EXHIBIT 10.2
STILLWATER MINING COMPANY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of September 2,
2003, is made by and between Stillwater Mining Company, a Delaware corporation
(the "Company"), and Xxxxxxx X. Xxxx ("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 Executive
Vice President and Chief Operating Officer. In such capacity, the Executive
shall report to the Chairman of the Board of Directors (the "Board") and the
Chief Executive Officer. Executive shall have and perform such duties,
responsibilities, and authorities as are customary for Executive Vice Presidents
and Chief Operating Officers in 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 an
executive vice president and chief operating officer of any company, or as may
reasonably assigned to him by the Chairman of the Board and Chief Executive
Officer. 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
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 September 2, 2003 (the "Commencement Date") and shall end
on September 1, 2005 ("Initial Period"), unless otherwise terminated by either
Party prior to the scheduled termination date as provided in Sections 8 and 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 three (3) months prior to the scheduled termination of 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 three-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 9(b)(i) 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. 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 two hundred and fifty thousand dollars ($250,000), 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 3(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 40% of his Base Salary (the "Target Bonus") based upon
satisfaction of criteria determined by the Board and/or its Compensation
Committee for each year during the Employment Term, starting with the year
commencing January 1, 2003 (except that for the year 2003, the Target Bonus
amount shall be $33,333 which is a pro rata portion of the Target Bonus for such
period based on the Commencement Date). Executive shall be eligible to earn a
maximum bonus equal to 80% of his Base Salary. For 2003, the Company shall
provide Executive with written notice of that period's
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performance goals no later than [October 1, 2003]; thereafter, written notice of
the performance goals shall be provided by February 28 of the applicable year.
4. 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, 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) The Company shall provide the Executive with use of a Company
vehicle during the Employment Term.
(c) Executive shall be entitled to four (4) weeks of vacation per
year during the Employment Term.
5. 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.
6. Relocation. The Company will reimburse Executive for costs related
to his relocation to Montana, in accordance with the Company's standard
relocation policy, provided, however, that the Company shall also provide the
Executive with the option of having the Company's relocation firm conduct an
appraisal of Executive's current home and purchase such home at the appraised
value.
7. Equity.
(a) Subject to Board approval, Executive shall be granted an
option to purchase 50,000 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. Executive may only exercise the Option Shares 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.
8. 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 9(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 9.
9. 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 9(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 or Termination without Good
Reason.
(i) In the event that the Company terminates Executive's
employment for Cause or Executive terminates employment (including any
non-renewal by Executive) without Good Reason (as defined below):
(A) Executive shall receive all payments provided in
Section 9(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 contendere
by Executive to, any
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felony or crime involving moral turpitude; (C) Executive's willful and
continued failure to 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 14 and 15 hereof, the Company
shall provide Executive with the following:
(A) all payments stated in Section 9(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 2003, when the numerator equals the
number of days elapsed since September 2, 2003 and the denominator
is 121) 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 twelve (12) 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 twelve (12) 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 twelve (12) 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.
(ii) Relevant Definitions.
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(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
(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
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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, duties or offices as
set forth in Section 1, status, or nature of responsibilities
within the Company;
(2) a decrease in Executive's annual Base Salary or
Target Bonus award opportunity below 40% of Base Salary (other
than an across-the-board percentage reduction for senior
management executives);
(3) 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);
(4) any other failure by the Company to perform any
material obligation under, or breach by the Company of any
material provision of, this Agreement that is not cured within 10
business days of receipt of written notice from Executive;
(5) a relocation of the Company's corporate offices
outside of the State of Montana; or
(6) 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.
Any termination by the Executive for any reason other than those
provided in subsections (1) - (6), above, or death or Disability, shall be
termination "without Good Reason."
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(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 terminates Executive's employment without
Cause, then, in lieu of the severance payments and benefits stated in Section
9(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 14 and 15 hereof, the Company shall provide Executive
with the following:
(i) all payments stated in Section 9(a) above plus settlement of
any amounts due under any Company plan, policy or practice;
(ii) 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 2003, when the numerator equals
the number of days elapsed since September 2, 2003 and the denominator is 121)
payable within thirty (30) days of the Termination Date;
(iii) a lump sum, payable within sixty (60) days of the Termination
Date, equal to two (2) 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;
(iv) 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
(v) 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:
(A) the payments stated in Section 9(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
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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 2003 when numerator equals the number of days elapsed since
September 2, 2003 and the denominator is 121) 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 because
physical or mental incapacity has rendered or will render Executive unable
to perform his duties as Executive Vice President and Chief Operating
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 9(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 plus 90, and the denominator of which is 365
(except for 2003 when numerator equals the number of days elapsed since
September 2, 2003 plus 90, and the denominator is 121) payable within
10 days of the Termination Date; and
(C) Executive's Option Shares shall vest and become
exercisable in accordance with the terms of the Option Agreement.
(g) No Offset or Mitigation. The payments specified in this Section 9
shall not be subject to mitigation or offset due to Executive's employment
subsequent to the Employment Term, provided, however, that the Executive does
not breach Sections 14 and 15 hereof.
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10. Excise Tax Gross-up.
(a) Subject to Section 10(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 10, 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.
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-
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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 Excise Tax and shall not take any position
or action that would materially increase the amount of any Gross-Up Payment
hereunder.
(b) Modified Cut-Back. Notwithstanding the foregoing Section
10(a), if it shall be determined that the amount of any payment due Executive
pursuant to Section 10(a) above would result in less than $20,000 in net
after-tax value to Executive, then no Gross-Up payment shall
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be made to Executive and the total payments due Executive pursuant to Section
10(a) shall be reduced to an amount that would not result in the imposition of
any Excise Tax.
11. Indemnification. The Company will hold harmless, indemnify, and
provide a defense to Executive to the fullest extent permitted by Montana 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.
12. 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.
13. 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 Montana 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 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 14 and/or 15 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
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costs and expenses (including fees and disbursements of counsel) incurred by
Executive pursuant to this Section 13 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 Montana 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 Montana law and any
applicable Montana 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 13, without breach of this
Section 13.
(c) Executive and the Company each understand and agree that the
arbitration of any dispute or controversy 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 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 13 shall survive the expiration or
termination for any reason of this Agreement.
14. 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;
(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
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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 later of (x) one (1) year after the
Termination Date (due to termination for any reason), and (y) the end of the
period during which Executive is receiving severance payments and/or benefits
from the Company under Section 9(c) or 9(d), he will not, without the express
written permission of the Company, which may be given or withheld in the
Company's sole and absolute 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 acknowledged by both
Executive and the Company that, because the Company transacts business
worldwide, the term of this Section 14(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 later of (x) one (1) year after the
Termination Date (due to termination for any reason), and (y) the end of the
period during which Executive is receiving severance payments and/or benefits
from the Company under Section 9(c) or 9(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.
15. 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 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
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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.
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 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 15(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 15 shall survive the
expiration or termination for any reason of this Agreement.
16. Essential Covenants. The covenants by Executive in Sections 14
and 15 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.
17. 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 14 and 15) 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.
18. 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
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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.
19. 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.
20. 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 00 Xxx 000
Xxx, Xxxxxxx 00000
If to Executive: at the last residential address known
by the Company.
21. 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.
22. 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.
23. 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.
24. 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.
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25. 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.
26. 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.
27. Governing Law. This Agreement shall be governed by the laws of
the State of Montana without reference to rules relating to conflict of law.
28. 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.
29. 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.
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
/s/ Xxxxxxx X. XxXxxxxxxx
-------------------------------------------
By: Xxxxxxx X. XxXxxxxxxx
---------------------
Title: Chief Executive Officer and Chairman
------------------------------------
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxx
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