EXHIBIT 10.22
CONSOLIDATED FREIGHTWAYS CORPORATION
MANAGEMENT CHANGE-OF-CONTROL PLAN
INTRODUCTION
The Consolidated Freightways Corporation Management Change-
of-Control Plan (the "Plan") is hereby adopted by the Board of
Directors (the "Board") of Consolidated Freightways Corporation,
a Delaware corporation (the "Company"), effective as of December
8, 1998. The Plan is intended to provide members of management
who are Participants in the Plan with the benefits specified
herein in the event of a Change of Control.
Certain capitalized terms used in the Plan are defined in
Article 10.
ARTICLE 1
ESTABLISHMENT OF THE PLAN
1.1 Establishment of Plan. As of the date of this
Agreement, the Company hereby establishes a plan to be known as
the "Management Change-of-Control Plan" (the "Plan"), which shall
contain the terms and conditions set forth herein.
1.2 Applicability of Plan. The benefits provided by the
Plan shall be available to all Participants, unless otherwise
specifically provided.
ARTICLE 2
ELIGIBILITY
2.1 Participation. All corporate officers of the Company,
Consolidated Freightways Corporation of Delaware and the
President of Canadian Freightways Limited, as of the date hereof
will be Participants in the Plan. The Board of Directors or the
Compensation Committee of the Board, who have executed a copy of
this Plan, (the "Compensation Committee") may, in its sole
discretion, designate additional members of management or
employees of the Company or any other corporation or entity that
directly or indirectly controls, is controlled by, or is under
common control with the Company (an "Affiliate") to be
Participants in the Plan and, subject to the terms of
Section 2.2, may decide that members of management or employees
who have been designated as Participants in the Plan shall no
longer be Participants. Notwithstanding any of the foregoing
provisions of this Section 2.1 or elsewhere in the Plan to the
contrary, no person otherwise eligible shall be a Participant if
such person has entered into an employment agreement with the
Company or an Affiliate of the Company which expressly provides
for severance benefits in the event of the termination of such
person's employment relationship with the Company or its
Affiliate, as appropriate.
2.2 Duration of Participation. A Participant shall cease
to be a Participant in the Plan upon a determination thereof by
the Board or the Compensation Committee; provided, however, that
in no event shall any such determination impair a Participant's
rights under this Plan with respect to benefits that have accrued
at or prior to such determination. Without limiting the
foregoing, if a Participant is then entitled to payment of
benefits under the Plan as a result of a Change of Control that
occurred at or prior to the time of such determination, such
Participant shall remain a Participant in the Plan until the full
amount of such benefits has been paid to such Participant. In no
event shall any Participant be entitled to benefits pursuant to
this Plan with respect to a Change of Control that occurs after
the termination of such Participant's employment with the
Company, for any reason or for no reason, and nothing in this
Plan shall alter the status of each Participant as an at-will
employee of the Company.
ARTICLE 3
SEVERANCE BENEFITS
3.1 Right to Severance Benefits. If the Change of Control
is consummated while the Plan remains in effect, and a
Participant is either (i) terminated by the Company or an
Affiliate of the Company employing such Participant without Cause
or (ii) voluntarily terminates such employment with Good Reason,
such Participant shall be entitled to receive Severance Benefits
from the Company as set forth in Section 3.2; provided, however,
that the Participant's termination of employment occurs either at
the time of or not more than twenty four (24) months after a
Change of Control.
3.2 Determination of Severance Benefits. If, after a
Change of Control, any Participant has a right to receive
Severance Benefits pursuant to Section 3.1 above, Severance
Benefits shall be determined as follows:
(a) Such Participant will receive as a lump sum cash
payment the equivalent of one (1) times Base Salary and his or
her Target Bonus. Such Participant shall also receive an
additional one (1) year's age and service credit under the
Company's defined benefit pension plan and supplemental
retirement plan as if Participant had continued to perform
services for such period with the same amount of Base Salary and
Target Bonus.
(b) The Company shall pay the premiums for the
terminated Participant and for the eligible spouse and other
COBRA qualified beneficiaries of the terminated Participant for
the health insurance continuation benefits provided under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, ("COBRA"), and Section 4980B of the Internal Revenue
Code of 1986, as amended (the "Code"), for the maximum period
provided by law for such qualified beneficiary's COBRA
continuation rights, but in any event not to exceed one (1) year
from the date of Participant's termination of employment.
3.3 Time of Severance Payment. The portions of the
Severance Benefits payable in cash shall be paid by the Company
in lump sum in cash not later than thirty (30) days following the
Date of Termination (as defined in Section 3.7).
3.4 No Mitigation. The Participant shall not be required
to mitigate the amount of the Severance Benefits by seeking other
employment or otherwise, and any amount earned by the Participant
as the result of employment by another employer after the Date of
Termination shall not reduce the Severance Benefits.
3.5 Withholding. The Company shall withhold appropriate
federal, state, local and foreign income and employment taxes
from any payments hereunder.
3.6 Notice of Termination. Any termination by the Company
or its Affiliate for Cause or by the Company for termination of
the Plan or by the Participant for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given by hand delivery or by registered or certified mail, return
receipt requested, postage prepaid, if to the Participant, to the
Participant at the Participant's address as set forth in the
Company's records, and, if to the Company, to Consolidated
Freightways Corporation, 175 Linfield Drive, Menlo Park, CA
94025, or to such other address as may be designated by the
Company. Any notices given pursuant to this Section 3.6 shall be
effective on the earlier of the date on which such notice is
actually received by the addressee or the date that is three days
after such notice is sent by the addressor. For purposes of the
Plan, a "Notice of Termination" means a written notice which (i)
indicates the provisions in the Plan that are affected by such
termination and (ii) if the Date of Termination, as defined
below, is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice). The failure
by the Company or the Participant to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Cause or of Good Reason shall not waive any right of
the Company or of the Participant, respectively, hereunder or
preclude the Company or the Participant, respectively, from
asserting such fact or circumstance in enforcing its or his/her
rights hereunder.
3.7 Date of Termination. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that if
the Participant's employment is terminated by the Company or its
Affiliate other than for Cause, the Date of Termination shall be
the date on which the Company notifies the Participant of such
termination or such later date specified by the Company.
3.8 Certain Reduction of Payments. In the event that any
distribution received or to be received by a Participant pursuant
to the Plan ("Distribution") would (i) constitute a "parachute
payment" within the meaning of Section 280G of the Code and (ii)
be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then such Distribution shall be reduced to
the largest amount which would result in no portion of the
Distribution being subject to the Excise Tax or such Distribution
may be paid in full, whichever produces the better after-tax
result for the Participant. Necessary calculations will be
prepared by a mutually acceptable accounting firm, paid in full
by the Company.
As a condition of receiving benefits under this Agreement,
Participant may not directly solicit employees or full-time
consultants of the Company to leave during his/her employment
with the Company or for a period of two years from termination of
employment. Participant shall also waive any known or unknown
claim against the Company and its Affiliates, including, if
applicable, any acquiring corporation, other than those arising
under the Agreement. Participant shall sign an appropriate
release if so requested.
ARTICLE 4
PAYMENTS TO AND FROM THE PLAN
The cash benefits under the Plan shall be paid from the
general funds of the Company (by certified or official bank check
or wire transfer of immediately available funds to an account
designated by the applicable Participant), and the Participants
shall be no more than unsecured general creditors of the Company.
ARTICLE 5
OTHER RIGHTS AND BENEFITS NOT AFFECTED
5.1 Nonexclusivity. Nothing in the Plan shall prevent or
limit any Participant's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or
practices provided by the Company or its affiliates and for which
a Participant may otherwise qualify, nor shall anything herein
limit or otherwise affect such rights as any Participant may have
under any stock option or other agreements with the Company.
Except as otherwise expressly provided herein, amounts which are
vested benefits or which a Participant is otherwise entitled to
receive under any plan, policy, practice or program of the
Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or
program. Provided, however, Participant shall be entitled within
thirty (30) days of the Date of Termination to be paid a pro-rata
portion of Participant's Target Bonus based upon performance of
the Company and/or an Affiliate and/or as otherwise provided in
the annual bonus plan against the plan objectives.
5.2 Employment Status. The Plan does not constitute a
contract of employment or impose on any Participant, the Company
or any of the Company's affiliates any obligation to retain any
Participant as an employee, to change the status of the
Participant's employment, or to change the Company's or
affiliate's policies regarding termination of employment. In no
event shall any Participant be entitled to benefits pursuant to
this Plan with respect to a Change of Control that occurs after
the termination of such Participant's employment with the
Company, for any reason or for no reason, and nothing in this
Plan shall alter the status of each Participant as an at-will
employee of the Company.
ARTICLE 6
SUCCESSOR TO COMPANY
The Plan shall be binding upon any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of
the Company and any parent company, and any such successor or
assignee and parent company, if any, shall be required to perform
the Company's obligations under the Plan, in the same manner and
to the same extent that the Company would be required to perform
if no such succession or assignment had taken place. In such
event, the term "Company," as used in the Plan, shall mean the
Company, and any successor or assignee to the business or assets
and any parent company, which by reason hereof becomes bound by
the terms of the Plan.
ARTICLE 7
AMENDMENT AND TERMINATION; ADMINISTRATIVE AUTHORITY
7.1 Amendment or Termination. The Board may amend or
terminate this Plan at any time. Notwithstanding the foregoing,
the Plan shall not terminate, expire or be adversely amended with
respect to any Participant who becomes entitled to benefits
hereunder until such Participant has received such payments or
other rights in full, nor shall the Plan be terminated or
adversely amended with respect to any Participant without the
written consent of such Participant at any time during the twenty
four (24) month period commencing with the occurrence of a Change
of Control.
7.2 Administrative Authority. The Company shall have the
responsibility and authority to establish rules, forms and
procedures for the administration of the Plan, and to construe
and interpret the Plan and to decide any and all questions of
fact, interpretation, definition, computation or administration
arising in connection with the operation of the Plan, including,
but not limited to, the eligibility to participate in the Plan
and amount of benefits paid under the Plan.
ARTICLE 8
NON-TRANSFER OF BENEFITS
No benefit hereunder shall be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to do so shall be void.
ARTICLE 9
LEGAL CONSTRUCTION AND ARBITRATION
9.1 Applicable Law. This Plan shall be construed in
accordance with the laws of the State of California without
regard to the conflict of laws provisions thereof.
9.2 Arbitration. Any and all disputes or controversies,
whether of law or fact of any nature whatsoever, arising from or
respecting the application of the Plan to any Participant shall
be decided by arbitration by the American Arbitration Association
in accordance with the rules and regulations of that Association,
or by any other arbitration body mutually agreed upon by the
parties. Pre-arbitration discovery shall be permitted at the
request of either party to a dispute under appropriate protection
for proprietary and confidential business information.
The arbitrators shall be selected as follows: the Company
and the Participant who is a party to the dispute shall each
select one independent, qualified arbitrator and the two
arbitrators so selected shall select the third arbitrator. The
Company reserves the right to disqualify any individual
arbitrator who shall be employed by or affiliated with a
competing organization. The Company will pay all of the costs of
any arbitrator hired to resolve a dispute as determined by the
American Arbitration Association.
Arbitration shall take place in San Mateo County,
California, or any other location mutually agreeable to the
parties. At the request of either party, arbitration proceedings
will be conducted in the utmost secrecy and, in such case, all
documents, testimony and records shall be received, heard and
maintained by the arbitrators in secrecy under seal, available
for inspection only by the parties to the arbitration, their
respective attorneys, and their respective expert consultants or
witnesses who shall agree, in advance and in writing, to receive
all such information confidentially and to maintain such
information in secrecy, and make no use of such information
except for the purposes of the arbitration, until such
information shall become generally known.
The arbitrators, who shall act by majority vote, shall be
able to decree any and all relief of an equitable nature,
including but not limited to such relief as a temporary
restraining order, a temporary injunction, or a permanent
injunction, and shall also be able to award damages, with or
without an accounting and costs. The decree or judgment of an
award rendered by the arbitrators may be entered and enforced in
any court having jurisdiction over the parties.
Reasonable notice of the time and place of arbitration shall
be given to persons other than the parties, if such notice is
required by law, in which case such persons or their authorized
representatives shall have the right to attend or participate in
the arbitration hearing in such manner as the law shall require.
If any action is necessary to enforce or interpret the
application of the Plan to a Participant, then that Participant
shall be entitled to reasonable attorneys fees, costs, and
necessary disbursements in addition to any other relief to which
that Participant may be entitled, if any, under all circumstances
regardless of the outcome of the action.
ARTICLE 10
DEFINITIONS
For purposes of the Plan, the following terms shall have the
meanings set forth below.
10.1 "Base Salary" means the greater of the Participant's
base salary on the date hereof, or on the date of the Change-of-
Control. In no event may Base Salary be reduced.
10.2 "Cause" means the occurrence of any of the following:
(a) any intentional action or intentional failure to act by
Participant which was performed in bad faith and to the material
detriment of the Company; (b) Participant intentionally refuses
or intentionally fails to act in accordance with any lawful and
proper direction or order of the Board; (c) Participant willfully
and habitually neglects the duties of employment; or (d)
Participant is convicted of a felony crime involving fraud or an
act of dishonesty against the Company, provided that in the event
that any of the foregoing events is capable of being cured, the
Company shall provide written notice to Participant describing
the nature of such event and Participant shall thereafter have
ten (10) business days to cure such event.
10.3 "Change-of-Control" means any one of the following:
(a) The Company is merged, or consolidated, or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than 50% of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by
the holders of voting securities of the Company immediately prior
to such transaction;
(b) The Company sells at least fifty percent (50%) of
its assets in a twelve (12) month period to any other corporation
or other legal person and thereafter, less than 50% of the
combined voting power of the then-outstanding voting securities
of the acquiring or consolidated entity are held in the aggregate
by the holders of voting securities of the Company immediately
prior to such sale;
(c) There is a report filed after the date of this
Agreement on Schedule 13D or Schedule 14 D-1 (or any successor
schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act") disclosing
that any person (as the term "person" is used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) representing 25% or more of the combined voting
power of the then-outstanding voting securities of the Company;
(d) The Company shall file a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to item 1 of Form 8-X
thereunder or Item 5(f) of Schedule 14A thereunder (or any
successor schedule, form or report or item therein) that the
change in control of the Company has or may have occurred or will
or may occur in the future pursuant to any then-existing contract
or transaction;
(e) During any period of two consecutive years,
individuals who at the beginning of any such period constitute
the directors of the Company cease for any reason to constitute
at least a majority thereof unless the election or the nomination
for election by the Company's shareholders of each director of
the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the
beginning of such period (an "Incumbent Director"), and any
director so approved shall be treated as an Incumbent Director in
the future; or
(f) the liquidation or dissolution of the Company.
10.4 "Company" means Consolidated Freightways Corporation,
Consolidated Freightways Corporation of Delaware, and any
successor as provided in Article 6 hereof.
10.5 "Date of Termination" has the meaning set forth in
Section 3.7.
10.6 "Effective Date" shall mean December 8, 1998.
10.7 "Good Reason" means any action taken by the Company or
its successor, as the case may be, that results in a
(i) reduction of Participant's Base Salary and/or Target Bonus
opportunity as in effect immediately prior to the Effective Date
of the Plan or in effect immediately prior to the occurrence of a
Change of Control, whichever is greater, (ii) failure to provide
a package of welfare benefit plans, pension benefit plans, and
fringe benefits for employees of the Company and its Affiliates
and to other officers of the Company and its Affiliates (other
than senior executive officers) which, taken as a whole, provides
substantially similar benefits to those in which the Participant
is entitled to participate immediately prior to the Commencement
Date of this Agreement or that in effect prior to the occurrence
of a Change-of-Control, whichever is greater, or any action by
the Company which would materially adversely affect Participant's
participation or materially reduce Participant's benefits under
any of such plans, (iii) change in Participant's
responsibilities, authority, title (excluding the Corporate
Secretary title), office, or reporting relationships resulting in
diminution of position, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith which
is remedied by the Company promptly after notice thereof is given
by Participant, and excluding the reporting to the equivalent
senior level executive at the Company or the parent company of
the Company, (iv) request that Participant relocate to a worksite
that is more than 15 miles from his or her prior worksite, unless
Participant accepts such relocation opportunity, (v) material
reduction in Participant's duties (excluding the Corporate
Secretary function), (vi) failure or refusal of a successor to
the Company or a parent company to assume the Company's
obligations under this Agreement, as provided in Article 6,
(vii) material breach by the Company or any successor to the
Company of any of the material provisions of this Agreement, or
(viii) failure to provide a package of welfare benefit plans,
pension benefits, and fringe benefits for Participants made
available to employees of the Company and its Affiliates and to
other officers (other than senior executive officers) of the
Company and its Affiliates. In the event of a Change of Control
of the Company in which the Company shall become a division or
subsidiary of a larger organization, references to the
Participant's title with the Company shall be deemed to mean the
equivalent position with such division or subsidiary for purposes
of this Section 10.7, and shall not be deemed to be a Good Reason
under this Section 10.7.
10.8 "Notice of Termination" has the meaning set forth in
Section 3.6.
10.9 "Participant" shall mean an employee who has been
designated as a Participant as provided in Section 2.1, and
signed a copy of the Plan.
10.10 "Plan" has the meaning set forth in Section 1.1.
10.11 "Severance Benefits" has the meaning set forth in
Section 3.2.
10.12 "Target Bonus" shall mean the amount of the annual
cash bonus which the Participant has an opportunity to earn under
the terms of the Company's annual cash incentive bonus plan if
the Company achieves but does not exceed all of the performance
objectives designated under such incentive bonus plan, but not
less than 35% of Base Salary.
ARTICLE 11
MISCELLANEOUS
11.1 Severability. If any term, provision, covenant or
restriction of the Plan is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of the Plan shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
11.2 Construction of Plan. Any gender, where appearing in
the Plan, shall be deemed to include the other gender, the
singular shall include the plural, and the plural shall include
the singular, unless the context otherwise requires. Descriptive
headings of the several Articles of the Plan are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof. In the event of a
conflict between the text of the Plan and any summary,
description or other information regarding the Plan, the text of
the Plan shall control.
ARTICLE 12
CLAIMS, INQUIRIES AND APPEALS
12.1 Applications for Benefits and Inquiries. Any
application for benefits, inquiries about the Plan or inquiries
about present or future rights under the Plan must be submitted
to the Plan Administrator in writing. The Company, or any
successor, shall at all times maintain a Plan Administrator, and
shall give each Participant written notice of any change in the
Plan Administrator or the address to which benefits or inquiries
should be sent. The Plan Administrator is:
Consolidated Freightways Corporation
Attention: General Counsel
175 Linfield Drive
Menlo Park, CA 94025
12.2 Denial of Claims. In the event that any application
for benefits is denied in whole or in part, the Plan
Administrator must notify the applicant, in writing, of the
denial of the application. The written notice of denial will be
set forth in a manner designed to be understood by the
Participant, and will include specific reasons for the denial,
specific references to the Plan provision upon which the denial
is based and a description of any information or material that
the Plan Administrator needs to complete the review. This
written notice will be given to the employee within 20 days after
the Plan Administrator receives the application.
12.3 Legal Action. No legal action for benefits under the
Plan may be brought until the claimant (i) has submitted a
written application for benefits in accordance with the
procedures described by Section 12.1 above and (ii) has been
notified by the Plan Administrator that the application is denied
(or the application is deemed denied due to the Plan
Administrator's failure to act on it within the established time
period). The Company will reimburse Participant for all
reasonable attorney's fees and costs associated with bringing any
action to enforce their rights hereunder, regardless of the
outcome of such proceeding, provided that the arbitrator or court
does not find the claims was brought in bad faith.
ARTICLE 13
OTHER PLAN INFORMATION
13.1 Employer and Plan Identification Numbers. The Employer
Identification Number assigned to the Company (which is the "Plan
Sponsor" as that term is used in ERISA) by the Internal Revenue
Service is 77-0425334.
13.2 Ending Date for Plan's Fiscal Year. The date of the
end of the fiscal year for the purpose of maintaining the Plan's
records is December 31.
13.3 Agent for the Service of Legal Process. The agent for
the service of legal process with respect to the Plan is:
Consolidated Freightways Corporation, 175 Linfield Drive, Menlo
Park, CA 94025, Attn: General Counsel. Service of legal process
also may be made upon the Plan Administrator.
13.4 Plan Sponsor and Administrator. The "Plan Sponsor" and
the "Plan Administrator" of the Plan is Consolidated Freightways
Corporation, 175 Linfield Drive, Menlo Park, CA 94025. The Plan
Sponsor's and Plan Administrator's telephone number is (650) 326-
1700. The Plan Administrator is the named fiduciary charged with
the responsibility for administering the Plan.
ARTICLE 14
EXECUTION
This Management Change of Control Plan is executed by a duly
authorized officer of the Company as of the 8th day of December,
1998.
Consolidated Freightways
Corporation
By:/s/Stephen D. Richards
Name: Stephen D. Richards
Title: Senior Vice President &
General Counsel
CONSOLIDATED FREIGHTWAYS CORPORATION
MANAGEMENT CHANGE-OF-CONTROL PLAN
INTRODUCTION
The Consolidated Freightways Corporation Management Change-
of-Control Plan (the "Plan") is hereby adopted by the Board of
Directors (the "Board") of Consolidated Freightways Corporation,
a Delaware corporation (the "Company"), effective as of December
8, 1998. The Plan is intended to provide members of management
who are Participants in the Plan with the benefits specified
herein in the event of a Change of Control.
Certain capitalized terms used in the Plan are defined in
Article 10.
ARTICLE 1
ESTABLISHMENT OF THE PLAN
1.1 Establishment of Plan. As of the date of this
Agreement, the Company hereby establishes a plan to be known as
the "Management Change-of-Control Plan" (the "Plan"), which shall
contain the terms and conditions set forth herein.
1.2 Applicability of Plan. The benefits provided by the
Plan shall be available to all Participants, unless otherwise
specifically provided.
ARTICLE 2
ELIGIBILITY
2.1 Participation. All corporate officers of the Company,
Consolidated Freightways Corporation of Delaware and the
President of Canadian Freightways Limited, as of the date hereof
will be Participants in the Plan. The Board of Directors or the
Compensation Committee of the Board, who have executed a copy of
this Plan, (the "Compensation Committee") may, in its sole
discretion, designate additional members of management or
employees of the Company or any other corporation or entity that
directly or indirectly controls, is controlled by, or is under
common control with the Company (an "Affiliate") to be
Participants in the Plan and, subject to the terms of
Section 2.2, may decide that members of management or employees
who have been designated as Participants in the Plan shall no
longer be Participants. Notwithstanding any of the foregoing
provisions of this Section 2.1 or elsewhere in the Plan to the
contrary, no person otherwise eligible shall be a Participant if
such person has entered into an employment agreement with the
Company or an Affiliate of the Company which expressly provides
for severance benefits in the event of the termination of such
person's employment relationship with the Company or its
Affiliate, as appropriate.
2.2 Duration of Participation. A Participant shall cease
to be a Participant in the Plan upon a determination thereof by
the Board or the Compensation Committee; provided, however, that
in no event shall any such determination impair a Participant's
rights under this Plan with respect to benefits that have accrued
at or prior to such determination. Without limiting the
foregoing, if a Participant is then entitled to payment of
benefits under the Plan as a result of a Change of Control that
occurred at or prior to the time of such determination, such
Participant shall remain a Participant in the Plan until the full
amount of such benefits has been paid to such Participant. In no
event shall any Participant be entitled to benefits pursuant to
this Plan with respect to a Change of Control that occurs after
the termination of such Participant's employment with the
Company, for any reason or for no reason, and nothing in this
Plan shall alter the status of each Participant as an at-will
employee of the Company.
ARTICLE 3
SEVERANCE BENEFITS
3.1 Right to Severance Benefits. If the Change of Control
is consummated while the Plan remains in effect, and a
Participant is either (i) terminated by the Company or an
Affiliate of the Company employing such Participant without Cause
or (ii) voluntarily terminates such employment with Good Reason,
such Participant shall be entitled to receive Severance Benefits
from the Company as set forth in Section 3.2; provided, however,
that the Participant's termination of employment occurs either at
the time of or not more than twenty four (24) months after a
Change of Control.
3.2 Determination of Severance Benefits. If, after a
Change of Control, any Participant has a right to receive
Severance Benefits pursuant to Section 3.1 above, Severance
Benefits shall be determined as follows:
(a) Such Participant will receive as a lump sum cash
payment the equivalent of one (1) times Base Salary and his or
her Target Bonus. Such Participant shall also receive an
additional one (1) year's age and service credit under the
Company's defined benefit pension plan and supplemental
retirement plan as if Participant had continued to perform
services for such period with the same amount of Base Salary and
Target Bonus.
(b) The Company shall pay the premiums for the
terminated Participant and for the eligible spouse and other
COBRA qualified beneficiaries of the terminated Participant for
the health insurance continuation benefits provided under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, ("COBRA"), and Section 4980B of the Internal Revenue
Code of 1986, as amended (the "Code"), for the maximum period
provided by law for such qualified beneficiary's COBRA
continuation rights, but in any event not to exceed one (1) year
from the date of Participant's termination of employment.
3.3 Time of Severance Payment. The portions of the
Severance Benefits payable in cash shall be paid by the Company
in lump sum in cash not later than thirty (30) days following the
Date of Termination (as defined in Section 3.7).
3.4 No Mitigation. The Participant shall not be required
to mitigate the amount of the Severance Benefits by seeking other
employment or otherwise, and any amount earned by the Participant
as the result of employment by another employer after the Date of
Termination shall not reduce the Severance Benefits.
3.5 Withholding. The Company shall withhold appropriate
federal, state, local and foreign income and employment taxes
from any payments hereunder.
3.6 Notice of Termination. Any termination by the Company
or its Affiliate for Cause or by the Company for termination of
the Plan or by the Participant for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given by hand delivery or by registered or certified mail, return
receipt requested, postage prepaid, if to the Participant, to the
Participant at the Participant's address as set forth in the
Company's records, and, if to the Company, to Consolidated
Freightways Corporation, 175 Linfield Drive, Menlo Park, CA
94025, or to such other address as may be designated by the
Company. Any notices given pursuant to this Section 3.6 shall be
effective on the earlier of the date on which such notice is
actually received by the addressee or the date that is three days
after such notice is sent by the addressor. For purposes of the
Plan, a "Notice of Termination" means a written notice which (i)
indicates the provisions in the Plan that are affected by such
termination and (ii) if the Date of Termination, as defined
below, is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice). The failure
by the Company or the Participant to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Cause or of Good Reason shall not waive any right of
the Company or of the Participant, respectively, hereunder or
preclude the Company or the Participant, respectively, from
asserting such fact or circumstance in enforcing its or his/her
rights hereunder.
3.7 Date of Termination. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that if
the Participant's employment is terminated by the Company or its
Affiliate other than for Cause, the Date of Termination shall be
the date on which the Company notifies the Participant of such
termination or such later date specified by the Company.
3.8 Certain Reduction of Payments. In the event that any
distribution received or to be received by a Participant pursuant
to the Plan ("Distribution") would (i) constitute a "parachute
payment" within the meaning of Section 280G of the Code and (ii)
be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then such Distribution shall be reduced to
the largest amount which would result in no portion of the
Distribution being subject to the Excise Tax or such Distribution
may be paid in full, whichever produces the better after-tax
result for the Participant. Necessary calculations will be
prepared by a mutually acceptable accounting firm, paid in full
by the Company.
As a condition of receiving benefits under this Agreement,
Participant may not directly solicit employees or full-time
consultants of the Company to leave during his/her employment
with the Company or for a period of two years from termination of
employment. Participant shall also waive any known or unknown
claim against the Company and its Affiliates, including, if
applicable, any acquiring corporation, other than those arising
under the Agreement. Participant shall sign an appropriate
release if so requested.
ARTICLE 4
PAYMENTS TO AND FROM THE PLAN
The cash benefits under the Plan shall be paid from the
general funds of the Company (by certified or official bank check
or wire transfer of immediately available funds to an account
designated by the applicable Participant), and the Participants
shall be no more than unsecured general creditors of the Company.
ARTICLE 5
OTHER RIGHTS AND BENEFITS NOT AFFECTED
5.1 Nonexclusivity. Nothing in the Plan shall prevent or
limit any Participant's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or
practices provided by the Company or its affiliates and for which
a Participant may otherwise qualify, nor shall anything herein
limit or otherwise affect such rights as any Participant may have
under any stock option or other agreements with the Company.
Except as otherwise expressly provided herein, amounts which are
vested benefits or which a Participant is otherwise entitled to
receive under any plan, policy, practice or program of the
Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or
program. Provided, however, Participant shall be entitled within
thirty (30) days of the Date of Termination to be paid a pro-rata
portion of Participant's Target Bonus based upon performance of
the Company and/or an Affiliate and/or as otherwise provided in
the annual bonus plan against the plan objectives.
5.2 Employment Status. The Plan does not constitute a
contract of employment or impose on any Participant, the Company
or any of the Company's affiliates any obligation to retain any
Participant as an employee, to change the status of the
Participant's employment, or to change the Company's or
affiliate's policies regarding termination of employment. In no
event shall any Participant be entitled to benefits pursuant to
this Plan with respect to a Change of Control that occurs after
the termination of such Participant's employment with the
Company, for any reason or for no reason, and nothing in this
Plan shall alter the status of each Participant as an at-will
employee of the Company.
ARTICLE 6
SUCCESSOR TO COMPANY
The Plan shall be binding upon any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of
the Company and any parent company, and any such successor or
assignee and parent company, if any, shall be required to perform
the Company's obligations under the Plan, in the same manner and
to the same extent that the Company would be required to perform
if no such succession or assignment had taken place. In such
event, the term "Company," as used in the Plan, shall mean the
Company, and any successor or assignee to the business or assets
and any parent company, which by reason hereof becomes bound by
the terms of the Plan.
ARTICLE 7
AMENDMENT AND TERMINATION; ADMINISTRATIVE AUTHORITY
7.1 Amendment or Termination. The Board may amend or
terminate this Plan at any time. Notwithstanding the foregoing,
the Plan shall not terminate, expire or be adversely amended with
respect to any Participant who becomes entitled to benefits
hereunder until such Participant has received such payments or
other rights in full, nor shall the Plan be terminated or
adversely amended with respect to any Participant without the
written consent of such Participant at any time during the twenty
four (24) month period commencing with the occurrence of a Change
of Control.
7.2 Administrative Authority. The Company shall have the
responsibility and authority to establish rules, forms and
procedures for the administration of the Plan, and to construe
and interpret the Plan and to decide any and all questions of
fact, interpretation, definition, computation or administration
arising in connection with the operation of the Plan, including,
but not limited to, the eligibility to participate in the Plan
and amount of benefits paid under the Plan.
ARTICLE 8
NON-TRANSFER OF BENEFITS
No benefit hereunder shall be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to do so shall be void.
ARTICLE 9
LEGAL CONSTRUCTION AND ARBITRATION
9.1 Applicable Law. This Plan shall be construed in
accordance with the laws of the State of California without
regard to the conflict of laws provisions thereof.
9.2 Arbitration. Any and all disputes or controversies,
whether of law or fact of any nature whatsoever, arising from or
respecting the application of the Plan to any Participant shall
be decided by arbitration by the American Arbitration Association
in accordance with the rules and regulations of that Association,
or by any other arbitration body mutually agreed upon by the
parties. Pre-arbitration discovery shall be permitted at the
request of either party to a dispute under appropriate protection
for proprietary and confidential business information.
The arbitrators shall be selected as follows: the Company
and the Participant who is a party to the dispute shall each
select one independent, qualified arbitrator and the two
arbitrators so selected shall select the third arbitrator. The
Company reserves the right to disqualify any individual
arbitrator who shall be employed by or affiliated with a
competing organization. The Company will pay all of the costs of
any arbitrator hired to resolve a dispute as determined by the
American Arbitration Association.
Arbitration shall take place in San Mateo County,
California, or any other location mutually agreeable to the
parties. At the request of either party, arbitration proceedings
will be conducted in the utmost secrecy and, in such case, all
documents, testimony and records shall be received, heard and
maintained by the arbitrators in secrecy under seal, available
for inspection only by the parties to the arbitration, their
respective attorneys, and their respective expert consultants or
witnesses who shall agree, in advance and in writing, to receive
all such information confidentially and to maintain such
information in secrecy, and make no use of such information
except for the purposes of the arbitration, until such
information shall become generally known.
The arbitrators, who shall act by majority vote, shall be
able to decree any and all relief of an equitable nature,
including but not limited to such relief as a temporary
restraining order, a temporary injunction, or a permanent
injunction, and shall also be able to award damages, with or
without an accounting and costs. The decree or judgment of an
award rendered by the arbitrators may be entered and enforced in
any court having jurisdiction over the parties.
Reasonable notice of the time and place of arbitration shall
be given to persons other than the parties, if such notice is
required by law, in which case such persons or their authorized
representatives shall have the right to attend or participate in
the arbitration hearing in such manner as the law shall require.
If any action is necessary to enforce or interpret the
application of the Plan to a Participant, then that Participant
shall be entitled to reasonable attorneys fees, costs, and
necessary disbursements in addition to any other relief to which
that Participant may be entitled, if any, under all circumstances
regardless of the outcome of the action.
ARTICLE 10
DEFINITIONS
For purposes of the Plan, the following terms shall have the
meanings set forth below.
10.1 "Base Salary" means the greater of the Participant's
base salary on the date hereof, or on the date of the Change-of-
Control. In no event may Base Salary be reduced.
10.2 "Cause" means the occurrence of any of the following:
(a) any intentional action or intentional failure to act by
Participant which was performed in bad faith and to the material
detriment of the Company; (b) Participant intentionally refuses
or intentionally fails to act in accordance with any lawful and
proper direction or order of the Board; (c) Participant willfully
and habitually neglects the duties of employment; or (d)
Participant is convicted of a felony crime involving fraud or an
act of dishonesty against the Company, provided that in the event
that any of the foregoing events is capable of being cured, the
Company shall provide written notice to Participant describing
the nature of such event and Participant shall thereafter have
ten (10) business days to cure such event.
10.3 "Change-of-Control" means any one of the following:
(a) The Company is merged, or consolidated, or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than 50% of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by
the holders of voting securities of the Company immediately prior
to such transaction;
(b) The Company sells at least fifty percent (50%) of
its assets in a twelve (12) month period to any other corporation
or other legal person and thereafter, less than 50% of the
combined voting power of the then-outstanding voting securities
of the acquiring or consolidated entity are held in the aggregate
by the holders of voting securities of the Company immediately
prior to such sale;
(c) There is a report filed after the date of this
Agreement on Schedule 13D or Schedule 14 D-1 (or any successor
schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act") disclosing
that any person (as the term "person" is used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) representing 25% or more of the combined voting
power of the then-outstanding voting securities of the Company;
(d) The Company shall file a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to item 1 of Form 8-X
thereunder or Item 5(f) of Schedule 14A thereunder (or any
successor schedule, form or report or item therein) that the
change in control of the Company has or may have occurred or will
or may occur in the future pursuant to any then-existing contract
or transaction;
(e) During any period of two consecutive years,
individuals who at the beginning of any such period constitute
the directors of the Company cease for any reason to constitute
at least a majority thereof unless the election or the nomination
for election by the Company's shareholders of each director of
the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the
beginning of such period (an "Incumbent Director"), and any
director so approved shall be treated as an Incumbent Director in
the future; or
(f) the liquidation or dissolution of the Company.
10.4 "Company" means Consolidated Freightways Corporation,
Consolidated Freightways Corporation of Delaware, and any
successor as provided in Article 6 hereof.
10.5 "Date of Termination" has the meaning set forth in
Section 3.7.
10.6 "Effective Date" shall mean December 8, 1998.
10.7 "Good Reason" means any action taken by the Company or
its successor, as the case may be, that results in a
(i) reduction of Participant's Base Salary and/or Target Bonus
opportunity as in effect immediately prior to the Effective Date
of the Plan or in effect immediately prior to the occurrence of a
Change of Control, whichever is greater, (ii) failure to provide
a package of welfare benefit plans, pension benefit plans, and
fringe benefits for employees of the Company and its Affiliates
and to other officers of the Company and its Affiliates (other
than senior executive officers) which, taken as a whole, provides
substantially similar benefits to those in which the Participant
is entitled to participate immediately prior to the Commencement
Date of this Agreement or that in effect prior to the occurrence
of a Change-of-Control, whichever is greater, or any action by
the Company which would materially adversely affect Participant's
participation or materially reduce Participant's benefits under
any of such plans, (iii) change in Participant's
responsibilities, authority, title (excluding the Corporate
Secretary title), office, or reporting relationships resulting in
diminution of position, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith which
is remedied by the Company promptly after notice thereof is given
by Participant, and excluding the reporting to the equivalent
senior level executive at the Company or the parent company of
the Company, (iv) request that Participant relocate to a worksite
that is more than 15 miles from his or her prior worksite, unless
Participant accepts such relocation opportunity, (v) material
reduction in Participant's duties (excluding the Corporate
Secretary function), (vi) failure or refusal of a successor to
the Company or a parent company to assume the Company's
obligations under this Agreement, as provided in Article 6,
(vii) material breach by the Company or any successor to the
Company of any of the material provisions of this Agreement, or
(viii) failure to provide a package of welfare benefit plans,
pension benefits, and fringe benefits for Participants made
available to employees of the Company and its Affiliates and to
other officers (other than senior executive officers) of the
Company and its Affiliates. In the event of a Change of Control
of the Company in which the Company shall become a division or
subsidiary of a larger organization, references to the
Participant's title with the Company shall be deemed to mean the
equivalent position with such division or subsidiary for purposes
of this Section 10.7, and shall not be deemed to be a Good Reason
under this Section 10.7.
10.8 "Notice of Termination" has the meaning set forth in
Section 3.6.
10.9 "Participant" shall mean an employee who has been
designated as a Participant as provided in Section 2.1, and
signed a copy of the Plan.
10.10 "Plan" has the meaning set forth in Section 1.1.
10.11 "Severance Benefits" has the meaning set forth in
Section 3.2.
10.12 "Target Bonus" shall mean the amount of the annual
cash bonus which the Participant has an opportunity to earn under
the terms of the Company's annual cash incentive bonus plan if
the Company achieves but does not exceed all of the performance
objectives designated under such incentive bonus plan, but not
less than 50% of Base Salary.
ARTICLE 11
MISCELLANEOUS
11.1 Severability. If any term, provision, covenant or
restriction of the Plan is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of the Plan shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
11.2 Construction of Plan. Any gender, where appearing in
the Plan, shall be deemed to include the other gender, the
singular shall include the plural, and the plural shall include
the singular, unless the context otherwise requires. Descriptive
headings of the several Articles of the Plan are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof. In the event of a
conflict between the text of the Plan and any summary,
description or other information regarding the Plan, the text of
the Plan shall control.
ARTICLE 12
CLAIMS, INQUIRIES AND APPEALS
12.1 Applications for Benefits and Inquiries. Any
application for benefits, inquiries about the Plan or inquiries
about present or future rights under the Plan must be submitted
to the Plan Administrator in writing. The Company, or any
successor, shall at all times maintain a Plan Administrator, and
shall give each Participant written notice of any change in the
Plan Administrator or the address to which benefits or inquiries
should be sent. The Plan Administrator is:
Consolidated Freightways Corporation
Attention: General Counsel
175 Linfield Drive
Menlo Park, CA 94025
12.2 Denial of Claims. In the event that any application
for benefits is denied in whole or in part, the Plan
Administrator must notify the applicant, in writing, of the
denial of the application. The written notice of denial will be
set forth in a manner designed to be understood by the
Participant, and will include specific reasons for the denial,
specific references to the Plan provision upon which the denial
is based and a description of any information or material that
the Plan Administrator needs to complete the review. This
written notice will be given to the employee within 20 days after
the Plan Administrator receives the application.
12.3 Legal Action. No legal action for benefits under the
Plan may be brought until the claimant (i) has submitted a
written application for benefits in accordance with the
procedures described by Section 12.1 above and (ii) has been
notified by the Plan Administrator that the application is denied
(or the application is deemed denied due to the Plan
Administrator's failure to act on it within the established time
period). The Company will reimburse Participant for all
reasonable attorney's fees and costs associated with bringing any
action to enforce their rights hereunder, regardless of the
outcome of such proceeding, provided that the arbitrator or court
does not find the claims was brought in bad faith.
ARTICLE 13
OTHER PLAN INFORMATION
13.1 Employer and Plan Identification Numbers. The Employer
Identification Number assigned to the Company (which is the "Plan
Sponsor" as that term is used in ERISA) by the Internal Revenue
Service is 77-0425334.
13.2 Ending Date for Plan's Fiscal Year. The date of the
end of the fiscal year for the purpose of maintaining the Plan's
records is December 31.
13.3 Agent for the Service of Legal Process. The agent for
the service of legal process with respect to the Plan is:
Consolidated Freightways Corporation, 175 Linfield Drive, Menlo
Park, CA 94025, Attn: General Counsel. Service of legal process
also may be made upon the Plan Administrator.
13.4 Plan Sponsor and Administrator. The "Plan Sponsor" and
the "Plan Administrator" of the Plan is Consolidated Freightways
Corporation, 175 Linfield Drive, Menlo Park, CA 94025. The Plan
Sponsor's and Plan Administrator's telephone number is (650) 326-
1700. The Plan Administrator is the named fiduciary charged with
the responsibility for administering the Plan.
ARTICLE 14
EXECUTION
This Management Change of Control Plan is executed by a duly
authorized officer of the Company as of the 8th day of December,
1998.
Consolidated Freightways
Corporation
By:/s/Stephen D. Richards
Name: Stephen D. Richards
Title: Senior Vice President &
General Counsel