Exhibit 10.21
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this "Agreement"),
dated as of ________________, is made and entered by and between Roadway
Corporation, a Delaware corporation (the "Company"), and ______________________
(the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company or
one or more of its Subsidiaries and has made and is expected to continue to make
major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most
companies, the possibility of a Change in Control (as defined below) exists;
WHEREAS, the Company desires to assure itself of both present
and future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executives, including the
Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior
executives are not practically disabled from discharging their duties in respect
of a proposed or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement
for the Executive to continue to remain in the employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as
follows:
1. Certain Defined Terms. In addition to terms defined
elsewhere herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:
(a) "Affiliate" means with respect to any Person, any
holder of more than 10% of the outstanding shares or equity interests of such
Person or any other Person which directly or indirectly controls, is controlled
by or is under common control with such Person. A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
"controlled" Person, whether through ownership of voting securities, by contract
or otherwise.
(b) "Base Pay" means the Executive's annual base salary
rate as in effect from time to time.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means that, prior to any termination pursuant
to Section 3(a)(iii), or Section 3(b), the Executive shall have:
(i) been convicted of a criminal violation
involving fraud, embezzlement, theft or violation of federal antitrust statutes
or federal securities laws in connection with his duties or in the course of his
employment with the Company or any Affiliate of the Company;
(ii) committed intentional wrongful damage to
property of the Company or any Affiliate of the Company; or
(iii) committed intentional wrongful disclosure of
secret processes or confidential information of the Company or any Affiliate of
the Company;
and any such act shall have been demonstrably and materially
harmful to the Company. For purposes of this Agreement, no act or failure to act
on the part of the Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be deemed
"intentional" only if done or omitted to be done by the Executive not in good
faith and without reasonable belief that the Executive's action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three quarters
of the Board then in office at a meeting of the Board called and held for such
purpose, after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel (if the Executive chooses to
have counsel present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, the Executive had committed an act
constituting "Cause" as herein defined and specifying the particulars thereof in
detail. Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any such determination.
(e) "Change in Control" means
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company where such acquisition causes
such Person to own 20% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not be deemed to result in a Change of Control: (A) any acquisition
directly from the Company that is approved by the Incumbent Board (as defined in
subsection (ii) below), (B) any acquisition by the Company, or (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company;
provided, further, that if any Person's beneficial ownership of the Outstanding
Company Voting Securities reaches or exceeds 20% as
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a result of a transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional voting securities of
the Company, such subsequent acquisition shall be treated as an acquisition that
causes such Person to own 20% or more of the Outstanding Company Voting
Securities; and provided, further, that if at least a majority of the members of
the Incumbent Board determines in good faith that a Person has acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% of more of the Outstanding Company Voting Securities
inadvertently, and such Person divests as promptly as practicable a sufficient
number of shares so that such Person beneficially owns (within the meanings of
Rule 13d-3 promulgated under the Exchange Act) less than 20% of the Outstanding
Company Voting Securities, then no Change of Control shall have occurred as a
result of such Person's acquisition; or
(ii) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board" (as modified by this clause (ii))
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for director, without
objection to such nomination) shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) The consummation of a reorganization, merger
or consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation, or
other transaction ("Business Combination") excluding, however, such a Business
Combination pursuant to which (A) the individuals and entities who were the
ultimate beneficial owners of voting securities of the Company immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
65% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, of the entity resulting from such
Business Combination (including, without limitation, an entity that as a result
of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) (B) no
Person (excluding any employee benefit plan (or related trust) of the Company,
the Company or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of the combined voting
power of the then outstanding securities entitled to vote generally in the
election of directors of the entity resulting from such Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company except pursuant to a
Business Combination described in clauses (A), (B) and (C) of subsection (iii),
above.
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(f) "Employee Benefits" means the perquisites, benefits
and service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or arrangements
in which Executive is entitled to participate, including without limitation any
stock option, performance share, performance unit, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement, or other
retirement income or welfare benefit, deferred compensation, incentive
compensation, group or other life, health, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company or an
Affiliate of the Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans, programs or
arrangements.
(g) "Incentive Pay" means an annual bonus, incentive or
other payment of compensation, in addition to Base Pay, made or to be made in
regard to services rendered in any year or other period pursuant to any bonus,
incentive, profit-sharing, performance, discretionary pay or similar agreement,
policy, plan, program or arrangement (whether or not funded) of the Company or
an Affiliate of the Company, or any successor thereto.
(h) "Retirement Plans" means the employee pension benefit
plans of the Company, and any Affiliate of the Company, whether or not qualified
under Section 401(a) of the Internal Revenue Code and any other employee pension
benefit plan that is a successor thereto if the Executive was a participant in
such Retirement Plan on the date of the occurrence of the Change in Control.
(i) "Severance Period" means the period of time
commencing on the date of the first occurrence of a Change in Control and
continuing until the earlier of (i) the second anniversary of the occurrence of
the Change in Control, or (ii) the Executive's death; provided, however, that
commencing on each anniversary of the Change in Control, the Severance Period
will automatically be extended for an additional year unless, not later than 90
calendar days prior to such anniversary date, either the Company or the
Executive shall have given written notice to the other that the Severance Period
is not to be so extended.
(j) "Subsidiary" means an entity in which the Company
directly or indirectly beneficially owns 50% or more of the Outstanding Company
Voting Securities.
(k) "Term" means the period commencing as of the date
hereof and expiring on the close of business on December 31, 2004; provided,
however, that (i) commencing on January 1, 2003 and each January 1 thereafter,
the term of this Agreement will automatically be extended for an additional year
unless, not later than September 30 of the immediately preceding year, the
Company or the Executive shall have given notice that it or the Executive, as
the case may be, does not wish to have the Term extended; (ii) if a Change in
Control occurs during the Term, the Term shall expire and this Agreement will
terminate at the expiration of the Severance Period; and (iii) subject to the
last sentence of Section 9, if, prior to a Change in Control, the Executive
ceases for any reason to be an employee of the Company and any Affiliate of the
Company, thereupon without further action the Term shall be deemed to have
expired and this Agreement will immediately terminate and be of no further
effect. For purposes of this Section 1(l), the Executive shall not be deemed to
have ceased to be an employee of the Company and any Affiliate of the Company by
reason of the transfer of Executive's employment between the Company and any
Affiliate of the Company, or among any Affiliates of the Company.
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(l) "Termination Date" means the date on which the
Executive's employment is terminated (the effective date of which shall be the
date of termination, or such other date that may be specified by the Executive
if the termination is pursuant to Section 3(b)).
2. Operation of Agreement. This Agreement will be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, except as provided in Section 9, this Agreement
will not be operative unless and until a Change in Control occurs. Upon the
occurrence of a Change in Control at any time during the Term, without further
action, this Agreement shall become immediately operative.
3. Termination Following a Change in Control.
(a) In the event of the occurrence of a Change in
Control, the Executive's employment may be terminated by the Company or an
Affiliate of the Company during the Severance Period and the Executive shall be
entitled to the benefits provided by Section 4 unless such termination is the
result of the occurrence of one or more of the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently
disabled within the meaning of, and begins actually to receive disability
benefits pursuant to, the long-term disability plan in effect for, or applicable
to, Executive immediately prior to the Change in Control; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is terminated by the
Company or any Affiliate of the Company other than pursuant to Section 3(a)(i),
3(a)(ii) or 3(a)(iii), the Executive will be entitled to the benefits provided
by Section 4 hereof.
(b) In the event of the occurrence of a Change in
Control, the Executive may terminate employment with the Company and any
Affiliate of the Company during the Severance Period with the right to severance
compensation as provided in Section 4 upon the occurrence of one or more of the
following events (regardless of whether any other reason, other than Cause as
hereinabove provided, for such termination exists or has occurred, including
without limitation other employment):
(i) Failure to elect or reelect or otherwise to
maintain the Executive in the office or the position, or a substantially
equivalent or better office or position, of or with the Company and/or an
Affiliate of the Company (or any successor thereto by operation of law or
otherwise), as the case may be, which the Executive held immediately prior to a
Change in Control, or the removal of the Executive as a Director of the Company
and/or an Affiliate of the Company (or any successor thereto) if the Executive
shall have been a Director of the Company and/or an Affiliate of the Company
immediately prior to the Change in Control;
(ii) (A) A significant adverse change in the
nature or scope of the authorities, powers, functions, responsibilities or
duties attached to the position with the Company and any Affiliate of the
Company which the Executive held immediately prior to the Change in Control, (B)
a reduction in the Executive's Base Pay received from the Company and
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any Affiliate of the Company, (C) a reduction in the target level of opportunity
for Incentive Pay, or (D) the termination or denial of the Executive's rights to
Employee Benefits or a reduction in the scope or value thereof, any of which is
not remedied by the Company within 10 calendar days after receipt by the Company
of written notice from the Executive of such change, reduction or termination,
as the case may be;
(iii) The liquidation, dissolution, merger,
consolidation or reorganization of the Company or the transfer of all or
substantially all of its business and/or assets, unless the successor or
successors (by liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its business and/or assets have
been transferred (by operation of law or otherwise) assumed all duties and
obligations of the Company under this Agreement pursuant to Section 11(a);
(iv) The Company relocates its principal
executive offices (if such offices are the principal location of Executive's
work), or requires the Executive to have his principal location of work changed,
to any location that, in either case, is in excess of 50 miles from the location
thereof immediately prior to the Change in Control, or requires the Executive to
travel away from his office in the course of discharging his responsibilities or
duties hereunder at least 20% more (in terms of aggregate days in any calendar
year or in any calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the three full years
immediately prior to the Change in Control without, in either case, his prior
written consent; or
(v) Without limiting the generality or effect of
the foregoing, any material breach of this Agreement by the Company or any
successor thereto which is not remedied by the Company within 10 calendar days
after receipt by the Company of written notice from the Executive of such
breach.
(c) A termination by the Company pursuant to Section 3(a)
or by the Executive pursuant to Section 3(b) will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company or an Affiliate of the Company providing Employee
Benefits, which rights shall be governed by the terms thereof.
4. Severance Compensation.
(a) If, following the occurrence of a Change in Control,
the Company or an Affiliate of the Company terminates the Executive's employment
during the Severance Period other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), or if the Executive terminates his employment pursuant to Section
3(b), the Company will pay to the Executive the amounts described in Annex A
within five business days after the Termination Date and will continue to
provide to the Executive the benefits described on Annex A for the periods
described therein.
(b) Without limiting the rights of the Executive at law
or in equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the Company will
pay interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite "prime rate" as quoted from time to
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time during the relevant period in the Midwest Edition of The Wall Street
Journal, plus 4%. Such interest will be payable as it accrues on demand. Any
change in such prime rate will be effective on and as of the date of such
change.
(c) Notwithstanding any provision of this Agreement to
the contrary, the parties' respective rights and obligations under this Section
4 and under Sections 5, 7, 8 and 9 will survive any termination or expiration of
this Agreement or the termination of the Executive's employment following a
Change in Control for any reason whatsoever.
(d) Unless otherwise expressly provided by the applicable
plan, program or agreement, after the occurrence of a Change in Control, the
Company shall pay in cash to the Executive a lump sum amount equal to the value
of any annual bonus or long-term incentive pay (including, without limitation,
incentive-based annual cash bonuses and performance units, but not including any
equity-based compensation or compensation provided under a qualified plan)
earned or accrued with respect to the Executive's service during the performance
period or periods that includes the date on which the Change in Control
occurred, disregarding any applicable vesting requirements; provided that such
amount shall be calculated at the plan target or payout rate, but prorated to
base payment only on the portion of the Executive's service that had elapsed
during the applicable performance period. Such payment shall take into account
service rendered through the payment date and shall be made at the earlier of
(i) the date prescribed for payment pursuant to the applicable plan, program or
agreement, or (ii) within five business days after the Termination Date.
(e) Notwithstanding any provision to the contrary in any
applicable plan, program or agreement, upon the occurrence of a Change in
Control, all equity incentive awards held by the Executive shall become fully
vested and all stock options held by the Executive shall become fully
exercisable.
5. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that this Agreement shall become operative and it
shall be determined (as hereafter provided) that any payment (other than the
Gross-Up payments provided for in this Section 5) or distribution by the Company
or any of its Affiliates to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option,
performance share, performance unit, stock appreciation right or similar right,
or the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"); provided, however, that no
Gross-up Payment shall be made with respect to the Excise Tax, if
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any, attributable to (i) any incentive stock option, as defined by Section 422
of the Code ("ISO") granted prior to the execution of this Agreement, or (ii)
any stock appreciation or similar right, whether or not limited, granted in
tandem with any ISO described in clause (i). The Gross-Up Payment shall be in an
amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(f), all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in his sole discretion. The Executive shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination Date, if
applicable, and any such other time or times as may be requested by the Company
or the Executive. If the Accounting Firm determines that any Excise Tax is
payable by the Executive, the Company shall pay the required Gross-Up Payment to
the Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Company and the Executive
an opinion that the Executive has substantial authority not to report any Excise
Tax on his federal, state or local income or other tax return. As a result of
the uncertainty in the application of Section 4999 of the Code (or any successor
provision thereto) and the possibility of similar uncertainty regarding
applicable state or local tax law at the time of any determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) and the Executive thereafter is required to make a payment of any Excise
Tax, the Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company to, or for
the benefit of, the Executive within five business days after receipt of such
determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Section 5(b). Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment shall be binding upon the Company
and the Executive.
(d) 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
payable by the Executive. The Executive shall make proper payment of the amount
of any Excise Tax, and at the request of the Company,
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provide to the Company true and correct copies (with any amendments) of his
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. If prior to the filing of the Executive's
federal income tax return, or corresponding state or local tax return, if
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Executive shall within five business days pay to the
Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Section 5(b) shall be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive the
full amount of such fees and expenses within five business days after receipt
from the Executive of a statement therefor and reasonable evidence of his
payment thereof.
(f) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following the date
on which he gives such notice to the Company and (ii) the date that any payment
of an amount with respect to such claim is due. If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) provide the Company with any written records
or documents in his possession relating to such claim reasonably requested by
the Company;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 5(f), the Company shall control all proceedings taken in connection with
the contest
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of any claim contemplated by this Section 5(f) and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim (provided,
however, that the Executive may participate therein at his own cost and expense)
and may, at its option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(f), the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5(f)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
any taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 5(f), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid by the
Company to the Executive pursuant to this Section 5.
6. No Mitigation Obligation. The Company hereby acknowledges
that it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date. Accordingly,
the payment of the severance compensation by the Company to the Executive in
accordance with the terms of this Agreement is hereby acknowledged by the
Company to be reasonable, and the Executive will not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor will any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive hereunder or otherwise, except as
expressly provided in the last sentence of Paragraph 2 set forth on Annex A.
7. Legal Fees and Expenses.
(a) It is the intent of the Company that the Executive
not be required to incur legal fees and the related expenses associated with the
interpretation, enforcement or defense of
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Executive's rights under this Agreement by litigation or otherwise because the
cost and expense thereof would substantially detract from the benefits intended
to be extended to the Executive hereunder. Accordingly, if it should appear to
the Executive that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
or threatens to take any action to declare this Agreement void or unenforceable,
or institutes any litigation or other action or proceeding designed to deny, or
to recover from, the Executive the benefits provided or intended to be provided
to the Executive hereunder, the Company irrevocably authorizes the Executive
from time to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether
the Executive prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys' and related fees and expenses incurred by the Executive in
connection with any of the foregoing.
(b) Without limiting the obligations of the Company
pursuant to Section 7(a) hereof, in the event a Change in Control occurs, the
performance of the Company's obligations under this Agreement, including,
without limitation, this Section 7 and Annex A, shall be secured by amounts
deposited or to be deposited in trust pursuant to certain trust agreements to
which the Company shall be a party providing that the benefits to be provided
hereunder and the fees and expenses of counsel selected from time to time by the
Executive pursuant to Section 7(a) shall be paid, or reimbursed to the Executive
if paid by the Executive, either in accordance with the terms of such trust
agreements, or, if not so provided, on a regular, periodic basis upon
presentation by the Executive to the trustee of a statement or statements
prepared by such counsel in accordance with its customary practices. Any failure
by the Company to satisfy any of its obligations under this Section 7(b) shall
not limit the rights of the Executive hereunder. Subject to the foregoing, the
Executive shall have the status of a general unsecured creditor of the Company
and shall have no right to, or security interest in, any assets of the Company
or any Affiliate of the Company.
8. Confidentiality; Nonsolicitation.
(a) During the Term, the Company agrees that it will
disclose to Executive its confidential or proprietary information (as defined in
this Section 8(a)) to the extent necessary for Executive to carry out his
obligations to the Company. The Executive hereby covenants and agrees that he
will not, without the prior written consent of the Company, during the Term or
thereafter disclose to any person not employed by the Company, or use in
connection with engaging in competition with the Company, any confidential or
proprietary information of the Company. For purposes of this Agreement, the term
"confidential or proprietary information" will include all information of any
nature and in any form that is owned by the Company and that is not publicly
available (other than by Executive's breach of this Section 8(a)) or generally
11
known to persons engaged in businesses similar or related to those of the
Company. Confidential or proprietary information will include, without
limitation, the Company's financial matters, customers, employees, industry
contracts, strategic business plans, product development (or other proprietary
product data), marketing plans, and all other secrets and all other information
of a confidential or proprietary nature. For purposes of the preceding two
sentences, the term "Company" will also include any Subsidiary (collectively,
the "Restricted Group"). The foregoing obligations imposed by this Section 8(a)
will not apply (i) during the Term, in the course of the business of and for the
benefit of the Company, (ii) if such confidential or proprietary information
will have become, through no fault of the Executive, generally known to the
public or (iii) if the Executive is required by law to make disclosure (after
giving the Company notice and an opportunity to contest such requirement).
(b) The Executive hereby covenants and agrees that during
the Term and for two years thereafter Executive will not, without the prior
written consent of the Company, which consent shall not unreasonably be
withheld, on behalf of Executive or on behalf of any person, firm or company,
directly or indirectly, attempt to influence, persuade or induce, or assist any
other person in so persuading or inducing, any employee of the Restricted Group
to give up, or to not commence, employment or a business relationship with the
Restricted Group.
9. Employment Rights. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or any
Affiliate of the Company prior to or following any Change in Control. Any
termination of employment of the Executive or the removal of the Executive from
the office or position in the Company or any Affiliate of the Company that
occurs following the commencement of any discussion with a third person that
ultimately results in a Change in Control, shall be deemed to be a termination
or removal of the Executive after a Change in Control for purposes of this
Agreement.
10. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any applicable law, regulation
or ruling.
11. Successors and Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding upon and inure to the
benefit of the Company and any successor to the Company, including without
limitation any persons acquiring directly or indirectly all or substantially all
of the business or assets of the Company whether by purchase, merger,
consolidation, reorganization or otherwise (and such successor shall thereafter
be deemed the "Company" for the purposes of this Agreement), but will not
otherwise be assignable, transferable or delegable by the Company.
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(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b). Without limiting the generality
or effect of the foregoing, the Executive's right to receive payments hereunder
will not be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by Executive's
will or by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
12. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier service
such as FedEx, UPS, or Purolator, addressed to the Company (to the attention of
the Secretary of the Company) at its principal executive office and to the
Executive at his principal residence, or to such other address as any party may
have furnished to the other in writing and in accordance herewith, except that
notices of changes of address shall be effective only upon receipt.
13. Governing Law. The validity, interpretation, construction
and performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Ohio, without giving effect
to the principles of conflict of laws of such State.
14. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstance is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstance will not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
15. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. References to Sections are to Sections of this
Agreement.
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16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered as of the date first above written.
ROADWAY CORPORATION
By: ____________________________________________
________________________________________________
14
Annex A
SEVERANCE COMPENSATION
(1) A lump sum payment in an amount equal to two times
the sum of (A) Base Pay (at the highest rate in effect for any period within
five years prior to the Termination Date), plus (B) Incentive Pay (in an amount
equal to not less than the highest target or payout Incentive Pay rate in any of
the five fiscal years immediately preceding the year in which the Change in
Control occurred).
(2) For a period of 24 months following the Termination
Date (the "Continuation Period"), the Company will arrange to provide the
Executive with Employee Benefits that are welfare benefits including, without
limitation, life insurance (but not stock option, performance share, performance
unit, stock purchase, stock appreciation or similar compensatory benefits or
benefits covered by (3) below) substantially similar to those that the Executive
was receiving or entitled to receive immediately prior to the Termination Date
(or, if greater, immediately prior to the reduction, termination, or denial
described in Section 3(b)(ii)). If and to the extent that any benefit described
in this Paragraph 2 is not or cannot be paid or provided under any policy, plan,
program or arrangement of the Company or any Affiliate of the Company, as the
case may be, then the Company will itself pay or provide for the payment to the
Executive, his dependents and beneficiaries, of such Employee Benefits along
with, in the case of any benefit described in this Paragraph 2 which is subject
to tax because it is not or cannot be paid or provided under any such policy,
plan, program or arrangement of the Company or any Affiliate of the Company, an
additional amount such that after payment by the Executive, or his dependents or
beneficiaries, as the case may be, of all taxes so imposed, the recipient
retains an amount equal to such taxes. Notwithstanding the foregoing, or any
other provision of the Agreement, for purposes of determining the period of
continuation coverage to which the Executive or any of his dependents is
entitled pursuant to Section 4980B of the Code (or any successor provision
thereto) under the Company's medical, dental and other group health plans, or
successor plans, the Executive's "qualifying event" shall be the termination of
the Continuation Period. Further, for purposes of the immediately preceding
sentence and for any other purpose including, without limitation, the
calculation of service or age to determine Executive's eligibility for benefits
under any life insurance plan or policy, the Executive shall be considered to
have remained actively employed on a full-time basis through the termination of
the Continuation Period. Without otherwise limiting the purposes or effect of
Section 6, Employee Benefits otherwise receivable by the Executive pursuant to
this Paragraph 2 will be reduced to the extent comparable welfare benefits are
actually received by the Executive from another employer during the Continuation
Period following the Executive's Termination Date, and any such benefits
actually received by the Executive shall be reported by the Executive to the
Company.
(3) In addition to the retirement income and other
benefits to which Executive is entitled under the Company's Retirement Plans
with respect to Executive's employment through the Termination Date, a lump sum
payment in an amount equal to the present value of the excess of (x) the
retirement income and other benefits that would be payable to the Executive
under the Retirement Plans if Executive had continued to be employed as an
active participant in the Company's Retirement Plans through the Continuation
Period given the Executive's Base Pay
A-1
and Incentive Pay (as determined in Paragraph 1) (without regard to any
amendment to the Retirement Plans made subsequent to a Change in Control which
reduces the retirement income or other benefits thereunder), over (y) the
retirement income and other benefits that the Executive is entitled to receive
(either immediately or on a deferred basis) under the Retirement Plans. For
purposes of this Paragraph 3, present value shall be determined by applying the
interest rate and mortality table used for the purpose of calculating benefits
under the Company's pension benefit plan.
(4) A lump sum payment in an amount equal to the cost of
providing medical coverage to the Executive from the expiration of the
Continuation Period until the Executive is eligible to receive Medicare.
(5) Reasonable fees for outplacement services, by a firm
selected by the Executive, at the expense of the Company in an amount not in
excess of 20% of the Executive's Base Pay.
(6) Financial counseling during the Continuation Period
in a manner similar to that provided to executive officers prior to a Change in
Control.
A-2
