Exhibit 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the " Agreement" ) dated April 25, 2008 between Intrepid Potash Inc., a Delaware corporation, having its principal executive offices in Denver, Colorado, (the " Company" ) and Hugh E. Harvey, Jr. (" Executive" ). RECITALS
A. Executive is a senior executive of Intrepid Mining LLC (" Intrepid Mining" ), a Delaware limited liability company that owns and operates potash mining and processing facilities in Utah and
New Mexico and that produces and markets potash related products and by-products.
B. On December 20, 2007, the Company filed a registration statement on Form S-1 with respect to the initial sale of shares of its common stock to the public (the " IPO" ).
C. Shortly prior to the closing of the IPO, Intrepid Mining will contribute its assets to the Company and the Company will thereafter conduct the business formerly conducted by Intrepid Mining and employ those individuals formerly employed by Intrepid Mining (the " Formation Transaction" ).
D. In connection with the IPO, the Company and Executive wish to enter into an employment agreement to memorialize the terms and conditions of Executive' s employment as Executive Vice President of Technology of the Company on and after the IPO.
AGREEMENT
In consideration of the mutual promises and agreements set forth below, the Company and Executive agree as follows:
1. TERM OF EMPLOYMENT : Subject to the terms of this Agreement, the Company agrees to employ Executive, and Executive hereby accepts such employment, effective as of the date of the Formation Transaction (the " Effective Date" ). Executive' s employment shall be for a term of eighteen months, subject to earlier termination as provided in paragraph 4, herein (the " Term" ); provided, however, that the Term will automatically be extended by twelve months on the last day of the initial eighteen month term and on each anniversary of such date thereafter, unless one party to this Agreement provides written notice of non-renewal to the other party at least 90 days prior to the effective date of such automatic extension.
2. POSITION AND DUTIES : a. Position : Executive shall serve as Executive Vice President of Technology of the Company and shall have the same duties, responsibilities, and authority as he had in his employment capacity with Intrepid Mining immediately prior to the IPO, along with such other duties, responsibilities and authority as the Company' s Board of Directors (the " Board" ) may establish. Executive shall report directly to the Board and shall perform his duties and responsibilities primarily at the Company' s offices in Denver, Colorado. b. Commitment of Executive : Executive shall devote substantially his full business time, energy, and ability to the business of the Company and its subsidiaries; provided, however, that Executive shall be entitled to remain actively involved in the management and operation of Intrepid Oil and Gas, LLC and the other investment entities owned in whole or in part by Executive as of the Effective Date, to the extent such activities do not interfere materially with the performance of Executive' s duties and responsibilities hereunder. Except as may otherwise be permitted by this Agreement or with the prior express authorization of the Board, Executive shall not render business or professional services to any other person or firm, whether for compensation or otherwise. c. Other Positions and Services : Executive may, if such activities do not interfere materially with the performance of Executive' s duties and responsibilities hereunder, (i) continue to serve as a director or trustee of the other for-profit corporations or businesses for which he is serving as a director or trustee on the Effective Date, (ii) with the prior approval of the Board, serve as a director or trustee of other for profit corporations or businesses, provided, that if the Board later determine that it no longer approves of the directorship, it shall notify Executive in writing and Executive shall resign such directorship within a reasonable period of time, (iii) serve on civic or charitable boards or committees, and (iv) deliver lectures, fulfill speaking engagements, or teach at educational institutions (and retain any fees therefrom).
d. Investments : Executive may invest in other businesses (an " Investment" ); provided , that the Investment shall not (i) pose a conflict of interest with regard to Executive' s employment hereunder, (ii) require Executive' s active involvement in the management or operation of such Investment (recognizing that Executive shall be permitted to monitor and oversee the Investment), except as permitted in 2(b), above, or (iii) interfere materially with the performance of Executive' s duties and obligations hereunder. For the purposes of clause (i) of the preceding sentence, Executive shall not be deemed to be subject to a conflict of interest merely by reason of (i) his ownership of Intrepid Oil and Gas, LLC and the other investment entities owned in whole or in part by Executive as of the Effective Date, or (ii) his ownership of less than five percent (5%) of (A) the outstanding stock of any entity whose stock is traded on an established stock exchange or on the
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National Association of Securities Dealers Automated Quotation System, or (B) the outstanding equity interests of any venture fund, investment pool or similar investment vehicle that solicits investments on a " blind pool" basis.
e. No Conflict : Executive represents and warrants that the execution of this Agreement and performance of his duties hereunder will not conflict with or constitute a default under any contract or legal obligation he owes to any third party. 3. COMPENSATION AND BENEFITS : The Company shall compensate Executive for his services as set forth in this paragraph 3 with the objective of compensating the Executive at levels consistent with similarly situated executives at peer companies; provided that the Company may change from time to time the terms and benefits of any retirement, welfare or fringe benefit plan of the Company, including the right to change any service provider, so long as such change applies generally to the senior executives of the Company.
a. Salary : The Company shall pay Executive a base salary of $487,500 per annum (the " Base Salary" ) in periodic installments in accordance with the Company' s payroll practices. Amounts payable shall be reduced by standard withholding and other authorized deductions. The Compensation Committee of the Board (the " Compensation Committee" ) will review Executive' s salary at least annually and may increase (but not decrease) the Base Salary. Executive' s salary as so adjusted shall thereafter be treated as Executive' s Base Salary hereunder.
b. Cash Bonus / Short-Term Incentives : Executive shall be eligible to receive annual bonuses/short-term cash incentives in accordance with the Company' s annual cash bonus/short-term incentive program(s) for senior management, as such program(s) may be modified from time to time.
c. Equity Compensation .
(i) General . On or around the completion of the IPO, the Company will adopt an equity incentive plan for the benefit of its eligible service providers (the " 2008 Equity Plan" ). Executive shall be entitled to participate in the 2008 Equity Incentive Plan and any subsequent equity compensation programs sponsored by the Company or its subsidiaries (the " Equity Plans" ) on such terms as shall be established by the Compensation Committee in its sole discretion. (ii) Change of Control . All grants made under the Equity
Incentive Plansshall vest in full immediately prior to the occurrence of a Change of Control. For purposes of this Agreement, a Change of Control means: (A) the acquisition by any individual, entity, or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the " Exchange Act" )) (a " Person" ) of " beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the combined
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voting power of the Company' s then outstanding securities entitled to vote generally in the election of directors, other than any acquisition (1) directly from, or by, the Company, (2) by a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, or (3) by Robert P. Jornayvaz III, Hugh E. Harvey Jr. or J. Landis Martin (collectively the " Principals" ), or by any " group" (within the meaning of Section 13(d)(3) of the Exchange Act) that is controlled by one or more of the Principals; (B) the individual directors of the Board as of the Effective Date (the " Incumbent Directors" ) cease to constitute at least two-thirds of the Board; provided, however, that for purposes of this paragraph, any new director whose election by the Board or nomination for election by the Company' s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered an Incumbent Director; (C) consummation, in one transaction or a series or related transactions, of a reorganization, merger, or consolidation of the Company or sale or other disposition, direct or indirect, of all or substantially all of the assets of the Company (a " Business Combination" ), in each case, unless, following such Business Combination, the Persons who were the " beneficial owners" of outstanding voting securities of the Company immediately prior to such Business Combination " beneficially own," by reason of such ownership of the Company' s voting securities immediately before the Business Combination, more than 50% of the combined voting power of the company resulting from such Business Combination (including, without limitation, a company which as a result of such transaction owns the Company or all or substantially all of the Company' s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such Business Combination; or (D) approval by those Persons holding the voting securities of the Company of a complete liquidation or dissolution of the Company. A Person will not be deemed to be a member of a " group" for purposes of this definition solely by virtue of becoming party to an agreement with one or more Principals that requires such Person to vote the voting stock of the Company in a manner specified by the Principals.
d. Retirement Plans : Executive shall be entitled to participate in all retirement plans applicable generally to other senior executives of the Company, in accordance with the terms of such plans, as they may be amended from time to time.
e. Welfare Benefit Plans : Executive and his family shall be eligible to participate in and receive all benefits under the Company' s welfare benefit plans and programs applicable generally to other senior executives of the Company (collectively, as amended from time to time, the " Company Plans" ), in accordance with the terms of the Company Plans.
f. Vacation and Sick Leave : Executive shall be entitled to vacation, sick leave, and paid time off in accordance with the plans, policies, and programs in effect generally with respect to other senior executives of the Company, including the limitations, if any, on the carry-over of accrued but unused time.
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g. Expenses : The Company shall reimburse Executive for reasonable expenses for cellular telephone usage, entertainment, travel, meals, lodging, and similar items incurred in the conduct of the Company' s business. Such expenses shall be reimbursed in accordance with the Company' s expense reimbursement policies and guidelines.
h. Fringe Benefits and Perquisites . Executive and his family shall be eligible for all other fringe benefits or perquisites offered generally to senior executives of the Company and their families. In addition, Executive shall be entitled to (i) use of a company-provided automobile of his choice valued at no more than $75,000, (ii) personal use of the Company aircraft to the extent such use does not interfere with the Company' s use of the aircraft for business purposes, and (iii) the right to use the company aircraft (either directly or through one or more entities controlled, directly or indirectly, by Executive) under a time-sharing arrangement pursuant to which Executive will reimburse the Company for the cost of such use up to limits imposed by Federal Aviation Administration regulations.
i. Officers and Directors Liability Insurance; Indemnification : During Executive' s employment with the Company and thereafter so long as Executive may have liability arising out of Executive' s service as an officer or director of the Company or any subsidiary, the Company will continue and maintain directors and officers liability insurance (" D&O Insurance" ) covering Executive in an amount and scope that is at least as favorable as the coverage applicable to the officers and employees of Intrepid Mining as of the date hereof; provided, however, that if such a policy cannot be procured for a premium equal to or less than the premium paid for the year in which the Effective Date occurs, the Company shall procure an insurance policy with the greatest coverage and scope procurable for such premium.
4. TERMINATION : This Agreement may be terminated by the Company or Executive prior to the expiration of the Term pursuant to this paragraph 4.
a. Cause : The Company may terminate this Agreement for " Cause" immediately upon written notice to Executive. For purposes of this Agreement, " Cause" shall mean any one or more of the following events:
(i) conviction of (or pleading nolo contendere to) a felony;
(ii) engaging in theft, fraud, embezzlement, or willful misappropriation of the property of the Company;
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(iii) violation of any Company policy or practice regarding discrimination or harassment that would be grounds for termination of a Company employee in general;
(iv) Executive' s willful failure to perform substantially Executive' s material duties as contemplated by paragraph 2 above (other than such failure resulting from incapacity due to physical or mental illness), which, for avoidance of doubt, shall include Executive' s insubordination to the Board, after (i) a written demand for corrected performance is delivered to Executive by the Board that identifies specifically the manner in which the Board believes Executive has not performed substantially Executive' s material duties, and (ii) Executive fails to cure the matters identified in the written demand within 30 days. No act or failure to by Executive shall be deemed " willful" if done, or omitted to be done, by him in good faith and with the reasonable belief that his action or omission was in the best interest of the Company.
b. Death or Disability : If Executive has a Disability (as defined below), the Company may give to Executive written notice of its intention to terminate this Agreement. In such event, this Agreement shall terminate effective on the 30th day after receipt of such notice by Executive, provided that Executive shall not have returned to full-time performance of Executive' s material duties within the 30-day period after such receipt. For purposes of this Agreement, " Disability" shall mean any physical or mental condition which prevents Executive, for a period of 90 consecutive days, from performing and carrying out Executive' s material duties and responsibilities with the Company, as determined by the Board. This Agreement shall terminate automatically upon Executive' s death.
c. Other than Death or Disability or Cause : The Company may terminate this Agreement upon thirty (30) days written notice to Executive at any time and for any reason. d. Termination by Executive : Executive may terminate this Agreement upon thirty (30) days written notice to the Company at any time and for any reason.
e. Survival of Terms : Portions of this Agr ...