Exhibit 10.iii.(r)
July 13, 1999
E. Xxxx Xxxx
Vice President and Treasurer
IMC Global Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Dear Xxxx:
This Agreement is to assure you that in the event you become entitled
to payments by operation of the Employment Agreement dated July 13,
1999 ("Employment Agreement") between you and IMC Global Inc.
("Global") due to a "Change in Control" (as that term is defined in the
Employment Agreement) of Global, and if any of the payments to be made
under the Employment Agreement or any payments which are construed as
being made under the Employment Agreement, ("Agreement Payments") will
be subject to the tax ("Excise Tax") imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended ("Code") (or any similar tax
that may hereafter be imposed), Global shall pay to you (at the time
specified in Paragraph (c) below) an additional amount ("Gross-up
Payment") such that the net amount retained by you, 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 Agreement Payments, shall be
equal to the Total Payments.
a) For purposes of determining whether any of the
Agreement Payments will be subject to the Excise Tax and the amount
of such Excise Tax, (i) any other payments or benefits received or
to be received by you in connection with a Change in Control of
Global or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement
with Global, any person whose actions result in a Change of Control
of Global or any person affiliated with Global or such person)
(which, together with the 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 Global'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 Global'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, you 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, you shall repay to Global 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 you 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), Global
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 payment of any amounts under your Employment
Agreement; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or before
such day, Global shall pay to you on such day an estimate, as
determined in good faith by Global, 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 payment of any amounts under
the Employment Agreement.
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 Global to you, payable on the fifth day after
demand by Global (together with interest at the rate provided in
Section 1274 (b)(2)(B) of the Code).
All Gross-up Payments will be paid to you 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 Global under this Agreement. Any repayment due
Global from you as a result of the circumstances described in the
last sentence of the preceding paragraph shall be made by you after
you have received such excess amounts from the Trust.
This Agreement supersedes any and all previous agreements entered
into between you and Global concerning Gross-up Payments.
Global is pleased to be able to provide you with this additional
assurance of economic protection in the event of a Change in
Control.
Please sign, date and return one original of this letter.
Sincerely yours,
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Xx.
Chief Executive Officer
I have read this Agreement and understand and accept its terms.
Executive:____________________________ Date:______________________
