EXHIBIT 10(a)
CYPRUS AMAX MINERALS COMPANY
MATERIAL CONTRACTS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN CYPRUS AMAX MINERALS COMPANY
AND XXXXXX X. XXXX
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CYPRUS AMAX MINERALS COMPANY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is entered
into as of this 1st day of January, 1996, by and between Cyprus Amax Minerals
Company (the "Company"), a Delaware corporation, and Xxxxxx X. Xxxx ("Xx.
Xxxx").
RECITALS
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Whereas, Xx. Xxxx and the Company have extinguished their Employment
Agreement dated as of May 14, 1992; and
Whereas, the Board of Directors of the Company has decided that it is
desirable to retain for the Company the benefit of Xx. Xxxx'x services as
Chairman of the Board of Directors of the Company, and President and Chief
Executive Officer of the Company and to contract with him regarding the same;
and
Whereas, Xx. Xxxx desires to contract formally with the Company with respect
to his employment as Chairman of the Board of Directors of the Company and as
President and Chief Executive Officer of the Company;
Now, therefore, in consideration of the undertakings and the payments herein
set forth, the Company and Xx. Xxxx mutually agree as follows:
1. ENGAGEMENT. The Company hereby agrees to engage Xx. Xxxx as an employee
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of the Company to serve as Chairman of the Board of Directors of the Company
and President and Chief Executive Officer of the Company until December 31,
2000 and to continue his engagement as an employee during the term of
employment set forth in Section 3 of this Agreement, and Xx. Xxxx hereby
agrees to accept such employment upon the terms and conditions set forth
herein. Xx. Xxxx acknowledges that the Company will seek to find a successor
to Xx. Xxxx during the Employment Period to serve as Chief Executive Officer
of the Company. In the event that the Company replaces Xx. Xxxx as Chief
Executive Officer during the Employment Period, then Xx. Xxxx'x employment
shall be deemed terminated; however, without prejudice to his rights
pursuant to Section 3(B), Xx. Xxxx agrees to continue as Chairman at no
additional compensation (other than regular board fees) until the earlier of
December 31, 2000 or the first anniversary of his successor's appointment as
Chief Executive Officer of the Company.
2. COMPENSATION.
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(a) For all services rendered to the Company during the term of this
Agreement, Xx. Xxxx shall receive a salary (the "Salary") at an annual rate
not less than the higher of: (i) $1,000,000.00; or (ii) Xx. Xxxx'x then
current Base Salary. Such Salary shall be paid to Xx. Xxxx on the same dates
and in the same increments as salaries are paid to other employees in
accordance with established Company practices.
"Base Salary" as used in this Agreement shall mean, as of any date of
determination, the annual rate of compensation being paid to Xx. Xxxx for
services performed by Xx. Xxxx for the Company, excluding amounts payable to Xx.
Xxxx or for his account under Company benefit plans or programs including
without limitation retirement, savings, vacation, life insurance, medical,
dental and disability plans of programs) or under Company special compensation
plans or programs (including without limitation bonus and stock option or stock
grant plans of programs). Xx. Xxxx'x Base Salary shall be reviewed no less
frequently than annually. Any increase in Base Salary shall become effective at
such time as the Board of Directors in its sole discretion shall determine.
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(b) Xx. Xxxx shall be eligible to participate in each generally applicable
Company benefit plan or program (including without limitation retirement,
savings, vacation, life insurance, medical, dental and disability plans or
programs) and in each Company special compensation plan or program
(including without limitation bonus and stock option or stock grant plans of
programs) to the extent provided by the terms and conditions of each plan or
program. In particular, Xx. Xxxx'x target cash bonus each year shall be 100
percent of his then current Base Salary, to be based upon accomplishment of
objectives to be agreed between Xx. Xxxx and the Board of Directors. Except
as provided in Section 3(B), nothing in this Agreement is intended to limit
the discretion of the Company or the Board of Directors in administration of
the special compensation plans or any future plans or programs.
(c) Xx. Xxxx shall be granted as of January 2, 1996, a nonqualified stock
option to purchase 1,000,000 shares of the Company's common stock with an
exercise price equal to $26.4375 (the "Option"). The Option shall vest and
become exercisable with respect to 333,333 shares on December 31, 1998, with
respect to an additional 333,333 shares on December 31, 1999 and with
respect to the final 333,334 shares on December 31, 2000, provided that the
Option shall vest and become immediately exercisable upon a termination of
Xx. Xxxx'x employment by Xx. Xxxx or the Company entitling Xx. Xxxx to
payments pursuant to Section 3(B) (a "Qualifying Termination") or upon a
Change of control (as defined in the Company's Management Incentive
Program).
(d) Xx. Xxxx shall be eligible to participate in the Company's KELTIP
with a guideline award of 50,000 shares, with the actual award to be made to
Xx. Xxxx being determined by the Compensation Committee.
(e) Xx. Xxxx shall be entitled to a supplemental retirement benefit (the
"SERP") equal to x times y/20 minus z where x equals 60% of Xx. Xxxx'x Final
Average Pay, y equals two times Xx. Xxxx'x years (or partial years) of
service with the Company and z equals any other qualified or nonqualified
defined benefit retirement benefits payable to Xx. Xxxx either by the
Company or any previous employer. The SERP shall vest in five equal annual
installments commencing on December 31, 1996, provided that the SERP shall
become immediately vested upon a Qualifying Termination or upon a Change of
Control (as defined in the Company's Management Incentive Program). For
purposes of the SERP, "Final Average Pay" means the average annual base
salary and annual bonus paid to Xx. Xxxx in the highest three consecutive
years of completed service with the Company. Actuarial determinations with
respect to the SERP shall be made by the Company's actuaries.
3. TERM. Unless terminated earlier pursuant to the terms of this Section 3,
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and except for provisions of this Agreement which by their terms survive
termination of this Agreement, the term of this agreement shall be until
December 31, 2000 (the "Employment Period").
(a) Termination.
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(i) Termination of Employment by Company for Breach of Covenant,
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Termination by Xx. Xxxx'x Resignation, Retirement, Disability, or Death.
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Xx. Xxxx'x employment and this Agreement may be terminated by the action of
the Board of Directors of the Company upon 30 days' written notice
specifying that the basis for termination is a breach of any of his
covenants in Section 4 of this Agreement. In the event of termination of
employment by the action of the Board of Directors of the Company for such
breach, or in the event of Xx. Xxxx'x (a) resignation, (b) retirement (as
defined in the Company's benefits plans or payroll practices), (c) death, or
(d) disability (which shall be deemed to include only an incapacitating
condition which in the Company's reasonable judgment will materially and
adversely interfere with Xx. Xxxx'x performance of his assigned duties for a
period in excess of six months), then, as of the date of such termination
for breach of covenant, resignation, retirement, death, or determination of
disability, the Company shall
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no longer have any further obligation to pay the Salary or, except as
otherwise provided herein, other compensation otherwise required by Section
2 of this Agreement.
(ii) Termination of Employment for Any Other Reason. Xx. Xxxx'x
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employment and this Agreement may be terminated by action of the Board of
Directors upon 30 days' written notice specifying that the basis for
termination is any reason other than (a) resignation, (b) retirement, (c)
death, (d) disability, or (e) termination for breach of covenant (all as
defined in Section 3(A)(i) of this Agreement), which reasons may include
without limitation the Board of Directors' choice of another executive to
perform Xx. Xxxx'x duties, or the reorganization of the Company or its
management.
(iii) No Other Rights of Termination. This Agreement can be
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terminated by the Company or the Board of Directors only as provided in
Section 3(A)(i) and (ii) above.
(b) Benefits upon Termination. In the event Xx. Xxxx'x employment is
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terminated by the Company due to death or disability (as defined in Section
3(A)(i); or by action of the Board of Directors pursuant to Section
3(A)(ii); or in the event that Xx. Xxxx chooses to terminate his employment
within 30 days after any one or more of the following changes by the Company
or the Board of directors in his terms of employment; a reduction in Base
Salary below $1,000,000.00, an action of the Board of Directors pursuant to
which Xx. Xxxx ceases to serve as Chairman of the Board and Chief Executive
Officer, or an action of the Board of Directors pursuant to which Xx. Xxxx
ceases to serve as President of the Company without his written consent:
(i) The Company shall pay Xx. Xxxx, immediately upon termination of
Xx. Xxxx'x employment:
(1) a lump sum amount which shall be computed on the basis of the
definition of actuarial equivalent specified in the Retirement Plan for
Salaried Employees of Cyprus Amax Minerals Company ("Retirement Plan"),
equal to the additional retirement benefit that would have been received by
Xx. Xxxx under the Retirement Plan as if he had remained employed until
December 31, 2000, and
(2) the full benefit that would have been received under the SERP, the
Cyprus Amax Minerals Company Full Retirement Benefit Plan for Certain
Salaried Employees, Cyprus Amax Minerals Company Restorative Benefits Plan
for Salaried Employees, and Cyprus Amax Minerals Company 415 Limitation Plan
for Salaried Employees, or such benefits under successor plans, if
applicable, in each case calculated for all purposes as if Xx. Xxxx had
remained in the employment of the Company until December 31, 2000 and as if
Xx. Xxxx retired as of that date and elected to receive payment immediately
upon termination. Such calculation of benefit shall be based on the higher
of the average of the final five complete calendar years of Xx. Xxxx'x
compensation preceding termination or Xx. Xxxx'x compensation for the
calendar year preceding the year of termination, as the term "compensation"
is defined in the applicable plans, plus in either case the value in each
year of any and all restricted stock granted to Xx. Xxxx pursuant to Section
3(B), of the now ineffective Employment Agreement dated as of May 14, 1992
between Xx. Xxxx and Cyprus Minerals Company valued as of the date of
vesting, provided, however, that for purposes of determining benefits
payable pursuant to the SERP, calculations of benefits shall be determined
by reference to Final Average Pay. For purposes of computing the additional
benefit under the Full Retirement Benefit Plan, the additional Full
Retirement Benefit Plan credited service computation will include the
additional period of Benefit Service deemed to have been credited under the
Retirement Plan for purposes of computing the additional benefits under the
Retirement Plan.
(ii) The Company shall also pay to Xx. Xxxx, immediately upon
termination of Xx. Xxxx'x employment, a cash payment equal to the amount of
his then current Base Salary from the date of termination until December 31,
2000, plus a bonus payment both for the period prior to termination of
employment in respect of which no bonus has yet been paid and for the period
from the date of
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termination until December 31, 2000, calculated at the average of the annual
bonus payments previously paid to him for the prior three years. Such
payments shall be in lieu of any and all payments to which Xx. Xxxx would
otherwise be entitled under the Salaried and Non-Represented Hourly
Severance Plan or any successor plan or policy.
(iii) Xx. Xxxx shall be entitled to outplacement services provided by
a firm of Xx. Xxxx'x choice at a cost to the Company of up to fifteen
percent of then current Base Salary plus one year of bonus computed as
provided in Section 3(B)(ii). Further, commencing upon termination, Xx. Xxxx
shall be entitled to receive any and all welfare benefits applicable to
retirees, as though Xx. Xxxx had been eligible to retire and had retired as
of the termination date at the age and with the years of service used to
calculate the additional retirement benefit, pursuant to Section 3(B)(i)
above.
(iv) This Section 3(B) shall not in any way duplicate any benefit,
or alter the manner in which or time at which benefits are paid, pursuant to
any qualified plans maintained by the Company.
In the event that benefits are paid to Xx. Xxxx under Section
3(B)(i)(b) of this Agreement, this Agreement shall, effective as of the date
payment is made to Xx. Xxxx under this Agreement, operate as an amendment of
each of the Cyprus Amax Minerals Company Full Retirement Benefit Plan for
Certain Salaried Employees, the Cyprus Amax Company Restorative Benefits Plan
for Salaried Employees, and the Cyprus Amax Minerals Company 415 Limitation Plan
for Salaried Employees, which amendment provides that payment of such benefits
under this Agreement, to the extent such payments are equal to or in excess of
the benefits accrued and payable under the respective Plan as of the date of Xx.
Xxxx'x termination of employment triggering such payment of benefits under this
Agreement, constitute payment and satisfaction in full of any obligation the
Company may have to pay benefits under the respective Plan.
(v) To the extent legal counsel designated by the Company (which
counsel may or may not be an employee of the Company) shall have determined
that in his or her opinion to do so would neither (a) conflict, in effect,
with the Management Incentive Program or any successor plan nor (b) violate
or create any valid claim under any law or regulation (including any rule of
any securities market) applicable to either the Company or Xx. Xxxx, the
Company shall permit Xx. Xxxx to exercise stock options granted pursuant to
the Program, or any successor plan, or stock appreciation rights, if any,
granted in tandem with those options, for a period which shall end three
years following such date of termination. Unless the matters shall have
already been determined in a manner which the Company deems dispositive, if
the Company gives notice of termination to Xx. Xxxx under Section 3(A)(ii)
of this Agreement or receives notice of termination from Xx. Xxxx under
Section 3(B) of this Agreement, the Company shall promptly request legal
counsel to determine the matters specified in the preceding sentence and no
payment, if any, shall be made to Xx. Xxxx pursuant to this paragraph (v)
until such determination shall have been received by the Company.
Notwithstanding the first textual paragraph of this Section 3, Section
3(B), together with other Sections of this Agreement to the extent cross
reference therein, shall survive any termination of this Agreement by the
Company pursuant to 3(A)(ii).
Following such termination, the referenced provisions shall remain in
effect until the Company and Xx. Xxxx may otherwise mutually agree.
4. XX. XXXX'X COVENANTS. While employed by the Company pursuant to this
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Agreement, Xx. Xxxx agrees to perform faithfully and competently the duties
of Chairman of the Board of Directors, President and Chief Executive Officer
of the Company, and such other duties as may be requested by the Board of
Directors, which duties shall be commensurate generally with his duties as
of the
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date of this Agreement, and to perform such services as typically are
performed by persons holding such positions in comparable companies. Xx.
Xxxx agrees to devote his full time and all of his attention and skill
faithfully, diligently, and loyalty to the proper performance of his duties
hereunder. Xx. Xxxx agrees to comply with all applicable laws and
regulations materially affecting his position of which he is aware and to
follow all lawful directions of the Company's Board of Directors. During the
term of this Agreement, Xx. Xxxx agrees not to serve in any capacity with
another company, partnership, or organization, or to retain any fees,
income, profit, or compensation therefrom, if such activities would violate
any conflict-of-interest policy adopted by the Company or if such company,
partnership, or organization is a competitor of the Company in any of its
operations.
Xx. Xxxx agrees that he will not divulge or appropriate for his own
use, or for the use of any third party, any confidential, proprietary or
sensitive information of a material nature (including without limitation, trade
secrets, know-how, technical data including computer programs, financial data,
customer or vendor lists, personnel information, planning data and projections,
and any information received from third parties under disclosure restrictions),
discovered, developed, or obtained by him during the course of his employment,
concerning methods, processes, designs, equipment, and operating procedures of
the Company, which confidentiality requirement shall survive the termination of
this Agreement and Xx. Xxxx'x employment hereunder for a period of three years.
Xx. Xxxx hereby acknowledges the Company's right to possession of and title in
and to all papers, documents, or other materials prepared by Xx. Xxxx or
provided to him by reason of his employment by the Company. Upon termination of
his employment, Xx. Xxxx shall promptly deliver to the Company all materials
relating to the business of the Company which are in his possession or are under
his control.
The Company and Xx. Xxxx agree that the remedies available at law for
any breach by Xx. Xxxx of his covenants in this Section 4 will be inadequate and
that the Company also shall be entitled to injunctive relief in any action
brought to enforce those covenants.
5. SUCCESSORS. This Agreement, and the rights and obligations created hereby,
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shall be binding upon and shall inure to the benefit of Cyprus Amax Minerals
Company and all of its successors and assigns (whether by merger or
otherwise).
6. ATTORNEY'S FEES AND INTEREST. The Company shall reimburse Xx. Xxxx for
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any and all reasonable attorney's fees and expenses incurred by Xx. Xxxx in
litigation in respect of this Agreement in which a final determination is
made that the Company has breached any provision of the Agreement, and shall
pay to Xx. Xxxx any and all prejudgment interest awarded for delayed
payments by the Company under the Agreement.
7. NO DUPLICATION OF PAYMENTS. The payments provided in Sections 3(B)(i), (ii)
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and (iii) hereof are not intended to be in addition to similar payments and
benefits made under any other agreement, including any employment agreement
covering a change of control. Accordingly, in such circumstances Xx. Xxxx
shall be entitled to the larger of the payments and the better of the
benefits under this Agreement or any other employment agreement but not to
both.
8. MISCELLANEOUS.
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(a) The Agreement shall supersede any and all prior agreements of contracts
between Xx. Xxxx and the Company concerning the subject matter hereof,
including without limitation that letter agreement dated as of May 9, 1992
and that Employment Agreement dated as of May 14, 1992 between the parties
hereto.
(b) This Agreement may be rescinded, revoked, or amended only by a written
instrument signed by both parties, with the approval of the Board of
Directors. The failure of either party to insist
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xxxx xxxxxx compliance with any of the terms, conditions, and covenants
hereof shall not be deemed a waiver of that or any similar right or power at
any subsequent time.
(c) The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(d) Nothing in this Agreement shall be interpreted to limit the right of the
Company to amend or terminate any existing or future benefit plan or
program.
(e) Any written notice required or permitted to be given hereunder is
sufficient if sent by registered mail or delivered by hand, to the Company
at its main place of business, or to Xx. Xxxx at his home address as
reflected in Company records.
(f) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of
this Agreement.
(g) This Agreement is to be governed and construed in accordance with the
laws of the state of Colorado, excluding any conflict of laws or provisions
thereof which would cause the laws of any other state to be applicable
hereto.
IN WITNESS WHEREOF, Xx. Xxxx has signed this Agreement, and the Company has
caused its duly authorized representative to sign this Agreement, in each case
as of the date first written above.
CYPRUS AMAX MINERALS COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chairman, Compensation and
Benefits Committee
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
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