Exhibit 10.2
MANAGEMENT RETENTION AGREEMENT
THIS MANAGEMENT RETENTION AGREEMENT (this “Agreement”) is entered into this
      day of December, 2008, between FedEx Corporation, a Delaware corporation
(the “Corporation”), and                                          (the
“Executive”).
WHEREAS, the Executive currently serves as
                                         of the Corporation; and
WHEREAS, the Corporation considers the establishment and maintenance of a sound
and vital management to be essential to protecting and enhancing the best
interests of the Corporation and its stockholders; and
WHEREAS, the Board of Directors of the Corporation (the “Board”) has determined
that it is in the best interests of the Corporation and its stockholders to
secure the Executive’s continued services and to ensure the Executive’s
continued dedication and objectivity in the event of any threat or occurrence
of, or negotiation or other action that could lead to or create the possibility
of, a Change of Control (as defined in Section 2) of the Corporation, without
concern as to whether the Executive might be hindered or distracted by personal
uncertainties and risks created by any such possible Change of Control, and to
encourage the Executive’s full attention and dedication to the Corporation, the
Board has authorized the Corporation to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Corporation and the Executive
agree as follows:
1. Operation of Agreement.
(a) The “Effective Date” shall be the date during the Change of Control Period
(as defined in Section 1(b)) on which a Change of Control occurs. Anything in
this Agreement to the contrary notwithstanding, if the Executive’s employment
with the Corporation terminates within six months prior to the date on which a
Change of Control occurs, and the Executive can reasonably demonstrate that the
termination:
(1) was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control, or
(2) was directly related to, arose in connection with or occurred in
anticipation of, such Change of Control,
then for all purposes of this Agreement the “Effective Date” shall mean the date
immediately prior to the date of such termination.

 

 

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(b) The “Change of Control Period” is the period commencing on the date of this
Agreement and ending on the first anniversary of such date; provided, however,
that commencing on the date one year after the date of this Agreement, and on
each annual anniversary of that date (such date and each annual anniversary
thereof is referred to as the “Renewal Date”), the Change of Control Period will
be automatically extended for an additional one-year period unless at least 30
days, but not more than 90 days, prior to the Renewal Date the Corporation gives
the Executive notice that the Change of Control Period will not be extended. The
Corporation may not give the Executive any non-extension notice, however, during
any period of time when the Board has knowledge that any person has taken steps
reasonably calculated to effect a Change of Control of the Corporation until, in
the Board’s opinion, such person has abandoned or terminated its efforts to
effect a Change of Control.
2. Change of Control.
For purposes of this Agreement, a “Change of Control” means the occurrence of
any of the following during the Change of Control Period:
(a) Any “person” (as such term is used in Sections 13(d) and 14 of the
Securities Exchange Act of 1934, as amended), other than (1) the Corporation,
(2) any subsidiary of the Corporation, (3) any employee benefit plan (or a trust
forming a part thereof) maintained by the Corporation or any subsidiary of the
Corporation, (4) any underwriter temporarily holding securities of the
Corporation pursuant to an offering of such securities or (5) any person in
connection with a transaction described in clauses (1), (2) and (3) of Section
(2)(b) below, becomes the “beneficial owner” (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of securities of the
Corporation representing 30% or more of the total voting power of the
Corporation’s then outstanding voting securities, unless such securities (or, if
applicable, securities that are being converted into voting securities) are
acquired directly from the Corporation in a transaction approved by a majority
of the Incumbent Board (as defined in Section 2(d) below).
(b) The consummation of a merger, consolidation or reorganization with or into
the Corporation or in which securities of the Corporation are issued, or the
sale or other disposition, in one transaction or a series of transactions, of
all or substantially all of the assets of the Corporation (a “Corporate
Transaction”), unless:
(1) the stockholders of the Corporation immediately before such Corporate
Transaction will own, directly or indirectly, immediately following such
Corporate Transaction, at least 60% of the total voting power of the outstanding
voting securities of the corporation or other entity resulting from such
Corporate Transaction (including a corporation or other entity that acquires all
or substantially all of the Corporation’s assets, the “Surviving Company”) or
the ultimate parent company thereof in substantially the same proportion as
their ownership of the voting securities of the Corporation immediately before
such Corporate Transaction;
(2) the individuals who were members of the Board immediately prior to the
execution of the agreement providing for such Corporate Transaction constitute a
majority of the members of the board of directors or equivalent governing body
of the Surviving Company or the ultimate parent company thereof; and

 

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(3) no person, other than (i) the Corporation, (ii) any subsidiary of the
Corporation, (iii) any employee benefit plan (or a trust forming a part thereof)
maintained by the Corporation or any subsidiary of the Corporation, (iv) the
Surviving Company, (v) any subsidiary or parent company of the Surviving
Company, or (vi) any person who, immediately prior to such Corporate
Transaction, was the beneficial owner of securities of the Corporation
representing 30% or more of the total voting power of the Corporation’s then
outstanding voting securities, is the beneficial owner of 30% or more of the
total voting power of the then outstanding voting securities of the Surviving
Company or the ultimate parent company thereof.
(c) The stockholders of the Corporation approve a complete liquidation or
dissolution of the Corporation.
(d) Directors who, as of the date of this Agreement, constitute the Board (the
“Incumbent Board”) cease to constitute at least a majority of the Board (or, in
the event of any merger, consolidation or reorganization the principal purpose
of which is to change the Corporation’s state of incorporation, form a holding
company or effect a similar reorganization as to form, the board of directors of
such surviving company or its ultimate parent company); provided, however, that
any individual becoming a member of the Board subsequent to the date of this
Agreement whose election, or nomination for election by the Corporation’s
stockholders, was approved by a vote of a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened proxy contest relating to the election of directors.
Notwithstanding the foregoing, a Change of Control will not be deemed to occur
solely because any person (a “Subject Person”) becomes the beneficial owner of
more than the permitted amount of the outstanding voting securities of the
Corporation as a result of the acquisition of voting securities by the
Corporation which, by reducing the number of voting securities outstanding,
increases the proportional number of voting securities beneficially owned by the
Subject Person, provided, that if a Change of Control would occur (but for the
operation of this sentence) as a result of the acquisition of voting securities
by the Corporation, and after such acquisition by the Corporation, the Subject
Person becomes the beneficial owner of any additional voting securities that
increases the percentage of the then outstanding voting securities beneficially
owned by the Subject Person to 30% or more of the total voting power, then a
Change of Control will have occurred.
3. Employment Period.
The Corporation agrees to continue the Executive in its employ, and the
Executive agrees to remain in the Corporation’s employ, for the period
commencing on the Effective Date and ending on the third anniversary of such
date (the “Employment Period”).

 

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4. Position and Duties.
(a) During the Employment Period:
(1) the Executive’s position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period immediately
preceding the Effective Date; and
(2) the Executive’s services will be performed at the location where the
Executive was employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(b) Excluding periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the Corporation’s business and affairs and, to the
extent necessary to discharge the responsibilities assigned to the Executive
under this Agreement, to use the Executive’s reasonable best efforts to perform
faithfully and efficiently these responsibilities. The Executive may:
(1) serve on corporate, civic or charitable boards or committees;
(2) deliver lectures, fulfill speaking engagements or teach at educational
institutions; and
(3) manage personal investments,
so long as such activities do not significantly interfere with the performance
of the Executive’s responsibilities. It is expressly understood and agreed that,
to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of these activities (or the
conduct of activities similar in nature and scope) subsequent to the Effective
Date will not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Corporation.
5. Compensation.
(a) Base Salary. During the Employment Period, the Executive will receive a base
salary (“Base Salary”) at a monthly rate at least equal to the highest monthly
base salary paid to the Executive by the Corporation and any of its affiliates
during the 12-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base Salary will be
reviewed at least annually and will be increased at any time and from time to
time as will be consistent with increases in base salary awarded in the ordinary
course of business to other key executives. Any increase in the Base Salary will
not serve to limit or reduce any other obligation to the Executive under this
Agreement. The Base Salary will not be reduced after any such increase and the
term Base Salary as used in this Agreement shall refer to the Base Salary as so
increased. As used in this Agreement, the term “affiliates” includes any company
controlling, controlled by or under common control with the Corporation.

 

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(b) Annual Bonus. In addition to the Base Salary, the Executive will be awarded,
for each of the Corporation’s fiscal years (a “Fiscal Year”) ending during the
Employment Period, an annual bonus (an “Annual Bonus”) (either pursuant to a
bonus, profit sharing or incentive plan or program of the Corporation or
otherwise) in cash at least equal to the average annual bonus paid or payable to
the Executive during the three Fiscal Years immediately prior to the Fiscal Year
in which the Effective Date occurs (or for such lesser number of full Fiscal
Years prior to the Effective Date for which the Executive was eligible to earn
such a bonus, and annualized with respect to any such Fiscal Year for which the
Executive has been employed only during a portion thereof). Each such Annual
Bonus will be payable within the first 60 days of the Fiscal Year next following
the Fiscal Year for which the Annual Bonus is awarded.
(c) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive will be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable to other peer
executives of the Corporation (including, without limitation, the Corporation’s
qualified and non-qualified pension, profit sharing, long-term performance
bonus, restricted stock and stock option plans, in each case comparable to those
in effect or as subsequently amended), but in no event will these plans,
practices, policies and programs provide the Executive with compensation,
benefits and reward opportunities less favorable, in the aggregate, than the
most favorable of those provided by the Corporation for the Executive under such
plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as provided at any time thereafter with respect to other peer
executives of the Corporation and its affiliates.
(d) Welfare Benefit Plans. During the Employment Period, the Executive and/or
the Executive’s family, as the case may be, will be eligible for participation
in and shall receive all benefits under the welfare benefit plans, practices,
policies and programs provided by the Corporation (including, without
limitation, medical, prescription, dental, vision, disability, salary
continuance, group life, accidental death and travel accident insurance plans
and programs), in each case comparable to those in effect at any time during the
90-day period immediately preceding the Effective Date which would be most
favorable to the Executive or, if more favorable to the Executive, as in effect
at any time thereafter with respect to other peer executives of the Corporation
and its affiliates.
(e) Expenses. During the Employment Period, the Executive will be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Corporation in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to other peer
executives of the Corporation and its affiliates.
(f) Fringe Benefits. During the Employment Period, the Executive will be
entitled to fringe benefits in accordance with the most favorable plans,
practices, programs and policies of the Corporation in effect for the Executive
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time thereafter with
respect to other peer executives of the Corporation and its affiliates.

 

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(g) Office and Staff Support. During the Employment Period, the Executive will
be entitled to an office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance, at least equal to those
provided to the Executive by the Corporation at any time during the 90-day
period immediately preceding the Effective Date which would be most favorable to
the Executive or, if more favorable to the Executive, as provided at any time
thereafter with respect to other peer executives of the Corporation and its
affiliates.
(h) Vacation. During the Employment Period, the Executive will be entitled to
paid vacation in accordance with the most favorable policies of the Corporation
as in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other peer executives of the
Corporation and its affiliates.
6. Termination.
(a) Death or Disability. This Agreement will terminate automatically upon the
Executive’s death during the Employment Period. The Corporation may terminate
this Agreement, after having established the Executive’s Disability (as defined
below) during the Employment Period, by giving to the Executive written notice
of its intention to terminate the Executive’s employment. In such case, the
Executive’s employment with the Corporation will terminate effective on the
180th day after receipt of such notice (the “Disability Effective Date”),
provided, that within 180 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive’s duties. For purposes of
this Agreement, “Disability” means absence from the full-time performance of the
Executive’s duties pursuant to a determination made in accordance with the
procedures established by the Corporation under the Corporation’s long-term
disability benefits plan (as in effect as of the Effective Date) that the
Executive is disabled as a result of incapacity due to physical or mental
illness.
(b) Cause. During the Employment Period, the Corporation may terminate the
Executive’s employment for “Cause.” For purposes of this Agreement, “Cause”
means:
(1) any act or acts of dishonesty taken by the Executive and intended to result
in substantial personal enrichment of the Executive;
(2) repeated material violations by the Executive of the Executive’s obligations
under Section 4 of this Agreement:
(i) which are demonstrably willful and deliberate on the Executive’s part (which
violations occur other than as a result of incapacity due to the Executive’s
physical or mental illness), and
(ii) which result in demonstrably material economic injury to the Corporation
and which are not remedied in a reasonable period of time after receipt of
written notice from the Corporation specifying such breach; or
(3) the conviction of the Executive of a felony.

 

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Notwithstanding anything to the contrary set forth in this Agreement, “Cause”
will not exist, however, unless and until the Corporation has delivered to the
Executive a copy of a resolution duly adopted by three-quarters (3/4) of the
Board and, to the extent applicable, three-quarters (3/4) of the Incumbent
Board, if any, at a meeting of the Board called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, the Executive was guilty of the conduct set
forth in this Section 6(b) and specifying the particulars in detail.
(c) Good Reason. The Executive’s employment may be terminated by the Executive
for Good Reason within the two-year period following the date of the initial
existence of the event or circumstances constituting Good Reason. For purposes
of this Agreement, “Good Reason” means:
(1) a material diminution in the Executive’s authority, duties or
responsibilities with the Corporation, including, without limitation, a
reduction in the level of the Executive’s reporting responsibility as it existed
immediately prior to the Effective Date (such as the Executive being required to
report to an officer or employee of the Corporation instead of reporting
directly to the Board);
(2) a material failure by the Corporation to comply with any of the provisions
of Section 5 of this Agreement;
(3) a material change in the office or location at which the Corporation
requires the Executive to be based during the Employment Period, except for
travel reasonably required in the performance of the Executive’s
responsibilities;
(4) any purported termination by the Corporation of the Executive’s employment
otherwise than as expressly permitted by this Agreement, it being understood
that any such purported termination will not be effective for any purpose of
this Agreement; or
(5) any material failure by the Corporation to comply with and satisfy
Section 13 of this Agreement;
provided, however, that the Executive will have Good Reason to terminate
employment only if (i) the Executive provides notice to the Corporation of the
existence of the event or circumstances constituting Good Reason specified in
any of the preceding clauses within 90 days of the initial existence of such
event or circumstances, and (ii) the Corporation does not remedy such event or
circumstances within 30 days following receipt by the Corporation of such
notice.

 

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(d) Notice of Termination. Any termination by the Corporation for Cause or by
the Executive for Good Reason will be communicated by a Notice of Termination to
the other party, given in accordance with Section 15(b). For purposes of this
Agreement, a “Notice of Termination” means a written notice which:
(1) indicates the specific termination provision in this Agreement relied upon;
(2) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated; and
(3) if the Date of Termination (as defined in Section 6(e) below) is other than
the date of receipt of such notice, specifies the Date of Termination (which
date shall be not more than 15 days after the giving of such notice (except as
provided in Section 6(e) of this Agreement)).
(e) Date of Termination. “Date of Termination” means (1) the effective date on
which the Executive’s employment by the Corporation terminates as specified in a
Notice of Termination by the Corporation or the Executive, as the case may be,
(2) if the Executive’s employment is terminated by the Corporation other than
for Cause, the date specified in the notice from the Corporation to the
Executive regarding such termination, (3) if the Executive voluntarily
terminates employment (excluding a termination for Good Reason), the date on
which the Executive notifies the Corporation of such termination (or such later
date as agreed to by the Executive and the Corporation), or (4) if the
Executive’s employment by the Corporation terminates by reason of death, the
date of the Executive’s death. Notwithstanding the previous sentence, if the
Executive’s employment is terminated for Disability (as defined in
Section 6(a)), or the Executive’s employment is terminated by the Corporation
other than for Cause, then such Date of Termination will be no earlier than
30 days following the date on which a Notice of Termination or other notice is
received.
7. Obligations of the Corporation Upon Termination.
(a) Death. If the Executive’s employment terminates during the Employment Period
by reason of the Executive’s death, the Corporation will not have any further
obligations to the Executive’s legal representatives under this Agreement, other
than those obligations accrued hereunder at the date of the Executive’s death.
Anything to the contrary notwithstanding, the Executive’s family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Corporation to surviving families of peer executives of the
Corporation under such plans, programs and policies relating to family death
benefits, if any, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive’s estate
and/or the Executive’s family, as in effect on the date of the Executive’s death
with respect to other peer executives of the Corporation and its affiliates and
their families.

 

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(b) Disability. If the Executive’s employment is terminated during the
Employment Period by reason of the Executive’s Disability, the Executive will be
entitled after the Disability Effective Date to receive disability and other
benefits at least equal to the most favorable of those provided by the
Corporation to disabled executives and/or their families in accordance with such
plans, programs and policies relating to disability, if any, as in effect at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Executive and/or the Executive’s family, as in effect at
any time thereafter with respect to other peer executives of the Corporation and
its affiliates and their families.
(c) Cause; Other Than For Good Reason. If the Executive’s employment is
terminated by the Corporation for Cause, or if the Executive voluntarily
terminates employment during the Employment Period, excluding a termination for
Good Reason, the Corporation will pay the Executive his full Base Salary through
the Date of Termination at the rate in effect at the time Notice of Termination
or other notice is given and shall have no further obligations to the Executive
under this Agreement.
(d) Qualifying Termination. If during the Employment Period the Executive
suffers a “separation from service” (as defined in Treasury Regulation
§1.409A-1(h)) because his employment is terminated either by the Corporation
other than for Cause or Disability or by reason of the Executive’s death or by
the Executive for Good Reason (a “Qualifying Termination”), then, on the date
that is six months after the Date of Termination (or, if earlier than the end of
such six-month period, within 30 days following the date of the Executive’s
death), the Corporation will pay to the Executive (except as provided below) as
compensation for services rendered to the Corporation:
(1) A lump-sum cash amount equal to the sum of:
(i) the Executive’s unpaid Base Salary through the Date of Termination (at the
rate in effect on the Date of Termination or, if higher, at the highest rate in
effect at any time within the 90-day period preceding the Effective Date); plus
(ii) that portion of the target Annual Bonus under the Corporation’s incentive
compensation plans or any similar plans or programs then in effect determined by
multiplying the target Annual Bonus by the fraction arrived at by dividing the
number of full weeks for which the Executive was employed during the Fiscal Year
in which his Date of Termination occurred by 52; plus
(iii) a pro rata portion of the target payments under the Corporation’s
long-term performance bonus (“LTI”) plans, or any similar plans or programs then
in effect, adopted with respect to the current Fiscal Year and with respect to
each of the immediately two preceding Fiscal Years. In each case, the pro rata
portion of the LTI payment shall be determined by dividing the number of full
weeks for which the Executive was employed since the beginning of the Fiscal
Year with respect to which the relevant LTI plan was adopted to his Date of
Termination by 156; plus
(iv) any unpaid vacation under the Corporation’s vacation policy in effect at
the Date of Termination (or, if more favorable to the Executive, under any
vacation policy of the Corporation in effect at any time within the 90-day
period preceding the Effective Date).

 

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(2) A lump-sum cash amount equal to the sum of:
(i) three times the Executive’s highest annual rate of Base Salary in effect
during the 12-month period prior to the Date of Termination; plus
(ii) three times the target annual bonus in effect for the Fiscal Year in which
the Change of Control occurs; plus
(iii) three times the target LTI payment for the Fiscal Year in which the Change
of Control occurs.
Any amount paid to the Executive pursuant to this Section 7(d)(2) shall be
offset by any other amount of severance relating to salary or bonus continuation
to be received by the Executive upon termination of the Executive’s employment
under any other severance plan, policy, employment agreement or arrangement of
the Corporation.
(3) A lump sum cash amount equal to the excess of (i) the actuarial present
value as of the Date of Termination of the benefits that would be accrued under
the FedEx Corporation Employees’ Pension Plan and the FedEx Corporation
Retirement Parity Pension Plan determined by assuming that (A) the Executive has
earned an additional 36 months of the Executive’s highest annual rate of Base
Salary in effect during the 12-month period prior to the Date of Termination and
target annual bonus in effect for the Fiscal Year in which the Change of Control
occurs and (B) the Executive is credited with an additional 36 months of age and
service under such plans, over (ii) the actuarial present value of the actual
benefits accrued by the Executive as of the Date of Termination under such plans
without the assumptions set forth in clauses (A) and (B) of this Section
(7)(d)(3).
For purposes of determining actuarial present value under this Section 7(d)(3):
(i) the most current Mortality Table (assuming a blend of 50 percent of male
mortality rates and 50 percent of female mortality rates) shall be utilized; and
(ii) the interest rate on 30-year U.S. Treasury securities for the month of May
preceding the Fiscal Year in which the Date of Termination occurs shall be used
(such rate is the “applicable interest rate” under Section 417(e)(3)(A)(ii)(II)
of the Internal Revenue Code).
(4) A lump sum cash amount equal to the Corporation’s cost (determined as of the
Date of Termination) of 36 months of coverage under each plan and policy
providing medical, dental, vision, accident, disability and life coverage with
respect to the Executive and his covered dependents, determined at the same
coverage level and upon the same terms as in effect immediately prior to the
Date of Termination.
8. Consequence of a Change of Control Upon Certain Entitlements.
(a) Except as provided herein, the consequences of a Change of Control on the
Executive’s stock options, restricted stock awards, or any other award or grant
of stock or rights to purchase the stock of the Corporation (by option, warrant
or otherwise) and pension, retirement, bonus, long-term incentive or any other
similar benefits, will be determined in accordance with the provisions of the
applicable plans and agreements in effect on the Effective Date.

 

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(b) (1) No later than 30 days following the occurrence of a Change of Control,
the Corporation will fund in full that portion, if any, of its obligations to
the Executive under the FedEx Corporation Retirement Parity Pension Plan that
are then unfunded. Such funding will be provided through an irrevocable domestic
“rabbi” trust for the benefit of the Executive, which will be established as
promptly as possible following the Effective Date for the purpose of receiving
contributions from the Corporation to fund such obligations.
(2) No later than 30 days following the occurrence of a Change of Control, the
Corporation will fund its obligations to provide payments and benefits under
this Agreement (other than the obligations which are provided for in
Section 8(b)(1)) by the establishment of an irrevocable domestic “rabbi” trust
for the benefit of the Executive to which it contributes an amount sufficient to
meet its obligations. The trust described in this Section 8(b)(2) may be part of
the trust described in Section 8(b)(1).
(3) Any trust created pursuant to this Section 8 will provide for distribution
of amounts to the Executive in order to pay taxes, if any, that become due prior
to payment of amounts pursuant to the trust. Following the occurrence of a
Change of Control, the Corporation will make periodic additional contributions
(no less frequently than annually) to keep the trust fully funded. The intent is
that no later than the date 30 days following the Change of Control and annually
thereafter (the “Applicable Dates”) the amount of such fund will equal at least
the then present value (determined as of each Applicable Date) of any amounts
subject to the funding requirement of Section 8(b)(1) as determined by a
nationally recognized firm qualified to provide actuarial services and to fully
fund the payments and benefits described in Section 8(b)(2). The establishment
and funding of any such trust will not affect the Corporation’s obligation to
provide the benefits being funded.
(4) The trust(s) may be terminated in accordance with the trust agreement
between the Corporation and the trustee and, if so terminated, the Corporation
will not be required to establish a successor trust under this Section 8(b). The
trust described in this Section 8(b) may be part of a trust funding similar
obligations for other employees of the Corporation or its affiliates.

 

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9. Non-exclusivity of Rights.
Nothing in this Agreement will prevent or limit the Executive’s continuing or
future participation in any benefit, bonus, incentive or other plan, program,
policy or practice provided by the Corporation or any of its affiliates and for
which the Executive may qualify, nor, subject to Section 15(f), will anything in
this Agreement limit or otherwise affect such rights as the Executive may have
under any stock option, stock warrant, restricted stock, pension, bonus,
long-term incentive award or other contracts, agreements, plans or programs with
or of the Corporation or any of its affiliates. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of, or any contract or agreement with, the
Corporation or any of its affiliates at or subsequent to the Date of Termination
will be payable in accordance with such plan, policy, practice, program,
contract or agreement except as explicitly modified by this Agreement.
10. No Set-off; No Mitigation.
The Corporation’s obligation to make the payments provided for in this Agreement
and otherwise to perform its obligations will not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Corporation may
have against the Executive or any other person. In no event will the Executive
be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement, nor will the amount of any payment under this Agreement be
reduced, except as otherwise specifically provided herein, by any compensation
earned by the Executive as a result of employment by another employer.
11. Tax Payment.
(a) Withholdings and Deductions. Any payment made pursuant to Section 7(d) will
be paid, less standard withholdings and other deductions authorized by the
Executive or required by law.
(b) Gross-up for Certain Taxes.
(1) Subject to the provisions of Section 11(f) of this Agreement, all
determinations required to be made under this Section 11, including whether and
when a Gross-up Payment (as defined below) is required and the amount of such
Gross-up Payment and the assumptions to be utilized in arriving at such
determination, will be made by a nationally recognized public accounting firm
(other than the firm serving as the accountant or auditor for the individual,
entity or group effecting the Change of Control) that is designated by the
Corporation (the “Accounting Firm”), which will provide detailed supporting
calculations both to the Corporation and the Executive within 15 business days
of the receipt of notice from the Executive that there has been a Payment (as
defined below), or such earlier time as is requested by the Corporation
(collectively, a “Determination”). All fees and expenses of the Accounting Firm
will be borne solely by the Corporation.

 

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(2) Anything in this Agreement to the contrary notwithstanding and except as set
forth below, if it is determined by the Accounting Firm that any payment,
distribution or other benefit (including any acceleration of vesting of any
benefit) received or deemed received by the Executive from the Corporation and
its affiliates pursuant to this Agreement or otherwise (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any Gross-up Payment required by
this Section 11) (a “Payment”) is or will become subject to any excise tax
imposed by Section 4999 of the Internal Revenue Code or any similar tax payable
under any United States federal, state, local or other law (such excise tax and
all such similar taxes, together with any interest and penalties imposed in
respect thereto, are referred to in this Agreement as the “Excise Taxes”), then
the Corporation will pay the Executive within five days of receipt of the
Determination, and in no event later than the end of the calendar year in which
the Executive pays such taxes, an amount (the “Gross-up Payment”) such that the
net amount retained by the Executive, after the deduction of any Excise Taxes on
the Payments, and any federal, state and local income tax, Medicare and any
Excise Tax (including any applicable interest and penalties on all such taxes)
upon such Gross-up Payment, will be equal to the amount of the Payments in the
absence of the imposition of such Excise Taxes and the Gross-up Payment.
(3) For purposes of determining the amount of the Gross-up Payment, the
Executive will be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-up
Payment is to be made and local income taxes at the highest marginal rates of
taxation in the state and locality of his residence in such calendar year.
(4) If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it will furnish the Executive with a written opinion that failure to
report the Excise Tax on the Executive’s applicable federal income tax return
will not result in the imposition of a negligence or similar penalty.
(c) Determination by the Executive.
(1) If at any time within 90 days following determination of the Gross-up
Payment by the Accounting Firm, the Executive disputes the amount of the
Gross-up Payment, the Executive may accept the amount determined under Section
11(b) without prejudice and may elect to demand payment of the additional amount
which the Executive, in accordance with an opinion of counsel to the Executive
(“Executive Counsel Opinion”), determines to be the full Gross-up Payment. Any
such demand by the Executive shall be made by delivery to the Corporation of a
written notice that specifies the Gross-up Payment determined by the Executive
and an Executive Counsel Opinion regarding such Gross-up Payment (such written
notice and opinion collectively, the “Executive’s Determination”).
(2) Within 14 days after delivery of the Executive’s Determination to the
Corporation, the Corporation shall either (i) pay the Executive the additional
Gross-up Payment set forth in the Executive’s Determination or (ii) deliver to
the Executive a certificate specifying the Gross-up Payment determined by the
Accounting Firm, together with an opinion of the Corporation’s counsel
(“Corporation Counsel Opinion”), and pay the Executive the Gross-up Payment
specified in such certificate (less the portion of such amount, if any,
previously paid to the Executive by the Corporation). If for any reason the
Corporation fails to comply with clause (ii) of the preceding sentence, the
Gross-up Payment specified in the Executive’s Determination shall be controlling
for all purposes.

 

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(d) Opinion of Counsel. “Executive Counsel Opinion” means a legal opinion of
nationally recognized executive compensation counsel that there is a reasonable
basis to support a conclusion that the Gross-up Payment determined by the
Executive has been calculated in accordance with this Section and applicable
law. “Corporation Counsel Opinion” means a legal opinion of a nationally
recognized executive compensation counsel that (1) there is a reasonable basis
to support a conclusion that the Gross-up Payment set forth by the Accounting
Firm has been calculated in accordance with this Section and applicable law, and
(2) there is no reasonable basis for the calculation of the Gross-up Payment
determined by the Executive.
(e) Additional Gross-up Amounts. If, despite the initial conclusion of the
Corporation and/or the Executive that certain Payments are neither subject to
Excise Taxes nor to be counted in determining whether other Payments are subject
to Excise Taxes (any such item, a “Non-Parachute Item”), it is later determined
with finality (pursuant to subsequently-enacted provisions of the Internal
Revenue Code, final regulations or published rulings of the Internal Revenue
Service, a final judgment of a court of competent jurisdiction or a
determination by the Accounting Firm) that any of the Non-Parachute Items are
subject to Excise Taxes, or are to be counted in determining whether any
Payments are subject to Excise Taxes, with the result that the amount of Excise
Taxes payable by the Executive is greater than the amount determined by the
Corporation or the Executive pursuant to this Section, as applicable, then,
within 90 days of such final determination, on a date determined by the
Corporation, the Corporation shall pay the Executive an additional Gross-up
Payment in order to compensate the Executive for such additional Excise Taxes,
any interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 11(b), and any federal, state and local
income tax, Medicare and any Excise Tax upon such additional Gross-up Payments,
calculated in the manner described in Section 11(b).
(f) Amount Increased or Contested.
(1) The Executive shall notify the Corporation in writing of any claim by the
Internal Revenue Service or other taxing authority that, if successful, would
require the payment by the Corporation of a Gross-up Payment. Such notice shall
include the nature of such claim and the date on which such claim is due to be
paid.
(2) The Executive shall give such notice as soon as practicable, but no later
than ten business days, after the Executive first obtains actual knowledge of
such claim; provided, however, that any failure by the Executive to give or
delay in giving such notice shall affect the Corporation’s obligations under
this Section only if and to the extent that such failure results in actual
prejudice to the Corporation.

 

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(3) The Executive shall not pay such claim less than 30 days after the Executive
gives such notice to the Corporation (or, if sooner, the date on which payment
of such claim is due). If the Corporation notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
(i) give the Corporation any information that it reasonably requests relating to
such claim;
(ii) take such action in connection with contesting such claim as the
Corporation reasonably requests in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Corporation;
(iii) cooperate with the Corporation in good faith to contest such claim; and
(iv) permit the Corporation to participate in any proceedings relating to such
claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax, income tax or employment
tax, including related interest and penalties, imposed as a result of such
representation and payment of costs and expenses.
(4) Without limiting the foregoing, the Corporation shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner.
(5) The Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Corporation shall determine; provided, however, that if
the Corporation directs the Executive to pay such claim and sue for a refund,
the Corporation shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify the Executive, on an after-tax basis,
for any Excise Tax, income tax or employment tax, including related interest or
penalties, imposed with respect to such advance; and further provided, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Corporation’s control of the contest shall be limited to issues with respect to
which a Gross-up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or other taxing authority.

 

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(g) Refunds.
(1) If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 11(f), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Corporation’s complying with the requirements of Section 11(f)), within 90 days
of a final determination of such entitlement, pay the Corporation the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto).
(2) If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 11(f), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Corporation does not notify the Executive in writing of its intent to contest
such determination before the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be refunded and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-up Payment required to be paid.
(3) Any contest of a denial of refund shall be controlled by Section 11(f).
12. Confidential Information; Non-Competition; Release.
(a) Confidentiality.
(1) The Executive shall hold in a fiduciary capacity for the benefit of the
Corporation all Confidential Information (as defined below) relating to the
Corporation or any of its affiliates and their respective businesses, which
shall have been obtained by the Executive during the Executive’s employment by
the Corporation or any of its affiliates.
(2) “Confidential Information” means any non-public, proprietary information
that may provide the Corporation with a competitive advantage, including,
without limitation, any trade secrets, formulas, flow charts, computer programs
and codes (including, without limitation, any source codes), or other systems
information, business, product or marketing plans, sales and other forecasts,
financial information, customer lists and information relating to compensation
and benefits, provided that such proprietary information does not include any
information which is available to the general public or is generally available
within the relevant business or industry other than as a result of the
Executive’s breach of this Section 12(a).
(3) Confidential Information may be in any medium or form, including, without
limitation, physical documents, computer files, drives or discs, videotapes,
audiotapes and oral communications.
(4) Anything herein to the contrary notwithstanding, it shall not be a violation
of this Section 12(a) for the Executive to disclose information in the ordinary
course of properly carrying out his duties and responsibilities on behalf of the
Corporation or to respond to an order of a court or other body having
jurisdiction provided that he gives the Corporation prior notice of any such
order. In no event shall an asserted violation of the provisions of this Section
12(a) constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.

 

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(b) Non-Competition.
(1) The Executive agrees that he shall not for a period of one year following
the Date of Termination, directly or indirectly own, manage, operate, join,
control, be employed by, or participate in the ownership, management, operation
or control of or be connected in any manner, including but not limited to,
holding the positions of officer, director, shareholder, consultant, independent
contractor, employee, partner or investor, with any Competing Enterprise (as
defined below); provided, however, that the Executive may invest, without being
deemed in violation of this Section 12(b), in stocks, bonds or other securities
of any corporation or other entity (but without participating in the business
thereof) if such stocks, bonds or other securities are listed for trading on a
national securities exchange or NASDAQ and the Executive’s investment does not
exceed 1% of the issued and outstanding shares of capital stock, or in the case
of bonds or other securities, 1% of the aggregate principal amount thereof
issued and outstanding.
(2) For purposes of this Agreement, the term “Competing Enterprise” shall mean
an enterprise that engages in any business that, on the Date of Termination, is
engaged in by the Corporation or by any of its affiliates if such enterprise
engages in such business in any geographic areas in which the Corporation or any
of its affiliates conducts such business.
(c) Return of Property. Except as expressly provided herein, promptly following
the Executive’s termination of employment, the Executive shall return to the
Corporation all property of the Corporation then in the Executive’s possession
or under his control, except that the Executive may retain his personal notes,
diaries, Rolodexes (whether in electronic form or otherwise), calendars and
correspondence so long as any Confidential Information therein is conveyed to
the Corporation in a tangible medium prior to the Executive’s termination of
employment.
(d) Irreparable Injury. The Executive agrees that any breach of the terms of
this Section 12 would result in irreparable injury and damage to the Corporation
for which the Corporation would have no adequate remedy at law. The Executive
further agrees that in the event of said breach or any reasonable threat of
breach, the Corporation shall be entitled to an immediate injunction and
restraining order to prevent such breach or threatened breach. The terms of this
Section 12(d) shall not prevent the Corporation from pursuing any other
available remedies for any breach or threatened breach hereof, including but not
limited to, the recovery of damages. Should a court or arbitrator determine that
any provision of this Section 12 is unreasonable, the parties agree that such
provision shall be interpreted and enforced to the maximum extent such court or
arbitrator deems reasonable.
(e) Release. In the event of a Qualifying Termination, the Executive agrees to
release the Corporation and its affiliates from any and all liabilities, claims
and causes of action arising from or in connection with his employment, or the
termination of his employment, by the Corporation, other than the obligations of
the Corporation under this Agreement and except with respect to the matters
referenced in Sections 8(a) and 9 of this Agreement.

 

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(f) Survival.
(1) The provisions of this Section 12 shall survive any termination of this
Agreement and of the Employment Period, and the existence of any claim or cause
of action by the Executive against the Corporation, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Corporation of the covenants and agreements of this Section.
(2) Anything in this Section 12(f) to the contrary notwithstanding, the
provisions of Section 12(b) shall only apply in the event of:
(i) a termination of the Executive’s employment described in Section 1(a) hereof
prior to the occurrence of a Change of Control;
(ii) a termination of the Executive’s employment during the Employment Period
that constitutes a Qualifying Termination; or
(iii) a termination for Cause at any time during the Employment Period.
13. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by any merger or consolidation of the
Corporation whereby the Corporation is or is not the surviving or resulting
corporation or as a result of any transfer of all or substantially all of the
assets of the Corporation. In the event of any such merger, consolidation or
transfer of assets, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or the person or entity to which such assets
are transferred.
(b) The Corporation agrees that concurrently with any merger, consolidation or
transfer of assets referred to in Section 13(a) hereof, it will cause any
successor or transferee unconditionally to assume, by written instrument
delivered to the Executive (or his beneficiary or estate), all of the
obligations of the Corporation hereunder.
(c) (1) No rights or obligations of the Corporation under this Agreement may be
assigned or transferred by the Corporation except that such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
in which the Corporation is not the continuing entity, or in connection with the
sale or liquidation of all or substantially all of the assets of the
Corporation, or in connection with the disposition of all or substantially all
of the assets of the Corporation, or in connection with the disposition of the
business of the Corporation substantially as an entirety, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Corporation and such assignee or transferee assumes all of the
liabilities, obligations and duties of the Corporation under this Agreement,
either contractually or as a matter of law.

 

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(2) This Agreement is personal to the Executive and, without the prior written
consent of the Corporation, shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amounts would be
payable to the Executive hereunder had the Executive continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons appointed in writing by the
Executive to receive such amounts or, if no person is so appointed, to the
Executive’s estate.
14. Indemnification.
(a) If, after the Effective Date, the Executive is made or is threatened to be
made a party to, or is otherwise involved in, any action, suit or proceeding by
reason of the fact that he is or was a director, officer or employee of the
Corporation or any of its affiliates, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, the Corporation shall, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, (i) indemnify and hold harmless the Executive against all
liability and loss suffered and expenses (including attorneys’ fees) reasonably
incurred by the Executive in connection therewith, and (ii) pay the expenses
(including attorneys’ fees) incurred by the Executive in defending any such
action, suit or proceeding in advance of its final disposition; provided,
however, that the payment of expenses incurred by the Executive in advance of
the final disposition of the action, suit or proceeding shall be made only upon
receipt of an undertaking by the Executive to repay all amounts advanced if it
should ultimately be determined that the Executive is not entitled to be
indemnified under this Section or otherwise.
(b) After the Effective Date, the Corporation shall maintain a directors’ and
officers’ liability insurance policy covering the Executive on terms with
respect to coverage and amounts no less favorable than those of such policy in
effect on the Effective Date.

 

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15. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:

                  If to the Corporation:   FedEx Corporation         942 South
Shady Grove Road         Memphis, Tennessee 38120
 
      Attn:   Christine P. Richards
 
          Executive Vice President,
 
          General Counsel and Secretary

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) If any contest or dispute shall arise under this Agreement involving
termination of the Executive’s employment with the Corporation or involving the
failure or refusal of the Corporation to perform fully in accordance with the
terms hereof, the Corporation shall reimburse the Executive, on a current basis,
for all legal fees and expenses, if any, incurred by the Executive in connection
with such contest or dispute regardless of the result thereof.
(e) This Agreement contains the entire understanding between the Corporation and
the Executive with respect to the subject matter hereof and supersedes and
nullifies any previous change of control employment agreement between the
parties, including, without limitation, the Management Retention Agreement,
dated as of                     , 200 , between the Corporation and the
Executive.

 

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(f) The Executive and the Corporation acknowledge that the employment of the
Executive by the Corporation is “at will” and, prior to the Effective Date, may
be terminated by either the Executive or the Corporation at any time. Except as
specified in Section 1(a) hereof, upon a termination of the Executive’s
employment or upon the Executive’s ceasing to be an officer of the Corporation,
in each case, prior to the Effective Date, there shall be no further rights
under this Agreement.
(g) The Corporation’s or the Executive’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Corporation or the Executive may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 6(c) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(h) Any reference in this Agreement to any compensation, bonus, profit sharing,
stock option, restricted stock, pension, savings, retirement, welfare, vacation
or other similar benefit plan or program means and includes, for purposes of
this Agreement, any substitute or successor plan or program.
[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the
authorization from its Board of Directors, the Corporation has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

            FedEx Corporation
      By:           Name:   Christine P. Richards        Title:   Executive Vice
President,
General Counsel and Secretary           

 

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