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EXHIBIT 10.13
FORM OF
KEY EXECUTIVE EMPLOYMENT PROTECTION AGREEMENT
THIS AGREEMENT between Landstar
System, Inc., a Delaware corporation (the "Company"), and
__________________ (the "Executive"), dated as of this ___ day of
__________________, 200___.
W I T N E
S S E T H :
WHEREAS, the Company has employed
the Executive in an executive officer position and has determined
that the Executive holds a position of significant importance with
the Company;
WHEREAS, the Company believes
that, in the event it is confronted with a situation that could
result in a change in ownership or control of the Company,
continuity of management will be essential to its ability to
evaluate and respond to such situation in the best interests of
shareholders;
WHEREAS, the Company understands
that any such situation will present significant concerns for the
Executive with respect to his financial and job security;
WHEREAS, the Company desires to
assure itself of the Executive’s services during the period
in which it is confronting such a situation, and to provide the
Executive certain financial assurances to enable the Executive to
perform the responsibilities of his position without undue
distraction and to exercise his judgment without bias due to his
personal circumstances;
WHEREAS, to achieve these
objectives, the Company and the Executive desire to enter into an
agreement providing the Company and the Executive with certain
rights and obligations upon the occurrence of a Change of Control
(as defined in Section 2);
NOW, THEREFORE, in consideration
of the premises and mutual covenants herein contained, it is hereby
agreed by and between the Company and the Executive as follows:
1. Operation of
Agreement . (a) Effective Date . The effective date of
this Agreement shall be the date on which a Change of Control
occurs (the "Change of Control Date"), provided that ,
except as provided in Section 1(b), if the Executive is not
employed by the Company on the Change of Control Date, this
Agreement shall be void and without effect. Notwithstanding the
foregoing, if, prior to the occurrence of a Potential Change of
Control (as defined in Section 2) or, if a Potential Change of
Control has not occurred, prior to the occurrence of a Change of
Control, the Executive is demoted, the Board of Directors shall
have the right to declare this Agreement void and without
effect.
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(b) Termination of
Employment Following a Potential Change of Control .
Notwithstanding Section 1(a), if ( i ) the
Executive’s employment is terminated by the Company without
Cause (as defined in Section 2) after the occurrence of a
Potential Change of Control and prior to the occurrence of a Change
of Control and ( ii ) a Change of Control occurs within one
year of such termination, the Executive shall be deemed, solely for
purposes of determining his rights under this Agreement, to have
remained employed until the date such Change of Control occurs and
to have been terminated by the Company without Cause immediately
after this Agreement becomes effective.
(c) Termination of
Employment Following Death or Disability . This Agreement shall
terminate automatically upon the Executive’s termination of
employment as a result of the executive’s death or due to
Disability (as defined in Section 2).
2. Definitions . (a)
Change of Control . For the purposes of this Agreement, a
"Change of Control" shall mean ( i ) any "person," including
a "group" (as such terms are used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended ("the Act")), but
excluding the Company, any of its subsidiaries, or any employee
benefit plan of the Company or any of its subsidiaries, or any
employee benefit plan of the Company or any of its subsidiaries, is
or becomes the "beneficial owner" (as defined in Rule 13(d)(3)
under the Act), directly or indirectly, of common stock of the
Company representing 35% or more of the combined voting power of
the Company’s then outstanding common stock; (ii) the
Shareholders of the Company approve a definitive agreement (a
"Definitive Agreement") (a) for the merger or other business
combination of the Company with or into another corporation, a
majority of the directors of which were not directors of the
Company immediately prior to the merger and in which the
shareholders of the Company immediately prior to the effective date
of such merger directly or indirectly own less than 50% of the
voting power in such corporation or (b) for the sale or other
disposition of all or substantially all of the assets of the
Company, and the transactions contemplated by such Definitive
Agreement are, in either case, consummated; or ( iii ) the
purchase of common stock of the Company pursuant to any tender or
exchange offer made by any "person," including a "group" (as such
terms are used in Sections 13(d) and 14(d)(2) of the Act), other
than the Company, any of its subsidiaries, or an employee benefit
plan of the Company or any of its subsidiaries for 35% or more of
the common stock of the Company.
(b) Potential Change of
Control . For the purposes of this Agreement, a "Potential
Change of Control" shall be deemed to have occurred if ( i )
any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Act) commences a tender or exchange offer for common stock,
which if consummated, would result in such person owning 35% or
more of the combined voting power of the Company’s then
outstanding common stock; ( ii ) the Company enters into an
agreement the consummation of which would constitute a Change of
Control; ( iii ) proxies for the election of directors of
the Company are solicited by anyone other than the Company; or (
iv ) any other event occurs which is deemed to be a
Potential Change of Control by the Board of Directors of the
Company.
(c) Cause . For the
purposes of this Agreement, "Cause" means ( i ) the
Executive’s conviction or plea of nolo contendere to a
felony; ( ii ) an act or acts of extreme dishonesty
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or gross misconduct on the Executive’s part which result
or are intended to result in material damage to the Company’s
business or reputation; or ( iii ) repeated material
violations by the Executive of his position, authority or
responsibilities as in effect at the Change of Control Date, which
violations are demonstrably willful and deliberate on the
Executive’s part and which result in material damage to the
Company’s business or reputation.
(d) Good Reason .
"Good Reason" means the occurrence of any of the following, without
the express written consent of the Executive, after the occurrence
of a Potential Change of Control or a Change of Control:
(i) ( A ) the assignment to
the Executive of any duties inconsistent in any material adverse
respect with the Executive’s position, authority or
responsibilities as in effect at the Change of Control Date, or (
B ) any other material adverse change in such position,
including titles, authority or responsibilities;
(ii) any failure by the Company,
other than an insubstantial or inadvertent failure remedied by the
Company promptly after receipt of notice thereof given by the
Executive, to provide the Executive with ( A ) an annual
base salary, as it may be increased from time to time (the "Base
Salary"), which is at least equal to the Base Salary paid to the
Executive immediately prior to the Change of Control Date, or (
B ) incentive compensation opportunities at a level which is
at least equal to the level of incentive compensation opportunities
made available, to the Executive immediately prior to the Change of
Control Date;
(iii) the failure by the Company
to permit the Executive (and, to the extent applicable, his
dependents) to participate in or be covered under all pension,
retirement, deferred compensation, savings, medical, dental,
health, disability, group life, accidental death and travel
accident insurance plans and programs of the Company and its
affiliated companies at a level that is commensurate with the
Executive’s participation in such plans immediately prior to
the Change of Control Date (or, if more favorable to the Executive,
at the level made available to the Executive or other similarly
situated officers at any time thereafter);
(iv) the Company’s requiring
the Executive to be based at any office or location more than 50
miles from that location at which he performed his services for the
Company immediately prior to the Change of Control, except for
travel reasonably required in the performance of the
Executive’s responsibilities; or
(v) any failure by the Company to
obtain the assumption and agreement to perform this Agreement by a
successor as contemplated by Section 5.
In no event shall the mere
occurrence of a Change of Control, absent any further impact on the
Executive, be deemed to constitute Good Reason.
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(e) Disability . For
purposes of this Agreement, "Disability" shall mean the
Executive’s inability to perform the duties of his position,
as determined in accordance with the policies and procedures
applicable with respect to the Company’s long-term disability
plan, as in effect immediately prior to the Change of Control
Date.
(f) Notice of
Termination . Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with
Section 6(d). For purposes of this Agreement, a "Notice of
Termination" means a written notice given, in the case of a
termination for Cause, within 10 business days of the
Company’s having actual knowledge of the events giving rise
to such termination, and in the case of a termination for Good
Reason, within 90 days of the later to occur of ( x )
the Change of Control Date or ( y ) the Executive’s
having actual knowledge of the events giving rise to such
termination, and which ( i ) indicates the specific
termination provision in this Agreement relied upon, ( ii )
sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s
employment under the provision so indicated, and ( iii ) if
the termination date is other than the date of receipt of such
notice, specifies the termination date of this Agreement (which
date shall be not more than 30 days after the giving of such
notice). The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing
of Good Reason shall not waive any right of the Executive hereunder
or preclude the Executive from asserting such fact or circumstance
in enforcing his rights hereunder.
(g) Date of
Termination . For the purpose of this Agreement, the term "Date
of Termination" means ( i ) in the case of a termination for
which a Notice of Termination is required, the date of receipt of
such notice of Termination or, if later, the date specified
therein, as the case may be, and ( ii ) in all other cases,
the actual date on which the Executive’s employment
terminates.
3. Employment Protection
Benefits . (a) Basic Benefits . If (x) on or before
the second anniversary of the Change in Control Date
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