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Exhibit 10.15(c)
AGREEMENT REGARDING CHANGE IN MANAGEMENT
AND TERMINATION OF EMPLOYMENT
THIS AGREEMENT is entered into as of the [ ]day of November,
1996 (the "Effective Date") by and between Caliber System, Inc., an Ohio
corporation (together with its successors and assigns permitted under this
Agreement the "Company"), and [ ] ("Executive").
W I T N E S S E T H
WHEREAS, Executive currently serves as a Senior Vice
President-Finance and Chief Financial Officer; and
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 shareholders; and
WHEREAS, the Board (as defined in Section 1(a)) has determined
that 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
and objectivity in the event of a Change in Management (as defined in Section
1(c)) without a Change in Control of the Company (as defined in the Management
Retention Agreement between Executive and the Company dated November ___, 1996),
without concern as to whether Executive might be hindered or distracted by
personal uncertainties and risks created by any such possible Change in
Management, and to encourage Executive's full attention and dedication to 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.
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As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the
Company.
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(b) "Cause" means (1) conviction of Executive
for a felony or for a misdemeanor involving moral turpitude or (2) a
material breach by Executive of the duties and responsibilities associated with
his employment and position with the Company (other than as a result of
incapacity due to physical or mental illness) which is demonstrably willful and
deliberate on Executive's part, which is committed in bad faith or without
reasonable belief that such breach is in, or not opposed to, the best interests
of the Company and which is not remedied in a reasonable period of time after
receipt of written notice from the Company specifying such breach.
(c) "Change in Management" means any diminution
in Daniel J. Sullivan's current duties and responsibilities with the
Company. However, the termination of Mr. Sullivan's duties and responsibilities
with the Company by reason of death, Disability or natural causes, shall not be
a Change in Management. Moreover, a Change in Management is not related to the
revenue or size of the Company. For purposes of this Agreement, the date of a
Change in Management shall be the earliest date on which a Change in Management
occurs in accordance with this Section 1(c).
(d) "Date of Termination" means (1) the
effective date on which Executive's employment by the Company terminates as
specified in a Notice of Termination by the Company or Executive, as the case
may be, or (2) if Executive's employment by the Company terminates by reason of
death, the date of death of Executive. Notwithstanding the previous sentence,
(i) if Executive's employment is terminated for Disability (as defined in
Section 1(e)) or (ii) if Executive's employment is terminated by the Company
other than for Cause, then such Date of Termination shall be no earlier than
thirty (30) days following the date on which a Notice of Termination is
received.
(e) "Disability" means absence from one's duties
and responsibilities with the Company on a full-time basis for at least one
hundred eighty (180) consecutive days as a result of incapacity due to mental or
physical illness.
(f) "Good Reason" shall mean termination by
Executive of his employment following occurrence of any of the following
events without his consent:
(i) a reduction in Executive's base
salary or target award opportunity as in effect immediately prior to the
Change in Management (including a change in performance criteria
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which impacts negatively on Executive's ability to achieve the target)
under the Company's annual or long-term performance incentive plans or programs,
the failure to continue Executive's participation in any incentive compensation
plan in which he was a participant immediately prior to the Change in Management
unless a plan providing a substantially similar opportunity is substituted, or
the termination or material reduction of any employee benefit or perquisite
enjoyed by him immediately prior to the Change in Management, unless comparable
benefits or perquisites (determined in the aggregate) are substituted;
(ii) diminution in Executive's duties and
responsibilities as in effect immediately prior to the Change in Management
or assignment to Executive of duties materially inconsistent with his duties as
in effect immediately prior to the Change in Management; or
(iii) the loss of any of Executive's titles
or positions held immediately prior to the Change in Management.
Notwithstanding anything contained in this Agreement
to the contrary, any circumstance described in clauses (i) through (iii) of
this Section 1(f) shall not constitute Good Reason unless Executive gives
written notice thereof to the Company in accordance with Section 8 and the
Company fails to remedy such circumstances within ten days following receipt of
such notice.
(g) "Notice of Termination" means notice of the
Date of Termination as described in Section 8(b).
(h) "Payment" means the following amounts
payable to Executive as compensation for services rendered to the Company:
(1) a lump-sum amount equal to the sum
of Executive's unpaid base salary from the Company and its subsidiaries
through the Date of Termination (at the rate in effect [without taking into
account any reduction of base salary constituting Good Reason] just prior to the
time a Notice of Termination is given) plus any benefit awards (including both
the cash and stock components) and bonus payments which pursuant to the terms of
any plans have been earned and vested; and
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(2) a lump-sum cash amount equal to two
(2) times (a) Executive's highest annual rate of base salary from the
Company and its subsidiaries in effect during the 12-month period prior to the
Date of Termination plus (b) the target annual bonus in effect for the year in
which the Change in Management occurs; except as provided in Section 7(a), any
amount paid pursuant to this Agreement shall offset any other amount of
severance to be received by Executive upon termination of employment of
Executive under any other severance plan, policy, or employment agreement of the
Company. Notwithstanding the timing of any Changes in Management or Termination
of Employment without Cause, Executive shall only be entitled to one Payment.
(i) "Qualifying Termination" means a termination
of Executive's employment by Executive for Good Reason; provided, however,
that a Qualifying Termination shall not include a termination as a result of
Executive's death, Disability or Retirement.
(j) "Retirement" means termination of employment
by either Executive or the Company on or after Executive's normal
retirement date under the terms of the Retirement Plan.
(k) "Retirement Plan" means the Company's
Retirement Plan or any successor or substitute plan or plans of the Company
put into effect prior to a Change in Management.
(l) "Transition Period" means the period of time
beginning with a Change in Management and ending on the earlier to occur of
(1) Executive's death and (2) expiration or termination of this Agreement
pursuant to Section 2.
2. Term of Agreement.
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(a) This Agreement shall commence on the
Effective Date and shall continue in effect until November [ ], 1998;
provided, however, that commencing on November [ ], 1998 and each following
annual anniversary of the Effective Date, the term of this Agreement shall
automatically be extended for an additional one-year period, unless at least
three months prior to such date, the Company shall have given notice not to
extend this Agreement; provided, however, that (i) no such action shall be taken
by the Company during any period of time when the Board has knowledge that any
person has taken steps reasonably calculated to effect a Change in Management
until, in the opinion of the Board, any efforts to effect a Change in Management
have been abandoned or terminated, and (ii)
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this Agreement shall continue in effect for at least twenty-four (24)
months following the occurrence of a Change in Management.
(b) Notwithstanding anything in this Section 2
to the contrary:
(i) in the event of Executive's voluntary
termination of his employment with the Company without Payment, this
Agreement shall automatically expire upon Executive's Notice of Termination;
(ii) if the Company makes Payment to
Executive pursuant to this Agreement, this Agreement shall automatically expire
upon such Payment; and
(iii) Executive's entitlement to Payment
pursuant to Section 3 shall terminate automatically upon election or
appointment of Executive to fill one or more of the positions of Chairman of the
Board, Chief Executive Officer, President or Chief Operating Officer of the
Company.
3. Payment Upon Change in Management or Qualifying
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Termination.
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(a) Following a Change in Management (other than
a Change in Management that consists (i) solely of the assignment of Daniel
J. Sullivan's duties and responsibilities as President to an individual other
than Executive, or (ii) solely of the appointment of a Chief Operating Officer
other than Mr. Sullivan or Executive) Executive may elect to terminate his
employment with or without Good Reason by giving a Notice of Termination
pursuant to Section 8 on or before forty-five (45) days following the Change in
Management. If Executive provides such notice, then the Company shall make
Payment to Executive (or Executive's beneficiary or estate) within five (5)
business days following Date of Termination.
(b) If during the Transition Period the
employment of Executive shall terminate by reason of a Qualifying
Termination, then the Company shall make Payment to Executive (or Executive's
beneficiary or estate) within five (5) business days following Date of
Termination.
4. Payment Upon Termination of Employment Without Cause.
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If at any time during the term of this Agreement all
employment of Executive with the Company shall terminate involuntarily and
without Cause, then Company shall make Payment to Executive (or Executive's
beneficiary or estate) within five (5) business days following Date of
Termination.
5. Confidentiality; Non-Competition.
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(a) During employment and thereafter, Executive
shall keep confidential all "Confidential Information" relating to the
Company or any of its subsidiaries, and their respective businesses, obtained by
Executive during his employment by the Company or any of its subsidiaries.
"Confidential Information" means any non-public, proprietary information that
may have intrinsic value to the Company or its subsidiaries, its clients or
other parties with which the Company has a relationship, or that may provide the
Company with a competitive advantage, including, without limitation, any trade
secrets, formulas, flow charts, computer programs, access codes or other systems
information, business, product or marketing plans, sales and other forecasts,
financial information, customer lists, and information relating to compensation
and benefits, provided that such proprietary information does not include any
information which is available to the general public or is generally available
within the relevant business or industry other than as a result of Executive's
breach of this Section 5(a). Confidential Information may be in any medium or
form, including, without limitation, physical documents, computer files or
discs, videotapes, audiotapes, and oral communications. Anything herein to the
contrary notwithstanding, it shall not be a violation of this Section 5(a) for
the Executive to disclose information in the ordinary course of properly
carrying out his duties and responsibilities on behalf of the Company or to
respond to an order of a court or other body having jurisdiction provided that
he gives the Company prompt notice of any such order.
(b) Executive agrees that he shall not for a
period of one (1) year following the Date of Termination, directly or
indirectly own, manage, operate, join, control, be employed by, or participate
in the ownership, management, operation or control of or be connected in any
manner, including but not limited to holding the positions of officer, director,
shareholder, consultant, independent contractor, employee, partner, or investor,
with any Competing Enterprise; provided, however, that Executive may invest
without being deemed in violation of this Section 5(b), in stocks, bonds, or
other securities of any corporation or other entity (but without participating
in the business thereof) if such stocks, bonds, or other securities are listed
for trading on a national securities exchange
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or NASDAQ and Executive's investment does not exceed 1% of the issued and
outstanding shares of capital stock, or in the case of bonds or other
securities, 1% of the aggregate principal amount thereof issued and outstanding.
"Competing Enterprise" shall mean an enterprise that engages in any business
that, on the Date of Termination, is engaged in by the Company or any of its
subsidiaries if such enterprise engages in such business in any geographic area
in which the Company or any of its subsidiaries conducts such business.
(c) Except as expressly provided herein,
promptly following Executive's termination of employment, Executive shall
return to the Company all property of the Company then in Executive's possession
or under his control, except that Executive may retain his personal notes,
diaries, Rolodexes, calendars and correspondence.
(d) Executive agrees that any material breach of
the terms of this Section would result in irreparable injury and damage to
the Company for which the Company would have no adequate remedy at law.
Executive further agrees that in the event of said material breach or any
reasonable threat of material breach, the Company shall be entitled to an
immediate injunction and restraining order to prevent such material breach or
threatened material breach. The terms of this paragraph shall not prevent the
Company from pursuing any other available remedies for any breach or threatened
breach hereof, including but not limited to the recovery of damages. Should a
court or arbitrator determine that any provision of this Section 5 is
unreasonable, the parties agree that such provision shall be interpreted and
enforced to the maximum extent such court or arbitrator deems reasonable.
(e) The provisions of this Section shall survive
any expiration or termination of this Agreement and the Transition Period,
and the existence of any claim or cause of action by Executive against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants and agreements of
this Section. Anything in this Section 5(e) to the contrary notwithstanding, the
provisions of Section 5(b) shall not apply in the event of a voluntary
termination by Executive of his employment provided Executive does not receive
Payment pursuant to this Agreement in connection with such a termination.
6. Withholding Taxes.
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The Company may withhold from all payments due to
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
7. Successors; Binding Agreement; Survivorship.
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(a) This Agreement shall not be terminated by
any merger or consolidation of the Company whereby the Company is or is not
the surviving or resulting corporation or as a result of any transfer of all or
substantially all of the assets of the Company. In the event of any such merger,
consolidation or transfer of assets, the provisions of this Agreement shall be
binding upon the surviving or resulting corporation or the person or entity to
which such assets are transferred. Notwithstanding anything to the contrary in
this Agreement, if as a result of any such merger, consolidation or transfer of
assets, Executive is entitled to a payment under any applicable change in
control management retention arrangements, then no payment shall be payable
under this Agreement.
(b) (i) No rights or obligations of the Company
under this Agreement may be assigned or transferred by the Company except
that such rights or obligations may be assigned or transferred pursuant to a
merger or consolidation in which the Company is not the continuing entity, or in
connection with the sale or liquidation of all or substantially all of the
assets of the Company, or in connection with the disposition of the business of
the Company substantially as an entirety, provided that the assignee or
transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations and
duties of the Company under this Agreement, either contractually or as a matter
of law.
(ii) This Agreement is personal to
Executive and, without the prior written consent of the Company, shall not
be assignable by Executive otherwise than by will or the laws of descent and
distribution. 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 shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, 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.
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(c) The respective rights and obligations of the
parties hereunder shall not survive the termination or expiration of this
Agreement except:
(i) to the extent necessary to carry out
the intentions of the parties (including without limitation any obligations of
the Company to make Payment hereunder), or
(ii) to the extent otherwise expressly
provided herein.
8. Notice.
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(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 five (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:
General Counsel
Caliber System, Inc.
3560 West Market Street, P.O. Box 5459
Akron, OH 44334-0459
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 (a "Notice of Termination")
of Executive's Date of Termination by the Company or Executive, as the case
may be, to the other, 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. The failure by Executive or the Company to set
forth in such notice any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of Executive or the Company
hereunder or preclude Executive
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or the Company from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
9. Governing Law; Validity.
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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 Ohio without regard to the principle of
conflict 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.
10. Settlement of Disputes.
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(a) Any controversy or claim arising out of or
relating to this Agreement, any amendment of this Agreement, or any breach
of any of the foregoing, shall, subject to the mutual agreement of the Company
and Executive, be settled by confidential arbitration, to be held in Akron,
Ohio, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association before three (3) arbitrators. The arbitrators shall
apply the provisions of this Agreement strictly as written (unless doing so
violates the clear intent of this Agreement), and shall explain the reasons and
basis of their award in detail and in writing. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof. All
reasonable costs and expenses relating to any controversy or claim that is
arbitrable under this Section (including reasonable attorney's fees of the
Executive) shall be paid by the Company promptly on written demand, except that
the arbitrators are authorized to require reimbursement of the Company by
Executive for moneys paid by it pursuant to this sentence if the arbitrators
determine that the substantive positions of the Executive in the arbitration
were entirely without merit. Pending final resolution of any arbitration or
court proceeding, the Company shall continue prompt payment of all amounts due
the Executive under this Agreement or any amendment thereof and prompt provision
of all benefits to which the Executive or his beneficiaries are entitled.
Notwithstanding the foregoing, nothing contained in this Section 10 shall limit
a party's right to seek equitable relief in any court of competent jurisdiction.
(b) In the event the Company and Executive do not agree to
arbitrate disputes as provided in Section 10(a), each hereby consents to the
jurisdiction of the Summit County Common Pleas
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Court of the State of Ohio, or (provided the amount in controversy is
appropriate) of the United States District Court for the Northern District of
Ohio.
11. Counterparts.
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This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
12. Miscellaneous.
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No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by Executive and an
authorized officer of the Company. No provision of this Agreement may be waived
unless such waiver is agreed to in writing and signed by the waiving party
which, in the case of the Company, shall mean by a duly authorized officer of
the Company. This Agreement contains the entire understanding and agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the parties with respect thereto. This
Agreement is not intended by either the Company or the Executive to amend
Executive's Performance Share Award Agreement under the Company's 1996 Equity
Incentive Compensation Plan or the Executive's Stock Option Agreement under the
Company's 1996 Equity Incentive Compensation Plan.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by a duly authorized officer of the Company. Executive has executed
this Agreement as of the date and year first written above.
Caliber System, Inc.
By:
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Agreed to this day of November, 1996.
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Executive