Delaware | 94-1444798 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2211 Old Earhart Road, Suite 100, Ann Arbor, MI | 48105 |
(Address of principal executive offices) | (Zip code) |
1 |
CON-WAY INC. | |||||
FORM 10-Q | |||||
Quarter Ended September 30, 2012 | |||||
Table of Contents | |||||
Page | |||||
PART I. FINANCIAL INFORMATION | |||||
Item 1. | Financial Statements | ||||
Consolidated Balance Sheets - | |||||
September 30, 2012 and December 31, 2011 | |||||
Statements of Consolidated Income - | |||||
Three and Nine Months Ended September 30, 2012 and 2011 | |||||
Statements of Consolidated Comprehensive Income - | |||||
Three and Nine Months Ended September 30, 2012 and 2011 | |||||
Statements of Consolidated Cash Flows - | |||||
Nine Months Ended September 30, 2012 and 2011 | |||||
Notes to Consolidated Financial Statements | |||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||||
Item 4. | Controls and Procedures | ||||
PART II. OTHER INFORMATION | |||||
Item 1. | Legal Proceedings | ||||
Item 1A. | Risk Factors | ||||
Item 6. | Exhibits | ||||
Signatures |
2 |
CON-WAY INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in thousands) | |||||||
September 30, | December 31, | ||||||
ASSETS | 2012 | 2011 | |||||
(Unaudited) | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 442,021 | $ | 438,010 | |||
Marketable securities | 3,200 | 13,255 | |||||
Trade accounts receivable, net | 629,370 | 577,522 | |||||
Other accounts receivable | 53,196 | 43,849 | |||||
Operating supplies, at lower of average cost or market | 25,674 | 22,822 | |||||
Prepaid expenses | 38,564 | 48,369 | |||||
Deferred income taxes | 17,069 | 46,563 | |||||
Total Current Assets | 1,209,094 | 1,190,390 | |||||
Property, Plant and Equipment | |||||||
Land | 189,319 | 194,078 | |||||
Buildings and leasehold improvements | 829,231 | 827,910 | |||||
Revenue equipment | 1,709,507 | 1,613,806 | |||||
Other equipment | 328,304 | 318,313 | |||||
3,056,361 | 2,954,107 | ||||||
Accumulated depreciation | (1,509,860 | ) | (1,458,074 | ) | |||
Net Property, Plant and Equipment | 1,546,501 | 1,496,033 | |||||
Other Assets | |||||||
Deferred charges and other assets | 34,957 | 36,743 | |||||
Capitalized software, net | 20,941 | 19,829 | |||||
Marketable securities | — | 5,354 | |||||
Intangible assets, net | 11,586 | 13,951 | |||||
Goodwill | 338,041 | 337,716 | |||||
405,525 | 413,593 | ||||||
Total Assets | $ | 3,161,120 | $ | 3,100,016 | |||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
3 |
CON-WAY INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in thousands except per share amounts) | |||||||
September 30, | December 31, | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | 2012 | 2011 | |||||
(Unaudited) | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 361,489 | $ | 345,489 | |||
Accrued liabilities | 255,472 | 235,146 | |||||
Self-insurance accruals | 104,272 | 104,328 | |||||
Short-term borrowings | 10,639 | 14,481 | |||||
Current maturities of long-term debt and capital leases | 12,745 | 24,026 | |||||
Total Current Liabilities | 744,617 | 723,470 | |||||
Long-Term Liabilities | |||||||
Long-term debt | 718,983 | 718,336 | |||||
Long-term obligations under capital leases | 36,765 | 51,902 | |||||
Self-insurance accruals | 148,903 | 158,889 | |||||
Employee benefits | 555,070 | 610,850 | |||||
Other liabilities and deferred credits | 34,814 | 39,120 | |||||
Deferred income taxes | 71,581 | 38,195 | |||||
Total Liabilities | 2,310,733 | 2,340,762 | |||||
Commitments and Contingencies (Note 8) | |||||||
Shareholders' Equity | |||||||
Common stock, $0.625 par value; authorized 100,000,000 shares; | |||||||
issued 63,550,965 and 63,065,931 shares, respectively | 39,692 | 39,394 | |||||
Additional paid-in capital, common stock | 611,094 | 595,992 | |||||
Retained earnings | 955,141 | 884,758 | |||||
Cost of repurchased common stock | |||||||
(7,581,970 and 7,468,869 shares, respectively) | (326,088 | ) | (322,454 | ) | |||
Accumulated other comprehensive loss | (429,452 | ) | (438,436 | ) | |||
Total Shareholders' Equity | 850,387 | 759,254 | |||||
Total Liabilities and Shareholders' Equity | $ | 3,161,120 | $ | 3,100,016 | |||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
4 |
CON-WAY INC. | |||||||||||||||
STATEMENTS OF CONSOLIDATED INCOME | |||||||||||||||
(Unaudited) | |||||||||||||||
(Dollars in thousands except per share amounts) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues | $ | 1,404,113 | $ | 1,377,079 | $ | 4,216,370 | $ | 3,971,255 | |||||||
Costs and Expenses | |||||||||||||||
Salaries, wages and employee benefits | 534,011 | 516,083 | 1,601,105 | 1,516,597 | |||||||||||
Purchased transportation | 384,312 | 365,306 | 1,152,563 | 1,030,822 | |||||||||||
Other operating expenses | 145,660 | 145,298 | 420,704 | 417,998 | |||||||||||
Fuel and fuel-related taxes | 136,011 | 142,185 | 420,196 | 428,322 | |||||||||||
Depreciation and amortization | 55,403 | 50,814 | 160,687 | 151,668 | |||||||||||
Maintenance | 33,893 | 35,711 | 98,474 | 97,692 | |||||||||||
Rents and leases | 29,654 | 30,423 | 86,596 | 86,944 | |||||||||||
Purchased labor | 29,956 | 30,134 | 84,999 | 83,226 | |||||||||||
1,348,900 | 1,315,954 | 4,025,324 | 3,813,269 | ||||||||||||
Operating Income | 55,213 | 61,125 | 191,046 | 157,986 | |||||||||||
Other Income (Expense) | |||||||||||||||
Investment income | 204 | 163 | 648 | 712 | |||||||||||
Interest expense | (13,667 | ) | (13,909 | ) | (41,199 | ) | (41,751 | ) | |||||||
Miscellaneous, net | (592 | ) | 227 | (3,218 | ) | (2,536 | ) | ||||||||
(14,055 | ) | (13,519 | ) | (43,769 | ) | (43,575 | ) | ||||||||
Income before Income Tax Provision | 41,158 | 47,606 | 147,277 | 114,411 | |||||||||||
Income Tax Provision | 15,854 | 18,478 | 54,527 | 48,939 | |||||||||||
Net Income | $ | 25,304 | $ | 29,128 | $ | 92,750 | $ | 65,472 | |||||||
Weighted-Average Common Shares Outstanding | |||||||||||||||
Basic | 55,906,636 | 55,535,074 | 55,806,937 | 55,331,170 | |||||||||||
Diluted | 56,463,535 | 56,117,334 | 56,432,216 | 56,054,059 | |||||||||||
Earnings per Common Share | |||||||||||||||
Basic | $ | 0.45 | $ | 0.52 | $ | 1.66 | $ | 1.18 | |||||||
Diluted | $ | 0.45 | $ | 0.52 | $ | 1.64 | $ | 1.17 | |||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
5 |
CON-WAY INC. | |||||||||||||||
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME | |||||||||||||||
(Unaudited) | |||||||||||||||
(Dollars in thousands) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net Income | $ | 25,304 | $ | 29,128 | $ | 92,750 | $ | 65,472 | |||||||
Other Comprehensive Income (Loss): | |||||||||||||||
Foreign currency translation adjustment | 674 | (1,226 | ) | (52 | ) | 477 | |||||||||
Unrealized gain on available-for-sale security, | |||||||||||||||
net of deferred tax of $182, $7, $145 and $21, respectively | 283 | 12 | 226 | 33 | |||||||||||
Employee benefit plans | |||||||||||||||
Amortization of actuarial loss included in expense, net of | |||||||||||||||
deferred tax of $1,872, $976, $5,633 and $2,928, respectively | 2,928 | 1,527 | 8,810 | 4,581 | |||||||||||
3,885 | 313 | 8,984 | 5,091 | ||||||||||||
Comprehensive Income | $ | 29,189 | $ | 29,441 | $ | 101,734 | $ | 70,563 | |||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
6 |
CON-WAY INC. | |||||||
STATEMENTS OF CONSOLIDATED CASH FLOWS | |||||||
(Unaudited) | |||||||
(Dollars in thousands) | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
Cash and Cash Equivalents, Beginning of Period | $ | 438,010 | $ | 421,420 | |||
Operating Activities | |||||||
Net income | 92,750 | 65,472 | |||||
Adjustments to reconcile net income to net cash provided | |||||||
by operating activities: | |||||||
Depreciation and amortization, net of accretion | 159,936 | 150,905 | |||||
Non-cash compensation and employee benefits | 25,299 | 17,668 | |||||
Increase in deferred income taxes | 57,102 | 42,049 | |||||
Provision for uncollectible accounts | 3,267 | 4,973 | |||||
Gain from sales of property, equipment and investment, net | (8,015 | ) | (1,923 | ) | |||
Changes in assets and liabilities: | |||||||
Receivables | (54,586 | ) | (104,658 | ) | |||
Prepaid expenses | 9,805 | 16,350 | |||||
Accounts payable | 8,716 | 53,788 | |||||
Accrued variable compensation | (4,742 | ) | 12,806 | ||||
Accrued liabilities, excluding accrued variable compensation | |||||||
and employee benefits | 25,153 | 15,172 | |||||
Self-insurance accruals | (10,042 | ) | (11,970 | ) | |||
Accrued income taxes | (8,949 | ) | 31,218 | ||||
Employee benefits | (55,865 | ) | (51,430 | ) | |||
Deferred charges and credits | (3,915 | ) | 1,508 | ||||
Other | (6,211 | ) | (5,878 | ) | |||
Net Cash Provided by Operating Activities | 229,703 | 236,050 | |||||
Investing Activities | |||||||
Capital expenditures | (213,217 | ) | (176,677 | ) | |||
Software expenditures | (5,743 | ) | (7,280 | ) | |||
Proceeds from sales of property and equipment | 19,385 | 6,083 | |||||
Purchases of marketable securities | (8,200 | ) | (11,230 | ) | |||
Proceeds from sales of marketable securities | 23,613 | 525 | |||||
Net Cash Used in Investing Activities | (184,162 | ) | (188,579 | ) | |||
Financing Activities | |||||||
Repayment of capital leases | (25,868 | ) | (14,884 | ) | |||
Net repayments of short-term borrowings | (3,891 | ) | (3,732 | ) | |||
Payment of debt issuance costs | — | (661 | ) | ||||
Proceeds from exercise of stock options | 3,357 | 5,374 | |||||
Excess tax benefit from share-based compensation | 1,632 | 713 | |||||
Payments of common dividends | (16,760 | ) | (16,617 | ) | |||
Net Cash Used in Financing Activities | (41,530 | ) | (29,807 | ) | |||
Increase in Cash and Cash Equivalents | 4,011 | 17,664 | |||||
Cash and Cash Equivalents, End of Period | $ | 442,021 | $ | 439,084 | |||
Supplemental Disclosure | |||||||
Cash paid (refunded) for income taxes, net | $ | 7,260 | $ | (28,005 | ) | ||
Cash paid for interest, net of amounts capitalized | $ | 43,105 | $ | 43,765 | |||
Non-cash Investing and Financing Activities | |||||||
Revenue equipment acquired through partial non-monetary exchanges | $ | 23,974 | $ | 25,708 | |||
Repurchased common stock issued under defined contribution plan | $ | — | $ | 17,307 | |||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
7 |
(Dollars in thousands except per share data) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 25,304 | $ | 29,128 | $ | 92,750 | $ | 65,472 | |||||||
Denominator: | |||||||||||||||
Weighted-average common shares outstanding | 55,906,636 | 55,535,074 | 55,806,937 | 55,331,170 | |||||||||||
Stock options and nonvested stock | 556,899 | 582,260 | 625,279 | 722,889 | |||||||||||
56,463,535 | 56,117,334 | 56,432,216 | 56,054,059 | ||||||||||||
Diluted Earnings per Share: | $ | 0.45 | $ | 0.52 | $ | 1.64 | $ | 1.17 | |||||||
Anti-dilutive securities excluded from the | |||||||||||||||
computation of diluted EPS | 1,818,992 | 2,070,672 | 1,779,609 | 1,838,289 |
8 |
(Dollars in thousands) | Logistics | Truckload | Other | Total | |||||||||||
Balance at December 31, 2010 | |||||||||||||||
Goodwill | $ | 55,374 | $ | 464,598 | $ | 727 | $ | 520,699 | |||||||
Accumulated impairment losses | (48,236 | ) | (134,813 | ) | — | (183,049 | ) | ||||||||
7,138 | 329,785 | 727 | 337,650 | ||||||||||||
Change in foreign currency exchange rates | 66 | — | — | 66 | |||||||||||
Balances at December 31, 2011 | |||||||||||||||
Goodwill | 55,440 | 464,598 | 727 | 520,765 | |||||||||||
Accumulated impairment losses | (48,236 | ) | (134,813 | ) | — | (183,049 | ) | ||||||||
7,204 | 329,785 | 727 | 337,716 | ||||||||||||
Change in foreign currency exchange rates | 325 | — | — | 325 | |||||||||||
Balances at September 30, 2012 | |||||||||||||||
Goodwill | 55,765 | 464,598 | 727 | 521,090 | |||||||||||
Accumulated impairment losses | (48,236 | ) | (134,813 | ) | — | (183,049 | ) | ||||||||
$ | 7,529 | $ | 329,785 | $ | 727 | $ | 338,041 |
September 30, 2012 | December 31, 2011 | ||||||||||||||
(Dollars in thousands) | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||
Customer relationships | $ | 23,098 | $ | 11,512 | $ | 27,570 | $ | 13,619 |
(Dollars in thousands) | |||
Year ending December 31: | |||
Remaining three months of 2012 | $ | 590 | |
2013 | 2,356 | ||
2014 | 2,356 | ||
2015 | 2,356 | ||
2016 | 2,356 | ||
2017 | 1,571 |
9 |
• | Freight. The Freight segment consists of the operating results of the Con-way Freight business unit, which provides regional, inter-regional and transcontinental less-than-truckload freight services throughout North America. |
• | Logistics. The Logistics segment consists of the operating results of the Menlo Worldwide Logistics business unit, which develops contract-logistics solutions, including the management of complex distribution networks and supply-chain engineering and consulting, and also provides multimodal freight-brokerage services. |
• | Truckload. The Truckload segment consists of the operating results of the Con-way Truckload business unit, which provides asset-based full-truckload freight services throughout North America. |
• | Other. The Other reporting segment consists of the operating results of Road Systems, a trailer manufacturer, and certain corporate activities for which the related income or expense has not been allocated to other reporting segments. |
10 |
(Dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues before Inter-segment Eliminations | |||||||||||||||
Freight | $ | 858,276 | $ | 843,300 | $ | 2,567,847 | $ | 2,450,870 | |||||||
Logistics | 427,790 | 417,142 | 1,294,965 | 1,181,129 | |||||||||||
Truckload | 160,094 | 158,705 | 480,337 | 459,371 | |||||||||||
Other | 15,229 | 12,160 | 44,156 | 36,454 | |||||||||||
Inter-segment Revenue Eliminations | (57,276 | ) | (54,228 | ) | (170,935 | ) | (156,569 | ) | |||||||
$ | 1,404,113 | $ | 1,377,079 | $ | 4,216,370 | $ | 3,971,255 | ||||||||
Inter-segment Revenue Eliminations | |||||||||||||||
Freight | $ | 11,996 | $ | 13,205 | $ | 37,868 | $ | 36,931 | |||||||
Logistics | 12,625 | 9,411 | 34,792 | 24,216 | |||||||||||
Truckload | 18,502 | 20,921 | 57,273 | 63,291 | |||||||||||
Other | 14,153 | 10,691 | 41,002 | 32,131 | |||||||||||
$ | 57,276 | $ | 54,228 | $ | 170,935 | $ | 156,569 | ||||||||
Revenues from External Customers | |||||||||||||||
Freight | $ | 846,280 | $ | 830,095 | $ | 2,529,979 | $ | 2,413,939 | |||||||
Logistics | 415,165 | 407,731 | 1,260,173 | 1,156,913 | |||||||||||
Truckload | 141,592 | 137,784 | 423,064 | 396,080 | |||||||||||
Other | 1,076 | 1,469 | 3,154 | 4,323 | |||||||||||
$ | 1,404,113 | $ | 1,377,079 | $ | 4,216,370 | $ | 3,971,255 | ||||||||
Operating Income (Loss) | |||||||||||||||
Freight | $ | 34,441 | $ | 40,721 | $ | 122,372 | $ | 100,220 | |||||||
Logistics | 10,990 | 12,679 | 35,972 | 33,420 | |||||||||||
Truckload | 11,273 | 7,867 | 36,442 | 25,273 | |||||||||||
Other | (1,491 | ) | (142 | ) | (3,740 | ) | (927 | ) | |||||||
$ | 55,213 | $ | 61,125 | $ | 191,046 | $ | 157,986 |
September 30, 2012 | |||||||||||||||
(Dollars in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Cash equivalents | $ | 398,496 | $ | 84,082 | $ | 314,414 | $ | — | |||||||
Current marketable securities | 3,200 | — | 3,200 | — |
December 31, 2011 | |||||||||||||||
(Dollars in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
Cash equivalents | $ | 398,450 | $ | 84,872 | $ | 313,578 | $ | — | |||||||
Current marketable securities | 13,255 | — | 13,255 | — | |||||||||||
Other marketable securities | 5,354 | — | — | 5,354 |
11 |
(Dollars in thousands) | Auction-rate security | ||
Balance at December 31, 2010 | $ | 6,039 | |
Loss included in other comprehensive income | (10 | ) | |
Settlements | (675 | ) | |
Balance at December 31, 2011 | $ | 5,354 | |
Gains (Losses) | |||
Included in earnings | (367 | ) | |
Included in other comprehensive income | 371 | ||
Settlements and Sales | |||
Settlements | (75 | ) | |
Sales | (5,283 | ) | |
Balance at September 30, 2012 | $ | — |
12 |
Qualified Pension Plans | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Interest cost on benefit obligation | $ | 17,542 | $ | 17,827 | $ | 52,626 | $ | 53,482 | |||||||
Expected return on plan assets | (21,102 | ) | (21,483 | ) | (63,308 | ) | (64,451 | ) | |||||||
Amortization of net loss | 4,862 | 2,636 | 14,585 | 7,909 | |||||||||||
Net periodic benefit expense (income) | $ | 1,302 | $ | (1,020 | ) | $ | 3,903 | $ | (3,060 | ) | |||||
Non-Qualified Pension Plans | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Interest cost on benefit obligation | $ | 860 | $ | 946 | $ | 2,579 | $ | 2,840 | |||||||
Amortization of net loss | 240 | 170 | 763 | 509 | |||||||||||
Net periodic benefit expense | $ | 1,100 | $ | 1,116 | $ | 3,342 | $ | 3,349 |
13 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Service cost | $ | 419 | $ | 360 | $ | 1,259 | $ | 1,081 | |||||||
Interest cost on benefit obligation | 1,080 | 1,123 | 3,239 | 3,369 | |||||||||||
Amortization of prior service credit | (302 | ) | (303 | ) | (905 | ) | (909 | ) | |||||||
Net periodic benefit expense | $ | 1,197 | $ | 1,180 | $ | 3,593 | $ | 3,541 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Dollars in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Salaries, wages and employee benefits | $ | 1,542 | $ | 316 | $ | 11,371 | $ | 9,485 | |||||||
Deferred income tax benefit | (596 | ) | (89 | ) | (4,414 | ) | (3,665 | ) | |||||||
Net share-based compensation expense | $ | 946 | $ | 227 | $ | 6,957 | $ | 5,820 |
14 |
15 |
• | Overview of Business |
• | Results of Operations |
• | Liquidity and Capital Resources |
• | Critical Accounting Policies and Estimates |
• | Forward-Looking Statements |
• | Freight. The Freight segment consists of the operating results of the Con-way Freight business unit, which provides regional, inter-regional and transcontinental less-than-truckload freight services throughout North America. |
• | Logistics. The Logistics segment consists of the operating results of the Menlo Worldwide Logistics business unit, which develops contract-logistics solutions, including the management of complex distribution networks and supply-chain engineering and consulting, and also provides multimodal freight-brokerage services. |
• | Truckload. The Truckload segment consists of the operating results of the Con-way Truckload business unit, which provides asset-based full-truckload freight services throughout North America. |
• | Other. The Other reporting segment consists of the operating results of Road Systems, a trailer manufacturer, and certain corporate activities for which the related income or expense has not been allocated to other reporting segments. |
16 |
(Dollars in thousands except per share amounts) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues | $ | 1,404,113 | $ | 1,377,079 | $ | 4,216,370 | $ | 3,971,255 | |||||||
Operating expenses | 1,348,900 | 1,315,954 | 4,025,324 | 3,813,269 | |||||||||||
Operating income | 55,213 | 61,125 | 191,046 | 157,986 | |||||||||||
Other non-operating expense | 14,055 | 13,519 | 43,769 | 43,575 | |||||||||||
Income before income tax provision | 41,158 | 47,606 | 147,277 | 114,411 | |||||||||||
Income tax provision | 15,854 | 18,478 | 54,527 | 48,939 | |||||||||||
Net income | $ | 25,304 | $ | 29,128 | $ | 92,750 | $ | 65,472 | |||||||
Diluted earnings per share | $ | 0.45 | $ | 0.52 | $ | 1.64 | $ | 1.17 |
17 |
(Dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenue before inter-segment eliminations | $ | 858,276 | $ | 843,300 | $ | 2,567,847 | $ | 2,450,870 | |||||||
Salaries, wages and employee benefits | 393,509 | 382,545 | 1,170,174 | 1,120,203 | |||||||||||
Purchased transportation | 149,655 | 138,520 | 436,917 | 396,761 | |||||||||||
Other operating expenses | 113,153 | 113,294 | 334,048 | 336,789 | |||||||||||
Fuel and fuel-related taxes | 91,239 | 96,549 | 285,501 | 293,003 | |||||||||||
Depreciation and amortization | 31,576 | 27,562 | 92,624 | 82,729 | |||||||||||
Maintenance | 24,868 | 25,546 | 72,709 | 70,779 | |||||||||||
Rents and leases | 13,119 | 12,460 | 37,229 | 35,235 | |||||||||||
Purchased labor | 6,716 | 6,103 | 16,273 | 15,151 | |||||||||||
Total operating expenses | 823,835 | 802,579 | 2,445,475 | 2,350,650 | |||||||||||
Operating income | $ | 34,441 | $ | 40,721 | $ | 122,372 | $ | 100,220 | |||||||
Operating margin | 4.0 | % | 4.8 | % | 4.8 | % | 4.1 | % | |||||||
2012 vs. 2011 | 2012 vs. 2011 | ||||||||||||||
Selected Operating Statistics | |||||||||||||||
Weight per day | -0.2 | % | +0.7 | % | |||||||||||
Revenue per hundredweight ("yield") | +3.5 | % | +4.2 | % | |||||||||||
Shipments per day ("volume") | -2.8 | % | -1.0 | % | |||||||||||
Weight per shipment | +2.6 | % | +1.8 | % |
18 |
19 |
(Dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenue before inter-segment eliminations | $ | 427,790 | $ | 417,142 | $ | 1,294,965 | $ | 1,181,129 | |||||||
Purchased transportation expense | (268,031 | ) | (262,477 | ) | (817,645 | ) | (737,159 | ) | |||||||
Net revenue | 159,759 | 154,665 | 477,320 | 443,970 | |||||||||||
Salaries, wages and employee benefits | 64,492 | 58,913 | 194,290 | 168,883 | |||||||||||
Other operating expenses | 42,741 | 38,928 | 122,869 | 115,907 | |||||||||||
Fuel and fuel-related taxes | 193 | 267 | 636 | 808 | |||||||||||
Depreciation and amortization | 2,303 | 2,637 | 7,366 | 8,273 | |||||||||||
Maintenance | 610 | 788 | 2,213 | 2,209 | |||||||||||
Rents and leases | 15,872 | 17,067 | 47,355 | 48,454 | |||||||||||
Purchased labor | 22,558 | 23,386 | 66,619 | 66,016 | |||||||||||
Total operating expenses excluding purchased transportation | 148,769 | 141,986 | 441,348 | 410,550 | |||||||||||
Operating income | $ | 10,990 | $ | 12,679 | $ | 35,972 | $ | 33,420 | |||||||
Operating margin on revenue | 2.6 | % | 3.0 | % | 2.8 | % | 2.8 | % | |||||||
Operating margin on net revenue | 6.9 | % | 8.2 | % | 7.5 | % | 7.5 | % |
20 |
(Dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Freight revenue | $ | 119,409 | $ | 118,395 | $ | 355,835 | $ | 342,973 | |||||||
Fuel-surcharge revenue | 35,628 | 35,829 | 110,050 | 103,298 | |||||||||||
Other revenue | 5,057 | 4,481 | 14,452 | 13,100 | |||||||||||
Revenue before inter-segment eliminations | 160,094 | 158,705 | 480,337 | 459,371 | |||||||||||
Salaries, wages and employee benefits | 52,604 | 54,142 | 159,196 | 156,562 | |||||||||||
Purchased transportation | 9,463 | 7,594 | 27,055 | 20,457 | |||||||||||
Other operating expenses | 15,477 | 16,238 | 47,297 | 45,192 | |||||||||||
Fuel and fuel-related taxes | 44,458 | 45,234 | 133,681 | 134,199 | |||||||||||
Depreciation and amortization | 17,904 | 17,764 | 51,595 | 51,593 | |||||||||||
Maintenance | 8,332 | 9,280 | 23,274 | 24,435 | |||||||||||
Rents and leases | 310 | 282 | 958 | 815 | |||||||||||
Purchased labor | 273 | 304 | 839 | 845 | |||||||||||
Total operating expenses | 148,821 | 150,838 | 443,895 | 434,098 | |||||||||||
Operating income | $ | 11,273 | $ | 7,867 | $ | 36,442 | $ | 25,273 | |||||||
Operating margin on revenue | 7.0 | % | 5.0 | % | 7.6 | % | 5.5 | % | |||||||
Operating margin on revenue | |||||||||||||||
excluding fuel-surcharge revenue | 9.1 | % | 6.4 | % | 9.8 | % | 7.1 | % | |||||||
2012 vs. 2011 | 2012 vs. 2011 | ||||||||||||||
Selected Operating Statistics | |||||||||||||||
Freight revenue per loaded mile | +2.0 | % | +2.7 | % | |||||||||||
Loaded miles | -1.1 | % | +1.0 | % |
21 |
(Dollars in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenue | |||||||||||||||
Road Systems | $ | 15,229 | $ | 12,160 | $ | 44,156 | $ | 36,454 | |||||||
Operating income (loss) | |||||||||||||||
Road Systems | $ | 19 | $ | 56 | $ | (106 | ) | $ | (23 | ) | |||||
Con-way reinsurance activities | (1,166 | ) | 24 | (2,594 | ) | 60 | |||||||||
Con-way corporate properties | (319 | ) | (351 | ) | (999 | ) | (1,081 | ) | |||||||
Other | (25 | ) | 129 | (41 | ) | 117 | |||||||||
$ | (1,491 | ) | $ | (142 | ) | $ | (3,740 | ) | $ | (927 | ) |
22 |
(Dollars in thousands) | Nine Months Ended September 30, | ||||||
2012 | 2011 | ||||||
Operating Activities | |||||||
Net income | $ | 92,750 | $ | 65,472 | |||
Non-cash adjustments (1) | 237,589 | 213,672 | |||||
Changes in assets and liabilities | (100,636 | ) | (43,094 | ) | |||
Net Cash Provided by Operating Activities | 229,703 | 236,050 | |||||
Net Cash Used in Investing Activities | (184,162 | ) | (188,579 | ) | |||
Net Cash Used in Financing Activities | (41,530 | ) | (29,807 | ) | |||
Increase in Cash and Cash Equivalents | $ | 4,011 | $ | 17,664 | |||
(1) “Non-cash adjustments” refer to depreciation, amortization, deferred income taxes, provision for uncollectible accounts, and other non-cash income and expenses. | |||||||
23 |
24 |
• | Defined Benefit Pension Plans |
• | Goodwill |
• | Income Taxes |
• | Property, Plant and Equipment and Other Long-Lived Assets |
• | Revenue Recognition |
• | Self-Insurance Accruals |
25 |
• | any projections of earnings, revenues, weight, yield, volumes, income or other financial or operating items; |
• | any statements of the plans, strategies, expectations or objectives of Con-way’s management for future operations or other future items; |
• | any statements concerning proposed new products or services; |
• | any statements regarding Con-way’s estimated future contributions to pension plans; |
• | any statements as to the adequacy of reserves; |
• | any statements regarding the outcome of any legal and other claims and proceedings that may be brought against Con-way; |
• | any statements regarding future economic conditions or performance; |
• | any statements regarding strategic acquisitions; and |
• | any statements of estimates or belief and any statements or assumptions underlying the foregoing. |
26 |
27 |
28 |
29 |
Exhibit No. | ||||
(10) | Material Contracts: | |||
10.1 | Compliance Amendment 2012-1 to the Con-way Inc. 2005 Supplemental Excess Retirement Plan (Amended and Restated December 2008)#. | |||
10.2 | Form of Amendment No. 2 to Severance Agreement (Change in Control)#. | |||
10.3 | Form of Severance Agreement (Change in Control) for Saul Gonzalez#. | |||
10.4 | Form of Severance Agreement (Change in Control) for Stephen K. Krull#. | |||
10.5 | Form of Severance Agreement (Change in Control) for W. Gregory Lehmkuhl#. | |||
10.6 | Form of Severance Agreement (Change in Control) for C. Randal Mullett#. | |||
10.7 | Form of Amendment No. 2 to Amended and Restated Severance Agreement (Non-Change in Control)#. | |||
10.8 | Form of Severance Agreement (Non-Change in Control) for Saul Gonzalez#. | |||
10.9 | Form of Severance Agreement (Non-Change in Control) for Stephen K. Krull#. | |||
10.10 | Form of Severance Agreement (Non-Change in Control) for W. Gregory Lehmkuhl#. | |||
10.11 | Form of Non-Change in Control Severance Policy (Con-way Inc. and Con-way Enterprise Services, Inc.) #. | |||
10.12 | Form of Non-Change in Control Severance Policy (Con-way Affiliates)#. | |||
(31) | Certification of Officers pursuant to Section 302 of the Sarbanes-Oxley Act of 2002: | |||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
(32) | Certification of Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
(101) | The following financial statements from Con-way’s Form 10-Q for the quarter ended September 30, 2012, filed on November 2, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Statements of Consolidated Income, (iii) Statement of Consolidated Comprehensive Income, (iv) Statements of Consolidated Cash Flows, and (v) Notes to Consolidated Financial Statements. | |||
# Designates a contract or compensation plan for Management or Directors. | ||||
30 |
Con-way Inc. | |
(Registrant) | |
November 2, 2012 | /s/ Stephen L. Bruffett |
Stephen L. Bruffett | |
Executive Vice President and | |
Chief Financial Officer |
31 |
Title: | Senior Vice President, Human Resources |
1. | The definition of EIP is hereby deleted in its entirety and replaced with the following: |
2. | The definition of Prorated Target Bonus Amount is hereby deleted in its entirety and replaced with the following: |
3. | Subsection (1) in the definition of Severance Benefits is hereby amended to add the clause “for the Severance Period,” at the beginning thereof. |
4. | Subsection (2) in the definition of Severance Benefits is hereby deleted in its entirety and replaced with the following: |
(2) | Health Benefits substantially similar to those provided to Executive and Executive's dependents by or on behalf of the Executive's Employer immediately prior to the Severance or, if more favorable to the Executive, those provided immediately prior to the Change in Control, in accordance with the applicable benefit plan eligibility requirements and policies and the following: |
5. | Subsection (3) in the definition of Severance Benefits is hereby deleted in its entirety and replaced with the following: |
(3) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by or are made available to Executive and Executive's dependents, as set forth below (and Executive shall promptly notify Employer or any successor company of any such benefits): |
(b) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are made available to the Executive and Executive's dependents (whether or not Executive elects to actually receive such benefits) by a new employer of Executive following the Executive's termination of employment with the Employer; |
6. | Subsection (4) in the definition of Severance Benefits is hereby deleted in its entirety and replaced with the following: |
7. | Section 2.1 is hereby amended to add the clause “and only to the extent permitted under Treasury regulation §1.409A-1(h)(1)” at the end thereof. |
8. | Section 3.2 is hereby deleted in its entirety and replaced with the following: |
9. | Section 3.3 is hereby amended to add the following clause at the end thereof: |
10. | In Section 3.4, the references to “Section 15 of the EIP” and “EIP” are hereby deleted and replaced with the following: |
11. | In Section 3.5, the third paragraph is hereby deleted in its entirety and replaced with the following: |
12. | In Section 6.5(3), the reference to “the United States District Court for the Northern District of California” is hereby deleted and replaced with “the United States District Court for the Eastern District of Michigan” and the reference to “California” is hereby deleted and replaced with “Michigan”. |
13. | Section 7.5 is hereby deleted in its entirety and replaced with the following: |
14. | In Section 7.9, the reference to “2855 Campus Drive, San Mateo, California 94403, attention General Counsel” is hereby deleted and replaced with “2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention President and General Counsel”. |
15. | Employer and the Executive agree that, except as specifically amended hereby, all provisions of the Agreement remain in full force and effect. |
• | The attached Terms and Conditions are incorporated herein and made a part of this Agreement. |
• | The Term of this Agreement shall commence on September 25, 2012 and expire as provided in the definition of “Term” in Section 1 of the attached Terms and Conditions. |
• | Subject to the other provisions of this Agreement, if the Executive incurs a Severance the Executive shall be entitled to receive from the Employer: |
(i) | the Severance Payment (the amount of which shall be determined using a multiple (the “Severance Multiple”) of two); |
(ii) | the Prorated Target Bonus Amount; |
(iii) | the Outplacement Services at a cost to the Employer not to exceed $25,000; and |
(iv) | the Severance Benefits for a period of 24 months following the Severance Date (the “Severance Period”). |
• | If the Executive transfers to and becomes an employee of the Company or an Affiliate, the Employer shall assign this Agreement to the Company or the Affiliate (as applicable) which shall become the Employer and shall assume the obligations of the Employer. |
• | This Agreement supersedes (i) all prior severance agreements between the Executive, on the one hand, and the Employer, the Company or any Affiliate, on the other hand, and (ii) all prior severance plans, severance policies or other severance arrangements applicable to the Executive, in each case relating to severance payments and other benefits to be made available to the Executive upon a change in control. |
CON-WAY TRUCKLOAD INC. By: ___/s/ Stephen Krull___________ Name: Stephen Krull Title: Secretary | EXECUTIVE By: ____/s/ Saul Gonzalez_________ Name: Saul Gonzalez |
7. General Provisions | ..........................................................................................23 |
1. | DEFINITIONS. As hereinafter used: |
(1) | 25% of the Company's Voting Securities Acquired by an Outsider. Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) 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; provided however that “person” shall not include: |
(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; |
(c) | any corporation owned, directly or indirectly, by the stock-holders of the Company in substantially the same proportions as their ownership of Stock; and |
(d) | any person that, pursuant to Rule 13d-1 promulgated under the Exchange Act, is permitted to, and actually does, report its beneficial ownership of voting securities of the Company on Schedule 13G (or any successor schedule) (a "13G Filer"), provided that, if any 13G Filer subsequently becomes required to or does report its beneficial ownership of voting securities of the Company on Schedule 13D (or any successor schedule), then the 13G Filer shall be deemed a “person” for purposes of clause (1) and shall be deemed to have acquired, on the first date on which such person becomes required to or does so report on Schedule 13D (or any successor schedule), beneficial ownership of all voting securities of the Company beneficially owned by it on such date. |
(2) | Members of the Board as of June 1, 2009 cease to constitute a majority of Directors. The following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on June 1, 2009, 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 on June 1, 2009 or whose appointment, election or nomination for election was previously so approved or recommended; |
(3) | Merger or Consolidation. There is consummated a merger or consolidation of the Company, a Subsidiary or an Affiliate with any other corporation or other entity, which merger or consolidation -- |
(a) | results in the voting securities of the Company outstanding immediately prior thereto failing 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 the surviving or parent entity outstanding immediately after such merger or consolidation, or |
(b) | is effected to implement a recapitalization of the Company (or similar transaction) in which a “person” (as defined in clause (a) above), directly or indirectly, acquires 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); |
(4) | Complete Liquidation or Disposition of All or Substantially All of the Company's Assets. 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 all or substantially all of the Company's assets, 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; or |
(5) | Disposition of a Business Unit. There is consummated the Disposition of a Business Unit; provided, however, that this clause (5) shall apply only to an Executive who immediately prior to the Disposition of a Business Unit was employed by (and on the payroll of) the Business Unit that was the subject of the Disposition of a Business Unit. |
(a) | Sale of Ownership Interests. A sale by the Company or an Affiliate of the then outstanding ownership interests of the Business Unit having more than 50% of the then existing voting power of all outstanding ownership interests of the Business Unit, whether by merger, consolidation or otherwise, unless after the sale the Company, an Affiliate, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company, the Business Unit or any other Affiliate, individually or collectively, directly or indirectly, owns the then outstand-ing ownership interests of the Business Unit having 50% or more of the then existing voting power of all outstanding ownership interests of the Business Unit; |
(b) | Sale of Assets. The sale of all or substantially all of the assets of the Business Unit as a going concern; or |
(c) | Other Transaction. Any other transaction or course of action engaged in, directly or indirectly, by the Company, the Business Unit or an Affiliate that has a substantially similar effect as the transactions of the type referred to in clause (a) or (b) above, |
(y) | Spin-off or Public Offering. In the event of the sale or distribution of ownership interests (including, without limitation, a spin-off) of the Business Unit to stockholders of the Company, or the sale of assets of the Business Unit to any corporation or other entity owned, directly or indirectly, by the stockholders of the Company, in either case in substantially the same proportions as their ownership of stock in the Company, or a public offering of the ownership interests of the Business Unit (even if after the public offering the Company has no direct or indirect ownership interest in the Business Unit), or |
(z) | Liquidation. In the event of the closing down or liquidation of the Business Unit, even if the Business Unit sells all or substantially all of its assets. |
(1) | the failure of any successor company, following the Change in Control, to assume the Agreement and all obligations thereunder, as of the date of such Change in Control; |
(2) | a material reduction in the authority, duties or responsibilities of the Executive from the authority, duties and responsibilities in effect immediately prior to the Change in Control; provided however, a mere change in the Executive's title shall not, in and of itself, constitute a material reduction in the authority, duties or responsibilities of the Executive under this clause (2); |
(3) | a reduction by the Employer in the Executive's base salary, cash bonus opportunity, or long term incentive opportunity, each as in effect immediately prior to the Change in Control or as the same may thereafter be increased from time to time; |
(4) | 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 40 miles more than the Executive's one way commute immediately prior to the Change in Control, |
(5) | a substantial increase in the Executive's business travel obligations from the Executive's business travel obligations immediately prior to the Change in Control; |
(6) | the failure by the Employer to pay to the Executive when due any portion of the Executive's current compensation; |
(7) | the failure by the Employer to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Employer'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 Employer and any entity in control of the Employer), the taking of any other action by the Employer 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 Employer to provide the Executive with the number of paid vacation days or PTO days (days of paid time off) to which the Executive was entitled; |
(8) | any purported termination of the Executive's employment which is not effected pursuant to a notice of termination satisfying the requirements of Section 5 of these Terms and Conditions; for purposes of this Agreement, no such purported termination shall be effective; and |
(9) | a material breach of this Agreement by the Employer or the Company. |
(1) | the Company or any Affiliate enters into a definitive agreement contemplating transactions that, if consummated, would result in the occurrence of a Change in Control; |
(2) | the Company or any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act publicly announces an intention to take or to consider actions, including but not limited to proxy contests or consent solicitations, which, if consummated, would constitute a Change in Control; |
(3) | any Person becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of the 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 |
(4) | the Board or the Employer Board if the Employer is other than the Company adopts a resolution to the effect that, for purposes of the Agreement, a Potential Change in Control has occurred. |
(1) | for the Severance Period, life and accident benefits substantially similar to those provided to the Executive and the Executive's dependents immediately prior to the Severance or, if more favorable to the Executive, immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to the Severance or the Change in Control in this Agreement (based on whether the benefits provided are substantially similar to those provided prior to the Severance or those provided prior to the Change in Control); provided, however, that, unless the Change in Control took place because of the event described in clause (5) of the definition of Change in Control (as modified hereby), the Employer may apply to such benefits any across the board changes similarly affecting all or substantially all employees participating in such benefits; and |
(2) | Health Benefits substantially similar to those provided to Executive and Executive's dependents by or on behalf of the Executive's Employer immediately prior to the Severance or, if more favorable to the Executive, those provided immediately prior to the Change in Control, in accordance with the applicable benefit plan eligibility requirements and policies and the following: |
(a) | if the Company, the Employer or a successor company maintains a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, then subject to subsection (6) of this definition of “Severance Benefits,” Employer or the successor company shall pay to Executive, in accordance with the provisions of Section 3.2, a lump sum payment equal to the aggregate premiums that Executive would be required to pay in order to obtain coverage for Executive and Executive's dependents under such plan for the Severance Period; |
(b) | if the Company, the Employer or a successor company does not maintain a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, the Employer or successor company shall promptly purchase, at its own expense and at no cost to the Executive, an individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the benefits described above (with no preexisting condition limitations); |
(c) | If at any time during the Severance Period the Employer or the successor company ceases to make available any Health Benefits under the retiree medical plan described in (a) above under which Executive and Executive's dependents are obtaining coverage, or materially modifies the Health Benefits available under the retiree medical plan to the detriment of the Executive, then Employer or the successor company shall promptly purchase, at its own expense and at no cost to the Executive, a individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the Health Benefits (with no preexisting condition limitations) for the remainder of the Severance Period; |
(3) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by or are made available to Executive and Executive's dependents, as set forth below (and Executive shall promptly notify Employer or any successor company of any such benefits): |
(a) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by the Executive or the Executive's dependents following the Executive's termination of employment with the Employer; or |
(b) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are made available to the Executive and Executive's dependents (whether or not Executive elects to actually receive such benefits) by a new employer of Executive following the Executive's termination of employment with the Employer; |
(4) | the Employer may limit any reimbursement to the Executive to the excess, if any, of the cost to the Executive of benefits received or made available pursuant to (1) and (2) over such cost immediately prior to the Severance Date or, if more favorable to the Executive, immediately prior to the Change in Control; |
(5) | if the Executive dies, the Employer shall continue to provide the Executive's dependents with the benefits otherwise receivable pursuant to (1) and (2) on the same basis as if the Executive had survived, and |
(6) | if any such benefits are treated as deferred compensation subject to Code section 409A and the Executive is a Specified Employee, the Executive shall pay the full cost of such benefits for the first six months after the Severance Date and the Employer shall reimburse the Executive for such payments as soon as practicable thereafter but not later than nine (9) months from the date the Executive paid such costs. |
2. | COMPENSATION OTHER THAN SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
2.1 | Following the occurrence of a Change in Control or Potential Change in Control and during the Term, during any period that the Executive fails to perform the Executive's full-time duties with the Employer as a result of incapacity due to Disability, the Employer 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 Employer during such period (other than any disability plan), until such time (if any) as the Executive's employment is terminated by the Employer for Disability and only to the extent permitted under Treasury regulation §1.409A-1(h)(1). |
2.2 | If the Executive shall incur a Severance, the Employer shall pay the Executive's full salary to the Executive through the Severance Date at the rate in effect immediately prior to the Severance Date 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 Severance Date under the terms of the Employer's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Severance Date or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
2.3 | If the Executive shall incur a Severance, the Employer 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 Severance). 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 Severance or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
3. | SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
3.1 | Subject to the other provisions of this Agreement (including, without limitation, Section 4 of these Terms and Conditions), if the Executive incurs a Severance, the Executive shall be entitled to receive from the Employer the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the other Severance Benefits. If (i) the Employer is not the Company, (ii) the Severance is related to a Change in Control or a Potential Change in Control that occurred other than because of the Disposition of a Business Unit as provided in clause (5) of the definition of Change in Control, and (iii) the Employer does not provide all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the Severance Benefits, the Company shall fulfill the obligations of the Employer under the Agreement, and the Executive need not exhaust the remedies provided in Section 3.4 and 3.5 against the Employer before being entitled to receive the Severance Payment and the Severance Benefits from the Company. |
3.2 | Subject to Section 3.3, the Employer shall pay to the Executive the Severance Payment, the Prorated Target Bonus Amount and any Severance Benefits that are payable in cash, in each case less amounts withheld for Taxes as required under applicable law, within sixty days following the Severance Date; provided, however, that any amounts payable following (i) the occurrence of a Potential Change in Control or (ii) in the event that the Change in Control does not constitute a “change in control event” within the meaning of Code section 409A, shall to the extent such amounts constitute nonqualified deferred compensation within the meaning of Code section 409A, be paid at the same time and in the same form as required in the Severance Agreement (Non-Change in Control), the Non-Change in Control Severance Policy or similar agreement or policy applicable to the Executive to the extent such payments would be aggregated within the meaning of Section 409A of the Code with the payments and benefits under such other agreements or policies; provided, further, if the Executive is a Specified Employee as of the Severance Date, any payment of nonqualified deferred compensation that would have been paid prior to the six-month anniversary of the Severance Date shall be delayed until the earlier to occur of (i) the date that is six (6) months and one (1) day after the Severance Date and (ii) the date of the Executive's death. Notwithstanding anything herein to the contrary and except as otherwise expressly provided for in a written agreement between the Executive and the Company or Employer, as applicable, an Executive eligible to receive the Severance Payment, the Prorated Target Bonus Amount and other Severance Benefits under this Agreement shall not be eligible to receive any severance payments or benefits under another policy, plan, program, or agreement of the Company (including, without limitation, the Severance Agreement (Non-Change in Control) and the Non-Change in Control Severance Policy). |
3.3 | The Executive shall not be eligible to receive a Severance Payment, a Prorated Target Bonus Amount, Severance Benefits or Outplacement Services under the Agreement unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company a written release substantially in the form attached as Exhibit A hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such release becomes effective prior to the time that the Executive (or the Executive's estate, as applicable) is to receive all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Severance Benefits or Outplacement Services; provided, however, each such payment or benefit which constitutes nonqualified deferred compensation and which is conditioned upon Executive's execution of a release and which is to be paid or provided during a designated period that begins in a first taxable year and ends in a second taxable year shall be paid or provided in the second taxable year. |
3.4 | In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Agreement, such person may make a claim to the Employer Board (or the Board if the second sentence of Section 3.1 applies), and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated on December 2008 and as subsequently amended from time to time (the “DCP”), shall apply with the Employer Board (or the Board if the second sentence of Section 3.1 applies) treated as the Committee. Although claims for amounts under this Agreement are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Agreement nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
3.5 | Any further dispute or controversy arising under or in connection with the Agreement which remains after the final decision of the Employer Board as contemplated by Section 3.4 shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with the American Arbitration Association's National Rules for Resolution of Employment Disputes as then in effect. Such arbitration shall be conducted in the metropolitan area closest to where the Executive lives. Judgment may be entered on the arbitrator's award in any court having jurisdiction over such metropolitan area; provided however, that the Executive shall be entitled to seek specific performance of his or her right to be paid or to receive benefits hereunder during the pendency of any dispute or controversy under or in connection with this Agreement. The fees and expenses of the arbitrator and the arbitration shall be borne by the Employer or the Company. |
3.6 | The Employer shall pay to the Executive all legal fees and expenses incurred by the Executive (i) in seeking in good faith to obtain or enforce any benefit or right provided by the Agreement or (ii) 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 payment 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 Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
3.7 | The Employer agrees that, if the Executive's employment with the Employer terminates following a Change in Control that is applicable to the Executive and during the Term of the Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive hereunder. Further, the amount of any payment or benefit provided for in the Agreement shall not be reduced (except as provided in clause (3) of the definition of Severance Benefits) 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 Employer, or otherwise. |
4. | ADJUSTMENTS. |
4.1 | Notwithstanding any other provisions of this Agreement, in the event it is determined that any payment or distribution of the Total Payments would be subject to the Excise Tax, then the Total Payments may be reduced as provided in Section 4.5 below. All determinations required to be made under this Section 4 shall be made by the Accounting Firm. |
4.2 | For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) the Accounting Firm shall make such determination with the assistance of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Accounting Firm, (ii) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a "payment" within the meaning of section 280G(b) of the Code shall be taken into account, (iii) no portion of the Total Payments shall be taken into account which, in the opinion of Tax Counsel does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, including but not necessarily limited to amounts which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered on or after the Change in Control pursuant to section 280G(b)(4)(A) of the Code, (iv) in calculating the Excise Tax, amounts treated as an “excess parachute payment” within the meaning of section 280G(b)(1) of the Code shall be reduced by the portion of the Executive's Total Payments which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered prior to the Change in Control pursuant to section 280G(b)(4)(B) of the Code, with reasonable compensation for services actually rendered prior to the Change in Control being offset against the Base Amount and (v) the value of any non‑cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Accounting Firm in accordance with the principles of sections 280G(d)(3) and (4) of the Code. |
4.3 | The Accounting Firm's determinations under this Agreement shall be completed within sixty (60) days of the Executive's Severance, shall be set forth in writing pursuant to Section 4.4 and shall be conclusive and binding on the Executive and the Company for all purposes. The Company and the Executive shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make a determination hereunder. The Company shall bear all costs the Accounting Firm and/or the Tax Counsel may reasonably incur in connection with any calculations contemplated hereunder. |
4.4 | If the Accounting Firm determines that the unreduced Total Payments (or reduced payment amount under Section 4.5, if applicable) are not subject to Excise Tax, it will, at the same time as it makes such determination furnish the Company and the Executive a written statement setting forth the manner in which such determination was made and the basis for such determination, including without limitation any opinions or other advice the Accounting Firm has received from Tax Counsel or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). |
4.5 | In the event the Accounting Firm determines that the Executive's Total Payments are subject to Excise Tax, the Accounting Firm shall also calculate a “reduced payment amount” by reducing the Executive's Total Payments to the minimum extent necessary so that no portion of any of the Total Payments, as so reduced, is subject to Excise Taxes. The Executive shall receive either (i) the unreduced Total Payments otherwise due to him or her or (ii) the reduced payment amount described in the preceding sentence, whichever will provide the Executive with the greater after-tax economic benefit taking into account for these purposes any applicable Excise Tax as described in Section 4.6, below. Determination of the reduced payment amount actually payable to the Executive shall be subject to Section 4.7, below. |
4.6 | When determining under Section 4.5 which of the Total Payments or the reduced payment amount will produce the greater after-tax economic benefit for the Executive, the Accounting Firm will take into consideration federal, state and local income taxes on the (unreduced) Total Payments as well as on the reduced payment amount, including the phase out of itemized deductions and personal exemptions attributable to the Total Payments and reduced payment amount, as the case may be, as well as the amount of Excise Tax to which the Executive would be subject on the unreduced Total Payments. For purposes of this Section 4.6, (i) 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 applicable unreduced Total Payment or reduced payment amount 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 in the calendar year in which the applicable unreduced Total Payment or reduced payment amount is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes and (ii) except to the extent that the Executive otherwise notifies the Company, the Executive shall be deemed to be subject to the loss of itemized deductions and personal exemptions to the maximum extent provided by the Code for each dollar of incremental income. |
4.7 | Where the Accounting Firm has determined under Section 4.5 that the reduced payment amount will be of greater economic benefit to the Executive than would the unreduced Total Payments, then such reduced payment amount will be determined by reducing the Total Payments otherwise payable to the Executive, in the following order: |
(1) | first, by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); |
(2) | second, by reducing any cash payments not subject to Code section 409A; |
(3) | third, by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(4) | fourth, by reducing any cash payments that are subject to Code section 409A (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(5) | fifth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to performance-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); |
(6) | sixth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to time-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and |
(7) | seventh, by reducing the acceleration of vesting of any stock options that are not described in (1), above. |
4.8 | Where the Accounting Firm has determined that the Total Payments are subject to Excise Tax, and that the unreduced Total Payments will be of greater economic benefit to the Executive than the reduced payment amount, then the federal, state and local income or other tax returns filed by the Executive shall be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax. The Executive shall make proper payment of any Excise Tax, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his or her federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company evidencing such payment, provided that any information unrelated to the Excise Tax may be deleted from the copies of the returns and documents delivered to the Company. |
4.9 | The Executive shall provide the Company prompt notice of any claim by or other correspondence from the Internal Revenue Service or other applicable taxing authority relating to the application of Excise Tax to the Total Payments. |
4.10 | The provisions of this Section 4 shall survive the termination or expiration of this Agreement for any reason. |
5. | NOTICE OF TERMINATION. |
5.1 | 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 the Employer to the Executive or the Executive to the Employer in accordance with Section 7.9, and shall follow the applicable procedures set forth in this Section 5. |
5.2 | The notice of termination shall indicate the specific termination provision in the 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. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
5.3 | The notice of termination shall specify the date of termination which, in the case of a termination by the Employer, shall not be less than thirty (30) days (except in the case of a termination for Cause, in which case the provisions of Section 5.2 shall control) and, in the case of a termination by the Executive, shall not be less than thirty (30) days nor more than sixty (60) days, respectively, from the date such notice of termination is given. |
(1) | Once the Employer or the Executive has specified a date of termination in a notice of termination, the date of termination cannot be changed by the Employer or the Executive except by mutual consent. |
(2) | The date of termination must be at least 30 days after the notice of termination unless the termination is for Good Reason and Good Reason first occurs during the last 30 days of the Term (determined without regard to this Section 5.3(2)), in which event the date of termination shall be (i) the end of the Term (determined without regard to this Section 5.3(2)) if the Employer receives notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)) or (ii) the later of ten days after receipt by the Employer of notice of the Executive's intent to terminate for Good Reason or five days after the end of the Term (determined without regard to this Section 5.3(2)) if the Employer does not receive notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)). |
5.4 | Failure by the Employer to follow the procedures set forth in this Section 5 shall result in (i) in the case of a purported termination for Cause, any actual termination being deemed to be and being treated for all purposes of this Agreement as a termination without Cause and (ii) Good Reason for termination by the Executive of the Executive's own employment. |
6. | RESTRICTIVE COVENANTS. |
6.1 | (a) Confidential Information. The Executive agrees, during the Executive's employment and at all times thereafter during the Severance Period, that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate, or take any action which may result in the use, sale, disclosure, or communication, of any Confidential Information (defined below), other than as required by law or as authorized in advance by the Employer in the course of the Executive's assigned duties and for the benefit of Employer. |
6.2 | Non-Solicitation. The Executive agrees that, during the Executive's employment and at all times thereafter during the Severance Period, the Executive shall not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity (whether as a sole proprietor, owner, employer, partner, investor, shareholder, member, employee, consultant, or otherwise), solicit, induce, or attempt to persuade any employee or agent of the Employer or any of its affiliates to leave such employment or other relationship or association with the Employer or any such affiliate in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Employer. |
6.3 | Non-Disparagement. The Executive agrees, during the Executive's employment and at all times thereafter during the Severance Period, not to make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticize or disparages or damages the reputation, goodwill, or standing in the community of the Employer, the Company or any Affiliate, or their respective employees, officers, directors, products or services. Notwithstanding the foregoing, nothing herein shall prohibit statements that are protected by applicable law or otherwise prohibit the Executive from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. |
6.4 | Return of Property. Except as authorized by the Employer, the Executive will not remove from the Employer's premises any property of the Employer, its affiliates, or the actual and prospective clients of any of them, including without limitation any documents or things containing any Confidential Information, computer programs and drives or storage devices of any kind (portable or otherwise), files, forms, notes, records, charts, or any copies thereof (collectively, "Property"). Immediately following the termination of the Executive's employment for any or no reason, the Executive shall return to the Employer all Property, including without limitation any and all laptops and other computer equipment, Blackberries and similar devices, cellphones, credit cards, keys and other access cards, and electronic and hardcopy files. |
6.5 | Reasonableness. In the event the provisions of this Section 6 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. |
6.6 | Equitable Relief. |
6.7 | Survival of Provisions. The obligations contained in this Section shall survive the termination of the Executive's employment with the Employer and shall be fully enforceable thereafter. |
7. | GENERAL PROVISIONS. |
7.1 | Except as otherwise provided herein or by law, no right or interest of the Executive under the Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Agreement shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Agreement to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
7.2 | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Agreement) to pay severance pay, a termination indemnity, notice pay or the like or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period"), then any Severance Payment hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
7.3 | Neither the entering into of this Agreement, nor the payment of any benefits hereunder shall be construed as giving the Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Agreement had never been executed. |
7.4 | If any provision of the Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Agreement shall be construed and enforced as if such provisions had not been included. |
7.5 | The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent. |
7.6 | The Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by the Executive and by the personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall die while any amount would still be payable to such Executive (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 the Agreement to the executors, personal representatives or administrators of the Executive's estate. |
7.7 | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. |
7.8 | The Agreement shall not be funded. The Executive shall not have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Agreement. |
7.9 | All notices and all other communications provided for in the 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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention General Counsel, and in the case of the Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
7.10 | The Agreement shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
1. | The Old Employer hereby assigns the Agreement to the New Employer. |
2. | The New Employer hereby assumes the obligations of the Old Employer under the Agreement. |
3. | The assignment and assumption are effective as of the date employment is transferred. |
4. | The Executive hereby acknowledges receipt of notice of the assignment and assumption. |
THE OLD EMPLOYER By: ___________________________ Name: Title: | THE NEW EMPLOYER By: ___________________________ Name: Title: |
EXECUTIVE ______________________________ Name: |
• | The attached Terms and Conditions are incorporated herein and made a part of this Agreement. |
• | The Term of this Agreement shall commence on April 25, 2011 and expire as provided in the definition of “Term” in Section 1 of the attached Terms and Conditions. |
• | Subject to the other provisions of this Agreement, if the Executive incurs a Severance the Executive shall be entitled to receive from the Employer: |
(i) | the Severance Payment (the amount of which shall be determined using a multiple (the “Severance Multiple”) of two); |
(ii) | the Prorated Target Bonus Amount; |
(iii) | the Outplacement Services at a cost to the Employer not to exceed $25,000; and |
(iv) | the Severance Benefits for a period of 24 months following the Severance Date (the “Severance Period”). |
• | If the Executive transfers to and becomes an employee of an Affiliate, the Employer shall assign this Agreement to the Affiliate (as applicable) which shall become the Employer and shall assume the obligations of the Employer. |
• | This Agreement supersedes (i) all prior severance agreements between the Executive, on the one hand, and the Employer, the Company or any Affiliate, on the other hand, and (ii) all prior severance plans, severance policies or other severance arrangements applicable to the Executive, in each case relating to severance payments and other benefits to be made available to the Executive upon a change in control. |
CON-WAY INC. By: ___/s/ Leslie P. Lundberg_____ Name: Leslie P. Lundberg Title: Senior Vice President | EXECUTIVE By: ____/s/ Stephen Krull_________ Name: Stephen Krull |
7. General Provisions | .......................................................................................23 |
1. | DEFINITIONS. As hereinafter used: |
(1) | 25% of the Company's Voting Securities Acquired by an Outsider. Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) 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; provided however that “person” shall not include: |
(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; |
(c) | any corporation owned, directly or indirectly, by the stock-holders of the Company in substantially the same proportions as their ownership of Stock; and |
(d) | any person that, pursuant to Rule 13d-1 promulgated under the Exchange Act, is permitted to, and actually does, report its beneficial ownership of voting securities of the Company on Schedule 13G (or any successor schedule) (a "13G Filer"), provided that, if any 13G Filer subsequently becomes required to or does report its beneficial ownership of voting securities of the Company on Schedule 13D (or any successor schedule), then the 13G Filer shall be deemed a “person” for purposes of clause (1) and shall be deemed to have acquired, on the first date on which such person becomes required to or does so report on Schedule 13D (or any successor schedule), beneficial ownership of all voting securities of the Company beneficially owned by it on such date. |
(2) | Members of the Board as of June 1, 2009 cease to constitute a majority of Directors. The following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on June 1, 2009, 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 on June 1, 2009 or whose appointment, election or nomina-tion for election was previously so approved or recommended; |
(3) | Merger or Consolidation. There is consummated a merger or consolidation of the Company, a Subsidiary or an Affiliate with any other corporation or other entity, which merger or consolidation -- |
(a) | results in the voting securities of the Company outstanding immediately prior thereto failing 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 the surviving or parent entity outstanding immediately after such merger or consolidation, or |
(b) | is effected to implement a recapitalization of the Company (or similar transaction) in which a “person” (as defined in clause (a) above), directly or indirectly, acquires 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); |
(4) | Complete Liquidation or Disposition of All or Substantially All of the Company's Assets. 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 all or substantially all of the Company's assets, 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; or |
(5) | Disposition of a Business Unit. There is consummated the Disposition of a Business Unit; provided, however, that this clause (5) shall apply only to an Executive who immediately prior to the Disposition of a Business Unit was employed by (and on the payroll of) the Business Unit that was the subject of the Disposition of a Business Unit. |
(a) | Sale of Ownership Interests. A sale by the Company or an Affiliate of the then outstanding ownership interests of the Business Unit having more than 50% of the then existing voting power of all outstanding ownership interests of the Business Unit, whether by merger, consolidation or otherwise, unless after the sale the Company, an Affiliate, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company, the Business Unit or any other Affiliate, individually or collectively, directly or indirectly, owns the then outstand-ing ownership interests of the Business Unit having 50% or more of the then existing voting power of all outstanding ownership interests of the Business Unit; |
(b) | Sale of Assets. The sale of all or substantially all of the assets of the Business Unit as a going concern; or |
(c) | Other Transaction. Any other transaction or course of action engaged in, directly or indirectly, by the Company, the Business Unit or an Affiliate that has a substantially similar effect as the transactions of the type referred to in clause (a) or (b) above, |
(y) | Spin-off or Public Offering. In the event of the sale or distribution of ownership interests (including, without limitation, a spin-off) of the Business Unit to stockholders of the Company, or the sale of assets of the Business Unit to any corporation or other entity owned, directly or indirectly, by the stockholders of the Company, in either case in substantially the same proportions as their ownership of stock in the Company, or a public offering of the ownership interests of the Business Unit (even if after the public offering the Company has no direct or indirect ownership interest in the Business Unit), or |
(z) | Liquidation. In the event of the closing down or liquidation of the Business Unit, even if the Business Unit sells all or substantially all of its assets. |
(1) | the failure of any successor company, following the Change in Control, to assume the Agreement and all obligations thereunder, as of the date of such Change in Control; |
(2) | a material reduction in the authority, duties or responsibilities of the Executive from the authority, duties and responsibilities in effect immediately prior to the Change in Control; provided however, a mere change in the Executive's title shall not, in and of itself, constitute a material reduction in the authority, duties or responsibilities of the Executive under this clause (2); |
(3) | a reduction by the Employer in the Executive's base salary, cash bonus opportunity, or long term incentive opportunity, each as in effect immediately prior to the Change in Control or as the same may thereafter be increased from time to time; |
(4) | 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 40 miles more than the Executive's one way commute immediately prior to the Change in Control, |
(5) | a substantial increase in the Executive's business travel obligations from the Executive's business travel obligations immediately prior to the Change in Control; |
(6) | the failure by the Employer to pay to the Executive when due any portion of the Executive's current compensation; |
(7) | the failure by the Employer to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Employer'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 Employer and any entity in control of the Employer), the taking of any other action by the Employer 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 Employer to provide the Executive with the number of paid vacation days or PTO days (days of paid time off) to which the Executive was entitled; |
(8) | any purported termination of the Executive's employment which is not effected pursuant to a notice of termination satisfying the requirements of Section 5 of these Terms and Conditions; for purposes of this Agreement, no such purported termination shall be effective; and |
(9) | a material breach of this Agreement by the Employer or the Company. |
(1) | the Company or any Affiliate enters into a definitive agreement contemplating transactions that, if consummated, would result in the occurrence of a Change in Control; |
(2) | the Company or any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act publicly announces an intention to take or to consider actions, including but not limited to proxy contests or consent solicitations, which, if consummated, would constitute a Change in Control; |
(3) | any Person becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of the 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 |
(4) | the Board or the Employer Board if the Employer is other than the Company adopts a resolution to the effect that, for purposes of the Agreement, a Potential Change in Control has occurred. |
(1) | for the Severance Period, life and accident benefits substantially similar to those provided to the Executive and the Executive's dependents immediately prior to the Severance or, if more favorable to the Executive, immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to the Severance or the Change in Control in this Agreement (based on whether the benefits provided are substantially similar to those provided prior to the Severance or those provided prior to the Change in Control); provided, however, that, unless the Change in Control took place because of the event described in clause (5) of the definition of Change in Control (as modified hereby), the Employer may apply to such benefits any across the board changes similarly affecting all or substantially all employees participating in such benefits; and |
(2) | Health Benefits substantially similar to those provided to Executive and Executive's dependents by or on behalf of the Executive's Employer immediately prior to the Severance or, if more favorable to the Executive, those provided immediately prior to the Change in Control, in accordance with the applicable benefit plan eligibility requirements and policies and the following: |
(a) | if the Company, the Employer or a successor company maintains a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, then subject to subsection (6) of this definition of “Severance Benefits,” Employer or the successor company shall pay to Executive, in accordance with the provisions of Section 3.2, a lump sum payment equal to the aggregate premiums that Executive would be required to pay in order to obtain coverage for Executive and Executive's dependents under such plan for the Severance Period; |
(b) | if the Company, the Employer or a successor company does not maintain a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, the Employer or successor company shall promptly purchase, at its own expense and at no cost to the Executive, an individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the benefits described above (with no preexisting condition limitations); |
(c) | If at any time during the Severance Period the Employer or the successor company ceases to make available any Health Benefits under the retiree medical plan described in (a) above under which Executive and Executive's dependents are obtaining coverage, or materially modifies the Health Benefits available under the retiree medical plan to the detriment of the Executive, then Employer or the successor company shall promptly purchase, at its own expense and at no cost to the Executive, a individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the Health Benefits (with no preexisting condition limitations) for the remainder of the Severance Period; |
(3) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by or are made available to Executive and Executive's dependents, as set forth below (and Executive shall promptly notify Employer or any successor company of any such benefits): |
(a) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by the Executive or the Executive's dependents following the Executive's termination of employment with the Employer; or |
(b) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are made available to the Executive and Executive's dependents (whether or not Executive elects to actually receive such benefits) by a new employer of Executive following the Executive's termination of employment with the Employer; |
(4) | the Employer may limit any reimbursement to the Executive to the excess, if any, of the cost to the Executive of benefits received or made available pursuant to (1) and (2) over such cost immediately prior to the Severance Date or, if more favorable to the Executive, immediately prior to the Change in Control; |
(5) | if the Executive dies, the Employer shall continue to provide the Executive's dependents with the benefits otherwise receivable pursuant to (1) and (2) on the same basis as if the Executive had survived, and |
(6) | if any such benefits are treated as deferred compensation subject to Code section 409A and the Executive is a Specified Employee, the Executive shall pay the full cost of such benefits for the first six months after the Severance Date and the Employer shall reimburse the Executive for such payments as soon as practicable thereafter but not later than nine (9) months from the date the Executive paid such costs. |
2. | COMPENSATION OTHER THAN SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
2.1 | Following the occurrence of a Change in Control or Potential Change in Control and during the Term, during any period that the Executive fails to perform the Executive's full-time duties with the Employer as a result of incapacity due to Disability, the Employer 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 Employer during such period (other than any disability plan), until such time (if any) as the Executive's employment is terminated by the Employer for Disability and only to the extent permitted under Treasury regulation §1.409A-1(h)(1). |
2.2 | If the Executive shall incur a Severance, the Employer shall pay the Executive's full salary to the Executive through the Severance Date at the rate in effect immediately prior to the Severance Date 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 Severance Date under the terms of the Employer's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Severance Date or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
2.3 | If the Executive shall incur a Severance, the Employer 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 Severance). 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 Severance or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
3. | SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
3.1 | Subject to the other provisions of this Agreement (including, without limitation, Section 4 of these Terms and Conditions), if the Executive incurs a Severance, the Executive shall be entitled to receive from the Employer the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the other Severance Benefits. If (i) the Employer is not the Company, (ii) the Severance is related to a Change in Control or a Potential Change in Control that occurred other than because of the Disposition of a Business Unit as provided in clause (5) of the definition of Change in Control, and (iii) the Employer does not provide all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the Severance Benefits, the Company shall fulfill the obligations of the Employer under the Agreement, and the Executive need not exhaust the remedies provided in Section 3.4 and 3.5 against the Employer before being entitled to receive the Severance Payment and the Severance Benefits from the Company. |
3.2 | Subject to Section 3.3, the Employer shall pay to the Executive the Severance Payment, the Prorated Target Bonus Amount and any Severance Benefits that are payable in cash, in each case less amounts withheld for Taxes as required under applicable law, within sixty days following the Severance Date; provided, however, that any amounts payable following (i) the occurrence of a Potential Change in Control or (ii) in the event that the Change in Control does not constitute a “change in control event” within the meaning of Code section 409A, shall to the extent such amounts constitute nonqualified deferred compensation within the meaning of Code section 409A, be paid at the same time and in the same form as required in the Severance Agreement (Non-Change in Control), the Non-Change in Control Severance Policy or similar agreement or policy applicable to the Executive to the extent such payments would be aggregated within the meaning of Section 409A of the Code with the payments and benefits under such other agreements or policies; provided, further, if the Executive is a Specified Employee as of the Severance Date, any payment of nonqualified deferred compensation that would have been paid prior to the six-month anniversary of the Severance Date shall be delayed until the earlier to occur of (i) the date that is six (6) months and one (1) day after the Severance Date and (ii) the date of the Executive's death. Notwithstanding anything herein to the contrary and except as otherwise expressly provided for in a written agreement between the Executive and the Company or Employer, as applicable, an Executive eligible to receive the Severance Payment, the Prorated Target Bonus Amount and other Severance Benefits under this Agreement shall not be eligible to receive any severance payments or benefits under another policy, plan, program, or agreement of the Company (including, without limitation, the Severance Agreement (Non-Change in Control) and the Non-Change in Control Severance Policy). |
3.3 | The Executive shall not be eligible to receive a Severance Payment, a Prorated Target Bonus Amount, Severance Benefits or Outplacement Services under the Agreement unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company a written release substantially in the form attached as Exhibit A hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such release becomes effective prior to the time that the Executive (or the Executive's estate, as applicable) is to receive all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Severance Benefits or Outplacement Services; provided, however, each such payment or benefit which constitutes nonqualified deferred compensation and which is conditioned upon Executive's execution of a release and which is to be paid or provided during a designated period that begins in a first taxable year and ends in a second taxable year shall be paid or provided in the second taxable year. |
3.4 | In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Agreement, such person may make a claim to the Employer Board (or the Board if the second sentence of Section 3.1 applies), and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated on December 2008 and as subsequently amended from time to time (the “DCP”), shall apply with the Employer Board (or the Board if the second sentence of Section 3.1 applies) treated as the Committee. Although claims for amounts under this Agreement are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Agreement nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
3.5 | Any further dispute or controversy arising under or in connection with the Agreement which remains after the final decision of the Employer Board as contemplated by Section 3.4 shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with the American Arbitration Association's National Rules for Resolution of Employment Disputes as then in effect. Such arbitration shall be conducted in the metropolitan area closest to where the Executive lives. Judgment may be entered on the arbitrator's award in any court having jurisdiction over such metropolitan area; provided however, that the Executive shall be entitled to seek specific performance of his or her right to be paid or to receive benefits hereunder during the pendency of any dispute or controversy under or in connection with this Agreement. The fees and expenses of the arbitrator and the arbitration shall be borne by the Employer or the Company. |
3.6 | The Employer shall pay to the Executive all legal fees and expenses incurred by the Executive (i) in seeking in good faith to obtain or enforce any benefit or right provided by the Agreement or (ii) 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 payment shall be made within five (5) busi-ness days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
3.7 | The Employer agrees that, if the Executive's employment with the Employer terminates following a Change in Control that is applicable to the Executive and during the Term of the Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive hereunder. Further, the amount of any payment or benefit provided for in the Agreement shall not be reduced (except as provided in clause (3) of the definition of Severance Benefits) 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 Employer, or otherwise. |
4. | ADJUSTMENTS. |
4.1 | Notwithstanding any other provisions of this Agreement, in the event it is determined that any payment or distribution of the Total Payments would be subject to the Excise Tax, then the Total Payments may be reduced as provided in Section 4.5 below. All determinations required to be made under this Section 4 shall be made by the Accounting Firm. |
4.2 | For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) the Accounting Firm shall make such determination with the assistance of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Accounting Firm, (ii) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a "payment" within the meaning of section 280G(b) of the Code shall be taken into account, (iii) no portion of the Total Payments shall be taken into account which, in the opinion of Tax Counsel does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, including but not necessarily limited to amounts which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered on or after the Change in Control pursuant to section 280G(b)(4)(A) of the Code, (iv) in calculating the Excise Tax, amounts treated as an “excess parachute payment” within the meaning of section 280G(b)(1) of the Code shall be reduced by the portion of the Executive's Total Payments which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered prior to the Change in Control pursuant to section 280G(b)(4)(B) of the Code, with reasonable compensation for services actually rendered prior to the Change in Control being offset against the Base Amount and (v) the value of any non‑cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Accounting Firm in accordance with the principles of sections 280G(d)(3) and (4) of the Code. |
4.3 | The Accounting Firm's determinations under this Agreement shall be completed within sixty (60) days of the Executive's Severance, shall be set forth in writing pursuant to Section 4.4 and shall be conclusive and binding on the Executive and the Company for all purposes. The Company and the Executive shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make a determination hereunder. The Company shall bear all costs the Accounting Firm and/or the Tax Counsel may reasonably incur in connection with any calculations contemplated hereunder. |
4.4 | If the Accounting Firm determines that the unreduced Total Payments (or reduced payment amount under Section 4.5, if applicable) are not subject to Excise Tax, it will, at the same time as it makes such determination furnish the Company and the Executive a written statement setting forth the manner in which such determination was made and the basis for such determination, including without limitation any opinions or other advice the Accounting Firm has received from Tax Counsel or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). |
4.5 | In the event the Accounting Firm determines that the Executive's Total Payments are subject to Excise Tax, the Accounting Firm shall also calculate a “reduced payment amount” by reducing the Executive's Total Payments to the minimum extent necessary so that no portion of any of the Total Payments, as so reduced, is subject to Excise Taxes. The Executive shall receive either (i) the unreduced Total Payments otherwise due to him or her or (ii) the reduced payment amount described in the preceding sentence, whichever will provide the Executive with the greater after-tax economic benefit taking into account for these purposes any applicable Excise Tax as described in Section 4.6, below. Determination of the reduced payment amount actually payable to the Executive shall be subject to Section 4.7, below. |
4.6 | When determining under Section 4.5 which of the Total Payments or the reduced payment amount will produce the greater after-tax economic benefit for the Executive, the Accounting Firm will take into consideration federal, state and local income taxes on the (unreduced) Total Payments as well as on the reduced payment amount, including the phase out of itemized deductions and personal exemptions attributable to the Total Payments and reduced payment amount, as the case may be, as well as the amount of Excise Tax to which the Executive would be subject on the unreduced Total Payments. For purposes of this Section 4.6, (i) 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 applicable unreduced Total Payment or reduced payment amount 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 in the calendar year in which the applicable unreduced Total Payment or reduced payment amount is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes and (ii) except to the extent that the Executive otherwise notifies the Company, the Executive shall be deemed to be subject to the loss of itemized deductions and personal exemptions to the maximum extent provided by the Code for each dollar of incremental income. |
4.7 | Where the Accounting Firm has determined under Section 4.5 that the reduced payment amount will be of greater economic benefit to the Executive than would the unreduced Total Payments, then such reduced payment amount will be determined by reducing the Total Payments otherwise payable to the Executive, in the following order: |
(1) | first, by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); |
(2) | second, by reducing any cash payments not subject to Code section 409A; |
(3) | third, by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(4) | fourth, by reducing any cash payments that are subject to Code section 409A (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(5) | fifth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to performance-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); |
(6) | sixth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to time-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and |
(7) | seventh, by reducing the acceleration of vesting of any stock options that are not described in (1), above. |
4.8 | Where the Accounting Firm has determined that the Total Payments are subject to Excise Tax, and that the unreduced Total Payments will be of greater economic benefit to the Executive than the reduced payment amount, then the federal, state and local income or other tax returns filed by the Executive shall be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax. The Executive shall make proper payment of any Excise Tax, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his or her federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company evidencing such payment, provided that any information unrelated to the Excise Tax may be deleted from the copies of the returns and documents delivered to the Company. |
4.9 | The Executive shall provide the Company prompt notice of any claim by or other correspondence from the Internal Revenue Service or other applicable taxing authority relating to the application of Excise Tax to the Total Payments. |
4.10 | The provisions of this Section 4 shall survive the termination or expiration of this Agreement for any reason. |
5. | NOTICE OF TERMINATION. |
5.1 | 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 the Employer to the Executive or the Executive to the Employer in accordance with Section 7.9, and shall follow the applicable procedures set forth in this Section 5. |
5.2 | The notice of termination shall indicate the specific termination provision in the 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. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
5.3 | The notice of termination shall specify the date of termination which, in the case of a termination by the Employer, shall not be less than thirty (30) days (except in the case of a termination for Cause, in which case the provisions of Section 5.2 shall control) and, in the case of a termination by the Executive, shall not be less than thirty (30) days nor more than sixty (60) days, respectively, from the date such notice of termination is given. |
(1) | Once the Employer or the Executive has specified a date of termination in a notice of termination, the date of termination cannot be changed by the Employer or the Executive except by mutual consent. |
(2) | The date of termination must be at least 30 days after the notice of termination unless the termination is for Good Reason and Good Reason first occurs during the last 30 days of the Term (determined without regard to this Section 5.3(2)), in which event the date of termination shall be (i) the end of the Term (determined without regard to this Section 5.3(2)) if the Employer receives notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)) or (ii) the later of ten days after receipt by the Employer of notice of the Executive's intent to terminate for Good Reason or five days after the end of the Term (determined without regard to this Section 5.3(2)) if the Employer does not receive notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)). |
5.4 | Failure by the Employer to follow the procedures set forth in this Section 5 shall result in (i) in the case of a purported termination for Cause, any actual termination being deemed to be and being treated for all purposes of this Agreement as a termination without Cause and (ii) Good Reason for termination by the Executive of the Executive's own employment. |
6. | RESTRICTIVE COVENANTS. |
6.1 | (a) Confidential Information. The Executive agrees, during the Executive's employment and at all times thereafter during the Severance Period, that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate, or take any action which may result in the use, sale, disclosure, or communication, of any Confidential Information (defined below), other than as required by law or as authorized in advance by the Employer in the course of the Executive's assigned duties and for the benefit of Employer. |
6.2 | Non-Solicitation. The Executive agrees that, during the Executive's employment and at all times thereafter during the Severance Period, the Executive shall not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity (whether as a sole proprietor, owner, employer, partner, investor, shareholder, member, employee, consultant, or otherwise), solicit, induce, or attempt to persuade any employee or agent of the Employer or any of its affiliates to leave such employment or other relationship or association with the Employer or any such affiliate in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Employer. |
6.3 | Non-Disparagement. The Executive agrees, during the Executive's employment and at all times thereafter during the Severance Period, not to make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticize or disparages or damages the reputation, goodwill, or standing in the community of the Employer, the Company or any Affiliate, or their respective employees, officers, directors, products or services. Notwithstanding the foregoing, nothing herein shall prohibit statements that are protected by applicable law or otherwise prohibit the Executive from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. |
6.4 | Return of Property. Except as authorized by the Employer, the Executive will not remove from the Employer's premises any property of the Employer, its affiliates, or the actual and prospective clients of any of them, including without limitation any documents or things containing any Confidential Information, computer programs and drives or storage devices of any kind (portable or otherwise), files, forms, notes, records, charts, or any copies thereof (collectively, "Property"). Immediately following the termination of the Executive's employment for any or no reason, the Executive shall return to the Employer all Property, including without limitation any and all laptops and other computer equipment, Blackberries and similar devices, cellphones, credit cards, keys and other access cards, and electronic and hardcopy files. |
6.5 | Reasonableness. In the event the provisions of this Section 6 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. |
6.6 | Equitable Relief. |
6.7 | Survival of Provisions. The obligations contained in this Section shall survive the termination of the Executive's employment with the Employer and shall be fully enforceable thereafter. |
7. | GENERAL PROVISIONS. |
7.1 | Except as otherwise provided herein or by law, no right or interest of the Executive under the Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Agreement shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Agreement to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
7.2 | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Agreement) to pay severance pay, a termination indemnity, notice pay or the like or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period"), then any Severance Payment hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
7.3 | Neither the entering into of this Agreement, nor the payment of any benefits hereunder shall be construed as giving the Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Agreement had never been executed. |
7.4 | If any provision of the Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Agreement shall be construed and enforced as if such provisions had not been included. |
7.5 | The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent. |
7.6 | The Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by the Executive and by the personal and legal representatives, executors, administra-tors, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall die while any amount would still be payable to such Executive (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 the Agreement to the executors, personal representatives or administrators of the Executive's estate. |
7.7 | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. |
7.8 | The Agreement shall not be funded. The Executive shall not have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Agreement. |
7.9 | All notices and all other communications provided for in the 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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention General Counsel, and in the case of the Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
7.10 | The Agreement shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
1. | The Old Employer hereby assigns the Agreement to the New Employer. |
2. | The New Employer hereby assumes the obligations of the Old Employer under the Agreement. |
3. | The assignment and assumption are effective as of the date employment is transferred. |
4. | The Executive hereby acknowledges receipt of notice of the assignment and assumption. |
THE OLD EMPLOYER By: ___________________________ Name: Title: | THE NEW EMPLOYER By: ___________________________ Name: Title: |
EXECUTIVE ______________________________ Name: |
• | The attached Terms and Conditions are incorporated herein and made a part of this Agreement. |
• | The Term of this Agreement shall commence on September 20, 2011 and expire as provided in the definition of “Term” in Section 1 of the attached Terms and Conditions. |
• | Subject to the other provisions of this Agreement, if the Executive incurs a Severance the Executive shall be entitled to receive from the Employer: |
(i) | the Severance Payment (the amount of which shall be determined using a multiple (the “Severance Multiple”) of two); |
(ii) | the Prorated Target Bonus Amount; |
(iii) | the Outplacement Services at a cost to the Employer not to exceed $25,000; and |
(iv) | the Severance Benefits for a period of 24 months following the Severance Date (the “Severance Period”). |
• | If the Executive transfers to and becomes an employee of the Company or an Affiliate, the Employer shall assign this Agreement to the Company or the Affiliate (as applicable) which shall become the Employer and shall assume the obligations of the Employer. |
• | This Agreement supersedes (i) all prior severance agreements between the Executive, on the one hand, and the Employer, the Company or any Affiliate, on the other hand, and (ii) all prior severance plans, severance policies or other severance arrangements applicable to the Executive, in each case relating to severance payments and other benefits to be made available to the Executive upon a change in control. |
CON-WAY FREIGHT INC. By: ___/s/ Stephen Krull_________ Name: Stephen Krull Title: Secretary | EXECUTIVE By: ____/s/ Walter G. Lehmkuhl______ Name: Walter G. Lehmkuhl |
7. General Provisions | .......................................................................................23 |
1. | DEFINITIONS. As hereinafter used: |
(1) | 25% of the Company's Voting Securities Acquired by an Outsider. Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) 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; provided however that “person” shall not include: |
(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; |
(c) | any corporation owned, directly or indirectly, by the stock-holders of the Company in substantially the same proportions as their ownership of Stock; and |
(d) | any person that, pursuant to Rule 13d-1 promulgated under the Exchange Act, is permitted to, and actually does, report its beneficial ownership of voting securities of the Company on Schedule 13G (or any successor schedule) (a "13G Filer"), provided that, if any 13G Filer subsequently becomes required to or does report its beneficial ownership of voting securities of the Company on Schedule 13D (or any successor schedule), then the 13G Filer shall be deemed a “person” for purposes of clause (1) and shall be deemed to have acquired, on the first date on which such person becomes required to or does so report on Schedule 13D (or any successor schedule), beneficial ownership of all voting securities of the Company beneficially owned by it on such date. |
(2) | Members of the Board as of June 1, 2009 cease to constitute a majority of Directors. The following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on June 1, 2009, 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 on June 1, 2009 or whose appointment, election or nomina-tion for election was previously so approved or recommended; |
(3) | Merger or Consolidation. There is consummated a merger or consolidation of the Company, a Subsidiary or an Affiliate with any other corporation or other entity, which merger or consolidation -- |
(a) | results in the voting securities of the Company outstanding immediately prior thereto failing 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 the surviving or parent entity outstanding immediately after such merger or consolidation, or |
(b) | is effected to implement a recapitalization of the Company (or similar transaction) in which a “person” (as defined in clause (a) above), directly or indirectly, acquires 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); |
(4) | Complete Liquidation or Disposition of All or Substantially All of the Company's Assets. 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 all or substantially all of the Company's assets, 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; or |
(5) | Disposition of a Business Unit. There is consummated the Disposition of a Business Unit; provided, however, that this clause (5) shall apply only to an Executive who immediately prior to the Disposition of a Business Unit was employed by (and on the payroll of) the Business Unit that was the subject of the Disposition of a Business Unit. |
(a) | Sale of Ownership Interests. A sale by the Company or an Affiliate of the then outstanding ownership interests of the Business Unit having more than 50% of the then existing voting power of all outstanding ownership interests of the Business Unit, whether by merger, consolidation or otherwise, unless after the sale the Company, an Affiliate, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company, the Business Unit or any other Affiliate, individually or collectively, directly or indirectly, owns the then outstand-ing ownership interests of the Business Unit having 50% or more of the then existing voting power of all outstanding ownership interests of the Business Unit; |
(b) | Sale of Assets. The sale of all or substantially all of the assets of the Business Unit as a going concern; or |
(c) | Other Transaction. Any other transaction or course of action engaged in, directly or indirectly, by the Company, the Business Unit or an Affiliate that has a substantially similar effect as the transactions of the type referred to in clause (a) or (b) above, |
(y) | Spin-off or Public Offering. In the event of the sale or distribution of ownership interests (including, without limitation, a spin-off) of the Business Unit to stockholders of the Company, or the sale of assets of the Business Unit to any corporation or other entity owned, directly or indirectly, by the stockholders of the Company, in either case in substantially the same proportions as their ownership of stock in the Company, or a public offering of the ownership interests of the Business Unit (even if after the public offering the Company has no direct or indirect ownership interest in the Business Unit), or |
(z) | Liquidation. In the event of the closing down or liquidation of the Business Unit, even if the Business Unit sells all or substantially all of its assets. |
(1) | the failure of any successor company, following the Change in Control, to assume the Agreement and all obligations thereunder, as of the date of such Change in Control; |
(2) | a material reduction in the authority, duties or responsibilities of the Executive from the authority, duties and responsibilities in effect immediately prior to the Change in Control; provided however, a mere change in the Executive's title shall not, in and of itself, constitute a material reduction in the authority, duties or responsibilities of the Executive under this clause (2); |
(3) | a reduction by the Employer in the Executive's base salary, cash bonus opportunity, or long term incentive opportunity, each as in effect immediately prior to the Change in Control or as the same may thereafter be increased from time to time; |
(4) | 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 40 miles more than the Executive's one way commute immediately prior to the Change in Control, |
(5) | a substantial increase in the Executive's business travel obligations from the Executive's business travel obligations immediately prior to the Change in Control; |
(6) | the failure by the Employer to pay to the Executive when due any portion of the Executive's current compensation; |
(7) | the failure by the Employer to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Employer'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 Employer and any entity in control of the Employer), the taking of any other action by the Employer 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 Employer to provide the Executive with the number of paid vacation days or PTO days (days of paid time off) to which the Executive was entitled; |
(8) | any purported termination of the Executive's employment which is not effected pursuant to a notice of termination satisfying the requirements of Section 5 of these Terms and Conditions; for purposes of this Agreement, no such purported termination shall be effective; and |
(9) | a material breach of this Agreement by the Employer or the Company. |
(1) | the Company or any Affiliate enters into a definitive agreement contemplating transactions that, if consummated, would result in the occurrence of a Change in Control; |
(2) | the Company or any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act publicly announces an intention to take or to consider actions, including but not limited to proxy contests or consent solicitations, which, if consummated, would constitute a Change in Control; |
(3) | any Person becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of the 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 |
(4) | the Board or the Employer Board if the Employer is other than the Company adopts a resolution to the effect that, for purposes of the Agreement, a Potential Change in Control has occurred. |
(1) | for the Severance Period, life and accident benefits substantially similar to those provided to the Executive and the Executive's dependents immediately prior to the Severance or, if more favorable to the Executive, immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to the Severance or the Change in Control in this Agreement (based on whether the benefits provided are substantially similar to those provided prior to the Severance or those provided prior to the Change in Control); provided, however, that, unless the Change in Control took place because of the event described in clause (5) of the definition of Change in Control (as modified hereby), the Employer may apply to such benefits any across the board changes similarly affecting all or substantially all employees participating in such benefits; and |
(2) | Health Benefits substantially similar to those provided to Executive and Executive's dependents by or on behalf of the Executive's Employer immediately prior to the Severance or, if more favorable to the Executive, those provided immediately prior to the Change in Control, in accordance with the applicable benefit plan eligibility requirements and policies and the following: |
(a) | if the Company, the Employer or a successor company maintains a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, then subject to subsection (6) of this definition of “Severance Benefits,” Employer or the successor company shall pay to Executive, in accordance with the provisions of Section 3.2, a lump sum payment equal to the aggregate premiums that Executive would be required to pay in order to obtain coverage for Executive and Executive's dependents under such plan for the Severance Period; |
(b) | if the Company, the Employer or a successor company does not maintain a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, the Employer or successor company shall promptly purchase, at its own expense and at no cost to the Executive, an individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the benefits described above (with no preexisting condition limitations); |
(c) | If at any time during the Severance Period the Employer or the successor company ceases to make available any Health Benefits under the retiree medical plan described in (a) above under which Executive and Executive's dependents are obtaining coverage, or materially modifies the Health Benefits available under the retiree medical plan to the detriment of the Executive, then Employer or the successor company shall promptly purchase, at its own expense and at no cost to the Executive, a individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the Health Benefits (with no preexisting condition limitations) for the remainder of the Severance Period; |
(3) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by or are made available to Executive and Executive's dependents, as set forth below (and Executive shall promptly notify Employer or any successor company of any such benefits): |
(a) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are actually received by the Executive or the Executive's dependents following the Executive's termination of employment with the Employer; or |
(b) | benefits otherwise receivable pursuant to (1) shall be reduced to the extent benefits of the same type are made available to the Executive and Executive's dependents (whether or not Executive elects to actually receive such benefits) by a new employer of Executive following the Executive's termination of employment with the Employer; |
(4) | the Employer may limit any reimbursement to the Executive to the excess, if any, of the cost to the Executive of benefits received or made available pursuant to (1) and (2) over such cost immediately prior to the Severance Date or, if more favorable to the Executive, immediately prior to the Change in Control; |
(5) | if the Executive dies, the Employer shall continue to provide the Executive's dependents with the benefits otherwise receivable pursuant to (1) and (2) on the same basis as if the Executive had survived, and |
(6) | if any such benefits are treated as deferred compensation subject to Code section 409A and the Executive is a Specified Employee, the Executive shall pay the full cost of such benefits for the first six months after the Severance Date and the Employer shall reimburse the Executive for such payments as soon as practicable thereafter but not later than nine (9) months from the date the Executive paid such costs. |
2. | COMPENSATION OTHER THAN SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
2.1 | Following the occurrence of a Change in Control or Potential Change in Control and during the Term, during any period that the Executive fails to perform the Executive's full-time duties with the Employer as a result of incapacity due to Disability, the Employer 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 Employer during such period (other than any disability plan), until such time (if any) as the Executive's employment is terminated by the Employer for Disability and only to the extent permitted under Treasury regulation §1.409A-1(h)(1). |
2.2 | If the Executive shall incur a Severance, the Employer shall pay the Executive's full salary to the Executive through the Severance Date at the rate in effect immediately prior to the Severance Date 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 Severance Date under the terms of the Employer's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Severance Date or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
2.3 | If the Executive shall incur a Severance, the Employer 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 Severance). 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 Severance or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
3. | SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
3.1 | Subject to the other provisions of this Agreement (including, without limitation, Section 4 of these Terms and Conditions), if the Executive incurs a Severance, the Executive shall be entitled to receive from the Employer the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the other Severance Benefits. If (i) the Employer is not the Company, (ii) the Severance is related to a Change in Control or a Potential Change in Control that occurred other than because of the Disposition of a Business Unit as provided in clause (5) of the definition of Change in Control, and (iii) the Employer does not provide all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the Severance Benefits, the Company shall fulfill the obligations of the Employer under the Agreement, and the Executive need not exhaust the remedies provided in Section 3.4 and 3.5 against the Employer before being entitled to receive the Severance Payment and the Severance Benefits from the Company. |
3.2 | Subject to Section 3.3, the Employer shall pay to the Executive the Severance Payment, the Prorated Target Bonus Amount and any Severance Benefits that are payable in cash, in each case less amounts withheld for Taxes as required under applicable law, within sixty days following the Severance Date; provided, however, that any amounts payable following (i) the occurrence of a Potential Change in Control or (ii) in the event that the Change in Control does not constitute a “change in control event” within the meaning of Code section 409A, shall to the extent such amounts constitute nonqualified deferred compensation within the meaning of Code section 409A, be paid at the same time and in the same form as required in the Severance Agreement (Non-Change in Control), the Non-Change in Control Severance Policy or similar agreement or policy applicable to the Executive to the extent such payments would be aggregated within the meaning of Section 409A of the Code with the payments and benefits under such other agreements or policies; provided, further, if the Executive is a Specified Employee as of the Severance Date, any payment of nonqualified deferred compensation that would have been paid prior to the six-month anniversary of the Severance Date shall be delayed until the earlier to occur of (i) the date that is six (6) months and one (1) day after the Severance Date and (ii) the date of the Executive's death. Notwithstanding anything herein to the contrary and except as otherwise expressly provided for in a written agreement between the Executive and the Company or Employer, as applicable, an Executive eligible to receive the Severance Payment, the Prorated Target Bonus Amount and other Severance Benefits under this Agreement shall not be eligible to receive any severance payments or benefits under another policy, plan, program, or agreement of the Company (including, without limitation, the Severance Agreement (Non-Change in Control) and the Non-Change in Control Severance Policy). |
3.3 | The Executive shall not be eligible to receive a Severance Payment, a Prorated Target Bonus Amount, Severance Benefits or Outplacement Services under the Agreement unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company a written release substantially in the form attached as Exhibit A hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such release becomes effective prior to the time that the Executive (or the Executive's estate, as applicable) is to receive all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Severance Benefits or Outplacement Services; provided, however, each such payment or benefit which constitutes nonqualified deferred compensation and which is conditioned upon Executive's execution of a release and which is to be paid or provided during a designated period that begins in a first taxable year and ends in a second taxable year shall be paid or provided in the second taxable year. |
3.4 | In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Agreement, such person may make a claim to the Employer Board (or the Board if the second sentence of Section 3.1 applies), and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated on December 2008 and as subsequently amended from time to time (the “DCP”), shall apply with the Employer Board (or the Board if the second sentence of Section 3.1 applies) treated as the Committee. Although claims for amounts under this Agreement are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Agreement nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
3.5 | Any further dispute or controversy arising under or in connection with the Agreement which remains after the final decision of the Employer Board as contemplated by Section 3.4 shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with the American Arbitration Association's National Rules for Resolution of Employment Disputes as then in effect. Such arbitration shall be conducted in the metropolitan area closest to where the Executive lives. Judgment may be entered on the arbitrator's award in any court having jurisdiction over such metropolitan area; provided however, that the Executive shall be entitled to seek specific performance of his or her right to be paid or to receive benefits hereunder during the pendency of any dispute or controversy under or in connection with this Agreement. The fees and expenses of the arbitrator and the arbitration shall be borne by the Employer or the Company. |
3.6 | The Employer shall pay to the Executive all legal fees and expenses incurred by the Executive (i) in seeking in good faith to obtain or enforce any benefit or right provided by the Agreement or (ii) 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 payment shall be made within five (5) busi-ness days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
3.7 | The Employer agrees that, if the Executive's employment with the Employer terminates following a Change in Control that is applicable to the Executive and during the Term of the Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive hereunder. Further, the amount of any payment or benefit provided for in the Agreement shall not be reduced (except as provided in clause (3) of the definition of Severance Benefits) 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 Employer, or otherwise. |
4. | ADJUSTMENTS. |
4.1 | Notwithstanding any other provisions of this Agreement, in the event it is determined that any payment or distribution of the Total Payments would be subject to the Excise Tax, then the Total Payments may be reduced as provided in Section 4.5 below. All determinations required to be made under this Section 4 shall be made by the Accounting Firm. |
4.2 | For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) the Accounting Firm shall make such determination with the assistance of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Accounting Firm, (ii) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a "payment" within the meaning of section 280G(b) of the Code shall be taken into account, (iii) no portion of the Total Payments shall be taken into account which, in the opinion of Tax Counsel does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, including but not necessarily limited to amounts which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered on or after the Change in Control pursuant to section 280G(b)(4)(A) of the Code, (iv) in calculating the Excise Tax, amounts treated as an “excess parachute payment” within the meaning of section 280G(b)(1) of the Code shall be reduced by the portion of the Executive's Total Payments which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered prior to the Change in Control pursuant to section 280G(b)(4)(B) of the Code, with reasonable compensation for services actually rendered prior to the Change in Control being offset against the Base Amount and (v) the value of any non‑cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Accounting Firm in accordance with the principles of sections 280G(d)(3) and (4) of the Code. |
4.3 | The Accounting Firm's determinations under this Agreement shall be completed within sixty (60) days of the Executive's Severance, shall be set forth in writing pursuant to Section 4.4 and shall be conclusive and binding on the Executive and the Company for all purposes. The Company and the Executive shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make a determination hereunder. The Company shall bear all costs the Accounting Firm and/or the Tax Counsel may reasonably incur in connection with any calculations contemplated hereunder. |
4.4 | If the Accounting Firm determines that the unreduced Total Payments (or reduced payment amount under Section 4.5, if applicable) are not subject to Excise Tax, it will, at the same time as it makes such determination furnish the Company and the Executive a written statement setting forth the manner in which such determination was made and the basis for such determination, including without limitation any opinions or other advice the Accounting Firm has received from Tax Counsel or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). |
4.5 | In the event the Accounting Firm determines that the Executive's Total Payments are subject to Excise Tax, the Accounting Firm shall also calculate a “reduced payment amount” by reducing the Executive's Total Payments to the minimum extent necessary so that no portion of any of the Total Payments, as so reduced, is subject to Excise Taxes. The Executive shall receive either (i) the unreduced Total Payments otherwise due to him or her or (ii) the reduced payment amount described in the preceding sentence, whichever will provide the Executive with the greater after-tax economic benefit taking into account for these purposes any applicable Excise Tax as described in Section 4.6, below. Determination of the reduced payment amount actually payable to the Executive shall be subject to Section 4.7, below. |
4.6 | When determining under Section 4.5 which of the Total Payments or the reduced payment amount will produce the greater after-tax economic benefit for the Executive, the Accounting Firm will take into consideration federal, state and local income taxes on the (unreduced) Total Payments as well as on the reduced payment amount, including the phase out of itemized deductions and personal exemptions attributable to the Total Payments and reduced payment amount, as the case may be, as well as the amount of Excise Tax to which the Executive would be subject on the unreduced Total Payments. For purposes of this Section 4.6, (i) 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 applicable unreduced Total Payment or reduced payment amount 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 in the calendar year in which the applicable unreduced Total Payment or reduced payment amount is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes and (ii) except to the extent that the Executive otherwise notifies the Company, the Executive shall be deemed to be subject to the loss of itemized deductions and personal exemptions to the maximum extent provided by the Code for each dollar of incremental income. |
4.7 | Where the Accounting Firm has determined under Section 4.5 that the reduced payment amount will be of greater economic benefit to the Executive than would the unreduced Total Payments, then such reduced payment amount will be determined by reducing the Total Payments otherwise payable to the Executive, in the following order: |
(1) | first, by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); |
(2) | second, by reducing any cash payments not subject to Code section 409A; |
(3) | third, by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(4) | fourth, by reducing any cash payments that are subject to Code section 409A (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(5) | fifth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to performance-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); |
(6) | sixth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to time-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and |
(7) | seventh, by reducing the acceleration of vesting of any stock options that are not described in (1), above. |
4.8 | Where the Accounting Firm has determined that the Total Payments are subject to Excise Tax, and that the unreduced Total Payments will be of greater economic benefit to the Executive than the reduced payment amount, then the federal, state and local income or other tax returns filed by the Executive shall be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax. The Executive shall make proper payment of any Excise Tax, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his or her federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company evidencing such payment, provided that any information unrelated to the Excise Tax may be deleted from the copies of the returns and documents delivered to the Company. |
4.9 | The Executive shall provide the Company prompt notice of any claim by or other correspondence from the Internal Revenue Service or other applicable taxing authority relating to the application of Excise Tax to the Total Payments. |
4.10 | The provisions of this Section 4 shall survive the termination or expiration of this Agreement for any reason. |
5. | NOTICE OF TERMINATION. |
5.1 | 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 the Employer to the Executive or the Executive to the Employer in accordance with Section 7.9, and shall follow the applicable procedures set forth in this Section 5. |
5.2 | The notice of termination shall indicate the specific termination provision in the 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. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
5.3 | The notice of termination shall specify the date of termination which, in the case of a termination by the Employer, shall not be less than thirty (30) days (except in the case of a termination for Cause, in which case the provisions of Section 5.2 shall control) and, in the case of a termination by the Executive, shall not be less than thirty (30) days nor more than sixty (60) days, respectively, from the date such notice of termination is given. |
(1) | Once the Employer or the Executive has specified a date of termination in a notice of termination, the date of termination cannot be changed by the Employer or the Executive except by mutual consent. |
(2) | The date of termination must be at least 30 days after the notice of termination unless the termination is for Good Reason and Good Reason first occurs during the last 30 days of the Term (determined without regard to this Section 5.3(2)), in which event the date of termination shall be (i) the end of the Term (determined without regard to this Section 5.3(2)) if the Employer receives notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)) or (ii) the later of ten days after receipt by the Employer of notice of the Executive's intent to terminate for Good Reason or five days after the end of the Term (determined without regard to this Section 5.3(2)) if the Employer does not receive notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)). |
5.4 | Failure by the Employer to follow the procedures set forth in this Section 5 shall result in (i) in the case of a purported termination for Cause, any actual termination being deemed to be and being treated for all purposes of this Agreement as a termination without Cause and (ii) Good Reason for termination by the Executive of the Executive's own employment. |
6. | RESTRICTIVE COVENANTS. |
6.1 | (a) Confidential Information. The Executive agrees, during the Executive's employment and at all times thereafter during the Severance Period, that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate, or take any action which may result in the use, sale, disclosure, or communication, of any Confidential Information (defined below), other than as required by law or as authorized in advance by the Employer in the course of the Executive's assigned duties and for the benefit of Employer. |
6.2 | Non-Solicitation. The Executive agrees that, during the Executive's employment and at all times thereafter during the Severance Period, the Executive shall not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity (whether as a sole proprietor, owner, employer, partner, investor, shareholder, member, employee, consultant, or otherwise), solicit, induce, or attempt to persuade any employee or agent of the Employer or any of its affiliates to leave such employment or other relationship or association with the Employer or any such affiliate in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Employer. |
6.3 | Non-Disparagement. The Executive agrees, during the Executive's employment and at all times thereafter during the Severance Period, not to make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticize or disparages or damages the reputation, goodwill, or standing in the community of the Employer, the Company or any Affiliate, or their respective employees, officers, directors, products or services. Notwithstanding the foregoing, nothing herein shall prohibit statements that are protected by applicable law or otherwise prohibit the Executive from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. |
6.4 | Return of Property. Except as authorized by the Employer, the Executive will not remove from the Employer's premises any property of the Employer, its affiliates, or the actual and prospective clients of any of them, including without limitation any documents or things containing any Confidential Information, computer programs and drives or storage devices of any kind (portable or otherwise), files, forms, notes, records, charts, or any copies thereof (collectively, "Property"). Immediately following the termination of the Executive's employment for any or no reason, the Executive shall return to the Employer all Property, including without limitation any and all laptops and other computer equipment, Blackberries and similar devices, cellphones, credit cards, keys and other access cards, and electronic and hardcopy files. |
6.5 | Reasonableness. In the event the provisions of this Section 6 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. |
6.6 | Equitable Relief. |
6.7 | Survival of Provisions. The obligations contained in this Section shall survive the termination of the Executive's employment with the Employer and shall be fully enforceable thereafter. |
7. | GENERAL PROVISIONS. |
7.1 | Except as otherwise provided herein or by law, no right or interest of the Executive under the Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Agreement shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Agreement to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
7.2 | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Agreement) to pay severance pay, a termination indemnity, notice pay or the like or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period"), then any Severance Payment hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
7.3 | Neither the entering into of this Agreement, nor the payment of any benefits hereunder shall be construed as giving the Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Agreement had never been executed. |
7.4 | If any provision of the Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Agreement shall be construed and enforced as if such provisions had not been included. |
7.5 | The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent. |
7.6 | The Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by the Executive and by the personal and legal representatives, executors, administra-tors, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall die while any amount would still be payable to such Executive (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 the Agreement to the executors, personal representatives or administrators of the Executive's estate. |
7.7 | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. |
7.8 | The Agreement shall not be funded. The Executive shall not have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Agreement. |
7.9 | All notices and all other communications provided for in the 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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention General Counsel, and in the case of the Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
7.10 | The Agreement shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
1. | The Old Employer hereby assigns the Agreement to the New Employer. |
2. | The New Employer hereby assumes the obligations of the Old Employer under the Agreement. |
3. | The assignment and assumption are effective as of the date employment is transferred. |
4. | The Executive hereby acknowledges receipt of notice of the assignment and assumption. |
THE OLD EMPLOYER By: ___________________________ Name: Title: | THE NEW EMPLOYER By: ___________________________ Name: Title: |
EXECUTIVE ______________________________ Name: |
• | The attached Terms and Conditions are incorporated herein and made a part of this Agreement. |
• | The Term of this Agreement shall commence on December 18, 2009 and expire as provided in the definition of “Term” in Section 1 of the attached Terms and Conditions. |
• | Subject to the other provisions of this Agreement, if the Executive incurs a Severance the Executive shall be entitled to receive from the Employer: |
(i) | the Severance Payment (the amount of which shall be determined using a multiple (the “Severance Multiple”) of one); |
(ii) | the Prorated Target Bonus Amount; |
(iii) | the Outplacement Services at a cost to the Employer not to exceed $10,000; and |
(iv) | the Severance Benefits for a period of 12 months following the Severance Date (the “Severance Period”). |
• | If the Executive transfers to and becomes an employee of an Affiliate, the Employer shall assign this Agreement to the Affiliate (as applicable) which shall become the Employer and shall assume the obligations of the Employer. |
• | This Agreement supersedes (i) all prior severance agreements between the Executive, on the one hand, and the Employer, the Company or any Affiliate, on the other hand, and (ii) all prior severance plans, severance policies or other severance arrangements applicable to the Executive, in each case relating to severance payments and other benefits to be made available to the Executive upon a change in control. |
CON-WAY INC. By: ___/s/ Jennifer W. Pileggi________ Name: Jennifer W. Pileggi Title: EVP General Counsel & Secretary | EXECUTIVE By: ___/s/ Charles R. Mullett________ Name: Charles R. Mullett |
1. | DEFINITIONS. As hereinafter used: |
(1) | 25% of the Company's Voting Securities Acquired by an Outsider. Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) 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; provided however that “person” shall not include: |
(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; |
(c) | any corporation owned, directly or indirectly, by the stock-holders of the Company in substantially the same proportions as their ownership of Stock; and |
(d) | any person that, pursuant to Rule 13d-1 promulgated under the Exchange Act, is permitted to, and actually does, report its beneficial ownership of voting securities of the Company on Schedule 13G (or any successor schedule) (a "13G Filer"), provided that, if any 13G Filer subsequently becomes required to or does report its beneficial ownership of voting securities of the Company on Schedule 13D (or any successor schedule), then the 13G Filer shall be deemed a “person” for purposes of clause (1) and shall be deemed to have acquired, on the first date on which such person becomes required to or does so report on Schedule 13D (or any successor schedule), beneficial ownership of all voting securities of the Company beneficially owned by it on such date. |
(2) | Members of the Board as of June 1, 2009 cease to constitute a majority of Directors. The following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on June 1, 2009, 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 on June 1, 2009 or whose appointment, election or nomina-tion for election was previously so approved or recommended; |
(3) | Merger or Consolidation. There is consummated a merger or consolidation of the Company, a Subsidiary or an Affiliate with any other corporation or other entity, which merger or consolidation -- |
(a) | results in the voting securities of the Company outstanding immediately prior thereto failing 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 the surviving or parent entity outstanding immediately after such merger or consolidation, or |
(b) | is effected to implement a recapitalization of the Company (or similar transaction) in which a “person” (as defined in clause (a) above), directly or indirectly, acquires 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); |
(4) | Complete Liquidation or Disposition of All or Substantially All of the Company's Assets. 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 all or substantially all of the Company's assets, 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; or |
(5) | Disposition of a Business Unit. There is consummated the Disposition of a Business Unit; provided, however, that this clause (5) shall apply only to an Executive who immediately prior to the Disposition of a Business Unit was employed by (and on the payroll of) the Business Unit that was the subject of the Disposition of a Business Unit. |
(a) | Sale of Ownership Interests. A sale by the Company or an Affiliate of the then outstanding ownership interests of the Business Unit having more than 50% of the then existing voting power of all outstanding ownership interests of the Business Unit, whether by merger, consolidation or otherwise, unless after the sale the Company, an Affiliate, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company, the Business Unit or any other Affiliate, individually or collectively, directly or indirectly, owns the then outstand-ing ownership interests of the Business Unit having 50% or more of the then existing voting power of all outstanding ownership interests of the Business Unit; |
(b) | Sale of Assets. The sale of all or substantially all of the assets of the Business Unit as a going concern; or |
(c) | Other Transaction. Any other transaction or course of action engaged in, directly or indirectly, by the Company, the Business Unit or an Affiliate that has a substantially similar effect as the transactions of the type referred to in clause (a) or (b) above, |
(y) | Spin-off or Public Offering. In the event of the sale or distribution of ownership interests (including, without limitation, a spin-off) of the Business Unit to stockholders of the Company, or the sale of assets of the Business Unit to any corporation or other entity owned, directly or indirectly, by the stockholders of the Company, in either case in substantially the same proportions as their ownership of stock in the Company, or a public offering of the ownership interests of the Business Unit (even if after the public offering the Company has no direct or indirect ownership interest in the Business Unit), or |
(z) | Liquidation. In the event of the closing down or liquidation of the Business Unit, even if the Business Unit sells all or substantially all of its assets. |
(1) | the failure of any successor company, following the Change in Control, to assume the Agreement and all obligations thereunder, as of the date of such Change in Control; |
(2) | a material reduction in the authority, duties or responsibilities of the Executive from the authority, duties and responsibilities in effect immediately prior to the Change in Control; provided however, a mere change in the Executive's title shall not, in and of itself, constitute a material reduction in the authority, duties or responsibilities of the Executive under this clause (2); |
(3) | a reduction by the Employer in the Executive's base salary, cash bonus opportunity, or long term incentive opportunity, each as in effect immediately prior to the Change in Control or as the same may thereafter be increased from time to time; |
(4) | 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 40 miles more than the Executive's one way commute immediately prior to the Change in Control, |
(5) | a substantial increase in the Executive's business travel obligations from the Executive's business travel obligations immediately prior to the Change in Control; |
(6) | the failure by the Employer to pay to the Executive when due any portion of the Executive's current compensation; |
(7) | the failure by the Employer to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Employer'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 Employer and any entity in control of the Employer), the taking of any other action by the Employer 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 Employer to provide the Executive with the number of paid vacation days or PTO days (days of paid time off) to which the Executive was entitled; |
(8) | any purported termination of the Executive's employment which is not effected pursuant to a notice of termination satisfying the requirements of Section 5 of these Terms and Conditions; for purposes of this Agreement, no such purported termination shall be effective; and |
(9) | a material breach of this Agreement by the Employer or the Company. |
(1) | the Company or any Affiliate enters into a definitive agreement contemplating transactions that, if consummated, would result in the occurrence of a Change in Control; |
(2) | the Company or any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act publicly announces an intention to take or to consider actions, including but not limited to proxy contests or consent solicitations, which, if consummated, would constitute a Change in Control; |
(3) | any Person becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of the 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 |
(4) | the Board or the Employer Board if the Employer is other than the Company adopts a resolution to the effect that, for purposes of the Agreement, a Potential Change in Control has occurred. |
(1) | life and accident benefits substantially similar to those provided to the Executive and the Executive's dependents immediately prior to the Severance or, if more favorable to the Executive, immediately prior to the Change in Control, at no greater cost to the Executive than the cost to the Executive immediately prior to the Severance or the Change in Control in this Agreement (based on whether the benefits provided are substantially similar to those provided prior to the Severance or those provided prior to the Change in Control); provided, however, that, unless the Change in Control took place because of the event described in clause (5) of the definition of Change in Control (as modified hereby), the Employer may apply to such benefits any across the board changes similarly affecting all or substantially all employees participating in such benefits; and |
(2) | Health Benefits for the Severance Period substantially similar to those provided to Executive and Executive's dependents by or on behalf of the Executive's Employer immediately prior to the Severance or, if more favorable to the Executive, those provided immediately prior to the Change in Control, in accordance with the following: |
(a) | if the Company, the Employer or a successor company maintains a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, then subject to subsection (6) of this definition of “Severance Benefits,” Employer or the successor company shall pay to Executive, in accordance with the provisions of Section 3.2, a lump sum payment equal to the aggregate premiums that Executive would be required to pay in order to obtain coverage for Executive and Executive's dependents under such plan for the Severance Period. |
(b) | if the Company, the Employer or a successor company does not maintain a retiree medical plan in which Executive and Executive's dependents are eligible to participate (with no preexisting condition limitations) and to receive the Health Benefits, the Employer or successor company shall promptly purchase, at its own expense and at no cost to the Executive, an individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the benefits described above (with no preexisting condition limitations). |
(c) | If at any time during the Severance Period the Employer or the successor company ceases to make available any Health Benefits under the retiree medical plan described in (a) above under which Executive and Executive's dependents are obtaining coverage, or materially modifies the Health Benefits available under the retiree medical plan to the detriment of the Executive, then Employer or the successor company shall promptly purchase, at its own expense and at no cost to the Executive, a individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the Health Benefits (with no preexisting condition limitations) for the remainder of the Severance Period. |
(3) | benefits otherwise receivable pursuant to (1) and (2) shall be reduced to the extent benefits of same type are actually received by or are made available to Executive and Executive's dependents, as set forth below (and Executive shall promptly notify Employer or any successor company of any such benefits): |
(a) | benefits otherwise receivable pursuant to (1) and (2) shall be reduced to the extent benefits of the same type are actually received by the Executive or the Executive's dependents following the Executive's termination of employment with the Employer, with no applicable pre-existing condition exclusions; or |
(b) | benefits otherwise receivable pursuant to (1) and (2) shall be reduced to the extent benefits of the same type are made available to the Executive and Executive's dependents (whether or not Executive elects to actually receive such benefits) by a new employer of Executive following the Executive's termination of employment with the Employer, with no applicable pre-existing condition exclusions are applicable; |
(5) | if the Executive dies, the Employer shall continue to provide the Executive's dependents with the benefits otherwise receivable pursuant to (1) and (2) on the same basis as if the Executive had survived, and |
(6) | if any such benefits are treated as deferred compensation subject to Code section 409A and the Executive is a Specified Employee, the Executive shall pay the full cost of such benefits for the first six months after the Severance Date and the Employer shall reimburse the Executive for such payments as soon as practicable thereafter but not later than nine (9) months from the date the Executive paid such costs. |
2. | COMPENSATION OTHER THAN SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
2.1 | Following the occurrence of a Change in Control or Potential Change in Control and during the Term, during any period that the Executive fails to perform the Executive's full-time duties with the Employer as a result of incapacity due to Disability, the Employer 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 Employer during such period (other than any disability plan), until such time (if any) as the Executive's employment is terminated by the Employer for Disability. |
2.2 | If the Executive shall incur a Severance, the Employer shall pay the Executive's full salary to the Executive through the Severance Date at the rate in effect immediately prior to the Severance Date 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 Severance Date under the terms of the Employer's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Severance Date or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
2.3 | If the Executive shall incur a Severance, the Employer 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 Severance). 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 Severance or, if more favorable to the Executive, as in effect immediately prior to the Change in Control or Potential Change in Control. |
3. | SEVERANCE PAYMENT, SEVERANCE BENEFITS AND PRORATED TARGET BONUS AMOUNT. |
3.1 | Subject to the other provisions of this Agreement (including, without limitation, Section 4 of these Terms and Conditions), if the Executive incurs a Severance, the Executive shall be entitled to receive from the Employer the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the other Severance Benefits. If (i) the Employer is not the Company, (ii) the Severance is related to a Change in Control or a Potential Change in Control that occurred other than because of the Disposition of a Business Unit as provided in clause (5) of the definition of Change in Control, and (iii) the Employer does not provide all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Outplacement Services, and the Severance Benefits, the Company shall fulfill the obligations of the Employer under the Agreement, and the Executive need not exhaust the remedies provided in Section 3.4 and 3.5 against the Employer before being entitled to receive the Severance Payment and the Severance Benefits from the Company. |
3.2 | The Employer shall pay to the Executive the Severance Payment, the Prorated Target Bonus Amount and any Severance Benefits that are payable in cash, in each case less amounts withheld for Taxes as required under applicable law, on the earliest date or dates permitted under Code section 409A, as determined by Tax Counsel or, in the absence of a determination by Tax Counsel, on the date that is six (6) months and one (1) day after the Severance Date (or as soon as practicable thereafter, but in no event later than ten (10) business days immediately following such date). The Employer shall use good faith efforts to obtain from Tax Counsel the determinations contemplated by this Section 3.2. The Executive shall be liable for the payment of all Taxes. The Employer shall be entitled to withhold from amounts to be paid to the Executive hereunder any Taxes which it is from time to time required to withhold. |
3.3 | The Executive shall not be eligible to receive a Severance Payment, a Prorated Target Bonus Amount, Severance Benefits or Outplacement Services under the Agreement unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes a written release substantially in the form attached as Exhibit A hereto after the Severance Date and such release becomes effective prior to the time that the Executive (or the Executive's estate, as applicable) is to receive all or any part of the Severance Payment, the Prorated Target Bonus Amount, the Severance Benefits or Outplacement Services. |
3.4 | In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Agreement, such person may make a claim to the Employer Board (or the Board if the second sentence of Section 3.1 applies), and the claims procedure set forth in Section 15 of the EIP shall apply with the Employer Board (or the Board if the second sentence of Section 3.1 applies) treated as the Committee. Although claims for amounts under this Agreement are governed by claims procedures under the EIP that also apply to ERISA-covered claims, neither this Agreement nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
3.5 | Any further dispute or controversy arising under or in connection with the Agreement which remains after the final decision of the Employer Board as contemplated by Section 3.4 shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with the American Arbitration Association's National Rules for Resolution of Employment Disputes as then in effect. Such arbitration shall be conducted in the metropolitan area closest to where the Executive lives. Judgment may be entered on the arbitrator's award in any court having jurisdiction over such metropolitan area; provided however, that the Executive shall be entitled to seek specific performance of his/her right to be paid or to receive benefits hereunder during the pendency of any dispute or controversy under or in connection with this Agreement. The fees and expenses of the arbitrator and the arbitration shall be borne by the Employer or the Company. |
3.6 | The Employer shall pay to the Executive all legal fees and expenses incurred by the Executive (i) in seeking in good faith to obtain or enforce any benefit or right provided by the Agreement or (ii) 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 payment 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 Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
3.7 | The Employer agrees that, if the Executive's employment with the Employer terminates following a Change in Control that is applicable to the Executive and during the Term of the Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive hereunder. Further, the amount of any payment or benefit provided for in the Agreement shall not be reduced (except as provided in clause (3) of the definition of Severance Benefits) 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 Employer, or otherwise. |
4. | ADJUSTMENTS. |
4.1 | Notwithstanding any other provisions of this Agreement, in the event it is determined that any payment or distribution of the Total Payments would be subject to the Excise Tax, then the Total Payments may be reduced as provided in Section 4.5 below. All determinations required to be made under this Section 4 shall be made by the Accounting Firm. |
4.2 | For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) the Accounting Firm shall make such determination with the assistance of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the Accounting Firm, (ii) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a "payment" within the meaning of section 280G(b) of the Code shall be taken into account, (iii) no portion of the Total Payments shall be taken into account which, in the opinion of Tax Counsel does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, including but not necessarily limited to amounts which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered on or after the Change in Control pursuant to section 280G(b)(4)(A) of the Code, (iv) in calculating the Excise Tax, amounts treated as an “excess parachute payment” within the meaning of section 280G(b)(1) of the Code shall be reduced by the portion of the Executive's Total Payments which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered prior to the Change in Control pursuant to section 280G(b)(4)(B) of the Code, with reasonable compensation for services actually rendered prior to the Change in Control being offset against the Base Amount and (v) the value of any non‑cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Accounting Firm in accordance with the principles of sections 280G(d)(3) and (4) of the Code. |
4.3 | The Accounting Firm's determinations under this Agreement shall be completed within sixty (60) days of the Executive's Severance, shall be set forth in writing pursuant to Section 4.4 and shall be conclusive and binding on the Executive and the Company for all purposes. The Company and the Executive shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make a determination hereunder. The Company shall bear all costs the Accounting Firm and/or the Tax Counsel may reasonably incur in connection with any calculations contemplated hereunder. |
4.4 | If the Accounting Firm determines that the unreduced Total Payments (or reduced payment amount under Section 4.5, if applicable) are not subject to Excise Tax, it will, at the same time as it makes such determination furnish the Company and the Executive a written statement setting forth the manner in which such determination was made and the basis for such determination, including without limitation any opinions or other advice the Accounting Firm has received from Tax Counsel or other advisors or consultants,(and any such opinions or advice which are in writing shall be attached to the statement). |
4.5 | In the event the Accounting Firm determines that the Executive's Total Payments are subject to Excise Tax, the Accounting Firm shall also calculate a “reduced payment amount” by reducing the Executive's Total Payments to the minimum extent necessary so that no portion of any of the Total Payments, as so reduced, is subject to Excise Taxes. The Executive shall receive either (i) the unreduced Total Payments otherwise due to him or her or (ii) the reduced payment amount described in the preceding sentence, whichever will provide the Executive with the greater after-tax economic benefit taking into account for these purposes any applicable Excise Tax as described in Section 4.6, below. Determination of the reduced payment amount actually payable to the Executive shall be subject to Section 4.7, below. |
4.6 | When determining under Section 4.5 which of the Total Payments or the reduced payment amount will produce the greater after-tax economic benefit for the Executive, the Accounting Firm will take into consideration federal, state and local income taxes on the (unreduced) Total Payments as well as on the reduced payment amount, including the phase out of itemized deductions and personal exemptions attributable to the Total Payments and reduced payment amount, as the case may be, as well as the amount of Excise Tax to which the Executive would be subject on the unreduced Total Payments. For purposes of this Section 4.6, (i) 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 applicable unreduced Total Payment or reduced payment amount 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 in the calendar year in which the applicable unreduced Total Payment or reduced payment amount is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes and (ii) except to the extent that the Executive otherwise notifies the Company, the Executive shall be deemed to be subject to the loss of itemized deductions and personal exemptions to the maximum extent provided by the Code for each dollar of incremental income. |
4.7 | Where the Accounting Firm has determined under Section 4.5 that the reduced payment amount will be of greater economic benefit to the Executive than would the unreduced Total Payments, then such reduced payment amount will be determined by reducing the Total Payments otherwise payable to the Executive, in the following order: |
(1) | first, by eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the fair market value (and if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall be reduced first, and so-on); |
(2) | second, by reducing any cash payments not subject to Code section 409A; |
(3) | third, by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(4) | fourth, by reducing any cash payments that are subject to Code section 409A (and if there be more than one such payment, by reducing the payments in reverse order, with the payments made the earliest being reduced first); |
(5) | fifth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to performance-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); |
(6) | sixth, by reducing the payments of any restricted stock, restricted stock units, phantom shares, performance share units, performance shares or similar equity-based awards that have been awarded to the Executive by the Company that are subject to time-based vesting (and if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award, with the most-recently awarded reduced first and the oldest award reduced last); and |
(7) | seventh, by reducing the acceleration of vesting of any stock options that are not described in (1), above. |
4.8 | Where the Accounting Firm has determined that the Total Payments are subject to Excise Tax, and that the unreduced Total Payments will be of greater economic benefit to the Executive than the reduced payment amount, then the federal, state and local income or other tax returns filed by the Executive shall be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax. The Executive shall make proper payment of any Excise Tax, and at the request of the Company, provide to the Company true and correct copies (with any amendments) of his/her federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company evidencing such payment, provided that any information unrelated to the Excise Tax may be deleted from the copies of the returns and documents delivered to the Company. |
4.9 | The Executive shall provide the Company prompt notice of any claim by or other correspondence from the Internal Revenue Service or other applicable taxing authority relating to the application of Excise Tax to the Total Payments. |
4.10 | The provisions of this Section 4 shall survive the termination or expiration of this Agreement for any reason. |
5. | NOTICE OF TERMINATION. |
5.1 | 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 the Employer to the Executive or the Executive to the Employer in accordance with Section 7.9, and shall follow the applicable procedures set forth in this Section 5. |
5.2 | The notice of termination shall indicate the specific termination provision in the 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. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
5.3 | The notice of termination shall specify the date of termination which, in the case of a termination by the Employer, shall not be less than thirty (30) days (except in the case of a termination for Cause, in which case the provisions of Section 5.2 shall control) and, in the case of a termination by the Executive, shall not be less than thirty (30) days nor more than sixty (60) days, respectively, from the date such notice of termination is given. |
(1) | Once the Employer or the Executive has specified a date of termination in a notice of termination, the date of termination cannot be changed by the Employer or the Executive except by mutual consent. |
(2) | The date of termination must be at least 30 days after the notice of termination unless the termination is for Good Reason and Good Reason first occurs during the last 30 days of the Term (determined without regard to this Section 5.3(2)), in which event the date of termination shall be (i) the end of the Term (determined without regard to this Section 5.3(2)) if the Employer receives notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)) or (ii) the later of ten days after receipt by the Employer of notice of the Executive's intent to terminate for Good Reason or five days after the end of the Term (determined without regard to this Section 5.3(2)) if the Employer does not receive notice of the Executive's intent to terminate for Good Reason ten days or more before the end of the Term (determined without regard to this Section 5.3(2)). |
5.4 | Failure by the Employer to follow the procedures set forth in this Section 5 shall result in (i) in the case of a purported termination for Cause, any actual termination being deemed to be and being treated for all purposes of this Agreement as a termination without Cause and (ii) Good Reason for termination by the Executive of the Executive's own employment. |
6. | RESTRICTIVE COVENANTS. |
6.1 | Confidential Information. The Executive agrees that during the Executive's employment and at all times thereafter during the Severance Period, the Executive will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Executive's assigned duties and for the benefit of the Employer, either during the period of the Executive's employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Employer, any of its subsidiaries, affiliated companies or businesses, which shall have been obtained by Executive during the Executive's employment with the Employer. This Section 6.1 applies to, but is not limited to, the Employer's, and its parent's, subsidiaries', and affiliates' legal matters, technical data, systems and programs, financial and planning data, business development or strategic plans or data, marketing strategies, software development, product development, pricing, customer information, trade secrets, personnel information, and other privileged or confidential business information. |
6.2 | Non-Solicitation. The Executive agrees that during the Executive's employment and at all times thereafter during the Severance Period, the Executive will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce (i) any employee of the Employer to leave such employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Employer or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee, or (ii) any customer of the Employer to purchase goods or services then sold by the Employer or from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer. |
6.3 | Non-Disparagement. The Executive agrees that during the Executive's employment and at all times thereafter during the Severance Period, the Executive will not to make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticize or disparage the Employer, the Company or any Affiliate, or their respective employees, officers, directors, products or services. The Employer agrees that it shall use its best reasonable efforts to assure that none of its executive officers or directors make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticize or disparage the Executive. Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this requirement. |
6.4 | Reasonableness. In the event the provisions of this Section 6 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. |
6.5 | Equitable Relief. |
(1) | The Executive acknowledges that the restrictions contained in this Section 6 are reasonable and necessary to protect the legitimate interests of the Employer, that the Employer would not have entered into the Agreement in the absence of such restrictions, and that any violation of any provision of this Section 6 will result in irreparable injury to Employer. By entering into the Agreement, the Executive represents that his or her experience and capabilities are such that the restrictions contained in this Section 6 will not prevent the Executive from obtaining employment or otherwise earning a living at the same general level of economic benefit as is currently the case. The Executive further represents and acknowledges that (i) he or she has been advised by Employer to consult his or her own legal counsel in respect of this Agreement, and (ii) that he or she has had full opportunity, prior to agreeing to enter into the Agreement, to review thoroughly this Agreement with his or her counsel. |
(2) | The Executive agrees that the Employer shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Section 6, which rights shall be cumulative and in addition to any other rights or remedies to which Employer may be entitled. In the event that any of the provisions of this Section 6 should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, service, or other limitations permitted by applicable law. |
(3) | The Executive irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of this Section 6, including without limitation, any action commenced by the Company for preliminary and permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the Northern District of California, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in California, (ii) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which the Executive may have to the laying of venue of any such suit, action or proceeding in any such court. Executive also irrevocably and unconditionally consents to the service |
6.6 | Survival of Provisions. The obligations contained in this Section shall survive the termination of the Executive's employment with the Employer and shall be fully enforceable thereafter. |
7. | GENERAL PROVISIONS. |
7.1 | Except as otherwise provided herein or by law, no right or interest of the Executive under the Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Agreement shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Agreement to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
7.2 | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Agreement) to pay severance pay, a termination indemnity, notice pay or the like or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period"), then any Severance Payment hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
7.3 | Neither the entering into of this Agreement, nor the payment of any benefits hereunder shall be construed as giving the Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Agreement had never been executed. |
7.4 | If any provision of the Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Agreement shall be construed and enforced as if such provisions had not been included. |
7.5 | The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent. |
7.6 | The Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by the Executive and by the personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall die while any amount would still be payable to such Executive (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 the Agreement to the executors, personal representatives or administrators of the Executive's estate. |
7.7 | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. |
7.8 | The Agreement shall not be funded. The Executive shall not have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Agreement. |
7.9 | All notices and all other communications provided for in the 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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2855 Campus Drive, San Mateo, California 94403, attention General Counsel, and in the case of the Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
7.10 | The Agreement shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
1. | The Old Employer hereby assigns the Agreement to the New Employer. |
2. | The New Employer hereby assumes the obligations of the Old Employer under the Agreement. |
3. | The assignment and assumption are effective as of the date employment is transferred. |
4. | The Executive hereby acknowledges receipt of notice of the assignment and assumption. |
THE OLD EMPLOYER By: ___________________________ Name: Title: | THE NEW EMPLOYER By: ___________________________ Name: Title: |
EXECUTIVE ______________________________ Name: |
1. | The definition of EIP is hereby deleted in its entirety and replaced with the following: |
2. | The definition of Severance Benefits is hereby deleted in its entirety and replaced with the following: |
3. | The definition of Tax Counsel is hereby deleted in its entirety. |
4. | Section 4.2 is hereby deleted in its entirety and replaced with the following: |
5. | Section 4.3 is hereby deleted in its entirety and replaced with the following: |
6. | In Section 4.4, the references to “Section 15 of the EIP” and “EIP” are hereby deleted and replaced with the following: |
7. | In Section 4.5, the third paragraph is hereby deleted in its entirety and replaced with the following: |
8. | In Section 6.5(c), the reference to “the United States District Court for the Northern District of California” is hereby deleted and replaced with “the United States District Court for the Eastern District of Michigan” and the reference to “California” is hereby deleted and replaced with “Michigan”. |
9. | Section 7.5 is hereby deleted in its entirety and replaced with the following: |
10. | In Section 7.9, the reference to “2855 Campus Drive, San Mateo, California 94403, attention General Counsel” is hereby deleted and replaced with “2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention President and General Counsel”. |
11. | The Employer and the Executive agree that, except as specifically amended hereby, all provisions of the Agreement remain in full force and effect. |
• | The attached Terms and Conditions are incorporated herein and made a part of this Agreement. |
• | Subject to the other provisions of this Agreement, if the Executive incurs a Severance the Executive shall be entitled to receive from the Employer: |
(i) | The Severance Payment (the amount of which shall be determined using a multiple (the “Severance Multiple”) of one and one-half). |
(ii) | The Outplacement Services at a cost to the Employer not to exceed $25,000; and |
(iii) | The Severance Benefits for a period of 18 months following the Severance Date (the “Severance Period”). |
• | If the Executive transfers to and becomes an employee of the Company or an Affiliate, the Employer shall assign this Agreement to the Company or the Affiliate (as applicable) which shall become the Employer and shall assume the obligations of the Employer. |
CON-WAY TRUCKLOAD INC. By: /s/ Stephen Krull________ Name: Stephen Krull Title: Secretary | EXECUTIVE By: /s/ Saul Gonzalez_________ Name: Saul Gonzalez |
1. Definitions............................................................................................ | 2 |
2. Prior Arrangements; CIC Severance Agreements................................. | 6 |
3. Compensation Other Than Severance Payment and Severance Benefits............................................................... | 7 |
4. Severance Payment and Severance Benefits; Outplacement Services; Vesting of Qualifying Long-Term Incentive Awards........... | 7 |
5. Notice of Termination........................................................................... | 9 |
6. Restrictive Covenants......................................................................... | 10 |
7. General Provisions.............................................................................. | 13 |
Exhibit A – Waiver and Release of Claims.............................................. | 16 |
Exhibit B – Assignment and Assumption of Agreement......................... | 18 |
1. | DEFINITIONS. As hereinafter used: |
(i) | a stock option, stock appreciation right (“SAR”) or similar award, or a restricted stock or restricted stock unit (“RSU”) award (whether cash-based or equity-based, and whether payable in cash or in stock); |
(ii) | that is outstanding on the Severance Date; |
(iii) | that has a vesting period that is longer than one year in duration; and |
(iv) | that is non-performance-based or, if performance-based, is based solely on changes in the price of the Company’s common stock. |
(a) | for each stock option, stock appreciation right (“SAR”) or similar award, and for each non-performance based restricted stock or restricted stock unit (“RSU”) award, in each case that is a Qualifying Long-Term Incentive Award scheduled to vest in installments over time, all unvested options, SARs or similar units, shares of restricted stock or RSUs included in such award that are scheduled to vest on or before the date that is the Number of Months after the Severance Date shall vest; and |
(b) | for each stock option, SAR or similar award, and for each non-performance based restricted stock or RSU award, in each case that is a Qualifying Long-Term Incentive Award subject to cliff-vesting, a percentage of the award shall vest, with the percentage determined by dividing the Number of Months by the total number of months in the cliff-vesting period. |
2. | PRIOR ARRANGEMENTS; CIC SEVERANCE AGREEMENTS. |
2.1 | The parties agree that all prior employment, separation, severance, termination, change of control, or similar agreements, arrangements, or plans (other than the CIC Severance Agreement), whether oral or written, covering the Executive are terminated and superseded and any notice periods with respect to such terminations are deemed satisfied or explicitly waived. |
2.2 | The parties further agree that the CIC Severance Agreement is intended to provide for severance payments and benefits to be made available to the Executive (on the terms and subject to the conditions contained therein) only upon a qualifying severance in connection with a Change in Control, and that this Agreement is intended to provide for severance payments and benefits to be made available to the Executive (on the terms and subject to conditions contained herein) only in connection with a qualifying severance occurring other than in connection with a Change in Control. In no event and under no circumstances shall the Executive be entitled to receive severance payments and benefits under both the CIC Severance Agreement and under this Agreement. |
3. | COMPENSATION OTHER THAN SEVERANCE PAYMENT AND SEVERANCE BENEFITS. |
3.1 | If the Executive shall incur a Severance, the Employer shall pay the Executive's full salary to the Executive through the Severance Date at the rate in effect immediately prior to the Severance Date, together with all compensation and benefits payable to the Executive through the Severance Date under the terms of the Employer’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Severance Date. |
3.2 | If the Executive shall incur a Severance, the Employer 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 Severance). 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 Severance. |
4. | SEVERANCE PAYMENT AND SEVERANCE BENEFITS; OUTPLACEMENT SERVICES; VESTING OF QUALIFYING LONG-TERM INCENTIVE AWARDS. |
4.1 | Subject to the other provisions of this Agreement (including, without limitation, Section 5 of these Terms and Conditions), if the Executive incurs a Severance, the Executive shall be entitled to receive from the Employer the Severance Payment, the Severance Benefits and the Outplacement Services. In addition, the Executive’s unvested Qualifying Long-Term Incentive Awards shall vest in accordance with and to the extent provided in the Vesting Provisions. |
4.2 | Subject to Section 4.3, the Severance Payment and any Severance Benefits that are payable in cash shall be payable to the Executive, in each case less amounts withheld for Taxes as required under applicable law, within sixty days following the Severance Date; provided, however, that the Executive shall not be eligible to receive the Severance Payment, Severance Benefits or Outplacement Services unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company a written release substantially in the form attached as Exhibit A hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such release becomes effective pursuant to the terms of such release. |
4.3 | Notwithstanding any other provision in this Agreement, to the extent any payments of the Severance Payment, Severance Benefits or Outplacement Services constitutes payments of nonqualified deferred compensation, within the meaning of Code section 409A, then (A) each such payment which is conditioned upon Executive’s execution of a release and which is to be paid or provided during a designated period that begins in a first taxable year and ends in a second taxable year shall be paid or provided in the second taxable year and (B) if the Executive is a Specified Employee as of the Severance Date, each such payment that would have been paid prior to the six-month anniversary of the Severance Date shall be delayed until the earlier to occur of (i) the date that is six (6) months and one (1) day after the Severance Date and (ii) the date of the Executive’s death. |
4.4 | In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Agreement, such person may make a claim to the Employer Board and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated in December 2008 and as subsequently amended from time to time (the “DCP”), shall apply with the Employer Board treated as the Committee. Although claims for amounts under this Agreement are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Agreement nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
4.5 | Any further dispute or controversy arising under or in connection with the Agreement which remains after the final decision of the Employer Board as contemplated by Section 4.4 shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with the American Arbitration Association’s National Rules for Resolution of Employment Disputes as then in effect. Such arbitration shall be conducted in the metropolitan area closest to where the Executive lives. Judgment may be entered on the arbitrator's award in any court having jurisdiction over such metropolitan area; provided however, that the Executive shall be entitled to seek specific performance of his or her right to be paid or to receive benefits hereunder during the pendency of any dispute or controversy under or in connection with this Agreement. The fees and expenses of the arbitrator and the arbitration shall be borne by the Employer. |
4.6 | The Employer 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 the Agreement. Such payment 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 Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive’s successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive’s dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive’s dependents. |
4.7 | The Employer agrees that, if the Executive incurs a Severance, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive hereunder. Further, the amount of any payment or benefit provided for in the Agreement shall not be reduced (except as provided in the definition of Severance Benefits) 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 Employer, or otherwise. |
5.1 | Any Involuntary Termination shall be communicated by written notice from the Employer to the Executive in accordance with Section 7.9, and shall follow the applicable procedures set forth in this Section 5. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive’s termination of employment) finding that, in the good faith opinion of the Employer 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. |
5.2 | The notice of termination from the Employer shall specify the date of termination, which shall not be less than ten (10) days from the date such notice of termination is given. Once the Employer has specified a date of termination in a notice of termination, the date of termination may not be changed except by mutual consent of the Employer and the Executive. |
6.1 (a) | Confidential Information. The Executive agrees, during the Executive’s employment and at all times thereafter, that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate, or take any action which may result in the use, sale, disclosure, or communication, of any Confidential Information (defined below), other than as required by law or as authorized in advance by the Employer in the course of the Executive's assigned duties and for the benefit of Employer. |
6.2 | Non-Solicitation. The Executive agrees that, during the Executive's employment and at all times thereafter during the Severance Period, the Executive shall not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity (whether as a sole proprietor, owner, employer, partner, investor, shareholder, member, employee, consultant, or otherwise), solicit, induce, or attempt to persuade any employee or agent of the Employer or any of its affiliates to leave such employment or other relationship or association with the Employer or any such affiliate in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Employer. |
6.3 | Non-Disparagement. The Executive agrees, during the Executive's employment and at all times thereafter, not to make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticizes or disparages or damages the reputation, goodwill, or standing in the community of the Employer, the Company or any Affiliate, or their respective employees, officers, directors, products or services. Notwithstanding the foregoing, nothing herein shall prohibit statements that are protected by applicable law or otherwise prohibit the Executive from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. |
6.4 | Competition. The Executive agrees that, during the Executive’s employment with the Employer, and for a period of twelve (12) months following the Severance Date (irrespective of the reason for the Executive’s termination and without any reduction or modification), the Executive shall not, without the prior written consent of the Employer Board, directly or indirectly (whether as a sole proprietor, owner, employer, partner, investor, shareholder, member, employee, consultant, or otherwise) engage in, become a partner, director, officer, principal, employee, consultant, investor, creditor, stockholder in, or otherwise perform services for, any business, proprietorship, association, firm or corporation not owned or controlled by the Company or its subsidiaries or affiliates which is engaged or proposes to engage or hereafter engages in the performance of services or provision of products relating to and competitive directly or indirectly with the business of regional and transcontinental less-than-truckload and full-truckload freight transportation, contract logistics and supply-chain management, and multimodal freight brokerage (the “Business”) in any geographic area in which the Company is or was engaged in or actively planning to engage in the Business as of the Executive’s Severance Date or during the previous twelve (12) month period; provided, however, that the Executive is not prohibited from owning one percent (1%) or less of the outstanding capital stock of any corporation whose stock is listed on a national securities exchange. |
6.5 | Return of Property. Except as authorized by the Employer, the Executive will not remove from the Employer’s premises any property of the Employer, its affiliates, or the actual and prospective clients of any of them, including without limitation any documents or things containing any Confidential Information, computer programs and drives or storage devices of any kind (portable or otherwise), files, forms, notes, records, charts, or any copies thereof (collectively, "Property"). Immediately following the termination of the Executive's employment for any or no reason, the Executive shall return to the Employer all Property, including without limitation any and all laptops and other computer equipment, Blackberries and similar devices, cellphones, credit cards, keys and other access cards, and electronic and hardcopy files. |
6.6 | Reasonableness. In the event the provisions of this Section 6 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. |
6.7 | Equitable Relief. |
6.8 | Survival of Provisions. The obligations contained in this Section shall survive the termination of Executive's employment with Employer and shall be fully enforceable thereafter. |
7.1 | Except as otherwise provided herein or by law, no right or interest of the Executive under the Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Agreement shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Agreement to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive’s legal guardian or personal representative. |
7.2 | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Agreement) to pay severance pay, a termination indemnity, notice pay or the like or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period"), then any Severance Payment hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
7.3 | Neither the entering into of this Agreement, nor the payment of any benefits hereunder shall be construed as giving the Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Agreement had never been executed. |
7.4 | If any provision of the Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Agreement shall be construed and enforced as if such provisions had not been included. |
7.5 | The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent. |
7.6 | The Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by the Executive and by the personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall die while any amount would still be payable to the Executive (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 the Agreement to the executors, personal representatives or administrators of the Executive's estate. |
7.7 | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. |
7.8 | The Agreement shall not be funded. The Executive shall not have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Agreement. |
7.9 | All notices and all other communications provided for in the 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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention President and General Counsel, and in the case of the Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
7.10 | The Agreement shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
1. | The Old Employer hereby assigns the Agreement to the New Employer. |
2. | The New Employer hereby assumes the obligations of the Old Employer under the Agreement. |
3. | The assignment and assumption are effective as of the date employment is transferred. |
4. | The Executive hereby acknowledges receipt of notice of the assignment and assumption. |
THE OLD EMPLOYER By: ___________________________ Name: Title: | THE NEW EMPLOYER By: ___________________________ Name: Title: |
EXECUTIVE ______________________________ Name: |
• | The attached Terms and Conditions are incorporated herein and made a part of this Agreement. |
• | Subject to the other provisions of this Agreement, if the Executive incurs a Severance the Executive shall be entitled to receive from the Employer: |
(i) | The Severance Payment (the amount of which shall be determined using a multiple (the “Severance Multiple”) of one and one-half). |
(ii) | The Outplacement Services at a cost to the Employer not to exceed $25,000; and |
(iii) | The Severance Benefits for a period of 18 months following the Severance Date (the “Severance Period”). |
• | Notwithstanding the definition of the term “Severance” in the Terms and Conditions, for purposes of this Agreement a Severance shall also include a Termination for Good Reason and (subject to the other provisions of this Agreement) upon a Termination for Good Reason the Executive shall be entitled to receive from the Employer all of the payments and benefits described above. |
(1) | A reduction of twenty percent (20%) or more in the Executive's target total direct compensation (determined using the midpoint of the applicable long-term incentive compensation opportunity range), made by the Employer in anticipation of, or within twenty-four (24) months after, the sale or other disposition (including by way of a spin-off or similar transaction) by the Company of one or more of its three principal operating units. As used herein, “target total direct compensation” means the Executive's annual base salary, target annual bonus and target long-term incentive compensation opportunity. |
• | Any Termination for Good Reason shall be communicated by written notice from the Executive to the Employer in accordance with Section 7.9 of the Terms and Conditions. A notice of Termination for Good Reason shall indicate the specific provision in the Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination for Good Reason. The notice of termination shall specify the termination date, which shall not be less than thirty (30) days nor more than sixty (60) days, respectively, from the date such notice is given and which (notwithstanding the definition of “Severance Date” in the Terms and Conditions) shall constitute the “Severance Date” for purposes of the Agreement. Once the Executive has specified a date of termination in a notice of termination, the date of termination may not be changed except by mutual consent of the Employer and the Executive. |
• | If the Executive transfers to and becomes an employee of an Affiliate, the Employer shall assign this Agreement to the Affiliate (as applicable) which shall become the Employer and shall assume the obligations of the Employer. |
CON-WAY INC. By: ___/s/ Leslie P. Lundberg_______ Name: Leslie P. Lundberg Title: Senior Vice President | EXECUTIVE By: ____/s/ Stephen Krull___________ Name: Stephen Krull |
1. Definitions.................................................................................... | 3 |
2. Prior Arrangements; CIC Severance Agreements | .............................7 |
1. | DEFINITIONS. As hereinafter used: |
(i) | a stock option, stock appreciation right (“SAR”) or similar award, or a restricted stock or restricted stock unit (“RSU”) award (whether cash-based or equity-based, and whether payable in cash or in stock); |
(ii) | that is outstanding on the Severance Date; |
(iii) | that has a vesting period that is longer than one year in duration; and |
(iv) | that is non-performance-based or, if performance-based, is based solely on changes in the price of the Company's common stock. |
(a) | for each stock option, stock appreciation right (“SAR”) or similar award, and for each non-performance based restricted stock or restricted stock unit (“RSU”) award, in each case that is a Qualifying Long-Term Incentive Award scheduled to vest in installments over time, all unvested options, SARs or similar units, shares of restricted stock or RSUs included in such award that are scheduled to vest on or before the date that is the Number of Months after the Severance Date shall vest; and |
(b) | for each stock option, SAR or similar award, and for each non-performance based restricted stock or RSU award, in each case that is a Qualifying Long-Term Incentive Award subject to cliff-vesting, a percentage of the award shall vest, with the percentage determined by dividing the Number of Months by the total number of months in the cliff-vesting period. |
2. | PRIOR ARRANGEMENTS; CIC SEVERANCE AGREEMENTS. |
2.1 | The parties agree that all prior employment, separation, severance, termination, change of control, or similar agreements, arrangements, or plans (other than the CIC Severance Agreement), whether oral or written, covering the Executive are terminated and superseded and any notice periods with respect to such terminations are deemed satisfied or explicitly waived. |
2.2 | The parties further agree that the CIC Severance Agreement is intended to provide for severance payments and benefits to be made available to the Executive (on the terms and subject to the conditions contained therein) only upon a qualifying severance in connection with a Change in Control, and that this Agreement is intended to provide for severance payments and benefits to be made available to the Executive (on the terms and subject to conditions contained herein) only in connection with a qualifying severance occurring other than in connection with a Change in Control. In no event and under no circumstances shall the Executive be entitled to receive severance payments and benefits under both the CIC Severance Agreement and under this Agreement. |
3. | COMPENSATION OTHER THAN SEVERANCE PAYMENT AND SEVERANCE BENEFITS. |
3.1 | If the Executive shall incur a Severance, the Employer shall pay the Executive's full salary to the Executive through the Severance Date at the rate in effect immediately prior to the Severance Date, together with all compensation and benefits payable to the Executive through the Severance Date under the terms of the Employer's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Severance Date. |
3.2 | If the Executive shall incur a Severance, the Employer 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 Severance). 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 Severance. |
4. | SEVERANCE PAYMENT AND SEVERANCE BENEFITS; OUTPLACEMENT SERVICES; VESTING OF QUALIFYING LONG-TERM INCENTIVE AWARDS. |
4.1 | Subject to the other provisions of this Agreement (including, without limitation, Section 5 of these Terms and Conditions), if the Executive incurs a Severance, the Executive shall be entitled to receive from the Employer the Severance Payment, the Severance Benefits and the Outplacement Services. In addition, the Executive's unvested Qualifying Long-Term Incentive Awards shall vest in accordance with and to the extent provided in the Vesting Provisions. |
4.2 | Subject to Section 4.3, the Severance Payment and any Severance Benefits that are payable in cash shall be payable to the Executive, in each case less amounts withheld for Taxes as required under applicable law, within sixty days following the Severance Date; provided, however, that the Executive shall not be eligible to receive the Severance Payment, Severance Benefits or Outplacement Services unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company a written release substantially in the form attached as Exhibit A hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such release becomes effective pursuant to the terms of such release. |
4.3 | Notwithstanding any other provision in this Agreement, to the extent any payments of the Severance Payment, Severance Benefits or Outplacement Services constitutes payments of nonqualified deferred compensation, within the meaning of Code section 409A, then (A) each such payment which is conditioned upon Executive's execution of a release and which is to be paid or provided during a designated period that begins in a first taxable year and ends in a second taxable year shall be paid or provided in the second taxable year and (B) if the Executive is a Specified Employee as of the Severance Date, each such payment that would have been paid prior to the six-month anniversary of the Severance Date shall be delayed until the earlier to occur of (i) the date that is six (6) months and one (1) day after the Severance Date and (ii) the date of the Executive's death. |
4.4 | In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Agreement, such person may make a claim to the Employer Board and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated in December 2008 and as subsequently amended from time to time (the “DCP”), shall apply with the Employer Board treated as the Committee. Although claims for amounts under this Agreement are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Agreement nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
4.5 | Any further dispute or controversy arising under or in connection with the Agreement which remains after the final decision of the Employer Board as contemplated by Section 4.4 shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with the American Arbitration Association's National Rules for Resolution of Employment Disputes as then in effect. Such arbitration shall be conducted in the metropolitan area closest to where the Executive lives. Judgment may be entered on the arbitrator's award in any court having jurisdiction over such metropolitan area; provided however, that the Executive shall be entitled to seek specific performance of his or her right to be paid or to receive benefits hereunder during the pendency of any dispute or controversy under or in connection with this Agreement. The fees and expenses of the arbitrator and the arbitration shall be borne by the Employer. |
4.6 | The Employer 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 the Agreement. Such payment shall be made within five (5) busi-ness days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
4.7 | The Employer agrees that, if the Executive incurs a Severance, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive hereunder. Further, the amount of any payment or benefit provided for in the Agreement shall not be reduced (except as provided in the definition of Severance Benefits) 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 Employer, or otherwise. |
5.1 | Any Involuntary Termination shall be communicated by written notice from the Employer to the Executive in accordance with Section 7.9, and shall follow the applicable procedures set forth in this Section 5. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
5.2 | The notice of termination from the Employer shall specify the date of termination, which shall not be less than ten (10) days from the date such notice of termination is given. Once the Employer has specified a date of termination in a notice of termination, the date of termination may not be changed except by mutual consent of the Employer and the Executive. |
6. | RESTRICTIVE COVENANTS. |
6.1 (a) | Confidential Information. The Executive agrees, during the Executive's employment and at all times thereafter, that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate, or take any action which may result in the use, sale, disclosure, or communication, of any Confidential Information (defined below), other than as required by law or as authorized in advance by the Employer in the course of the Executive's assigned duties and for the benefit of Employer. |
6.2 | Non-Solicitation. The Executive agrees that, during the Executive's employment and at all times thereafter during the Severance Period, the Executive shall not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity (whether as a sole proprietor, owner, employer, partner, investor, shareholder, member, employee, consultant, or otherwise), solicit, induce, or attempt to persuade any employee or agent of the Employer or any of its affiliates to leave such employment or other relationship or association with the Employer or any such affiliate in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Employer. |
6.3 | Non-Disparagement. The Executive agrees, during the Executive's employment and at all times thereafter, not to make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticizes or disparages or damages the reputation, goodwill, or standing in the community of the Employer, the Company or any Affiliate, or their respective employees, officers, directors, products or services. Notwithstanding the foregoing, nothing herein shall prohibit statements that are protected by applicable law or otherwise prohibit the Executive from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. |
6.4 | Return of Property. Except as authorized by the Employer, the Executive will not remove from the Employer's premises any property of the Employer, its affiliates, or the actual and prospective clients of any of them, including without limitation any documents or things containing any Confidential Information, computer programs and drives or storage devices of any kind (portable or otherwise), files, forms, notes, records, charts, or any copies thereof (collectively, "Property"). Immediately following the termination of the Executive's employment for any or no reason, the Executive shall return to the Employer all Property, including without limitation any and all laptops and other computer equipment, Blackberries and similar devices, cellphones, credit cards, keys and other access cards, and electronic and hardcopy files. |
6.5 | Reasonableness. In the event the provisions of this Section 6 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. |
6.6 | Equitable Relief. |
6.7 | Survival of Provisions. The obligations contained in this Section shall survive the termination of Executive's employment with Employer and shall be fully enforceable thereafter. |
7.1 | Except as otherwise provided herein or by law, no right or interest of the Executive under the Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Agreement shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Agreement to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
7.2 | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Agreement) to pay severance pay, a termination indemnity, notice pay or the like or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period"), then any Severance Payment hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
7.3 | Neither the entering into of this Agreement, nor the payment of any benefits hereunder shall be construed as giving the Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Agreement had never been executed. |
7.4 | If any provision of the Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Agreement shall be construed and enforced as if such provisions had not been included. |
7.5 | The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent. |
7.6 | The Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by the Executive and by the personal and legal representatives, executors, administra-tors, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall die while any amount would still be payable to the Executive (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 the Agreement to the executors, personal representatives or administrators of the Executive's estate. |
7.7 | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. |
7.8 | The Agreement shall not be funded. The Executive shall not have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Agreement. |
7.9 | All notices and all other communications provided for in the 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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention President and General Counsel, and in the case of the Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
7.10 | The Agreement shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
1. | The Old Employer hereby assigns the Agreement to the New Employer. |
2. | The New Employer hereby assumes the obligations of the Old Employer under the Agreement. |
3. | The assignment and assumption are effective as of the date employment is transferred. |
4. | The Executive hereby acknowledges receipt of notice of the assignment and assumption. |
THE OLD EMPLOYER By: ___________________________ Name: Title: | THE NEW EMPLOYER By: ___________________________ Name: Title: |
EXECUTIVE ______________________________ Name: |
• | The attached Terms and Conditions are incorporated herein and made a part of this Agreement. |
• | Subject to the other provisions of this Agreement, if the Executive incurs a Severance the Executive shall be entitled to receive from the Employer: |
(i) | The Severance Payment (the amount of which shall be determined using a multiple (the “Severance Multiple”) of one and one-half). |
(ii) | The Outplacement Services at a cost to the Employer not to exceed $25,000; and |
(iii) | The Severance Benefits for a period of 18 months following the Severance Date (the “Severance Period”). |
• | If the Executive transfers to and becomes an employee of the Company or an Affiliate, the Employer shall assign this Agreement to the Company or the Affiliate (as applicable) which shall become the Employer and shall assume the obligations of the Employer. |
CON-WAY FREIGHT INC. By: ___/s/ Stephen Krull_________ Name: Stephen Krull Title: Secretary | EXECUTIVE By: ____/s/ Walter G. Lehmkuhl_____ Name: Walter G. Lehmkuhl |
7. General Provisions | ................................................................................13 |
1. | DEFINITIONS. As hereinafter used: |
(i) | a stock option, stock appreciation right (“SAR”) or similar award, or a restricted stock or restricted stock unit (“RSU”) award (whether cash-based or equity-based, and whether payable in cash or in stock); |
(ii) | that is outstanding on the Severance Date; |
(iii) | that has a vesting period that is longer than one year in duration; and |
(iv) | that is non-performance-based or, if performance-based, is based solely on changes in the price of the Company's common stock. |
(a) | for each stock option, stock appreciation right (“SAR”) or similar award, and for each non-performance based restricted stock or restricted stock unit (“RSU”) award, in each case that is a Qualifying Long-Term Incentive Award scheduled to vest in installments over time, all unvested options, SARs or similar units, shares of restricted stock or RSUs included in such award that are scheduled to vest on or before the date that is the Number of Months after the Severance Date shall vest; and |
(b) | for each stock option, SAR or similar award, and for each non-performance based restricted stock or RSU award, in each case that is a Qualifying Long-Term Incentive Award subject to cliff-vesting, a percentage of the award shall vest, with the percentage determined by dividing the Number of Months by the total number of months in the cliff-vesting period. |
2. | PRIOR ARRANGEMENTS; CIC SEVERANCE AGREEMENTS. |
2.1 | The parties agree that all prior employment, separation, severance, termination, change of control, or similar agreements, arrangements, or plans (other than the CIC Severance Agreement), whether oral or written, covering the Executive are terminated and superseded and any notice periods with respect to such terminations are deemed satisfied or explicitly waived. |
2.2 | The parties further agree that the CIC Severance Agreement is intended to provide for severance payments and benefits to be made available to the Executive (on the terms and subject to the conditions contained therein) only upon a qualifying severance in connection with a Change in Control, and that this Agreement is intended to provide for severance payments and benefits to be made available to the Executive (on the terms and subject to conditions contained herein) only in connection with a qualifying severance occurring other than in connection with a Change in Control. In no event and under no circumstances shall the Executive be entitled to receive severance payments and benefits under both the CIC Severance Agreement and under this Agreement. |
3. | COMPENSATION OTHER THAN SEVERANCE PAYMENT AND SEVERANCE BENEFITS. |
3.1 | If the Executive shall incur a Severance, the Employer shall pay the Executive's full salary to the Executive through the Severance Date at the rate in effect immediately prior to the Severance Date, together with all compensation and benefits payable to the Executive through the Severance Date under the terms of the Employer's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Severance Date. |
3.2 | If the Executive shall incur a Severance, the Employer 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 Severance). 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 Severance. |
4. | SEVERANCE PAYMENT AND SEVERANCE BENEFITS; OUTPLACEMENT SERVICES; VESTING OF QUALIFYING LONG-TERM INCENTIVE AWARDS. |
4.1 | Subject to the other provisions of this Agreement (including, without limitation, Section 5 of these Terms and Conditions), if the Executive incurs a Severance, the Executive shall be entitled to receive from the Employer the Severance Payment, the Severance Benefits and the Outplacement Services. In addition, the Executive's unvested Qualifying Long-Term Incentive Awards shall vest in accordance with and to the extent provided in the Vesting Provisions. |
4.2 | Subject to Section 4.3, the Severance Payment and any Severance Benefits that are payable in cash shall be payable to the Executive, in each case less amounts withheld for Taxes as required under applicable law, within sixty days following the Severance Date; provided, however, that the Executive shall not be eligible to receive the Severance Payment, Severance Benefits or Outplacement Services unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company a written release substantially in the form attached as Exhibit A hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such release becomes effective pursuant to the terms of such release. |
4.3 | Notwithstanding any other provision in this Agreement, to the extent any payments of the Severance Payment, Severance Benefits or Outplacement Services constitutes payments of nonqualified deferred compensation, within the meaning of Code section 409A, then (A) each such payment which is conditioned upon Executive's execution of a release and which is to be paid or provided during a designated period that begins in a first taxable year and ends in a second taxable year shall be paid or provided in the second taxable year and (B) if the Executive is a Specified Employee as of the Severance Date, each such payment that would have been paid prior to the six-month anniversary of the Severance Date shall be delayed until the earlier to occur of (i) the date that is six (6) months and one (1) day after the Severance Date and (ii) the date of the Executive's death. |
4.4 | In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Agreement, such person may make a claim to the Employer Board and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated in December 2008 and as subsequently amended from time to time (the “DCP”), shall apply with the Employer Board treated as the Committee. Although claims for amounts under this Agreement are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Agreement nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
4.5 | Any further dispute or controversy arising under or in connection with the Agreement which remains after the final decision of the Employer Board as contemplated by Section 4.4 shall be settled exclusively by arbitration, conducted before a single neutral arbitrator in accordance with the American Arbitration Association's National Rules for Resolution of Employment Disputes as then in effect. Such arbitration shall be conducted in the metropolitan area closest to where the Executive lives. Judgment may be entered on the arbitrator's award in any court having jurisdiction over such metropolitan area; provided however, that the Executive shall be entitled to seek specific performance of his or her right to be paid or to receive benefits hereunder during the pendency of any dispute or controversy under or in connection with this Agreement. The fees and expenses of the arbitrator and the arbitration shall be borne by the Employer. |
4.6 | The Employer 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 the Agreement. Such payment shall be made within five (5) busi-ness days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
4.7 | The Employer agrees that, if the Executive incurs a Severance, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive hereunder. Further, the amount of any payment or benefit provided for in the Agreement shall not be reduced (except as provided in the definition of Severance Benefits) 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 Employer, or otherwise. |
5.1 | Any Involuntary Termination shall be communicated by written notice from the Employer to the Executive in accordance with Section 7.9, and shall follow the applicable procedures set forth in this Section 5. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
5.2 | The notice of termination from the Employer shall specify the date of termination, which shall not be less than ten (10) days from the date such notice of termination is given. Once the Employer has specified a date of termination in a notice of termination, the date of termination may not be changed except by mutual consent of the Employer and the Executive. |
6. | RESTRICTIVE COVENANTS. |
6.1 (a) | Confidential Information. The Executive agrees, during the Executive's employment and at all times thereafter, that he or she shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate, or take any action which may result in the use, sale, disclosure, or communication, of any Confidential Information (defined below), other than as required by law or as authorized in advance by the Employer in the course of the Executive's assigned duties and for the benefit of Employer. |
6.2 | Non-Solicitation. The Executive agrees that, during the Executive's employment and at all times thereafter during the Severance Period, the Executive shall not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity (whether as a sole proprietor, owner, employer, partner, investor, shareholder, member, employee, consultant, or otherwise), solicit, induce, or attempt to persuade any employee or agent of the Employer or any of its affiliates to leave such employment or other relationship or association with the Employer or any such affiliate in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Employer. |
6.3 | Non-Disparagement. The Executive agrees, during the Executive's employment and at all times thereafter, not to make, participate in the making of, or encourage any other person to make, any statements, written or oral, that criticizes or disparages or damages the reputation, goodwill, or standing in the community of the Employer, the Company or any Affiliate, or their respective employees, officers, directors, products or services. Notwithstanding the foregoing, nothing herein shall prohibit statements that are protected by applicable law or otherwise prohibit the Executive from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. |
6.4 | Return of Property. Except as authorized by the Employer, the Executive will not remove from the Employer's premises any property of the Employer, its affiliates, or the actual and prospective clients of any of them, including without limitation any documents or things containing any Confidential Information, computer programs and drives or storage devices of any kind (portable or otherwise), files, forms, notes, records, charts, or any copies thereof (collectively, "Property"). Immediately following the termination of the Executive's employment for any or no reason, the Executive shall return to the Employer all Property, including without limitation any and all laptops and other computer equipment, Blackberries and similar devices, cellphones, credit cards, keys and other access cards, and electronic and hardcopy files. |
6.5 | Reasonableness. In the event the provisions of this Section 6 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. |
6.6 | Equitable Relief. |
6.7 | Survival of Provisions. The obligations contained in this Section shall survive the termination of Executive's employment with Employer and shall be fully enforceable thereafter. |
7.1 | Except as otherwise provided herein or by law, no right or interest of the Executive under the Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Agreement shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Agreement to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
7.2 | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Agreement) to pay severance pay, a termination indemnity, notice pay or the like or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period"), then any Severance Payment hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
7.3 | Neither the entering into of this Agreement, nor the payment of any benefits hereunder shall be construed as giving the Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Agreement had never been executed. |
7.4 | If any provision of the Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Agreement shall be construed and enforced as if such provisions had not been included. |
7.5 | The Company, the Employer and the Executive intend for the Agreement to comply with the requirements of Code section 409A such that none of the payments hereunder will result in compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A). The Agreement shall be interpreted in a manner consistent with such intent. |
7.6 | The Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by the Executive and by the personal and legal representatives, executors, administra-tors, successors, heirs, distributees, devisees and legatees of the Executive. If the Executive shall die while any amount would still be payable to the Executive (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 the Agreement to the executors, personal representatives or administrators of the Executive's estate. |
7.7 | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. |
7.8 | The Agreement shall not be funded. The Executive shall not have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Agreement. |
7.9 | All notices and all other communications provided for in the 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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention President and General Counsel, and in the case of the Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
7.10 | The Agreement shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
1. | The Old Employer hereby assigns the Agreement to the New Employer. |
2. | The New Employer hereby assumes the obligations of the Old Employer under the Agreement. |
3. | The assignment and assumption are effective as of the date employment is transferred. |
4. | The Executive hereby acknowledges receipt of notice of the assignment and assumption. |
THE OLD EMPLOYER By: ___________________________ Name: Title: | THE NEW EMPLOYER By: ___________________________ Name: Title: |
EXECUTIVE ______________________________ Name: |
1. | Qualifying Termination of Employment. An Executive will be eligible to receive the severance payments and benefits described in this Policy only if the Executive incurs a Severance. |
2. | Severance Payments and Benefits. Subject to the other provisions of this Policy, if an Executive incurs a Severance, the Executive shall be entitled to receive the following from the Employer: |
(a) | Severance Payment. |
(b) | Annual Bonus Amount, provided that the Executive has been employed for at least one full calendar quarter during the year in which the Severance occurs. |
(c) | Health Benefits. |
(d) | Outplacement Services. |
3. | Waiver and Release; Agreement to Comply with Covenants. An Executive shall not be eligible to receive a Severance Payment, Annual Bonus Amount, Health Benefits or Outplacement Services under the Policy unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company the Waiver and Release of Claims and Restrictive Covenant Agreement substantially in the form of Attachment 2 hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such Waiver and Release of Claims and Restrictive Covenant Agreement becomes effective pursuant to its terms prior to the time that the Executive (or the Executive's estate, as applicable) is to receive all or any part of the Severance Payment, the Annual Bonus Amount, Health Benefits or Outplacement Services. |
4. | Timing of Payments; Taxes. The Severance Payment and any Health Benefits that are payable in cash shall be payable to the Executive in a lump sum payment within sixty days following the Severance Date. The Annual Bonus Amount shall be paid no later than March 15th of the year immediately following the year in which the Severance Date occurs. The Executive shall be liable for the payment of all Taxes. The Employer shall be entitled to withhold from amounts to be paid to the Executive hereunder any Taxes which it is from time to time required to withhold. |
5. | Disputes and Controversies. In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Policy, such person may make a claim to the Employer Board and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated in December 2008 and as subsequently amended from time to time (“DCP”), shall apply with the Employer Board treated as the Committee. Although claims for amounts under this Policy are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Policy nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
6. | Fees and Expenses; Mitigation. The Employer 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 the Policy. Such payment shall be made within five (5) busi-ness days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
(a) | Any Involuntary Termination shall be communicated by written notice from the Employer to the Executive in accordance with Section 8(i), and shall follow the applicable procedures set forth in this Section 7. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
(b) | The notice of termination from the Employer shall specify the date of termination, which shall not be less than ten (10) days from the date such notice of termination is given. Once the Employer has specified a date of termination in a notice of termination, the date of termination may not be changed except by mutual consent of the Employer and the Executive. |
(c) | Any Termination for Good Reason shall be communicated by written notice from the Executive to the Employer in accordance with Section 8(i) of this Policy. A notice of Termination for Good Reason shall indicate the specific provision in the Policy relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination for Good Reason. The notice of termination shall specify the termination date, which shall not be less than thirty (30) days nor more than sixty (60) days, respectively, from the date such notice is given and which shall constitute the “Severance Date” for purposes of the Policy. Once the Executive has specified a date of termination in a notice of termination, the date of termination may not be changed except by mutual consent of the Employer and the Executive. |
(a) | This Policy may be terminated or amended at any time in the sole discretion of the Company; provided that such action shall not affect the rights under the Policy of an Executive who incurs a Severance prior to such action. |
(b) | Except as otherwise provided herein or by law, no right or interest of the Executive under the Policy shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Policy shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Policy to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
(c) | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Policy) to pay severance pay, a termination indemnity, notice pay or the like to an Executive or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period") to an Executive, then any Severance Payment made to the Executive hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
(d) | Neither the entering into of this Policy, nor the payment of any benefits hereunder shall be construed as giving an Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Policy had never been executed. |
(e) | If any provision of the Policy shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Policy shall be construed and enforced as if such provisions had not been included. |
(f) | The Policy shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by an Executive and by the personal and legal representatives, executors, administra-tors, successors, heirs, distributees, devisees and legatees of the Executive. If an Executive shall die while any amount would still be payable to the Executive (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 the Policy to the executors, personal representatives or administrators of the Executive's estate. |
(g) | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Policy, and shall not be employed in the construction of the Policy. |
(h) | The Policy shall not be funded. No Executive shall have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Policy. |
(i) | All notices and all other communications provided for in the Policy (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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention President and General Counsel, and in the case of an Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
(j) | This Policy shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
(i) | a stock option, stock appreciation right (“SAR”) or similar award, or a restricted stock or restricted stock unit (“RSU”) award (whether cash-based or equity-based, and whether payable in cash or in stock); |
(ii) | that is outstanding on the Severance Date; |
(iii) | that has a vesting period that is longer than one year in duration; and |
(iv) | that is non-performance-based or, if performance-based, is based solely on changes in the price of the Company's common stock. |
(a) | for each stock option, stock appreciation right (“SAR”) or similar award, and for each non-performance-based restricted stock or restricted stock unit (“RSU”) award, in each case that is a Qualifying Long-Term Incentive Award scheduled to vest in installments over time, all unvested options, SARs or similar units, shares of restricted stock or RSUs included in such award that are scheduled to vest on or before the date that is twelve (12) months after the Severance Date shall vest; and |
(b) | for each stock option, SAR or similar award, and for each non-performance-based restricted stock or RSU award, in each case that is a Qualifying Long-Term Incentive Award that is subject to cliff-vesting, a percentage of the award shall vest, with the percentage determined by dividing the twelve (12) months by the total number of months in the cliff-vesting period. |
1. | Qualifying Termination of Employment. An Executive will be eligible to receive the severance payments and benefits described in this Policy solely in the event of an Involuntary Termination by the Employer of the Executive's employment with the Employer. |
2. | Severance Payments and Benefits. Subject to the other provisions of this Policy, if an Executive incurs an Involuntary Termination, the Executive shall be entitled to receive the following from the Employer: |
(a) | Severance Payment. |
(b) | Annual Bonus Amount, provided that the Executive has been employed for at least one full calendar quarter during the year in which the Involuntary Termination occurs. |
(c) | Health Benefits. |
(d) | Outplacement Services. |
3. | Waiver and Release; Agreement to Comply with Covenants. An Executive shall not be eligible to receive a Severance Payment, Annual Bonus Amount, Health Benefits or Outplacement Services under the Policy unless the Executive (or, in the event of the death of the Executive, the executor, personal representative or administrator of the Executive's estate) first executes and delivers to the Company the Waiver and Release of Claims and Restrictive Covenant Agreement substantially in the form of Attachment 2 hereto within the timeframe specified in the written release (but in no event later than 45 days following the Severance Date) and such Waiver and Release of Claims and Restrictive Covenant Agreement becomes effective pursuant to its terms prior to the time that the Executive (or the Executive's estate, as applicable) is to receive all or any part of the Severance Payment, the Annual Bonus Amount, Health Benefits or Outplacement Services. |
4. | Timing of Payments; Taxes. The Severance Payment and any Health Benefits that are payable in cash shall be payable to the Executive in a lump sum payment within sixty days following the Severance Date. The Annual Bonus Amount shall be paid no later than March 15th of the year immediately following the year in which the Severance Date occurs. The Executive shall be liable for the payment of all Taxes. The Employer shall be entitled to withhold from amounts to be paid to the Executive hereunder any Taxes which it is from time to time required to withhold. |
5. | Disputes and Controversies. In the event that the Executive or a dependent of the Executive believes that he or she is not receiving the full amounts to which he or she is entitled under the Policy, such person may make a claim to the Employer Board and the claims procedure set forth in Section A of the Administrative Appendix to the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated in December 2008 and as subsequently amended from time to time (“DCP”), shall apply with the Employer Board treated as the Committee. Although claims for amounts under this Policy are governed by claims procedures under the DCP that also apply to ERISA-covered claims, neither this Policy nor any amounts payable hereunder are, or are intended to be, governed by ERISA. |
6. | Fees and Expenses; Mitigation. The Employer 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 the Policy. Such payment 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 Employer reasonably may require. The Employer shall not be obligated to pay legal fees and expenses incurred by any person other than the Executive or the Executive's successor in interest hereunder. However, the Employer shall be obligated to pay legal fees and expenses incurred by the Executive on behalf of the Executive's dependents and legal fees and expenses incurred by the estate of the Executive on behalf of the Executive or the Executive's dependents. |
(a) | Any Involuntary Termination shall be communicated by written notice from the Employer to the Executive in accordance with Section 8(i), and shall follow the applicable procedures set forth in this Section 7. A notice of termination for Cause shall 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 Employer Board at a meeting of the Employer Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive of no less than thirty (30) days and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Employer Board and to have no less than thirty (30) days to substantially cure the acts or omissions that are the basis for Executive's termination of employment) finding that, in the good faith opinion of the Employer 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. |
(b) | The notice of termination from the Employer shall specify the date of termination, which shall not be less than ten (10) days from the date such notice of termination is given. Once the Employer has specified a date of termination in a notice of termination, the date of termination may not be changed except by mutual consent of the Employer and the Executive. |
(a) | This Policy may be terminated or amended at any time in the sole discretion of the Company; provided that such action shall not affect the rights under the Policy of an Executive who incurs an Involuntary Termination prior to such action. |
(b) | Except as otherwise provided herein or by law, no right or interest of the Executive under the Policy shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of the Executive under the Policy shall be liable for, or subject to, any obligation or liability of such Executive. When a payment is due under the Policy to an Executive who is unable to care for his or her affairs, payment may be made directly to the Executive's legal guardian or personal representative. |
(c) | If the Employer, the Company or any Affiliate is obligated pursuant to applicable law or by virtue of being a party to a contract (other than this Policy) to pay severance pay, a termination indemnity, notice pay or the like to an Executive or if the Employer, the Company or any Affiliate is obligated by law to provide advance notice of separation ("Notice Period") to an Executive, then any Severance Payment made to the Executive hereunder shall be reduced by the amount of any such severance pay, termination indemnity, notice pay or the like, as applicable, and by the amount of any compensation received during any Notice Period. |
(d) | Neither the entering into of this Policy, nor the payment of any benefits hereunder shall be construed as giving an Executive, or any person whomsoever, the right to be retained in the service of the Employer, and the Executive shall remain subject to discharge to the same extent as if the Policy had never been executed. |
(e) | If any provision of the Policy shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Policy shall be construed and enforced as if such provisions had not been included. |
(f) | The Policy shall be binding upon and shall inure to the benefit of and be enforceable by the Employer and its successors and assigns, and by an Executive and by the personal and legal representatives, executors, administra-tors, successors, heirs, distributees, devisees and legatees of the Executive. If an Executive shall die while any amount would still be payable to the Executive (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 the Policy to the executors, personal representatives or administrators of the Executive's estate. |
(g) | The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Policy, and shall not be employed in the construction of the Policy. |
(h) | The Policy shall not be funded. No Executive shall have any right to, or interest in, any assets of the Employer which may be applied by the Employer to the payment of benefits or other rights under the Policy. |
(i) | All notices and all other communications provided for in the Policy (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 Employer, to the principal office of the Employer, attention President, and in the case of the Company, to 2211 Old Earhart Road, Ann Arbor, Michigan, 48105, attention President and General Counsel, and in the case of an Executive, to the last known address of the Executive, and (iii) shall be effective only upon actual receipt. |
(j) | This Policy shall be construed and enforced according to the laws of the State of Delaware (without giving effect to the conflict of laws principles thereof) to the extent not preempted by federal law, which shall otherwise control. |
(i) | a stock option, stock appreciation right (“SAR”) or similar award, or a restricted stock or restricted stock unit (“RSU”) award (whether cash-based or equity-based, and whether payable in cash or in stock); |
(ii) | that is outstanding on the Severance Date; |
(iii) | that has a vesting period that is longer than one year in duration; and |
(iv) | that is non-performance-based or, if performance-based, is based solely on changes in the price of the Company's common stock. |
(a) | for each stock option, stock appreciation right (“SAR”) or similar award, and for each non-performance-based restricted stock or restricted stock unit (“RSU”) award, in each case that is a Qualifying Long-Term Incentive Award scheduled to vest in installments over time, all unvested options, SARs or similar units, shares of restricted stock or RSUs included in such award that are scheduled to vest on or before the date that is twelve (12) months after the Severance Date shall vest; and |
(b) | for each stock option, SAR or similar award, and for each non-performance-based restricted stock or RSU award, in each case that is a Qualifying Long-Term Incentive Award that is subject to cliff-vesting, a percentage of the award shall vest, with the percentage determined by dividing the twelve (12) months by the total number of months in the cliff-vesting period. |
1. | I have reviewed this quarterly report on Form 10-Q of Con-way Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
November 2, 2012 | /s/ Douglas W. Stotlar |
Douglas W. Stotlar | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Con-way Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
November 2, 2012 | /s/ Stephen L. Bruffett |
Stephen L. Bruffett | |
Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 2, 2012 |
/s/ Douglas W. Stotlar | |
Name: | Douglas W. Stotlar |
Title: | Chief Executive Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 2, 2012 |
/s/ Stephen L. Bruffett | |
Name: | Stephen L. Bruffett |
Title: | Chief Financial Officer |
Share-Based Compensation (Share-Based Compensation Arrangement Expenses Recognized) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
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Sep. 30, 2011
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Sep. 30, 2012
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Sep. 30, 2011
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Salaries, wages and employee benefits | $ 1,542 | $ 316 | $ 11,371 | $ 9,485 |
Deferred income tax benefit | (596) | (89) | (4,414) | (3,665) |
Net share-based compensation expense | $ 946 | $ 227 | $ 6,957 | $ 5,820 |
Goodwill And Intangible Assets (Schedule Of Intangible Assets) (Details) (USD $)
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3 Months Ended | 9 Months Ended | ||||
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Sep. 30, 2012
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Sep. 30, 2011
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Sep. 30, 2012
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Sep. 30, 2011
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Sep. 30, 2012
Customer Relationships [Member]
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Dec. 31, 2011
Customer Relationships [Member]
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Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization expense | $ 800,000 | $ 900,000 | $ 2,400,000 | $ 2,500,000 | ||
Gross Carrying Amount | 23,098,000 | 27,570,000 | ||||
Accumulated Amortization | $ 11,512,000 | $ 13,619,000 |
Goodwill And Intangible Assets
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Sep. 30, 2012
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets | Goodwill and Intangible Assets Goodwill The following table shows the changes in the gross carrying amounts of goodwill attributable to each applicable segment:
Intangible Assets Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. In the third quarter and first nine months of 2012, amortization expense related to intangible assets was $0.8 million and $2.4 million, respectively, compared to $0.9 million and $2.5 million in the same periods of 2011. Intangible assets consisted of the following:
Estimated amortization expense for the next five years is presented in the following table:
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