exv10w12






Exhibit 10.12




SEVERANCE AGREEMENT




     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”).



     1. Term of Agreement



         This Agreement shall remain in effect from the date hereof until:




	 	a)	 	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.





     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:




	 	a)	 	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;
	 
	 	b)	 	The sale, transfer, exchange or other disposition of all or substantially all
of the Company’s assets;
	 
	 	c)	 	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;
	 
	 	d)	 	The liquidation or dissolution of the Company; or
	 
	 	e)	 	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




 









 






	 	 	 	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.




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:




	 	a)	 	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;
	 
	 	b)	 	Has incurred a reduction in his total compensation as an employee of the Company
(consisting of base salary and maximum bonus potential);
	 
	 	c)	 	Has been notified that his principal place of work as an employee of the Company
will be relocated outside the Jacksonville, Florida area; or
	 
	 	d)	 	Is employed by a successor to the Company that has failed to comply with
Section 10(a).





     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:




	 	a)	 	The later of (1) the date 36 months after the date when the employment
termination was effective; or
	 
	 	b)	 	The date of the Employee’s death.




 









 











     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:




	 	a)	 	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;
	 
	 	b)	 	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
	 
	 	c)	 	Within the first 36 month period after the occurrence of a Change in Control, the
Company terminates the Employee’s employment for any reason.




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:




	 	a)	 	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:
	 
	 	b)	 	The sum of:






	 	(i)	 	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
	 
	 	(ii)	 	The greater of (A) the Employee’s annual bonus
for the most recent year completed prior to the date when the termination
of




 









 






	 	 	 	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.





     7. Supplemental Pension Benefit.




	 	a)	 	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.

	 
	 	b)	 	Calculation of Benefit. The Supplemental Benefit shall be the actuarial
equivalent of a monthly pension benefit equal to the difference between:







	 	(i)	 	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
	 
	 	(ii)	 	the amount of the actual monthly pension
benefit payable to the Employee as a single-life annuity under the Pension Plans.




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.




	 	a)	 	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





 









 






	 	 	 	previously were vested} and (ii) any right of the Company to repurchase shares of
its Common Stock from employee shall immediately lapse in full. Following a
termination of the Employee’s employment under Section 5, the Employee shall
remain entitled to exercise each stock option granted to the Employee by the
Company before or after the date of this Agreement until the earlier of (i) the
first anniversary of the employment termination date or (ii) the date when such
option would have expired by its terms if the Employee’s employment had not
terminated.
	 
	 	b)	 	Bonus. In the event of an employment termination described in Section 5, the
Company shall pay the Employee a bonus for the year in which such termination
occurs. Such bonus shall not be less than the greater of (i) the Employee’s annual
bonus for the most recent year completed prior to the date when the termination of
the Employee’s employment with the Company is effective or (ii) the amount of the
Employee’s maximum bonus potential then in effect, in either case prorated to
reflect the portion of such year during which the Employee was employed by the
Company.

	 
	 	c)	 	Group Insurance. During the Continuation Period, the Employee (and, where
applicable, the Employee’s dependents) shall be entitled to continue participation
in the group insurance plans maintained by the Company, including life, disability
and health insurance programs, at the Company’s expense. Where applicable, the
Employee’s salary for purposes of such plans shall be determined at the greater of
(i) the annual rate in effect on the date when the termination of the Employee’s
employment with the company is effective or (ii) the annual rate in effect on the
date of the Change in Control. To the extent that the Company finds it impossible to
cover the Employee under its group insurance policies during the Continuation
Period, the Company shall provide the Employee with individual policies which offer
at least the same level of coverage and which impose not more than the same costs on
the Employee. The foregoing notwithstanding, in the event that the Employee becomes
eligible for comparable group insurance coverage in connection with new employment,
the coverage provided by the Company under this Subsection (c) shall terminate
immediately. Any group health continuation coverage that the
Company is required to offer under the Consolidate Omnibus Budget Reconciliation
Act of 1986 shall commence when coverage under this Subsection (a) terminates.

	 
	 	d)	 	Outplacement Services. If one of the events described in Section 5 has occurred,
the Employee shall be entitled to senior-executive level outplacement services at
the Company’s expense. Such services shall
be provided by a firm selected by the Employee from a list compiled by the
Company.





 









 











     9. Excise Taxes.




	 	a)	 	Gross-Up Payment. If it is determined that any payment or distribution of any
type to or for the benefit of the Employee by the Company, any of its affiliates,
any person who acquires ownership or effective control of the Company or ownership
of a substantial portion of the Company’s assets (within the meaning of section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
thereunder) or any affiliate of such person, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise (the “Total
Payments”), would be subject to the excise tax imposed by section 4999 of the Code
or any interest or penalties with respect to such excise tax (such excise tax and
any such interest or penalties are collectively referred to as the “Excise Tax”),
then the Employee shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount calculated to ensure that after payment by the Employee of
all taxes (and any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments. Payments under his section are payable to the Employee, even if the
Employee is not eligible for employment termination benefits under this Agreement.
	 
	 	b)	 	Determination by Accountant. All determinations and calculations required to be
made under this Section 9 shall be made by an independent accounting firm selected
by the Employee from among the largest six accounting firms in the United States
(the “Accounting Firm”), which shall provide its determination (the
“Determination”), together with detailed supporting calculations regarding the
amount of any Gross-Up Payment and any other relevant matter, both to the company
and the Employee within five days of the termination of the Employee’s employment,
if applicable, or such earlier time as is requested by the Company or the Employee
(if the Employee reasonably believes that any of the Total Payments may be subject
to the Excise Tax). If the Accounting firm determines that no Excise Tax is payable
by the Employee, it shall furnish the Employee with a written statement that such
Accounting Firm has concluded that no Excise Tax is payable (including the reasons
therefor) and that the Employee has substantial authority not to report any Excise
Tax on the Employee’s federal income tax return. If a gross-Up payment is determined
to be payable, it shall be paid to the Employee within five days after the
Determination is delivered to the Company or the
Employee. Any determination by the Accounting Firm shall be binding Upon the
Company and the Employee, absent manifest error.




 









 






	 	c)	 	Over- and Underpayments. As a result of uncertainty in the application of section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the Company should have
been made (“Underpayment”), or that Gross-Up Payments will have been made by the
Company which should not have been made (“Overpayments”). In either such event, the
Accounting Firm shall determine the amount of the Underpayment or Overpayment that
has occurred. In the case of an Underpayment, the amount of such Underpayment shall
be promptly paid by the Company to or for the benefit of the Employee.
In the case of an Overpayment, the Employee shall, at the direction and expense
of the Company, take such steps as are reasonably necessary (including the filing
of returns and claims for refund), follow reasonable instructions from, and
procedures established by, the Company, and otherwise reasonably cooperate with
the Company to correct such Overpayment, provided, however, that (i) the Employee
shall in no event be obligated to return to the Company an amount greater than
the net after-tax portion of the Overpayment that the Employee has retained or
has recovered as a refund from the applicable taxing authorities and (ii) this
provision shall be interpreted in a manner consistent with the intent of
Subsection (a) above, which is to make the Employee whole, on an after-tax basis,
from the application of the Excise Tax, it being understood that the correction
of an Overpayment may result in the Employee’s repaying to the Company an amount
which is less that the Overpayment.
	 
	 	d)	 	Limitation on Parachute Payments. Any other provision of this Section 9
notwithstanding, if the Excise Tax could be avoided by reducing the Total Payments
by $50,000 or less, then the Total Payments shall be reduced to the extent necessary
to avoid the Excise Tax and no Gross-Up Payment shall be made. If the Accounting
Firm determines that the total Payments are to be reduced under the preceding
sentence, then the Company shall promptly give the Employee notice to that effect
and a copy of the detailed calculation thereof. The Employee may then elect, in the
Employee’s sole discretion, which and how much of the total Payments are to be
eliminated or reduced (as long as after such election no Excise Tax will be payable)
and shall advise the Company in writing of the Employee’s election within 10 days of
receipt of notice. If no such election is made by the Employee within such 10 day
period, then the Company may elect which and how much of the total Payments are to
be eliminated or reduced (as long as after such election no Excise Tax
will be payable) and shall notify the Employee promptly of such election.




 









 











     10. Successors.




	 	a)	 	Company’s Successors. The Company shall require any successor (whether direct or
indirect by purchase, lease, merger, consolidation, liquidation or otherwise) to all
or substantially all of the Company’s business or assets, by an agreement in
substance and form satisfactory to the Employee, to assume this Agreement and to
agree expressly to perform this Agreement in the same manner and to the same extent
as the Company would be required to perform it in the absence of a succession. F or
all purposes under this Agreement, the term
“Company” shall include any successor to the business or assets of the Company
which executes and delivers the assumption agreement described in this
Subsection (a) or which becomes bound by this Agreement by operation of law.






	 	b)	 	Employee’s Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.





     11. Miscellaneous Provisions.




	 	a)	 	Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to the Employee at the home address which the
Employee most recently communicated to the Company in writing. In the case of
the Company, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be directed to the attention of its Secretary.
	 
	 	b)	 	Waiver. No provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by
the Employee and by an authorized officer of the Company (other than the Employee).
No waiver by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of any
other condition or provision or of the same condition or provision at another time.
	 
	 	c)	 	Other Agreements; Amendments. This Agreement does not supersede the
Employment Agreement dated April 1, 1999, between




 









 






	 	 	 	the Employee and the company, except to the extent that the severance pay and
benefits provided in Sections 6, 7 and 8 of this Agreement (and the related
definitions) are greater than the severance pay and benefits provided by such
Employment Agreement. In no event shall the Employee be entitled to severance pay
both under this Agreement and under such Employment Agreement following a
termination of employment. This Agreement does not supersede any stock option or
restricted stock agreement between the Employee and the Company, except to the
extent that Section 8(a) of this Agreement provides for earlier exercisability or
vesting or a longer post-termination exercise period than such stock option or
restricted stock agreement. This Agreement may be amended only in writing, by an
instrument executed by both parties.
	 
	 	d)	 	No Setoff; Withholding Taxes. There shall be no right of setoff or counterclaim,
with respect to any claim, debt or obligation, against payments to the Employee
under this Agreement. Except as provided in Section 9, all payments made under this
Agreement shall be subject to reduction to reflect taxes required to be withheld by
law. The payments received under this Agreement shall be in lieu of, and not in
addition to, any payments received in connection with any Employment Agreement by
and between the Employee and the Company under any Company’s general severance plan
covering all its employees and should any payment be made under such Employment
Agreement or severance plan, the amounts payable hereunder shall be reduced by such
payments.
	 
	 	e)	 	Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Florida, except their
choice-of-law provisions.
	 
	 	f)	 	Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision hereof, which shall remain in full force and effect.
	 
	 	g)	 	Arbitration. Except as otherwise provided in Section , any controversy or claim
arising out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration in Jacksonville, Florida, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Arbitration shall be the
exclusive remedy for resolving disputes arising under this Agreement. Discovery
shall be permitted to the same extent as in a proceeding under the Federal Rules of
Civil Procedure. Judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. All
fees and expenses of the arbitrator and such Association shall be paid as
determined by the arbitrator.




 









 






	 	h)	 	Legal Fees. In the event of any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, the company shall pay the reasonable fees
and costs of the Employee’s attorneys attributable to such controversy or claim,
provided that the Employee prevails on at least one material issue arising in such
controversy or claim.
	 
	 	i)	 	No Assignment The rights of any person to payments or benefits under this
Agreement shall not be made subject to option or assignment, either by voluntary or
involuntary assignment or by operation of law, including (without limitation)
bankruptcy, garnishment, attachment or other creditor’s process, and any action in
violation of this Subsection (i) shall be void.





     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.



	 	 	 	 	 	 	 	 	 	 	 
	   EMPLOYEE	 	 	 	THE ST. JOE COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	   By:

	 	/s/ Stephen W. Solomon
	 	 	 	By:
	 	/s/ Michael F. Bayer
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Stephen W. Solomon
	 	 	 	 	 	Michael F. Bayer	 	 
	   Title:	 	 	 	 	 	Title: Vice President Human	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Resources & Administration	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	   Date: April 25, 1999	 	 	 	Date: March 31, 1999