Exhibit 99.1
EMPLOYMENT AGREEMENT
Xxxx X. Xxxxxxxxx ("Executive") and CNF Inc. ("Company"), for and in
consideration of the mutual promises and covenants hereinafter set forth, do
hereby enter into this Employment Agreement ("Agreement") as of June 4, 2005
(hereinafter, the "Effective Date").
1. Employment, Duties, and Responsibilities
1.1 Employment
Company hereby employs Executive and Executive accepts employment
and agrees to serve as Executive Advisor to the Chairman of the
Board of Company ("Chairman").
1.2 Duties and Responsibilities
Executive shall report directly to the Chairman and shall have
such duties and responsibilities as may be assigned to him from
time to time by the Chairman.
1.3 Term
This Agreement shall be effective from June 4, 2005 through
January 6, 2006.
1.4 Location of Employment
Company shall provide Executive with use of an office at Company's
headquarters when Executive's duties require that he discharge his
assignments at that location. At other times, Company agrees that
Executive may discharge his duties in a location that is mutually
acceptable to Executive and the Chairman.
1.5 Travel and Expense Reports
Executive shall be eligible to engage in business travel, as
requested by the Chairman, in accordance with Company's travel
policies applicable to executive officers of Company as of the
date such business travel is requested, and shall submit expense
reports for approval by the Chairman.
2. Compensation and Benefits
2.1 Base Salary
Executive's annual base salary shall be Five Hundred Twenty Six
Thousand Two Hundred Forty dollars, payable weekly through
Company's payroll system, less withholdings required by law or
otherwise authorized by Executive.
2.2 Incentive Compensation
For the period commencing on June 5, 2005 and ending on December
31, 2005, Executive shall be entitled to participate in Company's
standard annual Incentive Compensation Plan. For the period from
January 1, 2005 through June 4, 2005, Executive was entitled to
participate in the standard annual Incentive Compensation Plan
established for Menlo Worldwide, LLC. Executive's payment of
incentive compensation for 2005, if any, shall be pro rated
between Company's ICP plan and the ICP plan for Menlo Worldwide,
LLC, at his participation factor for 2005 of 100% of his annual
base salary, based on the number of weeks he was eligible to
participate under each such plan.
2.3 Lump Sum Payment
Not later than ten (10) days following the end of the term of this
Agreement, Company shall pay Executive a lump sum payment in the
gross amount of Three Million One Hundred Fifty Thousand dollars,
less withholdings required by law. The parties expressly agree
that this lump sum payment shall not be counted as basic
compensation for purposes of calculating any pension benefit for
Executive pursuant to Company's defined benefit pension plan or
Company's supplemental excess retirement plan.
2.4 Benefits
During the term of this Agreement, Executive shall remain eligible
to participate in each of Company's qualified and non-qualified
benefit plans in which he was an eligible participant immediately
preceding the effective date of this Agreement, including
Company's health plan, retirement plans, supplemental excess
retirement plans, life insurance plans, long term care insurance
plan, and deferred compensation plans; provided, however, that
nothing in this Agreement shall be construed to limit Company's
right to modify, amend or terminate any such plans according to
their terms.
2.5 Other Benefit Provisions
The parties agree that, except as expressly provided herein,
nothing in this Agreement shall be construed to limit, diminish,
enlarge, or otherwise modify any vested or accrued rights
Executive has, as of the date immediately preceding the Effective
Date of this Agreement, under Company's vacation and/or PTO
policies as well as Company's retirement plans, supplemental
excess retirement plans, health plan, life insurance plans, long
term care insurance plan (or discontinued plans in which Executive
was a participant, but as to which Executive retains rights),
including Company's: Value Management Plan for the three-year
cycle ending on December 31, 2005; Deferred Compensation Plan for
the years 2001 and 2002; and 1997 Equity and Incentive Plan, and
equity grants thereunder. For avoidance of doubt, the parties
agree that absent a termination by Executive without good reason,
as provided in Section 4.1.2, below, or a termination by Executive
to accept other employment, as provided in Section 4.1.3, below,
all of Executive's outstanding stock options and restricted stock
will continue to vest according to the time-based vesting schedule
specified in each of Executive's stock option agreements or
restricted stock award agreements.
2.6 Company Automobile
During the term of this Agreement, Executive shall continue to
have the use of the Company-provided automobile available to him
for his use immediately preceding the Effective Date of this
Agreement, or, in the discretion of Company, a comparable
replacement vehicle. Upon expiration of the term of this
Agreement, or termination prior to the end of the term of this
Agreement for any of the reasons provided in Section 4, below,
Executive shall return to the Company any Company-provided vehicle
available for his use at that time.
2.7 Gross-Up Payment
The parties agree that none of the payments or benefits to be
received by Executive in connection with this Agreement will be
subject to an Excise Tax and, accordingly, Executive agrees not to
file a tax return reporting an Excise Tax with respect to such
payments or benefits. If the Internal Revenue Service asserts
such an Excise Tax, Company shall have the right to participate in
the defense. If the Internal Revenue Service prevails, Company
shall pay to Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive,
after deduction of any Excise Tax on the total payments of any
federal, state, and local income and employment taxes and Excise
Taxes upon the Gross-Up Payment, shall be equal to the total
payments. For purposes of this Agreement, "Excise Tax" shall mean
any excise tax imposed under *4999 of the Internal Revenue Code or
its successors, specifically excluding without limitation (i) any
federal, state, or local income tax or employment tax and (ii) any
additional income tax payable pursuant to *409A of the Internal
Revenue Code or its successors.
3. Covenants and Commitments By Executive
3.1 Resignations
Executive agrees that he shall, as of the Effective Date of this
Agreement and in a form acceptable to Company, resign as an
officer and/or director of CNF Inc. and each and every CNF Inc.
subsidiary and affiliate as to which he was an officer and/or
director as of the date immediately preceding the Effective Date
of this Agreement. The parties agree that the foregoing
resignations shall not adversely affect Executive's continued
eligibility, level of benefits, or vesting in any benefit plan or
program of Company to which Executive would have been entitled
absent such resignations.
3.2 Mutual Non-Disparagement
Executive agrees that he shall not make, participate in the making
of, or encourage any other person to make, any statements, written
or oral, which criticize or disparage the goodwill or reputation
of Company, any of its subsidiaries or affiliates or any of their
respective past or present directors, officers, executives or
employees. Company agrees that it shall use its best reasonable
efforts to assure that none of its officers or directors make,
participate in the making of, or encourage any other person to
make, any statements, written or oral, which criticize or
disparage Executive.
3.3 Public Statements
Executive agrees that during the term of this Agreement, he shall,
only when requested in writing by the Chairman, make such public
statements or comments about Company, its performance, or its
business operations as may be requested by the Chairman, including
but not limited to written or oral communications with any of
Company's current or potential investors or any analysts of
Company's publicly traded securities.
3.4 Trade Associations
Executive agrees that during the term of this Agreement, he shall,
only when and as requested in writing by the Chairman, attend or
participate in meetings, seminars, symposia or other functions
sponsored by business or trade associations.
3.5 Sales Events
Executive agrees that during the term of this Agreement, he shall,
only when and as requested in writing by the Chairman, attend or
participate in sales events sponsored by Company or any of its
subsidiaries or affiliates.
3.6 Cooperation
Executive agrees that during the term of this Agreement, he will
comply fully with each and every reasonable request or instruction
by the Chairman pertaining directly or indirectly to Executive's
assigned duties.
3.7 Protection of Confidential Information
Executive agrees that he will not at any time, without the prior
written consent of an authorized officer of Company, either
directly or indirectly use, divulge or communicate to any person
or entity, in any manner, any privileged, confidential, or
proprietary information of any kind concerning any matters
affecting or relating to Company's or its subsidiaries' or
affiliates' business, except if the disclosure (i) is required by
law, (ii) involves information which had been lawfully revealed to
Executive by a third party having no
attorney-client or other confidentiality obligation to Company, or
(iii) involves information which is otherwise publicly available.
This prohibition against disclosure includes, but is not limited
to, Company's and its subsidiaries' and affiliates' legal matters,
technical data, systems and programs, financial and planning data,
business development or strategic plans or data, marketing or
branding strategies, software development, product development,
pricing, customer information, trade secrets, personnel
information, and other privileged or confidential business
information. Executive agrees to take every reasonable step to
protect such privileged, confidential, or proprietary information
from being disclosed to third parties. If Executive is required,
or believes he may be required to disclose such privileged,
confidential, or proprietary information pursuant to subpoena or
other legal process, he will give Company prompt notice so that
Company may object or take steps to prevent such disclosure.
3.8 Cooperation Following Termination
Executive agrees that he will, during the term of this Agreement
and for so long thereafter as Company may require, fully cooperate
with Company in handling its legal and other matters in which he
was involved or about which he has knowledge, such as answering
inquiries from Company or its counsel, testifying in depositions,
hearings, and trials, and engaging in other efforts on behalf of
Company and its subsidiaries and affiliates. Executive agrees
that following the term of this Agreement, he will make himself
available upon reasonable notice at reasonable times and places in
order to prepare for giving testimony, and to testify at
deposition, trial or other legal proceedings, without Company
having to serve him with a subpoena. Executive further expressly
agrees that following the term of this Agreement, he will not be
entitled to compensation, of any type or in any amount, for any of
this time expended in such proceedings; provided, however, that
Company agrees to reimburse Executive for reasonable out-of-pocket
costs and expenses he incurs as a result of his obligation to
cooperate with Company as provided herein.
3.9 Non-Solicitation
Executive agrees that during the term of this Agreement and for
one year following the Effective Date of this Agreement, he will
(i) refrain from encouraging any employee of Company or any of its
subsidiaries or affiliates to leave employment with Company, (ii)
refrain from soliciting any employee of Company or any of its
subsidiaries or affiliates to accept employment with any other
business enterprise, (iii) refrain from encouraging or assisting
any other person or entity in soliciting any employee of Company
or any of its subsidiaries or affiliates to accept employment with
any other business enterprise, and (iv) refrain from taking any
other action that would cause any employee of Company or any of
its subsidiaries or affiliates to leave their employment with
Company, whether to work for or with Executive in some other
business enterprise or otherwise.
4. Termination
4.1 Termination By Executive
4.1.1 For Good Reason
Company agrees that during the term of this Agreement, any
material failure by Company to comply with its obligations as
specified in Section 2, above, that is not corrected within ten
(10) days of receipt of written notice by Executive, shall
constitute good reason for Executive to terminate this Agreement.
The Parties further agree that termination for good reason by
Executive shall entitle Executive to a lump sum payment in an
amount equal to the sum of any and all amounts to which he would
otherwise be entitled if this Agreement continued in full force
and effect through its term, including without limitation the
value of his base salary, incentive compensation, and the lump sum
payment set forth in Section 2.3 above, the value of all benefits,
and the value of any stock options or restricted stock grants that
otherwise would vest on or prior to the end of the term of this
Agreement, according to the time-based vesting schedule specified
in each of Executive's stock option agreements or restricted stock
award agreements, as if Executive continued his employment through
the term of this Agreement.
4.1.2 Without Good Reason
Executive agrees that should he terminate this Agreement prior to
the end of its term for any reason other than good reason, as
specified above, including but not limited to his acceptance of
employment by any other business enterprise without the prior
consent of Company's board of directors, as provided in Section
4.1.3, below, Company shall have no obligation whatsoever to pay
him any further amount under this Agreement and further agrees
that any stock options or restricted stock grants that have not
vested according to the time-based vesting schedule specified in
each of Executive's stock option agreements or restricted stock
award agreements, by the date of such termination, shall lapse.
4.1.3 Acceptance of Other Employment
In the event that Executive elects to terminate this Agreement by
accepting employment with any other business enterprise, and
provided that Company's board of directors has first determined,
in its sole discretion, that such business enterprise is a non-
competing business and therefore consents to Executive's
termination prior to the end of the term of this Agreement,
Executive shall be entitled to receive the lump sum payment
specified in Section 2.3, above, not later than ten (10) days
following receipt of written notice from Executive of his decision
to accept such other employment. In the event that Executive
elects to terminate this Agreement by accepting such other
employment, Executive agrees that from and after the date of
receipt by Company of his written notice to Company of such
decision, Company shall have no obligation whatsoever to pay him
any further amount under this Agreement (save only the lump sum
payment as provided herein), and further agrees that any stock
options or restricted stock grants that have not vested according
to the time-based vesting schedule specified in each of
Executive's stock option agreements or restricted stock award
agreements, by the date of written notice from Executive of his
decision to accept such other employment, shall lapse.
4.2 Termination By Company
4.2.1 For Cause
Executive agrees that Company may terminate Executive's
employment, and this Agreement, at any time during the Term of
this Agreement for cause. For purposes of this Agreement, "cause"
shall mean: (i) an intentional act of fraud or dishonesty by
Executive in connection with his employment; (ii) Executive's
conviction of any felony, or a misdemeanor involving dishonesty;
(iii) an act of gross misconduct by Executive that is injurious or
potentially injurious to Company; (iv) wrongful disclosure by
Executive of confidential information, in contravention of his
obligations in Section 3.7, above; (v) failure by Executive to
refrain from acting as a consultant, agent or employee for any
other business enterprise; and/or (vi) a willful failure by
Executive to substantially perform his duties under this
Agreement, provided that such failure results in significant harm
to Company's business operations or impairment to Company's
strategic plans, but excluding a failure resulting from
Executive's complete or partial incapacity due to physical or
mental illness or impairment, if such incapacity, illness or
impairment is supported by documentation provided to Company by a
licensed medical practitioner. Prior to terminating Executive's
employment pursuant to clause (vi) herein, Company shall provide
Executive written notice of his failure to perform his duties,
stating specific examples of such failure, the nature of the harm
to Company's business operations or impairment of Company's
strategic plans, and specific corrective actions Executive must
take to be in compliance. Further, prior to terminating
Executive's employment pursuant to clause (vi) herein, Executive
shall have a reasonable opportunity, not exceeding thirty (30)
days from receipt of such notice to correct his failure. Any
termination by Company for cause shall first be approved by
Company's board of directors. In the event of termination by
Company for cause, Executive agrees that Company's obligations
shall be identical to its obligations as specified in Section
4.1.2, above.
4.2.2 Without Cause
Company agrees that in the event Company terminates this Agreement
other than for cause, as specified above, Executive shall be
entitled to the same payments and benefits as specified in Section
4.1.1, above.
4.3 Severance
Executive agrees that this Agreement shall supersede and
extinguish any current or prior agreements with Company and/or its
subsidiaries or affiliates for compensation or benefits that might
otherwise be payable to Executive in the event of a change in
control, including his Severance Agreement with Company and his
Severance Agreement with Menlo Worldwide, LLC. Executive
expressly waives any rights he may have under such agreements,
including but not limited to any claim that any stock options or
restricted stock awards are or were subject to accelerated vesting
as a result of any change in control, or otherwise.
5. General Release and Waiver of Unknown Claims
5.1 General Release
In consideration of the foregoing benefits, and for other valuable
consideration, Executive and his representatives, heirs,
successors, and assigns do hereby completely release and forever
discharge Company and any present or past subsidiaries and
affiliates, and its and their present and former shareholders,
officers, directors, agents, employees, attorneys, insurers,
successors, and assigns (collectively, "Released Parties") from
all claims, rights, demands, actions, obligations, liabilities,
and causes of action of every kind and character, known or
unknown, mature or unmatured, which Executive may now have or has
ever had, whether based on tort, contract (express or implied), or
any federal, state, or local law, statute, public policy, or
regulation (collectively, "Released Claims"). By way of example
and not in limitation of the foregoing, Released Claims shall
include any claims arising under Title VII of the Civil Rights Act
of 1964, the Americans with Disabilities Act and any and all other
federal, state and local equal employment opportunity laws; any
claims for benefits or payments under his executive Severance
Agreements with CNF Inc. and Menlo Worldwide, LLC, or any prior
such agreements, including any claim that any stock options or
restricted stock awards are or were subject to accelerated vesting
as a result of any change in control, or otherwise; any statutory
or common law claims asserting breach of contract, breach of the
covenant of good faith and fair dealing, infliction of emotional
distress, misrepresentation, interference with contract or
prospective economic advantage, defamation, invasion of privacy,
claims of retaliation, wrongful discharge, or wrongful
termination; and any claims for benefits arising under welfare
plans sponsored or adopted by Company and/or any affiliate.
Executive likewise releases the Released Parties from any and all
obligations for attorneys' fees incurred in regard to the above
claims, or otherwise. Notwithstanding the foregoing, Released
Claims shall not include (i) any claims based on obligations
created by or reaffirmed in this Agreement; (ii) any obligation
Company may have for any compensation earned by and due Executive
for work performed on or prior to the Effective Date of this
Agreement; and (iii) any claims for indemnification under
Company's and/or its affiliates' By-laws or insurance contracts
attributable to Executive's service as a director, officer or
employee of Company and/or its affiliates (including
indemnification for attorney's fees); (iv) claims arising out of
acts or omissions on or after the date of Executive's execution of
this Agreement; and (v) claims for industrial injury or illness
arising under any workers' compensation law.
5.2 Waiver of Unknown Claims
The parties understand and agree that Released Claims include not
only claims presently known to Executive, but also include all
unknown or unanticipated claims, rights, demands, actions,
obligations, liabilities, and causes of action of every kind and
character that would otherwise come within the scope of Released
Claims as described in Section 5.1 above. Executive understands
that he may hereafter discover facts different from what he now
believes to be true, which if known, could have materially
affected this Agreement, but he nonetheless waives any claims or
rights based on different or additional facts. Therefore,
Executive waives any and all rights or benefits which he may now
have, or in the future may have, under the terms of Section 1542
of the California Civil Code which provides as follows:
A general release does not extend to claims which the
Creditor does not know or suspect to exist in his or her
favor at the time of executing the release, which if known
by him or her must have materially affected his or her
settlement with the debtor.
6. Covenant Not to Xxx
Executive shall not xxx or initiate against any Released Party any
compliance review, action, or proceeding, or participate in the same,
individually or as a member of a class, under any contract (express or
implied), or any federal, state or local law, statute, or regulation
pertaining in any manner to Released Claims. Executive agrees that in
the event he brings any action or proceeding against Company in
contravention of this Section 6, Company shall be entitled to recover
its costs and reasonable attorney's fees incurred in defense of such
action or proceeding.
7. Nonadmission
The parties understand that this Agreement is, in part, a compromise
settlement of disputed claims and that the furnishing of the
consideration for this Agreement shall not be deemed or construed at any
time or for any purpose as an admission of liability by Company. The
liability for any and all claims is expressly denied by Company.
8. Integration
This Agreement is final, complete, exclusive, unambiguous, and fully
integrated with respect to its subject matter, such that no parol or
other evidence shall be admissible to contradict, explain, or supplement
this Agreement. All prior employment agreements, severance agreements,
settlement agreements, negotiations, drafts, representations,
stipulations, summaries, notices, and proposals by either party with
respect to the subject matter of this Agreement are merged herein,
extinguished, and superseded, except to the extent that the same have
been expressly referred to in this Agreement as having continued effect.
The parties understand and agree that this Agreement recites the sole
consideration to be provided by Company to Executive and Executive's
commitments and obligations to Company. Executive stipulates and agrees
that no representation or promise has been made to Executive by Company,
or any person or entity, except as recited expressly in this Agreement.
All agreements and understandings between the parties concerning
compensation, fees and benefits to be provided to Executive are embodied
and expressed in this Agreement.
9. Assignment, Successors and Assigns
Executive agrees that he will not assign, sell, transfer, delegate, or
otherwise dispose of, whether voluntarily or involuntarily, or by
operation of law, any rights or obligations under this Agreement. Any
such purported assignment, transfer, or delegation shall be null and
void. Executive represents that he has not previously assigned or
transferred any rights or obligations under this Agreement. Subject to
the foregoing, this Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, successors, and
permitted assigns. In the event of Executive's death prior to the end
of the term of this Agreement, or prior to Executive's receipt of the
payments and benefits to which he would be entitled by remaining
employed through the term of this Agreement but for his death,
Executive's estate shall be entitled to receive the same payments and
benefits as provided in Section 4.1.1, above, provided, however, that
Executive's estate shall not be entitled to (i) continued use of
Executive's company car, (ii) payment of Executive's salary from the
date of his death through the end of the term of this Agreement, (iii)
payment of annual incentive compensation in excess of the amount pro-
rated for Executive's employment prior to Executive's death, (iv)
vesting of any restricted stock that would not, by the terms of any
restricted stock award agreement, vest upon Executive's death, or (v)
benefits in excess of benefits available pursuant to the terms of
Company's benefits plans. This Agreement shall not benefit any other
person or entity except as specifically enumerated in this Agreement.
10. Severability
If any provision of this Agreement, or its application to any person,
place, or circumstance, is held by an arbitrator or a court of competent
jurisdiction to be invalid, unenforceable, or void, such provision shall
be enforced to the greatest extent permitted by law, and the remainder
of this Agreement and such provision as applied to other persons,
places, and circumstances shall remain in full force and effect.
11. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
12. Interpretation
This Agreement shall be construed as a whole, according to its fair
meaning, and not in favor of or against any party. By way of example
and not in limitation, this Agreement shall not be construed in favor of
the party receiving a benefit or against the party responsible for any
particular language in this Agreement. Captions are used for reference
purposes only and should be ignored in the interpretation of this
Agreement.
13. Attorneys Fees and Costs
The parties agree that in the event of a breach of this Agreement or any
provision thereof, the party who is found not to be in breach shall be
entitled to recover costs and reasonable attorney's fees.
14. Arbitration of Disputes/Venue
In the event of any controversy arising from or concerning the
interpretation or application of this Agreement, including the
arbitrability of such controversy, whether such controversy is grounded
in common or statutory law, the parties agree that such controversy
shall be resolved exclusively through binding arbitration in Santa Xxxxx
County, California before a single neutral arbitrator selected jointly
by the parties. The parties agree that this Section 14 establishes a
post-dispute arbitration agreement and stipulate, with the advice of
counsel or the opportunity to obtain such advice, that the same is not
an adhesive or unconscionable contract. The parties to the arbitration
shall have all rights, remedies, and defenses available to them in a
civil action for the issues in controversy. The Company shall be
unconditionally responsible for the fees and expenses of the arbitrator.
If, for any legal reason, a controversy subject to this Section 14
cannot be arbitrated as provided above, the parties agree that any civil
action shall be brought in the United States District Court for the
Northern District of California, San Xxxx Division, or, only if there is
no basis for federal jurisdiction, in the Superior Court of the State of
California in and for the County of Santa Xxxxx, and that the prevailing
party in any such action shall be entitled to recover costs and
reasonable attorney's fees. The parties further agree that any such
civil action shall be tried to the court, sitting without a jury. The
parties knowingly and voluntarily waive trial by jury.
15. Representation by Counsel
The parties acknowledge that (i) they have had the opportunity to
consult with counsel in regard to this Agreement, (ii) they have read
and understand the Agreement and they are fully aware of its legal
effect, and (iii) they are entering into this Agreement freely and
voluntarily, and based on each party's own judgment and not on any
representations or promises made by the other party, other than those
contained in this Agreement.
16. Notice
Any written notice that Executive is required to provide by the terms of
this Agreement shall be addressed to the Chairman of the Board of
Company. Any written notice that Company is required to provide by the
terms of this Agreement shall be addressed to Executive.
The parties have duly executed this Agreement as of the dates set forth
below.
