1
SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of July 31, 2000, is made by and between
Con-Way Transportation Services, Inc. (the "Company"), a wholly
owned subsidiary of CNF Transportation Inc., a Delaware
corporation ("CNF"), and Xxxxxx X. Xxxxxx (the "Executive").
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 of the Company;
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 of the Company 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 of the Company occurred.
Notwithstanding anything in this Agreement to the contrary,
unless a Change in Control of the Company has previously
occurred, this Agreement shall terminate, and be of no
further force or effect, upon the occurrence of a "Change in
Control" of CNF (within the meaning of Section 15 of the
severance agreement between the Executive and CNF dated as
of July 31, 2000 (the "CNF Severance Agreement")), provided
that the CNF Severance Agreement remains in effect at the
time of such Change in Control of CNF.
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 of
the Company 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 of the Company 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 of the
Company, (ii) the date of a Change in Control of the
Company, (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 of the Company 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 of the Company
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 of the Company, together with all compensation
and benefits payable to the Executive through the Date
of Termination under the terms of CNF's or 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
of the Company.
5.3 If the Executive's employment shall be terminated for
any reason following a Change in Control of the Company
and during the Term, the Company shall pay, or shall
make satisfactory arrangements with CNF to 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 CNF's or 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 of the Company.
6. Severance Payments.
6.1 If the Executive's employment is terminated following a
Change in Control of the Company 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 of the Company 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 of the Company
but prior to a Change in Control of the Company
(whether or not a Change in Control of the Company 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 of the Company, (ii)
during the Term the Executive terminates his employment
for Good Reason following a Potential Change in Control
of the Company but prior to a Change in Control of the
Company (whether or not a Change in Control of the
Company 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 of the
Company (whether or not a Change in Control of the
Company ever occurs).
(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 of the Company and
(ii) the highest of (1) the average annual bonus
earned by the Executive pursuant to any annual
bonus or incentive plan maintained by CNF or 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
of the Company 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 of the Company, at no greater cost to the
Executive than the cost to the Executive
immediately prior to such Date of Termination or
Change in Control of the Company; 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 of the Company. 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
CNF's or the Company's 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 of the Company 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 of the Company. 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 of the Company 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 of the Company.
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
of the Company 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 of the
Company 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 of the Company, 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 of
the Company 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 of the Company 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, CNF and 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 CNF and
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 of the Company, 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:
Con-Way Transportation Services, Inc.
000 Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Vice President and Corporate
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 of
the Company, 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 Michigan. 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 Ann Arbor, Michigan, 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) "Board" shall mean the Board of Directors of the
Company.
(E) "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.
(F) A "Change in Control of the Company" means the
occurrence of any one of the following events:
(I) a sale by CNF of the then outstanding shares of
capital stock of the Company having more than 50%
of the then existing voting power of all
outstanding securities of the Company, whether by
merger, consolidation or otherwise;
(II) the sale of all or substantially all of the assets
of the Company; or
(III) any other transaction or course of action
engaged in, directly or indirectly, by the Company
or CNF that has a substantially similar effect as
the transactions of the type referred to in clause
(I) or (II) above.
The foregoing notwithstanding, a Change in Control of
the Company shall not be deemed to have occurred (A) by
reason of the occurrence of a "Change in Control" of
CNF (within the meaning of Section 15 of the CNF
Severance Agreement), (B) except in the case of a
transaction described in clause (II) above, so long as
CNF or any of its Affiliates, individually or
collectively, own the then outstanding shares of
capital stock of the Company having 50% or more of the
then existing voting power of all outstanding
securities of the Company, (C) in the event of the sale
of shares of capital stock of the Company to any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any other
Affiliate of CNF, or (D) in the event of the sale or
distribution of shares of capital stock of the Company
to shareholders of CNF, or the sale of assets of the
Company to any corporation or other entity owned,
directly or indirectly, by the shareholders of CNF, in
either case in substantially the same proportions as
their ownership of stock in CNF.
(G) "CNF" shall mean CNF Transportation Inc. and any
successor to its business and/or assets.
(H) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Company" shall mean Con-Way Transportation Services,
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
$1.00 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 of the Company 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 of the Company, to assume
this Agreement and all obligations hereunder, as
of the date of such Change in Control of the
Company;
(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 of the
Company;
(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 of the Company), each as in
effect immediately prior to the Change in Control
of the Company 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
of the Company, 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 of the Company;
(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
CNF's or 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 of the Company (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 of the
Company, 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 CNF or 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 of the Company" shall be
deemed to have occurred if:
(I) CNF or the Company enters into an agreement, the
consummation of which would result in the
occurrence of a Change in Control of the Company;
or
(II) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change
in Control of the Company has occurred.
(W) "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.
(X) "Severance Payments" shall have the meaning set forth
in Section 6.1 hereof.
(Y) "Tax Counsel" shall have the meaning set forth in
Section 6.2 hereof.
(Z) "Term" shall mean the period of time described in
Section 2 hereof (including any extension, continuation
or termination described therein).
(AA) "Total Payments" shall mean those payments so described
in Section 6.2 hereof.
CON-WAY TRANSPORTATION SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
EXECUTIVE
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Address: 000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
16chw2955
EXHIBIT A
WAIVER AND RELEASE OF CLAIMS
In consideration of, and subject to, the payment to be made to me
by Con-Way Transportation Services, Inc. (the "Company") of the
"Severance Payments" (as defined in the 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/ Xxxxxx X. Xxxxxx
----------------------------
Signature of Executive
Print Name
Date Signed
