CHANGE OF CONTROL AGREEMENT
EXHIBIT 10.39
THIS CHANGE OF CONTROL AGREEMENT (this “Agreement”) is effective as of the [___] day of
[___], 200[_], between [UTi, Services, Inc., a California corporation] (the “Company”), and
[___] (“Employee”).
RECITALS
WHEREAS, the Company has determined that it is in the best interests of the Company, UTi
Worldwide Inc. (“UTi Worldwide”) and the related group of entities and companies (UTi Worldwide,
the Company and such related entities and companies are referred to herein collectively as the “UTi
Group”) to ensure that the UTi Group will have the continued dedication of Employee,
notwithstanding the possibility, threat or occurrence of a “Change of Control of UTi Worldwide” (as
defined on Exhibit A attached to this Agreement and incorporated herein).
NOW, THEREFORE, in consideration of the promises and covenants set forth below, the parties
hereto agree as follows:
1. Termination of Employment Following a Change of Control of UTi Worldwide.
(a) Subject to the terms and conditions of this Agreement, the Company hereby agrees to
provide the Employee with the payments described in Section 1(b) below in the event that Employee’s
employment with the Company is terminated by the Company other than for Cause (as defined below),
death or Disability (as defined below) during the period commencing on the effective date of a
Change of Control of UTi Worldwide and ending on the first anniversary of such effective date (such
period shall be referred to herein as the “Effective Period”). For purposes of this Agreement,
termination for “Cause” shall include any termination by the Company as a result of (i) Employee’s
willful failure to perform or the gross negligence in the performance of Employee’s material duties
to the UTi Group (and if such willful failure or gross negligence is susceptible to cure by
Employee, the failure to effect such cure by Employee within thirty (30) days after written notice
of such willful failure or gross negligence is given to Employee), (ii) Employee’s engagement in an
act of dishonesty involving or affecting the UTi Group or the falsification of records thereof,
(iii) Employee’s indictment or conviction for a crime of theft, embezzlement, fraud,
misappropriation of funds or other alleged act of dishonesty by Employee, or other crime involving
moral turpitude, or (iv) Employee’s engagement in any violation of law relating to Employee’s
employment or violation by Employee of Employee’s duty of care or loyalty to the UTi Group. For
purposes of this Agreement, Employee shall be deemed to have become “Disabled” or to have suffered
a “Disability” to the extent Employee is or has been incapable of performing substantially all of
Employee’s duties and responsibilities to the Company for one hundred twenty (120) days or more in
the aggregate during any consecutive twelve (12) months.
(b) If Employee’s employment is terminated by the Company during the Effective Period other
than for Cause, death or Disability, neither the Company nor the UTi Group shall have any further
obligation or liability to Employee except that Employee shall be
entitled to receive (a) the Accrued Benefits (as defined below) and (b) severance equal to
twelve (12) months of Employee’s then current monthly salary, subject to the condition set forth in
Section 1(c) below. Subject to Section 18 below, such severance shall be payable in twelve (12)
equal monthly installments commencing within sixty (60) days after Employee’s termination of
employment. For purposes of this Section 1(b), the phrase “Accrued Benefits shall mean, with
respect to Employee (i) the portion of Employee’s base salary which has been earned up to the date
of termination, (ii) compensation for any accrued and unused vacation up to the date of
termination, (iii) reimbursement for business expenses properly incurred up to the date of
termination and (iv) such benefits or payments to which Employee may be entitled under the terms
and conditions of any benefit, equity, incentive or compensation plan, program or award applicable
to Employee and Employee’s termination of employment to the extent accrued for the benefit of, or
owing to, Employee as of the date of such termination of employment, excluding the terms of any
severance or similar plan applicable to Employee (collectively, the “Accrued Benefits”).
(c) Employee agrees that it is a condition precedent to the Company’s obligations to pay the
severance payments provided for in Section 1(b) above that Employee execute a general release and
waiver prepared by the Company releasing and forever discharging the Company and the UTi Group and
each and all of their respective owners, shareholders, members, predecessors, successors, assigns,
agents, directors, officers and other representatives from any and all claims, charges, complaints,
liabilities, controversies, rights, demands, costs, and expenses (other than the obligations of the
Company set forth in Section 1(b)), and that such general release become irrevocable within sixty
(60) days of Employee’s termination of employment. Employee agrees that Employee will not assign
or transfer, or purport to assign or transfer, to any person any claim or a portion thereof or any
interest therein that Employee might have against the UTi Group.
2. Not a Contract of Employment.
Employee acknowledges and agrees that Employee is an “at will” employee whose employment may
be terminated at any time for any or no reason, and except as specifically provided for herein,
without liability. Nothing in this Agreement confers on Employee any right of continued employment
or restricts the Company’s right to terminate Employee’s employment at any time for any or no
reason.
3. Exclusivity of Payments. Employee acknowledges and agrees that Employee is not
entitled to any severance payments or other severance benefits from the Company, UTi Worldwide or
the UTi Group, other than the payments and benefits expressly provided in Section 1(b) of this
Agreement, except for any benefits which may be due to Employee in the normal course under any then
applicable employee benefit plan or program of the Company that provides for benefits after
termination of employment in accordance with the terms of such plan or program. Employee’s right
to receive payments or benefits under this Agreement upon termination of employment will cease if
Employee breaches any provision of Sections 4 or 5 below.
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4. Proprietary Information.
(a) Definition. Employee hereby acknowledges that Employee possesses and may make use
of, acquire, create, develop or add to certain confidential and/or proprietary information
regarding the UTi Group and its businesses and affiliates (whether in existence prior to, as of or
after the date hereof, collectively, “Proprietary Information”), which Proprietary Information
shall include, without limitation, all of the following materials and information (whether or not
reduced to writing and whether or not patentable or protected by copyright): trade secrets,
inventions, processes, formulae, programs, technical data, “know-how,” procedures, manuals,
confidential reports and communications, marketing methods, product sales or cost information, new
product ideas or improvements, customer-tailored solutions and other consulting products and
processes, new packaging ideas or improvements, research and development programs, identities or
lists of suppliers, vendors or customers, financial information and financial projections or any
other confidential or proprietary information relating to the UTi Group and/or its business. The
term “Proprietary Information” shall also include, without limitation, any confidential or
non-public information of suppliers or customers of the UTi Group obtained by Employee in the
course of Employee’s employment or association with the Company or the UTi Group. The term
“Proprietary Information” does not include any information that (i) at the time of disclosure is
generally available to and known by the public (other than as a result of its disclosure by
Employee), (ii) becomes available to Employee on a lawful, non-confidential basis from a person
other than the UTi Group or its suppliers or customers or its or their representatives, provided
that the source of such information was not known by Employee to be subject to an obligation of
confidentiality or otherwise disclosed such information to Employee with the reasonable expectation
that it would remain confidential.
(b) Nondisclosure. During the term of this Agreement and thereafter, Employee will
not, without the prior express written consent of the Chief Executive Officer of UTi Worldwide,
disclose or make any use of any Proprietary Information except as may be required in the course of
the performance of Employee’s services under this Agreement.
(c) Agreement Not to Solicit Employees and Customers. To protect the Proprietary
Information and trade secrets of the UTi Group, Employee agrees, during the term of Employee’s
employment with the UTi Group and for a period of one (1) year thereafter, not to, directly or
indirectly, either on Employee’s own behalf or on behalf of any other person or entity, (i) to
attempt to persuade, induce or solicit or employ any person who is an employee of the UTi Group or
otherwise encourage such employee to cease or terminate his or her employment with the UTi Group or
(ii) use or otherwise disclose any Proprietary Information in any attempt to persuade any customer
of the UTi Group to cease to do business or to reduce the amount of business which any customer of
the UTi Group has customarily done or contemplates doing with the UTi Group or to expand its
business with a competitor of the UTi Group.
(d) Reasonableness. Employee agrees that the covenants and agreements contained in
this Section 4 are reasonable and necessary to protect the Proprietary Information of the UTi Group
and that the covenants and agreements by Employee contained in this Section 4 shall be in addition
to any other agreements and covenants Employee may have agreed to in any other employee proprietary
information, confidentiality, non-disclosure or other similar agreement and that this Section 4
shall not be deemed to limit such other covenants and
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agreements, all of which shall continue to survive the termination of this Agreement in
accordance with their respective terms. A breach of the terms and covenants of such other
covenants and agreements shall be deemed to be a breach of the provisions of this Section 4 and
this Agreement.
5. Protection of Property. All records, files, manuals, documents, specifications,
lists of customers, forms, materials, supplies, computer programs and other materials furnished to
the Employee by the UTi Group, used on its behalf or generated or obtained during the course of the
performance of the Employee’s services hereunder, shall at all times remain the property of the UTi
Group. Upon termination of Employee’s employment with the UTi Group, Employee shall immediately
deliver to the UTi Group, or its authorized representative, all such property, including all
copies, remaining in Employee’s possession or control.
6. Specific Performance. In the event of the breach by Employee of any of the
provisions of Sections 4 or 5, the Company and the UTi Group, in addition to all other rights and
remedies they may have, may apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief to the extent authorized by law in order to
enforce or prevent any violations of the provisions thereof.
7. Arbitration. The parties hereto acknowledge that it is in their best interests to
facilitate the informal resolution of any disputes arising out of this Agreement or otherwise by
mutual cooperation and without resorting to litigation. As a result, if either party has a legally
recognized claim or dispute arising hereunder or otherwise, including but not limited to any claim
for breach of any contract or covenant (express or implied), any dispute regarding Employee’s
termination of employment, tort claims, claims for harassment or discrimination (including, but not
limited to, race, sex, religion, national origin, age, handicap or disability), claims for
compensation or benefits (except where a benefit plan or pension plan or insurance policy specifies
a different claims procedure) and claims for violation of public policy or, any federal, state or
other governmental law, statute, regulation or ordinance (except for claims involving workers’
compensation benefits), and the parties are unable to reach agreement among themselves within
thirty (30) days, then the parties agree to submit the dispute to JAMS for binding arbitration in
accordance with its then-current employment rules and applicable law. If the parties are unable to
agree to an arbitrator, JAMS will provide the names of seven potential arbitrators, giving each
party the opportunity to strike three names. The remaining arbitrator will serve as the
arbitration panel. The parties agree that the arbitration must be initiated within the time period
of the statute of limitations applicable to the claim(s) if the claim(s) had been filed in Court.
Arbitration may be initiated by the aggrieved party by sending written notice of an intent to
arbitrate by registered certified mail to all parties and to JAMS. The notice must contain a
description of the dispute, the amount involved and the remedies sought. All fees and expenses of
the arbitrator will be borne by the Company. Each party will pay for the fees and expenses of its
own attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearing
briefs, unless the party prevails on a claim for which attorneys’ fees are recoverable by statute,
in which case the arbitrator may award attorneys’ fees and costs to the prevailing party.
8. Representation by Counsel. Employee acknowledges that Employee has been given the
opportunity to consult legal counsel and seek such advice and consultation as Employee deems
appropriate or necessary.
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9. Successors; UTi Group. This Agreement is personal to the Employee and is not
assignable by the Employee. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. If a particular action is required to be taken, or a
particular notice is required to be given, by the Company, and such action or notice is in fact
taken by, or such notice is in fact given by, UTi Worldwide or another member of the UTi Group,
then such action or notice shall be deemed to have been taken or given by the Company.
Notwithstanding anything to the contrary contained in this Agreement, Employee agrees that Employee
is an employee only of the Company (or its successors or assigns, if applicable) and not an
employee of any other entity or member of the UTi Group; provided, however, that the Company may
assign Employee to another member of the UTi Group for payroll purposes.
10. Notice. For purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be deemed to have been
duly given when personally delivered, or if sent by overnight, commercial air courier service, on
the second business day after being delivered to the air courier service, or if mailed, on the
fifth day after being sent by first class, certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to Employee:
|
At Employee’s address as indicated on the books and records of the relevant member of the UTi Group. | |
If to Company:
|
At the UTi Group corporate offices at 000 Xxxxxxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000, Attention: General Counsel. |
Such communications may also be delivered to such other address as any 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 thereof.
11. Section 280G. To the extent that Section 280G and any related provisions of the
Internal Revenue Code of 1986, as amended, are applicable, Employee’s payments and benefits under
this Agreement and all other arrangements or programs shall not, in the aggregate, exceed the
maximum amount that may be paid to Employee without triggering golden parachute penalties under
Section 280G and related provisions of the Internal Revenue Code of 1986, as amended, as determined
in good faith by the Company’s independent auditors. If Employee’s benefits must be cut back to
avoid triggering such penalties, Employee’s benefits will be cut back in the priority order
Employee designates or, if Employee fails to promptly designate an order, in the priority order
designated by the Company. Employee and the Company agree to reasonably cooperate with each other
in connection with any administrative or judicial proceedings concerning the existence or amount of
golden parachute penalties on payments or benefits Employee receives.
12. Resignation from Positions. Upon Employee’s cessation of employment with the
Company for any reason, Employee agrees that Employee shall be deemed to have resigned as an
officer and as a director from every entity and company of the UTi Group for which Employee is then
serving as an officer or director, and any other entity or company for which Employee is then
serving as a director or officer at the request of the Company or the UTi Group, in each case
effective as of the date of cessation of Employee’s employment. Employee
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hereby grants the corporate secretary of UTi Worldwide an irrevocable power of attorney to
execute on behalf of Employee all such resignations and documents and instruments and take all such
other actions as reasonably necessary to carry out the intention of this Section.
13. Entire Agreement. This Agreement, together with the documents referenced herein,
contains the entire agreement of the parties hereto with respect to the subject matter hereof and
supersede any and all other agreements and understandings, either oral or in writing, between the
parties hereto with respect to the subject matter hereof. Each party to this Agreement
acknowledges that no representations, inducements, promises or agreements, written, oral or
otherwise, have been made by any party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement or promise not contained in this Agreement
shall be valid or binding.
14. Amendment; Waiver; Governing Law. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is agreed to in a
writing signed by Employee and by such officer of the Company as may be specifically designated by
UTi Worldwide. No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of California or if Employee is not employed in
California, the jurisdiction where Employee is employed by the Company.
15. Validity. The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
16. 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 together will constitute one and the same
instrument.
17. Survivability. The provisions in Sections 4, 5, 6, 7, 9, 10, 11, 12, 14, 15, 17
and 19 of this Agreement shall survive any termination of this Agreement.
18. Withholding of Taxes; Tax Reporting. The Company may withhold from any amounts
payable under this Agreement all such taxes, and may file with appropriate governmental authorities
all such information, returns or other reports with respect to the tax consequences of any amounts
payable under this Agreement, as may, in its reasonable judgment, be required by law.
19. Section 409A Compliance. Employee is solely responsible and liable for the
satisfaction of any federal, state, province or local taxes that may arise with respect to this
Agreement (including any taxes arising under Section 409A of the Code, except to the extent
otherwise specifically provided in a written agreement with the Company). Neither the Company nor
any of its employees, officers, directors, or service providers shall have any obligation
whatsoever to pay such taxes, to prevent Employee from incurring them, or to
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mitigate or protect Employee from any such tax liabilities. Notwithstanding anything in this
Agreement to the contrary, if any amounts that become due under this Agreement on account of
Employee’s termination of employment constitute “nonqualified deferred compensation” within the
meaning of Code Section 409A, payment of such amounts shall not commence until Employee incurs a
“separation from service” within the meaning of Treasury Regulation § 1.409A-1(h). If, at the time
of Employee’s termination of employment under this Agreement, Employee is a “specified employee”
(under Internal Revenue Code Section 409A), any payments that constitute “nonqualified deferred
compensation” within the meaning of Code Section 409A on account of Employee’s “separation from
service” (including any amounts payable pursuant to the preceding sentence) will not be paid until
after the end of the sixth calendar month beginning after Employee’s separation from service (the
“409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period,
Employee shall be paid a lump sum payment in cash equal to any payments delayed because of the
preceding sentence, together with interest on them for the period of delay at a rate not less than
the average prime interest rate published in the Wall Street Journal on any day chosen by the
Company during that period. Thereafter, Employee shall receive any remaining benefits as if there
had not been an earlier delay.
20. Termination. Notwithstanding any other provision contained herein, this Agreement
shall terminate upon the earlier to occur of (i) Employee’s cessation of employment with the UTi
Group, or (ii) twelve (12) months prior written notice from the Company; provided,
however, that, in the case of subclause (i) of this sentence, if Employee’s employment with
the UTi Group was terminated by the Company other than for Cause or Employee’s death or Disability
in connection with or in anticipation of a Change of Control of UTi Worldwide, then for purposes of
this Agreement, Employee shall be deemed to be employed by the Company as of the date of the Change
of Control of UTi Worldwide; provided, further, that any termination of this
Agreement pursuant to subclause (ii) of this sentence shall not relieve the Company from any
obligation to make the payments described in Section 1(b) which arises from a Change of Control of
UTi Worldwide occurring prior to the termination of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| “Company” | [UTi, Services, Inc., a California corporation] |
|||
| By: | ||||
| Name: | ||||
| Title: | ||||
| “Employee” | ||||
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EXHIBIT A TO CHANGE OF CONTROL AGREEMENT
For purposes of the attached Change of Control Agreement, a “Change of Control of UTi Worldwide”
shall be deemed to have occurred if:
(i) a sale, transfer, or other disposition of all or substantially all of the assets and
properties of UTi Worldwide is closed or consummated;
(ii) any “person,” “entity” or “group” (within the meaning of Section 13(d)(3) and 14(d)(2))
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than UTi Worldwide
or any majority owned subsidiary of UTi Worldwide, becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of UTi Worldwide
representing fifty percent (50%) or more of the combined voting power of UTi Worldwide’s then
outstanding securities that have the right to vote in the election of directors generally;
provided, however, that the following shall not constitute a “Change of Control of UTi Worldwide”
for purposes of this subclause (ii):
(a) any acquisition directly from UTi Worldwide (excluding any acquisition resulting from the
exercise of a conversion or exchange privilege in respect of outstanding convertible or
exchangeable securities); or
(b) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by
UTi Worldwide or any entity controlled by UTi Worldwide;
(iii) during any period of two consecutive years during the term of this Change of Control
Agreement, individuals who at the beginning of such period constitute the Board of Directors of UTi
Worldwide cease for any reason to constitute at least a majority thereof, unless the election of
each director who was not a director at the beginning of such period has been approved in advance
by directors representing at least two-thirds of the directors then in office who were directors at
the beginning of the period; or
(iv) UTi Worldwide is dissolved or liquidated or a merger, reorganization, or consolidation
involving UTi Worldwide is closed or consummated, other than a merger, reorganization, or
consolidation in which holders of the combined voting power of UTi Worldwide’s then outstanding
securities that have the right to vote in the election of directors generally immediately prior to
such transaction own, either directly or indirectly, fifty percent (50%) or more of the combined
voting power of the securities entitled to vote in the election of directors generally of the
merged, reorganized or consolidated entity (or its parent company) immediately following such
transaction.
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