EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of
September 15, 1998 (the "Effective Date") between Xxxxxxx X. Xxxxx (the
"Executive") and IMC Global Inc., a Delaware corporation (the "Company").
WHEREAS, the Company desires to employ the Executive as its
President and Chief Operating Officer and the Executive desires to accept
such employment upon the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and
covenants contained herein, the sufficiency of which is acknowledged, the
Executive and the Company hereby agree as follows:
ARTICLE I
Employment
Section 1.01 Term. The term of this Agreement (the "Term")
shall commence on the Effective Date and shall terminate on the third
anniversary of the Effective Date; provided, however, that unless (i) the
Company gives written notice of its intent to terminate the Agreement at
least three (3) months prior to the third anniversary of the Effective
Date or (ii) the Executive gives notice of his intent to terminate the
Agreement at least three (3) months prior to the third anniversary of the
Effective Date, this Agreement shall renew automatically for an additional
one year term and shall continue to renew automatically for additional one
year terms unless (i) written notice of the Company's intent to terminate
the Agreement is given at least three (3) months prior to the expiration
of the then current term or (ii) written notice of the Executive's intent
to terminate the Agreement is given at least three (3) months prior to the
expiration of the then current term.
Section 1.02. Position; Responsibilities. The Company shall
employ the Executive as its President and Chief Operating Officer and, if
elected, as a member of the Company's Board of Directors (the "Board" or
the "Board of Directors"). The Executive shall have responsibility and
authority for the management of the Company's business units and those
departments of the Company so designated by the Board or the Chief
Executive Officer of the Company. The Executive shall also perform other
operating and administrative duties (consistent with the position of
President and Chief Operating Officer) as the Executive may reasonably be
expected to perform on behalf of the Company or as may from time to time
be authorized or directed by the Board or its duly authorized designee.
The Executive agrees to be employed by the Company in all such capacities
subject to the covenants and conditions hereinafter set forth.
Section l.03. Duties. During the Term of this Agreement, the
Executive shall perform faithfully the duties assigned to him hereunder to
the best of his abilities and devote his full and undivided business time
and attention to the transaction of the Company's business and not engage
in any other business activities except with the prior written approval of
the Board or its duly authorized designee.
ARTICLE II
Compensation
Section 2.01. Base Salary. As compensation for his services
hereunder, during employment the Company shall pay the Executive salary at
the rate of $600,000 per year, less required or authorized deductions,
payable in installments in accordance with the Company's normal payment
schedule for senior management of the Company. The Executive's salary may
be increased from time to time by the Board or its duly authorized
designee in its sole discretion. The Executive's annual salary in effect
from time to time under this Section 2.01 is hereinafter called his "Base
Salary."
Section 2.02. Annual Bonus. During employment, the
Company shall provide the Executive the opportunity to earn an annual
bonus, pursuant to the Company's Management Incentive Compensation Program
(the "MICP") or successor annual bonus plan as in effect from time to
time, with an annual target bonus of at least 60% of the salary earned by
the Executive for the year. With respect to the Executive's annual bonus
for the Company's 1998 fiscal year, such bonus shall be at least equal to
60% of the salary earned by the Executive for such 1998 fiscal year.
Nothing in this Section 2.02 shall be construed as limiting the Company's
right to revise, amend or terminate the MICP or other annual bonus plan in
effect.
Section 2.03. Long-Term Incentives. During employment,
the Company shall provide the Executive the opportunity to earn long-term
incentive awards under the Company's 1996 Long-Term Incentive Plan (the
"LTIP") and 1988 Stock Option and Award Plan, as amended (the "Stock
Option Plan), or successor long-term incentive plan or plans as in effect
from time to time. The Executive's annual target award under the LTIP
will be at least equal to 80% of the Executive's salary grade midpoint.
With respect to the Executive's LTIP award for the Company's 1998 fiscal
year, such LTIP award shall be at least equal to 80% of the Executive's
salary grade midpoint for 1998 ($495,000); provided, however, that such
LTIP award shall be prorated to reflect the Executive's actual service
during such 1998 fiscal year. Nothing in this Section 2.03 shall be
construed as limiting the Company's right to revise, amend or terminate
any of the Company's LTIP, Stock Option Plan or other long-term incentive
plans.
Section 2.04. Retirement Benefits. Subject to Section
2.09, the Company shall provide the Executive with participation in the
Company's Profit Sharing and Savings Plan, 1998 Restoration Plan and 1998
Supplemental Executive Retirement Plan or successor qualified and
nonqualified retirement plans in effect from time to time and provided by
the Company to senior executive officers, subject to the participation and
eligibility requirements of such plans.
Section 2.05. Initial Stock Option Awards. The Company
will provide the Executive with an option to purchase 320,000 shares of
common stock of the Company at a price of $18.1875 per share. Such option
shall vest in annual increments of one-third over the three year period
commencing on the Executive's date of hire and shall have a ten year term.
In addition, the Company will provide the Executive with an option to
purchase 180,000 shares of common stock of the Company at the
aforementioned price per share. Such option to purchase 180,000 shares
shall have a ten year term and shall vest in full on the fifth anniversary
of the date of grant or, if earlier, in increments of one-third with the
first third vesting on the date on which the fair market value of the
Company's common stock is at least equal to $30.00 per share, the second
third vesting on the date on which the fair market value of the Company's
common stock is at least equal to $35.00 per share and the final third
vesting on the date on which the fair market value of the Company's common
stock is at least equal to $40.00 per share; provided, however, that no
portion of such option to purchase 180,000 shares shall be exercisable
prior to the first anniversary of the date of grant and not more than 50%
of the total number of shares subject to the Executive's option may be
exercised by the Executive during the one-year period beginning on the
first anniversary of the date of grant, as provided under the Company's
1988 Stock Option and Award Plan. The terms and conditions of such
options shall be governed by the Executive's individual stock option award
agreements and the Company's 1988 Stock Option and Award Plan, as amended
from time to time.
Section 2.06. Other Employee Benefits. Subject to Section
2.09, during employment, the Executive shall be entitled to participate in
all employee benefit plans, including, without limitation, group medical,
dental, short and long-term disability and life insurance. The Executive
shall also receive four weeks vacation and all other fringe benefits as
are from time to time made available generally to the senior management of
the Company. The Executive's participation shall be in accordance with
the terms and conditions of the various plans, programs and policies, and
as they are modified from time to time.
Section 2.07. Perquisites. During employment, the Company
also shall pay or reimburse the Executive for (i) a country club
membership up to a maximum of $50,000 for the initiation fee and $500 per
month in dues; (ii) his reasonable expenses up to a maximum of $7,500 per
calendar year for financial, tax, and estate planning advice provided by
the Ayco Company, L.P. or such other advisor chosen by the Executive;
(iii) the cost of his annual medical examination; (iv) the purchase price
of the automobile leased by him as of the Effective Date of this
Agreement; and (v) his legal fees incurred in preparing this Agreement.
Subject to Section 2.09, the Company shall provide to the Executive all
perquisites to which other senior executive officers of the Company
generally are entitled to receive and such other perquisites as the Board
or the Board's designee deems appropriate.
Section 2.08. Expense Reimbursements. The Company shall
reimburse the Executive for all proper expenses incurred by him in the
performance of his duties hereunder in accordance with the policies and
procedures established by the Board.
Section 2.09. Right to Change Plans. By reason of
Sections 2.04 through 2.08, the Company shall not be obligated to
institute, maintain, or refrain from changing, amending or discontinuing
any benefit plan, program, policy or any perquisite, so long as such
changes are similarly applicable to other senior executive officers of the
Company.
ARTICLE III
Termination of Employment
Section 3.01. Termination. The Executive's employment
may be terminated as follows. Regardless of the reason for the
termination of employment or by whom initiated, the Executive remains
obligated under the provisions of Article IV of this Agreement. Upon
termination for any reason, the Executive or his estate shall receive
payment for any accrued but unpaid Base Salary under Section 2.01,
vacation or bonus and any unreimbursed expenses under Section 2.08. He
shall also receive benefits under those plans described in Sections 2.03,
2.04 and 2.05 as determined in accordance with the terms of the applicable
plan and any applicable award agreement. Unless otherwise stated in this
Agreement or in any applicable benefit plans, the Executive shall have no
right to salary, bonus or benefits after employment is terminated and the
Company shall have no further obligations to the Executive.
(a) Death: The Executive's employment will terminate upon
the Executive's death.
(b) Inability to Perform: The Company may terminate the
Executive's employment upon the Executive's incapacity or inability to
perform his essential duties and responsibilities, with or without
reasonable accommodation, for ninety (90) calendar consecutive days or
periods aggregating ninety (90) calendar days in any twelve (12)-month
period because of an impairment of the Executive's physical or mental
health. Upon such termination, the Executive shall continue to receive
his Base Salary from the date of termination until the earlier of: (i) the
end of the Term of the Agreement, (ii) the Executive's eligibility for
retirement benefits under any Company retirement plans, or (iii) the
Executive's death. Such payments shall be made in accordance with the
Company's regular payroll procedures and shall be reduced by any amounts
received by the Executive pursuant to any insurance policy, plan or other
employee benefit provided to the Executive by the Company.
(c) For Cause: The Company may terminate the Executive's
employment for Cause immediately if, in the Company's reasonable
determination, the Executive (i) "grossly neglects" his duties; (ii)
engages in "misconduct"; or (iii) breaches a material provision of this
Agreement including but not limited to Article IV. "Gross neglect" means
the failure to perform the functions of the Executive's job or the failure
to carry out the Board's reasonable directions with respect to material
duties after the Executive is notified by the Board that the Executive is
failing to perform these functions or failing to carry out the reasonable
directions of the Board. Such notice shall specify the functions or
directions that the Executive is failing to perform and what steps need to
be taken to cure and shall set forth the reasonable time frame, which
shall be at a minimum forty-five (45) days, within which to cure. If
Executive fails to cure within the time frame the Company may terminate
Executive's employment by giving him thirty (30) days notice or pay in
lieu thereof. "Misconduct" means: embezzlement or misappropriation of
corporate funds, or other acts of fraud, dishonesty, or self-dealing
provided, however, that Executive shall be given notice and an opportunity
within the next forty-five (45) days to explain his position and actions
to the Company, which shall then make a final decision; any significant
violation of any statutory or common law duty of loyalty to the Company;
conviction for a felony; or any significant violation of Company policy or
any inappropriate workplace conduct that seriously disrupts or interferes
with Company operations; provided, however, that if the policy violation
or inappropriate conduct can be cured, then the Executive shall be given
written notice of the policy violation or inappropriate conduct and a
reasonable opportunity to cure, which shall be at a minimum forty-five
(45) days. If the Executive fails to cure within this time frame, the
Company may terminate Executive's employment by giving him thirty (30)
days notice or pay in lieu thereof.
(d) By the Company: The Company may terminate the
Executive's employment without cause or reason by giving the Executive
written notice, which shall set forth the date of termination which shall
be within ninety (90) days of the date of notice. During any notice
period, the Executive shall cooperate fully with the Company in achieving
a smooth transition of the Executive's duties and responsibilities to such
person(s) as may be designated by the Company. Upon such termination and
execution of a general release of all claims against the Company and other
related entities or persons, and upon the expiration of any applicable
revocation period and upon Executive's resignation from all positions,
including but not limited to, as an officer or director of the Company or
any of its subsidiaries or affiliates, the Executive shall be entitled to
receive the following "Severance Benefits":
1. An amount equal to three times the Executive's then
current Base Salary, payable in accordance with regular payroll procedures
of the Company;
2. An amount equal to three times the highest annual bonus
earned under the Company's Management Incentive Compensation Program, or
successor annual bonus plan in effect from time to time, during the three
consecutive complete bonus years immediately preceding the date on which
the Executive's termination of employment occurs; provided, however, that
in the event the Executive's employment is terminated prior to December
31, 2001, any prorated annual bonus received by the Executive shall be
annualized and the bonus years in which the Executive's employment
commences or terminates shall be deemed to be "complete bonus years" for
purposes of determining the highest annual bonus earned by the Executive
during the three consecutive complete bonus years immediately preceding
the date on which the Executive's termination of employment occurs.
3. An amount equal to three times the highest annual award
earned under the Company's 1996 Long-Term Incentive Plan, or successor
long-term incentive plan in effect from time to time, during the three
consecutive complete LTIP years immediately preceding the date on which
the Executive's termination of employment occurs; provided, however, that
in the event the Executive's employment is terminated prior to December
31, 2001, any prorated long-term incentive plan award received by the
Executive shall be annualized and the LTIP years in which the Executive's
employment commences or terminates shall be deemed to be "complete bonus
years" for purposes of determining the highest annual long-term incentive
award earned by the Executive during the three consecutive complete LTIP
years immediately preceding the date on which the Executive's termination
of employment occurs.
4. If the Executive timely and appropriately exercises his
right to continue his coverage under the Company's medical and dental
plans as provided under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA"), then the Company will pay the employer
portion (and the Executive will pay the employee portion) of the premiums
in effect under such plans for the Executive until the earlier of: (i)
the expiration of the three year period following the date on which the
Executive's termination of employment occurs and (ii) the date on which
the Executive is no longer eligible to continue such coverage under clause
4980B(f)(2)(B)(ii), (iii), (iv) or (v) of COBRA. Except as provided in
this paragraph, the Executive's continued participation and coverage under
the group health insurance plans shall be governed by COBRA;
5. The Company shall continue the Executive's coverage
under its life and disability insurance policies until the earlier of (i)
the expiration of the three year period following the date of termination
and (ii) the date on which the Executive becomes eligible to participate
in and receive similar benefits under a plan or arrangement sponsored by
another employer or under any Company sponsored retirement plan.
Participation shall be on the same terms and conditions as are applicable
to active employees;
6. The Executive's outstanding stock options shall become
immediately exercisable as of the date of the Executive's termination of
employment and shall remain exercisable during the two year period
following the Executive's termination of employment (but not after the
expiration of ten years from the date of grant); and
7. The Executive's account balance under the Company's 1998
Supplemental Executive Retirement Plan or successor supplemental
retirement plan in effect shall become fully vested as of the date of the
Executive's termination of employment.
Severance Benefits shall be subject to all applicable federal, state and
local deductions and withholdings. At the option of the Company, the
present value of the Severance Benefits or balance thereof due to the
Executive under paragraphs 3.01(d)(1), (2) or (3), determined pursuant to
section 280G(d)(4) of the Internal Revenue Code, may be paid in a lump
sum; provided, however, that in the event a Change in Control (as defined
in Article V herein) of the Company occurs while the Executive is
receiving Severance Benefits, a lump sum payment equal to the sum of the
remaining amounts due under Sections 3.01(d)(1), (2) and (3) shall be paid
to the Executive within thirty (30) days of such Change in Control. The
Company's obligation to continue Severance Benefits shall, subject to the
rights of any "qualified beneficiary" under COBRA, cease immediately if:
(i) the Executive has not satisfied his reasonable obligations to
cooperate fully with a smooth transition; or (ii) the Company has grounds
to terminate the Executive's employment immediately as specified above in
Section 3.01 (c)(iii). In the event the Executive dies before all
Severance Benefits are paid to him, the remaining amounts due to him as of
the date of his death under Sections 3.01(d)(1), (2) and (3) shall be
reduced by the proceeds the Executive's estate receives under any life
insurance policy with respect to which the premiums are paid by the
Company. The Executive understands and acknowledges that the Severance
Benefits constitute his sole benefits upon termination.
Section 3.02. Termination for Good Reason. If the
Executive reasonably believes he has "Good Reason," as defined herein, to
terminate employment, he must give the Board written notice which sets
forth in reasonable detail the facts and circumstances claimed to provide
a basis for such termination and a reasonable opportunity to cure, which
shall be at a minimum forty-five (45) days. If the Board fails to cure
the Good Reason within such reasonable time, the Executive may terminate
employment by giving the Board thirty (30) days written notice of his
intention to terminate this Agreement. "Good Reason" means: (i) the
permanent assignment of the Executive without his consent to duties
inconsistent with the Executive's authorities, duties, responsibilities,
provided, however, that an assignment of duties due to the Executive's
incapacity, temporary or otherwise, as determined by the Board or its duly
authorized designee, shall not trigger the Executive's right to terminate
for Good Reason; (ii) the failure to promote the Executive to the position
of Chief Executive Officer of the Company on or before January 1, 2000
and/or to promote the Executive to the position of Chairman of the Board
of Directors of the Company on or before November 1, 2000; (iii) the
failure to elect the Executive as a member of the Board of Directors of
the Company on or before the next regularly scheduled meeting of the Board
of Directors of the Company following the Effective Date of this Agreement
or to retain the Executive as a member of the Board of Directors of the
Company; or (iv) a change, without the Executive's consent, in the
Executive's primary employment location to a location that is more than 50
miles from the primary location of the Executive's employment as in effect
immediately prior to the Effective Date. Upon such termination and
execution of a general release of all claims against the Company and other
related entities and persons, and upon the expiration of any applicable
revocation period, the Executive shall receive the Severance Benefits
provided in Section 3.01(d) herein, subject to the terms, conditions and
limitations stated therein.
Section 3.03. Termination at Expiration of Agreement. If
the Executive's employment is terminated at the expiration of this
Agreement as provided in Section 1.01, the Executive shall be entitled to
receive the Severance Benefits described above in Section 3.01(d)(1)-(7);
provided, however, that wherever the word "three" appears in Section 3.01,
it shall be replaced with the word "two."
ARTICLE IV
Exclusivity of Services and Confidential/Proprietary Information
Section 4.01. Exclusivity of Services. Executive
acknowledges that during his employment with the Company he has developed,
acquired, and had access to and will develop, acquire and have access to
trade secrets or other proprietary or confidential information belonging
to the Company and that such information gives the Company a substantial
business advantage over others who do not have such information.
Accordingly, the Executive agrees to the following obligations that he
acknowledges to be reasonably designed to protect the Company's legitimate
business interests without unnecessarily or unreasonably restricting his
post-employment opportunities:
(a) during employment and for the period during which the
Executive is receiving Severance Benefits under Section 3.01, 3.02, or
3.03 he will not engage or assist others in engaging in competition with
the Company, directly or indirectly, whether as an employer, proprietor,
partner, stockholder (other than the holder of less than 5% of the stock
of a corporation the securities of which are traded on a national
securities exchange or in the over-the-counter market), director, officer,
employee, consultant, agent, or otherwise, in the business of producing
and distributing potash, phosphate, animal feed ingredients or salt or any
other significant business in which the Company is engaged or is preparing
to engage in at the time of termination;
(b) during employment and for the period during which the
Executive is receiving Severance Benefits under Section 3.01, 3.02, or
3.03 he will not solicit, in competition with the Company, directly or
indirectly, any person who is a client, customer or prospect (as such
terms are defined below) (including, without limitation, purchasers of the
Company's products) for the purpose of performing services and/or
providing goods and services of the kind performed and/or provided by the
Company in the business of producing and distributing potash, phosphate,
animal feed ingredients or salt or any other significant business in which
the Company is engaged or is preparing to engage in at the time of
termination;
(c) during employment and for the period during which the
Executive is receiving Severance Benefits under Section 3.01, 3.02, or
3.03 he will not induce or persuade or attempt to induce or persuade any
employee or agent of the Company to terminate his or her employment,
agency, or other relationship with the Company in order to enter into any
employment agency or other relationship in competition with the Company;
(d) the covenants contained in this Article IV(a) shall
apply within any jurisdiction of North America, it being understood that
the geographic scope of the business and strategic plans of the Company
extend throughout North America and are not limited to any particular
region thereof and that such business may be engaged in effectively from
any location in such area; and
(e) as used herein, the terms "client," "customer" and
"prospect" shall be defined as any client, customer or prospect of any
business in which the Company is or has been substantially engaged within
the one year period prior to the Executive's termination of employment (a)
to which or to whom the Executive submitted or assisted in the submission
of a presentation or proposal of any kind on behalf of the Company; (b)
with which or with whom the Executive had substantial contact relating to
the business of the Company; or (c) about which or about whom the
Executive acquired substantial confidential or other information as a
result of or in connection with the Executive's employment, at any time
during the one year period preceding the Executive's termination of
employment for any reason.
Notwithstanding the foregoing, if the Company consents in writing, it
shall not be a violation of this Article IV(a) for the Executive to engage
in conduct otherwise prohibited by this Section.
Section 4.02. Confidential/Proprietary Information. The
Executive agrees that he will not at any time during employment or
thereafter for the longest time permitted by applicable law, use,
disclose, or take any action which may result in the use or disclosure of
any trade secrets or other proprietary or confidential information of the
Company, except to the extent that the Company may specifically authorize
in writing. This obligation shall not apply when and to the extent that
any trade secret, proprietary or confidential information of the Company
becomes publicly available other than due to the Executive's act or
omission. In connection with this Article IV, the Executive has executed
and shall abide by the terms of the separate agreement attached hereto as
Exhibit A.
Section 4.03. Return of Company Property. The Executive
agrees that upon termination of his employment he will immediately
surrender and return to the Company all records and other documents
obtained by him, entrusted to him, or otherwise in his possession or
control during the course of his employment by the Company, together with
all copies thereof; provided, however, that subject to Company review and
authorization, the Executive may retain copies of such documents as
necessary for the Executive's personal records for federal income tax
purposes.
Section 4.04. Remedies.
(a) The Executive acknowledges that his breach of this
Article IV will result in immediate and irreparable harm to the Company's
business interests, for which damages cannot be calculated easily and for
which damages are an inadequate full remedy. Accordingly, and without
limiting the right of the Company to pursue all other legal or equitable
remedies available for the violation by the Executive of the covenants
contained in this Article IV, it is expressly agreed that remedies other
than injunctive relief cannot fully compensate the Company for the
irreparable injury that the Company could suffer due to any such
violation, threatened violation or continuing violation and that the
Company shall be entitled to injunctive relief, without the necessity of
proving actual monetary loss, to prevent any such violation, threatened
violation or continuing violation thereof.
(b) The Executive acknowledges that the provisions contained
in this Article IV are reasonable and necessary because of the substantial
harm that would be caused to the Company by the Executive engaging in any
of the activities prohibited or restricted herein. Nevertheless, it is
the intent and understanding of each party hereto that if, in any action
before any court, agency or other tribunal legally empowered to enforce
the covenants contained in this Article IV, any term, restriction,
covenant or promise contained therein is found to be unenforceable due to
unreasonableness or due to any other reason, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to
make it enforceable by such court or agency.
ARTICLE V
Change in Control
Section 5.01. Effective Date. For purposes of this
Article V, the term "Effective Date" shall mean the date on which a Change
in Control of the Company (as defined in Section 5.10) occurs. If there
is a Change in Control this Article shall become effective and this
Article shall govern the terms and conditions of the Executive's
employment after the Change in Control and the termination thereof on or
after the date which is ninety (90) days before the Effective Date and not
the provisions of Articles I, II, III and IV of this Agreement.
Section 5.02. Right to Change in Control Severance
Benefits. The Executive shall be entitled to receive from the Company
Change in Control Severance Benefits as described in Section 5.07 herein,
if during the term of this Agreement there has been a Change in Control of
the Company and there is a Termination (as defined in Section 5.06) prior
to the expiration of the Employment Term (as defined in Section 5.03).
Section 5.03. Employment Term. For purposes of this
Article V, the term "Employment Term" shall mean the period commencing on
the Effective Date of this Article V and ending on the earlier to occur of
(a) the last day of the month in which occurs the third anniversary of the
Effective Date of this Article V or (b) the last day of the month in which
the Executive attains mandatory retirement age pursuant to the terms of a
mandatory retirement plan of the Company as such were in effect and
applicable to the Executive immediately prior to the Effective Date of
this Article V.
Section 5.04. Employment. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company, until the expiration of the
Employment Term. During the Employment Term, the Executive shall exercise
such position and authority and perform such responsibilities as are
commensurate with the position and authority being exercised and duties
being performed by the Executive immediately prior to the Effective Date
of this Article V, which services shall be performed at the location where
the Executive was employed immediately prior to the Effective Date of this
Article V or at such other location as the Company may reasonably require;
provided, that the Executive shall not be required to accept another
location that he deems unreasonable in the light of his personal
circumstances.
Section 5.05. Compensation and Benefits. During the
Employment Term, the Executive shall receive the following compensation
and benefits:
(a) He shall receive an annual base salary which is not less
than his Base Salary immediately prior to the Effective Date of this
Article V, with the opportunity for increases, from time to time
thereafter, which are in accordance with the Company's regular executive
compensation practices.
(b) He shall be eligible to participate on a reasonable
basis, and to continue his existing participation, in annual incentive,
stock option, restricted stock, long-term incentive performance and any
other compensation plan which provides opportunities to receive
compensation in addition to his Base Salary which is the greater of (i)
the opportunities provided by the Company for executives with comparable
duties or (ii) the opportunities under any such plans in which he was
participating immediately prior to the Effective Date of this Article V.
(c) He shall be entitled to receive and participate in
salaried employee benefits (including, but not limited to, medical, life
and accident insurance, investment, stock ownership and disability
benefits) and perquisites which are the greater of (i) the employee
benefits and perquisites provided by the Company to executives with
comparable duties or (ii) the employee benefits and perquisites to which
he was entitled or in which he participated immediately prior to the
Effective Date of this Article V.
(d) He shall be entitled to continue to accrue credited
service for retirement benefits and to be entitled to receive retirement
benefits under and pursuant to the terms of the Company's qualified
retirement plan for salaried employees, the Company's supplemental
executive retirement plan, and any successor or other retirement plan or
agreement in effect on the Effective Date of this Article V in respect of
his retirement, whether or not a qualified plan or agreement, so that his
aggregate monthly retirement benefit from all such plans and agreements
(regardless when he begins to receive such benefit) will be not less than
it would be had all such plans and agreements in effect immediately prior
to the Effective Date of this Article V continued to be in effect without
change until and after he begins to receive such benefit.
Section 5.06. Termination. The term "Termination" shall
mean termination, on or after the date which is ninety (90) days before
the Effective date and prior to the expiration of the Employment Term, of
the employment of the Executive with the Company for any reason other than
death, disability (as described below), cause (as described below), or
voluntary resignation (as described below).
(a) The term "disability" means physical or mental
incapacity qualifying the Executive for long-term disability under the
Company's long-term disability plan.
(b) The term "cause" means (i) the willful and continued
failure of the Executive substantially to perform his duties with the
Company (other than any failure due to physical or mental incapacity)
after a demand for substantial performance is delivered to him by the
Board of Directors which specifically identifies the manner in which the
Board believes he has not substantially performed his duties or (ii)
willful misconduct materially and demonstrably injurious to the Company.
No act or failure to act by the Executive shall be considered "willful"
unless done or omitted to be done by him not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. The unwillingness of the Executive to accept any or all of a
change in the nature or scope of his position, authorities or duties, a
reduction in his total compensation or benefits, a relocation that he
deems unreasonable in light of his personal circumstances, or other action
by or request of the Company in respect of his position, authority or
responsibility that he reasonably deems to be contrary to this Agreement,
may not be considered by the Board of Directors to be a failure to perform
or misconduct by the Executive. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for cause for
purposes of this Article V unless and until there shall have been
delivered to him a copy of a resolution, duly adopted by a vote of three-
quarters of the entire Board of Directors of the Company at a meeting of
the Board called and held (after reasonable notice to the Executive and an
opportunity for the Executive and his counsel to be heard before the
Board) for the purpose of considering whether the Executive has been
guilty of such a willful failure to perform or such willful misconduct as
justifies termination for cause hereunder, finding that in the good faith
opinion of the Board the Executive has been guilty thereof and specifying
the particulars thereof.
(c) The resignation of the Executive shall be deemed
"voluntary" if it is for any reason other than one or more of the
following:
(i) The Executive's resignation or retirement (other than
mandatory retirement, as aforesaid) is requested by the Company
other than for cause;
(ii) Any significant change in the nature or scope of the
Executive's position, authorities or duties from those described in
Sections 1.02 and 1.03 of this Agreement;
(iii) Any reduction in his total compensation or benefits from
that provided in Section 5.04;
(iv) The breach by the Company of any other provision of this
Article V; or
(v) The reasonable determination by the Executive that, as a
result of a Change in Control of the Company and a change in
circumstances in his position, he is unable to exercise the
authorities and responsibility attached to his position and
contemplated by Sections 1.02 and 1.03 of this Agreement.
(d) Termination that entitles the Executive to the payments
and benefits provided in Section 5.07 shall not be deemed or treated by
the Company as the termination of the Executive's employment or the
forfeiture of his participation, award or eligibility for the purpose of
any plan, practice or agreement of the Company referred to in Section
5.05.
Section 5.07. Change in Control Severance Payments. In
the event of and within thirty (30) days following Termination, the
Company shall pay to the Executive the following benefits (collectively,
"Change in Control Severance Payments"):
(a) His Base Salary and all other benefits due him as if he
had remained an employee pursuant to this Article V through the remainder
of the month in which Termination occurs, less applicable withholding
taxes and other authorized payroll deductions;
(b) The amount equal to the target award for the Executive
under the Company's annual bonus plan for the fiscal year in which
Termination occurs, reduced pro rata for that portion of the fiscal year
not completed as of the end of the month in which Termination occurs;
provided, that if the Executive has deferred his award for such year under
the plan, the payment due the Executive under this Paragraph (b) shall be
paid in accordance with the terms of the deferral;
(c) The amount equal to the target award for the Executive
under the Company's long-term incentive plan for the fiscal year in which
Termination occurs, reduced pro rata for that portion of the fiscal year
not completed as of the end of the month in which Termination occurs;
(d) A lump sum severance allowance in an amount which is
equal to the sum of the amounts determined in accordance with the
following subparagraphs (i), (ii) and (iii):
(i) an amount equivalent to three times the Executive's Base
Salary at the rate in effect immediately prior to Termination;
(ii) an amount equal to three times the highest annual bonus
earned under the Company's Management Incentive Compensation
Program, or successor annual bonus plan in effect from time to time,
during the three consecutive complete bonus years immediately
preceding the date on which the Executive's termination of
employment occurs; provided, however, that in the event the
Executive's employment is terminated prior to December 31, 2001, any
prorated annual bonus received by the Executive shall be annualized
and the bonus years in which the Executive's employment commences or
terminates shall be deemed to be "complete bonus years" for purposes
of determining the highest annual bonus earned by the Executive
during the three consecutive complete bonus years immediately
preceding the date on which the Executive's termination of
employment occurs; and
(iii) an amount equal to three times the highest annual award
earned under the Company's 1996 Long-Term Incentive Plan, or
successor long-term incentive plan in effect from time to time,
during the three consecutive complete LTIP years immediately
preceding the date on which the Executive's termination of
employment occurs; provided, however, that in the event the
Executive's employment is terminated prior to December 31, 2001, any
prorated long-term incentive plan award received by the Executive
shall be annualized and the LTIP years in which the Executive's
employment commences or terminates shall be deemed to be "complete
bonus years" for purposes of determining the highest annual long-
term incentive award earned by the Executive during the three
consecutive complete LTIP years immediately preceding the date on
which the Executive's termination of employment occurs; and
(e) The Executive's account balance under the Company's 1998
Supplemental Executive Retirement Plan or successor supplemental
retirement plan in effect shall become fully vested upon the Executive's
Termination.
Section 5.08. Outstanding Stock Options. The Executive's
outstanding stock options shall become immediately exercisable upon the
occurrence of a Change in Control of the Company and shall remain
exercisable for the two year period following such Change in Control.
Section 5.09. Non-Competition and Confidentiality. The
Executive agrees that:
(a) There shall be no obligation on the part of the Company
to provide any further Change in Control Severance Benefits (other than
payments or benefits already earned or accrued) described in Section 5.07
if, when and so long as the Executive shall be employed by or otherwise
engage in any business which is competitive with any business of the
Company or of any of its subsidiaries, as such business existed as of the
Effective Date of this Article V, in which the Executive was engaged
during his employment, and if such employment or activity is likely to
cause serious damage to the Company or any of its subsidiaries; and
(b) during and after the Employment Term, he will not
divulge or appropriate to his own use or the use of others any secret or
confidential information pertaining to the businesses of the Company or
any of its subsidiaries obtained during his employment by the Company, it
being understood that this obligation shall not apply when and to the
extent any of such information becomes publicly known or available other
than because of his act or omission.
Section 5.10. Definition of "Change in Control". "Change
in Control" of the Company means, and shall be deemed to have occurred
upon, the first to occur of any of the following events:
(a) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 15% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Common
Stock") or (ii) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Voting Securities"); excluding, however, the
following: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or
exchange privilege unless the security being so exercised, converted or
exchanged was acquired directly from the Company), (B) any acquisition by
the Company, (c) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii)
of subsection (c) of this Section 5.10;
(b) individuals who, as of the effective date of this
Article V, constitute the Board of Directors (the "Incumbent Board") cease
for any reason to constitute at least a majority of such Board; provided,
that any individual who becomes a director of the Company subsequent to
the effective date of this Article V, whose election, or nomination for
election by the Company's stockholders, was approved by the vote of at
least a majority of the directors then comprising the Incumbent Board
shall be deemed a member of the Incumbent Board; and provided further,
that any individual who was initially elected as a director of the Company
as a result of an actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act,
or any other actual or threatened solicitation of proxies or consents by
or on behalf of any Person other than the Board shall not be deemed a
member of the Incumbent Board;
(c) approval by the stockholders of the Company of a
reorganization, merger or consolidation of the Company or sale or other
disposition of all or substantially all of the assets of the Company (a
"Corporate Transaction"); excluding, however, a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals or
entities who are the beneficial owners, respectively, of the Outstanding
Common Stock and the Outstanding Voting Securities immediately prior to
such Corporate Transaction will beneficially own, directly or indirectly,
more than 60% of, respectively, the outstanding shares of common stock,
and the combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or indirectly) in substantially the
same proportions relative to each other as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Common Stock and
the Outstanding Voting Securities, as the case may be, (ii) no Person
(other than: the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company; the corporation resulting from such Corporate Transaction;
and any Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 25% or more of the
Outstanding Common Stock or the Outstanding Voting Securities, as the case
may be) will beneficially own, directly or indirectly, 25% or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of
the outstanding securities of such corporation entitled to vote generally
in the election of directors and (iii) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction; or
(d) the consummation of a plan of complete liquidation or
dissolution of the Company.
Section 5.11. Excise Tax Payments. If any of the payments
to be made under Articles III or V of this Agreement (which payments shall
constitute the "Employment Agreement Payments") are subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") (or any similar tax that may hereafter be
imposed), the Company shall pay to the Executive at the time specified in
Paragraph (c) below an additional amount (the "Gross-up Payment") such
that the net amount retained by the Executive, after deduction of any
Excise Tax on the Total Payments (as hereinafter defined) and any federal,
state and local income tax and Excise Tax upon the Gross-up Payment
provided for by this paragraph, but before deduction for any federal,
state or local income tax on the Employment Agreement Payments, shall be
equal to the Total Payments.
(a) For purposes of determining whether any of the
Employment Agreement Payments are subject to the Excise Tax and the amount
of such Excise Tax, (i) any other payments or benefits received or to be
received by the Executive in connection with a Change in Control (as that
term is defined in Section 5.10) of the Company or the Executive's
termination of employment pursuant to the terms of any other plan,
arrangement or agreement with the Company, any person whose actions result
in a Change of Control of the Company or any person affiliated with the
Company or such person (which, together with the Employment Agreement
Payments, shall constitute the "Total Payments") shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Company's independent
auditors such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section 280G(b)(3) of the Code or
are otherwise not subject to the Excise Tax, (ii) the amount of the Total
Payments which shall be treated as subject to the Excise Tax shall be
equal to the lesser of (A) the total amount of the Total Payments or (B)
the amount of excess parachute payments within the meaning of Section
280G(b)(1) of the Code (after applying clause (i) above), and (iii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(b) For purposes of determining the amount of the Gross-up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar year in
which the Gross-up Payment is to be made and the applicable state and
local income taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time the Gross-up Payment is made, the Executive shall
repay to the Company at the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the portion of the Gross-up Payment being repaid by the
Executive if such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction), plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time the Gross-up Payment is
made (including by reason of any payment, the existence or amount of which
cannot be determined at the time of the Gross-up Payment), the Company
shall make an additional Gross-up Payment in respect of such excess (plus
any interest payable with respect of such excess) at the time that the
amount of such excess is finally determined.
(c) The Gross-up Payment or portion thereof provided for in
Paragraphs (a) and (b) above shall be paid not later than the thirtieth
day following the later of payment of any amounts which are subject to the
Excise Tax or the date on which the Change in Control of the Company
occurs; provided, however, that if the amount of such Gross-up Payment or
portion thereof cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than the forty-fifth day
after the later of payment of any amounts which are subject to the Excise
Tax or the date on which the Change in Control of the Company occurs.
(d) In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(e) All Gross-up Payments will be paid to the Executive from
the Trust established under the Trust Agreement between IMC Global Inc.
and Wachovia Bank Trust Company, N.A., which has been established to
protect payment obligations of the Company under this Agreement. Any
repayment due the Company from the Executive as a result of the
circumstances described in the last sentence of the preceding paragraph
shall be made by the Executive after the Executive has received such
excess amounts from the Trust.
ARTICLE VI
Miscellaneous
Section 6.01. Dispute Resolution. The Executive and the
Company shall not initiate legal proceedings relating in any way to this
Agreement or to the Executive's employment or termination from employment
with the Company until thirty (30) days after the party against whom the
claim is made ("respondent") receives written notice from the claiming
party of the specific nature of any purported claims and the amount of any
purported damages attributable to each such claim. The Executive and the
Company further agree that if respondent submits the claiming party's
claim to the CPR Institute for Dispute Resolution or JAMS/Endispute for
nonbinding mediation prior to the expiration of such thirty (30) day
period, the claiming party may not institute arbitration or other legal
proceedings against respondent until the earlier of: (a) the completion of
good-faith mediation efforts or (b) ninety (90) days after the date on
which the respondent received written notice of the claimant's claim(s);
provided, however, that nothing in this Section shall prohibit the Company
from pursuing injunctive or other equitable relief against the Executive
prior to, contemporaneous with, or subsequent to invoking or participating
in these dispute resolution processes. The Company shall pay the cost of
the mediator. In any subsequent litigation, including but not limited to
arbitration proceedings, the prevailing party shall be awarded, in
addition to any other relief awarded, his or its reasonable attorneys'
fees.
Section 6.02. Notices. All notices, requests or other
communications provided for in this Agreement shall be made, if to the
Company, to the Senior Vice President, Human Resources, and if to the
Executive, to Xxxxxxx X. Xxxxx. All notices, requests or other
communications provided for in this Agreement shall be made in writing
either (a) by personal delivery to the party entitled thereto, (b) by
facsimile with confirmation of receipt, (c) by mailing in the United
States mails or (d) by express courier service. The notice, request, or
other communication shall be deemed to be received upon personal delivery,
upon confirmation of receipt of facsimile transmission, or upon receipt by
the party entitled thereto if by United States mail or express courier
service; provided, however, that if a notice, request, or other
communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
Section 6.03. Authority; No Conflict. The Executive
represents and warrants to the Company that he has full right and
authority to execute and deliver this Agreement and to comply with the
terms and provisions hereof and that the execution and delivery of this
Agreement and compliance with the terms and provisions hereof by the
Executive will not conflict with or result in a breach of the terms,
conditions or provisions of any agreement, restriction or obligation by
which the Executive is bound.
Section 6.04. Assignment and Succession. This Agreement
shall be binding upon and shall operate for the benefit of the parties
hereto and their respective legal representatives, legatees, distributees,
heirs, successors and assigns. The rights and obligations of the Company
under this Agreement may be assigned to and shall inure to the benefit of
and be binding upon its successors and assigns. The Executive
acknowledges that the services he renders pursuant to this Agreement are
unique and personal. Accordingly, the Executive may not delegate or
assign any of his duties hereunder.
Section 6.05. Headings. The Article, Section, paragraph and
subparagraph headings are for convenience of reference only and shall not
define or limit the provisions hereof.
Section 6.06. Applicable Law. This Agreement shall at all
times be governed by and construed, interpreted and enforced in accordance
with the internal laws (as opposed to conflict of laws provisions) of the
State of Illinois.
Section 6.07. Entire Agreement, Amendment, Waiver. This
Agreement constitutes the entire agreement between the Company and the
Executive with respect to the subject matter hereof. This Agreement
supersedes any prior agreement made between the parties, including, but
not limited to, the Executive's offer letter dated August 28, 1998. The
parties may not amend this Agreement except by written instrument signed
by both parties. No waiver by either party at any time of any breach by
the other of any provision of this Agreement shall be deemed a waiver of
similar or dissimilar provision at the same time or any prior or
subsequent time.
Section 6.08. Severability. The provisions of this Agreement
shall be regarded as durable, and if any provision or portion thereof is
declared invalid or unenforceable by a court of competent jurisdiction,
the validity and enforceability of the remainder and applicability thereof
shall not be affected.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be signed by its duly authorized officer and the Executive has signed this
Agreement as of the day and year first above written.
IMC GLOBAL INC.
By:
/s/ Xxxxxxx X. Xxxxx
--------------------------------- -------------------------------
Xxxxxxx X. Xxxxx
Title:
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