1
EMPLOYMENT AGREEMENT
Agreement, made as of the 1st day of January, 1999 by and between Century
Aluminum Company, a Delaware corporation (the "Company"), and Craig A.
Davis (the "Executive").
RECITALS
A. The Company desires to employ Executive as Chairman of the Board 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. Position and Term of Employment. Executive's employment hereunder
shall commence as of January 1, 1999 and shall end December 31, 2001, unless
terminated sooner pursuant to Section 7 of this Agreement or extended by the
mutual agreement of the parties. During the term hereof, Executive shall be
employed as 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.
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 March 1, 1996, as amended by an
Amendment dated as of January 1, 1999, (the "SPA")), 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
2
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.
2.1 Base Salary. (a) (i) Executive shall be paid an initial
salary at the monthly rate of $50,833 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 $610,000.
(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 of 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
3
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 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. Executive shall be eligible for an annual
performance bonus in amounts between 30 percent and 75 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.
2.3 Expenses. During the term hereof, 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").
4
3.2 Effect of Termination of Employment or Change in Control.
(a) Notwithstanding the provisions of Executive's options, if
Executive resigns voluntarily or ceases to be employed by the Company (or an
affiliate) other than as a result of death or disability, Executive shall be
entitled to exercise such options to the extent such options could otherwise
have been exercised immediately prior to the time of termination at any time up
to and including 90 days after the date of termination, but not beyond the
expiration date of an option. This provision is not intended to limit any other
rights that Executive may have with respect to the vesting or exercise of
options, including rights under the SPA.
(b) If Executive dies or becomes disabled, all options and
performance shares which have not vested (other than those performance shares
described in Section 3.2 (c)) 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 of Control (as defined in the SPA but which
(i) results in the acquisition by any person of a Beneficial
Ownership of 40% or more of the combined voting power of the Company's
then outstanding Voting Securities and has not been approved by the
Incumbent Board, or
(ii) results in the Voting Securities being withdrawn from
public trading), then all options and performance share units which 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.
4.1 Other Benefits. Executive shall be entitled to (i) 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
4.2, subject in each case to the terms and requirements of each such plan or
program.
4.2 Supplemental Executive Retirement Benefit.
5
(a) Benefit, Service Credit and Offsets. The Company agrees to
provide Executive with a Supplemental Executive Retirement Benefit ("SERB")
providing an annual retirement benefit beginning at age sixty-two (62) or
thereafter, equal to the benefits which would have accrued to Executive under
the Salaried Employees Retirement Plan (the "Pension Plan") and the
contributions which would have been made to the Salaried Employee Defined
Contribution Retirement Plan (the "Defined Contribution Plan") on behalf of
Executive (hereinafter collectively referred to as the "Qualified Plans"),
computed as follows:
(i) The limitation on benefits and contributions with respect
to such employees under Section 415 of the Internal Revenue Code of 1986, as at
any time amended, and the regulations thereunder (hereinafter the "Code") shall
not be given effect;
(ii) Such accrued benefits and deemed contributions shall be
determined without giving effect to the one hundred and fifty thousand dollar
($150,000) limitation of Code Section 401 (a)(17), or any successor thereto; and
(iii) Any and all amounts due Executive under the Qualified
Plans shall be credited toward and shall reduce the benefits payable under the
SERB.
(b) Vesting. Notwithstanding the provisions of the Qualified Plans,
the SERB shall be fully vested and there shall be no reduction in the benefits
hereunder because of the number of years of service of Executive.
(c) Time and Method of Payment of Benefits. Benefit payments
hereunder shall be made to Executive in the same manner as provided under the
Qualified Plans. Except as
6
otherwise provided in the Qualified Plans, no benefits shall be payable
hereunder prior to death, disability or termination of employment.
(d) 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.
(e) Source of Payments. All benefits under this Section 4.2 shall be
paid in cash from the general funds of the Company, and 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 arrangements be unfunded for tax purposes and for purposes of Title I
of the Employee Retirement Income Security Act of 1974.
(f) Executive's Status. Executive shall have the status of a general
unsecured creditor of the Company and the SERB shall constitute a mere promise
to make benefit payments in the future.
(g) Survival of Benefit. The SERB shall survive any termination (or
non-renewal) of this Agreement, including, without limitation, a termination
pursuant to Section 7(c) hereof.
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
7
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 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
8
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 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
Executive Committee or the Board of Directors of the Company, the substance of
which order is (a) a proper duty of
9
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.
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.
10
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 document embodies the complete
agreement and understanding among the parties, written or oral, which may have
related to the subject matter hereof in any way and shall not be amended orally,
but only by the mutual agreement of the parties hereto in writing, specifically
referencing this Agreement.
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:
Title:_________________________
_______________________________
Craig A. Davis