13
AMENDED AND RESTATED
SEVERANCE AGREEMENT
THIS AGREEMENT, originally dated December 9, 1998, is amended and
restated in its entirety as of July 31, 2000. This Agreement is
made by and between CNF Transportation Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxxxxxxx (the
"Executive").
WHEREAS, the Company considers it essential to the best interests
of its stockholders to xxxxxx the continued employment of key
management personnel; and
WHEREAS, the Board recognizes that, as is the case with many
publicly held corporations, the possibility of a Change in
Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment
of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the
Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby
agree as follows:
1. Defined Terms. The definitions of capitalized terms used in
this Agreement are provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement shall
commence on the date hereof and shall continue in effect
through December 31, 2001; provided, however, that
commencing on January 1, 2001, and each January 1
thereafter, the Term shall automatically be extended for one
additional year unless, not later than September 30 of the
preceding year, the Company or the Executive shall have
given notice not to extend the Term; and further provided,
however, that if a Change in Control shall have occurred
during the Term, the Term shall expire no earlier than
twenty_four (24) months beyond the month in which such
Change in Control occurred.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in
consideration of the Executive's covenants set forth in
Section 4 hereof, the Company agrees, under the conditions
described herein, to pay the Executive the Severance
Payments and the other payments and benefits described
herein. Except as provided in Section 9.1 hereof, no
Severance Payments shall be payable under this Agreement
unless there shall have been (or, under the terms of the
second paragraph of Section 6.1 hereof, there shall be
deemed to have been) a termination of the Executive's
employment with the Company following a Change in Control
and during the Term. This Agreement shall not be construed
as creating an express or implied contract of employment
and, except as otherwise agreed in writing between the
Executive and the Company, the Executive (i) shall not have
any right to be retained in the employ of the Company, and
(ii) shall remain subject to discharge to the same extent as
if this Agreement had not been entered into by the Company
and the Executive.
4. Executive's Covenants. The Executive agrees that, subject
to the terms and conditions of this Agreement, in the event
of a Potential Change in Control during the Term, the
Executive will remain in the employ of the Company until the
earliest of (i) a date which is six (6) months from the date
of such Potential Change in Control, (ii) the date of a
Change in Control, (iii) the date of termination by the
Executive of the Executive's employment for Good Reason or
by reason of death, Disability or Retirement or (iv) the
termination by the Company of the Executive's employment for
any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control and during the Term,
during any period that the Executive fails to perform
the Executive's full-time duties with the Company as a
result of incapacity due to disability, including
physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in
effect at the commencement of any such period, together
with all compensation and benefits payable to the
Executive under the terms of any compensation or
benefit plan, program or arrangement maintained by the
Company during such period (other than any disability
plan), until the Executive's employment is terminated
by the Company for Disability.
5.2 If the Executive's employment shall be terminated
for any reason following a Change in Control and during
the Term, the Company shall pay the Executive's full
salary to the Executive through the Date of Termination
at the rate in effect immediately prior to the Date of
Termination or, if higher, the rate in effect
immediately prior to the Change in Control, together
with all compensation and benefits payable to the
Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans,
programs or arrangements as in effect immediately prior
to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the Change
in Control.
5.3 If the Executive's employment shall be terminated
for any reason following a Change in Control and during
the Term, the Company shall pay to the Executive the
Executive's normal post_termination compensation and
benefits as such payments become due (other than
severance payments under any severance plan as in
effect immediately prior to the Date of Termination).
Such post_termination compensation and benefits shall
be determined under, and paid in accordance with, the
Company's retirement, insurance and other compensation
or benefit plans, programs and arrangements as in
effect immediately prior to the Date of Termination or,
if more favorable to the Executive, as in effect
immediately prior to the Change in Control.
6. Severance Payments.
6.1 If the Executive's employment is terminated
following a Change in Control and during the Term,
other than (A) by the Company for Cause, (B) by reason
of death or Disability, or (C) by the Executive without
Good Reason, then the Company shall pay the Executive
the amounts, and provide the Executive the benefits,
described in this Section 6.1 ("Severance Payments")
and Section 6.2, in addition to any payments and
benefits to which the Executive is entitled under
Section 5 hereof; provided, however, that the Executive
shall not be entitled to the Severance Payments unless
and until the Executive (or, in the event of the
Executive's death, the executor, personal
representative or administrator of the Executive's
estate) has signed a written waiver and release
substantially in the form set forth on Exhibit A
hereto.
For purposes of this Agreement, the Executive's
employment shall be deemed to have been terminated
following a Change in Control by the Company without
Cause or by the Executive with Good Reason, if (i)
during the Term the Executive's employment is
terminated by the Company without Cause following a
Potential Change in Control but prior to a Change in
Control (whether or not a Change in Control ever
occurs) and such termination was at the request or
direction of a Person who has entered into an agreement
with the Company the consummation of which would
constitute a Change in Control, (ii) during the Term
the Executive terminates his employment for Good Reason
following a Potential Change in Control but prior to a
Change in Control (whether or not a Change in Control
ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or
direction of such Person or (iii) during the Term the
Executive's employment is terminated by the Company
without Cause or by the Executive for Good Reason and
such termination or the circumstance or event which
constitutes Good Reason is otherwise in connection with
or in anticipation of a Change in Control (whether or
not a Change in Control ever occurs).
An Executive will not be considered to have been
terminated by reason of the divestiture of a facility,
sale or other disposition of a business or business
unit, or the outsourcing of a business activity with
which the Executive is affiliated, notwithstanding the
fact that such divestiture, sale or outsourcing takes
place within two years following a Change in Control,
if the Executive is offered comparable employment by
the successor company and such successor company agrees
to assume the Company's obligations to the Executive
under this Agreement.
(A) In lieu of any further salary payments
to the Executive for periods subsequent to the
Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the
Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three times
the sum of (i) the Executive's annual base salary
as in effect immediately prior to the Date of
Termination or, if higher, in effect immediately
prior to the Change in Control and (ii) the
highest of (1) the average annual bonus earned by
the Executive pursuant to any annual bonus or
incentive plan maintained by the Company in
respect of the three fiscal years ending
immediately prior to the fiscal year in which
occurs the Date of Termination, (2) the average
annual bonus earned by the Executive pursuant to
any such plan in respect of the three fiscal years
ending immediately prior to the fiscal year in
which occurs the Change in Control or (3) the
target annual bonus in effect for the Executive
for the fiscal year in which occurs the Date of
Termination.
(B) For the thirty-six (36) month period
immediately following the Date of Termination, the
Company shall arrange to provide the Executive and
his dependents life, disability and accident
benefits substantially similar to those provided
to the Executive and his dependents immediately
prior to the Date of Termination or, if more
favorable to the Executive, those provided to the
Executive and his dependents immediately prior to
the Change in Control, at no greater cost to the
Executive than the cost to the Executive
immediately prior to such Date of Termination or
Change in Control; provided, however, that any
across the board changes to life, disability or
accident benefits similarly affecting all or
substantially all employees of the Company and any
entity in control of the Company shall not be
deemed a breach of this Section 6.1(B). Benefits
otherwise receivable by the Executive pursuant to
this Section 6.1(B) shall be reduced to the extent
benefits of the same type are received by or made
available to the Executive during the thirty-six
(36) month period following the Executive's
termination of employment (and any such benefits
received by or made available to the Executive
shall be reported to the Company by the
Executive); provided, however, that the Company
shall reimburse the Executive for the excess, if
any, of the cost of such benefits to the Executive
over such cost immediately prior to the Date of
Termination or, if more favorable to the
Executive, immediately prior to the Change in
Control. If the Executive dies during the thirty-
six (36) month period following the Date of
Termination, life, disability and accident benefit
coverage of the Executive's dependents shall
continue for the remainder of the thirty-six (36)
month period.
(C) Notwithstanding any provision of any
health or dental insurance plan or health or
dental benefit plan to the contrary, the Company
shall provide health and dental benefits to the
Executive and his dependents as if the Executive,
as of the Date of Termination, has retired (i)
under the terms of such plan as in effect
immediately prior to the Date of Termination or,
if more favorable to the Executive, immediately
prior to the Change in Control and (ii) with age
plus years of service totaling 85 or more.
Benefits otherwise receivable by the Executive
pursuant to this Section 6.1(C) shall be reduced
to the extent benefits of the same type are
received by or made available to the Executive
following the Executive's termination of
employment (and any such benefits received by or
made available to the Executive shall be reported
to the Company by the Executive); provided,
however, that the Company shall reimburse the
Executive for the excess, if any, of the cost of
such benefits to the Executive over such cost
immediately prior to the Date of Termination or,
if more favorable to the Executive, immediately
prior to the Change in Control. If the Executive
dies at a time when health and dental benefits are
being provided under this Section 6.1(C) to the
Executive's dependents, the Company shall continue
to provide the dependents with health and dental
benefits for as long as, and on the same basis as,
such benefits are provided to dependents of
retired employees who have retired with age plus
years of service totaling 85 or more.
(D) In addition to the retirement benefits
to which the Executive is entitled under each
Pension Plan or any successor plan thereto, the
Company shall pay the Executive a lump sum amount,
in cash, equal to the excess of (i) the actuarial
equivalent of the aggregate retirement pension
(taking into account any early retirement
subsidies associated therewith and determined as a
straight life annuity commencing at the date (but
in no event earlier than the third anniversary of
the Date of Termination) as of which the actuarial
equivalent of such annuity is greatest) which the
Executive would have accrued under the terms of
all Pension Plans (without regard to any amendment
to any Pension Plan made subsequent to a Change in
Control and on or prior to the Date of
Termination, which amendment adversely affects in
any manner the computation of retirement benefits
thereunder), determined as if the Executive (A)
were fully vested thereunder, (B) had accumulated
(after the Date of Termination) thirty-six (36)
additional months of service credit thereunder,
(C) had attained an age which is three years older
than the age the Executive had attained as of the
Date of Termination and (D) had been credited
under each Pension Plan during such period with
compensation equal to the Executive's annual
amount taken into account under Section 6.1(A)
hereof, over (ii) the actuarial equivalent of the
aggregate retirement pension (taking into account
any early retirement subsidies associated
therewith and determined as a straight life
annuity commencing at the date (but in no event
earlier than the Date of Termination) as of which
the actuarial equivalent of such annuity is
greatest) which the Executive had accrued pursuant
to the provisions of the Pension Plans as of the
Date of Termination. For purposes of this Section
6.1(D), "actuarial equivalent" shall be determined
using the same assumptions utilized under the
applicable Pension Plan immediately prior to the
Date of Termination or, if more favorable to the
Executive, immediately prior to the Change in
Control.
6.2 (A) Whether or not the Executive becomes
entitled to the Severance Payments, if any of the
payments or benefits received or to be received by
the Executive in connection with a Change in
Control or the Executive's termination of
employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or
agreement with the Company, any Person whose
actions result in a Change in Control or any
Person affiliated with the Company or such Person)
(such payments or benefits, excluding the Gross-Up
Payment, being hereinafter referred to as the
"Total Payments") will be subject to the Excise
Tax, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such
that the net amount retained by the Executive,
after deduction of any Excise Tax on the Total
Payments and any federal, state and local income
and employment taxes and Excise Tax upon the Gross-
Up Payment, shall be equal to the Total Payments.
(B) For purposes of determining whether any
of the Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i)
all of the Total Payments shall be treated as
"parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the
opinion of tax counsel ("Tax Counsel") reasonably
acceptable to the Executive and selected by the
accounting firm which was, immediately prior to
the Change in Control, the Company's independent
auditor (the "Auditor"), such payments or benefits
(in whole or in part) should not constitute
parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, (ii) all "excess
parachute payments" within the meaning of Section
280G(b)(l) of the Code shall be treated as subject
to the Excise Tax unless, in the opinion of Tax
Counsel, such excess parachute payments (in whole
or in part) represent reasonable compensation for
services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of
the Base Amount allocable to such reasonable
compensation, or should otherwise not be subject
to the Excise Tax and (iii) the value of any
noncash benefits or any deferred payment or
benefit shall be determined by the Auditor in
accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal
income tax at the highest marginal rate of federal
income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of
taxation in the state and locality of the
Executive's residence on the Date of Termination
(or if there is no Date of Termination, then the
date on which the Gross-Up Payment is calculated
for purposes of this Section 6.2), net of the
maximum reduction in federal income taxes which
could be obtained from deduction of such state and
local taxes.
(C) In the event that the Excise Tax is
finally determined to be less than the amount
taken into account hereunder in calculating the
Gross-Up Payment, the Executive shall repay to the
Company, within five (5) business days following
the time that the amount of such reduction in the
Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and
federal, state and local income and employment
taxes imposed on the Gross-Up Payment being repaid
by the Executive, to the extent that such
repayment results in a reduction in the Excise Tax
and a dollar-for-dollar reduction in the
Executive's taxable income and wages for purposes
of federal, state and local income and employment
taxes), plus interest on the amount of such
repayment at 120% of the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount
taken into account hereunder in calculating the
Gross-Up Payment (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any
interest, penalties or additions payable by the
Executive with respect to such excess) within five
(5) business days following the time that the
amount of such excess is finally determined. The
Executive and the Company shall each reasonably
cooperate with the other in connection with any
administrative or judicial proceedings concerning
the existence or amount of liability for Excise
Tax with respect to the Total Payments.
6.3 The payments provided in subsections (A), (C) and
(D) of Section 6.1 hereof and in subsections (A) and
(B) of Section 6.2 hereof shall be made not later than
the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company
or, in the case of payments under Section 6.2 hereof,
in accordance with Section 6.2 hereof, of the minimum
amount of such payments to which the Executive is
clearly entitled and shall pay the remainder of such
payments (together with interest on the unpaid
remainder (or on all such payments to the extent the
Company fails to make such payments when due) at 120%
of the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day
after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess
shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at
120% of the rate provided in Section 1274(b)(2)(B) of
the Code). At the time that payments are made under
this Agreement, the Company shall provide the Executive
with a written statement setting forth the manner in
which such payments were calculated and the basis for
such calculations including, without limitation, any
opinions or other advice the Company has received from
Tax Counsel, the Auditor or other advisors or
consultants (and any such opinions or advice which are
in writing shall be attached to the statement).
6.4 The Company also shall pay to the Executive all
legal fees and expenses incurred by the Executive in
seeking in good faith to obtain or enforce any benefit
or right provided by this Agreement or in connection
with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder.
Such payments shall be made within five (5) business
days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and
expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control
and during the Term, any purported termination of the
Executive's employment (other than by reason of death)
shall be communicated by written Notice of Termination
from one party hereto to the other party hereto in
accordance with Section 10 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set
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. Further, a Notice of Termination for Cause
is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than
three_quarters (3/4) of the entire membership of the
Board at a meeting of the Board which was called and
held for the purpose of considering such termination
(after reasonable notice to the Executive and an
opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board,
the Executive was guilty of conduct set forth in clause
(i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with
respect to any purported termination of the Executive's
employment after a Change in Control and during the
Term, shall mean (i) if the Executive's employment is
terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the
Executive shall not have returned to the full-time
performance of the Executive's duties during such
thirty (30) day period), and (ii) if the Executive's
employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the
case of a termination by the Company, shall not be less
than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a
termination by the Executive, shall not be less than
fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination
is given).
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the Term, the
Executive is not required to seek other employment or to
attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 hereof.
Further, the amount of any payment or benefit provided for
in this Agreement (other than to the extent provided in
Section 6.1(B) and 6.1(C) hereof) shall not be reduced by
any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon
any successor to the Company, the Company will require
any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent
that the Company would be required to perform it if no
such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same
amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason
after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date
of Termination.
9.2 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 amount would still be
payable to the Executive hereunder (other than amounts
which, by their terms, terminate upon the death of the
Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement
to the executors, personal representatives or
administrators of the Executive's estate.
10. Notices. All notices and other communications provided for
in this Agreement (i) shall be in writing, (ii) shall be
hand delivered, sent by overnight courier or by United
States registered mail, return receipt requested and postage
prepaid, addressed, in the case of the Executive, to the
address inserted below the Executive's signature on the
final page hereof and, if to the Company, to the address set
forth below, or to such other address as either party may
have furnished to the other in writing in accordance
herewith, and (iii) shall be effective only upon actual
receipt.
To the Company:
CNF Transportation Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: General Counsel
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed
by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or
of any lack of compliance with, any condition or provision
of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
This Agreement supersedes any other agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by
either party; provided, however, that this Agreement shall
supersede any written agreement setting forth the terms and
conditions of the Executive's employment with the Company
only in the event that the Executive's employment with the
Company is terminated on or following a Change in Control,
by the Company other than for Cause or by the Executive for
Good Reason. The validity, interpretation, construction
and performance of this Agreement shall be governed by the
laws of the State of California. All references to sections
of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or
local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and
the Executive under this Agreement which by their nature may
require either partial or total performance after the
expiration of the Term (including, without limitation, those
under Sections 6 and 7 hereof) shall survive such
expiration.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and
the same instrument.
14. Settlement of Disputes; Arbitration.
14.1 All claims by the Executive for benefits under
this Agreement shall be directed to and determined by
the Board and shall be in writing. Any denial by the
Board of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and
the specific provisions of this Agreement relied upon.
The Board shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim
and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days
after notification by the Board that the Executive's
claim has been denied.
14.2 Any further dispute or controversy arising under
or in connection with this Agreement shall be finally
settled exclusively by arbitration in Palo Alto,
California, in accordance with the rules of the
American Arbitration Association then in effect;
provided, however, that the evidentiary standards set
forth in this Agreement shall apply. Judgment may be
entered on the arbitrator's award in any court having
jurisdiction.
15. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the Exchange
Act.
(B) "Auditor" shall have the meaning set forth in
Section 6.2 hereof.
(C) "Base Amount" shall have the meaning set forth in
Section 280G(b)(3) of the Code.
(D) "Beneficial Owner" shall have the meaning set
forth in Rule 13d_3 under the Exchange Act.
(E) "Board" shall mean the Board of Directors of the
Company.
(F) "Cause" for termination by the Company of the
Executive's employment shall mean (i) the willful and
continued failure by the Executive to substantially
perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's
incapacity due to disability, including physical or
mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination
for Good Reason by the Executive pursuant to Section
7.1 hereof) after a written demand for substantial
performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in
which the Board believes that the Executive has not
substantially performed the Executive's duties, or (ii)
the willful engaging by the Executive in conduct which
is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no
act, or failure to act, on the Executive's part shall
be deemed "willful" unless done, or omitted to be done,
by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure
to act, was in the best interest of the Company. In
the event of a dispute concerning the application of
this provision, no claim by the Company that Cause
exists shall be given effect unless the Company
establishes to the Board and, in the event of an
arbitration as contemplated by Section 14.2, to the
arbitrator, by clear and convincing evidence that Cause
exists.
(G) A "Change in Control" means the occurrence of any
one of the following events:
(I) any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act
(other than (A) the Company or its Affiliates, (B)
any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or
its Affiliates and (C) any corporation owned,
directly or indirectly, by the stockholders of the
Company in substantially the same proportions as
their ownership of the Common Stock), is or
becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (not
including in the securities beneficially owned by
such person any securities acquired directly from
the Company or its Affiliates) representing 25% or
more of the combined voting power of the Company's
then outstanding voting securities;
(II) the following individuals cease for any
reason to constitute a majority of the number of
directors then serving: individuals who, on the
date hereof, constitute the Board and any new
director (other than a director whose initial
assumption of office is in connection with an
actual or threatened election contest, including
but not limited to a consent solicitation,
relating to the election of directors of the
Company) whose appointment or election by the
Board or nomination for election by the Company's
stockholders was approved or recommended by a vote
of at least two-thirds (2/3) of the directors then
still in office who either were directors as of
the date hereof or whose appointment, election or
nomination for election was previously so approved
or recommended;
(III) there is consummated a merger or
consolidation of the Company or any direct or
indirect subsidiary of the Company with any other
corporation, other than (A) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving or parent
entity) more than 50% of the combined voting power
of the voting securities of the Company or such
surviving or parent entity outstanding immediately
afer such merger or consolidation or (B) a merger
or consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove
defined), directly or indirectly, acquired 25% or
more of the combined voting power of the Company's
then outstanding securities (not including in the
securities beneficially owned by such person any
securities acquired directly from the Company or
its Affiliates); or
(IV) the stockholders of the Company approve
a plan of complete liquidation of the Company or
there is consummated an agreement for the sale or
disposition by the Company of assets having an
aggregate book value at the time of such sale or
disposition of more than 75% of the total book
value of the Company's assets on a consolidated
basis (or any transaction having a similar
effect), other than any such sale or disposition
by the Company (including by way of spin-off or
other distribution) to an entity, at least 50% of
the combined voting power of the voting securities
of which are owned immediately following such sale
or disposition by stockholders of the Company in
substantially the same proportions as their
ownership of the Company immediately prior to such
sale or disposition; provided, however, that a
Change in Control shall be deemed not to have
occurred under this clause (IV) if, immediately
prior to the consummation of any sale or
disposition of a business unit that is taken into
account in determining whether a Change in Control
has occurred, the Executive is employed by, and is
party to a severance agreement with, such business
unit.
(H) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(I) "Company" shall mean CNF Transportation Inc. and,
except in determining under Section 15(G) hereof
whether or not any Change in Control of the Company has
occurred, shall include any successor to its business
and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise. In
addition, when used in the context of the Executive's
employment, "Company" shall mean the Company or any of
its subsidiaries.
(J) "Common Stock" shall mean the common stock, par
value $0.625 per share, of the Company.
(K) "Date of Termination" shall have the meaning set
forth in Section 7.2 hereof.
(L) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's
employment, if, as a result of the Executive's
incapacity due to disability, including physical or
mental illness, the Executive shall have been absent
from the full-time performance of the Executive's
duties with the Company for a period of six (6)
consecutive months, the Company shall have given the
Executive a Notice of Termination for Disability, and,
within thirty (30) days after such Notice of
Termination is given, the Executive shall not have
returned to the full-time performance of the
Executive's duties.
(M) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(N) "Excise Tax" shall mean any excise tax imposed
under Section 4999 of the Code.
(O) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
(P) "Good Reason" for termination by the Executive of
the Executive's employment shall mean the occurrence
(without the Executive's express written consent) after
any Change in Control and during the Term of any one of
the following acts by the Company, or failures by the
Company to act, unless such act or failure to act is
corrected within 30 days of receipt by the Company of
notice of the Executive's intent to terminate for Good
Reason hereunder:
(I) the failure of the successor company,
following the Change in Control, to assume this
Agreement and all obligations hereunder, as of the
date of such Change in Control;
(II) the assignment to the Executive of any
duties inconsistent with the Executive's status as
an executive of the Company or a substantial
adverse alteration in the nature or status of the
Executive's responsibilities from those in effect
immediately prior to the Change in Control;
(III) a reduction by the Company in the
Executive's annual base salary (except for across-
the-board salary reductions similarly affecting
all executives of the Company and all executives
of any Person in control of the Company) or
incentive compensation opportunity (both short-
term and long-term, valued in a manner consistent
with the valuation methodology used by the Company
prior to the Change in Control), each as in effect
immediately prior to the Change in Control or as
the same may thereafter be increased from time to
time;
(IV) the relocation of the Executive's
principal place of employment to a location that
results in an increase in the Executive's one way
commute of at least 50 miles more than the
Executive's one way commute immediately prior to
the Change in Control, except for required travel
on the Company's business to an extent
substantially consistent with the Executive's
business travel obligations immediately prior to
the Change in Control;
(V) the failure by the Company to pay to the
Executive when due any portion of the Executive's
current compensation;
(VI) the failure by the Company to continue
to provide the Executive with benefits
substantially similar to those enjoyed by the
Executive under any of the Company's pension,
savings, life insurance, medical, health and
accident, or disability plans in which the
Executive was participating immediately prior to
the Change in Control (except for across the board
changes similarly affecting all or substantially
all employees of the Company and any entity in
control of the Company), the taking of any other
action by the Company which would directly or
indirectly materially reduce any of such benefits
or deprive the Executive of any material fringe
benefit enjoyed by the Executive immediately prior
to the Change in Control, or the failure by the
Company to provide the Executive with the number
of paid vacation days to which the Executive is
entitled.
The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected
by the Executive's incapacity due to disability,
including physical or mental illness. The
Executive's continued employment shall not
constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting
Good Reason hereunder.
Notwithstanding anything in this
Agreement to the contrary, if the Executive's
employment is terminated by the Executive for any
reason during the one-month period commencing on
the first anniversary of a Change in Control, such
termination shall be deemed a termination of the
Executive's employment for Good Reason.
(Q) "Gross-Up Payment" shall have the meaning set
forth in Section 6.2 hereof.
(R) "Notice of Termination" shall have the meaning set
forth in Section 7.1 hereof.
(S) "Pension Plan" shall mean any tax-qualified,
supplemental or excess benefit pension plan maintained
by the Company and any other plan or agreement entered
into between the Executive and the Company which is
designed to provide the Executive with supplemental
retirement benefits.
(T) "Person" shall mean any person, as such term is
used in Sections 13(d) and 14(d) of the Exchange Act
(other than (A) the Company or its Affiliates, (B) any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or its Affiliates,
and (C) any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the
same proportions as their ownership of the Common
Stock)
(U) "Potential Change in Control" shall be deemed to
have occurred if:
(I) the Company enters into an agreement,
the consummation of which would result in the
occurrence of a Change in Control;
(II) the Company or any Person publicly
announces an intention to take or to consider
taking actions, including but not limited to proxy
contests or consent solicitations, which, if
consummated, would constitute a Change in Control;
(III) any Person becomes the Beneficial
Owner, directly or indirectly, of securities of
the Company representing 15% or more of either the
then outstanding shares of common stock of the
Company or the combined voting power of the
Company's then outstanding securities (not
including in the securities beneficially owned by
such Person any securities acquired directly from
the Company or its affiliates); or
(IV) the Board adopts a resolution to the
effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.
(V) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's
employment if such employment is terminated in
accordance with the Company's retirement policy,
including early retirement, generally applicable to its
salaried employees.
(W) "Severance Payments" shall have the meaning set
forth in Section 6.1 hereof.
(X) "Tax Counsel" shall have the meaning set forth in
Section 6.2 hereof.
(Y) "Term" shall mean the period of time described in
Section 2 hereof (including any extension, continuation
or termination described therein).
(Z) "Total Payments" shall mean those payments so
described in Section 6.2 hereof.
CNF TRANSPORTATION INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
EXECUTIVE
Name: Xxxx X. Xxxxxxxxx
Address: 00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
16chw2939
EXHIBIT A
WAIVER AND RELEASE OF CLAIMS
In consideration of, and subject to, the payment to be made to me
by CNF Transportation Inc. (the "Company") of the "Severance
Payments" (as defined in the Amended and Restated Severance
Agreement, dated as of July 31, 2000, entered into between me and
the Company (the "Agreement")), I hereby waive any claims I may
have for employment or re-employment by the Company or any
subsidiary of the Company after the date hereof, and I further
agree to and do release and forever discharge the Company or any
subsidiary of the Company, and their respective past and present
officers, directors, shareholders, insurers, employees and agents
from any and all claims and causes of action, known or unknown,
arising out of or relating to my employment with the Company or
any subsidiary of the Company, or the termination thereof,
including, but not limited to, wrongful discharge, breach of
contract, tort, fraud, the Civil Rights Acts, Age Discrimination
in Employment Act, Employee Retirement Income Security Act of
1974, Americans with Disabilities Act, or any other federal,
state or local legislation or common law relating to employment
or discrimination in employment or otherwise.
Notwithstanding the foregoing or any other provision hereof,
nothing in this Waiver and Release of Claims shall adversely
affect (i) my rights under the Agreement; (ii) my rights to
benefits other than severance benefits under plans, programs and
arrangements of the Company or any subsidiary or parent of the
Company which are accrued but unpaid as of the date of my
termination; or (iii) my rights to indemnification under any
indemnification agreement, applicable law and the certificates of
incorporation and bylaws of the Company and any subsidiary or
parent of the Company, and my rights under any director's and
officers' liability insurance policy covering me.
I acknowledge that I have signed this Waiver and Release of
Claims voluntarily, knowingly, of my own free will and without
reservation or duress, and that no promises or representations
have been made to me by any person to induce me to do so other
than the promise of payment set forth in the first paragraph
above and the Company's acknowledgment of my rights reserved
under the second paragraph above.
I understand that this release will be deemed to be an
application for benefits under the Agreement and that my
entitlement thereto shall be governed by the terms and conditions
of the Agreement and any applicable plan. I expressly hereby
consent to such terms and conditions.
I acknowledge that I have been given not less than forty-five
(45) days to review and consider this Waiver and Release of
Claims (unless I have signed a written waiver of such review and
consideration period), and that I have had the opportunity to
consult with an attorney or other advisor of my choice and have
been advised by the Company to do so if I choose. I may revoke
this Waiver and Release of Claims seven days or less after its
execution by providing written notice to the Company.
I acknowledge that it is my intention and the intention of the
Company in executing this Waiver and Release of Claims that the
same shall be effective as a bar to each and every claim, demand
and cause of action hereinabove specified. In furtherance of
this intention, I hereby expressly waive any and all rights and
benefits conferred upon me by the provisions of SECTION 1542 OF
THE CALIFORNIA CIVIL CODE, to the extent applicable to me, and
expressly I consent that this Waiver and Release of Claims shall
be given full force and effect according to each and all of its
express terms and provisions, including as well those related to
unknown and unsuspected claims, demands and causes of action, if
any, as well as those relating to any other claims, demands and
causes of action hereinabove specified. SECTION 1542 provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS
OR HER SETTLEMENT WITH THE DEBTOR."
I acknowledge that I may hereafter discover claims or facts in
addition to or different from those which I now know or believe
to exist with respect to the subject matter of this Waiver and
Release of Claims and which, if known or suspected at the time of
executing this Waiver and Release of Claims, may have materially
affected this settlement.
Finally, I acknowledge that I have read this Waiver and Release
of Claims and understand all of its terms.
/s/ Xxxx X. Xxxxxxxxx
----------------------
Signature of Executive
Print Name
Date Signed
