Document:

SEVERANCE LETTER

 

EXHBIIT 10.12

[CENTURY ALUMINUM
LETTERHEAD]

Century Aluminum Company

2511 Garden Road

Building A, Suite 200

Monterey, CA 93940

831 642-9300 Main

831 642-9082 Fax

October 15, 2003

Mr. Gerald A. Meyers

25254 Hatton Road

Carmel, CA 93923

Dear Gerry:

The Company acknowledges receipt of and accepts your resignation. The purpose
of this letter is to assure you that, while your employment with the Company
will cease, the Company will provide you with all rights and benefits to which
you are entitled under that Employment Agreement between you and the Company
dated as of January 1, 2002, (the “Employment Agreement”). In addition, the
Company will provide you certain additional benefits. Those rights and
benefits are as follows:

          Base Salary. The Company will pay you a Base Salary of $475,000 per annum
through December 31, 2004. The base salary will be paid in accordance with the
Company’s normal payroll practice and will be subject to applicable payroll
taxes and deductions.

          Bonuses. The Company will pay you an annual bonus of $175,000 for each of
calendar years 2003 and 2004. (This amount is equal to the highest bonus you
have received from the Company in the past three years.) Consistent with the
Company’s past practices, these bonuses will be paid early in 2004 and 2005,
respectively.

          Lonq-Term Incentive Program. For purposes of grants under the
Company’s long-term incentive program (the Performance Share Program) you
will be treated as though you had been employed through
December 31, 2004.
Accordingly, you will participate at 100% of your Performance Share Award
level for plan periods 2001 — 2003 and 2002 — 2004, and at 66 and 2/3% of your
Performance Share Award level for plan period 2003 — 2005.

          Pension. You will be credited for pension benefit purposes as though
you had remained employed by the Company through December 31, 2004.

          Supplemental Executive Retirement Benefits. You will be credited with five
years of “Requisite Years of Service” under the Company’s Supplemental
Retirement Income Benefit Plan (“SERB”). Accordingly, you will be vested at
100% of the benefits under that plan. Once vested, those payments are not
reduced actuarially. Pursuant to the terms of the SERB and your Employment
Agreement, payments under the SERB will begin at the time and in the manner you
begin receiving payments under the Company’s Qualified Retirement Plan

 

 

          Exercise Period for Options. The Company’s 1996 Stock Incentive Plan
provides that the right to exercise options terminates upon termination of
employment, except in cases of the retirement or death of an employee.
Nevertheless, the Company agrees that options granted to you in connection
with the Company’s IPO may be
exercised by you until March 27, 2006.

          Insurance.
Section 4.1 (i) of your Employment Agreement describes the
health, life and other insurance benefits the Company provides to you. The
Company will continue to provide those benefits to you, as well as Company-paid
annual physical examinations, through December 31, 2004, on the same basis it
provides those benefits to other senior executives. You will be entitled to
take over Company-paid term life insurance policies after December 31, 2004,
and you will be entitled to retiree health insurance benefits after December
31, 2004, to the extent those benefits exist for other retirees.

          Other Matters. You may have the two Company computers which are in your
possession. The Company also will pay for legal advice you may reasonably
seek relating to your ability to trade in Company stock and, until December
31, 2004, it will reimburse you for the cost of maintaining the margin loan
on Company stock against which you have a loan as of the date of this letter.

In the interests of avoiding any future misunderstandings about the
contents of this letter or the Company’s obligations to you, and in
recognition of the benefits the Company is giving you beyond those to which
you otherwise would be entitled, the Company asks that you acknowledge below
that the matters set forth in this letter fully satisfy any rights you have
under your Employment Agreement or otherwise. Also, the Company asks that you
waive any claim for any consideration or benefit beyond that described in
this letter.

Gerry, the Company thanks you for the valuable services you have rendered to it.

Very truly yours,

CENTURY ALUMINUM COMPANY

	 	 	 	 	 
	By

	 	/s/ Craig A. Davis
	 	 
	

	 	
 	 	 
	

	 	Craig A. Davis	 	 

The foregoing is acknowledged and agreed to this 15th day of October, 2003

/s/ Gerald A. Meyers

Gerald A. MeyersSEVERANCE PROTECTION AGREEEMNT

 

Exhibit 10.17

SEVERANCE PROTECTION AGREEMENT

          THIS AGREEMENT, made as of the 14th day of October 2003, by and between
the Company (as hereinafter defined) and E. Jack Gates (the “Executive”).

WITNESSETH:

          WHEREAS, the Board of Directors of the Company (the “Board”) recognizes
that the possibility of a Change in Control (as hereinafter defined) exists and
that the threat or the occurrence of a Change in Control can result in
significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;

          WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Executive Vice President and Chief Operating Officer of the Company in the
event of a threat or the occurrence of a Change in Control and to ensure his
continued dedication and efforts in such event without undue concern for his
personal financial and employment security; and

          WHEREAS, the Executive is the Executive Vice President and Chief Operating
Officer of the Company and in order to induce the Executive to remain in the
employ of the Company, particularly in the event of a threat or the occurrence
of a Change in Control, the Company desires to enter into this Agreement with
the Executive to provide the Executive with certain benefits in the event his
employment is terminated as a result of, or in connection with, a Change in
Control;

          NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is hereby agreed as follows:

          1. Term of Agreement. This Agreement shall be effective as of October 14,
2003, and shall continue in effect until January 1, 2006, provided, however,
that commencing on January 1, 2006, and on each January 1 thereafter, the term
of this Agreement shall automatically be extended for one (1) year, subject
however, to termination as provided in the last sentence of this Section 1; and
provided, further, however, that the term of this Agreement shall not expire
prior to the later of (i) the expiration of thirty six (36) months after the
occurrence of a Change in Control during the term of this Agreement, or (ii)
until such time as all benefits to be provided for hereunder have been provided
in full. Except as otherwise provided herein, this Agreement and the rights and
obligations of each party shall terminate if the Executive or the Company
terminates the Executive’s employment prior to the occurrence of a Change in
Control.

 

 

          2. Definitions.

          2.1. Accrued Compensation. For purposes of this Agreement, “Accrued
Compensation” shall mean any and all amounts or rights earned, accrued or
vested through the Termination Date (as hereinafter defined) but not paid as of
the Termination Date, including (i) base salary, (ii) reimbursement for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company during the period ending on the Termination Date, (iii) vacation pay,
(iv) bonuses and incentive compensation (other than the “Pro Rata Bonus” (as
hereinafter defined)) and Supplemental Retirement and Health Benefits.

          2.2. Cause. For purposes of this Agreement, a termination of employment is
for “Cause” if the Executive (a) has disregarded a direct, material order of
the Board, the substance of which order is (i) a proper duty of the Executive
under the terms of his Employment Agreement, (ii) permitted by law, and (iii)
otherwise permitted by his Employment Agreement, which disregard continues
after fifteen (15) days’ opportunity and failure to cure, or (b) has been
convicted of a felony or any crime involving moral turpitude.

          2.3. Change in Control. For purposes of this Agreement, a “Change in
Control” shall mean any of the following events:

               (a) An acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any “Person” (as the
term person is used for purposes of Section 13(d) or 14(d) of the 1934 Act)
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty percent (20%)
or more of the combined voting power of the Company’s then outstanding Voting
Securities; provided, however, that in determining whether a Change in Control
has occurred, Voting Securities which are acquired in a Non-Control Acquisition
(as hereinafter defined) shall not constitute an acquisition which would cause
a Change in Control. A “Non-Control Acquisition” shall mean an acquisition by
(1) an employee benefit plan (or a trust forming a part thereof) maintained by
(x) the Company or (y) any corporation or other Person of which a majority of
its voting power or its equity securities or equity interest is owned directly
or indirectly by the Company (a “Subsidiary”). (2) the Company or any
Subsidiary, or (3) any Person in connection with a Non-Control Transaction (as
hereinafter defined);

               (b) The individuals who, as of the date hereof, are members of the Board
(the “Incumbent Board”), cease for any reason to constitute at least two-thirds
of the Board; provided, however, that if the election, or nomination for
election by the Company’s stockholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Agreement, be considered a member of the Incumbent Board;
provided, further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened “Election Contest” (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a “Proxy
Contest”) including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or

 

 

               (c) Approval by stockholders of the Company of:

                    (1) A merger, consolidation or reorganization involving the Company,
unless

                         (i) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least seventy percent (70%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the “Surviving Corporation”) in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,

                         (ii) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the
Surviving Corporation, and

                         (iii) no Person (other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any
Subsidiary, or any Person who, immediately prior to such merger,
consolidation or reorganization, had Beneficial Ownership of
fifteen percent (15%) or more of the then outstanding Voting
Securities) has Beneficial Ownership of fifteen percent (15%) or
more of the combined voting power of the Surviving Corporation’s
then outstanding voting securities (a transaction described in
clauses (i) through (iii) above shall herein be referred to as a
“Non-Control Transaction”);

                    (2) A complete liquidation or dissolution of the Company; or

                    (3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than
a transfer to a Subsidiary).

          Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the “Subject Person”) acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Company,
and after such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities beneficially owned by the
Subject Person, then a Change in Control shall occur.

 

 

               (d) Notwithstanding anything contained in this Agreement to the contrary,
if the Executive’s employment is terminated prior to a Change in Control and
the Executive reasonably demonstrates that such termination (i) was at the
request of a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a
Change in Control (a “Third Party”) or (ii) otherwise occurred in connection
with, or in anticipation of, a Change in Control which actually occurs, then
for all purposes of this Agreement, the date of a Change in Control with
respect to the Executive shall mean the date immediately prior to the date of
such termination of the Executive’s employment.

          2.4. Company. For purposes of this Agreement, the “Company” shall mean
Century Aluminum Company, a Delaware corporation, and shall include its
Successors and Assigns (as hereinafter defined). As used in this Agreement, the
term “affiliates” shall include any company controlled by, controlling, or
under common control with, the Company.

          2.5. Disability. For purposes of this Agreement, “Disability” shall mean a
physical or mental infirmity which impairs the Executive’s ability to
substantially perform his duties with the Company for a period of one hundred
eighty (180) consecutive days and the Executive has not returned to his full
time employment prior to the Termination Date as stated in the Notice of
Termination (as hereinafter defined).

          2.6. Good Reason.

               (a) For purposes of this Agreement, “Good Reason” shall mean the
occurrence after a Change in Control of any of the events or conditions
described in subsections (1) through (9) hereof:

                    (1) a change in the Executive’s status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive’s reasonable judgment, represents an adverse change from his
status, title, position or responsibilities as in effect at any time
within one year preceding the date of a Change in Control or at any time
thereafter; the assignment to the Executive of any duties or
responsibilities which, in the Executive’s reasonable judgment, are
inconsistent with his status, title, position or responsibilities as in
effect at any time within one year preceding the date of a Change in
Control or at any time thereafter; or any removal of the Executive from
or failure to reappoint or reelect him to any of such offices or
positions, except in connection with the termination of his employment
for Disability, Cause, as a result of his death or by the Executive other
than for Good Reason;

                    (2) a reduction in the Executive’s base salary or the failure of the
Company to (i) pay to the Executive an annual bonus in cash at least
equal to the annual bonus paid to the Executive for the most recently
completed fiscal year prior to the Change in Control, such bonus to be
paid no later than the end of the third month of the fiscal year next
following the fiscal year for which the annual bonus is awarded, unless
the Executive shall elect to defer the receipt of such annual bonus, (ii)
increase the Executive’s base salary, annual bonus and any other
incentive compensation, including performance shares and options,
consistent with the Company’s practice prior to the

 

 

Change in Control or, if greater, as the same may be increased from
time to time for other key executive officers of the Company and its
affiliated companies, or (iii) pay to the Executive any compensation or
benefits to which he is entitled within five (5) days of the date due;

                    (3) the Company’s requiring the Executive to be based at any place
outside a 30-mile radius from the Company’s offices where he was based
prior to the Change in Control, except for reasonably required travel on
the Company’s business which is not materially greater than such travel
requirements prior to the Change in Control;

                    (4) the failure by the Company to (A) continue in effect (without
reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan (including, without limitation,
long-term disability, medical, dental, life insurance, flexible spending
account, pre-tax insurance premiums, vacation pay, pension and
profit-sharing) in which the Executive was participating at any time
within one year preceding the date of a Change in Control or at any time
thereafter, unless such plans are replaced with plans that provide
substantially equivalent compensation or benefits to the Executive, (B)
provide the Executive with compensation and benefits, in the aggregate,
at least equal (in terms of benefit levels and/or reward opportunities)
to those provided for under each other employee benefit plan, program and
practice in which the Executive was participating at any time within one
year preceding the date of a Change in Control or at any time thereafter,
or (C) permit the Executive to participate in any or all incentive,
savings, retirement plans and benefit plans, fringe benefits, practices,
policies and programs applicable generally to other key executives of the
Company and its affiliated companies;

                    (5) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company, which petition is
not dismissed within sixty (60) days;

                    (6) any material breach by the Company of any provision of this
Agreement;

                    (7) any purported termination of the Executive’s employment for
Cause by the Company which does not comply with the terms of Section 2.2;

                    (8) the disposition of all, or substantially all, of the assets of
the Company; or

                    (9) the failure of the Company to obtain an agreement, satisfactory
to the Executive, from any Successors and Assigns to assume and agree to
perform this Agreement, as contemplated in Section 6 hereof.

               (b) Any event or condition described in Section 2.6(a)(l) through (9)
above which occurs prior to a Change in Control but which the Executive
reasonably demonstrates (1)

 

 

was at the request of a Third Party, or (2) otherwise arose in connection
with, or in anticipation of, a Change in Control which actually occurs, shall
constitute Good Reason for purposes of this Agreement notwithstanding that it
occurred prior to the Change in Control.

          2.7. Highest Annual Bonus. For purposes of this Agreement, “Highest Annual
Bonus” shall mean an amount equal to the highest bonus or bonuses paid or
payable to the Executive in any of the five most recently completed fiscal
years prior to the Change in Control (or such shorter period that the Executive
has been employed).

          2.8. Highest Base Salary. For purposes of this Agreement, “Highest Base
Salary” shall mean the Executive’s annual base salary at the highest rate in
effect during the five-year period (or such shorter period that the Executive
has been employed) prior to the Change in Control, and shall include all
amounts of his base salary that are deferred under the qualified and
non-qualified employee benefit plans of the Company or any other agreement or
arrangement.

          2.9. Notice of Termination. For purposes of this Agreement, following a
Change in Control, “Notice of Termination” shall mean a written notice of
termination from the Company of the Executive’s employment which indicates the
specific termination provision in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated. The Notice of Termination shall also specify the relevant
Termination Date.

          2.10. Pro Rata Bonus. For purposes of this Agreement, “Pro Rata Bonus”
shall mean an amount equal to the Highest Annual Bonus multiplied by a
fraction, the numerator of which is the number of days elapsed in the fiscal
year through the Termination Date and the denominator of which is 365.

          2.11. Successors and Assigns. For purposes of this Agreement, “Successors
and Assigns” shall mean a corporation or other entity acquiring all or
substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.

          2.12. Termination Date. For purposes of this Agreement, “Termination Date”
shall mean in the case of the Executive’s death, his date of death, in the case
of the Executive’s resignation for any reason, the last day of his employment,
and in all other cases, the date specified in the Notice of Termination;
provided, however, that if the Executive’s employment is terminated by the
Company for Cause or due to Disability, the date specified in the Notice of
Termination shall be at least 30 days after the date the Notice of Termination
is given to the Executive, provided, that in the case of Disability the
Executive shall not have returned to the full-time performance of his duties
during such period of at least 30 days.

          3. Termination of Employment.

          3.1. If, during the term of this Agreement, the Executive’s employment
with the Company shall be terminated within thirty-six (36) months following a
Change in Control, the Executive shall be entitled to the following
compensation and benefits:

 

 

               (a) If the Executive’s employment with the Company shall be terminated (1)
by the Company for Cause or Disability, (2) by reason of the Executive’s death,
or (3) by the Executive other than for Good Reason, the Company shall pay to
the Executive the Accrued Compensation and, if such termination is other than
by the Company for Cause, a Pro Rata Bonus.

               (b) If the Executive’s employment with the Company shall be terminated by
reason of the Executive’s death or disability, the Executive, or his
beneficiaries or personal representatives, as the case may be, shall be
entitled to receive the greater of those amounts described in Section 3.1 (a)
above or such other compensation and benefits as may be provided for in their
employment and other agreements for termination of employment under similar
circumstances.

               (c) If the Executive’s employment with the Company shall be terminated for
any reason other than as specified in Section 3.1(a), the Executive shall be
entitled to the following:

                         (i) the Company shall pay the Executive all Accrued
Compensation and a Pro Rata Bonus;

                         (ii) the Company shall pay the Executive as severance pay and
in lieu of any further compensation for periods subsequent to the
Termination Date, in a single payment an amount in cash equal to
three times the sum of (A) the Highest Base Salary and (B) the
Highest Annual Bonus in each case calculated to include amounts
deferred under the Company’s qualified and non-qualified plans;

                         (iii) for a period of thirty-six (36) months after the
Termination Date (the “Continuation Period”), the Company shall, at
its expense, continue on behalf of the Executive and his dependents
and beneficiaries all employee benefits provided (x) to the
Executive at any time during the one year period prior to the
Change in Control or at any time thereafter or (y) to other
similarly situated executives who continue in the employ of the
Company during the Continuation Period, including, but not limited
to, long-term disability, medical, dental, life insurance, flexible
spending account and pre-tax insurance premiums.

The coverage and benefits (including deductibles and costs)
provided in this Section 3.1 (c)(iii) during the Continuation
Period shall be no less favorable to the Executive and his
dependents and beneficiaries than the most favorable of such
coverage and benefits during any of the periods referred to in
clauses (x) and (y) above. The Company’s obligation hereunder with
respect to the foregoing benefits shall be limited to the extent
that the Executive obtains any such benefits pursuant to a
subsequent employer’s benefit plans, in which case the Company may
reduce the coverage of any benefits it is required to provide the
Executive hereunder as long as the aggregate coverage and benefits
of the combined benefit plans is no less favorable to the Executive
than the coverage and benefits required to be provided hereunder.
This subsection (iii) shall not be interpreted so as to

 

 

limit any benefits to which the Executive, his dependents or
beneficiaries may be entitled under any of the Company’s employee
benefit plans, programs or practices following the Executive’s
termination of employment, including, without limitation, retiree
medical and life insurance benefits;

                         (iv) the Company shall credit the Executive for pension
purposes with three (3) years of service beyond the Termination
Date and shall pay to the Executive in a single payment an amount
in cash equal to the excess of (A) the Recalculated Retirement
Benefit (as provided in this Section 3.1 (c) (iv) had (w) the
Executive remained employed by the Company for the additional three
(3) complete years of credited service, (x) his annual compensation
during such period been equal to the Highest Base Salary and the
Highest Annual Bonus, (y) the benefit accrual formulas of each
retirement plan remained no less advantageous to the Executive than
those in effect immediately preceding the date on which a Change in
Control occurred and the Company made employer contributions to
each defined contribution plan in which the Executive was a
participant at the Termination Date in an amount equal to the
amount of such contribution for the plan year immediately preceding
the Termination Date, and (z) he been fully (100%) vested in his
benefit under each retirement plan in which the Executive was a
participant, over (B) the lump sum actuarial equivalent of the
aggregate retirement benefit the Executive is actually entitled to
receive under such retirement plans. For purposes of this
subsection (iv), the “Recalculated Retirement Benefit” shall mean
the lump sum actuarial equivalent of the aggregate retirement
benefit the Executive would have been entitled to receive under the
Company’s Qualified pension plan (the “Qualified Plan”). For
purposes of this subsection (iv), the “actuarial equivalent” shall
be determined in accordance with the actuarial assumptions used for
the calculation of benefits under the Qualified Plan as applied
prior to the Termination Date in accordance with such plans’ past
practices; and

                         (v) (A) the restrictions on any outstanding incentive awards
(including restricted stock and performance share units) granted to
the Executive under the 1996 Stock Incentive Plan or under any
other incentive plan or arrangement shall lapse and such incentive
awards shall become 100% vested and all stock options granted to
the Executive shall become immediately exercisable and shall become
100% vested (and restrictions on any stock issued upon exercise of
stock options shall lapse), and Section 6.B of the 1996 Stock
Incentive Plan Implementation Guidelines notwithstanding, all
performance shares awarded to the Executive pursuant to the
Guidelines shall be valued at 100% as though the Company had
achieved its target for each respective Plan Period, and an equal
number of shares of common stock shall be awarded to the Executive,
and (B) the Executive shall have the right to require the Company
to purchase, for cash, any shares of unrestricted stock or shares
purchased upon exercise of any options or received pursuant to a
performance share award at a price equal to the fair market value
of such shares on the date of purchase by the Company.

 

 

               (d) The amounts provided for in Sections 3.1(a), 3.1 (c)(i), 3.1 (c)(ii)
and 3.1 (c)(iv) shall be paid in a single lump sum cash payment within five (5)
days after the Executive’s Termination Date (or earlier, if required by
applicable law).

               (e) The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Section 3.1(c)(iii). Notwithstanding the foregoing, the
Executive agrees that during the Continuation Period, he shall not (i) solicit
any employees of the Company to leave the Company’s employ to work for any
company with which the Executive is employed, or (ii) employ any employee who
is employed by the Company at any time during the Continuation Period. A breach
of either of the foregoing covenants will result in the Executive forfeiting
any further benefits to which he is entitled pursuant to Section 3.1 (c)(iii),
although the Executive shall not be required to return any payments to the
Company that have been made to the Executive prior to the date of such breach.

          3.2. (a) Except as otherwise provided in Section 3.1 (b), the severance
pay and benefits provided for in this Section 3 shall be in lieu of any other
severance or termination pay to which the Executive may be entitled under any
employment agreement or any Company severance or termination plan, program,
practice or arrangement.

               (b) The Executive’s entitlement to any other compensation benefits shall
be determined in accordance with the Company’s employee benefit plans and other
applicable programs, policies and practices then in effect.

               (c) Notwithstanding anything to the contrary in this Agreement, in the
event the Executive is terminated by the Company after the occurrence of a
Change in Control and is subsequently rehired by the Company at any time
thereafter, the Executive shall not be entitled to any further benefits under
Section 3.1 (c)(iii) of this Agreement although the Executive shall not be
required to return any payments to the Company which have been made to the
Executive prior to the date the Executive is rehired.

          4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive’s employment by the Company shall be communicated
by Notice of Termination to the Executive. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.

          5. Excise Tax Payments.

               (a) In the event that any payment or benefit (within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
“Code”)) to the Executive or for his benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, his employment with the Company or a change
in ownership or effective control of the Company or of a substantial portion of
its assets (each a “Payment” and collectively, the “Payments”), would be
subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive

 

 

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 Executive will be entitled to receive an additional payment (a
“Gross-Up Payment”), such that the net amount retained by the Executive, after
deduction and/or payment of any Excise Tax on the Payments and the Gross-Up
Payment and any federal, state and local income tax on the Gross-Up Payment
(including any interest or penalties, other than interest and penalties imposed
by reason of the Executive’s failure to file timely a tax return or pay taxes
shown due on his return, imposed with respect to such taxes), shall be equal to
the Payments.

               (b) An initial determination as to whether a Gross-Up Payment is required
pursuant to this Agreement and the amount of such Gross-Up Payment shall be
made at the Company’s expense by an accounting firm selected by the Company and
reasonably acceptable to the Executive which is designated as one of the four
largest accounting firms in the United States (the “Accounting Firm”). The
Accounting Firm shall provide its determination (the “Determination”), together
with detailed supporting calculations and documentation to the Company and the
Executive within five days of the Termination Date if applicable, or such other
time as requested by the Executive (provided the Executive reasonably believes
that any of the Payments may be subject to the Excise Tax) and if the
Accounting Firm determines that no Excise Tax is payable by the Executive as
provided in Section 5(a) above, it shall furnish the Executive with an opinion
reasonably acceptable to the Executive to such effect. Within ten days of the
delivery of the Determination to the Executive, the Executive shall have the
right to dispute the Determination (the “Dispute”). The Gross-Up Payment, if
any, as determined pursuant to this Paragraph 5(b) shall be paid by the Company
to the Executive within five days of the receipt of the Accounting Firm’s
determination. The existence of the Dispute shall not in any way affect the
Executive’s right to receive the Gross-Up Payment in accordance with the
Determination. Upon the final resolution of a Dispute, the Company shall
promptly pay to the Executive any additional amount required by such
resolution. If there is no Dispute, the Determination shall be binding, final
and conclusive upon the Company and the Executive subject to the application of
Section 5(c) below.

               (c) As a result of the uncertainty in the application of Sections 4999 and
280G of the Code, it is possible that a Gross-Up Payment (or a portion thereof)
will be paid which should not have been paid (an “Excess Payment”) or a
Gross-Up Payment (or a portion thereof) which should have been paid will not
have been paid (an “Underpayment”). An Underpayment shall be deemed to have
occurred (i) upon notice (formal or informal) to the Executive from any
governmental taxing authority that the Executive’s tax liability (whether in
respect of the Executive’s current taxable year or in respect of any prior
taxable year) may be increased by reason of the imposition of the Excise Tax on
a Payment or Payments with respect to which the Company has failed to make a
sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by
reason of a determination by the Company (which shall include the position
taken by the Company, together with its consolidated group, on its federal
income tax return) or (iv) upon the resolution of the Dispute to the
Executive’s satisfaction. If an Underpayment occurs, the Executive shall
promptly notify the Company and the Company shall promptly, but in any event,
at least five days prior to the date on which the applicable government taxing
authority has requested payment, pay to the Executive an additional Gross-Up
Payment equal to the amount of the Underpayment plus any interest and penalties
(other than interest and penalties imposed by

 

 

reason of the Executive’s failure to file timely a tax return or pay taxes
shown due on the Executive’s return) imposed on the Underpayment. An Excess
Payment shall be deemed to have occurred upon a Final Determination (as
hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or
Payments (or portion thereof) with respect to which the Executive had
previously received a Gross-Up Payment. A “Final Determination” shall be deemed
to have occurred when the Executive has received from the applicable government
taxing authority a refund of taxes or other reduction in the Executive’s tax
liability by reason of the Excess Payment and upon either (x) the date a
determination is made by, or an agreement is entered into with, the applicable
governmental taxing authority which finally and conclusively binds the
Executive and such taxing authority, or in the event that a claim is brought
before a court of competent jurisdiction, the date upon which a final
determination has been made by such court and either all appeals have been
taken and finally resolved or the time for all appeals has expired or (y) the
statute of limitations with respect to the Executive’s applicable tax return
has expired. If an Excess Payment is determined to have been made, the amount
of the Excess Payment shall be treated as a loan by the Company to the
Executive and the Executive shall pay to the Company on demand (but not less
than 10 days after the determination of such Excess Payment and written notice
has been delivered to the Executive) the amount of the Excess Payment plus
interest at an annual rate equal to the Applicable Federal Rate provided for in
Section 1274(d) of the Code from the date the Gross-Up Payment (to which the
Excess Payment relates) was paid to the Executive until the date of repayment
to the Company.

               (d) Notwithstanding anything contained in this Agreement to the contrary,
in the event that, according to the Determination, an Excise Tax will be
imposed on any Payment or Payments, the Company shall pay to the applicable
government taxing authorities as Excise Tax withholding, the amount of the
Excise Tax that the Company has actually withheld from the Payment or Payments.

          6. Successors’ Binding Agreement.

               (a) This Agreement shall be binding upon and shall inure to the benefit of
the Company, its Successors and Assigns and the Company shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.

               (b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal personal representative.

          7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (a) the Executive’s termination of
employment (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination of employment), (b) the Executive
seeking to obtain or enforce any right or benefit provided by this Agreement
(including, but not limited to, any such fees and expenses incurred in
connection with the

 

 

Dispute and any other matter arising under Section 5, including the
existence and amount of any Excess Payment or Underpayment and issues with
respect to the Gross-Up Payment, whether as a result of any applicable
government taxing authority proceeding, audit or otherwise, or by any other
plan or arrangement maintained by the Company under which the Executive is or
may be entitled to receive benefits), provided, however, that any such action
by the Executive is commenced in good faith and for good reason, and (c) the
Executive’s hearing before the Board as contemplated in Section 2.2 of this
Agreement; provided, however, that the circumstances set forth in clauses (a)
and (b) (other than as a result of the Executive’s termination of employment
under circumstances described in Section 2.3(d)) occurred on or after a Change
in Control.

          8. Notices. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses for the parties set
forth on Exhibit A hereto or to any other addresses as the respective parties
may designate by notice delivered pursuant to this Section 8, provided that all
notices to the Company shall be directed to the attention of the Board with a
copy to the Secretary of the Company. All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the third
business day after the mailing thereof, except that notice of change of address
shall be effective only upon receipt.

          9. Non-Exclusivity of Rights. Except as otherwise provided in Section
3.2(a), nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company and for which the Executive may
qualify, nor shall anything herein limit or reduce such rights as the Executive
may have under any other agreements with the Company. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.

          10. Settlement of Claims. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.

          11. Modification, Waiver and Miscellaneous. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and the Company.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreement or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.

          12. Governing Law and Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware
without giving

 

 

effect to the conflict of laws principles thereof. Any claims arising
under or related to this Agreement shall be settled by binding arbitration
pursuant to the rules of the American Arbitration Association or such other
rules as to which the parties may agree. The arbitration shall take place in
San Francisco, California, within thirty (30) days following service of notice
of such dispute by one party on the other. The arbitration shall be conducted
before a panel of three (3) arbitrators, one to be selected by each of the
parties and the third to be selected by the other two. The panel of arbitrators
shall have no authority to order a modification or amendment of this Agreement.
The parties agree to abide by all awards rendered in such proceedings. Such
awards shall be final and binding on all parties, and may be filed with the
clerk of one or more courts, state or federal, having jurisdiction over the
party against whom such award is rendered or such party’s property as a basis
of judgment and of the issuance of execution for its collection.

          13. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

          14. Entire Agreement. Except as otherwise provided below, this Agreement
constitutes the entire agreement between the parties hereto and supersedes all
prior agreements, if any, understandings and arrangements, oral or written,
between the parties hereto with respect to the subject matter hereof. If the
Executive and the Company have also entered into an Employment Agreement, and
there is an inconsistency between the terms of this Agreement and the terms of
the Employment Agreement, then the Agreement which provides terms most
favorable to the Executive shall govern.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Executive has executed this Agreement as
of the day and year first above written.

	 	 	 
	

	 	CENTURY ALUMINUM COMPANY
	 
	 	 
	 
	 	 
	

	 	By: /s/ Gerald J. Kitchen   
	

	 	
 
	 
	 	 
	 
	 	 
	

	 	/s/ E. Jack Gates   
	

	 	
 
	

	 	E. JACK GATES

 

 

EXHIBIT A

If to the Company:

at its principal executive offices

If to the Executive:

E. Jack Gates

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