Exhibit 10.06
SETTLEMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS
This Settlement Agreement and General Release of Claims
(hereinafter "Release") is made between Xxxxxxx X. Xxxxx
("Xxxxx") and Consolidated Freightways Corporation ("CFC")
for the complete and final settlement of the Amended
Employment Agreement, dated as of November 13, 2000, between
Blake and CFC (hereinafter the "Employment Agreement") and
the release of claims, if any. The parties hereto
voluntarily and knowingly enter into the following Release
and have agreed and do agree as follows:
1 Except as specifically otherwise provided herein, Blake
shall and hereby does, acknowledge full and complete
satisfaction of the Employment Agreement and does hereby
release, absolve and discharge CFC, its subsidiaries, their
predecessors, successors and assigns, past and present, and
each of them as well as their directors, officers,
stockholders, agents, servants, employees, representatives
and attorneys, and each of them (all hereinafter referred to
collectively and individually as "CFC and Affiliates") from
any and all claims, demands, liens, agreements, contracts,
covenants, actions, suits, causes of action, employment
discrimination accusations, wages, obligations, debts,
expenses, damages, judgements, orders, and liabilities of
whatever kind or nature in law, equity or otherwise, whether
known or unknown, suspected or unsuspected, which Blake now
owns or holds or at any time heretofore owned or held
against said entities or persons or any of them, including
specifically but not exclusively and without limiting the
generality of the foregoing (1) any and all claims arising
out of or in any way connected with Blake's employment by
CFC and Affiliates and Blake's separation from employment
with CFC and Affiliates as an officer and director and
change in employment relationship as provided hereunder; (3)
any and all claims for wages or other compensation due as a
result of said employment relationship, including any
payments under any long or short term incentive plan; (4)
any and all claims for statutory penalties, interest, or
attorneys' fees; (5) any and all claims for wrongful
discharge, whether contractual or tortious, including any
claim for constructive discharge or forced involuntary
retirement; (6) any and all claims for intentional,
negligent, or wrongful termination; (7) any and all claims
for breach of contract, whether express or implied; (8) any
and all claims for pension or other retirement benefits; (9)
any and all tort claims, including claims for intentional or
negligent infliction of emotional distress or defamation;
(10) any and all claims for breach of the covenant of good
faith and fair dealing, whether contractual or tortious;
(11) any and all claims for labor protection benefits under
state, federal or local law; (12) any and all claims that
could be raised under any state, federal or municipal laws
pertaining to age, sex, race, religion, veteran status, job
protection, national origin, disability or other employment
discrimination of whatever type; (13) any and all claims
arising out of or in any way connected with Blake's
Employment Agreement; (14) any and all claims for severance
benefits and/or payments of whatever type; (15) any and all
claims under any executive or general employee benefit plans
or arrangements; (16) any and all claims arising out of or
in any way connected with any loss, damage or injury
whatever, known or unknown, suspected or unsuspected,
resulting from any act or omission by CFC and Affiliates
committed or omitted on or prior to the date hereof. Blake
hereby releases all of his employment rights and privileges
with CFC and Affiliates except as specifically provided
below.
2 This Release is expressly intended to waive any and all
claims Blake may presently possess or previously possessed,
however enumerated and regardless of the nature, source or
basis for any such claim. The parties hereby intend this
Release to have a broad effect and to settle all disputes,
without limitation of any kind or nature, which Blake may
have against CFC and Affiliates.
Blake knowingly waives any requirement that a general
release does not extend to claims that the he does not
know or suspect to exist in his favor at the time of
executing the Release, which, if known by him, may have
materially affected his settlement with CFC and
Affiliates. Notwithstanding any such provisions and of
any other laws of similar scope and effect, and for the
purpose of implementing a full and complete release of
claims, CFC and Blake expressly acknowledge that this
Release is intended to include in its effect, without
limitation, all claims which he does not know or suspect
to exist in his favor at the time of execution of this
Release.
3 Blake acknowledges and agrees that the only
representations or inducements that have been made to him to
secure his signature on this document and the only
consideration he will receive for signing this Release are
as appears in this document, and Blake further agrees that
this document and documents and plans referred to herein
constitute the entire agreement between him and CFC and
Affiliates on the subject of his separation from employment
as an officer and director of CFC and Affiliates and change
in employment relationship provided hereunder.
4 Blake expressly waives any rights or claims under the
Federal Age Discrimination in Employment Act and Older
Workers' Benefit Protection Act in connection with his
separation from employment as an officer and director of CFC
and Affiliates and change in employment relationship as
provided hereunder. Blake, after having been advised to
consult with an attorney, affirms that he has had at least
twenty-one (21) days in which to consider executing the
release of age discrimination claims under the
aforementioned statutes. Blake is further aware of his
right to revoke the waiver of age discrimination claims
within seven (7) days after signing this Release. In the
event Blake revokes the waiver of claims contained herein,
within seven (7) days after signing this Release he shall
immediately return to CFC all sums and benefits he has
received pursuant to this Release other than accrued
vacation pay and salary.
5 As a condition of receiving severance, salary and
benefits under this Release, Blake agrees not to directly or
indirectly solicit employees or full time consultants of CFC
and Affiliates to leave during his continued employment with
CFC or for a period of two years from termination of
employment.
6 In consideration of the representations and agreements
of Blake herein, CFC agrees to provide the following
severance pay and arrangements:
a) Pay Blake upon execution of the Release, $75,521.82,
less withholding taxes, representing an initial severance
payment, and thereafter pay him $11,106.15 per week starting
July 22, 2002, less withholding taxes, until a total of
$1,436,776.02, less withholding taxes, is paid, including
the initial severance payment. All such payments shall be
in full satisfaction of any obligations of CFC and
Affiliates to Blake and any obligations of Blake to CFC and
Affiliates, including his stock loan, except as specifically
provided hereunder. CF acknowledges that it is its intent to
accelerate payment of the entire amount due as soon as
reasonably prudent, as determined by the Compensation
Committee of the Board of Directors. The Committee will
reconsider the payment schedule in July 2002.
b) Pay up to $7,500 for outplacement services incurred by
Blake within 60 days of the date hereof.
c) Issue upon the exercise of stock options up to 60,000
shares of CFC stock for $14.0625 per share provided such
option is exercised on or prior to May 12, 2004, and issue
up to126,000 shares of CFC stock for $4.71875 per share and
up to 26,320 shares of CFC stock for $5.95 per share
provided such options are exercised on or prior to May 28,
2005, subject to sooner termination as provided therein, all
in accordance with the terms of the applicable Stock Option
Grant Notices, the corresponding Stock Option Agreements,
the 1999 Equity Incentive Plan and the Notices of Exercise.
d) Provide coverage for Blake and his spouse, under the
terms of the CFC Health Plan under the terms available to
active employees from time to time in effect through May 8,
2004. Thereafter, CFC will pay Blake's retiree medical
premiums for him and his spouse under the Health Plan
through December 31, 2004. The amounts paid after May 8,
2004 will be reported as income to the Internal Revenue
Service. In addition, Blake shall be entitled to an annual
executive physical through December 31, 2004 in accordance
with the physical program for senior executives.
e) Continue the term life insurance on Blake through
December 31, 2004 on the terms available to senior officers.
f) Provide the vested retirement benefits under the CFC
Pension Plan and the supplemental retirement benefits under
the Supplemental Retirement Plan in accordance with their
terms with additional age and service credit from May 8,
2002 through December 31, 2004 with severance pay credited
as if Blake had continued to perform services and continued
to receive base salary and target bonus.
g) Provide Blake, following retirement on May 8, 2004,
retiree benefits to the extent then generally available to
employees.
h) Promptly transfer title to Blake's company car to him
and on the last day of each month, beginning June 30, 2002,
and pay Blake $871.64 per month, through December 31, 2004,
less applicable withholding taxes, in lieu of a car
allowance and 401(k) plan match.
i) Reimburse Blake up to $2,500 for tax preparation
service annually through December 31, 2004 in accordance
with the policy for senior executives from time to time in
effect.
j) Reimburse Blake up to $4,500 for financial planning
services incurred on or prior to December 31, 2004.
7. Blake agrees to bear all tax consequences and pay
all withholding taxes for which he is liable for sums
referred to herein in connection with this settlement,
and agrees to hold harmless and indemnify CFC and
Affiliates against all liabilities, penalties, interest
and expenses (including reasonable attorneys' fees and
expenses) in the event that any proceeding is instituted
by any governmental agency in connection with the tax
consequences of said sums.
8. Blake agrees to cooperate with CFC and Affiliates at
CFC's expense but without additional compensation, except
as provided below, in connection with any claims,
disputes or lawsuits on an as-needed basis.
9. Blake agrees to continue his employment as a regular
employee of CFC as Assistant to the President,
reporting to the Chief Executive Officer of CFC, or the
Chief Operating Officer of its principal subsidiary,
through May 8, 2004 at a salary of $385 per week, with
the benefits generally available to employees (except
life insurance as provided above and vacation) and
subject to the CFC's standard terms of employment for non-
union employees, including compliance with the CFC Code
of Ethics. Provided however, nothing herein shall prevent
Blake from also accepting employment with another company
so long as Blake continues to comply with the terms of
this Release. During his period of continued employment,
Blake shall provide not less than 20 days of service as
requested from time to time. Blake shall be entitled to
have his salary proportionally adjusted for services
required in excess of those days, subject to his
availability. Blake shall retire under the CFC Pension
Plan on May 8, 2004. Blake shall continue to earn
retirement benefits related to his salary from May 29,
2002 through May 8, 2004 under the Pension Plan, but the
amount of such benefits shall be deducted from SERP
payments owed Blake. He agrees that he will not
thereafter seek employment with CFC or Affiliates in the
future.
During the term, Blake's employment shall not be
terminated except for: (a) any intentional action or
intentional failure to act by Blake which was performed
in bad faith and to the material detriment of CFC; (b)
intentional refusal or intentional failure to act in
accordance with the lawful and proper direction of the
Board of Directors or the CEO; (c) willful or habitual
neglect of his duties of employment; (d) conviction of a
felony crime involving fraud or an act of dishonesty
against CFC; or (e) Blake's material breach of the terms
of this Release. Provided however, if any of the
foregoing events is capable of being cured, CFC shall
provide written notice to Blake (but only once for
similar acts) describing the nature of the event and
Blake shall have ten business days to cure such event.
10. The terms of settlement and this Release of claims are
a private matter and are to be held in strict confidence by
CFC and Blake and their attorneys and shall not be disclosed
to other persons other than their attorneys, spouses,
financial planners, tax return preparers, government taxing
authorities, or as required to comply with legal process or
other legal requirements. The parties understand that this
is a material term of the Release and that any disclosure by
the parties of the terms and conditions of the Release shall
be treated as a breach and will entitle the parties, at
their option, to seek all damages occasioned by the breach.
11. The parties recognize that, in connection with Blake's
employment, he had access to certain written and oral
information, data, marketing techniques and information,
customer information, administrative and operational
procedures, materials, marketing plans, strategic planning,
pricing guidelines, contract terms, and other trade secrets
or confidential or proprietary information of CFC and
Affiliates, which information is not otherwise generally
available to the public (the "Confidential Information").
The parties further recognize that Blake may have, on behalf
of CFC and Affiliates, produced, refined, or contributed to
the production or refinement of such Confidential
Information. The parties further recognize that CFC and
Affiliates had and have a right to protect the
confidentiality and ownership of that Confidential
Information, that the nature of this business is highly
specialized and unique, and that Blake's position with CFC
and Affiliates was one of confidence and trust.
Blake covenants and agrees that he will, upon request
of CFC, and in any event upon termination of his
continuing employment relationship referred to above,
deliver to CFC any and all Confidential Information as
defined above, including but not limited to any and all
records, forms, contracts, studies, reports,
appraisals, strategic planning documents, price lists,
shipper or customer lists or information, special
pricing arrangements, financial data, lists of names or
other shipper data, and any other articles or papers,
computer tapes, and materials that have come into his
possession by reason of his employment with CFC,
together with all copies thereof, whether or not any of
said items were prepared by him, and he shall not
retain memoranda or copies of said items.
Blake acknowledges and agrees that he will not use for
himself or others or disclose to any individual or
company directly or indirectly any Confidential
Information as defined above. Further he will not use
for himself or others or disclose to any individual or
company directly or indirectly any information
concerning customer shipping volumes, rates, price
lists, special pricing arrangements, financial data,
strategic planning information, or other shipper data,
that he learned or acquired while at CFC that is not
otherwise readily available from the shipper/customer
or other public source. Blake understands that any
unauthorized disclosure or use of Confidential
Information, as set forth herein, will entitle CFC, at
its option, to seek all damages occasioned by the
breach.
12. By entering into this Release, it is expressly agreed
between the parties that neither party admits any liability
or wrongdoing in connection with any aspect of Blake's
employment by CFC and Affiliates or his change in employment
status. Neither the agreement to enter into this Release
nor anything in this Release shall be admissible in any
proceeding as evidence of any admission by CFC or Blake of
any breach of any contractual obligation, wrongdoing, or
other wrongful action in any form whatsoever. The parties
hereto enter into this Release in order to resolve actual
and potential claims, and no admission of liability can be
implied from that action.
13. CFC releases, absolves and discharges Blake and his
successors in interest from any and all claims, demands,
liens, agreements, contracts, covenants, actions, suits,
causes of action, damages, judgments, orders and liabilities
of whatever kind or nature in law, equity or otherwise,
whether known or unknown, suspected or unsuspected, which
arise out of actions taken by him while employed at CFC and
Affiliates through the date hereof which were within the
course and scope of his employment, and agrees that it will
defend and indemnify Blake for such actions to the fullest
extent permitted by law, CFC's articles of incorporation and
by-laws. Such release and indemnity shall not apply to any
action or course of conduct that is outside the course and
scope of his employment, including, without limitation, any
illegal activities, dishonesty, violations of criminal laws
or any violation of CFC's Code of Ethics. CFC shall maintain
directors and officers liability insurance covering Blake
for his period of service as an officer and/or director of
CFC under the same terms as for directors and officers of
CFC from time to time in effect until at least May 28, 2005.
14. The terms of this Release are contractual and not a
mere recital. Should any provision, or part of any
provision or application thereof be held invalid, the
invalidity shall not affect any other provisions or
applications of the Release which can be given effect
without the invalid provision or applications, and to this
end provisions of this Release are declared to be severable.
15. The Release shall bind and benefit all parties hereto,
their spouses, legal successors, heirs, assigns, partners,
guarantors, agents, executors, representatives and advisors,
and all other claiming by and through them. In the case of
any corporation, the Release shall bind and benefit its
subsidiaries, affiliates, parents, assigns, employees,
successors-in-interest, agents, directors, officers, and
shareholders.
16. All parties and their counsel have reviewed this
Release, and the normal rule of construction providing that
any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Release.
17. No breach of any provisions hereto can be waived unless
done so expressly and in writing. Express waiver of any one
breach shall not be deemed a waiver of any other breach of
the same or any other provisions hereof. The Release may be
amended or modified only by a written agreement executed by
all parties to this Release.
18. The parties represent and declare that, in executing
this Release, they relied solely upon their own judgment,
belief and knowledge, and the advice and recommendations of
their own independently selected counsel, if any, concerning
the nature, extent and duration of their rights and claims,
and that they have not been influenced to any extent
whatsoever in executing the same by any representations or
statements not expressly contained or referred to in this
Release.
19. This Release and the interpretation thereof shall be
governed by and construed according to the laws of the State
of Washington. Any action to resolve any disagreements
arising out of, or related to the subject matter of this
Release shall be brought in the State of Washington.
20. All parties acknowledge they have carefully read and
understood the contents of the Release. The parties hereto
further expressly agree that the considerations recited in
this Release are the sole and only considerations for this
agreement, and that no representations, promises, or
inducements have been made by any party or its officers,
employees, agents, or attorneys thereof other than as appear
in this Release. This Release supercedes any other oral or
written agreements or understandings between the parties
regarding any matter within the scope of the Release. The
parties hereto acknowledge voluntarily entering into this
agreement with full knowledge of the rights that they may be
waiving.
Dated as of May 28, 2002
Xxxxxxx X. Xxxxx Consolidated Freightways Corporation
/s/Xxxxxxx X. Xxxxx By: /s/Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President and
General Counsel
