EMPLOYMENT AGREEMENT
EXHIBIT 10.19
THIS EMPLOYMENT AGREEMENT is made as of the 13 day of December, 2005, by and between Century
Aluminum Company, a Delaware corporation (the “Company”), and Xxxxx X. Xxxxxx (the “Executive”).
RECITALS
A. The Company desires to employ Executive as its President and Chief Executive Officer; and
B. Executive is willing to accept such employment on the terms and conditions set forth in
this Agreement.
THE PARTIES AGREE as follows:
1.1 Position and Term of Employment. Executive’s employment hereunder shall commence
as of December 13, 2005, and shall end December 31, 2008, unless terminated sooner pursuant to
Section 7 of this Agreement or extended by the mutual agreement of the parties. Executive shall be
employed as the President 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 the Company
and 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.
Executive shall not at any time while employed by the Company or any of its affiliates (as
defined in the Severance Protection Agreement between the Company and Executive dated as of
December 13, 2005, (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 a de minimum amount of the outstanding
capital stock of any public corporation which sells or buys from or otherwise transacts business
with the Company and its affiliates.
2.1 Base Salary.
(a) (i) Effective as of December 13, 2005, Executive shall be paid an initial salary at the
monthly rate of $62,500, 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 usual practices and policies of the Company. However, Executive’s base annual
salary shall not be reduced to less than $750,000.
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(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 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
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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.
(a) In recognition of his potential contributions to the Company, Executive shall be entitled
to receive a one-time cash bonus of $475,000 which shall be payable January 31, 2006.
(b) Executive shall be eligible for an annual performance bonus in amounts between 0 and 100
percent of his Base Salary based upon his individual performance and achievement by the Company of
overall objectives as determined by the Committee. The Company agrees that Executive shall be
entitled to receive a cash bonus of not less than $325,000 for his services for the full year 2006.
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.
2.4 Relocation; Housing. The Company shall pay for all reasonable and customary
relocation expenses to Monterey, California, as set forth in the Relocation Policy attached to this
Agreement. In addition, the Company will provide, at the
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Company’s expense, temporary housing in the Monterey area for a period of six months from the
effective date of this Agreement.
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. Upon approval by the compensation committee of the Board of
Directors (“Compensation Committee”), the Company shall grant Executive options to purchase 100,000
shares of Company stock (the “Grant”) at an exercise price based on the price of the stock on the
day Executive signs this Agreemet. In addition the Compensation Committee shall be asked to
approve a grant of 50,000 restricted stock shares, which grant will vest one-half on January 1,
2007, and the other half on January 1, 2008.
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. If Executive’s employment terminates by reason of death or disability,
Executive or Executive’s representative may
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exercise all unexercised options within three years after such death or disability or the
expiration date of the option, whichever is sooner.
(c) If Executive dies, becomes disabled or retires, performance shares awarded to such
Executive pursuant to the Guidelines shall immediately vest, but be valued and awarded at the times
and in the manner awarded to other plan participants pursuant to the terms of such Guidelines.
(d) If there is a Change in Control, then all options and performance shares that have not
vested will accelerate and vest immediately. Performance shares 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. Upon a Change in Control, 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.)
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
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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.
4.2 Pension 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 (and subject
to the vesting requirements below), a monthly retirement payment (“Target Retirement Income”) in an
amount equal to fifty percent of Executive’s “Final Average Monthly Compensation” (base salary plus
cash bonus in any three calendar years out of the previous ten years of employment which produces
the highest monthly average). 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”),
payments under the Qualified Plan computed as set forth in that plan.
(b) Supplemental Executive Retirement Benefits. In addition to payments 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 SERB Plan, which
benefits are as follows:
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(i) An amount equal to the 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) An amount that represents the difference between Executive’s Target Retirement Income and
the Executive’s Qualified Plan Benefit plus the amount payable under Section 4. (b) (i) above.
(c) Vesting. The Qualified Plan Benefits and the Supplemental Retirement Benefit
described in Section 4.2 (b) (i) shall be fully vested as of the date of this Agreement. Upon the
termination of Executive’s employment he shall be entitled to receive all such benefits as provided
in Section 4.2 (d). The Supplemental Retirement Benefit described in Section 4.2 (b) (ii) shall
begin vesting five years after the date of this Agreement and shall vest thereafter at 20 percent
per annum, except as follows. If, after vesting has commenced, but prior to full vesting:
(i) Executive voluntarily terminates his employment (other than for “Good Reason” as defined
in the SPA), then for such calendar year Executive shall vest 20% 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
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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 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
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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 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
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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 the Company and after
termination regardless of the reason therefore, 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 therefore.
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.
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(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
(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.
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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.
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.
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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 | /s/ Xxxxx X. Xxxxxx | ||||
| Xxxxx X. Xxxxxx | ||||||
Title:
|
Executive Vice President | |||||
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