Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of the 5th day of June, 2000 (the "Effective Date"), by and between
USFreightways Corporation, a Delaware corporation (the "Employer"), and Samuel
K. Skinner (the "Executive").
RECITALS
A. The Employer desires that the Executive provide services for the benefit of
the Employer and its wholly-owned subsidiaries and the Executive desires to
accept such employment with the Employer.
B. The Employer and the Executive acknowledge that the Executive will be a
senior member of the management team of the Employer and, as such, will
participate in implementing the Employer's business plan.
C. In the course of employment with the Employer, the Executive will have access
to certain confidential information that relates to or will relate to the
business of the Employer and its wholly-owned subsidiaries.
D. The Employer desires that any such information not be disclosed to other
parties or otherwise used for unauthorized purposes.
NOW, THEREFORE, in consideration of the above premises and the
following mutual covenants and conditions, the parties agree as follows:
1. Employment. The Employer shall employ the Executive beginning on the
Effective Date. On July 17, 2000, the Executive shall become the President and
Chief Executive Officer of the Employer. In addition to the foregoing, the
Employer covenants and agrees that (i) as soon as reasonably practicable after
December 31, 2000, the Executive will be elected as Chairman of the Board of
Directors of the Employer (the "Board") and will remain Chairman as long as he
is a member of the Board, and (ii) as long as the Executive remains employed as
the President and Chief Executive Officer of the Employer, he will continue to
be slated as a nominee for a director of the Employer. The Executive hereby
accepts such employment on the following terms and conditions.
2. Duties. The Executive shall work for the Employer from the Effective Date
through July 16, 2000 and perform such services from the Effective Date through
July 16, 2000 as the Board may from time to time direct. Beginning July 17,
2000, the Executive shall work for the Employer in a full-time capacity. The
Executive shall, beginning July 17, 2000, have the duties, responsibilities,
powers, and authority customarily associated with the position of President and
Chief Executive Officer. The Executive shall report to, and follow the direction
of, the Board. In addition to the foregoing, the Executive also shall perform
such other and unrelated services and duties as may be assigned to him from time
to time by the Board consistent with his position as President and Chief
Executive Officer. The Executive shall diligently, competently, and faithfully
perform all duties, and shall devote his entire business time, energy,
attention, and skill to the performance of duties for the Employer or its
wholly-owned subsidiaries and will use his best efforts to promote the interests
of the Employer. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic, religious or charitable boards
or committees, so long as such activities do not individually or in the
aggregate significantly interfere with the performance of the Executive's
responsibilities as an employee of the Employer in accordance with this
Agreement. In addition, it shall not be considered a violation of the foregoing
for the Executive, through July 16, 2000, to conclude any business affairs he
may have at his prior employer
3. Executive Loyalty. Subject to the exceptions set forth in Paragraph 2, the
Executive shall devote all of his time, attention, knowledge, and skill solely
and exclusively to the business and interests of the Employer, and the Employer
shall be entitled to all benefits and profits arising from or incident to any
and all work, services, and advice of the Executive. The Executive expressly
agrees that during the term of this Agreement, he shall not engage, directly or
indirectly, as a partner, officer, director, member, manager, stockholder,
advisor, agent, employee, or in any other form or capacity, in any other
business similar to that of the Employer. The foregoing notwithstanding, nothing
herein contained shall be deemed to prevent the Executive from investing his
money in the capital stock or other securities of any corporation whose stock or
securities are publicly-owned or are regularly traded on any public exchange,
nor shall anything herein contained be deemed to prevent the Executive from
investing his money in real estate, or to otherwise manage his personal
investments and financial affairs.
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4. Compensation.
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A. Salary. The Employer shall pay the Executive an annual base salary of
$600,000 (the "Base Salary"), payable in substantially equal installments in
accordance with the Employer's payroll policy from time to time in effect. The
Executive's Base Salary shall commence on July 17, 2000 and shall be subject to
any payroll or other deductions as may be required to be made pursuant to law,
government order, or by agreement with, or consent of, the Executive. Changes to
the Base Salary, as adjusted, may be made following an annual salary review, the
first of which shall take place in or around July, 2001, and all subsequent
reviews shall occur thereafter at the same time as reviews are conducted
generally for executive officers of the Employer. The Base Salary shall not be
reduced, and the term Base Salary shall refer thereafter to the Base Salary, as
it may be increased from time to time.
B. Performance Bonus. The Executive shall participate in a bonus program, which
program shall provide the Executive with an opportunity to achieve a targeted
calendar year bonus of up to one hundred percent (100%) of the Base Salary. For
the calendar year ending December 31, 2000, the Executive shall be guaranteed a
bonus of no less than one hundred fifty thousand dollars ($150,000). The actual
terms and conditions of the annual bonus program shall be established by the
Employer, with input from the Executive, shall be memorialized in a written
document to be prepared by the Employer and which will be incorporated herein by
reference, and will provide for the payment of an annual bonus hereunder if the
Employer achieves specified company-wide objectives and if the Executive
achieves specified personal management objectives. All such objectives shall be
agreed upon by the Executive and the Board prior to the beginning of each
calendar year (or, for calendar year 2000, within ninety (90) days of the
Effective Date). Any bonus earned hereunder shall be payable no later than
ninety (90) days following the end of the calendar year for which the bonus is
earned.
C. Stock Options. On the Effective Date, the Employer shall grant the Executive
a non-qualified option to purchase two hundred thousand (200,000) shares of the
common stock of the Employer. Such stock option shall be granted in accordance
with and pursuant to the terms of the Employer's Long-Term Incentive Plan. The
stock option shall be granted at an exercise price equal to the "fair market
value" of such common stock of the Employer on the Effective Date. The grant of
such stock option, and the terms thereof, has been memorialized in the Option
Agreement attached hereto as Exhibit A.
D. Stock Grant. On the Effective Date, the Executive shall be provided with a
grant of $200,000 worth of common stock of the Employer. The number of shares of
such grant shall be based upon the "fair market value" of such common stock of
the Employer on the Effective Date. The stock grant shall be made in accordance
with and pursuant to the terms of the Employer's Long-Term Incentive Plan. The
grant of such stock, and the terms thereof, has been memorialized in the Stock
Grant Agreement attached hereto as Exhibit B.
E. Other Benefits. During the term of this Agreement, the Employer shall:
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(1) include the Executive in any life insurance, disability
insurance, medical, dental or health insurance, vacation,
savings, pension and retirement plans and other benefit plans
or programs (including, if applicable, any excess benefit or
supplemental executive retirement plans) maintained by the
Employer for the benefit of its executives; and
(2) include the Executive in such perquisites as the Employer may
establish from time to time that are commensurate with his
position and at least comparable to those received by other
executives of the Employer (including, but not limited to,
reimbursement of club dues for one (1) downtown club and an
automobile allowance of $1,000 per month).
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5. Expenses. The Employer shall reimburse the Executive for all reasonable and
approved business expenses, provided the Executive submits paid receipts or
other documentation acceptable to the Employer and as required by the Internal
Revenue Service to qualify as ordinary and necessary business expenses under the
Internal Revenue Code of 1986, as amended (the "Code").
6. Termination. The Executive's services shall terminate upon the first to occur
of the following events:
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A. Disability or Death. Upon the Executive's date of death or the date the
Executive is given written notice that he has been determined to be disabled by
the Employer. For purposes of this Agreement, the Executive shall be deemed to
be disabled if the Executive, as a result of illness or incapacity, shall be
unable to perform substantially his required duties for a period of four (4)
consecutive months or for any aggregate period of six (6) months in any twelve
(12) month period. A termination of the Executive's employment by the Employer
for disability shall be communicated to the Executive by written notice and
shall be effective on the tenth (10th) business day after receipt of such notice
by the Executive, unless the Executive returns to full-time performance of his
duties before such tenth (10th) business day.
B. Cause. On the date the Board provides the Executive with written notice
that he is being terminated for "cause." For purposes of this Agreement, the
Executive shall be deemed terminated for cause if the Employer terminates the
Executive after the Executive:
(1) shall have been indicted (or the equivalent thereof) for any
felony including, but not limited to, a felony involving
fraud, theft, misappropriation, dishonesty, or embezzlement;
or
(2) shall have committed intentional acts of misconduct that
materially impair the goodwill or business of the Employer or
cause material damage to its property, goodwill, or business;
or
(3) shall have refused to, or willfully failed to, perform his
material duties hereunder provided, however, that no
termination under this subparagraph (3) shall be effective
unless the Executive does not cure such refusal or failure to
the Employer's reasonable satisfaction as soon as practicable
after the Employer gives the Executive written notice
identifying such refusal or failure (and, in any event, within
thirty (30) calendar days after receipt of such written
notice).
No act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that his action or omission was in the best
interests of the Employer. A termination of the Executive's employment for Cause
shall be effected in accordance with the following procedures. The Board shall
give the Executive written notice ("Notice of Termination for Cause") of its
intention to terminate the Executive's employment for Cause, setting forth in
reasonable detail the specific conduct of the Executive that it considers to
constitute Cause and the specific provision(s) of this Agreement on which it
relies, and stating the date, time and place of the Board Meeting for Cause. The
"Board Meeting for Cause" means a meeting of the Board at which the Executive's
termination for Cause will be considered, that takes place not less than ten
(10) and not more than twenty (20) business days after the Executive receives
the Notice of Termination for Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Board Meeting for Cause.
The Executive's termination for Cause shall be effective when and if a
resolution is duly adopted at the Board Meeting for Cause by a two-thirds
majority vote of the entire membership of the Board, excluding the Executive
from the count of such membership, stating that in the good faith opinion of the
Board, the Executive is guilty of the conduct described in the Notice of
Termination for Cause, and that such conduct constitutes Cause under this
Agreement.
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C. On the date the Executive terminates his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" means:
(1) the assignment to the Executive of any duties materially
inconsistent in any respect with Paragraph 2 of this
Agreement, or any other action by the Employer that results in
a diminution in the Executive's position, authority, duties or
responsibilities, other than an isolated, insubstantial and
inadvertent action that is not taken in bad faith and is
remedied by the Employer after receipt of notice thereof from
the Executive;
(2) any requirement by the Employer that the Executive's services
be rendered primarily at a location or locations other than
within the greater Chicago metropolitan area and for other
than a de minimis period of time; or
(3) any breach of this Agreement by the Employer that is not
remedied by the Employer within five (5) business days after
receipt of notice thereof from the Executive, or as soon
thereafter as may be commercially practicable.
A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Employer written notice ("Notice of Termination for
Good Reason") of the termination within three (3) months of the event
constituting Good Reason, setting forth in reasonable detail the specific
conduct of the Employer that constitutes Good Reason and the specific provisions
of this Agreement on which Executive relies. A termination of employment by the
Executive for Good Reason shall be effective on the fifth (5th) business day
following the date when the Notice of Termination for Good Reason is given,
unless the notice sets forth a later date (which date shall in no event be later
than thirty (30) business days after the notice is given).
D. Without Cause. On the date the Employer terminates the Executive's employment
for any reason, other than a reason otherwise set forth in this Paragraph 6,
provided that the Employer shall give the Executive sixty (60) days written
notice prior to such date of its intention to terminate such employment.
E. Resignation. On the date the Executive terminates his employment for any
reason, other than a reason otherwise set forth in this Paragraph 6, provided
that the Executive shall give the Employer sixty (60) days written notice
prior to such date of his intention to terminate this Agreement.
7. Compensation Upon Termination.
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A. Termination Payment. If the Executive's services are terminated pursuant to
Paragraph 6B or 6E, the Executive shall be entitled to his Base Salary through
his final date of active employment plus any accrued but unused vacation pay.
The Executive also shall be entitled to any benefits mandated under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) or required under
the terms of any death, insurance, or retirement plan, or stock option program
or agreement, provided by the Employer and to which the Executive is a party or
in which the Executive is a participant, including, but not limited to, any
short-term or long-term disability plan or program, if applicable.
<PAGE>
B. Severance Payment. Except as otherwise provided in this Paragraph 7B, if the
Executive's services are terminated pursuant to Paragraph 6A, 6C, or 6D, the
Executive shall be entitled to his Base Salary through his final date of active
employment, plus any accrued but unused vacation pay. The Executive also shall
be entitled to a severance amount equal to the sum of (i) two times the Base
Salary, plus (ii) one times the performance bonus, if any, paid to the Executive
for the most recently completed calendar year. Such severance payment shall be
payable to the Executive over twenty-four (24) months following the date of
termination, provided (a) the Executive signs an agreement that releases the
Employer from actions, suits, claims, proceedings and demands related to the
period of employment and/or the termination of employment, and (b) the Employer
shall be permitted to offset from the severance payment hereunder any salary
paid to the Executive during the sixty (60) day written notice period, if the
Executive performs no substantial services during such sixty (60) day written
notice period. Additionally, the Executive shall be entitled to any benefits
mandated under the Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA) or required under the terms of any death, insurance, or retirement plan,
or stock option program or agreement, provided by the Employer and to which the
Executive is a party or in which the Executive is a participant. Any payments
made to the Executive under the foregoing provisions of this Paragraph 7B shall
be reduced by any death or insurance benefits payable to the Executive (or his
beneficiary) under the terms of this Agreement and, if employment is terminated
within twelve (12) months of the Effective Date, by any wages and/or
compensation earned by the Executive through his performance of substantially
full-time employment during the duration of such twenty-four (24) month period.
The foregoing notwithstanding, if, following a "Change of Control," (1) the
Executive is terminated by the Employer or its successor, pursuant to Paragraph
6D, within six (6) months following the Change of Control, or (2) the Executive
elects within six (6) months following such Change of Control to terminate his
employment pursuant to Paragraph 6C, the Executive shall be entitled to the
following single sum payment, in lieu of any payment otherwise set forth above,
and payable as soon as practicable following termination: an amount equal to
three (3) times the average of the Executive's prior five (5) years of cash
compensation from the Employer (or for such lesser period, as annualized, as the
Executive may have been employed by the Employer hereunder). In addition, all
options to purchase common stock of the Employer, which are otherwise
unexercisable at the time of the termination, shall immediately vest and become
exercisable. For purposes of this Paragraph 7B, a "Change of Control" shall be
deemed to occur on the earliest of (1) the acquisition by any entity, person, or
group of beneficial ownership, as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, of at least 51% of the outstanding capital
stock of the Employer entitled to vote for the election of directors ("Voting
Stock"); (2) the effective time of (i) a merger or consolidation of the Employer
with one or more corporations as a result of which the holders of the
outstanding Voting Stock of the Employer immediately prior to such merger hold
less than 50% of the Voting Stock of the surviving or resulting corporation, or
(ii) a transfer of substantially all of the property or assets of the Employer
other than to an entity of which the Employer, or an affiliate of the Employer,
owns at least 50% of the Voting Stock; or (3) the election to the Board, without
the recommendation or approval of the incumbent Board, of directors constituting
a majority of the number of directors of the Employer then in office.
<PAGE>
C. Change in Control. If a change in control shall occur (as defined in Section
280G(b)(2)(a)(i) of the Code), and a determination is made by legislation,
regulation, ruling directed to the Executive or the Employer, or court decision,
that the aggregate amount of any payment made to the Executive hereunder, or
pursuant to any plan, program, or policy of the Employer in connection with, on
account of, or as a result of, such change in control constitutes "excess
parachute payments" under the Code that are subject to the excise tax provisions
of Section 4999 of the Code, or any successor sections thereof, the Executive
shall be entitled to receive from the Employer, in addition to any other amounts
payable hereunder, an additional payment (a "Gross-Up Payment") 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, without limitation,
any income taxes (and any interest and penalties imposed thereon) and 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; provided, however, if the
aggregate amount of payments to the Executive, without regard to the Gross-Up
Payment, does not exceed one hundred ten percent (110%) of the maximum amount
that the Executive could receive without regard to the payments being subject to
the excise tax provisions of Section 4999 of the Code (the "Tax Limit"), then
(i) no Gross-Up Payment shall be made hereunder, and (ii) the payments shall be
reduced to the Tax Limit. All determinations required to be made under this
Paragraph 7, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by a certified public accounting firm
designated by the Employer and reasonably acceptable to the Executive which is
one of the five largest accounting firms in the United States (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the
Employer and the Executive within fifteen (15) business days of the receipt of
notice from the Executive that there has been an excess parachute payment, or
such earlier time as is requested by the Employer. All fees and expenses of the
Accounting Firm shall be borne solely by the Employer. Any Gross-Up Payment, as
determined pursuant to this Paragraph 7 shall be paid by the Employer to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Employer should have been made ("Underpayment") consistent with the
calculations required to be made hereunder. In the event that the Employer
exhausts its remedies hereunder and the Executive thereafter is required to make
a payment of any excise tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Employer to or for the benefit of the Executive. The Executive shall
notify the Employer in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Employer of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no later
than ten (10) business days after the Executive is informed in writing of such
claim and shall apprise the Employer of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the thirty (30) day period following the date on
which he gives such notice to the Employer (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Employer notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
<PAGE>
(1) give the Employer any information reasonably requested by the Employer
relating to such claim;
(2) take such action in connection with contesting such claim as the
Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Employer;
(3) cooperate with the Employer in good faith in order effectively to
contest such claim; and
(4) permit the Employer to participate in any proceedings relating to such
claim;
provided, however, that the Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for 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 limitation on the foregoing provision of
this Paragraph 7C, the Employer shall control all proceedings taken in
connection with such contest 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 and may, at its sole option, either
direct the Executive to pay the tax claimed and sue 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 Employer shall
determine. Notwithstanding anything herein to the contrary, if, after the
receipt by the Executive of an amount advanced by the Employer pursuant to this
Paragraph 7C, the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Employer's substantial
compliance with the requirements of this Paragraph 7C) promptly pay to the
Employer the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Employer pursuant to Paragraph 7C, a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Employer does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
8. Protective Covenants. The Executive acknowledges and agrees that solely by
virtue of his employment by, and relationship with, the Employer, he has
acquired and will acquire "Confidential Information", as hereinafter defined, as
well as special knowledge of the Employer's relationships with its customers and
suppliers, and that, but for his association with the Employer, the Executive
would not or will not have had access to said Confidential Information or
knowledge of said relationships. The Executive further acknowledges and agrees
(i) that the Employer has long term, near-permanent relationships with its
customers and suppliers, and that those relationships were developed at great
expense and difficulty to the Employer over several years of close and
continuing involvement; and (ii) that the Employer's relationships with its
customers and suppliers are and will continue to be valuable, special and unique
assets of the Employer and that the identity of its customers and suppliers is
kept under tight security with the Employer and cannot be readily ascertained
from publicly available materials or from materials available to the Employer's
competitors. In return for the consideration described in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and as a condition precedent to the Employer entering into
this Agreement, and as an inducement to the Employer to do so, the Executive
hereby represents, warrants, and covenants as follows:
A. The Executive has executed and delivered this Agreement as his free and
voluntary act, after having determined that the provisions contained herein are
of a material benefit to him, and that the duties and obligations imposed on him
hereunder are fair and reasonable and will not prevent him from earning a
comparable livelihood following the termination of his employment with the
Employer.
B. The Executive has read and fully understands the terms and conditions set
forth herein, has had time to reflect on and consider the benefits and
consequences of entering into this Agreement, and has had the opportunity to
review the terms hereof with an attorney or other representative, if he so
chooses.
C. The execution and delivery of this Agreement by the Executive does not
conflict with, or result in a breach of or constitute a default under, any
agreement or contract, whether oral or written, to which the Executive is a
party or by which the Executive may be bound.
<PAGE>
D. The Executive agrees that, during the time of his employment with the
Employer and for a period of one (1) year following the later of (i) the
termination of the Executive's employment hereunder pursuant to Paragraph 6B or
6E, or (ii) one year following the date of the last payment provided for under
Paragraph 7B, the Executive will not, except on behalf of the Employer, anywhere
in North America, or in any other place or venue where the Employer or any
affiliate, subsidiary, or division thereof now conducts or operates, or may
conduct or operate, its business prior to the date of the Executive's
termination of employment:
(1) directly or indirectly, contact, solicit or direct any person,
firm, corporation, association or other entity to contact or
solicit, any of the Employer's customers, prospective
customers, or suppliers (as hereinafter defined) for the
purpose of providing any products and/or services that are the
same as or similar to the products and services provided by
the Employer to its customers during the term hereof. In
addition, the Executive will not disclose the identity of any
such customers, prospective customers, or suppliers, or any
part thereof, to any person, firm, corporation, association,
or other entity for any reason or purpose whatsoever; or
(2) solicit or accept if offered to him, with or without
solicitation, on his own behalf or on behalf of any other
person, the services of any person who is a current employee
of the Employer (or was an employee of the Employer during the
year preceding such solicitation), nor solicit any of the
Employer's current employees (or an individual who was an
employee of the Employer during the year preceding such
solicitation) to terminate employment with the Employer, nor
agree to hire any current employee (or an individual who was
an employee of the Employer during the year preceding such
hire) of the Employer into employment with himself or any
company, individual or other entity (provided,however, and
notwithstanding the foregoing, the Executive shall not be
precluded from hiring any current employee (or an individual
who was an employee of the Employer during the year preceding
such hire) of the Employer into any position of public service
with a federal, state, or local governmental entity or
agency so long as the Executive does not solicit the services
of such employee or former employee); or
(3) directly or indirectly, whether as an investor (excluding
investments representing less than one percent (1%) of the
common stock of a public company), lender, owner, stockholder,
officer, director, consultant, employee, agent, salesperson or
in any other capacity, whether part-time or full-time, become
associated with any business involved in a business similar
to, or comparable to, the business of the Employer or any
affiliate of the Employer; or
(4) act as a consultant, advisor, officer, manager, agent,
director, partner, independent contractor, owner, or employee
for or on behalf of any of the Employer's customers,
prospective customers, or suppliers (as hereinafter defined),
with respect to or in any way with regard to any aspect of the
Employer's business and/or any other business activities in
which the Employer engages during the term hereof.
E. The Executive acknowledges and agrees that the scope described above is
necessary and reasonable in order to protect the Employer in the conduct of its
business and that, if the Executive becomes employed by another employer, he
shall be required to disclose the existence of this Paragraph 8 to such employer
and the Executive hereby consents to and the Employer is hereby given permission
to disclose the existence of this Paragraph 8 to such employer.
F. For purposes of this Paragraph 8, "customer" shall be defined as any person,
firm, corporation, association, or entity that purchased any type of product
and/or service from the Employer or is or was doing business with the Employer
or the Executive within the twelve (12) month period immediately preceding
termination of the Executive's employment. For purposes of this Paragraph 8,
"prospective customer" shall be defined as any person, firm, corporation,
association, or entity contacted or solicited by the Employer or the Executive
(whether directly or indirectly) or who contacted the Employer or the Executive
(whether directly or indirectly) within the twelve (12) month period immediately
preceding termination of the Executive's employment for the purpose of having
such persons, firms, corporations, associations, or entities become a customer
of the Employer. For purposes of this Paragraph 8, "supplier" shall be defined
as any person, firm, corporation, association, or entity who is or was doing
business with the Employer or the Executive or who was contacted or solicited by
the Employer or the Executive (whether directly or indirectly) or who contacted
or solicited the Employer or the Executive (whether directly or indirectly)
within the twelve (12) month period immediately preceding termination of the
Executive's employment.
<PAGE>
G. The Executive agrees that both during his employment and thereafter the
Executive will not, for any reason whatsoever, use for himself or disclose to
any person not employed by the Employer any "Confidential Information" of the
Employer acquired by the Executive during his relationship with the Employer,
both prior to and during the term of this Agreement. The Executive further
agrees to use Confidential Information solely for the purpose of performing
duties with, or for, the Employer and further agrees not to use Confidential
Information for his own private use or commercial purposes or in any way
detrimental to the Employer. The Executive agrees that "Confidential
Information" includes but is not limited to: (1) any financial, engineering,
business, planning, operations, services, potential services, products,
potential products, technical information and/or know-how, organization charts,
formulas, business plans, production, purchasing, marketing, pricing, sales,
profit, personnel, customer, broker, supplier, or other lists or information of
the Employer; (2) any papers, data, records, processes, methods, techniques,
systems, models, samples, devices, equipment, compilations, invoices, customer
lists, or documents of the Employer; (3) any confidential information or trade
secrets of any third party provided to the Employer in confidence or subject to
other use or disclosure restrictions or limitations; and (4) any other
information, written, oral, or electronic, whether existing now or at some time
in the future, whether pertaining to current or future developments, and whether
previously accessed during the Executive's tenure with the Employer or to be
accessed during his future employment with the Employer, which pertains to the
Employer's affairs or interests or with whom or how the Employer does business.
The Employer acknowledges and agrees that Confidential Information does not
include (a) information properly in the public domain, (b) information in the
Executive's possession prior to the date of his original association with the
Employer, or (c) information which is required to be disclosed by law or legal
process provided that the Executive notifies the Employer prior to or, if such
advance notification is not possible, promptly after such disclosure and
cooperates with the Employer in obtaining any protective order regarding or
other confidential treatment of such information.
H. In the event that the Executive intends to communicate information to any
individual(s), entity or entities (other than the Employer), to permit access by
any individual(s), entity or entities (other than the Employer), or to use
information for the Executive's own account or for the account of any
individual(s), entity or entities (other than the Employer) and such information
would be Confidential Information hereunder but for the exceptions set out at
(a) and (b) of Paragraph G of this Agreement, the Executive shall notify the
Employer of such intent in writing, including a description of such information,
no less than fifteen (15) days prior to such communication, access or use.
I. During and after the term of employment hereunder, the Executive will not
remove from the Employer's premises any documents, records, files, notebooks,
correspondence, reports, video or audio recordings, computer printouts, computer
programs, computer software, price lists, microfilm, drawings or other similar
documents containing Confidential Information, including copies thereof, whether
prepared by him or others, except as his duty shall require, and in such cases,
will promptly return such items to the Employer. Upon termination of his
employment with the Employer, all such items including summaries or copies
thereof, then in the Executive's possession, shall be returned to the Employer
immediately.
<PAGE>
J. The Executive recognizes and agrees that all ideas, inventions, patents,
copyrights, copyright designs, trade secrets, trademarks, processes,
discoveries, enhancements, software, source code, catalogues, prints, business
applications, plans, writings, and other developments or improvements and all
other intellectual property and proprietary rights and any derivative work based
thereon (the "Inventions") conceived by the Executive, alone or with others,
during the term of his employment, whether or not during working hours, that are
within the scope of the Employer's business operations or that relate to any of
the Employer's work or projects (including any and all inventions based wholly
or in part upon ideas conceived during the Executive's employment with the
Employer), are the sole and exclusive property of the Employer. The Executive
further agrees that (1) he will promptly disclose all Inventions to the Employer
and hereby assigns to the Employer all present and future rights he has or may
have in those Inventions, including without limitation those relating to patent,
copyright, trademark or trade secrets; and (2) all of the Inventions eligible
under the copyright laws are "work made for hire." At the request of the
Employer, the Executive will do all things deemed by the Employer to be
reasonably necessary to perfect title to the Inventions in the Employer and to
assist in obtaining for the Employer such patents, copyrights or other
protection as may be provided under law and desired by the Employer, including
but not limited to executing and signing any and all relevant applications,
assignments or other instruments. Notwithstanding the foregoing, pursuant to the
Employee Patent Act, Illinois Public Act 83-493, the Employer hereby notifies
the Executive that the provisions of this Paragraph 8 shall not apply to any
Inventions for which no equipment, supplies, facility or trade secret
information of the Employer was used and which were developed entirely on the
Executive's own time, unless (1) the Invention relates (i) to the business of
the Employer, or (ii) to actual or demonstrably anticipated research or
development of the Employer, or (2) the Invention results from any work
performed by the Executive for the Employer.
K. The Executive acknowledges and agrees that all customer lists, supplier
lists, and customer and supplier information, including, without limitation,
addresses and telephone numbers, are and shall remain the exclusive property of
the Employer, regardless of whether such information was developed, purchased,
acquired, or otherwise obtained by the Employer or the Executive. The Executive
also agrees to furnish to the Employer on demand at any time during the term of
this Agreement, and upon the termination of this Agreement, any other records,
notes, computer printouts, computer programs, computer software, price lists,
microfilm, or any other documents related to the Employer's business, including
originals and copies thereof.
L. The Executive acknowledges that he may become aware of "material" nonpublic
information relating to customers whose stock is publicly traded. The Executive
acknowledges that he is prohibited by law as well as by Employer policy from
trading in the shares of such customers while in possession of such information
or directly or indirectly disclosing such information to any other persons so
that they may trade in these shares. For purposes of this Paragraph L,
"material" information may include any information, positive or negative, which
might be of significance to an investor in determining whether to purchase, sell
or hold the stock of publicly traded customers. Information may be significant
for this purpose even if it would not alone determine the investor's decision.
Examples include a potential business acquisition, internal financial
information that departs in any way from what the market would expect, the
acquisition or loss of a major contract, or an important financing transaction.
M. It is agreed that any breach or anticipated or threatened breach of any of
the Executive's covenants contained in this Paragraph 8 will result in
irreparable harm and continuing damages to the Employer and its business and
that the Employer's remedy at law for any such breach or anticipated or
threatened breach will be inadequate and, accordingly, in addition to any and
all other remedies that may be available to the Employer at law or in equity in
such event, any court of competent jurisdiction may issue a decree of specific
performance or issue a temporary and permanent injunction, without the necessity
of the Employer posting bond or furnishing other security and without proving
special damages or irreparable injury, enjoining and restricting the breach, or
threatened breach, of any such covenant, including, but not limited to, any
injunction restraining the Executive from disclosing, in whole or part, any
Confidential Information. The Executive acknowledges the truthfulness of all
factual statements in this Agreement and agrees that he is estopped from and
will not make any factual statement in any proceeding that is contrary to this
Agreement or any part thereof.
<PAGE>
9. Notices. Any and all notices required in connection with this Agreement shall
be deemed adequately given only if in writing and (a) personally delivered, or
sent by first class, registered or certified mail, postage prepaid, return
receipt requested, or by recognized overnight courier, (b) sent by facsimile,
provided a hard copy is mailed on that date to the party for whom such notices
are intended, or (c) sent by other means at least as fast and reliable as first
class mail. A written notice shall be deemed to have been given to the recipient
party on the earlier of (a) the date it shall be delivered to the address
required by this Agreement; (b) the date delivery shall have been refused at the
address required by this Agreement; (c) with respect to notices sent by mail or
overnight courier, the date as of which the Postal Service or overnight courier,
as the case may be, shall have indicated such notice to be undeliverable at the
address required by this Agreement; or (d) with respect to a facsimile, the date
on which the facsimile is sent and receipt of which is confirmed. Any and all
notices referred to in this Agreement, or which either party desires to give to
the other, shall be addressed to his residence in the case of the Executive, or
to its principal office in the case of the Employer.
10. Waiver of Breach. A waiver by the Employer of a breach of any provision
of this Agreement by the Executive shall not operate or be construed as a
waiver or estoppel of any subsequent breach by the Executive. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.
11. Assignment. The Executive acknowledges that the services to be rendered
by him are unique and personal. Accordingly, the
Executive may not assign any of his rights or delegate any of his duties
or obligations under this Agreement. The rights and obligations of the
Employer under this Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of the Employer.
12. Entire Agreement. This Agreement sets forth the entire and final agreement
and understanding of the parties and contains all of the agreements made between
the parties with respect to the subject matter hereof. This Agreement supersedes
any and all other agreements, either oral or in writing, between the parties
hereto, with respect to the subject matter hereof. No change or modification of
this Agreement shall be valid unless in writing and signed by the Employer and
the Executive.
13. Severability. If any provision of this Agreement shall be found invalid or
unenforceable for any reason, in whole or in part, then such provision shall be
deemed modified, restricted, or reformulated to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement, as the case may require, and this Agreement shall be
construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified, restricted, or
reformulated or as if such provision had not been originally incorporated
herein, as the case may be. The parties further agree to seek a lawful
substitute for any provision found to be unlawful; provided, that, if the
parties are unable to agree upon a lawful substitute, the parties desire and
request that a court or other authority called upon to decide the enforceability
of this Agreement modify those restrictions in this Agreement that, once
modified, will result in an agreement that is enforceable to the maximum extent
permitted by the law in existence at the time of the requested enforcement.
14. Headings. The headings in this Agreement are inserted for convenience only
and are not to be considered a construction of the provisions hereof.
15. Execution of Agreement. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one agreement.
16. Recitals. The recitals to this Agreement are incorporated herein as an
integral part hereof and shall be considered as substantive and not precatory
language.
<PAGE>
17. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or breach thereof, other than any controversy or claim arising under
Paragraph 8, shall be resolved by arbitration in accordance with the National
Rules for the Resolution of Employment Disputes ("Rules") of the American
Arbitration Association through a single arbitrator selected in accordance with
the Rules. The decision of the arbitrator shall be rendered within thirty (30)
days of the close of the arbitration hearing and shall include written findings
of fact and conclusions of law reflecting the appropriate substantive law.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof in the State of Illinois. In reaching his or her
decision, the arbitrator shall have no authority (a) to authorize or require the
parties to engage in discovery (provided, however, that the arbitrator may
schedule the time by which the parties must exchange copies of the exhibits
that, and the names of the witnesses whom, the parties intend to present at the
hearing), (b) to interpret or enforce Paragraph 8 of the Agreement (for which
Paragraph 19 shall provide the exclusive venue), (c) to change or modify any
provision of this Agreement, (d) to base any part of his or her decision on the
common law principle of constructive termination, or (e) to award any damages
not otherwise available under the laws of the State of Illinois (or under any
applicable federal laws) and may not make any ruling, finding or award that does
not conform to this Agreement. Each party shall bear all of his or its own legal
fees, costs and expenses of arbitration and one-half (1/2) of the costs of the
arbitrator.
18. Indemnification. To the fullest extent permitted by law, the Employer agrees
to indemnify the Executive against, and to hold the Executive harmless from any
and all claims, lawsuits, losses, damages, assessments, penalties, expenses,
costs and liabilities of any kind or nature, including without limitation, court
costs and attorneys' fees, which the Executive may sustain directly as a result
of, or in connection with, any act or omission by the Employer or its employees
or any suit or other proceeding brought by a third party (including but not
limited to governmental or regulatory agencies or bodies) in connection with the
foregoing or in connection with any act or omission of the Executive while he
was employed or served as an officer or director of the Employer or any
wholly-owned subsidiary thereof, unless such claim, lawsuit, loss, damage,
assessment, penalty, expense, cost or liability is the result of the Executive's
gross negligence or willful misconduct.
19. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without reference to its
conflict of law provisions. Furthermore, the Executive agrees and consents to
submit to personal jurisdiction in the state of Illinois in any state or federal
court of competent subject matter jurisdiction situated in Cook County,
Illinois. The Executive further agrees that the sole and exclusive venue for any
suit arising out of, or seeking to enforce, the terms of Paragraph 8 of this
Agreement shall be in a state or federal court of competent subject matter
jurisdiction situated in Cook County, Illinois. In addition, the Executive
waives any right to challenge in another court any judgment entered by such Cook
County court or to assert that any action instituted by the Employer in any such
court is in the improper venue or should be transferred to a more convenient
forum.
IN WITNESS WHEREOF, the parties have set their signatures on the date
first written above.
EMPLOYER: EXECUTIVE:
USFREIGHTWAYS CORPORATION, SAMUEL K. SKINNER
a Delaware corporation
By: /s/John W. Puth /s/Samuel K. Skinner
------------ --------------------
Its: Compensation Committee, Chairman
--------------------------------
<PAGE>
EXHIBIT A
USFREIGHTWAYS CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective this 5th day of June, 2000 (the "Grant
Date"), between USFreightways Corporation, a Delaware corporation (the
"Company"), and Samuel K. Skinner (the "Optionee").
WHEREAS, in accordance with the terms of that certain Employment
Agreement as executed by and between the Company and the Optionee effective of
even date herewith (the "Employment Agreement"), the Company desires to grant to
the Optionee an option to purchase shares of its common capital stock (the
"Shares") under the Company's Long-Term Incentive Plan (the "Plan"); and
WHEREAS, the Company and the Optionee understand and agree that any
terms used herein have the same meanings as in the Plan (the Optionee being
referred to in the Plan as a "Participant").
NOW, THEREFORE, in consideration of the following mutual covenants and
for other good and valuable consideration, the parties agree as follows:
1. GRANT OF OPTION
The Company grants to the Optionee the right and Option to purchase all
or any part of an aggregate of 200,000 Shares (the "Option") on the
terms and conditions and subject to all the limitations set forth
herein and in the Plan, which is incorporated herein by reference. The
Optionee acknowledges receipt of a copy of the Plan and acknowledges
that the definitive records pertaining to the grant of this Option, and
exercises of rights hereunder, shall be retained by the Company. The
Option granted herein is intended to be a Nonstatutory Option as
defined in the Plan.
2. PURCHASE PRICE
The purchase price of the Shares subject to the Option shall be
$25.9373 per Share, the fair market value of a Share as of the Grant
Date.
3. EXERCISE OF OPTION
Subject to the Plan and this Agreement, the Option shall be exercisable
as follows:
EXERCISE PERIOD
----------------------------------------------------------------------------
Number of Shares Commencement Date Expiration Date
40,000 Grant Date 10th Anniversary of Grant Date
40,000 1st Anniversary of Grant Date 10th Anniversary of Grant Date
40,000 2nd Anniversary of Grant Date 10th Anniversary of Grant Date
40,000 3rd Anniversary of Grant Date 10th Anniversary of Grant Date
40,000 4th Anniversary of Grant Date 10th Anniversary of Grant Date
Notwithstanding the foregoing, if the Optionee's services are
terminated by the Company (without "cause," as such term is defined in
the Employment Agreement) within six (6) months following a Change of
Control, or the Optionee voluntarily terminates his employment within
six (6) months following a Change of Control, all Shares, whether or
not exercisable in accordance with the Schedule set forth above, shall
become immediately exercisable. For purposes of this Agreement, a
"Change of Control" shall be as defined in Paragraph 7B of the
Employment Agreement.
4. ISSUANCE OF STOCK
The Option may be exercised in whole or in part (to the extent that it
is exercisable in accordance with its terms) by giving written notice
(or any other approved form of notice) to the Company. Such written
notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being
exercised, shall contain the warranty, if any, required under the Plan
and shall specify a date (other than a Saturday, Sunday or legal
holiday) not less than five (5) nor more than ten (10) days after the
date of such written notice, as the date on which the Shares will be
purchased, at the principal office of the Company during ordinary
business hours, or at such other hour and place agreed upon by the
Company and the person or persons exercising the Option, and shall
otherwise comply with the terms and conditions of this Agreement and
the Plan. On the date specified in such written notice (which date may
be extended by the Company if any law or regulation requires the
Company to take any action with respect to the Shares prior to the
issuance thereof), the Company shall accept payment for the Shares and
shall deliver to the Optionee an appropriate certificate or
certificates for the Shares as to which the Option was exercised.
<PAGE>
The Option price of any Shares shall be payable at the time of exercise
as determined by the Company either:
(a) in cash, by certified check or bank check, or by wire transfer; or
(b) in whole shares of the Company's common stock, provided, however,
that (i) if such shares were acquired pursuant to an incentive
stock option plan (as defined in Code Section 422) of the Company
or Affiliate, then the applicable holding period requirements of
said Section 422 have been met with respect to such shares, (ii)
if the Optionee is subject to the reporting requirements of
Section 16 of the Securities Exchange Act of 1934, as amended
from time to time, and if such shares were granted pursuant to an
option, then such option must have been granted at least six (6)
months prior to the exercise of the Option hereunder, and (iii)
such shares were owned by the Optionee for six (6) or more months
prior to the exercise of the Option hereunder; or
(c) through the delivery of cash or the extension of credit by a
broker-dealer to whom the Optionee has submitted notice of
exercise or otherwise indicated an intent to exercise an Option
(a so-called "cashless" exercise); or
(d) in any combination of (a), (b), or (c) above.
The fair market value of the stock to be applied toward the purchase
price shall be determined as of the date of exercise of the Option in a
manner consistent with the determination of fair market value with
respect to the grant of an Option under the Plan. Any certificate for
shares of outstanding stock of the Company used to pay the purchase
price shall be accompanied by a stock power duly endorsed in blank by
the registered holder of the certificate, with signature guaranteed in
the event the certificate shall also be accompanied by instructions
from the Optionee to the Company's transfer agent with respect to
disposition of the balance of the shares covered thereby.
The Company shall pay all original issue taxes with respect to the
issuance of Shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith. The holder
of this Option shall have the rights of a stockholder only with respect
to those Shares covered by the Option which have been registered in the
holder's name in the share register of the Company upon the due
exercise of the Option.
5. NON-ASSIGNABILITY
This Option shall not be transferable by the Optionee and shall be
exercisable only by the Optionee, except as the Plan may otherwise
provide.
6. NOTICES
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by registered or certified mail, return receipt
requested, addressed as follows:
To the Company: USFreightways Corporation
8550 West Bryn Mawr Avenue
Suite 700
Chicago, Illinois 60631
Attn: Long-Term Incentive Plan Committee
To the Optionee: Samuel K. Skinner
11 Indian Hill Road
Winnetka, Illinois 60093
or to such other address or addresses of which notice in the same
manner has previously been given. Any such notice shall be deemed to
have been given when mailed in accordance with the foregoing
provisions.
<PAGE>
7. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Illinois.
8. BINDING EFFECT
This Agreement shall (subject to the provisions of Section 5 hereof) be
binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed on their behalf, by their duly authorized
representatives, all on the day and year first above written.
COMPANY: OPTIONEE:
USFREIGHTWAYS CORPORATION
By: _______________________ _____________________________
Its: _______________________ Samuel K. Skinner
<PAGE>
EXHIBIT B
USFREIGHTWAYS CORPORATION
STOCK GRANT AGREEMENT
THIS AGREEMENT is made effective this 5th day of June, 2000 (the "Grant
Date") between USFreightways Corporation, a Delaware corporation (the
"Company"), and Samuel K. Skinner (the "Recipient").
WHEREAS, in accordance with the terms of that certain Employment
Agreement as executed by and between the Company and the Recipient effective of
even date herewith (the "Employment Agreement"), the Company desires to grant to
the Recipient certain shares of its common capital stock (the "Stock") under the
Company's Long-Term Incentive Plan (the "Plan"); and
WHEREAS, the Company and the Recipient understand and agree that any
terms used herein have the same meanings as in the Plan (the Recipient being
referred to in the Plan as a "Participant").
NOW, THEREFORE, in consideration of the following mutual covenants and
for other good and valuable consideration, the parties agree as follows:
1. GRANT OF STOCK
The Company hereby grants to the Recipient 7,711 Shares of Stock on the
terms and conditions and subject to all the limitations set forth
herein and in the Plan, which is incorporated herein by reference. The
Recipient acknowledges receipt of a copy of the Plan. The Company and
the Recipient acknowledge that the number of Shares granted hereunder
equals $200,000 of Stock on the Grant Date.
2. CERTIFICATES AND SHAREHOLDER RIGHTS
The Company's Transfer Agent and Registrar shall prepare and issue a
stock certificate in the Recipient's name representing the Shares of
Stock that the Recipient has been granted. From and after the issuance
of the certificate, the Recipient shall be the holder of record with
respect to the Stock.
3. WITHHOLDING
The Company shall have the power and right to deduct or withhold, or
require the Recipient to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes required by law to be withheld
with respect to any grant made under or as a result of this Agreement.
In the alternative, the Recipient may elect, subject to Company
approval, to satisfy the withholding requirement in whole or in part,
by having the Company withhold Shares that would otherwise be
transferred to the Recipient having a fair market value, on the date
the tax is to be determined, equal to the minimum marginal tax that
could be imposed on the transaction. All elections shall be made in
writing and signed by the Recipient.
<PAGE>
5. NOTICES
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by registered or certified mail, return receipt
requested, addressed as follows:
To the Company: USFreightways Corporation
8550 West Bryn Mawr Avenue
Suite 700
Chicago, IL 60631
Attn: Long-Term Incentive Plan Award Committee
To the Recipient: Samuel K. Skinner
11 Indian Hill Road
Winnetka, Illinois 60093
or to such other address or addresses of which notice in the same
manner has previously been given. Any such notice shall be deemed to
have been given when mailed in accordance with the foregoing
provisions.
6. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Illinois.
7. BINDING EFFECT
This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the Company and the Recipient have caused this Agreement to
be executed on its and his behalf effective the day and year first above
written.
USFREIGHTWAYS CORPORATION RECIPIENT
By:
--------------------------------------------------
Its: Samuel K. Skinner
------------------------------------------------
