Document:

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                                                                   EXHIBIT 10.10

                                   CONTRACT

                                    BETWEEN

                           STILLWATER MINING COMPANY

                                      AND

                      PAPER, ALLIED INDUSTRIAL, CHEMICAL
                    AND ENERGY WORKERS INTERNATIONAL UNION
                              AND ITS LOCAL 8-001
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                               TABLE OF CONTENTS
                               -----------------

<TABLE>
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                                                             Page
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<S>                                                          <C>
Articles of Agreement                                         1
Article 1 - Recognition                                       1
Article 2 - Non-Discrimination                                2
Article 3 - Union Security                                    2
Article 4 - Management Rights                                 3
Article 5 - Management-Union Committee                        4
Article 6 - Grievance and Arbitration                         5
Article 7 - Medical Arbitration                               7
Article 8 - Seniority                                         8
Article 9 - Probationary Period                               9
Article 10 - Job Postings                                     9
Article 11 - Lay-Off and Recall                               10
Article 12 - Severance Pay                                    11
Article 13 - Evaluations                                      11
Article 14 - Hours of Work and Overtime                       12
Article 15 - Classification and Wages                         14
Article 16 - Safety and Health                                14
Article 17 - Benefits                                         16
Article 18 - Holidays                                         16
Article 19 - Vacation                                         17
Article 20 - Union Leaves of Absence                          18
Article 21 - Family and Medical Leave                         19
Article 22 - Military Service                                 19
Article 23 - Bereavement Leave                                19
Article 24 - Jury and Witness Duty                            20
Article 25 - Contracting Out                                  20
Article 26 - Miscellaneous                                    21
Article 27 - Mine/Plant Closure                               22
Article 28 - No Strike                                        22
Article 29 - Past Practice                                    22
Article 30 - Validity                                         22
Article 31 - Complete Agreement                               23
Article 32 - Term of Agreement                                23
</TABLE>
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                             ARTICLES OF AGREEMENT

This Agreement is between Stillwater Mining Company ("Company"), its successors
and assigns, and the Paper, Allied Industrial, Chemical and Energy Workers
International Union and its Local 8-001 ("Union"), its successors and assigns.

                                   ARTICLE 1
                                  RECOGNITION

Section 1.  The Company recognizes the Union as the sole and exclusive
bargaining representative for the following Company employees employed by the
Company at the facilities at [insert address], Nye, Montana; and the facilities
at [insert address], Columbus, Montana.  All hourly production and maintenance
employees, including warehouse employees, laboratory technicians and custodians;
but excluding all temporary employees, student summer hires, professional
employees, technical employees, office clerical employees, guards, dispatchers
and supervisors, and those above the rank of supervisor.

Section 2.  The Union's Workers' Committee represents Union interests to the
Company.  The Workers' Committee will be selected by the Union, and consist of
seven (7) members, including the Local Union President who will be Chair.  The
six (6) remaining members will consist of three (3) from the Mine, one (1) from
the Concentrator, one (1) from the Smelter/BMR/Laboratory, and one (1) from
Maintenance/Warehouse.  Alternates may be selected to replace absent Committee
members.

Section 3.  The Local Union President will promptly notify the Company, in
writing, of the names of the Workers' Committee members, the Grievance Committee
members and any selected stewards.  The Company will be notified, in writing, of
any changes to these groups.

Section 4.  The activities of the Union's Workers' Committee will not result in
any disruption of the Company's operations, and employees will not neglect their
duties and responsibilities.

                                  ARTICLE 2
                              NON-DISCRIMINATION

Section 1.  The Company and Union agree that neither will discriminate nor
harass any employee or applicant for employment because of race, creed,
<PAGE>

marital status, color, age, disability, religion, national origin or sex in
violation of any applicable Federal, State or local law.

                                   ARTICLE 3
                                UNION SECURITY

Section 1.  Every employee covered by this Agreement must, for the life of this
Agreement after the grace period described below, satisfy a financial obligation
to the Union as the exclusive bargaining representative.  Under this Agreement,
the financial obligation for union members is an amount equivalent to monthly
dues, and for non-members a fee amount, as determined by the Union, to perform
the duties as exclusive representative under this Agreement.

   This financial obligation is a condition of continued employment and is in
consideration for the cost of representation and collective bargaining and is
not contingent upon present or future membership in the Union.

   The grace period for this Agreement is thirty (30) calendar days following
the completion of the employee's probationary period or by the thirtieth (30th)
calendar day following the effective date of this Agreement, whichever is later.

   Neither the Union, Company, nor any of their officers, agents or members will
intimidate or coerce employees about membership or non-membership in the Union.
If any dispute arises as to whether there has been any violation of this
provision (or whether an employee affected by this Agreement has failed to meet
the financial obligation), the dispute will be submitted directly to arbitration
for determination.

   The Union will indemnify and save the Company harmless against any and all
claims, demands, suits or other forms of liability that will arise out of or by
reason of action taken by the Company in complying with the provisions of this
Article.

Section 2.  For employees in the bargaining unit, the Company agrees to deduct
the Union dues for the month from the wages due each month, providing each
employee from whose check Union dues are to be deducted has on file a signed
payroll deduction authorization.

                                   ARTICLE 4
                               MANAGEMENT RIGHTS

Section 1.  Management retains all the general and traditional rights to manage
the business as well as any rights under law or agreed to by the parties.  These
rights rest exclusively in management who are the sole decision makers regarding
the Company's operations.  The following listing of specific management rights
is not intended to be all-inclusive, but are some of those rights considered to
be general rights of management.  The fact that a particular management right is
not included in the following listing does not
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mean the right does not exist.

Section 2.  The Company has the right to determine the number of employees
required by the Company at any place from time to time, for any and all
operations; to determine the jobs, content of jobs and to modify, combine or end
any job, classification, department or operation; to hire, classify, transfer,
promote, demote and layoff employees; to determine qualifications, evaluate
performance and assign and direct the workforce; to maintain order and
discipline; and to reprimand, suspend, discharge and otherwise discipline for
just cause.

Section 3.  The Company has the right to create and administer rules, policies
and procedures.  This will include the right to establish or revise attendance,
work, substance abuse, drug and/or alcohol testing, functional testing and
safety rules.  The Company has the right to establish or revise a disciplinary
policy to address violations of these rules.

Section 4.  The Company also has the right to determine the number and types of
facilities and working places; the kinds and locations of machines, tools and
equipment to be used; and the right to schedule production; to maintain
efficiency; to introduce new or improved research methods, materials, processes,
techniques, machinery and equipment, means of processing, distribution and
mining; to set the standards of productivity and the products to be produced; to
determine employees' working schedules, including, but not limited to, the
number of hours and shifts to be worked; to determine when overtime work is
necessary and to assign overtime; to choose customers; to utilize part-time and
temporary employees; to decide where or when training on a particular operation
or job is required, how much training is required and the right to move or
retrain employees;  to determine the amount and form of any incentive and/or
bonus compensation to be paid in addition to wages; to establish, implement,
modify, suspend or terminate any contract or incentive program; to use
independent contractors to perform any work or services.

Section 5.  The Company's failure to exercise any right or function reserved to
it, or the exercise of a management right in a particular way,  will not prevent
the Company from exercising any of its rights in the future or in some other way
not in conflict with this Agreement.  The only restrictions on management rights
are those expressly provided for in this Agreement.

Section 6.  The exercise of these rights alleged to be in conflict with any
other provision of this Agreement will be subject to the grievance and
arbitration procedures.

                                   ARTICLE 5
<PAGE>

                          MANAGEMENT-UNION COMMITTEE

Section 1.  The Company and the Union recognize the benefits of an open forum
where information, mutual concerns, interests, and complaints (not covered by
the grievance and arbitration procedures) affecting the workplace can be freely
discussed, with a view to exploring possible solutions which are acceptable and
beneficial to employees, the Union and the Company.  Without limiting the
opportunity for the Union and the Company to meet informally at the Nye or
Columbus facilities, the parties agree to establish a Management-Union Committee
(MUC).

Section 2.  The Workers' Committee will serve as representatives for the Union
at MUC meetings.  The Company representatives will be comprised of Senior
Management personnel.

Section 3.  MUC meetings will normally be held during regular business hours,
as necessary, on at least a quarterly basis.  Logistics for the meeting will be
mutually agreed upon and coordinated through the Human Resources Department.
Senior Management from the Nye and Columbus facilities will discuss agenda items
with the Local Union President prior to the meeting.  A formal meeting agenda
will be given to all Committee members at least five (5) days prior to the
meeting, whenever possible.

Section 4.  For employees on their regularly scheduled shifts, time spent at
MUC meetings will be considered as time worked and will be paid at an employee's
normal base rate.  The Company will make every reasonable effort to schedule the
MUC members on shift during MUC meetings.

Section 5.  The MUC is limited to joint discussion and consultation, and is not
intended to limit or restrict the rights reserved to the Union or the Company by
this Agreement.  The Committee is not intended to take the place of normal
communication between employees and the Company, or to serve as an alternative
to the grievance and arbitration procedures of this Agreement.

                                   ARTICLE 6
                           GRIEVANCE AND ARBITRATION

Section 1.  Dispute(s) between the Company and its employees may occur.
Employees are encouraged to settle these differences as quickly as possible with
their immediate foreman or supervisor.  If desired, the employee may be
accompanied and assisted by a steward or Grievance Committee member.  A
"grievance" is a dispute as to the interpretation, application, or alleged
violation of any of this Agreement's provisions.
<PAGE>

Section 2.  The Union will establish a Grievance Committee for dealing with
grievances for each of the following departments: Mine, Concentrator,
Maintenance/Warehouse and Smelter/BMR/Laboratory.  The Union will select up to
three (3) employees to serve on the Grievance Committees from each of the above
departments.  The Local Union President will be a member of each of the
Grievance Committees.

Section 3.  Failure by the Union to transmit a grievance to the next higher step
within the time limit provided will constitute a settlement of that grievance on
the basis of the last answer received.  If the Company's decision at any step of
this procedure is not given within the time limit specified, the grievance will
be upheld for the Union.  The time limits in this Article may be extended by
mutual agreement.  The Company will pay for time spent by union representatives
in grievance meetings that are scheduled during their regular working hours.

Section 4.   If a grievance arises that is not verbally settled with the
immediate supervisor, an earnest effort will be made to settle the grievance in
the following manner:

     Step 1:  Within fifteen (15) days from the time the grievance arose, the
     employee (or steward or Grievance Committee member) will present the
     grievance, in writing, using the standard grievance form, to the immediate
     supervisor, with a copy to the Human Resources Manager and the Local Union
     President.  The employee may be assisted by a member of the Grievance
     Committee or a steward, if so desired.  The supervisor will give a written
     reply within seven (7) days of this meeting.

     Step 2:  Failing satisfactory resolution at Step 1, the matter may be
     presented to the grievant's Department Head, with a copy to the Human
     Resources Manager, within ten (10) days of the immediate supervisor's
     decision.  The Department Head will convene a meeting with the employee, a
     steward or Grievance Committee member, and a Human Resources
     Representative, within ten (10) days of notification from the Union, for
     the purpose of resolving the grievance.  The Department Head will give a
     written reply within seven (7) days of the meeting.

     Step 3:  Failing satisfactory resolution at Step 2, the matter may be
     presented to a Company Vice President, with a copy to the Human Resources
     Manager, within ten (10) days of the Department Head's decision, with a
     request that a meeting be held with a Vice President for the purpose of
     resolving the grievance.  A Vice President will convene a meeting with the
<PAGE>

     Grievance Committee, the Local Union President, the steward who filed the
     grievance, a representative from the Human Resources Department and another
     management representative.  The meeting will be held within fourteen (14)
     days from the time the matter is submitted to a Vice President.  A Vice
     President will render a written decision to the Local Union President
     within ten (10) days of the meeting.

Section 5.  Following Step 3, the parties may refer a grievance to a mediator
acceptable to both parties.  There will be a maximum of three (3) grievances
submitted to binding arbitration per hearing.  The cost of the mediator will be
paid equally by both parties.

Section 6.  If the Union disagrees with the decision rendered by the Vice
President, it may, within thirty (30) days from the date of the decision, refer
the grievance to the Federal Mediation and Conciliation Service.  The parties
will request the Federal Mediation and Conciliation Service to submit a panel of
seven (7) arbitrators.  Each party will have the right to reject one panel of
arbitrators.  The Union will strike the first name and then the parties will
alternately strike a name until one arbitrator is left.  The arbitrator will be
notified of selection by a letter from the parties requesting that the
arbitrator set a time for the hearing.

Section 7.  If any grievance proceeds beyond Step 3, the grieving party must
submit in writing all known evidence bearing on the grievance. This includes,
but is not limited to, a description of the practice or matter giving rise to
the dispute, relevant dates and all witnesses, along with the specific contract
clause that is allegedly being violated. Evidence not disclosed according to
this section cannot be introduced by the grieving party at arbitration. Evidence
that is discovered at a later date may be introduced at hearing if disclosed to
the Company in writing at least five (5) days prior to the arbitration.

Section 8.  In rendering a decision, the arbitrator will be governed and limited
by this Agreement's provisions, applicable law, and the expressed intent of the
parties as described in this Agreement.  The arbitrator will have no power to
add to, subtract from, or modify any of the terms and provisions of this
Agreement, or substitute his judgment for that of the Company.  The arbitrator
will confine his judgment strictly to the facts submitted in the hearing, the
evidence before him, and this Agreement's express terms and provisions.  The
arbitrator's decision will be final and binding upon the parties.

Section 9.  The cost of the arbitrator will be paid equally by the parties.

Section 10. The Union and the employees waive their right to pursue any
judicial or administrative remedy against the Company as to any matter subject
<PAGE>

to the procedures established in this Article until such procedures are
exhausted.  Any settlement under the procedures established under this Article,
short of arbitration, will be binding upon the Company, the Union, and the
employees and will preclude any further administrative or judicial relief.

Section 11.  Any employee has the right to have a union representative present
if they are called into a meeting which may result in disciplinary action.

Section 12.  If it is necessary for a steward or Grievance Committee member to
take time off during their regularly scheduled shift to investigate or resolve a
grievance, they will request the permission of their immediate supervisor which
will not be unreasonably withheld.  When a steward or Grievance Committee member
enters an area other than their normal work area, they will inform the
supervisor of that area of their presence and reason for being there.  A steward
or Grievance Committee member will inform their supervisor when returning to
their normal work area.

Section 13.  Grievances dealing with discharges will be moved immediately to
Step 2 of the grievance procedure.

Section 14.  The Union, by not exercising any functions reserved to it or by
exercising any function in a particular way, will not be deemed to have waived
its right to exercise functions as set forth in this Agreement.

                                   ARTICLE 7
                              MEDICAL ARBITRATION

Section 1.  In the event a dispute arises concerning the physical fitness of an
employee to return to work or to continue to work, an attempt to resolve the
dispute by conference or consultation between a licensed physician selected by
the Company and a licensed physician selected by the Union, will first be made.

Section 2.  If no satisfactory conclusion is reached and the Union or the
Company so elects, a Board of three (3) licensed physicians will be selected,
one by the Company, one by the Union, and one by the two so-named, who will
decide the case.  The decision of the Board will be final and binding on both
parties to this Agreement and retroactive to the date the dispute arose.

Section 3.  The Company will bear the expense of the physician of its choice,
and the Union will bear the expense of the physician of its choice.  The expense
of the third physician will be paid by the losing party.  In the event that the
decision of the Board does not result in a clear-cut losing party, the expense
of the third physician will be paid equally by the parties.
<PAGE>

                                   ARTICLE 8
                                   SENIORITY

Section 1.  Company seniority will be determined by an employee's date of
original employment with the Company, if there has been no service break.
Company seniority will apply only for purposes of applicable benefit plans and
earned vacation.

Section 2.  Plant seniority will be determined from the employee's date of
original employment with the Company at its facilities covered by this Agreement
or date of employment if there had been a break in service.  An employee's plant
seniority will be lost if the employee:

   A.       Quits.
   B.       Is discharged for just cause.
   C.       Fails to work for any reason for two (2) years, or length of
            service, whichever is less.
   D.       Fails to return to work upon termination of a leave of absence.
   E.       Is promoted to a full-time non-bargaining unit position for a period
            in excess of one (1) year.

Section 3.  Department seniority will be determined by the date on which the
employee begins continuous service in one of the following departments:

   A.       Mine
   B.       Concentrator
   C.       Maintenance
   D.       Warehouse
   E.       Processing (Smelter/BMR/Laboratory)

The employee will lose department seniority in any previous department once
department seniority is established in any other department.

Section 4.  The Company will annually provide the Union with a current seniority
list which will also be posted in the workplace.

Section 5.  If employees are hired on the same day, seniority will be decided
by the flip of a coin.

                                   ARTICLE 9
                              PROBATIONARY PERIOD

Section 1.  All new employees will be considered probationary employees for
<PAGE>

a period of seven hundred eighty (780) hours worked. The probationary period may
be extended by five hundred twenty (520) hours worked, upon mutual agreement of
the Company, the Union and the employee.

Section 2.  Unless Company policies provide otherwise, probationary employees
will not be eligible for any benefits granted to regular employees under this
Agreement.  No terms of this Agreement other than this Article and the
appropriate wage rate will apply to probationary employees.

Section 3.  Employees continued in employment after the end of the probationary
period will become full-time employees and will be credited with continuous
service from the original date of hire.

                                  ARTICLE 10
                                 JOB POSTINGS

Section 1.  Whenever the Company determines a vacancy, other than a temporary
vacancy, exists in any biddable job classification, or a new job becomes
available, the Company will post a job posting on the bulletin boards for ten
(10) consecutive days.  Employees desiring to bid on the vacancy will apply in
writing to the Human Resources Department within the allotted ten (10) days.
Laid off employees, who have seniority rights, will be eligible to bid on all
job postings. Upon request, a copy of the job posting and of all bids will be
provided to the Local Union President.

Section 2.  The Company will determine the successful candidate based on
demonstrated performance and skill consistent with the Evaluations Article. When
there are two or more employees of equal skill and performance, the principle of
plant seniority will govern. If no qualified candidate applies or no bid is
received, the job may be filled by the Company from any other source.

Section 3.  Temporary vacancies of less than ninety (90) days may be filled at
the Company's discretion.

Section 4.  If the successful bidder proves unsatisfactory after a thirty (30)
day evaluation period, or chooses not to continue in the new position within the
thirty (30) day evaluation period, the employee will be returned to the position
last held with no loss of seniority.  The Company will then fill the position
with the next most qualified candidate from the original posting.

Section 5.  An employee who is awarded a job posting outside his department
cannot bid for another job for a period of one (1) year.  An employee who is
awarded a job posting within his department cannot bid for another job for a
period of four (4) months.
<PAGE>

                                  ARTICLE 11
                              LAY-OFF AND RECALL

Section 1.  In instances of layoff, recall, or job elimination, the Company,
consistent with the Evaluations Article, will consider employees' demonstrated
performance and skill.  When there are two or more employees of equal
performance and skill, the principle of plant seniority will govern.  Temporary
employees and probationary employees will be laid off prior to employees on the
seniority list, unless the temporary or probationary employees have special
skills not held by regular employees.

Section 2.  An employee has ten (10) days to respond to a recall to work by
certified mail.  The ten (10) days will begin running when the Company makes its
initial attempt to recall.  Unless other arrangements are made, the recalled
employee will have up to fourteen (14) days to return to work after responding
to the Company's offer.  Failure to respond or return to work within the time
limits outlined in this Section will result in a loss of seniority.

Section 3.  The Company will meet with the MUC Committee to discuss any layoffs
or reduction-in-force prior to implementation.  The Company will notify the
Union of any pending layoff or reduction-in-force as far in advance as possible.
If a layoff is less than ninety (90) days in duration, the Company will pay its
portion of the cost of fringe benefits during the layoff.

                                  ARTICLE 12
                                 SEVERANCE PAY

Section 1.  Any full-time employee who loses seniority because of a long-term
layoff or a permanent mine closure will be entitled to one (1) week of severance
at the employee's base rate of pay for each full year of continuous service with
the Company up to a maximum of fifteen (15) weeks of pay.

                                  ARTICLE 13
                                  EVALUATIONS

Section 1.  The job performance of all bargaining unit employees will be
evaluated on an annual basis.  New employees will be evaluated at the conclusion
of their probationary period.  This evaluation will be utilized until the next
annual review occurs.  These evaluations will have two components.  The first
will be based on performance.  The second will be a skills assessment.  The
Company retains the right, with input from the review committee, to
<PAGE>

periodically modify the evaluation process. Changes in the evaluation process
will be announced at least six (6) months before the end of the evaluation
period.

Section 2.  The performance evaluation results will be standardized between
departments (each of which must be ten (10) or more employees).  In other words,
each employee's performance score in the department will be ranked in raw score
order and assigned a percentile rank within the department.  This percentile
rank will be the number that will be used when comparing the performance of
employees from different departments.  Employees who are within ten (10)
percentage points of each other will be considered substantially equal for
performance purposes.

Section 3.  The skills assessment will be standardized in the same manner as
the performance evaluations.  Employees who are within ten (10) percentage
points of each other will be considered substantially equal for skills purposes.

Section 4.  Job restructuring, assignments, layoffs, eliminations, recall, and
other changes materially affecting employment will initially be based on the
employee's performance and skill level demonstrated in the employee's last
evaluation.  In each instance where performance and skill are a factor in the
Company's decision, the Company will articulate a minimum skill level needed for
consideration.  Employees who have the requisite skill level will initially be
compared on the basis of their job performance.  If their performance is
substantially equal, their skill levels will be compared.  If the skill level is
also substantially equal, plant seniority will be the deciding factor.  If, at
any step of this comparison process, the employees are not substantially equal,
the employee with the superior performance or skill level will be given
preference.

Section 5.  When the evaluation process is completed for an entire department,
employees will be provided with a copy of their individual performance
evaluation and skills assessment.  Employees who have questions about their
evaluations should initially discuss them with the individual who completed the
evaluation.  If this discussion does not resolve the matter, a request to meet
with the review committee may be filed.  This request must be made within
fifteen (15) days of receipt of the evaluation and specifically state with what
parts of the performance evaluation or skills assessment the employee disagrees.
The review committee is the only avenue available to challenge performance
evaluations and skill assessments, as they are not subject to the grievance and
arbitration procedures of this Agreement.

Section 6.  The review committee will meet with the employee and other involved
parties to determine whether either the performance evaluation or skills
assessment should be revised.  The decision to revise the evaluation or skills
assessment must be agreed upon by a majority of the review committee
<PAGE>

members hearing the matter. The decision of the review committee will be final
and binding on both the Company and the employee.

Section 7.  The Company and the Union will each designate five (5) individuals
who may act as review committee members.  When an employee requests to meet with
the committee, each party will select two (2) members from their respective
groups, who are not within the employee's department, to review the performance
evaluation and skills assessment.  At the review committee's request, the Vice
President of Operations will sit as a fifth member of the committee.

                                  ARTICLE 14
                          HOURS OF WORK AND OVERTIME

Section 1.  The normal workweek will begin at 12:01 a.m. each Tuesday and end at
12:00 midnight the following Monday.  Overtime will  be paid for all hours
worked in excess of forty (40) hours during a workweek.

Section 2.  Changes in working schedules (other than temporary incidental
changes) will be discussed with the MUC prior to implementation.

Section 3.  An employee who is called back for immediate work after leaving
Company property or who is called for immediate work outside their scheduled
working hours, and actually begins working, will be paid time and one-half (1
1/2) for work actually performed or a minimum of four (4) hours at the straight-
time rate, whichever is greater.  Employees will be compensated for call out
travel at the current Company mileage rate, up to a maximum of fifty (50) miles
each way.

Section 4.  If an employee's regularly scheduled shift is canceled less than
ninety (90) minutes before it is scheduled to begin, the employee will either
work a minimum of four (4) hours or be paid four (4) hours at his regular hourly
rate in lieu of work.

Section 5.  Upon prior approval of the supervisors involved, employees may
mutually agree to exchange shifts or days off provided the exchange does not
cause any disruption or increased cost to the Company, and that the exchange
does not cause the employee to be on duty more than sixteen (16) hours in any
twenty-four (24) hour period.

Section 6.  The Company agrees that overtime will be distributed as uniformly
and equally as possible and practical within each classification.  Employees
will not be forced to work overtime as long as there are employees in their
classification who are qualified and willing to work such overtime.  If no
qualified employees volunteer to accept requested overtime, the Company will
assign
<PAGE>

the overtime to a qualified employee, based on reverse order of department
seniority. Employees who decline offered overtime will be charged for the
overtime offered as if it has been worked for the purpose of overtime
allocation.

Section 7.  Any employee who has worked sixteen (16) consecutive hours will be
compensated at double (2) time for all hours worked over sixteen (16).  Any
employee who has worked sixteen (16) or more hours will be allowed a rest period
of at least eight (8) hours with no loss of overtime pay.

Section 8.  Pyramiding of overtime is prohibited.

Section 9.  For the purpose of computing weekly overtime the following will be
considered as time worked: holidays, jury/witness service, union business
involving contract administration or negotiations for the purpose of renewing
this Agreement, which fall on an employee's regularly scheduled work day; or
meetings, training and conferences required by the Company.  These hours will
not exceed the number of hours in the employee's normal work day.

Section 10. Except for the first shift worked for each work rotation, an
employee will be given twenty-four (24) hours notice of a change in shift.

Section 11. Employees who work a shift beginning after 12:00 (noon) will be
paid a shift differential of fifty cents ($.50) per hour.

                                  ARTICLE 15
                           CLASSIFICATION AND WAGES

Section 1.  The classifications and rates of pay are attached to this Agreement
and will continue in effect for the duration of this Agreement.

Section 2.  Employees temporarily assigned to work in a classification other
than their current classification will continue to be paid the rate of pay for
their current classification.

Section 3.  Management personnel may perform bargaining unit work when training,
investigating, testing, and in emergencies, or situations in which no qualified
bargaining unit employee is available to do the job required.

Section 4.  If a full-time employee is demoted, through no fault of their own,
from their regular classification, the employee will receive the higher rate of
pay for a period one (1) week for each full year of service at the previous
classification, at the time assigned to the lower classification.  There will be
no pyramiding of rate retention under this Article.
<PAGE>

                                  ARTICLE 16
                               SAFETY AND HEALTH

Section 1.  The Company and the Union believe an effective safety and health
program is essential for employee morale and well-being, as well as the long-
term viability of the Company.  Accordingly, the Company recognizes its
obligation to prevent, correct and eliminate all unhealthy and unsafe working
conditions and practices.  Employees are also expected to recognize, address and
report unhealthy or unsafe working conditions.  Further, employees will follow
all Company safety and health rules and procedures and comply with applicable
State and Federal regulations.

Section 2.  The Company will recognize one (1) Safety and Health Committee for
the Nye facilities and one (1) Safety and Health Committee for the Columbus
facilities.  The respective Safety and Health Committees will consist of
representatives elected annually by members of each work group at each location.
These Committees will meet monthly to discuss safety and health issues,
recommend corrective actions, and communicate safety and health information back
to employees.

Section 3.  There will be a Joint Safety and Health Review Committee ("JSHRC")
at each location where a Safety and Health Committee exists.  It will be
composed of four (4) members of the Safety and Health Committee and will meet at
least quarterly.  There will be equal representation of Company appointees and
Union appointees on the JSHRC.  Time spent in JSHRC meetings and approved
activities will be considered as time worked.  All matters considered and
handled by the JSHRC will be reduced to writing, and the joint minutes will be
maintained and communicated at the monthly Safety and Health Committee meetings.

Section 4.  The Company will conduct occupational health and medical monitoring
to measure exposures in the workplace as appropriate, or upon the recommendation
of the JSHRC.  Results will be distributed to the appropriate Safety and Health
Committees and the Local Union President, to the extent that employee
confidentiality is not compromised.

Section 5.  The Company will pay for required medical examinations and the
results will be kept in the employee's confidential medical file.  Upon request,
a copy of these records will be provided to the affected employee.

Section 6.  Personal protective equipment required by statute or for special
tasks not regularly performed will be provided by the Company at no cost to the
employee.  Upon employment, the Company will provide a one-time allocation of
other Company required personal protective equipment.  The Company will
<PAGE>

allow employees to purchase subsequent or additional personal protective
equipment through the warehouse at Company cost. Employees whose personal
protective equipment is damaged or destroyed through abnormal conditions, not
attributed to abuse, will receive replacement personal protective equipment
through the warehouse at Company expense.

Section 7.  Prescription safety glasses will be provided at a rate of one (1)
pair per year.  Replacement non-prescription safety glasses will be available.

Section 8.  The Company will provide for an ongoing safety and health training
program.  The content of health and safety training courses will be reviewed
with the JSHRC prior to selection.  Time spent on Company approved training will
be considered as time worked.  The cost of Company approved training will be
paid by the Company and expenses reimbursed based on current Company policy.

Section 9.  No employee will perform unsafe work or be required to perform
unsafe work.  Employees performing unsafe work or unsafe practices will be
subject to disciplinary action, up to and including discharge.  Refusal to
perform unsafe work will not warrant or justify any present or future
disciplinary action.

                                  ARTICLE 17
                                   BENEFITS

Section 1.  The Company will provide bargaining unit members with benefits on
the same basis as provided to its salaried employees.  The broad-based
categories of these benefits include health, life, and disability insurance, as
well as a 401(k) plan.

Section 2.  Amendments to the plans or changes in employee contribution levels
will be announced periodically.

                                  ARTICLE 18
                                   HOLIDAYS

Section 1.  The following days will be considered holidays:

   New Year's Day             Good Friday
   Memorial Day               Independence Day
   Labor Day                  Thanksgiving
   Day after Thanksgiving     Christmas Eve
   Christmas Day              Personal Holiday
<PAGE>

Section 2.  Employees who are required to work on any of the above holidays will
receive pay at the rate of time and one-half (1  1/2) plus holiday pay for all
hours worked.  Each full-time employee not required to work on these holidays
will receive eight (8) hours pay for such holidays at their regular rate of pay.
Employees scheduled to work on a holiday who fail to report to work will not
receive holiday pay.

Section 3.  When a Saturday or Sunday holiday is observed on a weekday, the
holiday pay will apply on that weekday.  Employees scheduled to work seven (7)
days per week rotating shift, will be paid holiday pay on the calendar day on
which the holiday occurs.  The actual holiday schedule will be posted each year,
as soon as practical.

Section 4.  An employee absent on either the scheduled workday before or after
the holiday will not receive pay if the absence is not approved by the Company.
An employee who is receiving disability benefits on both the scheduled workday
before and after the holiday will not receive pay for the holiday.

Section 5.  Employees will be entitled to one (1) personal holiday which may be
taken after the employee has completed their probationary period, provided at
least one (1) week's notice is given to the Company.  Scheduled annual vacation
will take precedence over the scheduling of personal holidays.

     In the case where more than one employee per crew requests to take a
personal holiday on the same day, department seniority will govern if the
personal holiday had been scheduled between January 1 and March 31 of any year.
Personal holidays will be allocated on a first come, first serve basis if
scheduled after April 1 of any year. Personal holidays will be allocated and
granted based on operational needs and the wishes of the employee. No more than
one (1) person per crew will be allowed off on personal holiday on any
particular day, except at Company discretion.

     When an employee takes the personal holiday immediately prior to or
immediately after a holiday, the employee will be paid according to this
Article, provided that the employee works the last scheduled shift prior to and
the next scheduled shift after the holiday and the personal holiday.

     If the personal holiday is not scheduled to be taken in the calendar year,
the employee will be paid for eight (8) hours for the personal holiday at their
base rate.  Personal holidays may not be banked or carried over into the next
year.

                                  ARTICLE 19
                                   VACATION

Section 1.  Employees will be eligible for paid vacation time in accordance with
<PAGE>

the following provisions.

                                    Amount of Paid
   Years of Service                 Vacation Available

   1 through 4                            80 hours
   5 through 9                           120 hours
   10 or more                            160 hours

Section 2.  At the beginning of the calendar year, each full-time employee who
has completed one year of continuous service will be credited with vacation
based on length of service.  Employees who have less than one year of service,
but have completed their probationary period, will be credited with a pro rata
amount of vacation on January 1.  Employees must use a minimum of eighty (80)
hours of their vacation leave annually.

Section 3.  At the beginning of each calendar year, full-time employees who have
completed fourteen (14) or more years of continuous service will receive a one
thousand dollar ($1,000) bonus.

Section 4.  Employees may choose to receive pay in lieu of time off for vacation
in excess of eighty (80) hours.  Pay in lieu of time off will also be provided
when the Company requests an employee to forego his vacation.  If, due to an
extreme situation, the Company requires an employee to work during a previously
scheduled vacation, the Company will make the employee whole for any verifiable,
non-refundable expenses incurred by the employee.  Vacation cannot be carried
over into the next calendar year without the Company's approval.  Vacation must
be taken in full-shift increments, unless shift scheduling dictates otherwise.

Section 5.  Vacation schedules will be posted or circulated among employees
during the first two (2) weeks of January of each year for employees to indicate
their vacation preference.  Vacation request forms will be utilized, with a copy
of the approved form returned to the employee.  Vacation will be scheduled to
meet the preference of employees whenever possible.  In case of conflict over
any vacation period, vacation will be granted in order of department seniority.
Where an employee elects to split vacation, that employee's seniority rights
will prevail only for the first choice until all other employees in the vacation
unit have had their first choice.  It is understood that the Company retains the
right to schedule vacations as operational conditions dictate.  However, no
employee will be forced to take vacation which has already been approved at a
time undesirable to the employee. Vacation requests must be pre-authorized by
the supervisor at least one (1) week in advance.

Section 6.  Holidays falling during an employee's vacation will be
<PAGE>

compensated for by holiday pay or by a one-day extension of the vacation, as the
employee elects.

Section 7.   Employees terminating service with the Company will be paid
vacation earned in the current year.

                                  ARTICLE 20
                            UNION LEAVES OF ABSENCE

Section 1.  The Company may grant a short-term unpaid leave of absence for Union
officials or members to attend Union functions.  These leaves will be granted
based on the Company's operating requirements.  Employees will retain service,
seniority and benefits during this leave of absence.  Requests for these leaves
must be made by the Union to the Company not less than fourteen (14) days before
the leave.

Section 2.  Upon thirty (30) days written notice from the Union, a long-term
unpaid leave of absence to perform work for the Union will be granted for one
(1) employee for up to one (1) year.  The employee may elect to return to the
employee's previous classification with a thirty (30) day written notice for
reinstatement from the Union to the Company.  The employee will hold and
accumulate seniority and continuous service for all purposes during the leave.
Upon request, the employee will be allowed to continue in the Company Group
Health Plan, and any Disability Plans, by paying the full cost of the benefits
during the leave.  Reinstatement will be granted if the employee is physically
able to return to the previously held classification, as determined by a Company
paid physical examination.  If the employee is physically unable to return to
the previously held classification, the employee will be allowed to return to a
job the employee is qualified to perform, if such job exists.

                                  ARTICLE 21
                           FAMILY AND MEDICAL LEAVE

Section 1.  The Company will comply with all applicable State and Federal laws
which address employees' rights to request or obtain family or medical leaves.
Employees who use the family medical leave because of a personal medical
condition will not be required to use vacation.

                                  ARTICLE 22
                               MILITARY SERVICE

Section 1.  The Company will comply with applicable State law and the
<PAGE>

Uniformed Services Employment and Reemployment Rights Act as they relate to
military leave.

Section 2.  Any employee who is required to attend an encampment of the Reserve
of the Armed Forces or the National Guard will be paid the difference between
the employee's base wages and military pay, for a period not to exceed seventeen
(17) days.

                                  ARTICLE 23
                               BEREAVEMENT LEAVE

Section 1.  In the event of the death of an employee's immediate family member,
a reasonable period of unpaid leave will be granted to the employee. Immediate
family includes the employee's spouse, children, stepchildren, parents, step-
parents, brothers, sisters, grandparents and grandchildren, and the parents and
grandparents of the employee's spouse.

Section 2.  To offset the expenses associated with attending the funeral, any
employee who has completed the probationary period will be paid forty (40) hours
of base wages in the event of the death of a spouse, child or step-child, or
twenty-four (24) hours of base wages in the event of the death of any other
immediate family member listed above.

                                  ARTICLE 24
                           JURY AND WITNESS SERVICE

Section 1.  Employees selected for jury duty or subpoenaed for witness service
will be allowed the necessary time off to perform the service.  Employees must
contact their immediate supervisor prior to reporting for jury duty or
subpoenaed witness service.  An employee who reports and is then released from
service must immediately contact the employee's supervisor to coordinate return
to work.  The Company will make reasonable allowances for travel and shift
schedules.

Section 2.  Regular full-time employees who are absent because of jury duty,
government subpoena where the Company is not a party, or Company subpoena, will
be paid the difference between the jury duty or specified witness pay and their
normal base wages for scheduled shifts missed.  Employees will be required to
provide documentation of service to receive applicable pay.

                                  ARTICLE 25
                                CONTRACTING OUT
<PAGE>

Section 1.  The Company, having the availability of equipment, skills, manpower,
or the time to do the work, will not contract out classified work now being done
by employees of the Company as long as there are qualified employees or
qualified former employees with re-employment rights.  This will not apply to
the installation of equipment or construction or any other activities not
ordinarily done by employees of the Company.

Section 2.  Before commencing any major contract job to be performed on the
premises, the Company will notify the Local Union President, in writing,
describing the nature, scope, and expected duration of the work to be performed.
The Company further agrees that it will meet, as necessary, with the Local Union
President, to discuss information concerning contracting out.

                                  ARTICLE 26
                                 MISCELLANEOUS

Section 1.  The Company will provide a copy of this Agreement to each employee.

Section 2.  In July of each year, mechanics and electricians who are on the
seniority list will receive a tool allowance of four hundred dollars ($400.00)
and two hundred dollars ($200.00) respectively.

Section 3.  The Company will provide a one-time boot allowance payment of seven
hundred and fifty dollars ($750.00) for all full-time employees on the effective
date of this Agreement.  All active probationary employees on the effective date
of this Agreement will receive the one-time payment when they satisfy their
probationary period.

Section 4.  The Company will provide a secure bulletin board at each of the
locations covered by this Agreement.

Section 5.  Employees in the bargaining unit will have access to their own
personnel file, by appointment with the Human Resources Manager, for the purpose
of reviewing it in person.  A union representative may accompany the employee.

Section 6.  Required notices may be made by personal service, confirmed
facsimile transmission or certified mail, return receipt requested.  The
designated party for the Company is the Human Resources Manager.  The designated
party for the Union is the International Representative.  Each party will
provide the other with the name and address of the individual who is authorized
to receive notices under this Section.
<PAGE>

Section 7.  Any employee required to work more than two (2) hours beyond the
normal quitting time will be provided with a meal.  An additional meal will be
furnished for each additional four (4) hours of continuous work.  The Company
may, with the agreement of the involved employees, in lieu of a meal and time to
eat the meal, compensate the employee by the payment of one (1) additional hour
at time and one-half (1  1/2).

Section 8.  Employees will have available five (5) full or partial, unpaid days
for sick leave each year.

Section 9.  Each January employees will earn an attendance bonus equal to two
and one-fourth percent (2.25%) of their base rate multiplied by straight and
overtime hours actually worked through December 31 of the previous year.

                                  ARTICLE 27
                              MINE/PLANT CLOSURE

Section 1.  The Company will comply with the Worker Adjustment Retraining and
Notification Act.

                                  ARTICLE 28
                                   NO STRIKE

Section 1.  During the term of this Agreement, there will be no strike, work
stoppage, picketing, honoring of any picket line at the Company premises, work
slowdown, sympathy strike, or any other form of economic pressure directed
against the Company or its services on the part of the Union or its members
covered by this Agreement.  The Company will not lock out any bargaining unit
employee during the term of this Agreement.

Section 2.  In the event of any breach of this Article, the Union will
immediately declare publicly that such action is unauthorized, will immediately
order its members to resume their normal duties and continue to take any
necessary action to correct the problem and restore the Company to full
operation.

                                  ARTICLE 29
                                 PAST PRACTICE

Section 1.  This Agreement supersedes any previous oral and written agreements
between the Company, its employees and the Union.  The Company will not be bound
by any past understandings, practices and/or customs between the Company, its
employees, and the Union on matters not
<PAGE>

specifically governed by the terms of this Agreement.

                                   ARTICLE 30
                                    VALIDITY

Section 1.  Nothing contained in this Agreement will be construed in any way as
interfering with the obligation of the parties to comply with any and all State
and Federal laws, or any rules, regulations, and orders of duly constituted
authorities pertaining to matters covered by this Agreement, and such compliance
will not constitute a breach of this Agreement.

Section 2.  If any court holds any part of this Agreement invalid, that decision
will not invalidate the entire Agreement.

                                  ARTICLE 31
                              COMPLETE AGREEMENT

Section 1.  This Agreement during its life may be amended only by mutual consent
of the parties.  Any amendments made to this Agreement will be reduced to
written form and will be duly signed by the authorized representatives of the
Company and the Union.

Section 2.  The parties acknowledge that during the negotiations resulting in
this Agreement, each had the unlimited right to make proposals with respect to
all subjects of collective bargaining.  The understandings and agreements
arrived at by the parties after exercise of that right are included in this
Agreement.  Therefore, the Company and the Union each waive the right and each
agrees that the other will not be obligated to bargain collectively with respect
to any matter referred to by this Agreement or with respect to any subject not
specifically referred to in this Agreement, except those required by law, even
though the subject may not have been within the knowledge or contemplation of
either or both of the parties at the time that they negotiated this Agreement.

                                  ARTICLE 32
                               TERM OF AGREEMENT

Section 1.  This Agreement will be in effect from July 1, 1999 until noon July
1, 2004, and if not terminated at the end of that period by sixty (60) days
written notice by one party to the other prior to this date, will continue in
effect until terminated by either party upon ninety (90) days written notice of
its desire to terminate or modify this Agreement.
<PAGE>

With their signatures, the authorized representatives of the parties express
their agreement.

STILLWATER MINING COMPANY PAPER, ALLIED INDUSTRIAL,
      CHEMICAL AND ENERGY WORKERS INTERNATIONAL UNION AND
      ITS LOCAL 8-001

By: ____________________________  By: ____________________________
    Vern Baker                        Don Beer

Date: __________________________  Date: __________________________

By: ____________________________  By: ____________________________
    Kris Koss                         Steven Gentry

Date: __________________________  Date: __________________________
<PAGE>

                           STILLWATER MINING COMPANY
                      BARGAINING UNIT BASE RATE STRUCTURE

<TABLE>
<CAPTION>
                                        7/01/99           7/01/00           7/01/01           7/01/02           7/01/03
Position Title                         Base Rate         Base Rate         Base Rate         Base Rate         Base Rate
--------------                         ---------         ---------         ---------         ---------         ---------
<S>                                    <C>               <C>               <C>               <C>               <C>
Leadman - Mechanic                      $  20.80          $  21.63          $  22.50          $  23.28          $  24.10
Leadman - Electrician                   $  20.80          $  21.63          $  22.50          $  23.28          $  24.10
Leadman - Lab                           $  20.80          $  21.63          $  22.50          $  23.28          $  24.10

Mechanic I                              $  19.08          $  19.84          $  20.64          $  21.36          $  22.11
Electrician I                           $  19.08          $  19.84          $  20.64          $  21.36          $  22.11
Hoistman I                              $  19.08          $  19.84          $  20.64          $  21.36          $  22.11

Leadman -Mine/Mill/Smelter/BMR          $  18.99          $  19.75          $  20.54          $  21.26          $  22.00

Leadman - Warehouse                     $  18.43          $  19.17          $  19.93          $  20.63          $  21.35

Mechanic II                             $  17.58          $  18.28          $  19.01          $  19.68          $  20.37
Electrician II                          $  17.58          $  18.28          $  19.01          $  19.68          $  20.37

Miner I                                 $  17.42          $  18.12          $  18.84          $  19.50          $  20.18
Mill/Smelter/BMR Operator I             $  17.42          $  18.12          $  18.84          $  19.50          $  20.18
U/G Construction I                      $  17.42          $  18.12          $  18.84          $  19.50          $  20.18
Lab Tech I                              $  17.42          $  18.12          $  18.84          $  19.50          $  20.18
Hoistman II                             $  17.42          $  18.12          $  18.84          $  19.50          $  20.18
Diamond Driller I                       $  17.42          $  18.12          $  18.84          $  19.50          $  20.18

Heavy Equipment Operator I              $  16.60          $  17.26          $  17.95          $  18.58          $  19.23
Miner II                                $  16.60          $  17.26          $  17.95          $  18.58          $  19.23
Sand Plant Operator                     $  16.60          $  17.26          $  17.95          $  18.58          $  19.23
Sandfiller                              $  16.60          $  17.26          $  17.95          $  18.58          $  19.23
U/G Equipment Operator I                $  16.60          $  17.26          $  17.95          $  18.58          $  19.23
Warehouse I                             $  16.60          $  17.26          $  17.95          $  18.58          $  19.23
U/G Construction II                     $  16.60          $  17.26          $  17.95          $  18.58          $  19.23

Mechanic III                            $  14.95          $  15.55          $  16.17          $  16.74          $  17.32
Electrician III                         $  14.95          $  15.55          $  16.17          $  16.74          $  17.32

U/G Equipment Operator II               $  14.32          $  14.89          $  15.49          $  16.03          $  16.59
Diamond Driller II                      $  14.32          $  14.89          $  15.49          $  16.03          $  16.59
Heavy Equipment Operator II             $  14.32          $  14.89          $  15.49          $  16.03          $  16.59
Mill/Smelter/BMR Operator II            $  14.32          $  14.89          $  15.49          $  16.03          $  16.59
Lab Tech II                             $  14.32          $  14.89          $  15.49          $  16.03          $  16.59
U/G Construction III                    $  14.32          $  14.89          $  15.49          $  16.03          $  16.59
Miner III                               $  14.32          $  14.89          $  15.49          $  16.03          $  16.59

Equipment Operator III                  $  12.58          $  13.08          $  13.61          $  14.08          $  14.58
Warehouse II                            $  12.58          $  13.08          $  13.61          $  14.08          $  14.58
Mill/Smelter/BMR Operator III           $  12.58          $  13.08          $  13.61          $  14.08          $  14.58
Lamp Repairer                           $  12.58          $  13.08          $  13.61          $  14.08          $  14.58
Lab Tech III                            $  12.58          $  13.08          $  13.61          $  14.08          $  14.58
Custodian                               $  12.58          $  13.08          $  13.61          $  14.08          $  14.58
</TABLE>
<PAGE>

<TABLE>
<S>                                     <C>               <C>               <C>               <C>               <C>
Probationary Rate                       $  10.06          $  10.46          $  10.88          $  11.26          $  11.66
</TABLE>

                    LINES OF PROGRESSION AND BID POSITIONS<PAGE>

                                                                   EXHIBIT 10.14

                             EMPLOYMENT AGREEMENT

     THIS AGREEMENT, dated as of July 1, 1999, is by and between STILLWATER
MINING COMPANY, a corporation duly organized and existing under the laws of the
State of Delaware (the "Company"), and JAMES A. SABALA ("Employee").

     WHEREAS, the Company desires to employ Employee and Employee desires to be
employed by the Company pursuant to the terms and conditions of this Agreement;
and

     WHEREAS, the Company has heretofore determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of the Company;
and

     WHEREAS, the Company has determined it is imperative to diminish the
inevitable distraction of the Employee by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control and to provide the Employee
with compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits to be paid to the Employee are at
least as favorable as those in effect at the time of the Change of Control and
which are competitive with those of other corporations.

     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:

                                   ARTICLE 1
                                  EMPLOYMENT

     The Company hereby employs Employee, and Employee agrees to serve as Vice
President and Chief Financial Officer for the Company.

                                   ARTICLE 2
                                     TERM

     The term of this Agreement shall be for a period commencing on the date
above and ending December 31, 1999, unless sooner terminated as hereinafter
provided.  The Agreement shall thereafter continue in effect for subsequent one
(1) year terms, commencing January 1, unless altered or terminated as
hereinafter provided; provided, however, that following a Change of Control, as
defined in Section 5.6, the Employment Term shall continue for no less than one
(1) additional year. The period of Employee's employment hereunder, including
any extension or extensions pursuant to the foregoing sentence, from the date of
commencement until the date of expiration or termination of this Agreement, is
referred to hereinafter as the "Employment Term."
<PAGE>

                                   ARTICLE 3
                             DUTIES AND AUTHORITY

     Employee agrees, unless otherwise specifically authorized by the Company,
to devote substantially all of his business time and effort to his duties for
the profit, benefit and advantage of the business of the Company, except that
Employee may serve on the boards of directors of other business corporations
that have no business relationship with the Company and which do not compete
with the Company.  In performing his duties hereunder, Employee shall have the
authorities customarily held by others holding positions similar to those
assigned to Employee in similar businesses, subject to the general and customary
supervision of the Company's Board of Directors and Chief Executive Officer.

                                   ARTICLE 4
                                 COMPENSATION

     1.1  Base Salary.  The Company agrees to pay Employee a base salary of One
          -----------
Hundred Seventy-Five Thousand Dollars ($175,000.00) per year, payable at the
usual times for the payment of the Company's executive employees, subject to
adjustment as provided herein.  Employee's base salary shall be reviewed at
least annually and may be increased, but not decreased, consistent with general
salary increases for the Company's executive employees or as appropriate in
light of the performance of Employee and the Company.  Notwithstanding anything
herein to the contrary, Employee's base salary may be reduced in the event of an
across-the-board salary reduction for all executive officers; provided, however,
that the percentage reduction of Employee's base salary shall not exceed the
highest percentage reduction in base salary of any other executive officer.

     1.2  Incentive Compensation.  Employee shall participate in the Company's
          ----------------------
incentive compensation plans for executive officers of the Company, as in effect
from time to time during the Employment Term. The Company shall adopt an annual
incentive program for executive officers of the Company that will provide for a
performance based cash bonus of an amount to be determined by the Board of
Directors of the Company (the "Annual Bonus").  Until changed by the Board of
Directors of the Company, the Annual Bonus shall be set at a target of 35% of
the Employee's base salary, with a maximum which shall not exceed 70% of the
Employee's base salary.

     1.3  Employee Benefits.  Employee shall be eligible to participate in such
          -----------------
other of the Company's employee benefit plans and to receive such benefits for
which his level of employment makes him eligible, in accordance with the
Company's policies as in effect from time to time during the Employment Term;
provided, however, that Employee shall be entitled to four weeks of vacation
during the initial term of this Agreement and during the term of each extension
hereof.

                                   ARTICLE 5
                                  TERMINATION

     1.4  Termination by the Company Without Cause; Termination by Employee for
          ---------------------------------------------------------------------
Good Reason.
-----------

                                      -2-
<PAGE>

          (a)  The Company shall have the right to terminate this Agreement
     without Cause (as defined below) upon ninety (90) days' notice to Employee.
     If Employee's employment hereunder is terminated by the Company without
     Cause or by Employee for "Good Reason" (as defined below) (other than a
     termination involving a Change of Control or by reason of death or
     disability), the Company shall pay Employee at the time of such termination
     in a lump sum a cash amount equal to: (i) 200 percent of his annual base
     salary in effect immediately preceding such termination and (ii) 200
     percent of the Annual Bonus paid or payable to the Employee for the most
     recently completed fiscal year during the Employment Term.

          (b)  For purposes of this Agreement, "Good Reason" shall mean:

               (i)    A material reduction in Employee's responsibilities,
          authorities, or duties;

               (ii)   Employee's job is eliminated other than by reason of
          promotion or termination for Cause;

               (iii)  The Company fails to pay Employee any amount otherwise
          vested and due hereunder or under any plan or policy of the Company,
          which failure is not cured within five (5) business days of receipt by
          the Company of written notice from Employee which describes in
          reasonable detail the amount which is due;

               (iv)   A material reduction in Employee's base salary except in
          the event of an across-the-board salary reduction for all executive
          officers;

               (v)    A material reduction in Employee's aggregate level of
          benefits under the Company's pension, life insurance, medical, health
          and accident, disability, deferred compensation or savings or similar
          plans, except in the event of an across-the-board reduction in such
          benefits for all executive officers;

               (vi)   A material reduction in Employee's reasonable opportunity
          to earn incentive compensation under any plan in which Employee is a
          participant, except in the event of an across-the-board reduction in
          such benefits for all executive officers;

               (vii)  The Company and its successor(s) (as described in
          subparagraph (ix) below) shall discontinue the business of the
          Company; or

               (viii) The failure of the Company to obtain an agreement to
          expressly assume this Agreement from any successor to the Company
          (whether such succession is direct or indirect by purchase, merger,
          consolidation or otherwise, to substantially all of the business
          and/or assets of the Company or a controlling portion of the Company's
          stock).

                                      -3-
<PAGE>

     Solely for the purposes of Section 5.6, any good faith determination of
Good Reason made by the Employee shall be conclusive.

     1.5  Termination by the Company for Cause; Voluntary Termination by
          --------------------------------------------------------------
Employee. Employee's employment hereunder may be terminated by the Company for
--------
"Cause." For purposes of Section 5.1, "Cause" shall mean (i) Employee's willful
and continued failure substantially to perform his duties hereunder for a period
of fifteen (15) days after written notice to Employee by the Company of each
such failure; (ii) Employee's dishonesty in the performance of his duties
hereunder; or (iii) Employee's conviction of a felony under the laws of the
United States or any state thereof. Employee shall have the right to voluntarily
terminate this Agreement upon ninety (90) days' notice to the Company. If
Employee is terminated for Cause, or if Employee voluntarily terminates
employment hereunder other than for Good Reason, he shall be entitled to receive
his base salary through the date of termination. All other benefits, if any,
payable to Employee following such termination of Employee's employment shall be
determined in accordance with the plans, policies and practices of the Company.

     1.6  Notice of Termination.  Any termination by the Company or by the
          ---------------------
Employee shall be communicated by Notice of Termination to the other party
hereto given in accordance with Article 18 of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Termination Date
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the giving
of such notice). The failure by the Employee or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Employee or the Company,
respectively, hereunder or preclude the Employee or the Company, respectively,
from asserting such fact or circumstance in enforcing the Employee's or the
Company's rights hereunder.

     1.7  Termination Date.  "Termination Date" means the date of receipt of the
          ----------------
Notice of Termination or any later date specified therein, as the case may be.

     1.8  Termination by Death or Disability.  Upon termination of Employee's
          ----------------------------------
employment due to death of Employee, Employee shall be entitled to his base
salary at the rate in effect at the time of Employee's death through the end of
the month in which his death occurs.  Employee's employment hereunder may be
terminated by the Company if Employee becomes physically or mentally
incapacitated and is therefore unable for a period of one hundred eighty (180)
consecutive days to perform his duties (such incapacity is hereinafter referred
to as "Disability").  Upon any such termination for Disability, Employee shall
be entitled to receive payment of disability benefits in lieu of salary under
the Company's Employee benefit plans as then in effect.

     1.9  Termination Following a Change of Control; Benefits.
          ---------------------------------------------------

                                      -4-
<PAGE>

               (1)  In the event there is a Termination Following a Change of
          Control, the Agreement shall terminate and Employee shall be entitled
          to the following severance benefits:

                    (1)  200 percent of Employee's annual base salary at the
               rate in effect immediately prior to the Change of Control or on
               the Termination Date, whichever is higher, payable in a lump sum
               within sixty (60) days after the Termination Date;

                    (2)  200 percent of the Employee's target bonus in effect
               immediately prior to the Change of Control (or on the Termination
               Date, whichever is higher).

                    (3)  The Company shall timely pay or provide to Employee any
               other amounts or benefits required to be paid or provided or
               which Employee is eligible to receive under any plan, program,
               policy, practice, contract or agreement of the Company (other
               than customary severance pay, office facilities and equity
               incentive program participation) to the same extent that Employee
               would be eligible therefor if he were employed on a full-time
               basis by the Company in the capacity provided for herein for a
               period of 12 months after the Termination Date, including
               receiving the full benefit of 12 months of employment at the
               income levels provided for herein for purposes of any retirement
               plan utilizing years of service as a criteria in the provision of
               benefits (such other amounts and benefits shall be hereinafter
               referred to as the "Other Benefits"); provided, however, that (i)
               for the purposes of the Company's equity incentive programs,
               Employee's employment shall be deemed terminated as of the
               Termination Date hereunder; and (ii) to the extent Employee,
               following the Termination Date, becomes employed by another
               employer and becomes entitled to receive health insurance
               benefits from such employer, the Company's obligation to provide
               such health insurance benefits hereunder shall be decreased;

                    (4)  All accrued compensation (including base salary and
               Highest Annual Bonus, each prorated through the Termination Date)
               and unreimbursed expenses through the Termination Date. Such
               amounts shall be paid to Employee in a lump sum in cash within
               thirty (30) days after the Termination Date.

                    (5)  The Employee shall be free to accept other employment
               following such Termination, and, except as provided herein, there
               shall be no offset of any employment compensation earned by the
               Employee in such other employment during such period against
               payments due Employee hereunder, and there shall be no offset in
               any compensation received from such other employment against the
               continued salary set forth above.

               (2)  The following terms shall have the meanings set forth below:

                    (1)  A "Change in Control" of the Company shall mean and
               shall be deemed to have occurred if any of the following events
               shall have occurred:

                                      -5-
<PAGE>

                    (1)  Any person (as defined in Sections 13(d) and 14(d) of
               the Securities Exchange Act of 1934, as amended (the "Exchange
               Act")) is or becomes the beneficial owner (as defined in Rule
               13d-3 of the Exchange Act), directly or indirectly, of securities
               of the Company (not including in the securities beneficially
               owned by such person any securities acquired directly from the
               Company or its affiliates) representing 30% or more of the
               combined voting power of the Company's then outstanding
               securities, excluding any person who becomes such a beneficial
               owner in connection with a transaction described in clause (i) of
               paragraph (c) below; or

                    (2)  the following individuals cease for any reason to
               constitute a majority of the number of directors then serving:
               individuals who, on the date hereof, constitute the Board and any
               new director (other than a director whose initial assumption of
               office is in connection with an actual or threatened election
               contest, including but not limited to a consent solicitation,
               relating to the election of directors of the Company) whose
               appointment or election by the Board or nomination for election
               by the Company's stockholders was approved or recommended by a
               vote of at least two-thirds (_) of the directors then still in
               office who either were directors on the date hereof or whose
               appointment, election or nomination for election was previously
               so approved or recommended; or

                    (3)  there is consummated a merger or consolidation of the
               Company or any direct or indirect subsidiary of the Company with
               any other corporation, other than (i) a merger or consolidation
               which would result in the voting securities of the Company
               outstanding immediately prior to such merger or consolidation
               continuing to represent (either by remaining outstanding or by
               being converted into voting securities of the surviving entity or
               any parent thereof) at least 55% of the combined voting power of
               the securities of the Company or such surviving entity or any
               parent thereof outstanding immediately after such merger or
               consolidation, or (ii) a merger or consolidation effected to
               implement a recapitalization of the Company (or similar
               transaction) in which no person is or becomes the beneficial
               owner, directly or indirectly, of securities of the Company (not
               including in the securities beneficially owned by such person any
               securities acquired directly from the Company or its affiliates)
               representing 30% or more of the combined voting power of the
               Company's then outstanding securities; or

                    (4)  the stockholders of the Company approve a plan of
               complete liquidation or dissolution of the Company or there is
               consummated an agreement for the sale or disposition by the
               Company of all or substantially all of the Company's assets,
               other than a sale or disposition by the Company of all or
               substantially all of the Company's assets to an entity, at least
               60% of the combined voting power of the voting securities of
               which are owned by

                                      -6-
<PAGE>

               stockholders of the Company in substantially the same proportions
               as their ownership of the Company immediately prior to such sale.

               Notwithstanding the foregoing, a "Change in Control" shall not be
          deemed to have occurred by virtue of the consummation of any
          transaction or series of integrated transactions immediately following
          which the record holders of the common stock of the Company
          immediately prior to such transaction or series of transactions
          continue to have substantially the same proportionate ownership in an
          entity which owns all or substantially all of the assets of the
          Company immediately following such transaction or series of
          transactions.

               (2)  "Termination Following a Change of Control" shall mean a
          Termination of the Employee without Cause by the Company in connection
          with or within two years following a Change of Control or a
          termination by the Employee for Good Reason of the Employee's
          employment with the Company within two years following a Change of
          Control.

               (3)  For the purposes of this Section 5.6 only, "Cause" shall
          mean:

                    (1)  Misfeasance or nonfeasance by the Employee in the
               performance of his duties under this Agreement intended to injure
               the Company which has a material adverse effect on the Company's
               business or operations, if such failure is not remedied or
               reasonable steps to effect such remedy are not commenced within
               thirty (30) days after written notice of such violation; or

                    (2)  Employee's conviction of a felony or any crime
               involving moral turpitude.

     1.10 Certain Additional Payments by the Company. Anything in this Agreement
          ------------------------------------------
to the contrary notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Employee
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 5.7) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (an "Excise Tax Payment") in the amount of the Excise Tax
(but not any income tax) imposed upon the Payments.  Notwithstanding the
foregoing provisions of this Section 5.7(a), if it shall be determined that the
Employee is entitled to an Excise Tax Payment but that the Employee, after
taking into account the Payments and the Excise Tax Payment, would not receive a
net after-tax benefit of at least $10,000 (taking into account both income taxes
and any Excise Tax) as compared to the net after-tax proceeds to the Employee
resulting from an elimination of the Excise Tax Payment and a reduction of the
Payments, in the aggregate, to an amount (the "Reduced Amount") such that the
receipt of Payments would not give rise to any Excise

                                      -7-
<PAGE>

Tax, then no Excise Tax Payment shall be made to the Employee and the Payments,
in the aggregate, shall be reduced to the Reduced Amount.

                                   ARTICLE 6
                                   INSURANCE

     Employee agrees that the Company may, from time to time, apply for and take
out in its own name and at its own expense, life, health, accident, or other
insurance upon Employee that the Company may deem necessary or advisable to
protect its interests hereunder; and Employee agrees to submit to any medical or
other examination necessary for such purposes and to assist and cooperate with
the Company in preparing such insurance; and Employee agrees that he shall have
no right, title, or interest in or to such insurance.

                                   ARTICLE 7
                            FACILITIES AND EXPENSES

     The Company shall make available to Employee such office space, secretarial
services, office equipment and furnishings as are suitable and appropriate to
Employee's title and duties.  The Company shall promptly reimburse Employee for
all reasonable expenses incurred in the performance of his duties hereunder,
including without limitation, expenses for entertainment, travel, management
seminars and use of the telephone, subject to the Company's reasonable
requirements with respect to the reporting and documentation of such expenses.

                                   ARTICLE 8
                                NONCOMPETITION

     1.11 Necessity of Covenant.  The Company and Employee acknowledge that:
          ---------------------

          (1)  The Company's business is highly competitive;

          (2)  The Company maintains confidential information and trade secrets
     as described in Article 9, all of which are zealously protected and kept
     secret by the Company;

          (3)  In the course of his employment, Employee will acquire certain of
     the information described in Article 9 and the Company would be adversely
     affected if such information subsequently, and in the event of the
     termination of Employee's employment, is used for the purposes of competing
     with the Company;

          (4)  The Company transacts business throughout the world; and

          (5)  For these reasons, both the Company and Employee further
     acknowledge and agree that the restrictions contained herein are reasonable
     and necessary for the protection of their respective legitimate interests
     and that any violation of these restrictions would cause substantial injury
     to the Company.

                                      -8-
<PAGE>

     1.12 Covenant Not to Compete.  Employee agrees that from and after the date
          -----------------------
hereof during the Employment Term and for a period of one (1) year after the end
of the Employment Term, he will not, without the express written permission of
the Company, which may be given or withheld in the Company's sole discretion,
directly or indirectly own, manage, operate, control, lend money to, endorse the
obligations of, or participate or be connected as an officer, director, 5% or
more stockholder of a publicly-held company, stockholder of a closely-held
company, employee, partner, or otherwise, with any enterprise or individual
engaged in a business which is competitive with the Platinum Group Metals
business conducted by the Company. It is understood and acknowledged by both
parties that, inasmuch as the Company transacts business worldwide, this
covenant not to compete shall be enforced throughout the United States and in
any other country in which the Company is doing business as of the date of
Employee's termination of employment.

     1.13 Disclosure of Outside Activities.  Employee, during the term of his
          --------------------------------
employment by the Company, shall at all times keep the Company informed of any
outside business activity and employment, and shall not engage in any outside
business activity or employment which may be in conflict with the Company's
interests.

     1.14 Survival.  The terms of this Article 8 shall survive the expiration or
          --------
termination of this Agreement for any reason.

                                   ARTICLE 9
                  CONFIDENTIAL INFORMATION AND TRADE SECRETS

     1.15 Nondisclosure of Confidential Information.  Employee has acquired and
          -----------------------------------------
will acquire certain "Confidential Information" of the Company. "Confidential
Information" shall mean any information that is not generally known, including
trade secrets, outside the Company and that is proprietary to the Company,
relating to any phase of the Company's existing or reasonably foreseeable
business which is disclosed to Employee by the Company including information
conceived, discovered or developed by Employee. Confidential Information
includes, but shall not be limited to, business plans, financial statements and
projections, operating forms (including contracts) and procedures, payroll and
personnel records, marketing materials and plans, proposals, software codes and
computer programs, project lists, project files, price information and cost
information and any other document or information that is designated by the
Company as "Confidential." The term "trade secret" shall be defined as follows:

     A trade secret may consist of any formula, pattern, device or compilation
     of information which is used in one's business, and which provides to the
     holder an opportunity to obtain an advantage over competitors who do not
     know or use it.

Accordingly, employee agrees that he shall not, during the Employment Term and
for three (3) years thereafter, use for his own benefit such Confidential
Information or trade secrets acquired during the term of his employment by the
Company.  Further, during the Employment Term and for three (3) years
thereafter, Employee shall not, without the written consent of the Board of
Directors of the Company or a person duly authorized thereby, which consent may
be given or withheld in the Company's sole discretion, disclose to any person,
other than an employee of the Company or a

                                      -9-
<PAGE>

person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by Employee of his duties, any Confidential Information or
trade secrets obtained by him while in the employ of the Company.

     1.16 Return of Confidential Information.  Upon termination of employment,
          ----------------------------------
Employee agrees to deliver to the Company all materials that include
Confidential Information or trade secrets, and all other materials of a
confidential nature which belong to or relate to the business of the Company.

     1.17 Exceptions.  The restrictions and obligations in Section 9.1 shall not
          ----------
apply with respect to any Confidential Information which: (i) is or becomes
generally available to the public through any means other than a breach by
Employee of his obligations under this Agreement; (ii) is disclosed to Employee
without obligation of confidentiality by a third party who has the right to make
such disclosure; (iii) is developed independently by Employee without use of or
benefit from the Confidential Information; (iv) was in possession of Employee
without obligations of confidentiality prior to receipt under this Agreement; or
(v) is required to be disclosed to enforce rights under this Agreement.

     1.18 Survival.  The terms of this Article 9 shall survive the expiration or
          --------
termination of this Agreement for any reason.

                                  ARTICLE 10
                             JUDICIAL CONSTRUCTION

     Employee believes and acknowledges that the provisions contained in this
Agreement, including the covenants contained in Articles 8 and 9 of this
Agreement, are fair and reasonable.  Nonetheless, it is agreed that if a court
finds any of these provisions to be invalid in whole or in part under the laws
of any state, such finding shall not invalidate the covenants, nor the Agreement
in its entirety, but rather the covenants shall be construed and/or blue-lined,
reformed or rewritten by the court as if the most restrictive covenants
permissible under applicable law were contained herein.

                                  ARTICLE 11
                          RIGHT TO INJUNCTIVE RELIEF

     Employee acknowledges that a breach by Employee of any of the terms of
Articles 8 or 9 of this Agreement will render irreparable harm to the Company,
and that in the event of such breach the Company shall therefore be entitled to
any and all equitable relief, including, but not limited to, injunctive relief,
and to any other remedy that may be available under any applicable law or
agreement between the parties.

                                  ARTICLE 12
                        CESSATION OF CORPORATE BUSINESS

     This Agreement shall cease and terminate if the Company shall discontinue
its business, and all rights and liabilities hereunder shall cease, except as
provided in Section 5.6 and Article 13.

                                      -10-
<PAGE>

                                  ARTICLE 13
                                  ASSIGNMENT

     12.1  Permitted Assignment.  Subject to the provisions of Section 5.6, the
           --------------------
Company shall have the right to assign this contract to its successors or
assigns, and all covenants or agreements hereunder shall inure to the benefit of
and be enforceable by or against its successors or assigns.

     12.2  Successors and Assigns.  The terms "successors" and "assigns" shall
           ----------------------
mean any person or entity which buys all or substantially all of the Company's
assets, or a controlling portion of its stock, or with which it merges or
consolidates.

                                  ARTICLE 14
                   FAILURE TO DEMAND, PERFORMANCE AND WAIVER

     The failure by either party to demand strict performance and compliance
with any part of this Agreement during the Employment Term shall not be deemed
to be a waiver of the rights of such party under this Agreement or by operation
of law.  Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed as a waiver of any subsequent
breach thereof.

                                  ARTICLE 15
                               ENTIRE AGREEMENT

     The Company and Employee acknowledge that this Agreement contains the full
and complete agreement between and among the parties, that there are no oral or
implied agreements or other modifications not specifically set forth herein, and
that this Agreement supersedes any prior agreements or understandings, if any,
between the Company and Employee, whether written or oral.  The parties further
agree that no modifications of this Agreement may be made except by means of a
written agreement or memorandum signed by the parties.

                                  ARTICLE 16
                                 GOVERNING LAW

     The parties hereby agree that this Agreement shall be construed in
accordance with the laws of the State of Colorado, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.

                                  ARTICLE 17
                                ATTORNEYS' FEES

     If either party shall commence any action or proceeding against the other
that arises out of the provisions hereof, or to recover damages as the result of
the alleged breach of any of the provisions hereof, the prevailing party therein
shall be entitled to recover all reasonable costs incurred in connection
therewith, including reasonable attorneys' fees.

                                      -11-
<PAGE>

                                  ARTICLE 18
                                    NOTICE

     All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

     If to the Employee:
          James A. Sabala
          1403 Solitude Lane
          Evergreen, Colorado 80439

     If to the Company:
          Vice President, Human Resources
          Stillwater Mining Company
          HC 54 Box 365
          Nye, Montana 59061

                                  ARTICLE 19
                                 COUNTERPARTS

     This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one instrument.

     IN WITNESS WHEREOF, the Company has hereunto signed its name and Employee
hereunder has signed his name, all as of the day and year first-above written.

                              STILLWATER MINING COMPANY

                              By:___________________________________
                                 Name:______________________________
                                 Title:_____________________________

                              EMPLOYEE

                              ______________________________________
                              James A. Sabala

                                      -12-

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