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EXHIBIT 10.18
STILLWATER MINING COMPANY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of February 12,
2001, is made by and between Stillwater Mining Company, a Delaware corporation
(the "Company"), and Xxxxxxx XxXxxxxxxx ("Executive") (each individually a
"Party" and collectively, the "Parties").
R E C I T A L S
WHEREAS, the Company desires to employ Executive and Executive desires
to be employed by the Company pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the Parties
agree as follows:
1. Employment; Duties and Scope.
(a) Position. Executive shall serve as the Company's Chief
Executive Officer and Chairman of its Board of Directors (the "Board"). For so
long as he is serving on the Board, Executive agrees to serve as a member of any
committee of the Board to which he is elected. In any and all such capacities,
Executive shall report only to the Board. Executive shall have and perform such
duties, responsibilities, and authorities as are customary for the chairman and
chief executive officer of corporations of similar size and businesses as the
Company as they may exist from time to time and as are consistent with such
positions and status.
(b) Duties; Obligations to the Company. During the Employment
Term, Executive shall devote his full business efforts and time to the Company
and the Company will be entitled to all of the benefits and profits arising from
or incident to all such work services and advice. Executive shall be responsible
for performing the business and professional services typically performed by the
chief executive officer of any company, or as may reasonably assigned to him by
the Board, subject to the general and customary supervision of the Board.
Executive agrees not to render commercial or professional services of any nature
to any person or organization, whether or not for compensation, during the
Employment Term without advance written approval of the Board, and Executive
will not directly or indirectly engage or participate during the Employment Term
in any business that is competitive in any manner with the Company's business;
provided, however, that this shall not preclude Executive from owning up to two
percent (2%) of the outstanding equity securities of a corporation whose stock
is listed on a national stock exchange or the NASDAQ.
(c) No Conflicting Obligations. Executive represents and warrants
to the Company that he is under no obligation or commitment, whether contractual
or otherwise, that is inconsistent with his obligations under this Agreement.
Executive represents and warrants that he will not use or disclose, in
connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other
person has any
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right, title, or interest and that his employment by the Company as contemplated
by this Agreement will not infringe or violate the rights of any other person or
entity. Executive represents and warrants to the Company that he has returned
all property and confidential information belonging to any prior employers.
2. Employment Term.
(a) The Initial Period of Executive's employment pursuant to this
Agreement shall begin February 12, 2001 (the "Commencement Date") and shall end
on February 11, 2004 ("Initial Period"), unless otherwise terminated by either
Party prior to the scheduled termination date as provided in Section 9 of this
Agreement.
(b) The Initial Period shall automatically be extended for
successive one year periods ("Renewal Period"), if not already otherwise
terminated as provided in this Agreement, unless either Party notifies the other
no later than six (6) months prior to the scheduled termination such Initial
Period or Renewal Period, in which case Executive's employment shall terminate
upon the scheduled termination date of the applicable Initial Period or Renewal
Period.
(c) In the event that this Agreement is not renewed because
Executive has given the 6-month notice prescribed in Section 2(b) on or before
the expiration of the Initial Period or any Renewal Period, such non-renewal
shall be treated as a Termination for Cause and Executive shall have the same
entitlements as provided in Section 10(b)(iii) below.
(d) The entire term of Executive's employment pursuant to this
Agreement from the Commencement Date until the date of expiration or termination
of Executive's employment pursuant to this Agreement shall be referred to herein
as the "Employment Term."
3. Board Membership. Executive currently serves as Chairman of the
Board. Executive's service on the Board at all times shall be without additional
compensation.
4. Cash Compensation.
(a) Base Salary. During the Employment Term, the Company shall pay
the Executive as compensation for his services a semi-monthly base salary at the
annualized rate of three hundred seventy-five thousand dollars ($375,000), less
applicable deductions and withholdings. Such base salary shall be paid
semi-monthly in accordance with normal Company payroll practices and procedures.
Executive's base salary shall be reviewed for increase no less than every twelve
(12) months and shall be subject to decrease only in the event (and only to the
extent) of an across-the-board reduction for other senior management employees
of the Company. (The annualized base salary to be paid to Executive pursuant to
this Section 4(a), together with any subsequent modifications thereto, shall be
referred to in this Agreement as the "Base Salary.")
(b) Bonuses. Executive shall be eligible to earn an annual target
bonus equal to 50% of his Base Salary (the "Target Bonus") based upon criteria
determined by the Board for each year during the Employment Term, starting with
the year commencing January 1, 2001 (except that for the year 2001, the Target
Bonus amount shall be $165,000, which is a pro rata portion of the
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Target Bonus for such period based on the Commencement Date). Although 50% of
the Base Salary is the Target Bonus, the Board in its discretion may pay
Executive a bonus equal to as low as 0% of his Base Salary or as high as 100%,
depending on the level of goal achievement. For 2001, the Company shall provide
Executive with written notice of that period's performance goals no later than
April 31, 2001; thereafter, written notice of the performance goals shall be
provided by February 28 of the applicable year.
5. Employee Benefits.
(a) During the Employment Term, Executive shall be eligible to
participate in such other of the Company's employee benefit plans and to receive
such benefits for which his position makes him eligible, including use of a
Company vehicle, in accordance with the Company's plans and policies as in
effect from time to time during the Employment Term, subject in each case to the
generally applicable terms and conditions of the plan or policy in question and
to the determinations of any person or committee administering such plan or
policy
(b) Executive shall be entitled to four (4) weeks of vacation per
year during the Employment Term.
6. Business Expense Reimbursements. During the Employment Term,
Executive shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with the performance of
his duties hereunder. The Company shall reimburse Executive for such expenses
upon presentation of an itemized account and appropriate supporting
documentation, all in accordance with the Company's generally applicable
policies.
7. Relocation Costs. The Company will reimburse Executive for costs
related to his relocation to Montana, in accordance with Company's Relocation
Policy.
8. Equity.
(a) Subject to Board approval, Executive shall be granted an
option to purchase 75,000 shares of the Company's Common Stock (the "Option
Shares"), at the aggregate Fair Market Value of the Option Shares on the date of
grant, pursuant to the Company's 1998 Equity Incentive Plan. "Fair Market Value"
means as of any given date, the closing sale price per share of the Company's
common stock reported on a consolidated basis for securities listed on the
principal stock exchange or market on which the common stock is traded on the
date as of which such value is being determined or, if there is no sale on that
day, then on the last previous day on which a sale was reported." The grant and
exercise of the Option Shares shall be subject to the terms of the notice of
grant of the Option and the Company's standard form of Non-Qualified Stock
Option Agreement ("Option Agreement"), and shall be contingent upon Executive
executing such Option Agreement and, for exercise, the Company's standard form
of stock purchase agreement. The Option Shares shall have a ten (10) year term
and shall vest in three (3) equal installments on each of the first three (3)
anniversaries of the date of this Agreement," as specified in the Option
Agreement. The Option Shares may only be exercised by Executive to the extent
that they have vested.
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(b) Executive also shall be eligible to participate in annual
option grants, if any, by the Company to its executives. Whether any option is
granted and if so, the number of shares which Executive may be granted the
option to purchase, shall be entirely within the discretion of the Board and/or
its Compensation Committee.
9. Termination of Employment. Notwithstanding the fixed term of
Executive's employment under this Agreement, the Company and Executive each may
terminate Executive's employment at any time for any or no reason with or
without cause (as defined in Section 10(b)(ii)), upon written notice to the
other Party. Executive's employment will terminate automatically in the event of
his death. Any payments and/or benefits due Executive from the Company upon
and/or after termination are specified in Section 10.
10. Termination Payments and Benefits
(a) Payments and Reimbursements Upon Any Termination of
Employment. In the event that Executive's employment terminates for any reason,
the Company shall pay Executive all Base Salary, any accrued but unpaid bonuses
for the period prior to the year of termination of employment, and all accrued
but unpaid vacation earned through the date of termination of employment, each
less applicable withholdings and deductions, and any reimbursement of expenses
owed pursuant to this Agreement within ten (10) days of the date of termination
("Termination Date"). Only the amounts stated in this Section 10(a), and no
severance payments or benefits, shall be due to Executive upon a termination of
his employment on the scheduled termination date of the Initial Period or
Renewal Period.
(b) Effect of Termination for Cause.
(i) in the event that the Company terminates Executive's
employment for Cause or Executive terminates employment (including any
non-renewal) without Good Reason (as defined below):
(A) Executive shall receive all payments provided in
Section 10(a) above;
(B) Executive's outstanding vested Option Shares shall be
exercisable in accordance with the terms and time limits of the
applicable Option Agreement; and
(C) Any unvested Option Shares shall be forfeited on the
Termination Date
(ii) Definition of Termination for Cause. For the purposes of
this Agreement, a termination of Executive's employment for "Cause"
means a termination of Executive's employment by the Company based upon
a determination that any one or more of the following has occurred: (A)
misfeasance or nonfeasance of duty by Executive that which was intended
to or does injure the reputation of Company or its business or
relationships; (B) conviction of, or plea of guilty or nolo contend ere
by Executive to, any felony or crime involving moral turpitude; (C)
Executive's willful and continued failure to
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substantially perform his duties under this Agreement (except by reason
of physical or mental incapacity) after written notice from the Board
and 15 days to cure such failure; (D) dishonesty by Executive in
performance of his duties under this Agreement; or (E) willful and
material breach of the restrictive covenants contained in this
Agreement; provided however, that definitions (C) through (E) shall not
provide Cause for termination if such termination occurs within two (2)
years following a Change in Control. A termination of Executive's
employment by the Company for any other reason will be a termination
without Cause.
(c) Effect of Termination Without Cause or Resignation for Good
Reason Other Than Within Two Years Following A Change in Control.
(i) In the event that, at any time other than within two "(2)"
years following a Change in Control, the Company terminates Executive's
employment without Cause or Executive resigns his employment for Good
Reason, then, contingent upon Executive signing and not revoking the
Severance Agreement and Release attached hereto as Exhibit A, and not
breaching the provisions of Sections 15 and 16 hereof, the Company
shall provide Executive with the following:
(A) all payments stated in Section 10 (a) above;
(B) a pro rata portion of Executive's Target Bonus, less
applicable withholdings and deductions, which pro rata portion
shall be determined by multiplying the Target Bonus by a fraction,
the numerator of which is the number of days elapsed in the
calendar year of the date of termination and the denominator of
which is 365 (except for 2001, when the numerator equals the
number of days elapsed since February 12 and the denominator is
322) payable within 10 days of the Termination Date;
(C) continued semi-monthly payments at Executive's Base
Salary rate, less applicable withholdings and deductions, for a
period of twenty-four (24) months;
(D) continuation of Executive's medical, health, and life
insurance (as in effect immediately prior to the date of
termination) for a period of twenty-four (24) months, or if not
permissible or commercially reasonable to continue the same
coverage of Executive under one or more of the insurance policies
or plans, continued payment for a period of twenty-four (24)
months of the after-tax cost to the Company of providing such
coverage to Executive (as measured immediately prior to the date
of termination); provided however, that such benefits or payments
shall cease upon the date on which Executive is eligible for
similar aggregate coverage from a subsequent employer; and
(E) the applicable accelerated vesting if any of the
Option Shares, pursuant to the applicable Option Agreement.
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(ii) Relevant Definitions.
(A) Change in Control. For the purposes of this Agreement,
a "Change in Control" shall mean and shall be deemed to have
occurred if any of the following events shall have occurred:
(1) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates)
representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding voting
securities, excluding any person who becomes such a beneficial
owner in connection with a transaction described in clause (i)
of subsection (3) below; or
(2) A change in the composition of the Board occurring
within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (i) are directors
of the Company as of the date hereof, or (ii) are elected, or
nominated for election, to the Board with the affirmative
votes of at least two-thirds (2/3) of the Incumbent Directors
at the time of such election or nomination (but shall not
include an individual whose election or nomination is in
connection with an actual or threatened election or proxy
contest, including but not limited to a consent solicitation
relating to the election of directors to the Company); or
(3) The consummation of a merger or consolidation of
the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
any parent thereof) at least fifty-five percent (55%) of the
combined voting power of the voting securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no person is or becomes the beneficial owner, directly
or indirectly, of securities of the Company (not including in
the securities beneficially owned by such person any
securities acquired directly from the Company or its
affiliates) representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding
securities; or
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(4) The consummation of a stockholder-approved sale,
transfer, or other disposition by the Company of all or
substantially all of the Company's assets in complete
liquidation or dissolution of the Company, other than a sale,
transfer, or other disposition by the Company of all or
substantially all of the Company's assets to an entity, at
least sixty percent (60%) of the combined voting power of the
voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
(5) Notwithstanding the foregoing subsections (1)
through-(4), a Change in Control shall not be deemed to have
occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which
the record holders of the common stock of the Company
immediately prior to such transaction or series of
transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions.
(B) Resignation for Good Reason. For the purposes of this
Agreement, a resignation for "Good Reason" means a termination of
Executive's employment at his initiative following the occurrence,
without Executive's written consent, of one or more of the
following events (except as a result of a prior termination):
(1) a material diminution or change, adverse to
Executive, in Executive's positions, titles, or offices as set
forth in Section 1, status, rank, nature of responsibilities,
or authority within the Company, or a removal of Executive
from or any failure to elect or re-elect or, as the case may
be, nominate Executive to any such positions or offices,
including as a member of the Board;
(2) the assignment to Executive of any duties that is
inconsistent with his status as the Company's Chairman and
Chief Executive Officer or other positions held hereunder;
(3) a decrease in Executive's annual Base Salary or
Target Bonus award opportunity below 50% of Base Salary (other
than an across-the-board percentage reduction for senior
management executives);
(4) a material reduction in the aggregate benefits for
which Executive is eligible under the Company's benefit plans
(other than an across-the-board reduction in the aggregate
benefits for senior management executives);
(5) any other failure by the Company to perform any
material obligation under, or breach by the Company of any
material
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provision of, this Agreement that is not cured within 10
business days of receipt of written notice from Executive;
(6) a relocation of the Company's corporate offices
outside of the State of Montana, or
(7) any failure to secure the agreement of any
successor corporation or other entity to the Company to fully
assume the Company's obligations under this Agreement.
(d) Effect of Termination Without Cause or Resignation for Good
Reason Within Two (2) Years Following A Change in Control. If, upon or within
two (2) years following a Change in Control, Executive resigns his employment
with the Company for Good Reason or the Company (or its successor) terminates
Executive's employment without Cause, then, in lieu of the severance payments
and benefits stated in Section 10(c) above, and contingent upon Executive
signing and not revoking the Severance Agreement and Release attached hereto as
Exhibit A, and not materially breaching the provisions of Sections 15 and 16
hereof, the Company shall provide Executive with the following:
(i) all payments stated in Section 10(a) above;
(ii) a lump sum, payable within thirty (30) days of the
Termination Date, equal to three (3) times the sum of (A) Executive's
Base Salary (or if a reduction of Base Salary is the reason for
Executive's termination for Good Reason, the Base Salary in effect
immediately prior to such reduction) plus (B) the greater of (i)
Executive's Target Bonus, or (ii) the bonus paid to Executive for the
most recent calendar year, less applicable withholdings and deductions;
(iii) continuation of Executive's medical, health, and life
insurance (as in effect immediately prior to the date of termination)
for a period of thirty-six (36) months, or if not permissible or
commercially reasonable to continue the same coverage of Executive
under one or more of the insurance policies or plans, continued payment
for a period of thirty-six (36) months of the after-tax cost to the
Company of providing such coverage to Executive (as measured
immediately prior to the date of termination); provided however, that
such benefits or payments shall cease upon the date on which Executive
is eligible for similar aggregate coverage from a subsequent employer;
and
(iv) immediate accelerated vesting of all Option Shares,
pursuant to the applicable Option Agreement, with the Option Shares
remaining exercisable for the balance of the term as determined in
accordance with the terms of the Option Agreement.
(e) Termination of Employment Due to Disability.
(i) In the event that Executive's employment terminates due to
Disability, Executive shall receive the following:
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(A) the payments stated in section 10(a), provided that
the Base Salary, less applicable withholdings and deductions,
shall be paid at least through the date on which Executive is
eligible to receive disability payments;
(B) A pro rata portion of the annual Target Bonus for the
year in which Executive's employment terminates, less applicable
withholdings and deductions, calculated by multiplying the Target
Bonus by a fraction, the numerator of which is the number of days
elapsed in the year as of the date of termination, and the
denominator of which is 365 (except for 2001 when numerator equals
the number of days elapsed since February 12 and the denominator
is 322) payable within 10 days of the Termination Date; and
(C) Disability benefits in accordance with the Company's
long-term disability plan.
(ii) A termination of Executive's employment due to
"Disability" shall mean a termination of Executive's employment by the
Board of Directors because physical or mental incapacity has rendered
or will render Executive unable to perform his duties as Chief
Executive Officer for a period of 180 consecutive days. The
determination regarding the existence and expected or actual duration
of such incapacity shall be made by a health professional mutually
acceptable to the Company and Executive. The Company shall provide 30
days' written notice of a termination due to Disability, or payment in
lieu thereof.
(iii) Executive's Option Shares shall vest and become
exercisable in accordance with the terms of the Option Agreement.
(f) Termination of Employment Due to Death.
(i) Executive's employment shall terminate automatically in
the event of his death.
(ii) In the event that Executive's employment terminates due
to his death, Executive (or Executive's estate) shall receive the
following:
(A) the payments stated in Section 10(a) above, except
that the Base Salary, less applicable deductions and withholdings,
shall be paid through the 90th day following the date of death;
(B) A pro rata portion of the annual Target Bonus for the
year in which Executive's employment terminates, less applicable
deductions and withholdings, calculated by multiplying the annual
Target Bonus by a fraction, the numerator of which is the number
of days elapsed in the year of termination and the denominator of
which is 365 (except for 2001 when numerator equals the number of
days elapsed since February 12 and the denominator is 322) payable
within 10 days of the Termination Date; and
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(C) Executive's Option Shares shall vest and become
exercisable in accordance with the terms of the Option Agreement.
11. Excise Tax Gross-up.
(a) Subject to Section 11(b) below, if Executive becomes entitled
to one or more payments (with a "payment" including, without limitation, the
vesting of an option or other non-cash benefit or property), whether pursuant to
the terms of this Agreement or any other plan, arrangement, or agreement with
the Company or any affiliated company (the "Total Payments"), which are or
become subject to the tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code") (or any similar tax that may hereafter be
imposed) (the "Excise Tax"), the Company shall pay to Executive at the time
specified below an additional amount (the "Gross-up Payment") (which shall
include, without limitation, reimbursement for any penalties and interest that
may accrue in respect of such Excise Tax) such that the net amount retained by
Executive, after reduction for any Excise Tax (including any penalties or
interest thereon) on the Total Payments and any federal, state and local income
or employment tax and Excise Tax on the Gross-up Payment provided for by this
Section 18, but before reduction for any federal, state, or local income or
employment tax on the Total Payments, shall be equal to the sum of (A) the Total
Payments, and (B) an amount equal to the product of any deductions disallowed
for federal, state, or local income tax purposes because of the inclusion of the
Gross-up Payment in Executive's adjusted gross income multiplied by the highest
applicable marginal rate of federal, state, or local income taxation,
respectively, for the calendar year in which the Gross-up Payment is to be made.
For purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax:
(i) The Total Payments shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of Section 280G(b)(1) of
the Code shall be treated as subject to the Excise Tax, unless, and
except to the extent that, in the written opinion of independent
compensation consultants, counsel or auditors of nationally recognized
standing ("Independent Advisors") selected by the Company and
reasonably acceptable to Executive, the Total Payments (in whole or in
part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of Section
280G(b)(3) of the Code or are otherwise not subject to the Excise Tax;
(ii) The amount of the Total Payments which shall be treated
as subject to the Excise Tax shall be equal to the lesser of (A) the
total amount of the Total Payments or (B) the total amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (i) above); and
(iii) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Independent Advisors in
accordance with the principles of Sections 280G(d)(3) and (4) of the
Code.
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For purposes of determining the amount of the Gross-up Payment,
Executive shall be deemed (A) to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made; (B) to pay any applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in which
the Gross-up Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of Executive's adjusted gross income); and (C)
to have otherwise allowable deductions for federal, state, and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-up Payment in Executive's adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, Executive shall
repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined (but, if previously paid to the taxing authorities, not
prior to the time the amount of such reduction is refunded to Executive or
otherwise realized as a benefit by Executive) the portion of the Gross-up
Payment that would not have been paid if such Excise Tax had been applied in
initially calculating the Gross-up Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest and penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.
The Gross-up Payment provided for above shall be paid on the 30th day
(or such earlier date as the Excise Tax becomes due and payable to the taxing
authorities) after it has been determined that the Total Payments (or any
portion thereof) are subject to the Excise Tax; provided, however, that if the
amount of such Gross-up Payment or portion thereof cannot be finally determined
on or before such day, the Company shall pay to Executive on such day an
estimate, as determined by the Independent Advisors, of the minimum amount of
such payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as
the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to Executive, payable on the
fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-up
Payment is made, the amount of each Gross-up Payment shall be computed so as not
to duplicate any prior Gross-up Payment. The Company shall have the right to
control all proceedings with the Internal Revenue Service that may arise in
connection with the determination and assessment of any Excise Tax and, at its
sole option, the Company may pursue or forego any and all administrative
appeals, proceedings, hearings, and conferences with any taxing authority in
respect of such Excise Tax (including any interest or penalties thereon);
provided, however, that the Company's control over any such proceedings shall be
limited to issues with respect to which a Gross-up Payment would be payable
hereunder, and Executive shall be entitled to settle or contest any other issue
raised by the Internal Revenue Service or any other taxing authority. Executive
shall cooperate with the Company in any proceedings relating to the
determination and assessment of any
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Excise Tax and shall not take any position or action that would materially
increase the amount of any Gross-Up Payment hereunder.
(b) Modified Cutback. Notwithstanding the foregoing Section 11(a),
if it shall be determined that the amount of any payment due Executive pursuant
to Section 11(a) above would result in less than $20,000 in net after-tax value
to Executive, then no Gross-Up payment shall be made to Executive and the total
payments due Executive pursuant to Section 11(a) shall be reduced to an amount
that would not result in the imposition of any Excise Tax.
12. Indemnification. The Company will hold harmless, indemnify, and
provide a defense to Executive to the fullest extent permitted by Delaware law
with respect to any claims, actions, suits, or proceedings, brought against
Executive by reason of, or arising out of, Executive's service as, or the
performance of Executive's duties as, an employee, director, officer, and/or
agent of the Company, provided that such claims, actions, suites, or proceedings
are not found by a court or arbitrator to have arisen out of employee's
intentional misconduct or gross negligence. The Company will pay, and subject to
any legal limitations, advance all costs, expenses, and losses, including
without limitation reasonable attorneys' fees, costs of settlements, and
consequential damages, actually and necessarily incurred by Executive in
connection with the defense of any such claims, actions, suits, or proceedings,
and in connection with any appeal thereof.
13. Directors' and Officers' Insurance. The Company shall use
commercially reasonable efforts to obtain and maintain directors' and officers'
liability insurance coverage in an amount equivalent to that of a well-insured
similarly situated company; provided, however, that, the failure to obtain and
maintain such insurance after the Company has exercised such commercially
reasonable efforts shall not be a breach of the Company's obligations under this
Agreement. Any directors' and officers' liability insurance covering Executive
shall continue to apply following the period in which Executive is serving as
officer or director of the Company for actions or omissions during the period in
which Executive was acting as officer or director.
14. Forfeiture Provisions.
(a) Forfeiture of Stock Options and Other Awards and Gains
Realized Upon Prior Option Exercises or Award Settlements. Unless otherwise
determined by the Committee, upon Executive's violation of any of the
restrictive covenants contained in [Sections 15 or 16] (each a "Forfeiture
Event") during the Term of Employment [and for 36 months thereafter], all of the
following forfeitures will result:
(i) The unexercised portion of any stock option, whether or
not vested, and any other Award not then settled (except for an Award
that has not been settled solely due to an elective deferral by
Executive and otherwise is not forfeitable in the event of any
termination of Executive's service) will be immediately forfeited and
canceled upon the occurrence of the Forfeiture Event; and
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(ii) Executive will be obligated to repay to the Company, in
cash, within five (5) business days after demand is made therefor by
the Company, the total amount of Award Gain (as defined herein)
realized by Executive upon each exercise of a stock option or
settlement of an Award (regardless of any elective deferral) that
occurred (A) during the period commencing with the date that is 24
months prior to the occurrence of the Forfeiture Event and the date 24
months after the Forfeiture Date, if the Forfeiture Event occurred
while Executive was employed by the Company, or (B) during the period
commencing 24 months prior to the date Executive's employment by the
Company terminated and ending 24 months after the date of such
termination, if the Forfeiture Event occurred after Executive ceased to
be so employed. For purposes of this Section, the term "Award Gain"
shall mean (i), in respect of a given stock option exercise, the
product of (x) the Fair Market Value per share of common stock at the
date of such exercise (without regard to any subsequent change in the
market price of shares) minus the exercise price times (y) the number
of shares as to which the stock option was exercised at that date, and
(ii), in respect of any other settlement of an Award granted to
Executive, the Fair Market Value of the cash or stock paid or payable
to Executive (regardless of any elective deferral) less any cash or the
Fair Market Value of any stock or property (other than an Award or
award which would have itself then been forfeitable hereunder and
excluding any payment of tax withholding) paid by Executive to the
Company as a condition of or in connection such settlement.
For purposes of this Agreement, "Award" shall mean any cash award,
stock option, stock appreciation right, restricted stock, deferred stock, bonus
stock, dividend equivalent, or other stock-based or performance-based award or
similar award, together with any related right or interest, granted to or held
by Executive.
(b) Committee Discretion. The Committee may, in its discretion,
waive in whole or in part the Company's right to forfeiture under this Section,
but no such waiver shall be effective unless evidenced by a writing signed by a
duly authorized officer of the Company. In addition, the Committee may impose
additional conditions on Awards, by inclusion of appropriate provisions in the
document evidencing or governing any such Award.
15. Non-Competition and Non-Solicitation.
(a) Necessity of Covenants. The Company and Executive acknowledge
that:
(i) The Company's business is highly competitive;
(ii) The Company maintains Confidential Information and trade
secrets (each described below), as discussed below, all of which are
zealously protected and kept secret by the Company;
(iii) In the course of his employment, Executive will acquire
certain of the Company's Confidential Information, and in the event of
any termination of Executive's employment, the Company would be
adversely affected if such information is used for the purposes of
competing with the Company;
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(iv) The Company transacts business throughout the world; and
(v) For these reasons, both the Company and Executive further
acknowledge and agree that the restrictions contained herein are
reasonable and necessary for the protection of their respective
legitimate interests and that any violation of these restrictions would
cause substantial injury to the Company.
(b) Covenant Not to Compete. Executive agrees that from and after
the Commencement Date and until the earlier of (i) three (3) years after the
Employment Term , or (ii) the later of (x) one (1) year after the Termination
Date, and (y) the end of the period during which Executive is receiving
severance payments and/or benefits from the Company under Section 10(c) or
10(d), he will not, without the express written permission of the Company, which
may be given or withheld in the Company's sole discretion, directly or
indirectly own, manage, operate, control, lend money to, endorse the obligations
of, or participate or be connected as an officer, director 5% or more
stockholder of a publicly-held company, stockholder of a closely-held company,
employee, partner, or otherwise, with any enterprise or individual engaged in
mining or the processing of metals or minerals in the United States and
throughout the world at the time of the termination of the Employment Term. It
is understood and acknowledge by both Executive and the Company that, because
the Company transacts business worldwide, the term of this Section 15(b) shall
be enforced throughout the United States and in any other country in which the
Company is doing business as of the Termination Date.
(c) Covenant Not To Solicit. Executive agrees that from and after
the Commencement Date and until the earlier of (i) three (3) years after the
Employment Term , or (ii) the later of (x) one (1) year after the Termination
Date, and (y) the end of the period during which Executive is receiving
severance payments and/or benefits from the Company under Section 10(c) or
10(d), he will not, except on behalf of the Company or with the express written
permission of the Company, which may be given or withheld in the Company's sole
discretion, directly or indirectly solicit, or attempt to solicit (on
Executive's own behalf or on behalf of any other person or entity) the
employment or retaining of any employee or consultant of the Company or any of
the Company's affiliates.
(d) Disclosure of Outside Activities. Executive, during the
Employment Term, shall at all times keep the Company informed of any outside
business activity and employment, and shall not engage in any outside business
activity or employment which may be in conflict with the Company's interests.
(e) Survival. The terms of this Section shall survive the
expiration or termination for any reason of this Agreement.
16. Confidential Information and Trade Secrets.
(a) Nondisclosure of Confidential Information. Executive has and
will acquire certain "Confidential Information" of the Company throughout the
Employment Term. For purposes of this Agreement, "Confidential Information"
shall mean any information that is not generally known (including trade secrets)
outside the Company and that is proprietary to the Company, relating
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to any phase of the Company's existing or reasonably foreseeable business that
is disclosed to Executive by the Company, including information conceived,
discovered, or developed by Executive. "Confidential Information" includes,
without limitation, business plans, financial statements and projections,
operating forms (including contracts) and procedures, payroll and personnel
records, marketing materials and plans, proposals, software codes and computer
programs, project lists, project files, price information and cost information
and any other document or information that is designated by the Company as
"Confidential." For purposes of this Agreement, the term "trade secret" shall
include any formula, pattern, device, or compilation of information which is
used in the Company's business, and which provides to the holder of such trade
secret an opportunity to obtain an advantage over competitors who do not know or
use such trade secret.
(i) Executive agrees that he shall not use for his own benefit
such Confidential Information or trade secrets acquired during the
Employment Term. Further, Executive shall not, without the written
consent of the Board of Directors of the Company or a person duly
authorized thereby, which consent may be given or withheld in the
Company's sole discretion, disclose to any person, other than an
employee of the Company or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by
Executive of his duties, any Confidential Information or trade secrets
obtained by him during the Employment Term.
(b) Return of Confidential Information. Upon any termination of
employment, Executive agrees to deliver any Company property and any documents,
notes, drawings, specifications, computer software, data and other materials of
any nature pertaining to any Confidential Information that are held by Executive
and will not take any of the foregoing, or any reproduction of any of the
foregoing, that is embodied an any tangible medium of expression, provided that
the foregoing shall not prohibit Executive from retaining his personal phone
directories and rolodexes.
(c) Exceptions. The restrictions and obligations in Section 16(a)
shall not apply with respect to any Confidential Information which (i) is or
becomes generally available to the public through any means other than a breach
by Executive of his obligations under this Agreement; (ii) is disclosed to
Executive without an obligation of confidentiality by a third party that is not
an affiliate of the Company who has the right to make such disclosure; (iii) is
developed by Executive independent of his performance of duties hereunder
without use of or benefit from the Confidential Information; (iv) was in
possession of Executive without obligations of confidentiality prior to receipt
under this Agreement; or (v) is required to be disclosed by law.
(d) Survival. The terms of this Section 16 shall survive the
expiration or termination for any reason of this Agreement.
17. Binding Arbitration.
(a) Executive and the Company each agree, to the extent permitted
by law, to arbitrate before a single neutral arbitrator, in accordance with the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association ("AAA") and Delaware law regarding discovery, any
dispute, claim, or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance,
breach, or termination
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thereof, or Executive's employment, recruitment to employment, or the
termination of such employment, whether in tort or contract, pursuant to current
or future statute or regulation, or otherwise, including but not limited to
claims for wrongful termination, breach of contract or contractual obligation,
discrimination, retaliation and harassment based on race, age, sex, disability,
and/or any other basis under Title VII of the Civil Rights Act of 1964, as
amended, and any and all federal, state, and local laws and regulations,
infliction of emotional distress, misrepresentation, fraud, and claims for
wages, commissions, bonuses, severance, stock options, fringe benefits, and the
like, except that the following will not be resolved by arbitration: any
dispute, claim, or controversy regarding workers' compensation benefits,
unemployment insurance benefits, or disability insurance benefits, or regarding
Sections 15 and/or 16 of this Agreement, and/or the validity, infringement, or
enforceability of any trade secret, patent right, copyright, trademark, or any
other intellectual property.
(b) The Company shall pay the cost of the arbitration filing and
hearing fees and the cost of the arbitrator, and any other expense or cost that
is unique to arbitration or that Executive would not be required to bear if he
were free to bring the dispute or claim in court. All reasonable costs and
expenses (including fees and disbursements of counsel) incurred by Executive
pursuant to this Section 16 shall be paid on behalf of or reimbursed to
Executive promptly by the Company; provided, however, that in the event the
arbitrator(s) determine(s) that any of Executive's litigation assertions or
defenses are determined to be in bad faith or frivolous, no such reimbursements
shall be due Executive, and any such expenses already paid to Executive shall be
immediately returned by Executive to the Company. The arbitration shall take
place in the AAA location that is closest to the Company's corporate offices in
Montana. The arbitrator shall apply Delaware law, without reference to rules of
conflicts of law, to the resolution of any dispute. The arbitrator shall issue a
written award that sets forth the essential findings and conclusions on which
the award is based. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The award shall be subject to
correction, confirmation, or vacation, as provided by Delaware law and any
applicable Delaware case law setting forth the standard of judicial review of
arbitration awards. Notwithstanding the foregoing, the parties may apply to any
court of competent jurisdiction for preliminary or interim equitable relief, or
to compel arbitration in accordance with this Section 17, without breach of this
Section 17.
(c) Executive and the Company each understand and agree that the
arbitration of any dispute or controversy listed in Section 17(c) shall be
instead of a hearing or trial before a court or jury. Executive and the Company
each understand that Executive and the Company are expressly waiving any and all
rights to a hearing or trial before a court or jury regarding any dispute or
controversy listed in Section 17(c) which they now have or which they may have
in the future. Nothing in this Agreement shall be interpreted as restricting or
prohibiting Executive from filing a charge or complaint with a federal, state,
or local administrative agency charged with investigating and/or prosecuting
such charges or complaints under any applicable federal, state, or municipal law
or regulation.
(d) The terms of this Section 17 shall survive the expiration or
termination for any reason of this Agreement.
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18. Essential Covenants. The covenants by Executive in Sections 15 and
16 are essential elements of this Agreement and without Executive's agreement to
comply with such covenants, the Company would not have entered into this
Agreement or employed Executive.
19. Injunctive Relief. Executive acknowledges that the injury suffered
as a result of a breach of any provision of this Agreement (including any
provision of Sections 15 and 16) would be irreparable and that an award of
monetary damages to the Company for such a breach would be an inadequate remedy.
Consequently, Executive agrees that the Company will have the right, in addition
to any other rights it may have, to obtain injunctive relief to restrain any
breach or threatened breach or otherwise to specifically enforce any provision
of this Agreement, and the Company will not be required to post bond or other
security in seeking such relief.
20. Assignment. The Company shall have the right to assign this
Agreement to its successors or assigns, and all covenants or agreements
hereunder shall inure to the benefit of and be enforceable by or against its
successors or assigns. The term "successors" and "assigns" shall include any
person or entity which buys all or substantially all of the Company's assets, or
a controlling portion of its stock, or with which it merges or consolidates.
This Agreement and all rights of Executive hereunder shall inure to the benefit
of, and be enforceable by, Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. The rights, duties, and covenants of Executive under this Agreement
may not be assigned.
21. No Waiver. The failure of either party to demand strict performance
and compliance with any part of this Agreement during the Employment Term shall
not be deemed to be a waiver of the rights of such party under this Agreement or
by operation of law. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach thereof.
22. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given if (a)
delivered personally or by facsimile, (b) one (1) day after being sent by
Federal Express or a similar commercial overnight service, or (c) three (3) days
after being mailed by registered or certified mail, return receipt requested,
prepaid and addressed to the parties or their successors in interest at the
following addresses, or at such other addresses as the parties may designate by
written notice in the manner aforesaid:
If to the Company: Stillwater Mining Company
XX Xxx 0000
Xxxxxxxx, Xxxxxxx 00000
If to Executive: at the last residential address known by the
Company.
23. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
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24. Entire Agreement. This Agreement, together with the Company's
Relocation Policy, and the applicable stock option and stock purchase agreements
and notices of grant referenced herein, represent the entire agreement and
understanding between the Company and Executive concerning Executive's
employment relationship with the Company, and supersede and replace any and all
prior agreements and understandings concerning Executive's employment
relationship with the Company.
25. No Oral Modification, Cancellation or Discharge. This Agreement may
only be amended, canceled or discharged in a writing signed by Executive and an
authorized member of the Board.
26. Withholding. The Company shall be entitled to withhold, or cause to
be withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.
27. Key-Man Insurance. Executive agrees that the Company may, from time
to time, apply for and take out in its own name and at its own expense, life,
health, accident, or other insurance upon Executive that the Company may deem
necessary or advisable to protect its interests hereunder; and Executive agrees
to submit to any medical or other examination necessary for such purposes and to
assist and cooperate with the Company in preparing such insurance; and Executive
agrees that he shall have no right, title, or interest in or to such insurance.
28. Attorneys' Fees. Should a dispute arise under this Agreement
following a Change in Control, or should any action or proceeding be commenced
to recover damages as a result of an alleged breach following a Change in
Control of the terms of this Agreement, then the successor to the Company as a
result of the Change in Control shall be required to pay the costs incurred by
Executive in connection therewith, including reasonable attorneys' fees, unless
it is determined that the dispute, action, or proceeding was frivolous or
brought by Executive in bad faith.
29. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware without reference to rules relating to conflict of law.
30. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
31. Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first written above:
STILLWATER MINING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Title: Chairman of Compensation
Committee
-------------------------
EXECUTIVE
/s/ Xxxxxxx XxXxxxxxxx
-------------------------------
Xxxxxxx XxXxxxxxxx
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