Exhibit 10.12
CHANGE OF CONTROL AGREEMENT
This Agreement is entered into between Wisconsin Central
Transportation Corporation, a Delaware corporation (the "Company"), and Xxxxxx
X. Xxxxxxx ("Executive"), as of the 25th day of January, 2001.
RECITALS
WHEREAS, Executive has been serving as Chairman of the Board of Directors of the
Company and has served as a director of the Company, as well as a director of
subsidiaries that are directly or indirectly wholly owned by the Company
("Subsidiaries").
WHEREAS, the Company is in the process of negotiating a possible merger of the
Company with a wholly-owned subsidiary of Canadian National Railway Company
("Merger").
WHEREAS, the Company desires to have Executive continue his service with the
Company during the negotiation process through the date of consummation of the
Merger or any earlier date on which a Change in Control (defined below) occurs
("Closing Date").
WHEREAS, the Company does not currently propose to have Executive remain as an
officer or director of the company resulting from the proposed merger or any
earlier Change in Control.
WHEREAS, for purposes of this Agreement the Term "Change in Control" means the
occurrence of one of the following events either before the Merger is approved
by the stockholders of the Company or after the Merger agreement is terminated
in accordance with its terms:
(iv) The acquisition by an entity, person or group (including all
affiliates or associates of such entity, person or group, but
excluding any person who on the date of this Agreement was the
beneficial owner of capital stock of the Company entitled to
exercise 30% or more of the Voting Power (as defined below)) of
beneficial ownership, as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, of capital stock of the
Company, if after such acquisition such entity, person or group
is entitled to exercise more than 30% of the outstanding voting
power of all capital stock of the Company entitled to vote in
elections of directors ("Voting Power");
(v) The effective time of (1) a merger or consolidation of the
Company with one or more other corporations as a result of which
the holders of the outstanding Voting Power of the Company
immediately prior to such merger or consolidation (other than the
surviving or resulting corporation or any affiliate or associate
thereof) hold less than 50% of the Voting Power of the surviving
or resulting corporation, or (2) a transfer of 30% of the Voting
Power, or a substantial portion of the property (at least 50% of
Ex. 10.12 - Page 1
book value), of the Company other than to an entity of which the
Company owns at least 50% of the Voting Power; or
(vi) During any 24-month period, individuals who at the beginning of
such period constituted the Board of Directors of the Company
(together with any new directors whose election by the Board of
Directors or nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the
directors who either were directors at the beginning of such
period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors.
Notwithstanding the foregoing, a Change in Control shall not be deemed to take
place by virtue of any transaction in which Executive is a participant in a
group effecting an acquisition of the Company if, after such acquisition,
Executive holds an equity interest in the entity that has acquired the Company.
AGREEMENT
Now, therefore, for good and valuable consideration, the receipt of which is
hereby acknowledged by both parties, the Company and Executive agree as follows:
I. CONTINGENT RIGHTS AND OBLIGATIONS
If the Executive has not resigned prior to the Closing Date, the following
rights and obligations shall exist:
3. RESIGNATION. Executive shall resign from all positions with the
Company and its Subsidiaries effective the Closing Date.
4. PAYMENT. In consideration of the agreements and subject to Executive's
performance of the undertakings set forth in this Agreement, the
Company, in full and final settlement of all of Executive's stated and
unstated claims, including any claim for severance or otherwise but
excluding any claims relating to deferred compensation, stock options
or phantom stock, agrees to make the following payments to Executive:
(d) The Company shall pay Executive the amount of earned and
previously unpaid compensation for the period ending on the
Closing Date in accordance with its customary practice.
(e) On the Closing Date, the Company shall make a $600,000 cash
payment to Executive.
(f) If federal excise taxes are applicable to the payment described
in paragraph 2(b), on the Closing Date the Company shall make an
additional payment to Executive equal to the amount required for
Executive to have received and retained $600,000 after
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payment of (i) the federal excise taxes applicable to all
payments under this paragraph 2 (including the payments under
this paragraph 2(c)) and (ii) the federal and state income taxes
applicable to any additional payment made pursuant to this
paragraph 2(c), but before payment of the federal and state
income taxes applicable to the $600,000 payment.
11. EXPENSE REIMBURSEMENT. The Company will reimburse Executive for business
expenses he incurred on its behalf prior to the Closing Date, subject to
compliance with the Company's existing expense reimbursement policies; provided
that any such request for reimbursement shall be made prior to the date 30 days
following the Closing Date.
12. RESERVED.
13. RESERVED.
14. RESERVED.
15. NON-COMPETITION. For the period beginning on the Closing Date and ending on
the first anniversary of the Closing Date, Executive agrees that he will not
(other than on behalf of one of the Class 1 railroads in the United States or
Canada and except as provided below) directly or indirectly engage in, assist,
perform services for, establish, or have any equity interest (other than
ownership of 1% or less of the outstanding stock of any corporation listed on
the New York or American Stock Exchanges or included in the NASDAQ National
Market System) in, whether as an employee, officer, director, agent, security
holder, creditor, consultant or otherwise, any entity or person which conducts
rail operations in the State of Wisconsin, the Upper Peninsula of Michigan, the
Chicago Switching District, the Minneapolis-St. Xxxx Switching District, the
Province of Ontario, the United Kingdom, New Zealand, Australia or Jordan;
provided, however, Executive is not prohibited from performing legal services,
directly or indirectly, for any such person or entity which conducts such rail
operations. Of the cash payments made pursuant to this Agreement, $300,000
($100,000 per year) is allocated as payment in consideration of Executive's
agreement not to compete as set forth in this paragraph.
16. CONFIDENTIALITY. Executive agrees that he will not, without the prior
written consent of the Company, directly or indirectly disclose to any
individual, corporation or other entity (other than the Company, its
Subsidiaries or Affiliates or their respective officers, directors or employees
entitled to such information) or use for his own or such another's benefit, any
information, whether or not reduced to written or other tangible form, which (a)
is not generally known to the public or in the industry; (b) has been treated by
the Company or any of its Subsidiaries or Affiliates as confidential or
proprietary; and (c) is of competitive advantage to the Company or any of its
Subsidiaries or Affiliates (such information being referred to in this paragraph
as "Confidential Information"). Confidential Information which becomes generally
known to the public without violation of this Agreement shall cease to be
subject to the restrictions of this paragraph.
17. COVENANTS GENERALLY. The parties agree and acknowledge that the duration,
scope and geographic areas applicable to the covenants set forth in paragraphs 7
and 8 of this Agreement are fair, reasonable and necessary and that adequate
compensation has been received by Executive for these obligations. If, however,
for any reason any court determines that the restrictions in this
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Agreement are not reasonable, that the consideration to Executive therefor is
inadequate or that Executive has been prevented from earning a livelihood, such
restrictions shall be deemed without further action by the parties to be
interpreted, modified or rewritten to include as much of the duration, scope and
geographic area of such restrictions as are valid and enforceable.
18. NON-DISPARAGEMENT.
c. Executive agrees that he shall not make any disparaging
statements about the Company, its Subsidiaries or Affiliates
(including any successor thereto) or the directors, officers or
employees of any of them; provided that the provisions of this
clause shall not apply to truthful testimony as a witness,
compliance with other legal obligations, or truthful assertion of
or defense against any claim of breach of this Agreement, or to
his truthful statements or disclosures to officers or directors
of the Company, and shall not require Executive to make false
statements or disclosures; and provided further that, at any
period after nine months following the Closing Date, he may, in
good faith, make fair and truthful comment about the Company, its
Subsidiaries or Affiliates or the directors, officers or
employees or any of them with respect to events arising or
circumstances existing after the Closing Date.
d. The Company agrees that neither the directors nor the officers of
the Company or its Subsidiaries nor any spokesperson for any of
them shall make any disparaging statements about Executive;
provided that the provisions of this clause shall not apply to
truthful testimony as a witness, compliance with other legal
obligations, truthful assertion of or defense against any claim
of breach of this Agreement or truthful statements or disclosures
to Executive, and shall not require false statements or
disclosures to be made; and provided further that the Company
may, in good faith, make fair and truthful comment in response to
any statements that may be made by Executive pursuant (or
purportedly pursuant) to the last proviso of paragraph 10(a) of
this Agreement.
23. RELEASE. Except for a claim based upon a breach of this Agreement or a
claim based on the claims specifically excluded in paragraph 2 of this
Agreement, effective as of the Closing Date Executive shall release the
Released Parties (as defined below) from any and all claims, suits, demands,
actions or causes of action of any kind or nature whatsoever, whether the
underlying facts are known or unknown, which Executive has or now claims, or
might have or claim, pertaining to or arising out of Executive's employment
by the Company or his separation therefrom or under any local, state or
federal common law, statute, regulation or ordinance, including without
limitation those claims dealing with employment discrimination, including
without limitation, Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. Section 2000e ET SEQ., 42 U.S.C. Section 1981, Americans with
Disabilities Act, the Illinois Human Rights Act or claims for breach of
contract, for misrepresentation, for defamation, for wrongful discharge under
the common law of any state, for infliction of emotional distress or for any
other tort under the common law of any state. This release shall run to the
Company and each of its Subsidiaries and Affiliates, and all predecessors,
successors and assigns thereof and each of their members, trustees,
shareholders, partners, principals, members, directors, officers, trustees,
employees, agents and attorneys, past or present, and all predecessors,
successors, heirs and assigns thereof (collectively, "Released Parties").
This release shall also
Ex. 10.12 - Page 4
be binding upon Executive and his heirs and assigns. In exchange for this
general release and waiver hereunder, as of the Closing Date Executive shall
acknowledge that he has received separate consideration beyond that which he is
otherwise entitled to under the Company's policy or applicable law.
24. COVENANT NOT TO XXX. To the maximum extent permitted by law, Executive
covenants not to xxx or to institute or cause to be instituted any action in any
federal, state or local agency or court against the Released Parties regarding
the matters covered by the release contained in paragraph 11 above (except to
enforce the terms of this Agreement). If Executive breaches the terms of the
release and covenant not to xxx, then the Released Parties shall be entitled to
recover their costs, including reasonable attorneys' fees incurred in defending
such action.
25. SPECIFIC ENFORCEMENT. Executive agrees that any breach by him of paragraphs
7 through 11 of this Agreement will cause the Company great injury which will be
difficult, if not impossible, to measure and that such injury will be immediate
and irreparable for which the Company will have no adequate remedy at law.
Consequently, Executive agrees that any material breach by Executive of the
foregoing paragraphs 7 through 11 of this Agreement shall entitle the Company to
injunctive relief, and shall entitle the Company to cancel its obligations under
this Agreement, provided that if a material breach occurs, the Company shall
notify Executive of such breach and Executive may, if possible, attempt to cure
such material breach. Executive agrees that, in the event of a breach by
Executive of the foregoing provisions of this Agreement the Company would be
more harmed by the denial of an injunction or other equitable relief than
Executive would be harmed by the issuance of an injunction or other equitable
relief and that the public interest would be furthered by the issuance of an
injunction or other equitable relief to prevent further or additional breach of
the foregoing provisions of this Agreement.
26. THIRD PARTY LEGAL PROCEEDINGS. Executive agrees to cooperate, at reasonable
times and on reasonable notice, with the Company in the truthful and honest
prosecution or defense of any claim in which the Released Parties may have an
interest (subject to reasonable limitations concerning time and place), which
may include without limitation making himself available to participate in any
proceeding involving any of the Released Parties, allowing himself to be
interviewed by representatives of the Company, appearing for depositions and
testimony without requiring a subpoena, and producing and providing any
documents or names of other persons with relevant information.
27. NO MITIGATION. Executive shall have no obligation to seek or accept
employment, and any compensation earned or provided to Executive from any person
or entity other than the Company and its Subsidiaries for the performance of
such employment or other services shall not reduce or otherwise affect the
amount due to Executive from the Company in accordance with this Agreement, so
long as such employment or service does not violate Executive's obligations
under paragraphs 7 and 8 of this Agreement.
28. INDEMNIFICATION; INSURANCE. Executive shall continue to be eligible for
indemnification from the Company with respect to acts or omissions on or prior
to the Closing Date pursuant to the indemnification provisions of the Company's
charter and/or bylaws to the same extent as other current or former directors
and officers of the Company. Executive shall be entitled to
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coverage with respect to acts or omissions on or prior to the Closing Date under
the directors and officers liability insurance coverage maintained by the
Company (at the Closing Date and as may be in effect from time to time
thereafter) to the same extent as other current or former officers and directors
of the Company.
29. COMPANY PROPERTY. After the Closing Date, Executive shall return any
material personal property to the Company or its Subsidiary or Affiliate, as the
case may be, except that Executive may retain the two Company fax machines that
he has been using.
II. MISCELLANEOUS.
30. INTEREST. If any payment to be made under this Agreement by the Company is
not paid within 30 days after it has become due, the Company will pay interest
on such unpaid amount at the Company's then cost of borrowings.
31. MODIFICATION. No modification of this Agreement shall be valid unless
signed by the party against whom such modification is sought to be enforced.
32. LEGAL COUNSEL. Executive acknowledges that he has carefully read and fully
understands the terms and provisions of this Agreement and all of his rights and
obligations thereunder, has had an opportunity to be represented by legal
counsel of his choosing prior to executing this Agreement which contains a
general release and waiver and that his execution of this Agreement is
voluntary.
33. NO ADMISSION. Executive agrees that neither this Agreement nor performance
hereunder constitutes an admission by the Company of any violation of any
federal, state or local law, regulation, common law, of any breach of any
contract or any other wrongdoing of any type.
34. NOTICES. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice). Such notices, demands, claims and other communications shall be
deemed given:
a. in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
b. in the case of certified or registered U.S. mail, five days after deposit
in the U.S. mail; or
c. in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
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provided, however, that in no event shall any such communications be deemed
to be given later than the date they are actually received. Communications
that are to be delivered by the U.S. mail or by overnight service are to be
delivered to the addresses set forth below:
If to the Company:
Wisconsin Central Transportation Corporation
One X'Xxxx Centre, Suite 9000
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
If to Executive:
Xxxxxx X. Xxxxxxx
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall
be effective only upon receipt.
27. ENTIRE AGREEMENT. This instrument constitutes the entire agreement between
the parties.
28. SEVERABILITY. If any provision, section, subsection or other portion of
this Agreement shall be determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable in whole or in part, and such determination
shall become final, such provision or portion shall be deemed to be severed or
limited, but only to the extent required to render the remaining provisions and
portions of this Agreement enforceable. This Agreement as thus amended shall be
enforced so as to give effect of the intention of the parties insofar as that is
possible. In addition, the parties hereby expressly empower a court of competent
jurisdiction to modify any term or provision of this Agreement to the extent
necessary to comply with existing law and to enforce this Agreement as modified.
29. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Illinois.
30. COUNTERPARTS. This Agreement may be signed in multiple counterparts, each
of which shall be deemed to be an original for all purposes.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
WISCONSIN CENTRAL
TRANSPORTATION CORPORATION
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Printed Name: Xxxxxx X. Xxxx
Its: Executive Vice President and Chief
Financial Officer
EXECUTIVE
/s/ Xxxxxx X. XXxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Ex. 10.12 - Page 8
