EXHIBIT 10.1
MATERIAL IN THIS DOCUMENT HAS BEEN
OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY
WITH THE COMMISSION.
PALLADIUM SALES AGREEMENT
THIS PALLADIUM SALES AGREEMENT (this "Agreement") is made and entered into
this 13 day of August, 1998, by and between STILLWATER MINING COMPANY, a
Delaware corporation, whose address is 717 17th Street, Suite 1480, Denver,
Colorado ("SMC"), and FORD MOTOR COMPANY, a Delaware corporation, whose address
is 17101 Rotunda Drive, Dearborn, Michigan ("Ford").
RECITAL
Ford and SMC are interested in entering into an arrangement by this
Agreement whereby SMC will supply Ford certain agreed upon amounts of palladium
sponge, .9995 minimum purity.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, SMC hereby agrees to sell and
deliver and Ford hereby agrees to purchase palladium of the quantity and quality
hereinafter set forth, upon the following terms and conditions:
Section 1. Definitions and Terminology. Unless the context indicates
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otherwise, capitalized terms used in this Agreement have the meaning set forth
in this Section 1.
Actual Monthly Production means the actual amount of mined metal out-
turned by SMC or on behalf of SMC by a third party refinery during any one
calendar month.
[***]
Business Day means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the United States are
authorized or obligated by law or executive order to close.
Confidentiality Agreement means that certain Confidentiality
Agreement, dated as of August 13, 1998, by and between SMC and Ford.
Contract Year means the twelve consecutive calendar months commencing
with January of each calendar year.
Delivery Point means Johnson Matthey or Engelhard (New Jersey), as
designated by Ford by the 20th Business Day of the Pricing Month.
Estimated Annual Production means the amount of annual production of
SMC estimated by SMC for a Contract Year and included in a written notification
to Ford by the December 15th prior to such Contract Year.
[***]
Metal means the Palladium to be sold under this Agreement.
Ounce is a troy ounce equivalent to 31.1035 grams.
Palladium means refined palladium in sponge form with .9995 minimum
purity.
Pricing Day means any day for which there is [***] published.
Pricing Month means the month prior to delivery during which pricing
is determined pursuant to Section 4 of this Agreement.
[***]
Section 2. Term. This Agreement shall have a term from January 1,
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1999, through and including December 31, 2003. This Agreement is subject to
earlier termination pursuant to Section 8 of this Agreement.
Section 3. Quantity and Delivery. Beginning on January 4, 1999, SMC
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will sell and deliver Metal FOB Delivery Point, to be credited to Ford's pool
account, and Ford will purchase the quantities of Metal set forth in this
Section 3, which shall be delivered no later than the third Business Day of the
month following the Pricing Month.
(a) Palladium. During the Contract Year 1999, SMC will sell and
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deliver and Ford will purchase on a monthly basis [***] of Actual Monthly
Production. During the Contract Years 2000, 2001, 2002 and 2003, SMC will sell
and deliver and Ford will purchase on a monthly basis [***] of Actual Monthly
Production. The parties acknowledge that the Actual Monthly Production will vary
from time to time.
[***]
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[***]
(c) Notification of Estimated Annual Production and of Actual
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Monthly Production. Not later than December 15th prior to each Contract Year,
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SMC shall, for informational purposes only, notify Ford in writing of the
Estimated Annual Production for such Contract Year. Not later than the last
Business Day of the month preceding the Pricing Month, SMC will notify Ford in
writing of its Actual Monthly Production, which amount will be priced during the
next month, i.e. the Pricing Month, and delivered by the third Business Day of
the month following the Pricing Month. Ford and SMC will verify actual
production amounts by reference to production data set forth in SMC's Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission (the
"SEC"). Ford shall have the right to request from SMC statements from SMC's
third party refiners to verify Actual Monthly Production amounts.
By way of example, for delivery of Metal in January 1999, SMC will notify
Ford of the Actual Monthly Production by the last Business Day in November 1998
and the Metal will be priced in December 1998 and delivered by January 4, 1999.
(d) Estimates. Estimated Annual Production will be provided by SMC
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to Ford for informational purposes only. SMC makes no warranty, commitment or
guaranty regarding the amount of Actual Monthly Production. Actual Monthly
Production may differ from estimated amounts due to a number of factors,
including but not limited to (i) fluctuations in ore grade, tons mined, crushed
or milled, (ii) variations in concentrator, smelter or refinery operations,
(iii) geological, technical, permitting, mining and processing problems; (iv)
delay in developing or failure to develop the East Boulder site; and (v)
availability of experienced employees.
Section 4. Pricing. Subject to Section 3(b) above, the price per Ounce
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to be paid to SMC by Ford for the actual quantities of Palladium delivered
pursuant to Section 3 above shall be based on the Average Monthly Price for the
Pricing Month less a discount of [***] per Ounce. [***]
Section 5. Payment Terms. On the last Business Day of each Pricing
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Month, SMC will notify Ford in writing via facsimile as to the formula-based
pricing computations set forth in Section 4 above for the actual quantities of
Metal to be delivered by SMC pursuant to this Agreement during the following
month. Unless Ford has provided SMC with Notice of disagreement with the
pricing computations within two Business Days of receipt of the pricing
computations, Ford will forward payment for 100% of the actual quantities by
wire transfer to SMC (pursuant to written wire transfer instructions which will
be provided by SMC) within two Business Days after release of the Metal to
Ford's pool account at the Delivery Point (unless the parties mutually agree in
writing to adjust the delivery date). All payments will be made in U.S.
Dollars.
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If Ford does not agree with SMC's pricing computations, Ford shall Notify
SMC of such disagreement within two Business Days of receipt of the pricing
computations and the parties shall seek resolution of such dispute as to the
calculation of the payment amount pursuant to the dispute resolution procedures
set forth in Section 15 below. If SMC receives Notice from Ford of its
disagreement with the pricing computations, SMC may suspend delivery of Metal to
Ford until such time as payment has been received by SMC. This right shall not
be deemed to be an exclusive right or remedy. Without derogating SMC's rights
under this Agreement, any delay in payment by Ford to SMC shall bear interest
calculated at the Prime Rate (as quoted by Chase Manhattan Bank in the Wall
Street Journal on the date such payment was due) from the date upon which
payment was due until the date full payment is received.
Section 6. Suspension of Delivery for Failure to Pay. Ten days after
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receipt by Ford of written notice from SMC to Ford of Ford's failure to pay
pursuant to the terms of Section 5 above, SMC may suspend delivery of Metal to
Ford until such time as payment has been received by SMC. This right shall not
be deemed to be an exclusive right or remedy.
Section 7. Risk of Loss; Title. Title and risk of loss and liability
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for all Metal delivered hereunder shall pass to Ford upon release of the Metal
at Ford's pool account at JM.
Section 8. Warranty. SMC warrants that the Metal supplied hereunder
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shall have a minimum purity of .9995, that SMC will convey good title thereto,
that the Metal will be delivered free and clear of all liens and encumbrances
and that the Metal will have been produced, handled and transported to the
Delivery Point in accordance with all applicable federal, state and local laws,
rules and regulations. OTHER THAN THOSE EXPRESSLY STATED IN THIS AGREEMENT,
THERE ARE NO REPRESENTATIONS, GUARANTEES OR WARRANTIES, EXPRESSED OR IMPLIED, OF
MERCHANTABILITY, FITNESS, OR SUITABILITY FOR A PARTICULAR PURPOSE OR USE
NOTWITHSTANDING ANY COURSE OF PERFORMANCE, USAGE OF TRADE OR LACK THEREOF
INCONSISTENT WITH THIS SECTION. SMC's sole liability for breach of warranty
shall be limited to replacement of the nonconforming Metal with conforming Metal
within 10 Business Days of notice from Ford of the nonconformity.
Section 9. Default and Termination. Either party shall be entitled to
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terminate this Agreement in the event of (i) the other party generally not
paying its debts as such debts become due, or admitting in writing its inability
to pay its debts generally or making a general assignment for the benefit of
creditors, the appointment of a receiver for the other party or any of its
assets, the filing by the other party of a voluntary petition in bankruptcy or
any form of reorganization, or the filing of an involuntary petition in
bankruptcy against the other party which is not dismissed with prejudice within
60 days of such filing, or the making of an assignment for the benefit of
creditors of the other party; or (ii) a breach by the other party of any of the
material terms or conditions of this Agreement, which breach is not cured within
30 days of notice of such breach by the non-breaching party. SMC shall be
entitled to terminate this Agreement in the event Ford does any of the
following: (i) acquire, or agree, offer or propose to acquire, directly or
indirectly, from SMC or any other person, any business or assets of, or
securities issued by, SMC or any right, warrant or option
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to acquire any of the foregoing; (ii) propose to enter into, directly or
indirectly, any merger or business combination involving SMC or any of its
subsidiaries or to purchase, directly or indirectly, a material portion of the
assets of SMC or any of its subsidiaries; (iii) make any proposal or request to
SMC or any of its officers or directors relating, directly or indirectly, to any
action referred to in clause (i) or (ii) of this paragraph or to any
modification or waiver of any provision of this paragraph; (iv) make or
participate in, directly or indirectly, any "solicitation" of "proxies" (as
those terms are used in the proxy rules of the SEC) to vote or seek to advise or
influence any person with respect to the voting of any voting securities of SMC
or any of its subsidiaries; (v) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) under the Securities Exchange
Act of 1934, as amended) with respect to any voting securities of SMC or any of
its subsidiaries; (vi) act alone or in concert with others to seek to control or
influence the management, Board of Directors or policies of SMC; (vii) advise,
assist or enter into any discussions, negotiations, arrangements or
understandings with any other person with respect to any of the foregoing; or
(viii) make any public statement or disclosure of any kind with respect to any
matter addressed by this paragraph (unless required by law) or take any other
action which might reasonably be expected to result in any such public
disclosure. Otherwise, this Agreement will terminate on December 31, 2003
(except that the provisions of Sections 5, 8, 11, 12, 15, 18 and 19 of this
Agreement will survive such termination).
Section 10. Taxes and Assessments. Ford shall be responsible for and
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shall reimburse SMC for the payment of all sales and use taxes, excise taxes
(which include, but are not limited to, federal manufacturers taxes,
environmental taxes, and state and local product taxes), and all other federal,
state, and local taxes or fees, however designated, other than taxes or fees on
income, paid or incurred by SMC directly or indirectly with respect to the
purchase, storage, exchange, use, transportation and handling of any Metal
delivered to Ford hereunder. If any personal property taxes are assessed
against the Metal by any governmental authority, such assessment shall be the
responsibility of and shall be paid by the party having title to the Metal at
the time of assessment.
Section 11. Claims. Claims as to shortage in quantity and deficiency in
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quality shall be made by written notice from Ford to SMC within five Business
Days after the delivery in question, or else any such claims shall be deemed to
have been waived. All other claims shall be made by written notice from one
party to the other party within 60 days after the delivery in question, or else
any such claims shall be deemed to have been waived. EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS AGREEMENT, NO CLAIMS WHATSOEVER SHALL BE MADE
HEREUNDER FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES.
Section 12. Limitation of Liability. SMC shall not be liable for any
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prospective or speculative profits or special, indirect, consequential, punitive
or exemplary damages, and SMC's liability with respect to this Agreement or any
action in connection herewith whether in contract, tort, or otherwise shall not
exceed the price of that portion of the Metal on which liability is asserted.
Section 13. Compliance with Laws. To the extent applicable, the parties
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agree to comply with all laws, ordinances rules, codes, regulations and lawful
orders of any federal, state or local governmental authority applicable to
performance of the Agreement.
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Section 14. Force Majeure.
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(a) Effect of Occurrence. In the event that either party is
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rendered unable, wholly or in part, by force majeure applying to it, to carry
out its obligations under this Agreement, it is agreed that such obligations of
such party, so far as they are affected by such force majeure, shall be
suspended during the continuance of any inability so caused, but for no longer
period; provided that Ford shall not be excused by any event of force majeure
from making timely payments for Metal delivered prior to the effective date of
their notice of force majeure. The parties agree that the various periods and
terms provided for herein shall be extended for a period equivalent to such
period of force majeure. The party claiming that an event of force majeure has
occurred will promptly notify the other party of the commencement and
termination of any event of force majeure. Prompt notice of force majeure shall
be given by the party invoking it to the other party, setting out the nature and
full details thereof, the extent of the interruption and the anticipated
duration of the interruption.
(b) Definition. The term "force majeure" as employed herein,
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shall mean causes beyond the reasonable control of the parties, including, but
not limited to, acts of God, explosions, fires, floods, breakdowns or damage to
SMC's mine(s) or related equipment or facilities, failure of plant or equipment
to operate according to plans or specifications, war or warlike hostilities,
riots, strikes, labor disputes, lockouts, unavoidable accidents, uncontrollable
delays in transportation, non-availability of any adequate means of
transportation, the effect of any state or federal laws, regulations or
requirements (expressly including inability to obtain or amend necessary
governmental approvals, licenses or permits on reasonably acceptable terms),
geological, technical, metallurgical, mining, construction, or processing
problems, non-availability of supplies, power shortages, court orders, acts of
military authority, acts or failures to act of federal, state or local agencies
or regulatory bodies and inability to obtain timely refining despite
commercially reasonable efforts of appropriate quantity of materials necessary
to produce the required amounts of Metal; provided, however, that performance
shall be resumed within a reasonable period of time after such cause has been
removed; and provided further that neither party shall be required against its
will to adjust any labor dispute or to question the validity of or to refrain
from judicially testing the validity of any federal, state or local order,
regulation or statute or to refrain from pursuing its legal or equitable
remedies against any third party. Notwithstanding the foregoing, the parties
agree that this Section 14 is not intended to provide relief from economic
conditions such as, but not limited to, market situations that provide lower or
higher prices than in effect under this Agreement.
Section 15. Dispute Resolution. Except as otherwise provided in this
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Agreement, the parties hereby agree that any dispute, controversy or claim
arising under this Agreement, or the breach thereof (a "Dispute"), shall first
be subject to the informal dispute resolution procedures set forth in this
Section 15. The party asserting the existence of a Dispute as to the
interpretation of any provision of this Agreement or the performance by the
other party of any of its obligations hereunder shall notify the other party in
writing of the nature of the asserted Dispute. Within 10 Business Days of
receipt of such notice, representatives from each party shall arrange and have a
personal or telephone conference in which they attempt to resolve such Dispute.
If those individuals are unable to resolve the Dispute within such time frame,
the Dispute shall be settled by arbitration
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administered in the State of New York under the rules of the American
Arbitration Association then in effect for the resolution of commercial disputes
by an arbitrator(s) selected by mutual agreement of the parties, or by the
American Arbitration Association absent such mutual agreement, and judgment on
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Any findings of such arbitration shall be final and
binding on the parties, and all reasonable costs (including attorneys' fees)
incurred as a result of a Dispute being referred to arbitration will be borne by
the party against whom any award is made. This Section 15 provides the exclusive
means of resolving disputes under this Agreement. Punitive or exemplary damages
shall not be awarded.
Section 16. Representations and Warranties. Each of the parties
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represents and warrants as follows:
(a) Good Standing. That it is a corporation duly incorporated
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and in good standing in its state of incorporation and that it is qualified to
do business and is in good standing in those states where necessary in order to
carry out the purposes of this Agreement;
(b) Performance. That it has the corporate capacity to enter
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into and perform this Agreement and all transactions contemplated herein and
that all corporate and other actions required to authorize it to enter into and
perform this Agreement have been properly taken;
(c) No Breach. That it will not breach any other agreement or
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arrangement by entering into or performing this Agreement; and
(d) Due Execution and Delivery. That this Agreement has been
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duly executed and delivered by it and is valid and binding upon it and
enforceable against it in accordance with its terms; provided, however, that no
representation or warranty is made as to the remedy of specific performance or
other equitable remedies for the enforcement of this Agreement or any other
agreement contemplated hereby, and provided further that this representation is
limited by applicable bankruptcy, insolvency, moratorium, and other similar laws
affecting generally the rights and remedies of creditors and secured parties.
Section 17. Notices. Any notice, election, report or other
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correspondence (collectively, "Notices") required or permitted hereunder shall
be in writing and (i) delivered personally to an officer of the party to whom
directed; (ii) sent by registered or certified United States mail, postage
prepaid, return receipt requested; (iii) sent by reputable overnight courier; or
(iv) sent by facsimile transmission with confirmation of receipt. All such
Notices shall be addressed to the party to whom directed as follows:
SMC: Stillwater Mining Company
717 17th Street, Suite 1480
Denver, Colorado 80202
Attn: Vice President of Metals Marketing
with a copy to: Chief Financial Officer
Facsimile: (303) 978-2590
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Ford: Ford Motor Company
17101 Rotunda Drive
Dearborn, Michigan 48121
Attn: Buyer/Precious Metals
Facsimile: (313) 594-0510
with a copy to: Director of Raw Materials Purchasing
Facsimile: (313) 322-5595
Either party may, from time to time, change its address for future Notices
hereunder by Notice in accordance with this Section 17. All Notices shall be
complete and deemed to have been given or made when mailed or sent by overnight
courier, or upon personal delivery when delivered personally or when receipt is
confirmed when sent by facsimile transmission.
Section 18. Publicity. Neither SMC nor Ford will issue or approve an
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advertisement, promotional material, news release or other form of publicity
concerning this Agreement or the transactions contemplated herein without the
prior approval of the other party as to the contents of such advertisement,
promotional material, news release or publicity and the timing of its release,
which approval cannot be unreasonably withheld.
Section 19. Confidentiality. The terms of the Confidentiality Agreement
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shall continue in full force and effect.
Section 20. Entire Agreement. This Agreement and the Confidentiality
----------------
Agreement represent the complete agreement between the parties hereto and
supersede all prior or contemporaneous oral or written agreements of the parties
to the extent they relate in any way to the subject matter hereof or thereof.
Section 21. Relationship of the Parties. Nothing contained in this
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Agreement shall be deemed to constitute either party the partner of the other,
nor, except as otherwise herein expressly provided, to constitute either party
the agent or legal representative of the other, nor to create any fiduciary
relationship between them. It is not the intention of the parties to create,
nor shall this Agreement be construed to create, any mining, commercial or other
partnership. Neither party shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other party, except as otherwise
expressly provided herein. The rights, duties, obligations and liabilities of
the parties shall be several and not joint or collective. Each party shall be
responsible only for its obligations as herein set out and shall be liable only
for its share of the costs and expenses as provided herein. Each party shall
indemnify, defend and hold harmless the other party, its directors, officers,
employees, agents and attorneys from and against any and all losses, claims,
damages and liabilities arising out of any act or any assumption of liability by
the indemnifying party, or any of its directors, officers, employees, agents and
attorneys done or undertaken, or apparently done or undertaken, on behalf of the
other party, except pursuant to the authority expressly granted herein or as
otherwise agreed in writing between the parties.
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Section 22. No Implied Covenants. There are no implied covenants
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contained in this Agreement other than those of good faith and fair dealing.
Section 23. Binding Effect; No Assignment. This Agreement shall bind
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and inure to the benefit of and be enforceable by the parties hereto and may not
be assigned by either party to a third party without the consent of the other
party, which consent shall not be unreasonably withheld, except with respect to
(i) any assignment to provide security in connection with any financing,
expressly including, by way of example and not limitation, assignments of
royalty, overriding royalties or net profits interests or production payments,
or (b) any merger, consolidation or other reorganization or transfer by
operation of law, or by purchase of the business of or substantially all of the
assets of one of the parties, with respect to which such consent by the
nonassigning party will not be required.
Section 24. Amendment and Waiver. Except as otherwise provided herein,
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no modification, amendment or waiver of any provision of this Agreement shall be
effective against either party unless such modification, amendment or waiver is
approved in writing by the parties hereto. The failure by either party to
demand strict performance and compliance with any part of this Agreement during
the term of this Agreement 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 or be
construed as a waiver of any subsequent breach thereof.
Section 25. Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
Section 26. Governing Law. The parties to this Agreement are domiciled
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in two different states. In order to create greater certainty with respect to
their legal rights and obligations under this Agreement, the parties desire to
adopt as the substantive law of this Agreement the law of a state which has
highly developed commercial law and precedent and which is not the domicile of
either party. The parties hereby agree that this Agreement shall be construed
in accordance with the laws of the State of New York as though this Agreement
were performed in full in the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
Section 27. Counterparts. This Agreement may be executed in
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
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Section 28. Attorneys' Fees. In the event of any controversy, claim, or
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dispute between the parties hereto, arising out of or relating to this Agreement
or the breach thereof, the prevailing party shall be entitled to recover from
the losing party reasonable expenses, attorneys' fees, and costs.
Section 29. Further Documents. At the request of either party, the
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parties shall execute and deliver any further instruments, agreements, documents
or other papers reasonably requested by that party to effect the purposes of
this Agreement and the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
STILLWATER MINING COMPANY FORD MOTOR COMPANY
By: /s/ William E. Nettles By: /s/ Jean N. Mayer
_______________________ _________________________
Name: William E. Nettles Name: Jean N. Mayer
Title: Chief Executive Officer Title: Executive Director
Manufacturing Procurement
Operations
By: /s/ Robert C. Lapple By: /s/ Jeff W. Wellman
________________________ _________________________
Name: Robert C. Lapple Name: Jeff W. Wellman
Title: Vice President Metals Marketing Title: Director of Raw
Materials Purchasing
By: /s/ Eric E. Conrad
_________________________
Name: Eric E. Conrad
Title: Purchasing Specialist
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