental to the best interests of the Corporation; and 

  

	 	(b)	 the right to maintain the confidentiality of Confidential Information, and the right to preserve the Corporation’s goodwill, constitute
proprietary rights which the Corporation is entitled to protect. 

  

	5.2	 The Executive will, while employed with the Corporation and at all times thereafter: 

 

	 	(a)	 hold all Confidential Information that the Executive receives in trust for the sole benefit of the Corporation and in strictest confidence;

  

	 	(b)	 protect all Confidential Information from disclosure and will not take any action that could reasonably be expected to result in any Confidential
Information losing its character as Confidential Information, and will take all lawful action necessary to prevent any Confidential Information from losing its status as Confidential Information; and 

  
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	 	(c)	 neither, except as required in the course of performing duties and responsibilities under this Agreement, directly or indirectly use, publish,
disseminate or otherwise disclose any Confidential Information to any unauthorized personnel of the Corporation or to any third party, nor use Confidential Information for any purpose other than the purposes of the Corporation, without the prior
written consent of the Corporation, which consent may be withheld in the Corporation’s sole and absolute discretion. 

  

	5.3	 The restrictions on the Executive’s use or disclosure of all Confidential Information, as set forth in this Article V, shall continue
following the expiration or termination of the Executive’s employment with the Corporation regardless of the reasons for or manner of such termination. 

  

	5.4	 Notwithstanding Section 5.2 herein, the Executive may, if and solely to the extent required by lawful subpoena or other lawful process,
disclose Confidential Information but, to the extent possible, shall first notify the Corporation of each such requirement so that the Corporation may seek an appropriate protective order or waive compliance with the provisions of this Agreement.
The Executive will co-operate fully with the Corporation at the expense of the Corporation in seeking any such protective order. 

ARTICLE VI 

NON-COMPETITION, NON-SOLICITATION AND NON-DISPARAGEMENT 
  

	6.1	 Non-Competition and Non-Solicitation. 

  

	 	(a)	 In this Agreement, “Competing Business” means the business activity the same as or in direct competition with the Business carried on by
the Corporation or its subsidiaries as of the date of the Executive’s termination of employment with the Corporation. 

  

	 	(b)	 The Executive covenants that for a period of twelve (12) months following the Date of Termination for any reason, including his resignation,
the Executive will not do any of the following, directly or indirectly, whether individually or in conjunction with any other person or entity: 

  

	 	1.	 Influence or attempt to influence, or solicit, any employee, consultant, supplier, contractor, agent, strategic partner, distributor, customer or
other person to terminate or modify any written or oral agreement, arrangement or course of dealing with the Corporation or its subsidiaries; or 

  
 14 

	 	2.	 Solicit for employment, employ or retain (or arrange to have any other person or entity employ or retain) any person who is at such time employed
or retained by the Corporation or its subsidiaries or has been employed or retained by the Corporation or its subsidiaries within the preceding twelve (12) months. 

 

	 	(c)	 The Executive acknowledges that the Corporation competes on a worldwide basis and that the geographical scope of the limitations in
Section 6.1 above are reasonable and necessary for the protection of the Corporation’s trade secrets, business interests, and other Confidential Information. The Executive confirms that the obligations in Section 6.1 above are
reasonably necessary for the protection of the Corporation and its shareholders and, given the Executive’s knowledge and experience, will not prevent the Executive from being gainfully employed. 

 

	6.2	 Non-Disparagement. The Executive undertakes and covenants that he will permanently refrain from directly or indirectly disclosing,
expressing, publishing or broadcasting, or causing to be disclosed, expressed, published or broadcast, or otherwise disseminated or distributed in any manner, in his own name, anonymously, by pseudonym or by a third party, to any person whatsoever,
any comments, statements or other communications (the “Statements”), which a reasonable person would regard as reflecting adversely on the character, reputation or goodwill of the Corporation or any of its subsidiaries or any of its or
their employees, officers, directors, investors, shareholders or agents, or which a reasonable person would regard as reflecting adversely on their publications, products, or services, and without limiting the generality of the foregoing, such
Statements shall not be made by means of oral communications, press releases, articles, letters, telephone calls, telephone messages, e-mail messages, or in postings on the Internet on websites, or to newsgroups or to listservers.

 ARTICLE VII 

OWNERSHIP OF INTELLECTUAL PROPERTY 
  

	7.1	 Definitions. In this Agreement, “Inventions” means, collectively, all: 

 

	 	(a)	 discoveries, inventions, ideas, suggestions, reports, documents, designs, technology, methodologies, compilations, concepts, procedures, processes,
products, protocols, treatments, methods, tests, improvements, work product and computer programs (including all source code, object code, compilers, libraries and developer tools, and any manuals, descriptions, data files, resource files and other
such materials relating thereto), and 

  

	 	(b)	 each and every part of the foregoing; 

that are conceived, developed, reduced to practice or otherwise made by the Executive either alone or with others or, in any
way, relate to the present or proposed programs, services, products or business of the Corporation, or to tasks assigned to the Executive in connection with the Executive’s duties or in connection with any research or development carried on or
planned by the Corporation, whether or not such Inventions are conceived, developed, reduced to practice or otherwise made during the Executive’s employment or during regular working hours and whether or not the Executive is specifically
instructed to conceive, develop, reduce to practice or otherwise make same. 

  
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	7.2	 Exclusive Property. The Executive agrees that all Inventions, and any and all services and products which embody, emulate or employ any such
Invention, shall be the sole property of the Corporation and all copyrights, patents, patent rights, trademarks, service marks, reproduction rights and all other proprietary title, rights and interest in and to each such Invention, whether or not
registrable (collectively, the “Intellectual Property Rights”), shall belong exclusively to the Corporation. 

  

	7.3	 Work for Hire. For purposes of all applicable copyright laws to the extent, if any, that such laws are applicable to any such Invention or
any such service or product, it shall be considered a work made for hire and the Corporation shall be considered the author thereof. 

  

	7.4	 Disclosure. The Executive will promptly disclose to the Corporation, or any persons designated by it, all Inventions and all such services
or products. 

  

	7.5	 Assignment. The Executive hereby assigns and further agrees to, from time to time as such Inventions arise, assign to the Corporation or its
nominee (or their respective successors or assigns) all of the Executive’s right, title and interest in and to the Inventions and the Intellectual Property Rights without further payment by the Corporation. 

 

	7.6	 Moral Rights. The Executive hereby waives and further agrees to, from time to time as such Inventions arise, waive for the benefit of the
Corporation and its successors or assigns all the Executive‘s moral rights in respect of the Inventions. 

  

	7.7	 Further Assistance. The Executive agrees to assist the Corporation in every proper way (but at the Corporation’s expense) to obtain
and, from time to time, enforce the Intellectual Property Rights and to the Inventions in any and all countries, and to that end will execute all documents for use in applying for, obtaining and enforcing the Intellectual Property Rights in and to
such Inventions as the Corporation may desire, together with any assignments of such Inventions to the Corporation or persons designated by it. The Executive’s obligation to assist the Corporation in obtaining and enforcing such Intellectual
Property Rights in any and all countries shall continue beyond the termination of this Agreement. 

  

	7.8	 Representations and Warranties. The Executive hereby represents and warrants that the Executive is subject to no contractual or other
restriction or obligation that will in any manner limit the Executive’s obligations under this Agreement or activities on behalf of the Corporation. The Executive hereby represents and warrants to the Corporation that the Executive has no
continuing obligations to any person (a) with respect to any previous invention, discovery or other item of intellectual property or (b) that require the Executive not to disclose the same. 

  
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 ARTICLE VIII 

ENFORCEMENT 
  

	8.1	 Enforcement. The Executive acknowledges and agrees that the covenants and obligations under Articles V, VI and VII are reasonable, necessary
and fundamental to the protection of the Corporation’s business interests, and the Executive acknowledges and agrees that any breach of these Articles by the Executive would result in irreparable harm to the Corporation and loss and damage to
the Corporation for which the Corporation could not be adequately compensated by an award of monetary damages. Accordingly, the Executive agrees that, in the event the Executive violates any of the restrictions referred to in Articles V, VI and VII,
the Corporation shall suffer irreparable harm and shall be entitled to preliminary and permanent injunctive relief and any other remedies in law or in equity which the court deems fit. 

ARTICLE IX 

INDEMNIFICATION 
  

	9.1	 Indemnification. In the event that the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative of any nature whatsoever (a “Proceeding”), other than any Proceeding initiated by the Executive or the Corporation related to any contest or dispute between the Executive and the
Corporation or any of its subsidiaries or affiliates with respect to this Agreement or the Executive’s employment hereunder, by reason of, or as a result of, the fact that the Executive is or was an officer, employee, Director or agent of the
Corporation, or any subsidiary or affiliate of the Corporation, or is or was serving at the request of the Corporation as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as an officer, employee, Director or agent of the Corporation, the
Executive shall be indemnified and held harmless by the Corporation to the fullest extent legally permitted or authorized by the Corporation’s constating documents or, if greater, by applicable federal, state or provincial legislation, against
all costs, expenses, liability and losses of any nature whatsoever (including, without limitation, attorney’s fees, judgments, fines, interest, taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by
the Executive in connection therewith (collectively, the “Indemnification Amounts”), and such indemnification shall continue as to the Executive even if he has ceased to be an officer, director, employee, Director or agent of the
Corporation or other entity and shall inure to the benefit of the Executive’s heirs, executors and administrators. 

  
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 ARTICLE X 

ARBITRATION 
  

	10.1	 Arbitration. Except as otherwise specifically provided by this Agreement, all disputes or differences arising out of or in connection with
this Agreement, or in respect of any legal relationship associated therewith or derived therefrom, including but not limited to disputes or differences relating to the terms or termination of the Executive’s employment, shall be referred to and
finally resolved by arbitration in the City of Vancouver, or any other mutually agreeable location, by the British Columbia International Commercial Arbitration Centre in accordance with its rules. The Arbitrator shall have the power to order costs
in favour of the successful party. The Corporation or the Executive may, without waiving their respective rights to compel arbitration, seek injunctive or other provisional relief from a court of competent jurisdiction in aid of arbitration to
prevent any arbitration award from being rendered ineffectual, to enforce the covenants and obligations under Articles V, VI and VII hereof, and for any other purposes in the interests of the Corporation or the Executive. 

ARTICLE XI 
 GENERAL

  

	11.1	 Resignation of Positions. The Executive agrees that after termination of his employment with the Corporation he will tender his resignation
from any position he may hold as an officer or Director of the Corporation or any of its affiliated or associated companies if so requested by the Board. 

  

	11.2	 Withholding. The Corporation shall have the right to withhold from any amount payable hereunder any federal, provincial and local taxes in
order for the Corporation to satisfy any withholding tax obligation it may have under any applicable law or regulation. 

  

	11.3	 Rights and Obligations Survive. The respective rights and obligations of the parties hereunder shall survive any termination of the
Executive’s employment to the extent necessary to preserve such rights and obligations. For greater certainty, notwithstanding anything to the contrary in this Agreement, the parties hereto acknowledge and agree that Sections 4.1, 4.2,
4.3, 4.5, 4.6, 5.1, 5.2, 5.3, 6.1, 6.2, 7.1, 7.2, 7.3, 7.5, 7.6, 7.7, 9.1, 11.3, 11.5, 11.7, 11.8, 11.14, 11.15 and 11.17 shall survive the termination of the Executive’s employment with the Corporation and remain in full force and effect.

  

	11.4	 Beneficiaries. The Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following the Executive’s death by giving the Corporation written notice thereof. In the event of the Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. 

  

	11.5	 Independent Legal Advice. The Executive hereby represents and warrants to the Corporation and acknowledges and agrees that he had the
opportunity to seek, was not prevented nor discouraged by the Corporation from seeking and did obtain, independent legal advice prior to the execution and delivery of this Agreement. 

  
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	11.6	 Fair and Reasonable Provisions. The Corporation and Executive acknowledge and agree that the provisions of this Agreement regarding further
payments of the Executive’s Base Salary, Annual Bonus and other bonuses, and the exercisability and vesting of the options or equity grants granted by the Corporation to the Executive, constitute fair and reasonable provisions for the
consequences of such termination, do not constitute a penalty, and such payments and benefits shall not be limited or reduced by amounts the Executive might earn or be able to earn from any other employment or ventures during the remainder of the
agreed term of this Agreement. 

  

	11.7	 Lump Sum Payment. Except as otherwise specifically provided in this Agreement, the Corporation shall pay the Executive any lump sum payment
due to him under this Agreement within ten (10) business days of the Date of Termination. Any payments due to the Executive under this Agreement that are not paid within such time shall accrue interest, compounded quarterly, on the total unpaid
amount payable under this Agreement, such interest to be calculated at a rate equal to one (1) percent in excess of the Prime Rate then in effect from time to time during the period of such non-payment.

  

	11.8	 Liability Insurance. The Corporation shall use its reasonable best efforts to obtain and continue coverage of the Executive under
directors’ and officers’ liability insurance both during and, while potential liability exists, after the Executive’s employment with the Corporation in the same amount and to the same extent, if any, as the Corporation covers its
other Directors and/or officers. 

  

	11.9	 No Derogation of Rights. Nothing herein derogates from any rights the Executive may have under applicable law. 

 

	11.10	 Assignability. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs
(in the case of the Executive) and assigns. No rights or obligations of the Corporation under this Agreement may be assigned or transferred by the Corporation except: (i) in the case of a “Permitted Assignment”; and (ii) such
rights or obligations may be assigned or transferred pursuant to a merger, amalgamation, reorganization, continuance or consolidation in which the Corporation is not the continuing entity, or the sale or liquidation of all or substantially all of
the assets of the Corporation, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Corporation and such assignee or transferee assumes the liabilities, obligations and duties of the Corporation,
as contained in this Agreement, either contractually or as a matter of law. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than: (a) his rights to compensation and
benefits, in whole or in part, which may be transferred by the Executive to (i) a corporation owned or controlled by the Executive or members of the Executive’s family, and (ii) a trust, the beneficiaries of which are the Executive or
members of the Executive’s family; (b) to a corporation through which the Executive shall provide the services required of him hereunder; and (c) as provided in Section 10.3 hereof. 

  
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	11.11	 Representations of the Executive. The Executive represents and warrants to the Corporation that: 

 

	 	(a)	 The Executive’s employment with the Corporation and the performance of his duties hereunder will not conflict with or result in a violation
of, a breach of, or a default under any contract, agreement or understanding to which he is a party or is otherwise bound. 

  

	 	(b)	 The Executive’s acceptance of employment with the Corporation and the performance of his duties hereunder will not violate any
non-solicitation, non-competition or other similar covenant or agreement of a prior employer. 

  

	11.12	 Representations of the Corporation. The Corporation represents and warrants that it is fully authorized and empowered to enter into this
Agreement and perform its obligations hereunder, which performance will not violate any agreement between the Corporation and any other person, firm or organization nor breach any provisions of its constating documents or governing legislation.

  

	11.13	 Amendment or Waiver. No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive
and an authorized officer of the Corporation. No waiver by either party hereto of any breach by the other party hereto of any condition or provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Corporation, as the case may be. 

 

	11.14	 Interpretation of Incentive Plan and Agreements Thereunder. In the event of a conflict between, or inconsistency with, any, or any part, of
the terms or provisions of this Agreement and the terms or provisions of the Incentive Plan or any agreements entered into pursuant to the Incentive Plan, as the case may be, the terms and provisions of this Agreement shall be deemed to govern,
supersede, and take precedence over such inconsistent or conflicting terms and provisions contained in the Incentive Plan and the agreements entered into pursuant to the Incentive Plan, as the case may be. 

 

	11.15	 Governing Law and Venue. The situs of this Agreement is Vancouver, British Columbia, Canada, and for all purposes this Agreement shall be
governed exclusively by and construed and interpreted in accordance with the laws of the Province of British Columbia, Canada, and the federal laws of Canada applicable therein. 

 

	11.16	 Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be properly given if delivered or
mailed by prepaid registered mail addressed as follows: 

  

	 	(a)	 in the case of the Corporation: 

Mercer International Inc. 

Suite 1120, 700 West Pender Street 

Vancouver, B.C. V6C 1G8 

  
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	 	(b)	 in the case of the Executive: 

to the last address of the Executive in the records of the Corporation and its subsidiaries or to such other address as the
parties may from time to time specify by notice given in accordance herewith. 
 Any notice so given shall be conclusively
deemed to have been given or made on the day of delivery, if delivered, or if mailed as aforesaid, upon the date shown on the postal return receipt as the date upon which the envelope containing such notice was actually received by the addressee.

  

	11.17	 Severability. If any provision contained herein is determined to be void or unenforceable for any reason, in whole or in part, it shall not
be deemed to affect or impair the validity of any other provision contained herein and the remaining provisions shall remain in full force and effect to the fullest extent permissible by law. 

 

	11.18	 Entire Agreement. This Agreement and the Corporation’s policies and procedures as amended from time to time constitute the entire
understanding and agreement between the parties concerning the subject matter hereof and supersede all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the parties with respect thereto.

  

	11.19	 Currency. Unless otherwise specified herein all references to dollar or dollars are references to Canadian dollars. 

 

	11.20	 Further Assurances. Each of the Executive and the Corporation will do, execute and deliver, or will cause to be done, executed and
delivered, all such further acts, documents and things as the Executive or the Corporation may require for the purposes of giving effect to this Agreement. 

  

	11.21	 Counterparts/Facsimile Execution. This Agreement may be executed in several parts in the same form, and by facsimile, and such parts as so
executed shall together constitute one original document, and such parts, if more than one, shall be read together and construed as if all the signing parties had executed one copy of the said Agreement. 

 

	11.22	 Affiliated Entities. The Executive acknowledges and agrees that all of the Executive’s covenants and obligations to the Corporation, as
well as all of the rights of the Corporation under this Agreement, shall run in favour of and shall be enforceable by the subsidiaries and affiliates of the Corporation. The Executive acknowledges that notwithstanding references in this Agreement to
subsidiaries and affiliates, this Agreement is between the Executive and the Corporation. The Executive shall have no right to enforce this Agreement against any party other than the Corporation unless this Agreement is assigned to any entity in
accordance with Section 11.10 hereof. 

  

[signature page follows] 

  
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 IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written. 

MERCER INTERNATIONAL INC. 
  

			
		
	 By:
		 /s/ David Gandossi

		
	 Name:
		 David M. Gandossi

		
	 Title:
		 EVP, CFO & Secretary

  
  
  

 

							
				
	 SIGNED, SEALED and DELIVERED
 by DAVID
URE
 in the presence of:
		 )

)
 )

)
 )

)
 )

)
 )

)
 )

)
 )
				
	 /s/ Denise Ure
				
	 Witness

14420 – 29th Ave
				 /s/ David Ure        

DAVID URE

	 Address
				
	 Surrey, BC V4P 1P5
				
	  

Accountant
				
	 Occupation
  

 
  
				

  

 A-1 

SCHEDULE A 

EXECUTIVE’S DUTIES 
  

	1.	 Supervision and management of all accounting and financial reporting functions of the Corporation; 

 

	2.	 Supervision and management of all other internal financial functions and controls of the Corporation; 

 

	3.	 Supervision and management of all employees in the financial and accounting departments of the Corporation; 

 

	4.	 Preparation of all budgets and business plans, and reporting on the same; 

 

	5.	 Participation in the development of policies and programs, and reporting on the same; and 

 

	6.	 Performance of such other functions and duties normally performed by a senior vice president, finance and/or executive vice-president of publicly
held companies comparable to the Corporation, and such other duties and functions consistent with the Executive’s position which the CEO and CFO shall, from time to time, reasonably direct.Exhibit 10.1

 

EXECUTION COPY

 

MASTER AGREEMENT AND LEASE AGREEMENT

 

THIS MASTER AGREEMENT AND LEASE AGREEMENT (alternatively the “Lease” or the “Agreement”) is entered into this 1st day of July, 2015, by and between Minera William S.A. de C.V. (hereinafter “William”) and Minera Hecla, S.A. de C.V. (hereinafter “Hecla”).

 

W I T N E S S E T H

 

WHEREAS, William is the owner of Leased Premises, as described herein;

 

WHEREAS, Hecla wishes to lease the Leased Premises from William, and William wishes to lease the Leased Premises to Hecla, pursuant to the terms and conditions established in this Agreement.

 

NOW THEREFORE, in consideration of the terms and conditions contained in this Agreement, the parties hereby agree as follows:

 

SECTION 1 — LEASED PREMISES

 

“Leased Premises” shall mean (i) an easement (the “Easement”) granted or to be granted by William to Hecla over those certain lands set forth in Exhibit A, and (ii) the oxide processing plant and related buildings and facilities located at William’s Velardeña properties (“Plant 2”) as set forth in Exhibit B.

 

SECTION 2 - REPRESENTATIONS

 

I.                                        William hereby represents that:

 

a)                                     It is a company duly incorporated and existing pursuant to the laws of Mexico, with Tax ID number MWI960314368 with the required authority and sufficient means to enter into this Agreement.

 

b)                                     Its legal representative executing this Agreement on its behalf is authorized and has sufficient power and authority to do so.

 

c)                                      WILLIAM MAKES NO REPRESENTATION OR WARRNTY REGARDING THE CONDITION OF THE LEASED PREMISES, WHICH ARE BEING LEASED TO HECLA ON AN AS IS, WHERE IS BASIS, OR ABOUT THE FITNESS OF THE LEASED PREMISES FOR MINERAL PROCESSING OR ANY OTHER PURPOSE.

 

II.                                   Hecla hereby represents that:

 

 

a)                                     It is a company duly incorporated and existing pursuant to the laws of Mexico, with Tax ID number MHE920507BY1 with the required authority and sufficient means to enter into this Agreement.

 

b)                                     Its legal representative executing this Agreement on its behalf is authorized and has sufficient power and authority to do so.

 

c)                                      It has had the opportunity to inspect and perform sufficient due diligence regarding the Leased Premises, including the condition of Plant 2.  Hecla accepts the Leased Premises on an AS IS, WHERE IS basis.

 

SECTION 3 - LEASE

 

William hereby leases to Hecla and Hecla hereby leases from William the Leased Premises, AS IS and WHERE IS, pursuant to the terms and conditions hereinafter set forth in this Agreement.

 

SECTION 4 - TERM

 

The initial term of the Lease shall be for eighteen (18) months (the initial term and as it may be extended, the “Lease Term”), commencing on July 1, 2015 (the “Commencement Date”) and ending on December 31, 2016. Hecla has the right to extend the Lease Term for an additional term of six (6) months until June 30, 2017 (the “Additional Term #1”), by written notice to William at least 90 calendar days prior to the end of the Lease Term.  During the Additional Term #1, Hecla shall retain exclusive use of the Leased Premises, on the same terms and conditions set forth in this Agreement.  Hecla may request extension of the Lease Term for a second additional term of six (6) months until December 31, 2017 (the “Additional Term #2”), by written notice to William at least 90 calendar days prior to the end of Additional Term #1.  William may reject Hecla’s request for Additional Term #2 at William’s sole option, in the event that William elects to use the Leased Premises, or to prepare to use the Leased Premises, to process material produced from a property controlled by William or an affiliate of William.  If William grants Hecla’s request for an Additional Term #2, Hecla shall retain exclusive use of the Leased Premises during such Term, on the same terms and conditions as set forth in this Agreement.

 

SECTION 5 — USE OF THE LEASED PREMISES

 

a)                                     Plant 2 includes an oxide processing plant. Attached hereto as Exhibit C of this Agreement is an inventory of machinery and equipment (the “Equipment”).  Said Equipment is part of Plant 2 and the Leased Premises.

 

b)                                     Hecla shall use the Leased Premises for the delivery, storage and processing through Plant 2 of minerals and mineralized material, the proper deposition of waste from such mineral processing, and the shipment of mineral products from the Leased Premises to other locations for further processing or sale, and related activities (collectively the “Permitted Use”),

 

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and Hecla shall not use the Leased Premises for any other purposes.  Hecla may use Plant 2 to process only such material and such amount of material as is permitted by applicable tailings, environmental and other permits (whether such permits be permits issued to Hecla or to William) and as can be processed in compliance with the terms of this Lease including without limitation the provisions of Section 7(b), and Hecla agrees to comply with the processing limitations and other requirements of all such permits.  Hecla may use, for the disposal of waste material from its operations at Plant 2, up to a total volume of 80,000 cubic meters of tailings dam capacity in the tailings facility on the Leased Premises during the Lease Term, provided that such amount may be increased in accordance with Section 9.

 

c)                                      Hecla may make certain improvements and alterations to Plant 2 at Hecla’s cost, subject to the prior written approval of William which shall not be unreasonably withheld.  Hecla shall provide William with a detailed description of the proposed improvements and alterations to Plant 2 when it requests approval of the same, and following the construction or addition of any such improvements and alterations Hecla shall provide an updated description of the as built improvements and alterations, together with engineering drawings and plans and such other information as William reasonably requests in writing.

 

d)                                     Hecla will conduct its operations on the Leased Premises pursuant to and in compliance with environmental permits and licenses required by applicable law for Hecla’s operations and obtained by Hecla.  If Hecla reasonably believes and notifies William in writing, in reasonable detail, that it will be unable to obtain its own environmental permits and licenses on or before March 31, 2016, but that approval of environmental authorities can be obtained on or before March 31, 2016 for Hecla to conduct its operations pursuant to the environmental permits and licenses of William, then Hecla and William shall proceed to obtain such approval.  The advance approval of environmental authorities is required in order for Hecla to process its material through Plant 2 and use the tailings facility.  Hecla may not process any of its material through Plant 2 or use the tailings facility prior to receiving such approvals.  William and Hecla will cooperate and assist each other in requesting the required approvals from the environmental authorities, including providing information regarding material to be processed by Hecla and other aspects of Hecla’s planned operations.  If the approvals of environmental authorities required for Hecla to process its material through Plant 2 and use the tailings facility have not been obtained on or before March 31, 2016, either Hecla or Golden shall have the right to terminate this Agreement.  In order to exercise this right, the party wishing to terminate shall provide written notice of such termination to the other party on or before 5:00 p.m., Torreon time, on March 25, 2016.  Termination of this Agreement is terminated under this Section 5(d) shall be without penalty to either Hecla or William.

 

e)                                      William is party to a labor contract with Sindicato Nacional de Trabajadores Mineros, Metalurgicos, Siderurgicos y Similares de la Republica Mexicana (the “Syndicato”)that currently covers the operation of Plant 2.  Hecla will negotiate with the Syndicato to establish its own labor contract with respect to its activities on the Leased Premises, and William will work with Hecla in these matters.  If Hecla has not entered into a labor contract with the Syndicato on or before January 1, 2016 then Hecla and William will cooperate so that employees working for Hecla on the Leased Premises will be employed by William, with the costs thereof plus a fee equal to 5% of such costs and applicable VAT reimbursed monthly by Hecla to William within 5

 

3

 

working days following receipt of the factura for the same.  Under all circumstances, Hecla will comply with the union contract applicable to its operations on the Leased Premises, including without limitation the payment of employment and statutory taxes, e.g. IMSS and infonavit.  Hecla acknowledges that William’s current labor contract is subject to renegotiation and possible termination in or after March 2016, and agrees that, if Hecla does not have its own labor contract, Hecla will conduct its operations on the Leased Premises pursuant to any labor contract subsequently negotiated by William that is in effect during the Lease Term.  If Hecla does not have its own labor contract, and William does not enter into a new labor contract following the expiration of the current labor contract, William shall have the right to terminate this Agreement without penalty.  Hecla will cooperate with and assist William in maintaining positive relations with the Syndicato.

 

f)                                       Hecla will conduct its operations on the Leased Premises in a good and workmanlike manner in accordance with standard international mining industry practices.  Hecla will provide to William within 5 days following the end of each calendar month a report of daily tonnage of material processed through Plant 2 for that calendar month..

 

g)                                      Each of Hecla and William will conduct its operations on the Leased Premises in compliance with all valid and applicable federal, state and local laws, rules and regulations in the United States and Mexico, including without limitation such laws, rules and regulations pertaining to social security, unemployment compensation, wages and hours and conditions of labor, environmental laws, licenses and permits, and anti-corruption laws including without limitation the United States Foreign Corrupt Practices Act.

 

h)                                     Hecla shall keep the title to the Leased Premises free and clear of all liens and encumbrances that result, or to the extent such result, from its performance of its operations and related activities hereunder; provided, however, that Hecla may refuse to pay any claims asserted against it which it disputes in good faith.  At its sole cost and expense, Hecla shall contest any suit, demand or action commenced to enforce such a claim and, if the suit, demand or action is decided by a court or other authority of ultimate and final jurisdiction against Hecla or the Leased Premises or William, Hecla shall promptly pay the judgment and shall post any bond and take all other action necessary to prevent any sale or loss of the Leased Property or any part thereof.  These obligations shall survive the termination of this Agreement.

 

i)                                         Hecla will be responsible for maintaining safety rules in accordance with industry standards, including but not limited to those mandated by applicable law.  Hecla shall bear all responsibility under the law for the safety of its own personnel employed on the Leased Premises and for persons entering the Leased Premises as Hecla’s agents or authorized visitors.  Hecla will designate a safety representative who shall be responsible for all safety aspects of any activities or operations carried out by Hecla.

 

j)                                        Hecla shall assume full responsibility for the security of the Leased Premises, its operations on the Leased Premises and for the materials and supplies, equipment, ore and mineral products on the Leased Premises.  If at any time the security arrangements of Hecla with respect to the Leased Premises are deemed or any regulatory agency to be inadequate or incomplete, William or Hecla may take whatever action is reasonably necessary to remedy such

 

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inadequacy or incompleteness and any costs associated with such action shall be for the account of Hecla.  If William believes that the security arrangements of Hecla with respect to the Leased Premises are not adequate, William shall provide written notice to Hecla, and Hecla and William shall cooperate to resolve William’s concerns. The taking of such action shall in no way relieve Hecla of any responsibility for the complete security of the Leased Premises and its equipment and other assets located on the Leased Premises.

 

k)                                     Hecla shall provide efficient, experienced, knowledgeable and technically qualified management and supervision to operate Plant 2 and the tailings facilities, including a designated representative who shall be available to a designated representative of William for communication on all aspects of improvements and alterations, Plant 2 operations and maintenance, tailings dam coordination, environmental reporting, data collection and related activities being performed by Hecla.  The initial designated representative of Hecla shall be John Jordan.  The initial designated representative of William shall be Luis Serna. Each party may change its designated representative by written notice to the other party.

 

l)                                         Hecla shall maintain such liability and other insurance in respect of its activities on the Leased Premises as is customary in the mining industry including without limitation a Responsibilidad Civil policy providing civil liability coverage for operating the plant of at least $5.0 million which shall name William as an additional insured, it being the intention of the parties that the carrier of each party shall be liable for any and all losses covered by the above-described insurance.  Hecla’s civil liability policy shall contain provisions that no cancellation or material changes in the policies shall become effective except on thirty (30) days’ advance written notice thereof to William.  Hecla’s insurance policies shall be primary insurance without right of contribution from any policy carried by William.

 

SECTION 6 — LEASE PAYMENTS

 

a)                                     As consideration for this Lease, Hecla shall pay William, on the fifth day of each calendar month, the monthly fee for that month as set forth in Exhibit D and the other payments to be made by Hecla to William pursuant to this Agreement.  Hecla shall pay William an advance payment of $500,000 (the “Advanced Payment”), plus applicable VAT taxes on such amount, within five (5) days following (i) receiving the environmental permits required for its operations on the Leased Premises as set forth in Section 5(d) or (ii) its determination of a permitting strategy reasonably expected to result in its receipt of the environmental permits required for its operations on the Leased Premises.  The Advanced Payment shall be applied against scheduled payments set forth in Exhibit D that are subsequent to the date that the Advanced Payment, plus applicable VAT taxes, is paid by Hecla.

 

b)                                     In addition to the monthly lease payments described above (“Monthly Lease Payments”), Hecla shall pay William $22.00 per dry tonne of ore processed, plus applicable VAT taxes on such amount (“Monthly Per Tonne Payments”) calculated as set forth in Exhibit D, payable within 15 days following the end of the month in which the ore is processed.  Monthly Per Tonne Payment.  The amount of Monthly Per Tonne Payments may be reduced as provided in Section 9.

 

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c)                                      Hecla shall make all payments to William pursuant to this Lease, including without limitation the $500,000 Advanced Payment, Monthly Lease Payments and Monthly Per Tonne Payments by wire transfer to the following bank account:

 

Minera William S.A. de C.V.

Scotiabank Inverlat, S.A.

########

########### (Acct #)

 

d)                                     William will be responsible for payment of the ownership taxes on the Leased Premises.

 

SECTION 7 - UTILITIES

 

a)                                     Hecla shall directly contract all utilities of any nature including sewer, gas, telephone and any other utilities that it may require in the Leased Premises, except that Hecla shall obtain electric power and water from William as set forth in Exhibit E and paragraph b) below.

 

b)                                     Hecla shall not use more than 600 cubic meters of water per day.  William agrees not to sell any water from its own wells to third parties during the Lease Term. During any period in which water availability to William from its own wells has decreased for any reason (other than the sale of water to third parties, which William has agreed in the preceding sentence not to do during the Lease Term), Hecla’s water usage shall be reduced, pro rata, at the same rate in which William’s overall water availability from its own wells has been reduced.  William shall have no liability to Hecla for damages of any kind if a sufficient amount of water is not available for Hecla’s planned operation of the Leased Premises.

 

SECTION 8 - REPAIRS AND MAINTENANCE

 

a)                                     Hecla shall be responsible at its sole expense, to maintain, service and repair, all the Leased Premises including without limitation maintenance of Plant 2, Equipment and any other equipment on the Leased Premises required to keep such in good working order in accordance with standard industry practices, recognizing that maintenance manuals may not be available for all equipment, and maintenance of the roads shown on Exhibit A.  Hecla may engage William to perform road maintenance at reasonable market rates.

 

b)                                     For the avoidance of doubt, William shall have no responsibility for maintenance, service or repair of, or hidden defects in, the Leased Premises, the Equipment, or any portion thereof or anything located thereon.

 

c)                                      In the event of a onetime catastrophic failure of or maintenance problem at Plant 2, the tailings facility or otherwise on the Leased Premises that would require expenditures in excess of $1,000,000 to restore Plant 2 to operation or result in a continuous period in excess of three months in which Hecla is unable to operate Plant 2, which does not result from the

 

6

 

negligence or misconduct of Hecla or its consultants or contractors, Hecla shall promptly provide written notice thereof to William and Hecla shall have the right within thirty (30) days following such notice to terminate this Agreement without penalty.  In the event of a onetime catastrophic failure of or maintenance problem at Plant 2, the tailings facility or otherwise on the Leased Premises that would require expenditures in excess of $1,000,000 to restore Plant 2 to operation or result in a continuous period in excess of three months in which Hecla is unable to operate Plant 2, which results from the negligence or misconduct of Hecla or its consultants or contractors, Hecla shall promptly provide written notice thereof to William and will promptly at Hecla’s own cost either repair and restore the Leased Premises to their original condition or within thirty (30) days pay to William an amount equal to the cost of paying a reputable third party company experienced in the constructions, maintenance and repair of mills, tailings facilities or other failed or destroyed facilities to do so.

 

SECTION 9 — TAILINGS FACILITY

 

Hecla and William recognize that Hecla may wish to use in excess of a total volume of 80,000 cubic meters of tailings dam capacity during the Lease Term for the disposal of waste material from its operations at Plant 2.  Recognizing that significant time may be required to develop a tailings facility expansion plan acceptable to both parties, obtain necessary permits and approvals for such a plan and construct an expansion, Hecla and William shall meet prior to December 31, 2015 to discuss and negotiate a mutually agreeable method of expansion of the tailings facility, at Hecla’s cost, to accommodate any use by Hecla of tailings capacity in excess of 80,000 cubic meters while preserving flexibility for future tailings expansion by William following termination of this Agreement.  The parties shall cooperate in obtaining government approvals and permits for an agreed tailings expansion plan.  Should Hecla fund, complete and commence use of any tailings expansion, the Monthly Per Tonne Payment for tonnes processed by Hecla in excess of the number of tonnes processed that resulted in use by Hecla of a total volume of 80,000 cubic meters of tailings dam capacity shall be calculated at the rate of $14.50 per dry tonne processed.  If William and Hecla fail to reach agreement on a tailings facililty expansion plan or are not able to obtain necessary permits and approvals, Hecla will not use more than a total volume of 80,000 cubic meters of tailings dam capacity during the Lease Term and, upon reaching such volume limitation, Hecla may terminate this Agreement without penalty.

 

SECTION 10 - DESTRUCTION

 

OMITTED.

 

SECTION 11 - INSPECTION

 

a)                                     Promptly following execution and delivery of this Agreement, and prior to Hecla conducting any activities on the Leased Premises, an inspection of Plant 2 and related facilities will be conducted by an independent facilities auditor who has been selected as mutually agreeable by both parties. The auditor will prepare and deliver to both parties a report that documents the components of Plant 2 and the related facilities and the condition of such

 

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components.  The cost of this inspection is to be borne in equal shares by both William and Hecla.

 

b)                                     At the end of the Lease Term, the independent facilities auditor performing the inspection identified in paragraph (a), shall conduct an inspection of Plant 2 and related facilities to determine and document the then current condition of the components of Plant 2 and related facilities including whether each such component is in substantially the same condition as prior to occupancy by Hecla, ordinary wear and tear excepted, and for any component not in such condition, the repairs or replacements required to restore such component to such condition. The cost of this inspection is to be borne in equal shares by both William and Hecla. The cost for any identified repairs to return Plant 2 and related facilities to pre-occupancy condition, ordinary wear and tear excepted, shall be borne by Hecla.  Hecla shall complete such repairs within 45 days of termination of this Lease, and shall have access to the Leased Premises for this purpose.

 

c)                                      Representatives of William and Hecla may observe the inspections required by paragraphs a) and b) above, and may review and provide comments to the auditor regarding the auditor’s report within 10 days of receiving the same.  Following consideration of such comments, and incorporation of such comments as the auditor deems appropriate in its sole discretion, the auditor shall issue a final report to both parties.  The final report of the independent facilities auditor shall be final and binding on both parties with respect to the matters covered thereby.

 

d)                                     William shall have the right to enter and inspect the Leased Premises during business hours upon 24 hours prior written notice for the purpose of ascertaining the condition of the Leased Premises and compliance with the Lease requirements; provided, however, William shall use reasonable efforts to minimize any disruption to Hecla’s business in the Leased Premises during such entry.

 

e)                                      As used in this Lease, “ordinary wear and tear” shall exclude damage to or the use or wear of certain components for which Hecla will compensate William as set forth on Exhibit F.

 

SECTION 12 - ASSIGNMENT AND SUBLETTING

 

Hecla shall not assign, delegate or otherwise transfer this Lease or any of its rights or obligations hereunder, permit the Leased Premises or any part thereof to be used by any person or party other than Hecla, or sublet the Leased Premises or any portion thereof without prior written consent of William.  These restrictions apply equally to third parties and to Hecla’s subsidiary companies, parent, affiliated entities.

 

SECTION 13 - RETURN OF THE LEASED PREMISES

 

a)                                     Upon the expiration of the Lease Term or any Additional Term, as applicable, Hecla shall return the Leased Premises and Equipment to William in substantially the same condition as when received, except for ordinary wear and tear.

 

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b)                                     Hecla shall have the option to remove its equipment, personal property and any improvements and alterations installed by Hecla within the Leased Premises (other than modifications to the tailings facility) within 30 days following termination of the Lease, and shall have the obligation to remove any such improvements and other alterations as requested in writing by William within 20 days following termination of the Lease.  Upon any such removal, Hecla shall restore the Leased Premises to a condition substantially similar to the condition when received by Hecla.  Removal of Hecla’s improvements and alterations shall be at Hecla’s sole cost.  Any equipment, personal property or alterations not removed by Hecla within this period shall be deemed to have been conveyed to William at no cost to William.

 

c)                                      If William believes that amounts payable to William under the Lease are outstanding following the Lease Term, William shall so notify Hecla in writing.  Hecla shall have the right to pay such amount directly to William.  In the event the Hecla does not pay such amount to William within 30 calendar days, William may draw the balance due from the financial security provided pursuant to Section 17, and the remaining balance of the financial security shall be released to Hecla within 30 calendar days following either Hecla’s payment to William of such amount or William’s draw from the financial security.

 

SECTION 14 - TERMINATION

 

a)                                     If Hecla is unable to use the Leased Premises to process ore for a period in excess of 90 continuous days commencing on or after January 1, 2016 due to a strike or labor dispute, order of an environmental or other regulatory agency, unavailability of water or power, event of the type described in Section 8(c), or other cause not related to Hecla’s San Sebastien mining operation or due to Hecla’s action or inaction, Hecla shall have the right to terminate the Lease without penalty by 10 days written notice to William.  In the event of such termination, Hecla shall pay to William within ten (10) days following such termination all amounts then due and payable under the Lease, other than amounts that may subsequently become payable pursuant to Section 11, which amounts shall be expended or paid by Hecla as set forth in Section 11.

 

b)                                     For the avoidance of doubt, in the event of termination of the Lease “without penalty,”  Hecla shall pay to William within ten (10) days following such termination all amounts then due and payable under the Lease, other than amounts that may subsequently become payable pursuant to Section 11, which amounts shall be expended or paid by Hecla as set forth in Section 11.

 

c)                                      If either party breaches any of its obligations under this Agreement and the breach is not substantially cured within the cure period specified below, then the other party may terminate this Agreement, without need of judicial resolution and no penalty, by 30 days written notice to the breaching party at any time before the breach is substantially cured.  The breaching party shall be entitled to a cure period of 5 days following written notice describing a breach of any payment obligation under the Lease, and to a cure period of 15 days following written notice describing a breach of any other obligation under the Lease provided that if a longer period is reasonably required to cure any such breach (other than a breach of payment obligation), the cure period shall be extended for as long as the breaching party is diligently prosecuting such cure to completion.  The existence of a breach, notice and diligent prosecution of a cure pursuant to this

 

9

 

paragraph (c) shall not prevent a party from exercising its termination rights under any other paragraph.

 

d)                                     Hecla may terminate this Agreement for convenience upon sixty (60) days written notice to William.  If Hecla terminates this Agreement for convenience prior to the end of the initial Lease Term on December 31, 2016, Hecla shall pay to William upon such termination an amount equal to the Monthly Lease Payment of $125,000 per month for each month remaining in the initial Lease Term.

 

SECTION 15 - BROKERAGE

 

William and Hecla each warrant to the other that it has had no dealings with any real estate broker or agent or other third party in connection with the negotiation of this Lease, and that it knows no real estate broker or agent or other third party who is or might be entitled to a commission or other such payment in connection with this Lease.

 

SECTION 16 - AUDITING

 

Hecla shall make available at the Leased Premises for the inspection of William all books and records related to its operations and activities on the Leased Premises, and William shall have the rights to audit such books and records from time to time. Hecla shall have the right to exclude from William’s inspection or audit the identification of its vendors and suppliers and other information regarding its operating and other costs (other than repair and maintenance costs), marketing, sales and financial results. William and Hecla shall attempt to select times that are mutually acceptable to each Party for the inspection of records.

 

SECTION 17 — FINANCIAL SECURITY

 

Within 10 days following the date of this Lease, Hecla shall furnish William with a $1,000,000 letter of credit, bond, or other such financial instrument in a form acceptable to William as security of its obligations under this Lease.  William shall be entitled to draw on such financial instrument to satisfy any payment obligations of Hecla that are not timely paid as required by this Lease including without limitation Section 14 hereof.

 

SECTION 18 — INDEMNIFICATION

 

a)                                     Each of Hecla and William agrees to indemnify, defend and hold harmless the other party (and its respective officers, affiliates, directors, successors, and assigns) from and against any and all debts, liens, claims, causes of action, administrative orders and notices, costs (including, without limitation, response and/or remedial costs), personal injuries, losses, damages, liabilities, demands, interest, fines, penalties and expenses, including reasonable attorney’s fees and expenses, consultant’s fees and expenses, court costs and all other out-of-pocket expenses, suffered or incurred by such other party and its successors as a result of:

 

(i)                                     any breach by Hecla or William of any of its respective representations, warranties, covenants and obligations set forth in this Agreement; or

 

10

 

(ii)                                  any operations or activities engaged in by Hecla or William on the Leased Premises, including without limitation any matter, condition or state of fact involving environmental laws or hazardous materials or environmental liabilities which may arise during the term of this Agreement and that is caused by Hecla or William as a result of its operations on the Leased Premises.

 

b)                                     Each of Hecla and William, hereto, within 5 days after the service of process upon either of them in a lawsuit, including any notices of any court action or administrative action (or any other type of action or proceeding), or promptly after either of them, to its respective knowledge, shall become subject to, or possess actual knowledge of, any damage, liability, loss, cost, expense, or claim to which the indemnification provisions of this Section 18 relate, shall give written notice to the other party setting forth the facts relating to the claim, damage, or loss, if available, and the estimated amount of the same. “Promptly” for purposes of this paragraph shall mean giving written notice within 5 days.  Failure by Hecla or William to provide prompt notification to the indemnifying party not relieve the indemnifying party of its indemnification obligations hereunder unless the indemnifying party is materially prejudiced thereby. Upon receipt of such notice relating to a lawsuit, the indemnifying party shall be entitled to:

 

(i)                                     participate at its own expense in the defense or investigation of any claim or lawsuit; or

 

(ii)                                  assume the defense thereof, in which event the indemnifying party shall not be liable to the indemnified party for legal or attorney fees thereafter incurred by the indemnified party in defense of such action or claim; provided, that if the indemnified party may have any unindemnified liability out of such claim, the indemnified party shall have the right to approve the counsel selected by the indemnifying party, which approval shall not be withheld unreasonably.

 

If the indemnifying party assumes the defense of any claim or lawsuit, all costs of defense of such claim or lawsuit shall thereafter be borne by the indemnifying party and the indemnifying party shall have the authority to compromise and settle such claim or lawsuit, or to appeal any adverse judgment or ruling with the cost of such appeal to be paid by the indemnifying party; provided, however, if the indemnified party may have any unindemnified liability arising out of such claim or lawsuit then the indemnifying party shall have the authority to compromise and settle each such claim or lawsuit only with the written consent of the indemnified party, which shall not be withheld unreasonably.  The indemnified party may continue to participate in any litigation at its expense after the indemnifying party assumes the defense of such action. In the event the indemnifying party does not elect to assume the defense of a claim or lawsuit, the indemnified party shall have authority to compromise and settle such claim or lawsuit only with the written consent of the indemnifying party, which consent shall not be unreasonably withheld, or to appeal any adverse judgment or ruling, with all costs, fees, and expenses indemnifiable under this Section 18 hereof to be paid by the indemnifying party. Upon the indemnified party’s furnishing to the indemnifying party an estimate of any loss, damage, liability, or expense to which the indemnification provisions of this Section 18 relate, the indemnifying party shall pay to indemnified party the amount of such estimate within 10 days after receipt of such estimate.

 

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SECTION 19 — NOTICES

 

Notice to William or Hecla pursuant to this Agreement shall be given when made in writing and delivered personally, sent by prepaid reputable courier service, or transmitted by facsimile transition with return receipt confirmed, to such party at the following addresses.  William or Hecla may change its address for purposes of this Section 19 by written notice to the other party.

 

In the case of a notice to William at:

 

Minera William S.A. de C.V.

Calle Río Tamesis No. 2505

Colonia Magdalenas

C.P. 27010

Torreón, Coahuila

Mexico

Attention:  General Manager, Velardena Operations

Fax:

Tel:  ##(###) #######

 

With a copy, which shall not constitute notice, at:

 

Golden Minerals Company

350 Indiana Street, Suite 800

Golden, Colorado, 80401

United States

Attention:  Chief Executive Officer

Fax:  #(###) ###-####

Tel:   #(###) ###-####

 

In the case of a notice to Hecla at:

 

Minera Hecla, S.A. de C.V.

Attn: President

Av. 20 de Noviembre No. 519 Oriente,

Col. Centro, Durango, Durango

Mexico

Fax:

Tel:

 

12

 

With a copy, which shall not constitute notice, to:

 

Hecla Limited

Attn: President

6500 N. Mineral Dr., Ste 200

Coeur d’Alene, ID 83815

United States

Fax:

Tel:

 

SECTION 20 - GOVERNING LAW AND JURISDICTION

 

This Agreement shall be governed and construed in accordance with the laws of the state of Colorado (other than its rules as to conflicts of law) and the laws of the United States as applicable. The exclusive venue for any dispute pursuant to or action to enforce this Agreement shall in the state or federal courts located in Denver Colorado, and each of Hecla and William hereby submits to the jurisdiction thereof.

 

SECTION 21 — LANGUAGE AND MISCELLANEOUS

 

a)                                     This Agreement is executed in the English language. In case of the preparation of a Spanish version of this Agreement, the English language version of this Agreement shall prevail in the event of any discrepancy between the English and Spanish versions.

 

b)                                     This Agreement may be executed by each of William and Hecla in counterparts and by facsimile, or by electronic delivery, each of which when so executed and delivered shall be an original, but both such counterparts, whether executed and delivered in the original or by facsimile or by electronic delivery, shall together constitute one and the same agreement.

 

c)                                      All dollar references in this Agreement are to United States dollars.

 

d)                                     In the event that any one or more of the provisions contained in this Agreement or in any other instrument or agreement contemplated hereby shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement or any such other instrument or agreement contemplated hereby.

 

e)                                      This Agreement may not be amended or modified, nor may any obligation hereunder be waived, except by writing duly executed on behalf of both parties, and unless otherwise specifically provided in such writing, any amendment, modification, or waiver shall be effective only in the specific instance and for the purpose it is given.

 

f)                                       Neither party shall have liability to the other party for lost profits or consequential, punitive, incidental, special or direct damages.

 

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g)                                      The following Sections of this Lease shall survive termination of the Lease: 6, 11, 13 and 16 through 21.

 

h)                                     This Agreement and the Contrato de Servidumbre de Paso between Hecla and William constitute all of the agreements among the parties with respect to the subject matter hereof and thereof.

 

i)                                         Whenever the singular or masculine or neuter is used in this Agreement, the same will be construed as meaning plural or feminine or body politic or corporate or vice versa, as the context so requires.  Use of the word “including” in this Agreement means “including without limitation” or “including but not limited to.”  Each of the Exhibits and Schedules attached to this Agreement is incorporated into the Agreement by this reference.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective the date and year first above written.

 

 

WILLIAM

 

	
By:
    	
/s/ Robert P. Vogels
    	
 
    
	
 
    	
 
    
	
Print   Name:
    	
Robert P. Vogels
    	
 
    
	
 
    	
 
    
	
Title:
    	
Vice President and   Director
    	
 
    
					

 

 

HECLA

 

	
By:
    	
/s/ John Jordan
    	
 
    
	
 
    	
 
    
	
Print   Name:
    	
John Jordan
    	
 
    
	
 
    	
 
    
	
Title:
    	
Vice President   Technical Services
    	
 
    
					

 

15

 

EXHIBIT D

 

LEASE PAYMENTS

 

As consideration for this Lease, Hecla shall pay to William the fees set forth on or before the dates set forth as follows:

 

Monthly Lease Payments

 

Hecla shall pay to William, on or before the fifth day of each calendar month the following Monthly Lease Payment, plus VAT:

 

	
Period 1: July 1, 2015 through September 30, 2015:
    	
 
    	
$25,000 per month
    
	
Period 2: October 1, 2015   through December 31, 2015:
    	
 
    	
$50,000 per month
    
	
Period 3: January 1, 2016   until Lease termination
    	
 
    	
$125,000 per month
    

 

If, during Periods 1 or 2, the water usage by Hecla on any day is in excess of 300 cubic meters or the mill feed on any day exceeds 50 tonnes of rock. The Monthly Lease Payment will be increased to $125,000 per month for the calendar month in which such water use or mill feed amount occurred and shall remain at such rate until the termination of the Lease.

 

Monthly Per Tonne Payments

 

Except as specified in the final paragraph below, Hecla shall pay to William monthly the amount of $22.00 per dry tonne (or such reduced amount as may become applicable pursuant to Section 9) for each dry tonne of material processed through Plant 2 during the preceding month, plus VAT, to be calculated, verified and paid as follows.

 

Within 10 working days following the end of each calendar month, Hecla shall deliver to William a written statement of the number of total dry tonnes of material processed through Plant 2 (the “Processed Tonnes”) during the preceding month, accompanied by supporting information including without limitation the metallurgical balance, track weights and belt weights for the preceding month.  Within 5 days following receipt of a factura from William in the amount of the Monthly Per Tonne Payment based on the Processed Tonnes reported, plus VAT, Hecla shall pay to William such amount by wire transfer to the account specified by William.

 

If William disputes the Processed Tonnes reported by Hecla for any month, William shall so notify Hecla in writing within 60 days of receiving Hecla’s statement.  Representatives of William and Hecla shall meet within 5 working days following such notice to discuss and try to resolve such dispute.  If representatives of William and Hecla have failed to resolve such dispute within 10 working days of their initial meeting, either William or Hecla may refer such dispute to the independent facilities auditor for resolution.  William and Hecla shall promptly provide the independent facilities auditor with any information he requests.  The independent facilities auditor shall endeavor to deliver within 60 days his decision setting forth his determination of the

 

 

number of Processed Tonnes for the month in question.  The decision of the independent facilities auditor shall be final and binding on the parties hereto, and any adjustment to the Monthly Per Tonne Payment for the month in question required as a result of his decision shall be reflected on the next factura for Monthly Per Tonne Payments issued by William.

 

For any calendar month following January 1, 2016 in which Hecla has not processed at least 6,000 dry tonnes, the total Monthly Per Tonne Payment shall be equal to $22.00 (without reduction pursuant to Section 9) multiplied by 6,000, plus VAT, which shall be paid by Hecla by wire transfer to the account specified by William within 5 days following receipt of a facture from William in the amount of such Monthly Per Tonne Payment, plus VAT.

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