EXHIBIT 10.56
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated as of the 7th day of May, 2001, is by and between
SPHERION CORPORATION, a Delaware corporation (hereinafter referred to as the
"COMPANY"), and [SEE ATTACHED SCHEDULE A] (hereinafter the "EXECUTIVE").
RECITALS
A. The Board of Directors of the Company (the "BOARD") considers it
essential to the best interests of the Company and its stockholders that its key
management personnel be encouraged to remain with the Company and its
subsidiaries and to continue to devote full attention to the Company's business
in the event that any third person expresses its intention to complete a
possible business combination with the Company, or in taking any other action
which could result in a "CHANGE IN CONTROL" (as defined herein) of the Company.
In this connection, the Board recognizes that the possibility of a Change in
Control and the uncertainty and questions which it may raise among management
may result in the departure or distraction of key management personnel to the
detriment of the Company and its stockholders. The Board has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction in the face of the potentially disturbing
circumstances arising from the possibility of a Change in Control of the
Company.
B. The Executive currently serves as the Company's [SEE ATTACHED
SCHEDULE A], and his services and knowledge are valuable to the Company in
connection with the management of its business.
C. The Board believes the Executive has made and is expected to
continue to make valuable contributions to the productivity and profitability of
the Company and its subsidiaries. Should the Company receive a proposal from a
third person concerning a possible business combination or any other action
which could result in a Change in Control, in addition to the Executive's
regular duties, the Executive may be called upon to assist in the assessment of
such proposal, advise management and the Board as to whether such proposal would
be in the best interests of the Company and its stockholders, and to take such
other actions as the Board might determine to be necessary or appropriate.
D. Should the Company receive any proposal from a third person
concerning a possible business combination or any other action which could
result in a change in control of the Company, the Board believes it imperative
that the Company and the Board be able to rely upon the Executive to continue in
his position, and that the Company and the Board be able to receive and rely
upon his advice, if so requested, as to the best interests of the Company and
its stockholders without concern that he might be distracted by the personal
uncertainties and risks created by such a proposal, and to encourage Executive's
full attention and dedication to the Company.
E. The Company and the Executive are parties to that certain Change in
Control Agreement dated November 18, 1998 (the "PRIOR CIC AGREEMENT").
F. The Company and the Executive desire to terminate the Prior CIC
Agreement (and any predecessor change in control agreements) and to enter into
this Agreement upon the terms and subject to the conditions hereinafter set
forth.
TERMS AND CONDITIONS
NOW, THEREFORE, to assure the Company and its subsidiaries that it will
have the continued, undivided attention, dedication and services of the
Executive and the availability of the Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a Change in Control of
the Company, and to induce the Executive to remain in the employ of the Company
and its subsidiaries, and for other good and valuable consideration, the
adequacy and sufficiency of which are hereby acknowledged, the Company and the
Executive agree as follows.
1. CHANGE IN CONTROL
(a) For purposes of this Agreement, a "CHANGE IN CONTROL" of
the Company shall be deemed to have occurred upon (i) the acquisition
at any time by a "PERSON" or "GROUP" (as that term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT")) (excluding, for this purpose, the Company or any
of its subsidiaries, any employee benefit plan of the Company or any of
its subsidiaries, an underwriter temporarily holding securities
pursuant to such securities, or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly, of securities representing 25% or more of the
combined voting power in the election of directors of the
then-outstanding securities of the Company or any successor of the
Company; (ii) the termination of service as directors, for any reason
other than death, disability or retirement from the Board, during any
period of two consecutive years or less, of individuals who at the
beginning of such period constituted a majority of the Board, unless
the election of or nomination for election of each new director during
such period was approved by a vote of at least two-thirds of the
directors still in office who were directors at the beginning of the
period; (iii) approval by the stockholders of the Company of
liquidation of the Company; (iv) approval by the stockholders of the
Company and consummation of any sale or disposition, or series of
related sales or dispositions, of 50% or more of the assets or earning
power of the Company; or (v) approval by the stockholders of the
Company and consummation of any merger or consolidation or statutory
share exchange to which the Company is a party as a result of which the
persons who were stockholders of the Company immediately prior to the
effective date of the merger or consolidation or statutory share
exchange shall have beneficial ownership of less than 50% of the
combined voting power in the election of directors of the surviving
corporation following the effective date of such merger or
consolidation or statutory share exchange.
(b) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction constitutes
a "MANAGEMENT APPROVED TRANSACTION." For purposes of this Agreement, a
"MANAGEMENT APPROVED TRANSACTION" shall be any transaction, which would
otherwise
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result in a Change in Control for purposes of this Agreement in which
the acquiring "PERSON", "GROUP" or other entity is either beneficially
owned by, or comprised of, in whole or in part, three or more members
of the Company's executive management, as such was constituted twelve
months prior to such transaction, or is majority owned by, or comprised
of, any employee benefit plan of the Company.
2. ADJUSTMENT OF BENEFITS UPON CHANGE IN CONTROL
(a) The Company agrees that the Compensation Committee of the
Board, or such other committee succeeding to such committee's
responsibilities with respect to executive compensation (collectively,
the "COMPENSATION COMMITTEE") may make such equitable adjustments to
any performance targets contained in any awards under the Company's
current incentive compensation plans, or any additional or successor
plan in which the Executive is a participant (collectively, the
"INCENTIVE PLANS"), as the Compensation Committee determines may be
appropriate to eliminate any negative effects from any transactions
relating to a Change in Control (such as costs or expenses associated
with the transaction or any related transaction, including, without
limitation, any reorganizations, divestitures, recapitalizations or
borrowings, or changes in targets or measures to reflect the disruption
of the business, etc.), in order to preserve reward opportunities and
performance objectives.
(b) In the case of a Change in Control, all restrictions and
conditions applicable to any awards of restricted stock or the vesting
of stock options or other awards granted to the Executive under the
Company's 2000 Stock Incentive Plan, Deferred Stock Plan, any similar,
predecessor or successor plan, or otherwise shall be deemed to have
been satisfied as of the date the Change in Control occurs, and this
Agreement shall be deemed to amend any agreements evidencing such
awards to reflect this provision.
3. TERMINATION FOLLOWING CHANGE IN CONTROL
(a) The Executive's employment may be terminated for any
reason by the Company following a Change in Control of the Company. If
the Executive's employment is terminated by the Company for any reason
other than for the reasons set forth in subparagraphs (i), (ii), (iii),
(iv) or (v) below within two years following a Change in Control, then
the Executive shall be entitled to the benefits set forth in this
Agreement in lieu of any termination, separation, severance or similar
benefits under the Executive's Employment Agreement, if any, or under
the Company's termination, separation, severance or similar plans or
policies, if any. If the Executive's employment is terminated for any
of the reasons set forth in subparagraphs (i), (ii), (iii), (iv) or (v)
below, then the Executive shall not be entitled to any termination,
separation, severance or similar benefits under this Agreement, and the
Executive shall be entitled to benefits under the Executive's
Employment Agreement, if any, or under the Company's termination,
separation, severance or similar plans or policies, if any, only in
accordance with the terms of such Employment Agreement, or such plans
or policies.
(i) termination by reason of the Executive's death,
PROVIDED the Executive has not previously given a "NOTICE OF
TERMINATION" pursuant to Section 4;
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(ii) termination by reason of the Executive's
"DISABILITY," PROVIDED the Executive has not previously given a "NOTICE
OF TERMINATION" pursuant to Section 4;
(iii) termination by reason of "RETIREMENT" at or
after age 65, PROVIDED the Executive has not previously given "NOTICE
OF TERMINATION" pursuant to Section 4;
(iv) termination by the Company for "CAUSE;" or
(v) voluntary termination by the Executive (other
than for "GOOD REASON" as provided in section 3(b) below).
For the purposes of this Agreement, "DISABILITY"
shall be defined as the Executive's inability by reason of illness or
other physical or mental disability to perform the principal duties
required by the position held by the Executive at the inception of such
illness or disability for any consecutive 180-day period. A
determination of disability shall be subject to the certification of a
qualified medical doctor agreed to by the Company and the Executive or,
in the Executive's incapacity to designate a doctor, the Executive's
legal representative. If the Company and the Executive cannot agree on
the designation of a doctor, each party shall nominate a qualified
medical doctor and the two doctors shall select a third doctor and the
third doctor shall make the determination as to disability.
For purposes of this Agreement, "RETIREMENT" shall
mean the Company's termination of the Executive's employment at or
after the date on which the Executive attains age 65.
For purposes of this Agreement, "CAUSE" shall mean
one or more of the following:
(I) the material violation of any of the terms and conditions
of this Agreement or any written agreements the Executive may from time
to time have with the Company (after 30 days following written notice
from the Board specifying such material violation and Executive's
failure to cure or remedy such material violation within such 30-day
period);
(II) inattention to or failure to perform Executive's assigned
duties and responsibilities competently for any reason other than due
to Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure
or remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information or
repeatedly conveying to one person, or conveying to an assembled public
group, negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not
limited to, misappropriation of funds or any property of the Company;
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(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the written Policies of
the Company which are not inconsistent with this Agreement or
applicable law (after 30 days following written notice from the Board
specifying such failure, and the Executive's failure to cure or remedy
such inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following
written notice from the Board specifying such refusal or
insubordination, and the Executive's failure to cure or remedy such
refusal or insubordination within such 30-day period); or
(VIII) unsatisfactory performance of duties by the Executive
as a result of alcohol or drug use by the Executive.
(b) The Executive may terminate his employment with the
Company following a Change in Control of the Company for "GOOD REASON"
by giving Notice of Termination at any time within two years after the
Change in Control. Any failure by the Executive to give such immediate
notice of termination for Good Reason shall not be deemed to constitute
a waiver or otherwise to affect adversely the rights of the Executive
hereunder, PROVIDED the Executive gives notice to receive such benefits
prior to the expiration of such two year period. If the Executive
terminates his employment as provided in this Section 3(b), then the
Executive shall be entitled to the benefits set forth in this Agreement
in lieu of any termination, separation, severance or similar benefits
under the Executive's Employment Agreement, if any, or under the
Company's termination, separation, severance or similar plans or
policies, if any.
For purposes of this Agreement, "GOOD REASON" shall mean the
occurrence of any one or more of the following events:
(I) The assignment to the Executive of any duties
inconsistent in any material adverse respect with his position,
authority or responsibilities with the Company and its subsidiaries
immediately prior to the Change in Control, or any other material
adverse change in such position, including titles, authority, or
responsibilities, as compared with the Executive's position immediately
prior to the Change in Control;
(II) A reduction by the Company in the amount of the
Executive's base salary or annual or long term incentive compensation
paid or payable as compared to that which was paid or made available to
Executive immediately prior to the Change in Control; or the failure of
the Company to increase Executive's compensation each year by an amount
which is substantially the same, on a percentage basis, as the average
annual percentage increase in the base salaries of other executives of
comparable status with the Company;
(III) The failure by the Company to continue to
provide the Executive with substantially similar perquisites or
benefits the Executive in the aggregate enjoyed under the Company's
benefit programs, such as any of the Company's pension, savings,
vacation, life insurance, medical, health and accident, or disability
plans in which he was
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participating at the time of the Change in Control (or, alternatively,
if such plans are amended, modified or discontinued, substantially
similar equivalent benefits thereto, when considered in the aggregate),
or the taking of any action by the Company which would directly or
indirectly cause such benefits to be no longer substantially
equivalent, when considered in the aggregate, to the benefits in effect
at the time of the Change in Control;
(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 immediately prior to the Change in
Control, except for a relocation consented to in writing by the
Executive, or travel reasonably required in the performance of the
Executive's responsibilities to the extent substantially consistent
with the Executive's business travel obligations prior to the Change in
Control;
(V) Any failure of the Company to obtain the
assumption of the obligation to perform this Agreement by any successor
as contemplated in Section 11 herein; or
(VI) Any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its obligations hereunder, in either case, for a period of
thirty business days after receipt of written notice from the Executive
and the failure by the Company to cure such breach or failure during
such thirty business day period.
4. NOTICE OF TERMINATION
Any termination of the Executive's employment following a
Change in Control, other than a termination as contemplated by Sections
3(a)(i) or 3(a)(iii) shall be communicated by written "NOTICE OF
TERMINATION" by the party affecting the termination to the other party
hereto. Any "NOTICE OF TERMINATION" shall set forth (a) the effective
date of termination, which shall not be less than 15 or more than 30
days after the date the Notice of Termination is delivered (the
"TERMINATION DATE"); (b) the specific provision in this Agreement
relied upon; and (c) in reasonable detail the facts and circumstances
claimed to provide a basis for such termination and the entitlement, or
lack of entitlement, to the benefits set forth in this Agreement.
Notwithstanding the foregoing, if within fifteen (15) days after any
Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a good faith dispute exists
concerning the termination, the actual Termination Date shall be the
date on which the dispute is finally determined in accordance with the
provisions of Section 18 hereof. In the case of any good faith dispute
as to the Executive's entitlement to benefits under this Agreement
resulting from any termination by the Company for which the Company
does not deliver a Notice of Termination, the actual Termination Date
shall be the date on which the dispute is finally determined in
accordance with the provisions of Section 18 hereof. Notwithstanding
the pendency of any such dispute referred to in the two preceding
sentences, the Company shall continue to pay the Executive his full
compensation then in effect and continue the Executive as a participant
in all compensation, benefits and perquisites in which he was then
participating, until the dispute is finally resolved, PROVIDED the
Executive is willing to continue to provide full time services to the
Company and its subsidiaries in substantially
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the same position, if so requested by the Company. Amounts paid under
this Section 4 shall be in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts
due under this Agreement. If a final determination is made, pursuant to
Section 18, that Good Reason did not exist in the case of a Notice of
Termination by the Executive, the Executive shall have the sole right
to nullify and void his Notice of Termination by delivering written
notice of same to the Company within three (3) business days of the
date of such final determination. If the parties do not dispute the
Executive's entitlement to benefits hereunder, the Termination Date
shall be as set forth in the Notice of Termination.
5. TERMINATION BENEFITS
(a) SEVERANCE PAYMENT. Subject to the conditions set forth in
this Agreement, on the Termination Date the Company shall pay the
Executive (reduced by any applicable payroll or other taxes required to
be withheld) a lump sum severance payment, in cash, equal to three (3)
times the sum of Executive's annual salary for the current year plus
his annual incentive award target for the current year (provided that
if the Notice of Termination is given prior to the determination of the
Executive's salary or annual incentive award target for the year in
which the Termination Date occurs, the amounts shall be based on the
annual salary for the prior year and the greater of the annual
incentive award target for the prior year or the actual incentive award
earned by the Executive for the prior year). The current year shall be
(A) for the purposes of determining annual salary, the year then
generally used by the Company for setting salaries for senior-level
executives (currently April 1 through the following March 31), and (B)
for purposes of determining annual incentive award target, the fiscal
year then generally used by the Company for setting annual incentive
award targets for senior-level executives, in which the Termination
Date occurs, and the prior year shall be the twelve-month period
immediately preceding the current year;
(b) EXPENSES. Reimbursement for expenses incurred by the
Executive in accordance with the Company's policy but not reimbursed
prior to the date of such termination of employment;
(c) PAYMENT OF DEFERRED COMPENSATION. Any compensation that
has been earned by the Executive but is unpaid as of the Termination
Date, including any compensation that has been earned but deferred
pursuant to the Company's Deferred Compensation Plan or otherwise,
shall be paid in full to the Executive on the Termination Date.
6. OTHER BENEFITS
Subject to the conditions set forth in this Agreement hereof,
the following benefits (subject to any applicable payroll or other taxes
required to be withheld) shall be paid or provided to the Executive:
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(a) HEALTH/WELFARE BENEFITS
(i) During the thirty-six (36) months following the
Termination Date (the "CONTINUATION PERIOD"), the Company shall
continue to keep in full force and effect all programs of medical,
dental, vision, accident, disability, life insurance, including
optional term life insurance, and other similar health or welfare
programs with respect to the Executive and his dependents with the same
level of coverage, upon the same terms and otherwise to the same extent
as such programs shall have been in effect immediately prior to the
Termination Date (or, if more favorable to the Executive, immediately
prior to the Change in Control), and the Company and the Executive
shall share the costs of the continuation of such insurance coverage in
the same proportion as such costs were shared immediately prior to the
Termination Date (or, if more favorable to the Executive, immediately
prior to the Change in Control) or, if the terms of such programs do
not permit continued participation by the Executive (or if the Company
otherwise determines it advisable to amend, modify or discontinue such
programs for employees generally), the Company shall otherwise provide
benefits substantially similar to and no less favorable to the
Executive in terms of cost or benefits ("EQUIVALENT BENEFITS") than he
was entitled to receive at the end of the period of coverage, for the
duration of the Continuation Period.
(ii) All benefits which the Company is required by
this Section 6(a) to provide, which will not be provided by the
Company's programs described herein, shall be provided through the
purchase of insurance unless the Executive is uninsurable. If the
Executive is uninsurable, the Company will provide the benefits out of
its general assets.
(iii) If the Executive obtains other employment
during the Continuation Period which provides health or welfare
benefits of the type described in Section 6(a)(i) hereof ("OTHER
COVERAGE"), then Executive shall notify the Company promptly of such
other employment and Other Coverage and the Company shall thereafter
not provide the Executive and his dependents the benefits described in
Section 6(a)(i) hereof to the extent that such benefits are provided
under the Other Coverage. Under such circumstances, the Executive shall
make all claims first under the Other Coverage and then, only to the
extent not paid or reimbursed by the Other Coverage, under the plans
and programs described in Section 6(a)(i) hereof.
(b) RETIREMENT BENEFITS
(i) For purposes of this Agreement, "RETIREMENT"
shall mean the Company's termination of the Executive's employment
within two years following a Change in Control of the Company and at or
after the date on which the Executive attains age 65; provided,
however, that any termination for Cause or due to Death or Disability
shall not constitute Retirement.
(ii) Subject to Section 6(b)(ii), the Executive shall
be deemed to be completely vested under the Company's 401(k) Plan,
Deferred Compensation Plan or other similar or successor plans which
are in effect as of the date of the Change in Control (collectively,
the "PLANS"), regardless of the Executive's actual vesting service
credit thereunder.
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(iii) Any part of the foregoing retirement benefits
which are otherwise required to be paid by a tax-qualified Plan but
which cannot be paid through such Plan by reason of the laws and
regulations applicable to such Plan, shall be paid by one or more
supplemental non-qualified Plans or by the Company.
(iv) The payments calculated hereunder which are not
actually paid by a Plan shall be paid thirty (30) days following the
Date of Termination in a single lump sum cash payment (of equivalent
actuarial value to the payment calculated hereunder using the same
actuarial assumptions as are used in calculating benefits under the
Plan but using the discount rate that would be used by the Company on
the Date of Termination to determine the actuarial present value of
projected benefit obligations).
(c) EXECUTIVE OUTPLACEMENT COUNSELING. During the Continuation
Period, unless the Executive shall reach normal retirement age during
the Continuation Period, the Executive may request in writing and the
Company shall at its expense engage within a reasonable time following
such written request an outplacement counseling service to assist the
Executive in obtaining employment.
(d) LOAN ABATEMENT
(i) All loans and advances (as well as accrued but
unpaid interest thereon) made by the Company to the Executive under the
terms and conditions of the Company's Stock Purchase Assistance Plan
(the "SPAP") shall be forgiven; and
(ii) All loans (as well as accrued but unpaid
interest thereon) with third parties incurred by the Executive to
purchase the Company's stock under the terms and conditions of the SPAP
shall be satisfied by the Company provided that the Executive forfeit
to the Company all shares of the Company's stock purchased with or
related to the advance of such funds.
7. PAYMENT OF CERTAIN COSTS
Except as otherwise provided in Section 18, if a dispute
arises regarding a termination of the Executive or the interpretation
or enforcement of this Agreement, subsequent to a Change in Control,
all of the reasonable legal fees and expenses incurred by the Executive
and all Arbitration Costs (as hereafter defined) in contesting any such
termination or obtaining or enforcing all or part of any right or
benefit provided for in this Agreement or in otherwise pursuing all or
part of his claim will be paid by the Company, unless prohibited by
law. The Company further agrees to pay pre-judgment interest on any
money judgment obtained by the Executive calculated at the prime
interest rate reported in THE WALL STREET JOURNAL in effect from time
to time from the date that payment to his should have been made under
this Agreement.
8. EXCISE TAX PAYMENTS.
(a) Notwithstanding anything contained in this Agreement to
the contrary, in the event that any payment (within the meaning of
Section 280G(b)(2) of the Internal
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Revenue Code of 1986, as amended or replaced (the "CODE")), or
distribution to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise in connection with, or arising out of, his
employment with the Company (a "PAYMENT" or "PAYMENTS"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, interest and penalties collectively
referred to as the "EXCISE TAX"), the Executive shall be entitled to
receive an additional payment (a "GROSS-UP PAYMENT") in an amount such
that after payment by the Executive of all such taxes (including any
interest or penalties imposed with respect to such taxes), including
any Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments; PROVIDED, that the Executive shall not be entitled to
receive any additional payment relating to any interest or penalties
attributable to any action or omission by the Executive in bad faith.
(b) An initial determination shall be made by an
accounting firm mutually agreeable to the Company and the Executive
and, if not agreed to within three days after the Date of Termination,
a national independent accounting firm selected by the Executive (the
"ACCOUNTING FIRM"), as to whether a Gross-Up Payment is required
pursuant to this Section 8 and the amount of such Gross-Up Payment. To
permit the Accounting Firm to make the initial determination the
Company shall furnish the Accounting Firm with all information
reasonably required for such firm to complete such determination as
soon as practicable after the Date of Termination, but in no event more
than fifteen (15) days thereafter. All fees, costs and expenses
(including, but not limited to, the cost of retaining experts) of the
Accounting Firm shall be borne by the Company and the Company shall pay
such fees, costs and expense as they become due. The Accounting Firm
shall provide detailed supporting calculations, reasonable acceptable
both to the Company and the Executive within thirty (30) days of the
Date of Termination, if applicable, or such other time as requested by
the Company or by the Executive (provided the Executive reasonably
believes that any of the Payments may be subject to the Excise Tax).
The Gross-Up Payment, if any, as determined pursuant to this Section
8(b) shall be paid by the Company to the Executive within five (5)
business days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the
Executive with an opinion reasonably satisfactory to the Executive that
no Excise Tax will be imposed with respect to any such Payment or
payments. Any such initial determination by the Accounting Firm of the
Gross-Up Payment shall be binding upon the Company and the Executive
subject to the application of Section 8(c).
(c) As a result of the uncertainty in the application
of Sections 4999 and 280G of the Code, it is possible that a Gross-Up
Payment (or a portion thereof) will be paid which should not have been
paid (an "OVERPAYMENT") or a Gross-Up Payment (or a portion thereof)
which should have been paid will not have been (an "UNDERPAYMENT"). An
Underpayment shall be deemed to have occurred upon a "Final
Determination" (as hereinafter defined) that the tax liability of the
Executive (whether in respect of the then current taxable year of the
Executive or in respect of any prior taxable year of the Executive)
will be increased by reason of the imposition of the Excise Tax on a
Payment
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or payments with respect to which the Company has failed to make a
sufficient Gross-Up Payment. An Overpayment shall be deemed to have
occurred upon a "FINAL DETERMINATION" (as hereinafter defined) that the
Excise Tax shall not be imposed (or shall be reduced) upon a Payment or
Payments with respect to which the Executive had previously received a
Gross-Up Payment. A Final Determination shall be deemed to have
occurred when (i) in the case of an Overpayment, the Executive has
received from the applicable governmental taxing authority a refund of
taxes or other reduction in his tax liability imposed as a result of a
Payment will be increased, and (ii) in the case of an Overpayment or an
Underpayment, upon either (x) the date a determination is made by, or
an agreement is entered into with, the applicable governmental taxing
authority which finally and conclusively binds the Executive and such
taxing authority, or in the event that a claim is brought before a
court of competent jurisdiction, the date upon which a final
determination has been made by such court and either all appeals have
been taken and finally resolved or the time for all appeals has expired
or (y) the statute of limitations with respect to the Executive's
applicable tax return has expired. If an Underpayment occurs, the
Executive shall promptly notify the company and the Company shall
promptly pay to the Executive an additional Gross-Up Payment equal o
the amount of the Underpayment plus any interest and penalties imposed
on the Underpayment (other than interest and penalties attributable to
any action or omission by the Executive in bad faith). If an
Overpayment occurs, the amount of the Overpayment shall be treated as a
loan by the Company to the Executive and the executive shall, within
ten (10) business days of the occurrence of such Overpayment, pay the
Company the amount of the Overpayment, with interest computed in the
same manner as for an Underpayment.
(d) Notwithstanding anything contained in this
Agreement to the contrary, in the event it is determined that an Excise
Tax will be imposed on any Payment or payments, the Company shall pay
to the applicable governmental taxing authorities as Excise Tax
withholding, the amount of the Excise Tax that the Company has actually
withheld from the Payment or Payments.
9. MITIGATION
The Executive is not required to seek other employment or
otherwise mitigate the amount of any payments to be made by the Company pursuant
to this Agreement, and employment by the Executive will not reduce or otherwise
affect any amounts or benefits due the Executive pursuant to this Agreement,
except as otherwise provided in Section 6(a)(iii).
10. CONTINUING OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION
(a) ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive hereby
recognizes and acknowledges the following:
(i) In connection with the Business, the Company has
expended a great deal of time, money and effort to develop and maintain
the secrecy and confidentiality of substantial proprietary trade secret
information and other confidential business information which, if
misused or disclosed, could be very harmful to the Company's business.
11
(ii) The Executive desires to become entitled to
receive the benefits contemplated by this Agreement but which the
Company would not make available to the Executive but for the
Executive's signing and agreeing to abide by the terms of this Section
10.
(iii) The Executive's position with the Company
provides the Executive with access to certain of the Company's
confidential and proprietary trade secret information and other
confidential business information.
(iv) The Company compensates its employees to, among
other things, develop and preserve business information for the
Company's ownership and use.
(v) If the Executive were to leave the Company, the
Company in all fairness would need certain protection in order to
ensure that the Executive does not appropriate and misuse any
confidential information entrusted to the Executive during the course
of the Executive's employment with the Company.
(b) CONFIDENTIAL INFORMATION
(i) The Executive agrees to keep secret and
confidential, and not to use or disclose to any third parties, except
as directly required for the Executive to perform the Executive's
employment responsibilities for the Company, or except as required by
law, any of the Company's confidential and proprietary trade secret
information or other confidential business information concerning the
Company's business acquired by the Executive during the course of, or
in connection with, the Executive's employment with the Company (and
which was not known by the Executive prior to the Executive's being
hired by the Company). Confidential information means information which
would constitute material, nonpublic information under the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, regardless of whether the Executive's use or
disclosure of such information is in connection with or related to a
securities transaction.
(ii) The Executive acknowledges that any and all
notes, records, reports, written information or documents of any kind,
computer files and diskettes and other documents obtained by or
provided to the Executive, or otherwise made, produced or compiled
during the course of the Executive's employment with the Company,
regardless of the type of medium in which it is preserved, are the sole
and exclusive property of the Company and shall be surrendered to the
Company upon the Executive's termination of employment and on demand at
any time by the Company.
(c) ACKNOWLEDGMENT REGARDING RESTRICTIONS. The Executive
recognizes and agrees that the provisions of this Section 10 are
reasonable and enforceable because, among other things, (i) the
Executive is receiving compensation under this Agreement and (ii) this
Section 10 therefore does not impose any undue hardship on the
Executive. The Executive further recognizes and agrees that the
provisions of this Section 10 are reasonable and enforceable in view of
the Company's legitimate interests in protecting its confidential
information.
12
(d) BREACH. In the event of a breach of Section 10(b), the
Company's sole remedy shall be the discontinuation of the payment,
allocation, accrual or provision of any amounts or benefits as provided
in Sections 5 or 6. The Executive recognizes and agrees, however, that
it is the intent of the parties that neither this Agreement nor any of
its provisions shall be construed to adversely affect any rights or
remedies that Company would have had, including, without limitation,
the amount of any damages for which it could have sought recovery, had
this Agreement not been entered into. Accordingly, the parties hereby
agree that nothing stated in this Section 10 shall limit or otherwise
affect the Company's right to seek legal or equitable remedies it may
otherwise have, or the amount of damages for which it may seek
recovery, in connection with matters covered by this Section 10 but
which are not based on breach or violation of this Section 10
(including, without limitation, claims based on the breach of fiduciary
or other duties of the Executive or any obligations of the Executive
arising under any other contracts, agreements or understandings).
Without limiting the generality of the foregoing, nothing in this
Section 10 or any other provision of this Agreement shall limit or
otherwise affect the Company's right to seek legal or equitable
remedies it may otherwise have, or the amount of damages for which it
may seek recovery, resulting from or arising out of statutory or common
law or any Company policies relating to fiduciary duties, confidential
information or trade secrets. Further, the Executive acknowledges and
agrees that the fact that Section 10(c) is limited to the Continuation
Period, and that the sole remedy of the Company hereunder is the
discontinuation of benefits, shall not reduce or otherwise alter any
other contractual or other legal obligations of the Executive during
any period or circumstance, and shall not be construed as establishing
a maximum limit on damages for which the Company may seek recovery.
11. BINDING AGREEMENT; SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns. The Company
shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. For purposes of this Agreement, "COMPANY"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, beneficiaries, devises and legatees. If the Executive
should die while any amounts are payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee,
beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
13
12. NOTICES
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii) on
the date of transmission, if delivered by confirmed facsimile, (iii) on the
first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the third business day following the date
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
-------------------
-------------------
-------------------
If to the Company:
Spherion Corporation
0000 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
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.
13. GOVERNING LAW
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
14. MISCELLANEOUS
No provisions of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. Section headings contained herein are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
15. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which will constitute
one and the same instrument.
16. NON-ASSIGNABILITY
This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, or transfer this
Agreement or any rights or obligations hereunder,
14
except as provided in Section 11. Without limiting the foregoing, the
Executive's right to receive payments hereunder shall not be assignable or
transferable, whether by pledge, creation of a security interest or otherwise,
other than a transfer by his will or trust or by the laws of descent or
distribution, and in the event of any attempted assignment or transfer contrary
to this paragraph the Company shall have no liability to pay any amount so
attempted to be assigned or transferred.
17. TERM OF AGREEMENT
The term of this Agreement (the "TERM") shall commence on the
date hereof and shall continue in effect for a period of three (3) years, unless
further extended or sooner terminated as hereinafter provided. At the end of
this three year period and on the first day of each one-year anniversary
thereafter, the Term shall automatically be extended for one additional year
unless either party shall have given notice to the other party, at least six
months prior to such anniversary that it does not wish to extend the Term.
However, if a Change in Control of the Company shall have occurred during the
original or any extended term of this Agreement, this Agreement shall continue
in effect for a period of twenty-four (24) months beyond the month in which such
Change in Control occurred; and, PROVIDED FURTHER, that if the Company shall
become obligated to make any payments or provide any benefits pursuant to
Section 5 or 6 hereof, this Agreement shall continue for the period necessary to
make such payments or provide such benefits.
18. RESOLUTION OF DISPUTES
(a) The parties hereby agree to submit any claim, demand,
dispute, charge or cause of action (in any such case, a "CLAIM") arising out of,
in connection with, or relating to this Change in Control Agreement to binding
arbitration in conformance with the J*A*M*S/ENDISPUTE Streamlined Arbitration
Rules and Procedures or the J*A*M*S/ ENDISPUTE Comprehensive Arbitration Rules
and Procedures, as applicable, but expressly excluding Rule 28 of the
J*A*M*S/ENDISPUTE Streamlined Rules and Rule 32 of the J*A*M*S/ENDISPUTE
Comprehensive Rules, as the case may be. All arbitration procedures shall be
held in Fort Lauderdale, Florida and shall be subject to the choice of law
provisions set forth in Section 13 of this Agreement.
(b) In the event of any dispute arising out of or relating
to this Agreement for which any party is seeking injunctive relief, specific
performance or other equitable relief, such matter may be resolved by
litigation. Accordingly, the parties shall submit such matter to the
exclusive jurisdiction of the United States District Court for the Southern
District of Florida or, if jurisdiction is not available therein, any other
court located in Broward County, Florida, and hereby waive any and all
objections to such jurisdiction or venue that they may have. Each party
agrees that process may be served upon such party in any manner authorized
under the laws of the United States or Florida, and waives any objections
that such party may otherwise have to such process.
19. RELEASE AND CONDITIONS
Any and all payments and benefits provided by the Company to
the Executive under this Agreement shall be conditioned on the following: (i)
Executive's continued compliance with the confidentiality provisions contained
herein; (ii) the Executive's execution of
15
a full release and settlement of any and all claims against the Company; and
(iii) the Executive's execution of a non-disparagement agreement and continued
compliance therewith.
20. NO SETOFF
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
21. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company or any of its subsidiaries or
successors and for which the Executive may qualify, nor shall anything herein
limit or reduce such rights as the Executive may have under any other agreements
with the Company or any of its subsidiaries or successors, except to the extent
payments are made pursuant to Section 5, they shall be in lieu of any
termination, separation, severance or similar payments pursuant to the
Executive's Employment Agreement, if any, and the Company's then existing
termination, separation, severance or similar plans or policies, if any. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any of its subsidiaries
shall be payable in accordance with such plan or program, except as explicitly
modified by this Agreement.
22. NO GUARANTEED EMPLOYMENT
The Executive and the Company acknowledge that this Agreement
shall not confer upon the Executive any right to continued employment and shall
not interfere with the right of the Company to terminate the employment of the
Executive at any time.
23. INVALIDITY OF PROVISIONS
In the event that any provision of this Agreement is
adjudicated to be invalid or unenforceable under applicable law in any
jurisdiction, the validity or enforceability of the remaining provisions thereof
shall be unaffected as to such jurisdiction and such adjudication shall not
affect the validity or enforceability of such provision in any other
jurisdiction. To the extent that any provision of this Agreement, including,
without limitation, Section 10 hereof, is adjudicated to be invalid or
unenforceable because it is overbroad, that provision shall not be void but
rather shall be limited to the extent required by applicable law and enforced as
so limited. The parties expressly acknowledge and agree that this Section 23 is
reasonable in view of the parties' respective interests.
24. NON-WAIVER OF RIGHTS
The failure by the Company or the Executive to enforce at any
time any of the provisions of this Agreement or to require at any time
performance by the other party of any of the provisions hereof shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of the Company or the
Executive thereafter to enforce each and every provision in accordance with the
terms of this Agreement.
16
25. EMPLOYMENT AGREEMENT.
If the Executive has an Employment Agreement with the Company,
and if circumstances arise which cause both the Employment Agreement and this
Agreement to apply to the Company and the Executive, then, to the extent of any
inconsistency between the provisions of this Agreement and the Employment
Agreement, the terms of this Agreement alone shall apply. However, if this
Agreement does not apply, then the provisions of the Employment Agreement shall
control and be unaffected by this Agreement.
26. UNFUNDED PLAN.
The Company's obligations under this Agreement shall be
entirely unfunded until payments are made hereunder from the general assets of
the Company, and no provision shall be made to segregate assets of the Company
for payments to be made under this Agreement. The Executive shall have no
interest in any particular assets of the Company but rather shall have only the
rights of a general unsecured creditor of the Company.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY
CERTIFYING THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR
REVIEW AND STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY
BEFORE SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE
AGREEMENT TO ASK ANY QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS
RECEIVED SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
[signatures appear on the following page]
17
IN WITNESS WHEREOF, the parties have caused this Change in
Control Agreement to be executed and delivered as of the day and year first
above set forth.
SPHERION CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
EXECUTIVE
By: _______________________________
Name: _____________________________
18
SCHEDULE A
-------------------------- -----------------------------------------------------
EXECUTIVE'S NAME EXECUTIVE'S POSITION
-------------------------- -----------------------------------------------------
Xxx X. Xxxxxx Executive Vice President and Chief Financial Officer
-------------------------- -----------------------------------------------------
Xxxxxx X. Xxxxxxxx Executive Vice President and Chief Operating Officer
-------------------------- -----------------------------------------------------
