EXHIBIT 10.26(a)
SEVERANCE AGREEMENT
THIS AGREEMENT dated as of May 1, 1996 amends, restates and supersedes
the provisions of a certain Severance Agreement or Amended and Restated
Severance Agreement between RYDER SYSTEM, INC., a Florida corporation (the
"Corporation"), and XXXXX X. XXXXXX (the "Executive"), dated as of the 24th day
of February, 1989.
WITNESSETH:
WHEREAS, the Executive is an officer and/or key employee of the
Corporation and/or its subsidiaries or affiliates and an integral part of its
management; and
WHEREAS, in order to retain the Executive, the Corporation desires to
provide severance benefits to the Executive if the Executive's employment with
the Corporation or its subsidiaries or affiliates terminates as provided herein
prior to 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 Corporation and the
Executive as follows:
1. TERM OF AGREEMENT. This Agreement shall become effective as of the
date hereof and shall terminate upon the occurrence of the earliest of the
events specified below; provided, however, that Section 5 shall survive
termination:
(a) the last day of the Severance Period (as defined in
Section 3(e));
(b) the termination of the Executive's employment by the
Executive for any reason or by the Corporation or its subsidiaries or affiliates
for Death, Disability or Cause (as defined in Sections 3(b) and (a)
respectively);
(c) one (1) year following the date of receipt of a mailing (by
overnight express mail or registered or certified mail, return receipt
requested) or hand delivery to the Executive by the Corporation of written
notice of its intent to terminate this Agreement, provided that the Executive is
not then receiving severance pay and benefits pursuant to Section 4 as a result
of his termination by the Corporation or its subsidiaries or affiliates other
than for Death, Disability or Cause (as defined in Sections 3(b) and (a)
respectively) prior to the end of the one (1) year period;
(d) a Change of Control of the Corporation (as defined in
Section 2), provided that the Executive is not then receiving severance pay and
benefits pursuant to Section 4 as a result of his termination by the Corporation
or its subsidiaries or affiliates other than for Death, Disability or Cause (as
defined in Sections 3(b) and (a) respectively) prior to the Change of Control;
(e) the material breach by the Executive of the provisions of
Section 5; or
(f) the termination of this Agreement pursuant to
Section 4(a)(i) or Section 4(a)(iii)(II).
Additionally, notwithstanding anything in this Agreement to the
contrary, if the Executive should die while receiving severance pay or benefits
pursuant to Section 4 as a result of his termination by the Corporation or its
subsidiaries or affiliates other than for Death, Disability or Cause (as defined
in Sections 3(b) and (a) respectively), this Agreement shall terminate
immediately upon the Executive's death and both parties shall be released from
all obligations under this Agreement other than those under the release
referenced in Section 5(b)(IV) and those relating to amounts or benefits which
are payable under this Agreement within five (5) business days after the
Executive's Date of Termination (if not yet paid), are vested under any plan,
program, policy or practice or which the Executive is otherwise entitled to
receive upon his death, including, but not limited to, life insurance. Any
payment due pursuant to the preceding sentence upon the Executive's death shall
be made to the estate of the deceased Executive, unless the plan, program,
policy, practice or law provides otherwise.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall be deemed to have occurred if:
(a) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "1934 Act")) (a "Person") becomes the beneficial owner, directly or
indirectly, of twenty percent (20%) or more of the combined voting power of the
Corporation's outstanding voting securities ordinarily having the right to vote
for the election of directors of the Corporation; provided, however, that for
purposes of this subparagraph (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by any employee benefit plan
or plans (or related trust) of the Corporation and its subsidiaries and
affiliates or (ii) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subparagraph (c) of this
Section 2; or
(b) the individuals who, as of August 18, 1995, constituted the
Board of Directors of the Corporation (the "Board" generally and as of August
18, 1995 the "Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3) of the Board, provided that any person becoming a director
subsequent to August 18, 1995 whose election, or nomination for election, was
approved by a vote of the persons comprising at least two-thirds (2/3) of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the 0000 Xxx) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
(c) there is a reorganization, merger or consolidation of the
Corporation (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Corporation's
outstanding common stock and outstanding voting securities ordinarily having the
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right to vote for the election of directors of the Corporation immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
fifty percent (50%) of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
ordinarily having the right to vote for the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination,
of the Corporation's outstanding common stock and outstanding voting securities
ordinarily having the right to vote for the election of directors of the
Corporation, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan or plans
(or related trust) of the Corporation or such corporation resulting from such
Business Combination and their subsidiaries and affiliates) beneficially owns,
directly or indirectly, 20% or more of the combined voting power of the then
outstanding voting securities of the corporation resulting from such Business
Combination and (iii) at least two-thirds (2/3) of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(d) there is a liquidation or dissolution of the Corporation
approved by the shareholders; or
(e) there is a sale of all or substantially all of the assets
of the Corporation.
If a Change of Control occurs and if the Executive's employment is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (A) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or (B) otherwise arose in connection with or in anticipation
of a Change of Control, a Change of Control shall be deemed to have
retroactively occurred on the date immediately prior to the date of such
termination of employment.
3. CERTAIN DEFINITIONS.
(a) CAUSE. The Executive's employment may be terminated for
Cause only if the Corporation's Chief Executive Officer determines that Cause
(as defined below) exists. For purposes of this Agreement, "Cause" means (i) an
act or acts of fraud, misappropriation, or embezzlement on the Executive's part
which result in or are intended to result in his or another's personal
enrichment at the expense of the Corporation or its subsidiaries or affiliates,
(ii) conviction of a felony, (iii) conviction of a misdemeanor involving moral
turpitude, (iv) willful failure to report to work for more than thirty (30)
continuous days not attributable to eligible vacation or supported by a licensed
physician's statement, or (v) any other activity which would constitute grounds
for termination for cause by the Corporation or its subsidiaries or affiliates.
For the purposes of this Section 3(a), any good faith interpretation by the
Corporation of the foregoing definition of "Cause" shall be conclusive on the
Executive.
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(b) DEATH OR DISABILITY.
(i) The Executive's employment will be terminated by
the Corporation or its subsidiaries or affiliates automatically upon the
Executive's death ("Death").
(ii) After having established the Executive's
Disability (as defined below), the Corporation may give to the Executive written
notice of the Corporation's and/or its subsidiaries' or affiliates' intention to
terminate the Executive's employment for Disability. The Executive's employment
will terminate for Disability effective on the thirtieth (30th) day after the
Executive's receipt of such notice (the "Disability Effective Date") if within
such thirty (30) day period after such receipt the Executive shall fail to
return to full-time performance of his duties. For purposes of this Agreement,
"Disability" means disability which after the expiration of more than five (5)
months after its commencement is determined to be total and permanent by a
licensed physician selected by the Corporation or its insurers and reasonably
acceptable to the Executive or his legal representative.
In the event of the Executive's termination for Death or
Disability, the Executive and, to the extent applicable, his legal
representatives, executors, heirs, legatees and beneficiaries shall have no
rights under this Agreement and their sole recourse, if any, shall be under the
death or disability provisions of the plans, programs, policies and practices of
the Corporation and/or its subsidiaries and affiliates, as appropriate.
(c) NOTICE OF TERMINATION. Any termination by the Corporation or
its subsidiaries or affiliates other than for Death shall be communicated by
notice to the Executive setting forth the basis for termination of the
Executive's employment and, if the Date of Termination (as defined below) is
other than the date of receipt of such notice, specifying the termination date
(the "Notice of Termination").
(d) DATE OF TERMINATION. Date of Termination means the date of
receipt of the Notice of Termination or any later date specified therein, as the
case may be; provided, however, that if the Executive's employment is terminated
by reason of Death or Disability, the Date of Termination shall be the date of
Death of the Executive or the Disability Effective Date, as the case may be.
(e) SEVERANCE PERIOD. Unless terminated sooner pursuant to
Section 1, the Severance Period means the period set forth below depending on
the Executive's management level at the time the Notice of Termination was
given, which period shall begin on the day following the Executive's Date of
Termination:
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Chief Executive Officer Three (3) years
Mgmt. Xxxxx 00 or above Three (3) years
Mgmt. Level 15-18 Two (2) years
Mgmt. Level 14 One (1) year and six (6) months
Mgmt. Level 13 One (1) year
Mgmt. Level 12 Nine (9) months
Mgmt. Level 11 Six (6) months
4. OBLIGATIONS OF THE CORPORATION.
(a) CIRCUMSTANCES OF TERMINATION.
(i) If, during the term of this Agreement prior to a
Change of Control, the Corporation or its subsidiaries or affiliates shall
terminate the Executive's employment for any reason other than for Death,
Disability or Cause, the Corporation agrees to provide the Executive with
compensation, benefits and perquisites in accordance with the terms and
provisions set forth in Subsection (iii) below and the other provisions of this
Agreement, and the Executive agrees that he shall be subject to such terms and
provisions. The Executive shall not be deemed to have terminated his employment
with the Corporation or any of its subsidiaries or affiliates, and thus shall
not be entitled to any amounts or benefits pursuant to this Agreement, if he
leaves the employ of the Corporation or any of its subsidiaries or affiliates
for immediate reemployment with the Corporation or any of its subsidiaries or
affiliates. Additionally, notwithstanding anything in this Agreement to the
contrary, the Executive shall not be entitled to any amounts or benefits
pursuant to this Agreement if, as a result of the sale of all or substantially
all of the stock or assets of one or more of the Corporation's subsidiaries or
affiliates not constituting a Change of Control, the Executive continues as an
employee of any of the companies whose stock or assets were sold or the
Executive leaves the employ of the Corporation or any of its subsidiaries or
affiliates and the Executive (A) is offered employment with the purchasing
company or any of its subsidiaries or affiliates, or (B) is offered continuing
employment with the Corporation or any of its remaining subsidiaries or
affiliates. In the event of the occurrence of any of the events set forth in the
preceding sentence, this Agreement shall terminate immediately and the Executive
shall not be entitled to any amounts or benefits hereunder; provided, however,
that this Agreement shall continue in effect if the Executive accepts the offer
of continuing employment with the Corporation or any of its remaining
subsidiaries or affiliates.
(ii) If during the term of this Agreement, the Executive
shall terminate his employment with the Corporation or its subsidiaries or
affiliates for any reason, or the Corporation or its subsidiaries or affiliates
shall terminate the Executive's employment for Death, Disability or Cause, then
the Executive shall not be entitled to any of the benefits set forth in
Subsection (iii) below or in any other provision of this Agreement, except to
the extent of the amounts which represent vested benefits or which the Executive
is otherwise entitled to receive under any plan, program, policy or practice of
the Corporation or any of its subsidiaries or affiliates at or subsequent to the
Executive's Date of Termination.
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(iii) If the Executive is entitled to receive severance
pay and benefits under Subsection (i) above, the Corporation agrees to provide
the Executive with the following compensation, benefits and perquisites, subject
to Section 5(b):
(I) CASH ENTITLEMENT. The Corporation shall pay
to the Executive the aggregate of the amounts determined pursuant to
clauses a through e below:
a. UNPAID SALARY AND VACATION. If not
already paid, the Executive's base salary and unused vacation
entitlement through the Executive's Date of Termination at the rate in
effect at the time the Notice of Termination was given.
b. SALARY MULTIPLE. A continuation of the
Executive's annual base salary at the rate in effect at the time the
Notice of Termination was given ("Annual Base Salary") for the
Executive's applicable Severance Period (as defined in Section 3(e)).
c. TENURE - RELATED BONUS. An amount equal
to the PRODUCT OF (i) the Executive's Annual Base Salary MULTIPLIED BY
(ii) the stated maximum bonus opportunity percentage available to the
Executive under the respective incentive compensation plan immediately
preceding the Notice of Termination MULTIPLIED BY (iii) the
"Executive's Three Year Average Bonus Percentage" (as defined below)
(the product of (i), (ii) and (iii) hereinafter referred to as the
"Bonus Opportunity") MULTIPLIED BY the number of the Executive's full
and prorated partial years of service with the Corporation and/or its
subsidiaries or affiliates, subject to a maximum of twelve (12) years,
DIVIDED BY twelve (12).
The "Executive's Three Year Average Bonus Percentage"
is the SUM OF the bonus percentages paid to the Executive DIVIDED BY
the stated maximum bonus opportunity percentages available to the
Executive rounded to one decimal place (e.g., 86.3%) FOR EACH OF the
three (3) fiscal years immediately preceding the date the Notice of
Termination was given DIVIDED BY three (3).
If the Executive has been employed by the Corporation
and/or its subsidiaries or affiliates for less than three (3) fiscal
years at the time the Notice of Termination was given, or if the
Executive was not eligible to receive an incentive compensation award
pursuant to an incentive compensation plan of the Corporation and/or
its subsidiaries or affiliates for one (1) or more of the three (3)
fiscal years immediately preceding the date the Notice of Termination
was given, the bonus percentage to be applied in the "Executive's Three
Year Bonus Percentage" calculation for any year in which the Executive
was not employed or eligible to receive an incentive award will be the
average bonus percentage paid for such year to all executives in the
Corporation or the Executive's respective division, as appropriate,
with a stated maximum bonus opportunity level similar to that of the
Executive at the date the Notice of Termination was given DIVIDED BY
the average stated maximum bonus opportunity percentage available to
these executives for such year rounded to one decimal place (e.g.,
86.3%).
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CALCULATION EXAMPLE OF EXECUTIVE'S THREE YEAR AVERAGE
BONUS PERCENTAGE
(2)
(1) STATED (1)/(2)
BONUS MAXIMUM BONUS
PERCENTAGE BONUS OPPORTUNITY
YEAR PAID OPPORTUNITY PERCENT
--------------------------------------------------------------------------
1 55.1% 60.0% 91.8%
2 71.8% 80.0% 89.8%
3 102.0% 100.0% 102.0%
------
Sum 283.6%
Executive's Three Year Average
Bonus Percentage (Sum DIVIDED BY 3) 94.5%
d. BONUS MULTIPLE. For the Chief Executive
Officer and executives in management level 17 and above at the time the
Notice of Termination was given ONLY, an amount equal to the PRODUCT OF
the Bonus Opportunity determined in clause c above MULTIPLIED BY the
following multiple depending on the Executive's management level at the
time the Notice of Termination was given:
Chief Executive Officer 2
Mgmt. Level 17 or above 1
e. PRIOR YEAR BONUS. If bonuses for the
calendar year prior to the Executive's Date of Termination have been
distributed and the Executive has not yet been paid his incentive
compensation award for such calendar year, and his Date of Termination
is subsequent to the incentive compensation award payment date for such
calendar year, then the Executive shall receive an additional amount
equal to the PRODUCT OF the actual salary earned by the Executive
during the prior calendar year MULTIPLIED BY the actual bonus
percentage approved for the Executive for such calendar year under the
respective incentive compensation plan.
The Executive agrees that he shall not be eligible
for or entitled to any other incentive compensation award, including
any pro rata incentive compensation award, pursuant to the
Corporation's and/or its subsidiaries' or affiliates' incentive
compensation plans. The Executive's agreement to this provision is a
material consideration for the Corporation's executing this Agreement.
The Corporation shall pay to the Executive the
amounts determined in clauses a through e above as follows:
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CLAUSE A: In a lump sum no later than the next normal
pay period for the Executive, unless otherwise required by law.
CLAUSE B: In equal semi-monthly installments on the
fifteenth and last day of each month during the Severance Period.
CLAUSE D: No later than the first March 1st following
the Executive's Date of Termination.
CLAUSES C AND E: In a lump sum within five (5)
business days after the Executive's Date of Termination.
(II) MEDICAL, DENTAL, DISABILITY, LIFE INSURANCE AND
OTHER SIMILAR PLANS AND PROGRAMS. Until the earliest to occur of (i)
the last day of the Severance Period, (ii) the date on which the
Executive becomes eligible for the designated coverage as an employee
of another employer which provides or offers such coverage to its
employees, or (iii) in the case of benefits requiring employee
contributions, the date the Executive fails to make such contributions
pursuant to the Corporation's or the plan's instructions or otherwise
cancels his coverage in accordance with plan provisions (the "Benefits
Continuation Period"), the Corporation shall continue to provide the
benefits which the Executive and/or his family is or would have been
entitled to receive under all medical, dental, disability, supplemental
life, group life, and accidental death and dismemberment insurance
plans and programs, and other similar plans and programs of the
Corporation and/or its subsidiaries or affiliates not otherwise
provided for in this Agreement, in each case on a basis providing the
Executive and/or his family with the opportunity to receive benefits at
least equal to those benefits provided by the Corporation and/or its
subsidiaries or affiliates to their comparably situated active
executives during the Benefits Continuation Period. The
non-contributory benefits will be paid for by the Corporation. The
medical and dental plan benefits, to the extent applicable, will be
provided in accordance with the provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), except that
the Corporation shall pay the COBRA premiums for the standard medical
and dental plan benefits during the Benefits Continuation Period minus
the Executive's contributory obligation determined as if the Executive
were still an executive employee of the Corporation. If the Executive's
participation in any such plan or program is barred by COBRA or for any
other reason, the Corporation shall pay or provide for payment of such
benefits or substantially similar benefits to the Executive and/or his
family. Failure of the Executive to accept available coverage from
another employer or to notify the Corporation, in writing, within
thirty (30) days of the Executive's eligibility for coverage under
another employer's plan shall terminate the Severance Period and this
Agreement immediately, and the Corporation shall have no further
obligations to the Executive under this Agreement; provided, however,
that the Executive will, if applicable, continue to be subject to the
provisions of Section 5 of this Agreement. Upon termination of his
coverage under this paragraph, the Executive may be eligible under
COBRA to continue some of his benefits
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for an additional period of time. If such is the case, the Executive
will be responsible for the entire COBRA premium. Additionally, the
Executive has thirty-one (31) days from the last day of coverage in
which to convert his group life insurance to an individual policy. The
Executive must arrange for conversion through an agent of Standard
Insurance Company of America, or such other insurance company as is
then providing coverage.
(III) CAR. a. If, at the time the Notice of
Termination was given, the Executive was assigned a car and was in
management level 14 or above, within five (5) business days after the
Executive's Date of Termination, the Corporation shall transfer to the
Executive free and clear title to the car assigned to the Executive at
the time the Notice of Termination was given.
b. If, at the time the Notice of
Termination was given, the Executive was assigned a car and was in
management level 13 or below, then the following provisions will apply:
If the Executive has less than one (1)
full year of service with the Corporation and/or its subsidiaries or
affiliates, the Executive shall have no right to purchase or receive
from the Corporation the car assigned to the Executive at the time the
Notice of Termination was given since the Executive shall have no
rights under this Agreement pursuant to Section 4(c).
If the Executive has one (1) or more but
fewer than five (5) full years of service with the Corporation and/or
its subsidiaries or affiliates, the Executive may purchase from the
Corporation free and clear title to the car assigned to the Executive
at the time the Notice of Termination was given for fifty percent (50%)
of the average retail value of the car listed in the National
Automobile Dealer's Association, Official Used Car Guide as of the date
of the purchase.
If the Executive has completed five (5)
or more full years of service with the Corporation and/or its
subsidiaries or affiliates, the Corporation shall transfer to the
Executive free and clear title to the car assigned to the Executive at
the time the Notice of Termination was given.
Purchase arrangements and title transfer
must be completed within five (5) business days after the Executive's
Date of Termination.
c. The Executive will be responsible for
the sales tax on transfer of the car as well as for all insurance,
maintenance, taxes and other liabilities associated with the car after
title transfer. Additionally, the Corporation shall assign to the
Executive all claims for breach of warranty and other similar matters
against the vendor and manufacturer of the car. The Executive agrees to
accept such car in an "As-Is" condition. THE EXECUTIVE WAS SOLELY
RESPONSIBLE FOR THE SELECTION AND MAINTENANCE OF THE CAR AND THEREFORE
ACKNOWLEDGES THAT THE
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CORPORATION DOES NOT MAKE ANY WARRANTY OR REPRESENTATION, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE CAR, INCLUDING, BUT NOT LIMITED
TO THE CONDITION OR DESIGN OF THE CAR, ANY LATENT DEFECTS OF THE CAR,
THE MERCHANTABILITY OF THE CAR OR ITS FITNESS FOR ANY PARTICULAR
PURPOSE.
d. Notwithstanding the Executive's
management level, if the Executive was receiving a car allowance at the
time the Notice of Termination was given, the Corporation shall pay to
the Executive, in a lump sum within five (5) business days after the
Executive's Date of Termination, an amount equal to the PRODUCT OF the
Executive's monthly car allowance in effect at the time the Notice of
Termination was given MULTIPLIED BY 12 MULTIPLIED BY the following
multiple depending on the Executive's management level at the time the
Notice of Termination was given:
Chief Executive Officer 3
Mgmt. Level 19 or above 3
Mgmt. Xxxxx 00-00 0
Xxxx. Xxxxx 00 1.5
Mgmt. Xxxxx 00 0
Xxxx. Xxxxx 00 .00
Xxxx. Xxxxx 00 .5
e. The Executive shall not be entitled to
any car telephone provided by the Corporation or its subsidiaries or
affiliates and such car telephone, if applicable, shall be returned to
the Corporation immediately upon title transfer.
(IV) OUTPLACEMENT. Until the end of the Severance
Period or until the Executive obtains another full-time job or becomes
self-employed, whichever occurs first, the Corporation shall provide
the Executive with professional outplacement services of the
Corporation's choice and shall reimburse the Executive for documented
incidental outplacement expenses directly related to job search such as
resume mailing, interviewing trips, and clerical support, subject to a
maximum cost of the lesser of (i) ten percent (10%) of the Executive's
Annual Base Salary (as defined in clause (I)b above), or (ii) $20,000
if the Executive was in management level 11-19 at the time the Notice
of Termination was given or $30,000 if the Executive was above
management level 19 or Chief Executive Officer at the time the Notice
of Termination was given. The Executive shall not be entitled to
receive cash in lieu of the professional outplacement services or
reimbursed incidental outplacement expenses provided by the
Corporation.
(V) PERQUISITE, COUNTRY CLUB, FINANCIAL PLANNING/TAX
PREPARATION AND EXECUTIVE PHYSICAL ALLOWANCES. For the twelve (12)
month perquisite, country club, financial planning/tax preparation and
executive physical payment period of the Corporation or the Executive's
respective division, as appropriate (i.e., January - December or
September - August), in which the Notice of Termination was given, if
not yet paid, and one (1) additional twelve (12) month period
thereafter, but in no event for
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longer than the Severance Period, the Corporation shall continue to
provide the Executive with the perquisite, country club, financial
planning/tax preparation and executive physical allowances, as
appropriate, the Executive would have been entitled to receive under
the plans, programs, policies and practices of the Corporation and/or
its subsidiaries or affiliates (subject to the Corporation's receipt of
appropriate documented evidence of such expenses), in each case on a
basis providing the Executive with an opportunity to receive benefits
at least equal to those provided by the Corporation and/or its
subsidiaries or affiliates to their comparably situated active
executives during the applicable period.
(VI) SPLIT-DOLLAR LIFE INSURANCE AND DEFERRED
COMPENSATION. Notwithstanding anything in the applicable agreements,
plans or policies to the contrary, if the Executive is covered by the
Corporation's split-dollar life insurance with its attendant deferred
compensation benefit at the time the Notice of Termination is given,
and the Executive wishes to retain both the life insurance coverage and
its future deferred compensation benefit, the Executive may purchase
the policy from the Corporation by paying the Corporation an amount
equal to the cash value of the policy. If the Executive elects to
purchase the policy from the Corporation, the Executive will have all
the benefits inherent in ownership of the whole-life policy, including
the cash value of the policy.
If the Executive wishes to retain the life
insurance coverage only, the Executive may convert the policy by
forfeiting the deferred compensation benefit. If the Executive chooses
this alternative, the Corporation will transfer ownership of the policy
to the Executive, and contemporaneously the Executive will execute an
agreement relinquishing the deferred compensation benefit. This
alternative transfers the entire cash value of the policy to the
Executive and relieves the Corporation of the administrative
record-keeping associated with the Executive's deferred compensation
benefit.
The Executive must notify the Corporation of
his election for the transfer of his split-dollar life insurance policy
and deferred compensation benefit within thirty (30) days following the
Executive's Date of Termination and the Corporation shall complete the
transfer immediately upon receipt of such notice and the required
payment or executed agreement.
(b) If a Change of Control occurs and the Executive is then
receiving severance pay and benefits pursuant to Section 4(a) as a result of his
termination by the Corporation or its subsidiaries or affiliates other than for
Death, Disability or Cause prior to the Change of Control, the Corporation shall
pay to the Executive in a lump sum, within five (5) business days after the
Change of Control, an amount (in lieu of future periodic payments) equal to the
present value of all future cash payments due to the Executive under this
Agreement (including the maximum outplacement and perquisite, country club,
financial planning/tax preparation and executive physical allowances, as
appropriate) using the First National Bank of Boston's base or prime commercial
lending rate then in effect for such computation. The Corporation and the
Executive shall continue to be liable to each other for all of their other
respective obligations under this Agreement.
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(c) Notwithstanding anything in this Agreement to the contrary, no
amount shall be paid or payable under this Agreement unless the Executive has
been employed by the Corporation and/or its subsidiaries or affiliates for at
least twelve (12) consecutive months at the time of his termination. In the
event the Executive is employed for less than twelve (12) consecutive months,
the Executive hereby agrees that he shall not receive or be entitled to anything
under this Agreement.
5. OBLIGATIONS OF THE EXECUTIVE.
(a) COVENANT OF CONFIDENTIALITY. All documents, records,
techniques, business secrets and other information of the Corporation, its
subsidiaries and affiliates which have or will come into the Executive's
possession from time to time during the Executive's affiliation with the
Corporation and/or any of its subsidiaries or affiliates and which the
Corporation treats as confidential and proprietary to the Corporation and/or any
of its subsidiaries or affiliates shall be deemed as such by the Executive and
shall be the sole and exclusive property of the Corporation, its subsidiaries
and affiliates. The Executive agrees that the Executive will keep confidential
and not use or divulge to any other party any of the Corporation's or its
subsidiaries' or affiliates' confidential information and business secrets,
including, but not limited to, such matters as costs, profits, markets, sales,
products, product lines, key personnel, pricing policies, operational methods,
customers, customer requirements, suppliers, plans for future developments, and
other business affairs and methods and other information not readily available
to the public. Additionally, the Executive agrees that upon his termination of
employment, the Executive shall promptly return to the Corporation any and all
confidential and proprietary information of the Corporation and/or its
subsidiaries or affiliates that is in his possession.
(b) If, at any time during the term of this Agreement, the
Corporation or its subsidiaries or affiliates shall terminate the Executive's
employment for any reason other than for Death, Disability or Cause, and the
Executive shall elect to receive severance pay and benefits in accordance with
Section 4, the Executive shall be subject to the following additional
provisions:
(I) COVENANT AGAINST COMPETITION. During the Severance
Period (without any reduction or modification), the Executive shall
not, without the prior written consent of the Corporation's Chief
Executive Officer, directly or indirectly engage or become a partner,
director, officer, principal, employee, consultant, investor, creditor
or stockholder in any business, proprietorship, association, firm or
corporation not owned or controlled by the Corporation or its
subsidiaries or affiliates which is engaged or proposes to engage or
hereafter engages in a business competitive directly with the business
conducted by the Corporation or any of its subsidiaries or affiliates
in any geographic area where such business of the Corporation or its
subsidiaries or affiliates is conducted; provided, however, that the
Executive is not prohibited from owning one percent (1%) or less of the
outstanding capital stock of any corporation whose stock is listed on a
national securities exchange.
(II) COVENANT OF NON-SOLICITATION. During the Severance
Period (without any reduction or modification), the Executive shall
not, either on the Executive's own account
12
or for any person, firm or company, solicit, interfere with or induce,
or attempt to induce, any employee of the Corporation or any of its
subsidiaries or affiliates to leave his employment or to breach his
employment agreement, if any.
(III) COVENANT OF NON-DISPARAGEMENT AND COOPERATION. The
Executive agrees not to make any remarks disparaging the conduct or
character of the Corporation or any of its subsidiaries or affiliates,
their current or former agents, employees, officers, directors,
successors or assigns ("Ryder"). In addition, the Executive agrees to
cooperate with Ryder, at no extra cost, in any litigation or
administrative proceedings (e.g., EEOC charges) involving any matters
with which the Executive was involved during the Executive's employment
with the Corporation. The Corporation shall reimburse the Executive for
travel expenses approved by the Corporation or its subsidiaries or
affiliates incurred in providing such assistance.
(IV) RELEASE. Upon his termination of employment, the
Executive shall execute and agree to be bound by a release agreement
substantially in the form attached as Exhibit A and, to the extent
applicable, a resignation letter substantially in the form attached as
Exhibit B, prior to and as a condition to receiving any payments or
benefits pursuant to this Agreement. If applicable, the release
agreement may contain provisions required by federal, state or local
law (e.g., the Older Worker's Benefit Protection Act) to effectuate a
general release of all claims.
(c) SPECIFIC REMEDY. The Executive acknowledges and agrees that
if the Executive commits a material breach of the Covenant of Confidentiality
or, if applicable, the Covenant Against Competition, the Covenant of
Non-Solicitation, or the Covenant of Non-Disparagement and Cooperation (as
provided in Subsections (a) and (b) above, the Corporation shall have the right
to have the covenant specifically enforced by any court having appropriate
jurisdiction on the grounds that any such breach will cause irreparable injury
to the Corporation, and that money damages will not provide an adequate remedy
to the Corporation. The Executive further acknowledges and agrees that the
Covenant of Confidentiality and, if applicable, the Covenant Against
Competition, the Covenant of Non-Solicitation, and the Covenant of
Non-Disparagement and Cooperation contained in this Agreement are fair, do not
unreasonably restrict the Executive's future employment and business
opportunities, and are commensurate with the compensation arrangements set out
in this Agreement. In addition, once the Executive makes an election to receive
severance pay and benefits pursuant to Section 4 and is subject to Subsection
(b) above, the Executive shall have no right to return any amounts or benefits
that are already paid or to refuse to accept any amounts or benefits that are
payable in the future in lieu of his specific performance of his obligations
under Subsection (b) above.
6. 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 plans, programs, policies or practices provided by the
Corporation or any of its subsidiaries or affiliates and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under such plans, programs, policies or practices or
under any stock option or other agreements with the Corporation or any of its
subsidiaries or affiliates,
13
specifically including but not limited to the Corporation's 1980 and 1995 Stock
Incentive Plans, the deferred compensation agreements, the Corporation's and/or
its subsidiaries' or affiliates' retirement, 401(k) and profit sharing plans,
the Corporation's Benefit Restoration Plan, Savings Restoration Plan,
supplemental disability and retiree life insurance. In the event there are any
amounts which represent vested benefits or which the Executive is otherwise
entitled to receive under these or any other plans, programs, policies or
practices, including any plan, program, policy or practice adopted after the
execution of this Agreement, of the Corporation or any of its subsidiaries or
affiliates at or subsequent to the Executive's Date of Termination, the
Corporation shall cause the relevant plan, program, policy or practice to pay
such amount, to the extent not already paid, in accordance with the provisions
of such plan, program, policy or practice. The phrase "Termination Date" as used
in the Corporation's 1980 and 1995 Stock Incentive Plans shall mean the end of
the Severance Period with respect to Non-Qualified Stock Options granted to the
Executive, if any, pursuant to such plan, and the Executive's Date of
Termination with respect to Incentive Stock Options and Restricted Stock Rights
granted to the Executive, if any, thereunder. The last day of the Severance
Period will be considered to be the Executive's termination date for purposes of
the Executive's deferred compensation agreement(s), if any.
7. NO MITIGATION. In no event shall the Executive be obligated to seek
other employment by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement nor, except as specifically
provided otherwise in this Agreement, shall the amount of any payment provided
for under this Agreement be reduced by any compensation or benefits earned by
the Executive as the result of employment by another employer after the Date of
Termination, or otherwise.
8. ASSIGNMENT. This Agreement is personal to the Executive and the
Executive does not have the right to assign this Agreement or any interest
herein. This Agreement shall inure to the benefit of and be binding upon the
Corporation and its successors.
9. MISCELLANEOUS. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The parties hereto agree that the appropriate
forum for any action brought hereunder shall be Miami, Florida. The captions of
this Agreement are not part of the provisions hereof and shall have no force or
effect. The Executive acknowledges and agrees that the Corporation may amend
this Agreement at any time to comply with any federal, state or local law or
regulation or as necessary to enforce the intent of Section 5. Otherwise, this
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder, other than
those under Section 3(c), shall be in writing and shall be given to the other
party by hand delivery, by overnight express mail, or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
14
IF TO THE EXECUTIVE: at the Executive's last address
appearing in the payroll/personnel records of the Corporation.
IF TO THE CORPORATION:
Ryder System, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Executive understands and acknowledges that the payments
and benefits provided to the Executive pursuant to this Agreement may be
unsecured, unfunded obligations of the Corporation. The Executive further
understands and acknowledges that the payments and benefits under this Agreement
may be compensation and as such may be included in either the Executive's W-2
earnings statements or 1099 statements. The Corporation may withhold from any
amounts payable under this Agreement such federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or regulation, as well
as any other deductions consented to in writing by the Executive.
(e) This Agreement, including its attached Exhibits, contains
the entire understanding of the Corporation and the Executive with respect to
the subject matter hereof. No agreements or representations, oral or written,
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 and its
attached Exhibits.
(f) The employment of the Executive by the Corporation or its
subsidiaries or affiliates may be terminated by either the Executive or the
Corporation or its subsidiaries or affiliates at any time and for any reason,
with or without cause. Nothing contained in this Agreement shall affect such
rights to terminate; provided, however, that nothing in this Section 9(f) shall
prevent the terms and provisions of this Agreement from being enforced in the
event of a termination described in Section 4(a).
(g) Whenever used in this Agreement, the masculine gender shall
include the feminine or neuter wherever necessary or appropriate and vice versa
and the singular shall include the plural and vice versa.
(h) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
15
10. AMENDMENT AND RESTATEMENT. The Corporation and the Executive agree
that this Agreement amends and correctly restates the entire agreement between
the parties as of May 1, 1996; that the provisions of this Agreement supersede
and replace the provisions of the Prior Agreement; and that the terms and
provisions of this Agreement shall be binding on the Corporation and the
Executive in all respects.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused these presents to be executed in its name on its behalf,
and its corporate seal to be hereunto affixed and attested by its assistant
secretary, all as of the day and year first above written.
---------------------------- ----------------------------
Witness Executive
---------------------------- ----------------------------
Witness Social Security Number
ATTEST: RYDER SYSTEM, INC.
(the "Corporation")
____________________________ By:__________________________
Assistant Secretary Executive Vice President
(Seal)
16
SEVERANCE AGREEMENT
EXHIBIT A
RELEASE AGREEMENT
FOR AND IN CONSIDERATION OF THE PAYMENT TO ME OF THE SEVERANCE BENEFITS
PURSUANT TO THE SEVERANCE AGREEMENT BETWEEN RYDER SYSTEM, INC. ("THE
CORPORATION") AND ME DATED MAY 1, 1996 (THE "SEVERANCE AGREEMENT"), I,
(EXECUTIVE'S NAME), ON BEHALF OF MYSELF, MY HEIRS, SUCCESSORS AND ASSIGNS
(COLLECTIVELY "I" OR "ME"), HEREBY RELEASE AND FOREVER DISCHARGE THE CORPORATION
AND ALL OF ITS SUBSIDIARIES AND AFFILIATES, THEIR CURRENT AND FORMER AGENTS,
EMPLOYEES, OFFICERS, DIRECTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY "RYDER"),
FROM ANY AND ALL CLAIMS, DEMANDS, ACTIONS, AND CAUSES OF ACTION, AND ALL
LIABILITY WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, FIXED
OR CONTINGENT, WHICH I HAVE OR MAY HAVE AGAINST RYDER AS A RESULT OF MY
EMPLOYMENT BY AND SUBSEQUENT TERMINATION AS AN EMPLOYEE OF RYDER, UP TO THE DATE
OF THE EXECUTION OF THIS RELEASE AGREEMENT. THIS INCLUDES BUT IS NOT LIMITED TO
CLAIMS AT LAW OR EQUITY OR SOUNDING IN CONTRACT (EXPRESS OR IMPLIED) OR TORT
ARISING UNDER FEDERAL, STATE, OR LOCAL LAWS PROHIBITING AGE, SEX, RACE,
DISABILITY, VETERAN OR ANY OTHER FORMS OF DISCRIMINATION. THIS FURTHER INCLUDES
ANY AND ALL CLAIMS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE
AMERICANS WITH DISABILITIES ACT OF 1990, TITLE VII OF THE CIVIL RIGHTS ACT OF
1964, OR THE EMPLOYEE RETIREMENT INCOME SECURITY ACT ("ERISA"), AS AMENDED, OR
CLAIMS GROWING OUT OF ANY LEGAL RESTRICTIONS ON RYDER'S RIGHT TO TERMINATE ITS
EMPLOYEES. I COVENANT AND AGREE THAT I WILL NOT XXX OR FILE ANY LAWSUIT OR
ACTION AGAINST RYDER IN THE FUTURE WITH RESPECT TO ANY CLAIM OR CAUSE OF ACTION
RELEASED AS PART OF THIS RELEASE AGREEMENT. I FURTHER AGREE THAT IF I VIOLATE
THIS COVENANT OR ANY OTHER PROVISION OF THIS RELEASE AGREEMENT OR THE SEVERANCE
AGREEMENT, I SHALL INDEMNIFY RYDER FOR ALL COSTS AND ATTORNEY'S FEES INCURRED BY
RYDER IN ENFORCING THIS RELEASE AGREEMENT AND THE SEVERANCE AGREEMENT.
This Release Agreement does not release Ryder from any of its current,
future or ongoing obligations under the Severance Agreement, specifically
including but not limited to cash payments and benefits due me.
I understand and agree that this Release Agreement and the Severance
Agreement shall not in any way be construed as an admission by Ryder of any
unlawful or wrongful acts
17
whatsoever against me or any other person, and Ryder specifically disclaims any
liability to or wrongful acts against me or any other person.
I agree that the terms and provisions of this Release Agreement and the
Severance Agreement, as well as any and all incidents leading to or resulting
from this Release Agreement and the Severance Agreement, are confidential and
that I may not discuss them with anyone without the prior written consent of the
Corporation's or its successor's Chief Executive Officer, except as required by
law; provided, however, that I agree to immediately give the Corporation or
its successor notice of any request to discuss this Release Agreement or the
Severance Agreement and to provide the Corporation or its successor with the
opportunity to contest such request prior to my response.
This Release Agreement shall be governed by and construed in accordance
with the laws of the state of Florida, without reference to principles of
conflict of laws. Except as provided in Sections 5(b)(IV) and 9(a) of the
Severance Agreement, this Release Agreement may not be amended or modified
otherwise than by a written agreement executed by the Corporation and me or our
respective successors and legal representatives.
The invalidity or unenforceability of any provision of this Release
Agreement shall not affect the validity or enforceability of any other provision
of this Release Agreement.
I CERTIFY THAT I HAVE FULLY READ, HAVE RECEIVED AN EXPLANATION OF, HAVE
NEGOTIATED AND COMPLETELY UNDERSTAND THE PROVISIONS OF THIS RELEASE AGREEMENT,
AND THAT I HAVE BEEN ADVISED BY THE CORPORATION THAT I SHOULD CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS RELEASE AGREEMENT. I FURTHER CERTIFY THAT I HAVE
HAD ADEQUATE TIME TO REVIEW AND CONSIDER THE PROVISIONS OF THIS RELEASE
AGREEMENT AND THAT I AM SIGNING THIS RELEASE AGREEMENT FREELY AND VOLUNTARILY,
WITHOUT DURESS, COERCION OR UNDUE INFLUENCE.
Dated this ____ day of _________________, 19__.
---------------------------- ----------------------------
Witness Executive
---------------------------- ----------------------------
Witness Social Security Number
Executive's Date of Termination:___________________
18
STATE OF _____________)
) ss:
COUNTY OF ___________ )
Before me personally appeared __________, to me well known and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged to and before me that he/she executed said instrument for the
purposes therein expressed.
WITNESS my hand and official seal this ____ day of _________________, 19___.
--------------------------
Notary Public
My Commission Expires:
__________________________ (Seal)
19
SEVERANCE AGREEMENT
EXHIBIT B
RESIGNATION LETTER
TO THE BOARD OF DIRECTORS
OF RYDER SYSTEM, INC.
Gentlemen:
Effective immediately, I hereby resign as an officer and/or director of Ryder
System, Inc. and/or its subsidiaries and affiliates and, to the extent
applicable, from all committees of which I am a member.
Sincerely,
----------------------------
Executive's Name
----------------------------
Date
20
