EXHIBIT 10.3
CHANGE IN CONTROL SEVERANCE AGREEMENT
This CHANGE IN CONTROL SEVERANCE AGREEMENT is entered into as of the
18th day of November, 2005, by and between Compass Minerals International, Inc.,
a Delaware corporation (the "Company"), and _________________ ("Executive").
WITNESSETH
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, the Company recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control may arise and that
possibility may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined it is in the best interests of the Company and its stockholders to
secure Executive's continued services and to ensure Executive's continued
dedication to Executive's duties in the event of any threat or occurrence of a
Change in Control (as defined in Section 1) of the Company.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. Definitions. As used in this Agreement, the following terms have the
following meanings:
(a) "Bonus Amount" means the higher of (i) Executive's average
annual incentive bonuses during the last 3 completed fiscal years
before the Date of Termination (annualized in the event Executive was
not employed by Company (or its affiliates) for the whole of any such
fiscal year) and (ii) Executive's aggregate annual target bonus
(targeted at 100%) for the fiscal year in which the Date of Termination
occurs.
(b) "Cause" means Executive's (i) conviction of, or plea of
guilty or nolo contendere to, a felony or misdemeanor involving moral
turpitude, (ii) indictment for a felony or misdemeanor under the
federal securities laws, (iii) willful misconduct or gross negligence
resulting in material harm to the Company, (iv) willful breach of
Executive's duties or responsibilities herein or of the separate
Restrictive Covenant Agreement referenced in Section 9, or (v) fraud,
embezzlement, theft, or dishonesty against the Company or any
Subsidiary, or (vi) willful violation of a policy or procedure of the
Company, resulting in any case in material harm to the Company. For
purposes of this paragraph (b), "willful" means those acts taken/not
taken in bad faith and without reasonable belief such action/inaction
was in the best interests of the Company or its affiliates. The Company
must notify Executive of an event constituting Cause pursuant
to Section 12 within 90 days following the Company's knowledge of its
existence or such event shall not constitute Cause under this
Agreement.
(c) "Change in Control" means the occurrence of any one
of the following events:
(i) a transaction or series of transactions (other
than an offering of the Company's common stock to the general
public through a registration statement filed with the
Securities and Exchange Commission) whereby any "person" or
related "group" of "persons" (as such terms are used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than the Company,
any of its subsidiaries, an employee benefit plan maintained
by the Company or any of its Subsidiaries, or a "person" that,
before such transaction, directly or indirectly controls, is
controlled by, or is under common control with, the Company)
directly or indirectly acquires beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company possessing more than 50% of the
total combined voting power of the Company's securities
outstanding immediately after such acquisition; or
(ii) during any period of two consecutive years,
individuals who, at the beginning of such period, constitute
the Board together with any new director(s) (other than a
director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described
in clause (i) above or clause (iii) below) whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors
at the beginning of the two year period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
(iii) the consummation by the Company (whether
directly involving the Company or indirectly involving the
Company through one or more intermediaries) of (A) a merger,
consolidation, reorganization, or business combination or (B)
a sale or other disposition of all or substantially all of the
Company's assets or (C) the acquisition of assets or stock of
another entity, in each case other than a transaction:
(x) that results in the Company's voting
securities outstanding immediately before
the transaction continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the
Company or the person that, as a result of
the transaction, controls, directly or
indirectly, the Company or owns, directly or
indirectly, all or substantially all of the
Company's assets or otherwise succeeds to
the business of the Company (the Company or
such person, the "Successor Entity"))
directly or indirectly, at least a majority
of the combined voting power of the
Successor Entity's outstanding voting
securities immediately after the
transaction, and
(y) after which no person or group beneficially
owns voting securities representing 50% or
more of the combined voting power of the
Successor Entity; provided, however, that no
person or group shall be treated for
purposes of this subparagraph as
beneficially owning 50% or more of combined
voting power of the Successor Entity solely
as a result of the voting power held in the
Company before the consummation of the
transaction; or
(iv) the Company's stockholders approve a liquidation
or dissolution of the Company.
(d) "Date of Termination" means (i) the effective date of
Termination of Executive's employment as provided in Section 12 or (ii)
the date of Executive's death, if Executive is employed as of such
date.
(e) "Good Reason" means, without Executive's express written
consent, the occurrence of any of the following events within 2 years
after a Change in Control:
(i) a material adverse change in Executive's duties
or responsibilities as of the Change in Control (or as the
same may be increased from time to time thereafter); provided,
however, that Good Reason shall not be deemed to occur upon a
change in Executive's reporting structure, upon a change in
Executive's duties or responsibilities that is a result of the
Company no longer being a publicly traded entity and does not
involve any other event set forth in this paragraph, or upon a
change in Executive's duties or responsibilities that is part
of an across-the-board change in duties or responsibilities of
employees at Executive's level;
(ii) any reduction in Executive's annual base salary
or annual target or maximum bonus opportunity in effect as of
the Change in Control (or as the same may be increased from
time to time thereafter); provided, however, that Good Reason
shall not include such a reduction of less than 10% that is
part of an across-the-board reduction applicable to employees
at Executive's level;
(iii) Company's (A) relocation of Executive more than
50 miles from Executive's primary office location and more
than 50 miles from Executive's principal residence as of the
Change in Control or (B) requirement that Executive travel on
Company business to an extent substantially greater than
Executive's travel obligations immediately before such Change
in Control;
(iv) a reduction of more than 10% in the aggregate
benefits provided to Executive under the Company's employee
benefit plans, including but not limited to any "top hat"
plans designated for key employees, in which Executive is
participating as of the Change in Control;
(v) any purported termination of Executive's
employment that is not effectuated pursuant to Section 12; or
(vi) the failure of the Company to obtain the
assumption agreement from any successor as contemplated in
Section 11(b).
Notwithstanding the foregoing, Executive must provide notice
of termination of employment pursuant to Section 12 within 90 days of
Executive's knowledge of an event constituting Good Reason or such
event shall not constitute Good Reason under this Agreement.
Additionally, an isolated, insubstantial, and inadvertent action taken
in good faith and that is remedied by the Company within 10 days after
receipt of notice thereof given by Executive shall not constitute Good
Reason.
(f) "Qualifying Termination" means a termination of
Executive's employment during the Termination Period (i) by the Company
other than for Cause or (ii) by Executive for Good Reason.
(g) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50% or
more of the total combined voting power of the then outstanding
securities or interests of such corporation or other entity entitled to
vote generally in the election of directors or in which the Company has
the right to receive 50% or more of the distribution of profits or 50%
of the assets or liquidation or dissolution.
(h) "Termination Period" means the period beginning with a
Change in Control and ending 2 years following such Change in Control.
Notwithstanding anything in this Agreement to the contrary, if (i)
Executive's employment is terminated before a Change in Control for
reasons that would have constituted a Qualifying Termination if they
had occurred after a Change in Control; (ii) Executive reasonably
demonstrates such termination (or Good Reason event) was at the request
of a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control; and (iii) a Change
in Control involving such third party (or a party competing with such
third party to effectuate a Change in Control) occurs, then, for
purposes of this Agreement, the date immediately before the date of
such termination or event constituting Good Reason shall be treated as
a Change in Control. For purposes of determining the timing of payments
and benefits under Section 4, the date of the actual Change in Control
shall be treated as the Date of Termination under Section 1(d), and,
for purposes of determining the amount of payments and benefits to
Executive under Section 4, the date Executive's employment is actually
terminated shall be treated as the Date of Termination under Section
1(d).
2. Obligation of Executive. In the event of a tender or exchange offer,
proxy contest, or the execution of any agreement that, if consummated, would
constitute a Change in Control, Executive agrees not to leave the employ of the
Company voluntarily, except as provided in Section 1(h), until the Change in
Control occurs or, if earlier, then such tender or exchange offer, proxy
contest, or agreement is terminated or abandoned.
3. Term of Agreement. This Agreement shall be effective on the date
hereof and shall continue in effect until December 31, 2008. On January 1, 2009,
and on each January 1 thereafter, the Term shall automatically extend for an
additional 1 year, unless either party gives written notice thereof at least 60
days before the date such extension would be effective. This Agreement shall
continue in effect for a period of 2 years after a Change in Control,
notwithstanding the delivery of any such notice, if such Change in Control
occurs during the term of this Agreement. Notwithstanding anything in this
Section to the contrary, this Agreement shall terminate if Executive or the
Company terminates Executive's employment before a Change in Control other than
as provided in Section 1(h).
4. Payments Upon Termination of Employment.
(a) Qualifying Termination. In the event of a Qualifying
Termination, the Company shall provide Executive the payments and
benefits set forth in paragraphs (b) and (c) of this Section.
(b) Qualifying Termination - Cash Payments. Within 30 days of
a Qualifying Termination, the Company shall make a lump sum cash
payment to Executive of the following:
(i) an amount equal to Executive's base salary due,
pro-rata bonus compensation due, and unreimbursed expenses
properly incurred through the Date of Termination; and
(ii) an amount equal to 2 times the sum of (A)
Executive's highest annual rate of base salary during the
12-month period immediately before the Date of Termination,
plus (B) the higher of (x) Executive's Bonus Amount or (y)
Executive's annual target bonus for the fiscal year in which
the Date of Termination occurs.
(c) Qualifying Termination - Benefits. In the event of a
Qualifying Termination, the Company shall allow Executive to continue
to participate in its medical, dental, accident, disability, and life
insurance benefit plans at the same level on which Executive was
enrolled as of the Change in Control (subject to generally applicable
changes to such plans) for 2 years or until Executive becomes eligible
for such benefits through another employer, whichever occurs first;
provided, that, if Executive cannot continue to participate in the
Company plans providing such benefits, then the Company shall otherwise
provide such benefits on the same after-tax basis as if continued
participation had been permitted.
(d) Non-Qualifying Termination. In the event Company
terminates Executive's employment without Cause or Executive terminates
his/her employment without Good Reason, Company shall be obligated only
to pay Executive's base salary due through the Date of Termination and
to reimburse Executive for expenses properly incurred through the Date
of Termination.
(e) Condition Precedent. As a condition precedent to receipt
of the payments and benefits provided by paragraphs (b) and (c) of this
Section, Executive must execute
an Agreement acceptable to the Company that contains a release of any
and all claims substantially in the following form:
Executive (on behalf of Executive and anyone claiming through
or on behalf of Executive) hereby releases Company (as defined herein)
and its successors, assigns, officers, employees, and agents, without
limitation ("Company Affiliates") from any and all claims, demands, and
causes of action ("claims"), known or unknown, suspected or
unsuspected, that Executive has or may have had against any of them
before the date Executive signs this Agreement, to the maximum extent
permitted by law and without limitation. This release includes, but is
not limited to, the following: claims related to or concerning
Executive's employment with Company; claims sounding in contract and/or
tort; claims for discrimination/harassment/retaliation under local,
state, or federal law, including but not limited to Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans
with Disabilities Act, the Age Discrimination in Employment Act, and
any other federal, state, or local law; claims under the Family and
Medical Leave Act; claims under any Company policy and/or practice; and
all other claims, whether common law or contract, all to the maximum
extent permitted by law and without limitation.
5. Additional Reimbursement Payment by the Company. If Executive is
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
with respect to any payment or benefit payable by the Company following a Change
of Control (ignoring for this purpose any payment under this Section 5), then
the Company shall pay to Executive an additional payment (a "Reimbursement
Payment") in an amount such that, after payment by Executive of all taxes
(including, without limitation, any income taxes and any interest and penalties
imposed with respect thereto, and any excise tax) imposed upon the Reimbursement
Payment, Executive retains an amount of the Reimbursement Payment equal to the
amount Executive pays as a result of such excise tax. For purposes of
determining the amount of the Reimbursement Payment, Executive shall be deemed
to pay applicable federal, state and local income taxes at the highest marginal
rates of income taxation for the calendar year in which the Reimbursement
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.
6. Delay of Payments. In the event that any payment or distribution to
be made hereunder constitutes "deferred compensation" subject to Section 409A of
the Internal Revenue Code and Executive is determined to be a specified employee
(as defined in Section 409A), such payment or distribution shall not be made
before the date that is six months after the termination of Executive's
employment (or, if earlier, the date of the Executive's death).
7. Withholding Taxes. The Company may withhold from all payments under
this Agreement all required taxes and/or other withholdings.
8. Resolution of Disputes; Reimbursement of Legal Fees.
(A) Any dispute or controversy arising under or in connection
with this Agreement (other than disputes related to the Restrictive
Covenant Agreement referenced in Section 9) shall be settled by final,
binding arbitration in Xxxxxxx County, Kansas, in accordance with the
National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. The Company shall bear
all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section.
(B) If Executive prevails in any contest or dispute under this
Agreement involving termination of Executive's employment with the
Company or involving Company's refusal to perform fully in accordance
with the terms hereof, then the Company shall reimburse Executive for
all reasonable legal fees and related expenses incurred in connection
with such contest or dispute.
9. Restrictive Covenants. Executive hereby agrees to the terms of the
Company's Restrictive Covenant Agreement attached hereto, which Restrictive
Covenant Agreement Executive also hereby agrees to execute. If Executive does
not execute the Restrictive Covenant Agreement within 10 days of the effective
date of this Agreement, then this Agreement is null and void.
10. Scope of Agreement. Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company and, if Executive's
employment with the Company terminates before a Change in Control, then
Executive shall have no further rights under this Agreement (except as otherwise
provided hereunder).
11. Successors; Binding Agreement.
(a) This Agreement shall survive any business combination and
shall be binding upon the surviving entity of any business combination
(in which case and such surviving entity shall be treated as the
Company hereunder).
(b) In connection with any business combination, the Company
will cause any successor entity to the Company unconditionally to
assume by written instrument delivered to Executive (or his beneficiary
or estate) all of the obligations of the Company hereunder. Company's
failure to obtain such assumption before the effective date of any such
business combination constitutes Good Reason under Section 1(e)(vi).
For purposes of implementing the foregoing, the date on which any such
business combination becomes effective shall be deemed the date Good
Reason occurs and shall be the Date of Termination, if requested by
Executive.
(c) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees,
and legatees. If Executive dies while any amounts would be payable to
Executive hereunder, then all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
such person or persons appointed in writing by Executive to receive
such amounts or, if no person is so appointed, to Executive's estate.
12. Notice.
(a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or 5 days after
deposit in the United States mail, certified and return receipt
requested, postage prepaid, addressed as follows:
If to Executive: ___________________________________________
If to the Company: Compass Minerals International, Inc.
Compass Minerals International, Inc.
0000 Xxxx 000xx Xxxxxx
Xxxxxxxx Xxxx XX 00000
Attention: Vice President Human Resources
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
(b) A written notice of the Date of Termination shall (i)
indicate the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated, and (iii)
specify the termination date, which date shall be not less than 15 days
or more than 60 days after the giving of such notice. The failure to
set forth in such notice any fact or circumstance that contributes to a
showing of Good Reason or Cause shall not waive any right hereunder or
preclude Executive or the Company from asserting such fact or
circumstance in enforcing Executive's or the Company's rights
hereunder.
13. Full Settlement. The Company's obligation to make any payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu and in full settlement of all other severance
payments to Executive under any other severance or employment agreement between
Executive and the Company and any severance plan of the Company. The Company's
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action that the Company may have
against Executive or others. In no event shall Executive be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement and, except
as provided in Section 4(c), such amounts shall not be reduced whether or not
Executive obtains other employment.
14. Survival. The respective obligations and benefits afforded to the
Company and Executive as provided in Sections 4 (to the extent that payments or
benefits are owed as a result of a termination of employment that occurs during
the term of this Agreement), 5 (to the extent that Payments are made to
Executive as a result of a Change in Control that occurs during the term of this
Agreement), 6, 7, 9, 11(c), and 13 shall survive the termination of this
Agreement.
15. Governing Law; Validity. The interpretation, construction, and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Kansas without regard to the
principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which other provisions shall remain in
full force and effect.
16. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
17. Miscellaneous. For purposes of interpretation/enforcement, the
parties to this Agreement shall be considered joint authors, and this Agreement
shall not be strictly construed against either such party. No provision of this
Agreement may be modified or waived unless such modification or waiver is agreed
to in writing and signed by Executive and by a duly authorized officer of the
Company. No waiver by either party at any time of any breach by the other party
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. Failure
by Executive or the Company to insist upon strict compliance with any provision
of this Agreement or to assert any right hereunder, including without
limitation, the right of Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. Except as otherwise specifically provided
herein, the rights of, and benefits payable to, Executive, his estate, or his
beneficiaries pursuant to this Agreement are in addition to any rights of, or
benefits payable to, Executive, his estate, or his beneficiaries under any other
employee benefit plan or compensation program of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has executed
this Agreement as of the day and year first above written.
COMPASS MINERALS INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
[NAME OF EXECUTIVE]
