EXHIBIT 99.9
FORM OF EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 21st day of
November, 1995 (with such date being subsequently referred to as "the date
hereof" in this Employment Agreement) by and between MAGMA COPPER COMPANY, a
Delaware corporation (the "Company") and ______________ (the "Executive").
ARTICLE ONE
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RETENTION OF KEY EXECUTIVES
1.1 Retention Objectives of the Company. MAGMA COPPER COMPANY,
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described in Section 2.1 as the "Company," considers it essential to the
continuing operation of the Company and the best interest of its shareholders to
assure the continuous dedication of key management personnel. It is recognized
in the context of public ownership that a Change in Control, defined in Section
2.1, of the Company may be sought and that such circumstances could prove
distracting to key executives and detrimental to the ongoing management and
administration of the Company. Such distraction is not in the best interest of
the shareholders of the Company. Accordingly, the Board has determined to
discourage the inevitable distraction of the Executive in the face of
potentially disturbing circumstances inherent in any situation involving a
Change in Control of the Company. This Employment Agreement is intended to
secure and encourage the ongoing retention of the Executive by providing
specific retention benefits upon a Change in Control, and separation benefits in
the event that the Executive's employment is altered as hereinafter described,
coincident with or subsequent to a Change in Control, and which are competitive
with those of other corporations. This Employment Agreement is to be
interpreted in a manner consistent with this objective. In order to induce the
Executive to remain in the employ of the Company, and in consideration of the
Executive's agreement set forth in Sections 3.3 and 4.1, the Company agrees to
pay the benefits set forth in this Employment Agreement, under the circumstances
described herein.
1.2. Relationship to Any Other Employment Agreement. In general, it
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is the intent of the Company and the Executive that the terms of this Employment
Agreement shall supersede and substitute for the provisions of any employment
understanding between the Company and the Executive relating to any items of
compensation during the contract term in the event of a Change in Control of the
Company. However, the benefits provided under this Employment Agreement shall
not be construed to supersede or substitute for any post-contract term benefits,
if any, provided for in any such employment representations and arrangements.
ARTICLE TWO
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DEFINITIONS AND CONSTRUCTION
2.1. Definitions.
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(a) "Act" shall mean the Securities Exchange Act of 1934, as amended.
(b) "Average Base Compensation" shall mean the Executive's annual
base salary compensation, including any portion that may be deferred by action
of the Executive, including any bonus or incentive bonus under the Company's
Annual Incentive Compensation Plan, at the rate in effect immediately prior to
the Termination Event or the Executive's Termination Date, whichever rate is
higher.
(c) "Base Compensation" shall mean the Executive's annual base salary
compensation (including any portion that may be deferred by action of the
Executive, but excluding any bonus or incentive bonus under any bonus or
incentive program of the Company) at the rate in effect immediately prior to the
Termination Event or the Executive's Termination Date, whichever rate is higher.
(d) "Beneficial Owner" shall have the same meaning as that term is
given in Rule 13d-3 under the Act.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Change in Control" shall mean a change in ownership or
managerial control of the stock, assets or business of the Company resulting
from one (1) or more of the following circumstances:
(i) On or after the date hereof, the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than sixty-five percent (65%) of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; provided however,
that a merger or consolidation effected to implement a recapitalization of the
Company (or a similar transaction), in which no Person other that Warburg,
Xxxxxx Capital Company, L.P., acquires thirty-five percent (35%) or more of the
Company's then outstanding voting securities shall not constitute a Change in
Control;
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(ii) On or after the date hereof, a change in ownership of the
Company through a action or series of transactions, such that any Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing thirty-five percent (35%) or more of securities of the
combined voting power of the Company's then outstanding securities; provided
that, for such purposes, any acquisition by the Company shall be disregarded;
and provided further that, in the event of such a change in ownership, if
Warburg, Xxxxxx Capital Company, L.P., as of the date of such change of
ownership and at all times thereafter, remains the Beneficial Owner of a
percentage interest in the Company equal to at least ten percent (10%) more than
any other Beneficial Owner of the combined voting power of the Company's then
outstanding securities, no Change in Control shall be deemed to have occurred
unless (A) the majority of the Board serving immediately prior to such Change in
Control shall deem a Change in Control to have occurred, or (B) Warburg, Xxxxxx
Capital Company, L.P., shall thereafter cease to be the Beneficial Owner of a
percentage ownership interest in the Company equal to at least ten percent (10%)
or more than any other Beneficial Owner of the combined voting power of the
Company's then outstanding securities (and in such event, the Change in Control
shall be deemed to have occurred on the date Warburg, Xxxxxx Capital Company,
L.P., ceases to be the Beneficial Owner of such greater combined voting power);
(iii) A change in identity of a majority of the members of the Board
within any twenty-four (24) month period; provided however, if such a change in
the identity of the members of the Board occurs following the acquisition of
fifty-one percent (51%) or more of the Company's then outstanding voting
securities by Warburg, Xxxxxx Capital Company, L.P., no Change in Control shall
be deemed to have occurred if such change of Board membership was approved in
writing (or by an approved written resolution) by a majority of the Board and of
the Management Executive Committee serving immediately prior to such change of
Board membership. For purposes of this Section 2.l(f)(iii), Management
Executive Committee shall mean a Committee appointed in writing by the then-
acting Chief Executive Officer of the Company, comprised of corporate officers
and such additional key employees of the Company as the Chief Executive Officer
shall appoint from time to time. The Chief Executive Officer may remove any
member of the Management Executive Committee by notice in writing delivered to
such member and the other members of the Management Executive Committee;
(iv) The approval by the Board (or by the shareholders if shareholder
approval is required by applicable law or under the terms of any relevant
agreement) of an agreement for the sale or disposition of all or substantially
all of the Company's assets or a sale/leaseback of all or substantially all of
the Company's assets (with or without a purchase option);
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(v) A transfer of all or substantially all of the Company's assets
pursuant to a partnership or joint venture agreement where the Company's
resulting interest is or becomes fifty percent (50%) or less;
(vi) On or after the date hereof, the Board (or the shareholders if
shareholder approval is required by applicable law or under the terms of any
relevant agreement) shall approve a plan of complete liquidation of the Company;
or
(vii) The execution or approval by the Board of any agreement, the
consummation of which would result in one of the foregoing.
(g) "Company" shall mean Magma Copper Company, any and all subsidiary
companies of Magma Copper Company and any successor, including but not limited
to any Person acquiring a controlling interest in the stock, assets or business
of the Company through merger, consolidation, acquisition, reorganization, lease
of assets (with or without a purchase option) or other purchase or
restructuring.
(h) "Code" shall mean the Internal Revenue Code of 1986, as in effect
from time to time.
(i) "Disability" shall mean the Executive's inability, due to
physical or mental illness or condition, to substantially perform the essential
functions of his position for a period of six (6) or more months.
(j) "Dismissal for Cause" shall mean dismissal approved in good faith
by three quarters (3/4ths) of the members of the Board for:
(i) An act or acts of dishonesty on the part of the Executive
constituting a felony or serious misdemeanor and resulting or intended to result
directly or indirectly in gain or personal enrichment at the expense of the
Company;
(ii) Substantial competition with the Company (such as securing a
customer or customers of the Company for a competitor or recruiting employees of
the Company for a competitor) in a manner directly affecting the business of the
Company;
(iii) The Executive's willful refusal or failure to substantially
perform the essential functions of his job with the Company (other than failure
due to Disability); for such purpose the term "willful" shall mean done
intentionally, knowingly, and purposely, without reasonable justification
therefor;
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(iv) Gross negligence in the performance of the Executive's material
and substantial duties of employment with the Company;
(v) Conviction of a felony involving moral turpitude;
(vi) A significant violation by the Executive of those established
policies and procedures of the Company that were in effect on the date of the
Change in Control and were communicated to the Executive prior to the Change in
Control;
(vii) The continued failure of the Executive to substantially perform
the essential functions of the Executive's job with the Company (other than due
to Disability) after a written demand for substantial performance is delivered
to the Executive by the Chief Executive Officer of the Company, which identifies
the manner in which the Executive has not substantially performed the essential
functions of his job; or
(viii) Conduct by the Executive which is in violation of any provision
of this Employment Agreement.
No dismissal shall be deemed to be a Dismissal for Cause unless the Executive
receives thirty (30) days' notice and is permitted a reasonable opportunity to
appear before the Board with counsel of the Executive's choice prior to the
effective date of discharge.
(k) "Employee Benefit Plan" shall have the meaning given the term
under Section 3 of ERISA.
(l) "Employment Period" shall mean the period commencing on the date
of a Change in Control of the Company, and ending on the second (2nd)
anniversary of such date.
(m) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as in effect from time to time.
(n) "Good Reason" shall mean the Executive's death, Disability or
Retirement prior to the occurrence of a Termination Event, Dismissal for Cause
or the Executive's resignation for a reason other than the occurrence of a
Termination Event.
(o) "Option Stock Benefit Adjustment Period" shall, except as
modified by Section 5.3, mean the twelve (12) month period ending with the
anniversary of the last event constituting the Change in Control.
(p) "Person" shall have the meaning given that term when used in
Sections 13(d) and 14(d) of the Act.
(q) "Restricted Stock Benefit Adjustment Period" shall, except as
modified by Section 5.3, mean the twelve (12)
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month period after notice of a Termination Event is given pursuant to Section
5.1.
(r) "Retirement" shall mean the separation from employment of the
Executive following the attainment of normal retirement age under the Retirement
Plan for Salaried Employees of Magma Copper Company or pursuant to such other
arrangement providing for the Executive's retirement as shall be mutually agreed
upon in writing by the Company and the Executive as constituting "Retirement"
for purposes of this Employment Agreement.
(s) "Securities Restriction" shall mean a securities trading
restriction imposed by law, the rules of any securities exchange, any agreement
to which the Company is a party or the absence of a regular public market
permitting acquisitions and dispositions of Company stock in a public
transaction, which precludes the Executive from freely disposing of Company
stock and retaining the proceeds of such disposition.
(t) "Stock Benefit Adjustment Period" shall mean the Option Stock
Benefit Adjustment Period or the Restricted Stock Benefit Adjustment Period,
whichever is appropriate in the context in which the term is applied.
(u) "1987 Stock Plan" shall mean the Magma Copper Company 1987 Stock
Option and Stock Award Plan.
(v) "1989 Stock Plan" shall mean the Magma Copper Company 1989 Stock
Option and Stock Award Plan.
(w) "1993 Stock Plan" shall mean the Magma Copper Company 1993 Stock
Option and Stock Award Plan.
(x) "Stock Plans" shall mean the 1987 Stock Plan, the 1989 Stock Plan
and the 1993 Stock Plan.
(y) "Termination Event" shall mean, after a Change in Control or, at
the time of a Change in Control, the occurrence of one (1) or more of the
following, due to a cause other than Good Reason:
(i) The assignment to the Executive by the Company of duties
inconsistent with the Executive's position, duties, responsibilities and status
with the Company as in effect immediately prior to the Change in Control, or a
material change in the Executive's titles or officers as in effect immediately
prior to the Change in Control or any removal of the Executive from or any
failure to reelect the Executive to any of such positions except in connection
with the termination of his employment for Good Reason; for purposes of this
Employment Agreement, a mere change of title, position or reporting relationship
that does not result in a material diminution in scope, status, duties and
responsibilities shall not constitute a
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Termination Event, nor shall an isolated, insubstantial and inadvertent action
not taken in bad faith and which is promptly remedied after notice constitute a
Termination Event, nor shall a promotion to a position of higher scope, status,
duties and responsibilities or a transfer to a position of equal scope, status,
duties and responsibilities constitute a Termination Event, as long as such
promotion or transfer is consistent with the Executive's training and
professional qualifications or is otherwise agreed to by the Executive;
(ii) A reduction in the Executive's Base Compensation as in effect on
the date hereof or as the same may be increased from time to time during the
term of this Employment Agreement that is not implemented correspondingly within
the executive or officer class of employees generally;
(iii) The Executive's relocation to any place outside of the United
States, except for required travel by the Executive on the Company's business to
an extent substantially consistent with the Executive's business travel
obligations at the time of a Change in Control; or
(iv) Any material breach by the Company of any provision of this
Employment Agreement.
(z) "Termination Date" shall mean the thirtieth (30th) day
following the day on which any party to this Employment Agreement gives written
notice to the other party that a Termination Event has occurred.
(aa) "Value Loss" shall, except as modified by Section 5.3, mean
the difference between the highest price during the respective Stock Benefit
Adjustment Period at which the stock held, or that could have been held after
option exercise, or that could have been sold by the Executive in the absence of
the Securities Restriction and the highest price in effect during the respective
Stock Benefit Adjustment Period during which the Executive actually could sell
such stock due to the absence of a Securities Restriction.
2.2. Construction. This Employment Agreement shall be construed in
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accordance with the laws of the State of Arizona, without reference to
principles of conflict of laws. Titles to articles, sections and paragraphs in
this Employment Agreement are intended solely for purposes of convenience and
are to be disregarded in construing this Employment Agreement.
ARTICLE THREE
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TERM AND CONDITIONS OF EMPLOYMENT
3.1. Terms of Agreement. This Employment Agreement shall be
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effective as of the date hereof. The term of this Employment
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Agreement shall continue in effect from such date for a period of three (3)
years from such date, subject to the provisions of this Article Three, unless
sooner terminated by the parties in accordance with the provisions hereof. The
Company and the Executive shall retain the right to terminate the employment of
the Executive at any time and for any reason prior to a Change in Control,
without liability under this Employment Agreement. The Executive and the Company
acknowledge that, except as may be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and, prior to a Change in Control, may be terminated by
either the Company or the Executive at any time. Moreover, prior to a Change in
Control, if the Executive's employment with the Company terminates, then the
Executive shall have no further rights under this Employment Agreement, except
as provided in Section 4.1. No termination or expiration of this Employment
Agreement shall affect any rights, obligations or liabilities of the Executive
or the Company that shall have accrued on or prior to the date of termination or
expiration.
3.2. Automatic Extension. Commencing on the third anniversary of the
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effective date hereof, and on each succeeding anniversary of the date hereof,
the term of this Employment Agreement shall automatically be extended for one
(1) additional year unless, not later than six (6) months preceding such
triennial anniversary date, the Company shall have given written notice pursuant
to Section 9.1 that it will not extend the terms of this Employment Agreement.
Notwithstanding the foregoing, if a Change in Control occurs while the Executive
is employed by the Company during the original or any extended term of this
Employment Agreement, the Company will continue thereafter to employ the
Executive, and the Executive will remain in the employ of the Company during the
Employment Period in accordance with the terms and provisions of this Employment
Agreement notwithstanding any notice issued by the Company precluding extension
of this Employment Agreement. The term of this Employment Agreement will
thereafter be automatically renewed pursuant to this Section 3.2, subject to
termination as provided herein. If a Change in Control occurs during the
original or any extended term of this Employment Agreement, notwithstanding any
notice issued by the Company precluding extension of the term of this Employment
Agreement, this Employment Agreement shall nevertheless continue in effect for a
period ending twenty-four (24) months following the occurrence of the Change in
Control. The automatic extension of the term of this Employment Agreement
pursuant to this Section 3.2 shall not be a modification of this Employment
Agreement in any significant respect within the meaning of section 28OG of the
Code and the rules and regulations thereunder. Notwithstanding the occurrence
of a Change in Control, in the event of the Executive's Disability, the Company
shall have the right to terminate this Employment Agreement by giving written
notice of termination pursuant to Section 9.1. Such termination shall be
effective as of the thirtieth (30th) day following the giving of such notice.
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3.3. Duties During the Employment Period. During the Employment
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Period, the Executive shall continue in the same capacities and positions held
by the Executive at the time of the Change in Control or in other capacities and
positions as may be mutually agreed to by the Company and the Executive in
writing. During such time, the Executive shall devote his best efforts,
attention and skill to the business and affairs of the Company, as such business
and affairs now exist and as they may hereafter be conducted. The services
which are to be performed by the Executive hereunder are to be rendered in the
United States of America, or in such other place or places as shall be mutually
agreed upon in writing by the Executive and the Company from time to time.
3.4. Compensation During the Employment Period. During the
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Employment Period, the Executive shall be compensated as follows:
(a) The Executive shall receive, at such intervals and in accordance
with such standard policies as may be in effect on the date of the Change in
Control, an annual salary not less than the Executive's annual salary as in
effect as of the date of the Change in Control. During the Employment Period,
the Board or an appropriate committee thereof will consider and appraise at
least annually, the contributions of the Executive to the Company's operating
efficiency, growth, production and profits, and, in accordance with past
practice in effect prior to the Change in Control, the Executive's Base
Compensation rate shall be adjusted upward, at least annually, to be
commensurate with increases given to other corporate officers and key employees
generally and as the scope and success of the Company's operations or the
Executive's duties expand. The Executive's Base Compensation shall not be
reduced after any such increase.
(b) During the Employment Period, on the first (1st) anniversary of
the occurrence of the Change in Control, if the Executive is in the active
employment of the Company, the Executive shall receive an amount equal to forty
percent (40%) of his Average Base Compensation in effect as of the date of such
Change in Control. In the event that the Executive is in the active employment
of the Company on the second (2nd) anniversary of the occurrence of the Change
in Control, and he has been continuously employed by the Company since such
Change in Control, the Executive shall receive as of such date an additional
amount equal to seventy percent (70%) of his Average Base Compensation in effect
as of the date of such Change of Control. For purposes of determining whether
the Executive is in the active employment of the Company, an Executive who has
been separated from employment or who is otherwise entitled to benefits under
Article Five shall not be deemed to be in the active employment of the Company.
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ARTICLE FOUR
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SEPARATION AFTER A CHANGE IN CONTROL
4.1. Termination. In the event that, during any term of this
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Employment Agreement, including the Employment Period, and coincident with or
following a Change in Control, the Executive is discharged from the employment
of the Company other than for Good Reason or the Executive resigns following the
occurrence of a Termination Event, the Executive shall be entitled to the
benefits provided in Article Five of this Employment Agreement. In the event
that, during any term of this Employment Agreement, including the Employment
Period, coincident with or following a Change in Control the separation or other
Termination Event of the Executive is on account of Good Reason, no compensation
or benefits shall be payable under Section 3.4 or Article Five. Notwithstanding
anything to the contrary, if a Change in Control occurs and the Executive's
employment with the Company is terminated without Good Reason prior to the
Change in Control and it is reasonably demonstrated by the Executive that such
termination of employment (a) was at the request of a third party who has taken
steps to effect the Change in Control or (b) was in anticipation of or in
connection with the Change in Control, the Executive shall, for purposes of this
Employment Agreement, be deemed to have been terminated by the Company as of the
Change in Control without Good Reason.
4.2. Disability; Retirement. In the event the Executive has been
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subject to Disability, upon expiration of the period qualifying the absence as a
Disability pursuant to Section 2.1(i), and in the event that the Executive
remains subject to Disability at the time of separation, he shall be ineligible
to receive benefits under Section 3.4 and Article Five following a Change of
Control. The term "Retirement" shall not include an election to retire after
occurrence of a Termination Event; any such retirement shall be treated
hereunder as a resignation following a Termination Event pursuant to Section
4.1.
ARTICLE FIVE
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TERMINATION BENEFITS
5.1. Notice of Termination Event. Following the occurrence of a
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Termination Event, either party to this Employment Agreement may give notice of
the Termination Event, in the manner required by Section 9.1. Such notice shall
indicate the specific provision of this Employment Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances giving rise to
the notice. As of the Termination Date, if the party receiving such notice has
not contested the accuracy of the notice or has given written acknowledgment of
the Termination Event, pursuant to Section 9.1, then the Executive shall be
deemed to be discharged or to have resigned following a
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Termination Event pursuant to Section 4.1. In the event that the party receiving
such notice shall contest the other party's assertion of a Termination Event
prior to the Termination Date, the Termination Date shall be the date on which
the dispute is finally determined, either by mutual written agreement of the
parties, by a binding and final arbitration award or by a final judgment, order
or decree of a court of competent jurisdiction entered upon such arbitration
award (the time for appeal therefrom having expired and no appeal having been
perfected). In the event of such dispute, benefits pursuant to this Article Five
shall be paid to the Executive during the period of dispute unless the Company
and the Executive otherwise agree, and in such event the Executive agrees to
refund to the Company any amounts finally determined not to be payable by reason
of nonoccurrence or delayed occurrence of a Termination Event or Termination
Date, or may apply such amounts against amounts otherwise due following the
determined actual date of a Termination Date, including, if applicable during
the Employment Period.
5.2. Compensation Following Termination Event. In the event that
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notice of a Termination Event is given pursuant to Section 5.1, until the
Executive's Termination Date (calculated as though such notice was acknowledged
as correct), the Executive shall continue as a regular employee and shall
receive all compensation and benefits from the Company to which he would be
entitled in the absence of the Termination Event or in the absence of separation
on account of Good Reason, at the amounts, rates and levels, and in the manner
payable, before the actions or event constituting the Termination Event,
including, if applicable, during the Employment Period. In the event that the
Executive's Termination Date shall occur during the Employment Period, the
Executive shall continue to receive all compensation payable, as described in
Section 3.4(a) during the Employment Period as though employment had continued
through the Employment Period, unless the Executive's Termination Event or other
separation from employment is for Good Reason.
5.3. Post-Termination Stock Related Compensation. Participants in
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one or more of the Stock Plans have received and will receive grants of stock
options, restricted stock and/or other awards thereunder. The Executive may be
a participant in one or more of the Stock Plans. If (a) with respect to stock
options, at the time of a Change in Control or at any time during the Option
Stock Benefit Adjustment Period or (b) with respect to restricted stock or other
awards, at the time of a Termination Event or at any time during the Restricted
Stock Benefit Adjustment Period, the Executive suffers a Value Loss, because he
cannot freely exercise options or other awards and/or sell or exchange Company
stock acquired as a result of option and restricted stock grants or other awards
under one or more of the Stock Plans due to a Securities Restriction being in
effect at any time during the Option Stock Benefit Adjustment Period or the
Restricted Stock Benefit Adjustment Period, respectively, the Executive shall be
entitled to compensation with respect to the
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options or stock subject to the Value Loss pursuant to this Section 5.3. Any
amount payable pursuant to this Section 5.3 as compensation for a Value Loss
with respect to stock options shall be paid in a lump sum within sixty (60) days
after the end of the Option Stock Benefit Adjustment Period, and with respect to
restricted stock or other awards shall be paid in a lump sum within sixty (60)
days after the end of the Restricted Stock Benefit Adjustment Period. Value Loss
compensation for restricted stock or other awards shall not be payable for
options and option stock, and Value Loss compensation for option and option
stock shall not be payable for restricted stock or other awards, each Value Loss
being separately determined and compensated. Amounts payable under this Section
5.3 shall be calculated by the private law firm serving as employee benefits and
executive compensation counsel to the Board immediately prior to the Change in
Control, and the determination of such amount made by such counsel in good faith
shall be binding upon and conclusive upon both the Company and the Executive. In
the event that the stock which is the subject of this Section 5.3 remains
subject to a Securities Restriction throughout the entire respective Stock
Benefit Adjustment Period, the Value Loss payable shall be calculated between
the high price during the respective Stock Benefit Adjustment Periods and zero
with respect to restricted stock or other awards, and, with respect to stock
options, shall be the option exercise price as set forth in the Executive's
option grants. In such event, where the stock remains subject to a Securities
Restriction throughout the entire respective Stock Benefit Adjustment Period, in
order to receive the benefit provided under this Section 5.3, the Executive
shall surrender his options and/or restricted stock and/or other awards and/or
stock obtained through the exercise of such options in exchange for such
payment. If such options and/or restricted stock and/or other awards and/or
stock are not surrendered, no payment shall be made pursuant to this Section 5.3
with respect to such options, restricted stock and/or other awards and/or stock.
In the event of the permanent loss of a public market for the Common Stock of
the Company coincident with or immediately following a Change in Control (that
can be determined at such date to have occurred as of such date or immediately
thereafter by reason of deregistration or cessation of trading on a recognized
exchange), the Option Stock Benefit Adjustment Period shall be deemed to have
expired as of the date of the Change in Control, with respect to options and
stock acquired through exercise of options, and compensation under this Section
5.3 shall be determined as of such date and payable within sixty (60) days
thereafter. In the event of such permanent loss of a public market, with respect
to restricted stock or other awards, the Restricted Stock Benefit Adjustment
Period shall be deemed to expire as of the Termination Event
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following or coincident with the Change in Control, and any compensation shall
be payable within sixty (60) days thereafter. In the event of such permanent
loss of a public market, with respect to restricted stock or other awards, the
Restricted Stock Benefit Adjustment Period shall be deemed to expire as of the
Termination Event following or coincident with the Change in Control, and any
compensation shall be payable within sixty (60) days after the date on which
notice of the Termination Event is given. In the event that any amounts (other
than grants of restricted stock or awards of stock options or stock issued on
the exercise thereof) are distributed or distributable to the Executive under
that certain Trust Agreement dated March 10, 1987, by and among the Company,
Newmont Mining Corporation and First Interstate Bank of Arizona, such amounts
shall be credited against any amounts payable under this Section 5.3 and shall
be subtracted from gross amounts payable pursuant to this Section 5.3 prior to
the payment of the net amount payable.
5.4. Retirement Benefits. In the event that the Executive shall
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become entitled to benefits pursuant to Section 4.1 and/or Section 5.1, the
Executive shall receive from the Company a monthly supplemental retirement
benefit equal to the excess of (a) over (b), where (a) is the retirement benefit
the Executive would be entitled to under the Retirement Plan for Salaried
Employees of Magma Copper Company (and under any related "excess benefit plan",
as defined in ERISA and under the retirement supplement contained in the Magma
Copper Company Special Executive Supplemental Benefit Plan had the Executive
remained in full-time employment for twenty-four (24) additional months
following his Termination Date (calculated as though notice pursuant to Section
5.1 has been acknowledged as correct), and (b) is the retirement benefit
actually payable to Executive under the Retirement Plan for Salaried Employees
of Magma Copper Company and any related excess benefit plan and under the
retirement supplement contained in the Magma Copper Company Special Executive
Supplemental Benefit Plan. Such monthly benefit shall commence as of the date
such benefits commence under the Retirement Plan for Salaried Employees of Magma
Copper Company, and shall be paid in the same form of monthly annuity payment as
elected by the Participant under such Retirement Plan, and shall be subject to
the same method of benefit calculation as under such Retirement Plan. Such
benefit shall be payable as though the Executive was fully vested in a
retirement benefit in the event the Executive is not actually fully vested under
the Retirement Plan for Salaried Employees of Magma Copper Company and shall
commence at the earliest age that the Executive could have elected to receive
benefits had he separated with a vested benefit under such retirement plan. If
the Magma Copper Company Special Executive Supplemental Benefit Plan is amended
to provide the benefit promised under this Section 5.4 for administrative
convenience, such benefit shall be provided under such plan, rather than under
this Employment Agreement, to preclude duplication of benefits. Benefits under
this Section 5.4 may be provided through a funding medium or trust maintained in
connection with the Magma Copper Company Special Executive Supplemental Benefit
Plan, or directly by the Company.
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5.5. Welfare Benefits. For a period of twenty-four (24) months,
----------------
commencing with the Executive's Termination Date (calculated as though notice
pursuant to Section 5.1 has been acknowledged as correct), the Executive (and
his dependents, as applicable) shall be provided by the Company with the same
life, health and disability plan participation, benefits and coverages to which
he was entitled as an employee immediately before the Change in Control. In the
event that under applicable law or the terms of the relevant Employee Benefit
Plans such participation, benefits and/or coverage cannot be provided to the
Executive following his Termination Date, such coverage and/or benefits shall be
provided directly by the Company pursuant to this Employment Agreement on a
comparable basis. In its sole discretion, the Company may obtain such coverage
and benefits for the Executive through private insurance acquired at the
Company's expense. Amounts paid or payable to or on behalf of the Executive
pursuant to any "employee welfare benefit plan," as defined in ERISA, providing
health and/or disability benefits, that is sponsored by the Company or an
affiliate of the Company, shall be credited against amounts due under this
Section 5.5. To the maximum extent permitted by applicable law, the benefits
provided under this Section 5.5 shall be in discharge of any obligations of the
Company or any rights of the Executive under the benefit continuation provisions
under Section 4980A of the Code and Part VI of Title I of the Employee
Retirement Income Security Act ("COBRA") or any other legislation of similar
import. The benefit received under this Section 5.5 shall be reduced by any
comparable benefit received under the Magma Copper Company Severance Pay Plan.
ARTICLE SIX
-----------
INTERNAL REVENUE CODE LIMITATIONS
6.1. Code Limitations. Notwithstanding anything to the contrary in
----------------
this Employment Agreement, if the Executive is entitled to benefits hereunder
following the occurrence of a Change in Control, in no event shall the present
value of benefits payable under this Employment Agreement, taken together with
the Executive's benefits under the Stock Plans, that, in the opinion of counsel
(as identified in Section 6.3), are considered "parachute payments" under
section 4999 of the Code, be reduced by the excise tax imposed by section 4999
of the Code. In the event that such benefits so taken together would exceed the
amount which is exempt from the excise tax imposed by section 4999 of the Code,
the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after the
deduction of any excise tax under Section 4999 and any interest charges or
penalties in respect of the imposition of such excise tax (but not any federal,
state or local income tax) on the present value of such benefits, and any
federal, state and local income tax, excise tax and penalties and interest, if
applicable, upon the
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additional payment provided for by this Section 6.1, shall be equal to the
present value of such benefits. For purposes of determining the additional
amount to be paid to the Executive pursuant to this Section 6.1, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the additional payment is
to be made and state and local income taxes at the highest marginal rates of
taxation in the state and locality of his residence on the date the additional
payment is made, net of the maximum reduction in federal income taxes which
could be obtained from deduction from such state and local taxes.
6.2. Definitions Applicable to This Article Six. For purposes of
------------------------------------------
this Article Six, the term "base amount" shall have the meaning ascribed to it
under section 280G(b)(3) of the Code, the term "parachute payment" shall have
the meaning ascribed to it under section 280G(b)(2) of the Code, "present value"
shall be determined in accordance with section 280G(d)(4) of the Code, and
"reasonable compensation" shall have the meaning ascribed to it under section
280G(b)(4) of the Code.
6.3. Interpretation. This Article Six shall be interpreted so as to
--------------
avoid the imposition of excise taxes on the Executive under section 4999 of the
Code, or to minimize such taxes. In applying the provisions of this Article Six
if, for any reason, an exemption from the application of the rules of section
4999 of the Code shall be available under the terms of said section or under any
applicable regulations or rulings thereunder, such exemption shall be fully
applied. No payment under this Employment Agreement or otherwise that is not,
in the opinion of counsel (as identified in this Section 6.3), a "parachute
payment" under section 4999 of the Code shall be taken into account in applying
the provisions of this Article Six. In application of the provisions of this
Article Six, calculations necessary to be made pursuant to the provisions of
this Article Six and interpretation of the Code and applicable regulations for
purposes of compliance with this Article Six shall be made by the private law
firm serving as employee benefits and executive compensation counsel to the
Board immediately prior to the Change in Control, and the determination of such
counsel made in good faith shall be binding and conclusive upon both the Company
and the Executive. All fees and expenses of such law firm pertaining thereto
shall be borne by the Company. Payments shall be made pursuant to this
Employment Agreement notwithstanding that the status of any payment as a
parachute payment has not been finally determined by the Internal Revenue
Service or any court of competent jurisdiction, or by arbitration as provided in
Article Eight. Any Gross-Up Payment, as determined pursuant to Section 6.1,
shall be paid by the Company to the Executive within five (5) days of the
receipt of the law firm's determination. If the law firm determines that no
excise tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the excise tax on the Executive's
applicable federal income tax return would not result in the
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imposition of a negligence (or similar) penalty. Any determination by the law
firm shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the law firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 6.4 and the Executive thereafter is required to make a payment of any
excise tax, the law firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.
6.4. Internal Revenue Service Claims. The Executive shall notify the
-------------------------------
Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten
(10) business days after the Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim prior to
the expiration of the thirty (30) day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(a) give the Company any information reasonably requested by the
Company relating to such claim;
(b) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;
(c) cooperate with the Company in good faith in order to
effectively contest such claim; and
(d) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any excise tax or income tax (including interest and
penalties and respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 6.4, the
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Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any excise tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable years of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment shall be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
6.5. Internal Revenue Service Refunds. If, after the receipt by the
--------------------------------
Executive of an amount advanced by the Company pursuant to Section 6.4, the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the requirements of
Section 6.4), promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of any amount advanced by the Company
pursuant to Section 6.4, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
ARTICLE SEVEN
-------------
SUCCESSION AND ASSIGNMENT
7.1. Succession of Executive. This Employment Agreement shall inure
-----------------------
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors,
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administrators, successors, heirs, distributees, devises and legatees. In the
event of the Executive's death while any amount would still be payable hereunder
to the Executive had he lived, unless otherwise provided herein, such amount
shall be paid in accordance with the terms of this Employment Agreement to the
Executive's devisee, legatee or other beneficiary or, if there is not such
devisee, legatee or beneficiary, to his estate.
7.2. Successors to the Company. Except as otherwise provided herein,
-------------------------
this Employment Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including, without limitation, any
corporation or corporations acquiring directly or indirectly all or
substantially all of the stock, business or assets of the Company whether by
merger, consolidation, division, sale or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Employment
Agreement). The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Employment Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place. Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Employment
Agreement entitling the Executive to the benefits hereunder, as though the
Executive was subject to a Termination Event due to a cause other than Good
Reason.
7.3. Assignment. This Employment Agreement is personal in nature,
----------
and neither the Executive nor the Company may assign or transfer this Employment
Agreement or rights hereunder except as provided in this Article Seven. The
obligation of the Company hereunder shall constitute a general unsecured
obligation of the Company; provided that, to the maximum extent permitted under
applicable laws of bankruptcy or insolvency, the obligations of the Company
hereunder shall have the highest creditor priority applicable to wages payable
to employees. No right, benefit or interest hereunder shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation or set-off in respect of any claim, debt or obligation or to
execution, attachment, levy or similar process, or assignment by operation of
law, except as otherwise provided in this Article Seven. Any attempt, voluntary
or involuntary, to effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null, void and of no
effect.
ARTICLE EIGHT
-------------
ADDITIONAL RIGHTS AND RESPONSIBILITIES
8.1. Mitigation. The Executive shall not be required to mitigate
----------
damages or the amount of any payment provided for under
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this Employment Agreement by seeking other employment or otherwise. The
provisions of this Employment Agreement, and any payment provided for hereunder,
shall not reduce any amounts otherwise payable, or in any way diminish the
Executive's existing rights which would accrue solely as a result of the passage
of time, under any Company Employee Benefit Plan, "payroll practice" (as defined
in ERISA), compensation arrangement, incentive plan, stock option or other
stock-related plan other than under the Magma Copper Company Severance Pay Plan,
as provided in Section 5.5 and 5.6.
8.2. Legal Costs. If any legal action or other proceeding is brought
-----------
by the Executive for the enforcement of this Employment Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Employment Agreement, except as provided in Section
8.3, the Executive shall be entitled to recover reasonable attorneys fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which he may be entitled, in the event and to the extent that the
Executive prevails in such action or other proceeding. Notwithstanding anything
hereinabove to the contrary, as between the Executive and the Company, the
Company shall bear all legal costs and expenses of defending the validity of
this Employment Agreement against any third party. The Company shall bear all
legal costs and expenses incurred in contesting or disputing the
characterization of any amounts paid pursuant to this Employment Agreement as
being nondeductible under section 280G of the Code or subject to imposition of
an excise tax under section 4999 of the Code.
8.3. Arbitration. After the occurrence of a Change in Control, any
-----------
controversy or claim arising out of or relating to this Employment Agreement, or
any breach thereof, shall, except as provided in Article Six, be adjudicated
only by arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon such award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitration shall be held
in the City of Phoenix, Arizona, or such other place as may be agreed upon at
the time by the parties to the arbitration. The arbitrator(s) shall, in their
award, allocate between the parties the costs of arbitration, which shall
include reasonable attorneys' fees of the parties, as well as the arbitrators'
fees and expenses, in such proportions as the arbitrator(s) deem just.
Notwithstanding the foregoing and pursuant to Section 8.2, the Executive shall
be entitled to seek specific performance in a court of competent jurisdiction of
the Executive's right to be paid his full compensation until the Executive's
Termination Date, during the pendency or dispute of any controversy arising
under or in connection with this Employment Agreement.
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ARTICLE NINE
------------
MISCELLANEOUS
9.1. Notices Generally. Any notice or other communication required
-----------------
or permitted pursuant to the terms of this Employment Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
United States mail, first class, postage prepaid and registered with return
receipt requested, addressed to the intended recipient at his or its address set
forth below and, in the case of a notice or other communication to the Company,
directed to the attention of the Board with a copy to the Secretary of the
Company, or to such other address as the intended recipient may have theretofore
furnished to the sender in writing in accordance herewith, except that any
notice of change of address is received, notices shall be sent to the following
addresses:
If to the Executive: If to the Company:
Magma Copper Company
0000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
9.2. Amendment; Waivers. This Employment Agreement may be amended only by
------------------
written amendment duly executed by both parties or their legal representatives
and authorized by action of the Board. Except as otherwise specifically
provided in this Employment Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this
Employment Agreement to be performed by such other party shall be deemed a
waiver of a subsequent breach of such condition or provision or a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.
9.3. Severability. If any one (1) or more of the provisions or parts of a
------------
provision contained in this Employment Agreement shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision or part of a provision of
this Employment Agreement, but this Agreement shall be reformed and construed as
if such invalid or illegal or unenforceable provision or party of a provision
had never been contained herein and such provisions or part thereof shall be
reformed so that it would be valid, legal and enforceable to the maximum extent
permitted by law.
9.4. Nature of Payments. Any payment made pursuant to this Employment
------------------
Agreement is not intended to be a penalty and shall not preclude the enforcement
of any other remedies available to the party making the payment.
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9.5. Withholding. Any payment provided for hereunder shall be payable net
-----------
of any applicable withholding required under federal, state or local law.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Employment Agreement as of the date and year first above written.
MAGMA COPPER COMPANY
____________________________________
By: X. Xxxxxxx Winter
Its: President and Chief Executive Officer
ATTEST:
____________________________________
By: Xxxxx X. Xxxxxxxx
Its: Vice President, Human Resources
EXECUTIVE
By:______________________________
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