EXHIBIT 10.1
EMPLOYMENT AGREEMENT
Agreement, made as of the 1st day of January 2002, by and between Century
Aluminum Company, a Delaware corporation (the "Company"), and Xxxxx X. Xxxxx
(the "Executive").
RECITALS
A. The Company desires to employ Executive as Chairman of the Board and
Chief Executive Officer and thereafter as Chairman of the Board of Directors;
and
B. Executive is willing to accept such employment on the terms and
conditions set forth in this Agreement.
THE PARTIES AGREE as follows:
1. Position and Term of Employment. Executive's employment hereunder shall
commence as of January 1, 2002, and shall end December 31, 2004, unless
terminated sooner pursuant to Section 7 of this Agreement or extended by the
mutual agreement of the parties. During the period January 1, 2002, through
December 31, 2002, Executive shall be employed as Chairman of the Board of
Directors and Chief Executive Officer of the Company and shall devote his full
business time, skill, attention and best efforts in carrying out his duties and
promoting the best interests of the Company. Executive shall also serve as a
director and/or officer of one or more of the Company's subsidiaries as may be
requested from time to time by the Board of Directors. Subject always to the
instructions and control of the Board of Directors of the Company, Executive
shall report to the Board of Directors of the Company and shall be responsible
for the control, supervision and management of the Company and its business
affairs.
From January 1, 2003, through December 31, 2004, Executive shall serve as
Chairman of the Board. In this capacity, Executive shall devote approximately
fifty percent of his time to working with the Company. Executive shall be
available to work with and advise and assist the Chief Executive Officer and
other executives of the Company on a broad range of strategic and other issues,
including the Company's growth strategy, its financial planning and structure,
acquisitions, succession planning and such other matters as the Chief Executive
Officer or Board of Directors may reasonably request. Executive shall not at any
time while employed by the Company or any of its affiliates (as defined in the
Amended and Restated Severance Protection Agreement between the Company and
Executive dated as of January 1, 2002, (the "SPA"), incorporated in this
Agreement by this reference), without the prior consent of the Board of
Directors, knowingly acquire any financial interests, directly or indirectly, in
or perform any services for or on behalf of any business, person or enterprise
which undertakes any business in substantial competition with the business of
the Company and its affiliates or sells to or buys from or otherwise transacts
business with the Company and its affiliates; provided that Executive may
acquire and own not more than five percent (5%) of the outstanding capital stock
of any public corporation which sells or buys from or otherwise transacts
business with the Company and its affiliates, and he may continue to serve as a
member of the Board of Directors of Glencore International AG.
2.1 Base Salary.
(a) (i) Executive shall be paid an initial salary at the monthly
rate of $59,875, which shall be paid in accordance with the Company's normal
payroll practice with respect to salaried employees, subject to applicable
payroll taxes and deductions (the "Base Salary"). Executive's Base Salary shall
be subject to review and possible change in accordance with the
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usual practices and policies of the Company. However, Executive's base annual
salary shall not be reduced to less than $718,500 during 2002. Provided
Executive ceases to be Chief Executive Officer effective January 1, 2003, then
from that date through December 31, 2004, Executive's base annual salary shall
be $500,000.
(ii) If for any reason other than Executive's voluntary
resignation, his death, or termination for cause pursuant to Section 7(c),
Executive does not continue to be employed by the Company, Executive shall
continue to receive an amount equal to his then current Base Salary plus an
annual performance bonus equal to the highest annual bonus payment Executive has
received in the previous three years ("Highest Annual Bonus") for the then
remaining balance of the term of this Agreement. In no event shall such payment
be less than one year's Base Salary plus Highest Annual Bonus. The foregoing
amounts shall be paid to Executive over the remaining term of this Agreement or
one year (whichever is applicable) in accordance with the Company's payroll and
bonus payment policies. Notwithstanding the foregoing, no payments under this
subparagraph (ii) shall be made if the Company makes all payments to Executive
required to be made, if any, under the SPA in the event of a Change in Control
(as defined in the SPA).
(b) If Executive resigns voluntarily or ceases to be employed by
reason of his death or by the Company (or any affiliate) for cause as described
in Section 7(c) of this Agreement, all benefits described in Sections 2 and 4
hereof shall terminate (except to the extent previously earned or vested).
(c) If Executive's employment shall have been terminated as a result
of Executive's disability pursuant to Section 7(b), the Company shall pay in
equal monthly
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installments for the then remaining balance of the term of this Agreement or one
year, whichever is greater, to Executive (or his beneficiaries or personal
representatives, as the case may be) disability benefits at a rate per annum
equal to one hundred percent (100%) of his then current Base Salary, plus
amounts equal to the Highest Annual Bonus, less payments and benefits, if any,
received under any disability plan or insurance provided by the Company and less
any "sick leave" payments received from the Company for the applicable period.
2.2 Bonuses. For his services during 2002, Executive shall be eligible for
an annual performance bonus in amounts between 0 and 150 percent of his Base
Salary upon achievement by the Company of targets as determined by the
Compensation Committee of the Board of Directors of the Company. Executive's
participation in bonus programs for calendar years 2003 and 2004 shall be at the
discretion of the Compensation Committee.
2.3 Expenses. The Company shall pay or reimburse Executive in accordance
with the Company's normal practices any travel, hotel and other expenses or
disbursements reasonably incurred or paid by Executive hereunder in connection
with the services performed by Executive, in each case upon presentation by
Executive of itemized accounts of such expenditures or such other supporting
information as the Company may require.
3.1 Incentive Plan. Executive shall be eligible for option grants and
performance share unit awards under the Company's 1996 Stock Incentive Plan (the
"Plan"), and the Guidelines adopted to implement the Plan.
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3.2 Effect of Termination of Employment or Change in Control.
(a) If Executive shall resign voluntarily or cease to be employed by
the Company (or an affiliate) for cause as described in Section 7(c) of this
Agreement, except as provided in the SPA, all benefits described in Section 3
hereof shall terminate (except to the extent previously earned or vested and, if
Executive retires, those which may become vested upon retirement pursuant to the
terms of the Guidelines).
(b) If Executive dies or becomes disabled, all options which have
not vested will accelerate and vest immediately, and, in the event of
Executive's death, all option rights will transfer to Executive's
representative. All then unexercised options will be cancelled one year after
Executive dies or becomes disabled.
(c) If Executive dies, becomes disabled or retires, performance
shares units awarded to such Executive pursuant to the Guidelines shall vest, be
valued and awarded pursuant to the terms of such Guidelines.
(d) If there is a Change in Control, then all options and
performance share units that have not vested will accelerate and vest
immediately. Performance share units awarded to Executive pursuant to the
Guidelines shall be valued at 100 percent as though the Company had achieved its
target for each relevant plan period. The Executive shall be entitled to receive
one share of the Company's common stock upon the vesting of each Performance
Share. The Executive shall have the right to require the Company to purchase,
for cash, and at fair market value, any shares of stock purchased upon exercise
of any option or received upon the vesting of any Performance Share. (Terms used
in this Section, unless defined in this Employment Agreement, are as defined in
the SPA.)
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4.1 Other Benefits. Executive shall be entitled to the following:
(i) to participate in life, medical, dental, hospitalization,
disability and life insurance benefit plans made available by the Company to its
senior executives and shall also be eligible to participate in existing
retirement or pension plans offered by the Company to its senior executives,
but, except as otherwise provided in Section 4.1 (ii) or Section 4.2, subject in
each case to the terms and requirements of each such plan or program; and
(ii) Upon his retirement, Executive also shall be entitled to
retiree health benefits equivalent to those available as of the date of
Executive's retirement to other senior executive retirees. Executive is 100%
vested for retiree health benefits.
4.2 Retirement Benefits. Notwithstanding any provisions of the Qualified
Plan or the Internal Revenue Code of 1986, as at any time amended, and the
regulations thereunder (the "Code"), it is the intention of the parties that
Executive shall receive, upon his retirement, as an annual retirement benefit
from the Company, approximately $695,000, estimated as of the date of this
Agreement equal to fifty percent of his final annual compensation (including
base pay plus annual cash bonus), of $1,390,000. For purposes of calculating the
amount to which Executive would be entitled, it was assumed Executive would
provide services through the year 2004. Accordingly, Executive shall be entitled
to receive retirement benefits as follows:
(a) Qualified Plan Benefits. The Executive shall be entitled to
receive, upon his retirement as provided for in the Company's Employees'
Retirement Plan (the "Qualified Plan"), benefits under the Qualified Plan
computed as set forth in that plan.
(b) Supplemental Executive Retirement Benefits. In addition to
benefits the Executive is entitled to receive under the Qualified Plan,
Executive also shall be entitled to receive Supplemental Executive Benefits as
set forth in this Agreement and in the Company's
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Supplemental Retirement Income Benefit Plan, adopted as of November 28, 2001,
("SERB Plan"), which SERB Plan is incorporated into this Agreement by this
reference. Those benefits are as follows:
(i) The sum of $200,000 per year. This amount reflects the
estimated difference between the amount Executive would receive under the
Qualified Plan and the amount he would be entitled to receive had his benefit
under the Qualified Plan not been subject to the limitations on benefits and
contributions set forth in Sections 401 (a)(17) and 415 of the Code; plus
(ii) The sum of $425,000 per year, or such lesser amount as
may be vested pursuant to Section 4.2 (c) at the time Executive retires or
otherwise becomes eligible to receive his Supplemental Retirement Benefits
pursuant to the terms of the SERB Plan.
(c) Vesting. The Supplemental Retirement Benefit described in
Section 4.2 (b) (i) shall be vested in its entirety as of the date of this
Agreement, and upon the termination of Executive's employment, he shall be
entitled to receive the same as provided in Section 4.2 (d). The Supplemental
Retirement Benefit described in Section 4.2 (b) (ii) will vest at 25% per annum
beginning on January 1, 2001, except as follows. If, prior to calendar year
2005:
(i) Executive voluntarily terminates his employment (other
than for "Good Reason" as defined in the SPA), then for such calendar year
Executive shall vest 25% if such termination occurs after June 30 of such year
and 0 percent if termination occurs before June 30 of such year;
(ii) Executive is terminated for cause, he shall not be
entitled to be vested for any interest for the year in which he is terminated;
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(iii) Executive dies or becomes disabled, the Supplemental
Retirement Benefit will vest 100 percent upon such event and Executive shall be
entitled to receive payments as described in Section 4.2 (d), except that if
termination is as a result of disability, and Executive is receiving disability
payments from the Company, the Supplemental Retirement Benefit will be reduced
so that the combined Supplemental Retirement Benefit and disability benefit
shall equal the amount described in Section 4.2 (b) (ii); or
(iv) There is a Change of Control, and Executive is terminated
or resigns for Good Reason in connection therewith, Executive will vest 100
percent immediately upon such termination or resignation.
(d) Time and Method of Payment of Benefits. Benefit payments under
the SERB Plan shall be made to Executive in the same manner as provided under
the Qualified Plans. Except as otherwise provided in the Qualified Plans, no
benefits shall be payable hereunder prior to death, disability or termination of
employment.
(e) Prohibition on Assignment. Other than pursuant to the laws of
descent and distribution, Executive's right to benefit payments under this
Section 4.2 are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment by
creditors of Executive or Executive's beneficiary.
(f) Source of Payments. Subject to Section 10 of the SERB Plan
("Section 10"), all benefits under this Section 4.2 shall be paid in cash from
the general funds of the Company, and, except as set forth below, no special or
separate fund shall be established or other segregation of assets made to assure
such payments; provided, however, that the Company may establish a bookkeeping
reserve to meet its obligations hereunder. It is the intention of the parties
that the
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arrangements be unfunded for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974. In the event of a possible
Change in Control, and before a Change in Control occurs, the Company shall
contribute to the Trust described in Section 10, and in the manner described
therein, those amounts necessary to cause the present value of the Trust assets
to be no less than the present value of the future benefits payable under the
SERB Plan.
(g) Executive's Status. Executive shall have the status of a general
unsecured creditor of the Company, and the SERB Plan shall constitute a mere
promise to make benefit payments in the future.
(h) Survival of Benefit. The Supplemental Retirement benefits
described in this Section 4.2 shall not be reduced during the term of this
Agreement or thereafter, and Executive's rights with respect to these benefits
and retiree health benefits described in Section 4.1 (ii) shall survive any
termination (or non-renewal) of this Agreement, including, without limitation, a
termination pursuant to Section 7(c), or any amendment or termination of the
SERB Plan, to the full extent necessary to protect the interests of Executive
under this Agreement and under the terms of the SERB Plan.
5. Confidential Information. Except as specifically permitted by this
Section 5, and except as required in the course of his employment with the
Company, while in the employ of the Company or thereafter, Executive will not
communicate or divulge to or use for the benefit of himself or any other person,
firm, association, or corporation without the prior written consent of the
Company, any Confidential Information (as defined herein) owned, or used by the
Company or any of its affiliates that may be communicated to, acquired by or
learned of by
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Executive in the course of, or as a result of, Executive's employment with the
Company or any of its affiliates. All Confidential Information relating to the
business of the Company or any of its affiliates which Executive shall use or
prepare or come into contact with shall become and remain the sole property of
the Company or its affiliates.
"Confidential Information" means information not generally known about the
Company and its affiliates, services and products, whether written or not,
including information relating to research, development, purchasing, marketing
plans, computer software or programs, any copyrightable material, trade secrets
and proprietary information, including, but not limited to, customer lists.
Executive may disclose Confidential Information to the extent it (i)
becomes part of the public domain otherwise than as a result of Executive's
breach hereof or (ii) is required to be disclosed by law. If Executive is
required by applicable law or regulation or by legal process to disclose any
Confidential Information, Executive will provide the Company with prompt notice
thereof so as to enable the Company to seek an appropriate protective order.
Upon request by the Company, Executive agrees to deliver to the Company at
the termination of Executive's employment, or at such other times as the Company
may request, all memoranda, notes, plans, records, reports and other documents
(and all copies thereof) containing Confidential Information that Executive may
then possess or have under his control.
6. Assignment of Patents and Copyrights. Executive shall assign to the
Company all inventions and improvements within the existing or contemplated
scope of the Company's business made by Executive while in the Company's employ,
together with any such patents or copyrights as may be obtained thereon, both
domestic and foreign. Upon request by the Company and at the Company's expense,
Executive will at any time during his employment with
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the Company and after termination regardless of the reason therefor, execute all
proper papers for use in applying for, obtaining and maintaining such domestic
and foreign patents and/or copyrights as the Company may desire, and will
execute and deliver all proper assignments therefor.
7. Termination.
(a) This Agreement shall terminate upon Executive's death.
(b) The Company may terminate Executive's employment hereunder upon
fifteen (15) days' written notice if in the opinion of the Board of Directors,
Executive's physical or mental disability has continued or is expected to
continue for one hundred and eighty (180) consecutive days and as a result
thereof, Executive will be unable to continue the proper performance of his
duties hereunder. For the purpose of determining disability, Executive agrees to
submit to such reasonable physical and mental examinations, if any, as the Board
of Directors may request and hereby authorizes the examining person to disclose
his findings to the Board of Directors of the Company.
(c) The Company may terminate Executive's employment hereunder "for
cause" (as hereinafter defined). If Executive's employment is terminated for
cause, Executive's salary and all other rights not then vested under this
Agreement shall terminate upon written notice of termination being given to
Executive. As used herein, the term "for cause" means the occurrence of any of
the following:
(i) Executive's disregard of a direct, material order of the
Board of Directors of the Company, the substance of which order is (a) a proper
duty of Executive pursuant to this Agreement, (b) permitted by law and (c)
otherwise permitted by this Agreement, which disregard continues after fifteen
(15) days' opportunity and failure to cure; or
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(ii) Executive's conviction for a felony or any crime
involving moral turpitude.
8. Additional Remedies. Executive recognizes that irreparable injury will
result to the Company and to its business and properties in the event of any
breach by Executive of the non-compete provisions of Section 1, the
confidentiality provisions of Section 5 or the assignment provisions of Section
6 and that Executive's continued employment is predicated on the covenants made
by him pursuant to such Sections. In the event of any breach by Executive of his
obligations under said provisions, the Company shall be entitled, in addition to
any other remedies and damages available, to injunctive relief to restrain any
such breach by Executive or by any person or persons acting for or with
Executive in any capacity whatsoever and other equitable relief.
9. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and the Company and their
respective legal representatives, successors and assigns. Neither this Agreement
nor any of the duties or obligations hereunder shall be assignable by Executive.
10. Governing Law; Jurisdiction. This Agreement shall be interpreted and
construed in accordance with the laws of the State of California. Each of the
Company and Executive consents to the jurisdiction of any state or federal court
sitting in California, in any action or proceeding arising out of or relating to
this Agreement.
11. Headings. The paragraph headings used in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement
for any purpose or in any way affect the interpretation of this Agreement.
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12. Severability. If any provision, paragraph or subparagraph of this
Agreement is adjudged by any court to be void or unenforceable in whole or in
part, this adjudication shall not affect the validity of the remainder of this
Agreement.
13. Complete Agreement. This Agreement and the SPA embody the complete
agreement and understanding among the parties, written or oral, which may have
related to the subject matter hereof in any way and neither shall be amended
orally, but only by the mutual agreement of the parties in writing, specifically
referencing this Agreement or the SPA, as the case may be. To the extent there
is an inconsistency between the terms of this Agreement and the terms of the
SPA, the Agreement which provides terms most favorable to the Executive shall
govern.
14. Counterparts. This Agreement may be executed in one or more separate
counterparts, all of which taken together shall constitute one and the same
Agreement.
CENTURY ALUMINUM COMPANY
By: /s/ Xxxxxx X. Kitchen
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Title:
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/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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