Question: At work, I have a “Change Of Control” agreement that gives me the right to collect severance if two “triggers” take place. That is, if (1) there is a change in ownership (“trigger” #1), and (2) my responsibilities and authority are diminished, I get a large payment.
First, I learned that our company had agreed to be purchased by another company. So, “trigger” #1 took place. Second, I received a “governance document” that said quite clearly that my responsibilities and authorities were going to be diminished.
As required by the Change of Control agreement, I then had to give my employer 30 days in which to “cure” my diminished responsibilities and authorities, or – without question – I was due the monies. I sent in that “notice to cure” within the required time period.
My CEO informed the new owners of my desire to exercise my Change Of Control rights, and my expectation was then that the new employer would either honor the agreement and pay me, or I would have to file a legal suit against them to collect.
Instead, 135 days later, the new employer’s Chief Operating Officer withdrew the governance document that severely diminished my responsibilities and authorities.
Have my rights been diminished, or does the withdrawal attempt strengthen my claim?
Answer: Dear Paula:
As many of our readers know, I particularly enjoy answering questions about agreements. I’m not sure why, but I do. Here goes:
a. First, every word, punctuation mark, and other parts of an agreement must be carefully reviewed to determine the parties’ respective rights and obligations. When interpreting an agreement, there is no substitute for what is expressed in what we attorneys call “the four corners of the document.” Before a court will look “outside” the document to figure out what the parties meant, or what is fair, first it looks “within the four corners.” So, since I haven’t read your agreement, my analysis must be limited to what you have described to me – and whether it is entirely accurate.
b. Second, conditions to an obligation arising (what are sometimes called “triggers”) must take place – without question – for an obligation to arise. If I say, “If it rains, I will pay you $10,” I don’t have to pay you a penny if (a) the weather forecaster said it should rain, but it did not, (b) it looked dark and cloudy as if it was going to rain, but it did not, or if (c) it snowed. So, are you sure the first trigger (change in ownership of the company) actually took place here, or might it have been merely a merger notice, and not an actual merger? Likewise, if you were required to send your “30-day notice” of election to claim your Change Of Control payments by way of Certified Mail, did you make a mistake and send it instead by Federal Express? Each party to a contract must make sure that its “triggers” are actually “pulled.” If conditions were not met, no obligation arises.
c. Third, the parties must adhere to deadlines and time limits to protect their rights and interests. As is common sense, “30 days” does not mean “about 30 days,” and neither does it mean “135 days.” If the new employer missed its 30-day deadline to “cure” your diminished responsibilities, it “missed the train.” It would seem to me that someone in the executive ranks of your new employer may have made a large mistake, to your benefit.
d. Fourth, “You can’t ‘un-ring’ a bell.” That is, once a trigger has been pulled, it has been pulled. I was once in Court on a matter like yours. The Judge configured his right hand in the form of a gun, and asked the other lawyer to come close to him. He then went “k’pow!. Sorry, counselor, once I pull the trigger, I can’t get the bullet back in my gun.” His point was clear: once a trigger is pulled, it is pulled. There are no “do overs” in law.
Paula, from what you’ve told me, I don’t think your rights have been diminished by the Chief Operating Officer’s attempt to withdraw the governance document. Nor do I think that his doing so would strengthen your claim. I do think you might do yourself a favor by consulting an attorney to review your agreement, the governance document, and the way you delivered your notice.
If you would like to obtain names of experienced employment attorneys in your city of Louisville, Kentucky [click here].
Agreements must be honored, but first they must be fully and carefully understood. I expect you are in good position in this matter. I hope this has been helpful to you.
We’d love to hear how you do.
© 2011 Alan L. Sklover, All Rights Reserved.