EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of May 8, 2000, is by and between STILLWATER
MINING COMPANY, a corporation duly organized and existing under the laws of the
State of Delaware (the "Company"), and Xxxxxx X. Xxxxxx ("Employee").
WHEREAS, the Company desires to employ Employee and Employee desires
to be employed by the Company pursuant to the terms and conditions of this
Agreement; and
WHEREAS, the Company has heretofore determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of the Company;
and
WHEREAS, the Company has determined it is imperative to diminish the
inevitable distraction of the Employee by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control and to provide the Employee
with compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits to be paid to the Employee are at
least as favorable as those in effect at the time of the Change of Control and
which are competitive with those of other corporations.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
ARTICLE 1
EMPLOYMENT
The Company hereby employs Employee, and Employee agrees to serve as
Vice President, East Boulder Operations for the Company.
ARTICLE 2
TERM
The term of this Agreement shall be for a period commencing on the
date above and ending December 31, 2000, unless sooner terminated as hereinafter
provided. The Agreement shall thereafter continue in effect for subsequent one
(1) year terms, commencing January 1, unless altered or terminated as
hereinafter provided; provided, however, that following a Change of Control, as
defined in Section 5.6, the Employment Term shall continue for no less than one
(1) additional year. The period of Employee's employment hereunder, including
any extension or extensions pursuant to the foregoing sentence, from the date of
commencement until the date of expiration or termination of this Agreement, is
referred to hereinafter as the "Employment Term."
ARTICLE 3
DUTIES AND AUTHORITY
Employee agrees, unless otherwise specifically authorized by the
Company, to devote substantially all of his business time and effort to his
duties for the profit, benefit and advantage of the business of the Company,
except that Employee may serve on the boards of directors of other business
corporations that have no business relationship with the Company and which do
not compete with the Company. In performing his duties hereunder, Employee
shall have the authority customarily held by others holding positions similar to
those assigned to Employee in similar businesses, subject to the general and
customary supervision of the Company's Board of Directors and Chief Executive
Officer.
ARTICLE 4
COMPENSATION
4.1 Base Salary. The Company agrees to pay Employee a base salary of One
-----------
Hundred Fifty Thousand Dollars ($150,000) per year, payable at the usual times
for the payment of the Company's executive employees, subject to adjustment as
provided herein. Employee's base salary shall be reviewed at least annually and
may be increased, but not decreased, consistent with general salary increases
for the Company's executive employees or as appropriate in light of the
performance of Employee and the Company. Notwithstanding anything herein to the
contrary, Employee's base salary may be reduced in the event of an across-the-
board salary reduction for all executive officers; provided, however, that the
percentage reduction of Employee's base salary shall not exceed the highest
percentage reduction in base salary of any other executive officer.
4.2 Incentive Compensation. Employee shall participate in the Company's
----------------------
incentive compensation plans for executive officers of the Company, as in effect
from time to time during the Employment Term. The Company shall adopt an annual
incentive program for executive officers of the Company that will provide for a
performance based cash bonus of an amount to be determined by the Board of
Directors of the Company (the "Annual Bonus"). Until changed by the Board of
Directors of the Company, the Annual Bonus shall be set at a target of 50% of
the Employee's base salary.
4.3 Employee Benefits. Employee shall be eligible to receive annual grants
-----------------
of stock options at the discretion of the Board of Directors. Employee shall be
eligible to participate in such other of the Company's employee benefit plans
and to receive such benefits for which his level of employment makes him
eligible, in accordance with the Company's policies as in effect from time to
time during the Employment Term; provided, however, that Employee shall be
entitled to four weeks of vacation during the initial term of this Agreement and
during the term of each extension hereof. The Employee shall be eligible to use
a Company vehicle during the term of this Agreement in accordance with Company
policy. The Company shall pay the Employee's reasonable moving expenses incurred
in conjunction with his move to Montana in accordance with Company policy.
Employee acknowledges that he has received a copy of the foregoing policies.
2
ARTICLE 5
TERMINATION
5.1 Termination by the Company Without Cause; Termination by Employee
---------------------------------------------------------------------
for Good Reason.
---------------
(a) The Company shall have the right to terminate this Agreement
without Cause (as defined below) upon thirty (30) days' notice to Employee.
If Employee's employment hereunder is terminated by the Company without
Cause or by Employee for "Good Reason" (as defined below) (other than a
termination involving a Change of Control or by reason of death or
disability), the Company shall pay Employee at the time of such termination
a lump sum a cash amount equal to 100 percent of his annual base salary in
effect immediately preceding such termination.
(b) For purposes of this Agreement, "Good Reason" shall mean:
(i) A material reduction in Employee's responsibilities,
authorities, or duties;
(ii) Employee's job is eliminated other than by reason of
promotion or termination for Cause;
(iii) The Company fails to pay Employee any amount otherwise
vested and due hereunder or under any plan or policy of the Company,
which failure is not cured within five (5) business days of receipt by
the Company of written notice from Employee which describes in
reasonable detail the amount which is due;
(iv) A material reduction in Employee's base salary except in
the event of an across-the-board salary reduction for all executive
officers;
(v) A material reduction in Employee's aggregate level of
benefits under the Company's pension, life insurance, medical, health
and accident, disability, deferred compensation or savings or similar
plans, except in the event of an across-the-board reduction in such
benefits for all executive officers;
(vi) A material reduction in Employee's reasonable opportunity
to earn incentive compensation under any plan in which Employee is a
participant, except in the event of an across-the-board reduction in
such benefits for all executive officers;
(vii) The Company and its successor(s) (as described in
subparagraph (ix) below) shall discontinue the business of the
Company; or
(viii) The failure of the Company to obtain an agreement to
expressly assume this Agreement from any successor to the Company
(whether such succession is direct or indirect by purchase, merger,
consolidation or otherwise, to
3
substantially all of the business and/or assets of the Company or a
controlling portion of the Company's stock).
Solely for the purposes of Section 5.6, any good faith determination
of Good Reason made by the Employee shall be conclusive.
5.2 Termination by the Company for Cause; Voluntary Termination by
--------------------------------------------------------------
Employee.
--------
(a) Employee's employment hereunder may be terminated by the Company
for "Cause." For purposes of Section 5.1, "Cause" shall mean (i) Employee's
willful and continued failure substantially to perform his duties hereunder
for a period of fifteen (15) days after written notice to Employee by the
Company of each such failure; (ii) Employee's dishonesty in the performance
of his duties hereunder; or (iii) Employee's conviction of a felony under
the laws of the United States or any state thereof.
(b) Employee shall have the right to voluntarily terminate this
Agreement upon thirty (30) days' notice to the Company.
(c) If Employee is terminated for Cause, or if Employee voluntarily
terminates employment hereunder other than for Good Reason, he shall be
entitled to receive his base salary through the date of termination. All
other benefits, if any, payable to Employee following such termination of
Employee's employment shall be determined in accordance with the plans,
policies and practices of the Company.
5.3 Notice of Termination. Any termination by the Company or by the
---------------------
Employee shall be communicated by Notice of Termination to the other party
hereto given in accordance with Article 18 of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Termination Date
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the giving
of such notice). The failure by the Employee or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Employee or the Company,
respectively, hereunder or preclude the Employee or the Company, respectively,
from asserting such fact or circumstance in enforcing the Employee's or the
Company's rights hereunder.
5.4 Termination Date. "Termination Date" means the date of receipt of the
----------------
Notice of Termination or any later date specified therein, as the case may be.
5.5 Termination by Death or Disability. Upon termination of Employee's
----------------------------------
employment due to death of Employee, Employee shall be entitled to his base
salary at the rate in effect at the time of Employee's death through the end of
the month in which his death occurs. Employee's employment hereunder may be
terminated by the Company if Employee becomes physically or mentally
incapacitated and is therefore unable for a period of one hundred eighty (180)
consecutive days to perform his duties (such incapacity is hereinafter referred
to as "Disability"). Upon any such termination for Disability, Employee shall
be entitled to receive
4
payment of disability benefits in lieu of salary under the Company's Employee
benefit plans as then in effect.
5.6 Termination Following a Change of Control; Benefits.
(a) In the event there is a Termination Following a Change of
Control, the Agreement shall terminate and Employee shall be entitled to
the following severance benefits:
(i) 150 percent of Employee's annual base salary at the rate
in effect immediately prior to the Change of Control or on the
Termination Date, whichever is higher, payable in a lump sum within
thirty (30) days after the Termination Date;
(ii) 150 percent of the Employee's target bonus in effect
immediately prior to the Change of Control (or on the Termination
Date, whichever is higher).
(iii) The Company shall timely pay or provide to Employee any
other amounts or benefits required to be paid or provided or which
Employee is eligible to receive under any plan, program, policy,
practice, contract or agreement of the Company (other than customary
severance pay, office facilities and equity incentive program
participation) to the same extent that Employee would be eligible
therefor if he were employed on a full-time basis by the Company in
the capacity provided for herein for a period of 18 months after the
Termination Date, including receiving the full benefit of 18 months of
employment at the income levels provided for herein for purposes of
any retirement plan utilizing years of service as a criteria in the
provision of benefits (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits"); provided, however,
that (i) for the purposes of the Company's equity incentive programs,
Employee's employment shall be deemed terminated as of the Termination
Date hereunder; and (ii) to the extent Employee, following the
Termination Date, becomes employed by another employer and becomes
entitled to receive health insurance benefits from such employer, the
Company's obligation to provide such health insurance benefits
hereunder shall be decreased;
(iv) All accrued compensation (including base salary and
Highest Annual Bonus, each prorated through the Termination Date) and
unreimbursed expenses through the Termination Date. Such amounts shall
be paid to Employee in a lump sum in cash within thirty (30) days
after the Termination Date.
(v) The Employee shall be free to accept other employment
following such Termination, and, except as provided herein, there
shall be no offset of any employment compensation earned by the
Employee in such other employment during such period against payments
due Employee hereunder, and there shall be no offset in any
compensation received from such other employment against the continued
salary set forth above.
(b) The following terms shall have the meanings set forth below:
5
(i) A "Change in Control" of the Company shall mean and shall be deemed
to have occurred if any of the following events shall have occurred:
(a) Any person (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or
becomes the beneficial owner (as defined in Rule 13d-3 of 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 30% or more of
the combined voting power of the Company's then outstanding securities,
excluding any person who becomes such a beneficial owner in connection with
a transaction described in clause (i) of paragraph (c) below; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: Individuals who, on the
date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the
Company's stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination
for election was previously so approved or recommended; or
(c) there is consummated 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 to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 55% of the combined voting power of
the 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 30% or more of the combined voting power of the Company's then
outstanding securitie s; or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
6
entity, at least 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.
Notwithstanding the foregoing, 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.
(ii) "Termination Following a Change of Control" shall mean a Termination
of the Employee without Cause by the Company in connection with or within
two years following a Change of Control or a termination by the Employee
for Good Reason of the Employee's employment with the Company within two
years following a Change of Control.
(iii) For the purposes of this Section 5.6 only, "Cause" shall mean:
(a) Misfeasance or nonfeasance by the Employee in the performance
of his duties under this Agreement intended to injure the Company which has
a material adverse effect on the Company's business or operations, if such
failure is not remedied or reasonable steps to effect such remedy are not
commenced within thirty (30) days after written notice of such violation;
or
(b) Employee's conviction of a felony or any crime involving moral
turpitude.
5.7 Certain Additional Provisions. Anything in this Agreement to the
-----------------------------
contrary notwithstanding, any payment or distribution by the Company to or for
the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") shall be limited to the maximum amount that can be payable without
such Payment being subject to the excise tax imposed by Section 4999 of the Code
on Employee. The Company agrees to comply, to the extent feasible, with the
Employee's preferences concerning the components of any Payment required to be
limited under the previous sentence.
ARTICLE 6
INSURANCE
Employee 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 Employee that the Company may deem necessary or advisable
to protect its interests hereunder; and Employee 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 Employee agrees that he shall
have no right, title, or interest in or to such insurance.
7
ARTICLE 7
FACILITIES AND EXPENSES
The Company shall make available to Employee such office space,
secretarial services, office equipment and furnishings as are suitable and
appropriate to Employee's title and duties. The Company shall promptly
reimburse Employee for all reasonable expenses incurred in the performance of
his duties hereunder, including without limitation, expenses for entertainment,
travel, management seminars and use of the telephone, subject to the Company's
reasonable requirements with respect to the reporting and documentation of such
expenses.
ARTICLE 8
NONCOMPETITION
8.1 Necessity of Covenant. The Company and Employee acknowledge that:
---------------------
(a) The Company's business is highly competitive;
(b) The Company maintains confidential information and trade secrets
as described in Article 9, all of which are zealously protected and kept
secret by the Company;
(c) In the course of his employment, Employee will acquire certain of
the information described in Article 9 and the Company would be adversely
affected if such information subsequently, and in the event of the
termination of Employee's employment, is used for the purposes of competing
with the Company;
(d) The Company transacts business throughout the world; and
(e) For these reasons, both the Company and Employee 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.
8.2 Covenant Not to Compete. Employee agrees that from and after the date
-----------------------
hereof during the Employment Term and for a period of one (1) year after the end
of the Employment Term, 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 a business which is competitive with the Platinum Group Metals
business conducted by the Company. It is understood and acknowledged by both
parties that, inasmuch as the Company transacts business worldwide, this
covenant not to compete shall be enforced throughout the United States and in
any other country in which the Company is doing business as of the date of
Employee's termination of employment.
8.3 Disclosure of Outside Activities. Employee, during the term of his
--------------------------------
employment by the Company, shall at all times keep the Company informed of any
outside business activity
8
and employment, and shall not engage in any outside business activity or
employment which may be in conflict with the Company's interests.
8.4 Survival. The terms of this Article 8 shall survive the expiration or
--------
termination of this Agreement for any reason.
ARTICLE 9
CONFIDENTIAL INFORMATION AND TRADE SECRETS
9.1 Nondisclosure of Confidential Information. Employee has acquired and
-----------------------------------------
will acquire certain "Confidential Information" of the Company. "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 which is disclosed to Employee by the Company including information
conceived, discovered or developed by Employee. Confidential Information
includes, but shall not be limited to, 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." The term "trade secret" shall be defined as follows:
A trade secret may consist of any formula, pattern, device or
compilation of information which is used in one's business, and which
provides to the holder an opportunity to obtain an advantage over
competitors who do not know or use it.
Accordingly, employee agrees that he shall not, during the Employment Term and
for three (3) years thereafter, use for his own benefit such Confidential
Information or trade secrets acquired during the term of his employment by the
Company. Further, during the Employment Term and for three (3) years
thereafter, Employee 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
Employee of his duties, any Confidential Information or trade secrets obtained
by him while in the employ of the Company.
9.2 Return of Confidential Information. Upon termination of employment,
----------------------------------
Employee agrees to deliver to the Company all materials that include
Confidential Information or trade secrets, and all other materials of a
confidential nature which belong to or relate to the business of the Company.
9.3 Exceptions. The restrictions and obligations in Section 9.1 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
Employee of his obligations under this Agreement; (ii) is disclosed to Employee
without obligation of confidentiality by a third party who has the right to make
such disclosure; (iii) is developed independently by Employee without use of or
benefit from the Confidential Information; (iv) was in possession of Employee
without obligations of
9
confidentiality prior to receipt under this Agreement; or (v) is required to be
disclosed to enforce rights under this Agreement.
9.4 Survival. The terms of this Article 9 shall survive the expiration or
--------
termination of this Agreement for any reason.
ARTICLE 10
JUDICIAL CONSTRUCTION
Employee believes and acknowledges that the provisions contained in
this Agreement, including the covenants contained in Articles 8 and 9 of this
Agreement, are fair and reasonable. Nonetheless, it is agreed that if a court
finds any of these provisions to be invalid in whole or in part under the laws
of any state, such finding shall not invalidate the covenants, nor the Agreement
in its entirety, but rather the covenants shall be construed and/or blue-lined,
reformed or rewritten by the court as if the most restrictive covenants
permissible under applicable law were contained herein.
ARTICLE 11
RIGHT TO INJUNCTIVE RELIEF
Employee acknowledges that a breach by Employee of any of the terms of
Articles 8 or 9 of this Agreement will render irreparable harm to the Company,
and that in the event of such breach the Company shall therefore be entitled to
any and all equitable relief, including, but not limited to, injunctive relief,
and to any other remedy that may be available under any applicable law or
agreement between the parties.
ARTICLE 12
CESSATION OF CORPORATE BUSINESS
This Agreement shall cease and terminate if the Company shall
discontinue its business, and all rights and liabilities hereunder shall cease,
except as provided in Section 5.6 and Article 13.
ARTICLE 13
ASSIGNMENT
13.1 Permitted Assignment. Subject to the provisions of Section 5.6, the
--------------------
Company shall have the right to assign this contract 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.
13.2 Successors and Assigns. The terms "successors" and "assigns" shall
----------------------
mean 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.
10
ARTICLE 14
FAILURE TO DEMAND, PERFORMANCE AND WAIVER
The failure by 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.
ARTICLE 15
ENTIRE AGREEMENT
The Company and Employee acknowledge that this Agreement contains the
full and complete agreement between and among the parties, that there are no
oral or implied agreements or other modifications not specifically set forth
herein, and that this Agreement supersedes any prior agreements or
understandings, if any, between the Company and Employee, whether written or
oral. The parties further agree that no modifications of this Agreement may be
made except by means of a written agreement or memorandum signed by the parties.
ARTICLE 16
GOVERNING LAW
The parties hereby agree that this Agreement shall be construed in
accordance with the laws of the State of Colorado, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.
ARTICLE 17
ATTORNEYS' FEES
If either party shall commence any action or proceeding against the
other that arises out of the provisions hereof, or to recover damages as the
result of the alleged breach of any of the provisions hereof, the prevailing
party therein shall be entitled to recover all reasonable costs incurred in
connection therewith, including reasonable attorneys' fees.
ARTICLE 18
NOTICE
All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee:
Xxxxxx X. Xxxxxx
XX Xxx 0000
Xxx Xxxxxx, XX 00000
11
____________________________
If to the Company:
Vice President, Human Resources
Stillwater Mining Company
0000 - 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
ARTICLE 19
COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one instrument.
12
IN WITNESS WHEREOF, the Company has hereunto signed its name and
Employee hereunder has signed his name, all as of the day and year first-above
written.
STILLWATER MINING COMPANY
By: ___________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
EMPLOYEE
_______________________________
Xxxxxx X. Xxxxxx
13
