EXHIBIT 10.6
KEY EXECUTIVE EMPLOYMENT PROTECTION
AGREEMENT
THIS AGREEMENT
between Landstar System, Inc., a Delaware corporation (the
“Company”), and James B. Gattoni (the
“Executive”), dated as of this 30
th day of December, 2000.
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 Change of Control or a Potential Change of Control
(as defined in Section 2), the Executive is demoted, the Board
of Directors shall have the right to declare this Agreement void
and without effect.
(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 death or termination 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
the greater of 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 ) 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; 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 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 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.
1
(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.
(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. A
(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 noti
