THIS AGREEMENT is
entered into as of April 1, 1999, by and between Stephen W.
Solomon (the “Employee”) and THE ST. JOE COMPANY, a
Florida corporation (the “Company”).
This
Agreement shall remain in effect from the date hereof
until:
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a)
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The
date when the Company has met all of its obligations under this
Agreement following a termination of the Employee’s
employment with the Company for a reason described in
Section 5.
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2.
Definition of Change in Control.
For all purposes
under this Agreement, “Change in Control” shall mean
the occurrence of any of the following events after the date of
this Agreement:
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a)
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The
consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if 50%
or more of the combined voting power, directly or indirectly, of
the continuing or surviving entity’s securities outstanding
immediately after such merger, consolidation or other
reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization;
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b)
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The
sale, transfer, exchange or other disposition of all or
substantially all of the Company’s assets;
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c)
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A
change in the composition of the Board, as a result of which fewer
than two-thirds of the incumbent directors are directors who either
(i) had been directors of the Company on the date
24 months prior to the date of the event that may constitute a
Change in Control (the “original directors”) or
(ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate
of the original directors who were still in office at the time of
the election or nomination and the directors whose election or
nomination was previously so approved;
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d)
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The
liquidation or dissolution of the Company; or
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e)
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Any
transaction as a result of which any person is the
“beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing at 25% of the
total voting power represented by the
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Company’s then outstanding
voting securities. For purposes of this Paragraph (e), the term
“person” shall have the same meaning as when used in
sections 13(d) and 14(d)of such Act but shall exclude (i) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a. parent or subsidiary of the
Company, (ii) a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company,
(iii) the Alfred I. duPont Testamentary Trust and
(iv) the Nemours Foundation.
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A transaction
shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create
a holding company that will be owned in substantially the same
proportions by the persons who held the Company’s securities
immediately before such transaction.
3.
Definition of Good Reason.
For all
purposes under this Agreement, “Good Reason” shall mean
that the Employee:
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a)
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A
demotion in title with the Company from that in effect immediately
prior to the Change in Control which demotion results in a
substantial and material reduction in responsibilities with the
Company from those in effect immediately prior to the Change in
Control;
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b)
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Has
incurred a reduction in his total compensation as an employee of
the Company (consisting of base salary and maximum bonus
potential);
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c)
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Has
been notified that his principal place of work as an employee of
the Company will be relocated outside the Jacksonville, Florida
area; or
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d)
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Is
employed by a successor to the Company that has failed to comply
with Section 10(a).
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4.
Definition of Continuation Period.
For all purposes
under this Agreement, “Continuation Period” shall mean
the period commencing on the date when the termination of the
Employee’s employment under Section 5 is effective and
ending on the earlier of:
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a)
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The
later of (1) the date 36 months after the date when the
employment termination was effective; or
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b)
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The
date of the Employee’s death.
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5.
Entitlement to Severance Pay and Benefits.
The Employee shall
be entitled to receive the severance pay described in
Section 6 and the benefits in sections 7 and 8 from the
Company if, and only if, one of the following events
occurs:
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a)
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Within the period which is the last
six months of the first year after the occurrence of a Change in
Control, the Employee voluntarily resigns the Employee’s
employment for any reason;
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b)
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Within the first 36 month
period after the occurrence of a Change in Control, the Employee
voluntarily resigns the Employee’s employment for Good
Reason; or
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c)
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Within the first 36 month
period after the occurrence of a Change in Control, the Company
terminates the Employee’s employment for any
reason.
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The
determination of whether the Employee’s employment has
terminated shall be made without regard to whether the Employee
continues to provide services to the Company as a member of its
Board of Directors or otherwise in the capacity of an independent
contractor. A transfer of the Employee’s employment from the
Company to a successor of the company shall not be considered a
termination of employment, if such successor complies with the
requirements of Section 10(a).
6. Amount
of Severance Pay .
Within five
business days after the termination of the Employee’s
employment under Section 5, the Company shall pay the Employee
a lump sum equal to the product of:
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a)
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The
number of years (with a partial year counted as the appropriate
fraction) between the date of the termination of the
Employee’s employment under section 5 and the later of
(1) the date 36 months after the date of the employment
termination times:
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b)
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The
sum of:
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(i)
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The
Employee’s base compensation at the greater of (A) the
annual rate in effect on the date when the termination of the
Employee’s employment with the Company is effective or
(B) the annual rate in effect on the date of the Change in
Control; plus
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(ii)
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The
greater of (A) the Employee’s annual bonus for the most
recent year completed prior to the date when the termination
of
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the
Employee’s employment with the Company is effective or (B)
the amount of the Employee’s maximum bonus potential then in
effect, provided, however, that if the employee has earned a bonus
for any three completed years prior to the date when termination of
the Employee’s employment with the Company is effective, then
this paragraph (ii) shall be the average of the three most
recent completed years for which a bonus was earned.
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7.
Supplemental Pension Benefit .
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a)
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Payment of Benefit
. In the event of an
employment termination described in section 5, in lieu of accruing
additional pension benefits under the Company’s Salaried
Employees Pension Plan and any other funded or unfunded
defined-benefit pension plans now or hereafter maintained by the
Company (collectively, the “Pension Plans”) during the
Continuation Period, the Employee shall be entitled to receive an
unfunded supplemental pension benefit under this Agreement (the
“Supplemental Benefit”). The Supplemental Benefit shall
be calculated under Subsection (b) below and shall be paid in
a lump sum within five business days after a termination of the
Employee’s employment under Section 5.
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b)
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Calculation of Benefit
. The Supplemental
Benefit shall be the actuarial equivalent of a monthly pension
benefit equal to the difference between:
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(i)
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The
amount of the hypothetical monthly pension benefit that would be
payable to the employee as a single-life annuity under the Pension
Plans had the Employee (A) continued to be employed as an employee
of the Company during the Continuation Period and (B) received
compensation equal to the amount described in Section 6(b) during
the Continuation Period; minus
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(ii)
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the
amount of the actual monthly pension benefit payable to the
Employee as a single-life annuity under the Pension
Plans.
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For purposes of
this subsection (b), actuarial equivalence shall be determined by
applying the actuarial assumptions then set forth in the
Company’s principal funded pension plan for salaried
employees.
8. Stock,
Bonus, Group Insurance and Outplacement Services.
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a)
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Stock Options and Stock Subject to
Repurchase .
In the event of a Change in Control, (i) all stock options
granted to the Employee by the Company before or after the date of
this Agreement shall immediately become exercisable in full
(regardless of whether such stock options
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previously were vested} and
(ii) any right of the Company to repurchase shares of its
Common Stock from employee shall immediately
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